As of December 31, 2007 - egco.co.th · As of December 31, 2007 ... Content Page Part 1 Executive Summary 1 Part 2 Listed company 8 ... Section 4 Research and Development 37

-Translation-

Annual registration statement

As of December 31, 2007

Electricity Generating Public Company Limited

Content

Page

Part 1 Executive Summary 1

Part 2 Listed company 8 Section 1 Risk Factors 9 Section 2 Business Characteristic 14 Section 3 Operation of Business Line 20 Section 4 Research and Development 37 Section 5 Operational assets 38 Section 6 Future projects 43 Section 7 Dispute 45 Section 8 Capital Structure 46 Section 9 Management 50 Section 10 Internal Control 91 Section 11 Connected Transaction 95 Section 12 Financial Status and Operational Results 101 Section 13 Others 132

Part 3 The Certification of Information

Attachment 1 CV of the Management and the Control Persons Attachment 2 The positions of the Management and the Control Persons Attachment 3 Power Industry Attachment 4 Organization structure

Glossary 1. Companies The Company, EGCO, We Electricity Generating Public Company Limited Group companies, EGCO Group

Electricity Generating Public Company Limited and its subsidiaries and joint venture companies.

AE Agro Energy Company Limited AEP Amata-EGCO Power Limited AMESCO Amata Power-ESCO Service Company Limited APBP Amata Power (Bang Pakong) Limited APMC Alto Power Management Corporation BLCP BLCP Power Limited CHC, Conal Conal Holdings Corporation East Water Eastern Water Resources Development and Management Public

Company Limited EGAT Electricity Generating Authority of Thailand EGCO BVI EGCO International (BVI) Limited EGCO Cogen EGCO Cogeneration Company Limited EGCO Green EGCO Green Energy Company Limited EGCO JD EGCO Joint Ventures & Development Company Limited Egcom Tara Egcom Tara Company Limited ESCO EGCO Engineering and Service Company Limited GCC Gulf Cogeneration Company Limited GEC, Gulf Gulf Electric Public Company Limited GEN Gulf Energy Company Limited GIPP Gulf IPP Company Limited GPG Gulf Power Generation Company Limited GYG Gulf Yala Green Company Limited KEGCO Khanom Electricity Generating Company Limited NKCC Nong Khae Cogeneration Company Limited NMPC Northern Mindanao Power Corporation NTPC Nam Theun 2 Power Company Limited OneEnergy OneEnergy Thailand Limited REGCO Rayong Electricity Generating Company Limited Roi-Et Green Roi-Et Green Company Limited SCC Samutprakarn Cogeneration Company Limited SPPC Southern Philippines Power Corporation TLPC Thai LNG Power Corporation Limited WMPC Western Mindanao Power Corporation 2. Government Organizations EPPO Energy Policy and Planning Office NEPC National Energy Policy Council PWA Provincial Waterworks Authority SEC Securities and Exchange Commission, Thailand SET Stock Exchange of Thailand 3. Other Institutions IOD Thai Institute of Directors JBIC Japan Bank for International Corporation 4. Technical Terms COSO The Committee of Sponsoring Organization of the Treadway

Organization IPP Independent Power Producer SPP Small Power Producer

Part 1 Executive Summary

Page 1


1. Business Characteristics

Electricity Generating Public Company Limited (EGCO or EGCOMP as recognized by the Stock Exchange of Thailand) is structured as a holding Company for the purpose of owning shares in the businesses, which generate and trade electricity and in other related power businesses both in domestic and other countries in South East Asian. EGCO’s installed capacity in its shareholding proportion would be 3,509 MWs from 14 power plants. The Company set its long term objectives as follows • To grow at a rate higher than the average demand growth rate in Thailand and the ASEAN

region • To provide return as a rate higher than the average return rate of the industry in Thailand • To excel in organization management and good corporate governance with acceptance from

the public and the community. 2. Risk Factors

Realizing the importance of risk analysis and management to create long term value to the shareholders, the Board of Directors set the policy for risk management in writing as well as the warning system. Also, the Board requested the Management to conduct the risk analysis and risk mitigation for new projects to propose to each relative committee for consideration. In 2007, the Board revised the good corporate governance policy and assigned the audit committee to oversee the company’s risk management and the Management to follow the policy and directly report to the Board. Then, the Management established the Management Risk Committee comprising EGCO Executives, Managing Directors of subsidiaries with the President as Chairman. Each subsidiary also set up its risk management committee to govern its corporate risk management. Major risk factors and the countermeasures are as summarized below.

Risk Factors Countermeasures 1. New Development Project Risk 1.1 New Projects Intense competition among the growing number of companies, cost of capital, cost of machinery and construction, and political risks.

The information and experience gained from the recent IPP bidding has been analyzed and incorporated to improve the strategic direction for our future investment projects both in Thailand and abroad.

1.2 Country Risk - For new investment projects, risk analysis and associated mitigation measures are required to be submitted to responsible committees for consideration as follows.


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Risk Factors Countermeasures The countries’ macroeconomic Industry uncertainty of political, economic, social policy

- The responsible personnel are generally assigned to review and monitor the political situations in our target countries.

- The progress reports of investment projects are submitted to the Board regularly.

2. Project Construction Risk project construction delay and cost overrun

- Employ fixed price construction contracts to the greatest extent possible and utilize only qualified and experienced sub-contractors. In some special cases, the Company retains outside specialist advisors to provide its core staff with assistance on construction risk mitigation as appropriate.

- Assign responsible personnel to follow up the progress of construction as compared to the agreed construction schedule and budget. Such individuals are required to attend all regular project meetings and provide comments on management reports and insights from past experience.

- Prepare the project progress reports for the Board of Directors on a regular basis.

- Perform regular internal audits of the operation of each project by the Company’s internal audit division.

3. Operational Risks 3.1 Risk of Failure to Reach Target Return on Investment

- Where possible assign EGCO management and personnel to be representatives as directors or management of its subsidiaries and new investment projects.

- Utilize the Company’s Asset Management Division to regularly monitor operating performances of each facility and its staff and review and report upon the actual return on investment against the set target.

- Prepare regular progress reports for 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.

3.2 Plant Performance Risks 3.2.1 Plant efficiency

- Include the key plant 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 have responsibility.

- Set up Early Warning Systems for critical information regarding the plant operation processes.

- Ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff.

- Ensure that spare part inventory is adequate and well managed.


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Risk Factors Countermeasures - Implement the Quality Management System (ISO:

9001:2000) at REGCO, KEGCO and Roi-Et Green to ensure that those power plants operate in accordance with the terms of their PPAs

- Continuously develop the competencies of the firms’ human resources.

3.2.2 Raw water shortage for electricity generating

- Increasing raw water storage capacity - Seeking additional sources of raw water supply - Setting measures to minimize raw water usage.

3.2.3 Fuel Shortage for Electricity Generating

- With PTT and/or EGAT being the main sources of supply, the risks of fuel shortage is considered low for the power plants which use natural gas.

- For BLCP Power Plant, it strictly monitors and maintains a sufficient amount of reserve coal at site and through long-term arrangements and with potential alternative suppliers to ensure the adequacy under the terms of the PPA.

- For power plants which use biomass fuel, The primary risk prevention measures are to reserve more fuel quantity and to seek alternative sources in surrounding areas.

3.2.4 Safety Health and Environment

- Safety, Health and Environment (SHE) Management Manual have been developed and is strictly enforced at all EGCO owned plant. The Manual contains SHE policy, work plans, practices, and review procedures for EGCO Group companies.

- Work manuals, training plans and emergency plans have been identified and the procedures contained therein implemented.

- Lists of related laws and regulations on SHE have been gathered and responsible persons for each procedure are clearly assigned.

- EGCO Group procures insurance policies against All Risks, Machinery Breakdown, Business Interruption and Third Party Liability to help ensure sufficient coverage in the case of unexpected events.

- REGCO and KEGCO have been certified and have maintained the Environment Management System (ISO: 14001) as well as Thai Industrial Standards for the Occupational Health and Safety Management (TIS: 18001 & OHSAS: 18001). These help us to ensure that the operations, waste disposal and related work processes are efficient and acceptable from a safety, health, and environment standpoint.

- Management also strongly encourages employees to prioritize safe, prudent working procedures to avoid accidents caused by carelessness.

4. Financial Risks 4.1 Foreign Exchange - Matching currencies of project development and

construction costs with funding source currencies


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Risk Factors Countermeasures Rate Fluctuation

- Matching the currency of long-term funding profiles with those of each project’s revenue stream during the operation phase.

- Using “Revenue Swap” as an instrument to mitigate foreign exchange rate fluctuation risk. As a consequence, the Group’s revenues are stable and can be projected accurately.

4.2 Interest Rate Fluctuation

- Using financial hedging instrument to fix floating interest rate exposures to the maximum extent commercially possible to provide the most predictable cash flow of loan expenditure over its long-term power purchase contracts.

- Seeking 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.

3. Operational Assets

A. Fixed Assets The fixed assets of the company and subsidiaries as at December 31, 2007 comprise the following items.

Items Value/1

(Million Baht)

1. Land and Building Less Accumulated Depreciation Total

5,389.91 (1,985.71) 3,404.20

2. Power Plant and Transmission System Less Accumulated Depreciation Total

35,087.03 (20,024.32) 15,062.71

3. Office Equipment and Cars Less Accumulated Depreciation Total

476.88 (350.11) 126.77

4. Work under construction 43.95 Remark : /1 The number was shown in EGCO Group’s consolidated financial statement . B. Intangible Assets Intangible assets was comprised of concession (Power Purchase Agreement, Steam Purchase Agreement and Tapped Water Purchase Agreement) and good will from business acquisition in 2007 of 210.70 million baht.

C. Investment and Management Policy in Subsidiaries and Joint Ventures


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EGCO set its corporate vision “to be the leading Thai integrated electric power Company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environment protection and social development support. In this regard, EGCO has identified its key long term objectives as follows. 1. Invest in the business in which EGCO Group has expertise to maximize profit and create

growth to the Group with the acceptable risks, 2. Allocate the appropriate shareholding proportion in its investment to possess the

governing right over joint venture companies, 3. Uphold the investment basis of Non-recourse or Limited Recourse Project Finance with

clear sponsor support and contingent liability, 4. Support Corporate Social Responsibility projects and comply to all governing laws.

4. Future Investment There are two additional power plant projects, namely Kaeng Khoi 2 and Nam Theun 2 which are under development. Their total capacity accountable for EGCO’s share proportion is 635 MW. EGCO’s business strategy will place more emphasis on expansion investment opportunities in ASEAN markets, including neighboring Mekong countries such as Lao PDR, Myanmar and Cambodia, with respect to projects that will supply electricity to Thailand, and also investment in a domestic project in Thailand relating to fuel storage and supply. As for renewable energy projects, EGCO will continue to pursue investment opportunities in prospective domestic projects using wind, waste and biomass as fuel sources. The projects in the pipeline included LNG Receiving Terminal, Nam Theun 1, Koh Khong, Waste to Energy and Wind project. 5. Capital Structure As of December 31, 2007, the company’s registered and paid up capital is as follows. Registered capital : 5,300 million baht, 530,000,000 ordinary shares at par value 10 baht/share Paid-up capital : 5,264.65 million baht; 526,465,000 ordinary shares at par value 10 baht/share The company’s dividend policy is to distribute approximately 40% of the 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 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 company also set a policy that the subsidiaries in which the company has significant control pay dividend at 100% of their net income after tax.


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6. Internal Control The Board of Directors supervises to ascertain that existing internal control systems of the company and subsidiaries are compliance with those of the SET’s guideline and COSO’s Internal Control Framework. (The Committee of Sponsoring Organizations of the Treadway Commission). In this regard, the Board has entrusted the Audit Committee with the responsibility to review the effectiveness and efficiency of the internal control systems and having the internal audit division audit the operation compliance with the systems. The internal audit division functionally reports directly to the Audit Committee. 7. Connected Transaction The company’s connected transaction is comprised of the power purchase and the maintenance services between the Group companies and Electricity Generating Authority of Thailand (“EGAT”) and financial support to subsidiaries and joint ventures. These transactions are considered normal business transactions and the disclosure is made in compliance to the regulations of Securities Exchange of Thailand (SET) and Securities and Exchange Commission (Thailand) (SEC). 8. Financial Status EGCO Group’s consolidated net profit for 2007, ended December 31, 2007, was 8,402 million baht, an increase of 2,386 million baht or 40% compared to 2006. Excluding the impact of foreign exchange, the net profit was 8,281 million baht, representing an increase of 2,982 million baht or 56% as compared to the previous year. This is due to higher revenues from IPPs and higher profits from overseas group and other service. Moreover, EGCO realized less dividend and other incomes, higher administrative expenses and less profit from SPPs. In 2007, EGCO paid out the interim dividend from its first half year performance at 2.25 baht per share on September 21, 2007.

Financial Overview

Consolidated Financial Statements2007* 2006* 2005 2004 2003 2002 2001 2000 1999 1998

FINANCIAL PERFORMANCE (M.BAHT)Sales and service income 10,939 13,839 16,022 15,620 15,378 11,463 10,732 9,697 8,541 8,802Other income 655 848 805 852 898 669 880 854 910 1,431Cost of sales and cost of services 5,711 5,815 8,151 7,593 6,017 4,926 4,033 3,462 2,776 3,677Administrative expenses and others 1,700 2,154 2,202 1,894 1,323 963 936 1,031 905 383Impairment charge - - - (34) 170 342 - - - - Interest expenses 819 1,166 1,859 2,220 2,631 2,807 3,299 3,325 2,984 3,302Share of profit (loss) from

subsidiaries, an associate and joint ventures 5,051 (83) 27 29 (545) (73) 35 (77) 8 73Profit (loss) attributable to minorities 135 169 264 232 303 236 203 (38) (94) (5)Net Profit (loss) before Fx 8,281 5,299 4,378 4,595 5,287 2,784 3,175 2,694 2,889 2,950Fx gain (loss) 121 716 (285) 67 707 174 (236) (1,478) (241) 3,232Net Profit (loss) 8,402 6,016 4,093 4,662 5,994 2,958 2,939 1,217 2,648 6,181FINANCIAL POSITION (M.BAHT)Total Assets 53,600 50,459 61,250 55,066 56,437 55,824 52,965 55,112 49,898 45,113Total Liabilities 11,605 14,661 29,136 25,963 29,736 34,876 33,780 37,664 33,079 30,351Parent's shareholders' equity 41,475 35,289 31,041 28,173 25,895 20,276 18,544 16,979 16,762 14,712Minority Interest 521 509 1,073 982 859 724 641 469 56 49Treasury Stock - - - (52) (52) (52) - - - - Issued and paid-up share capital 5,265 5,265 5,265 5,265 5,265 5,265 5,259 5,244 5,243 5,227PER SHARE DATA (BAHT)Net Profit (loss) before Fx 15.73 10.07 8.32 8.75 10.07 5.30 6.04 5.14 5.51 5.65 Net Profit (loss) 15.96 11.43 7.78 8.88 11.41 5.62 5.60 2.32 5.05 11.83 Book Value 78.78 67.03 58.96 53.55 49.21 38.51 35.26 32.38 31.97 28.15 Dividend 4.75 4.00 3.25 3.00 2.75 2.50 2.25 2.00 2.00 1.27

RATIO ANALYSIS2007* 2006* 2005 2004 2003 2002 2001 2000 1999 1998

Liquidity ratio (Time) 4.22 1.65 2.27 3.25 2.19 2.21 2.80 2.85 6.97 4.08 Cashflows liquidity ratio (Time) 1.09 1.58 1.29 1.33 1.01 1.02 1.01 0.97 1.29 0.68 Gross profit ratio (%) 47.80 57.98 49.13 51.39 60.88 57.02 62.42 64.30 67.50 58.22 Earnings ratio (%) 50.48 41.19 24.28 28.25 38.10 24.53 25.23 11.62 27.99 59.98 Return on equity ratio (%) 21.89 18.14 13.83 17.28 26.02 15.26 16.55 7.21 16.83 51.53 Return on assets ratio (%) 16.15 10.77 7.04 8.36 10.68 5.44 5.44 2.32 5.57 13.63 Debt to equity ratio (Time) 0.28 0.41 0.91 0.89 1.11 1.66 1.76 2.16 1.97 2.06

Remarks:* From January 1, 2007, EGCO Group has changed the accounting policy for interests in joint ventures in the consolidated financial statements from "Proportionate Consolidation" to the "Equity Method"; and adopted the accounting policy regarding Employee Benefits. The retrospective adjustments have been made on 2006 financial statements.

Part 2 Listed Company

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Part 2 Listed Company

Name : Electricity Generating Public Company Limited (EGCO)

Business : Holding Company focusing on power business and other related business

Registration : 0107537008666 ( Previously Number Listed Co. 333

Sector : Energy and Utilities

Industry : Resources

Registered Capital : 5,300 million baht

Paid up Capital : 5,246.65 million baht

Par Value : 10 baht

Foreign Limit : 44.81%

% of Free Float : 52.17% as of September 10, 2007

Head Office : EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Rd., Tungsonghong, Laksi, Bangkok 10210, Thailand.

Home Page : http://www.egco.com

Tel. : 66 0 2998-5000, 0 2998-5999

Fax : 66 0 2955-0956-9

IR Contact : 0 29985145-7

Email address: [email protected]

Part 2 Section 1 Rick Factors

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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 has included the risk management policy in the written document of Risk Management manual to be a guideline and mutual understanding throughout EGCO group. Such policy identified each subsidiary to continuously manage their risk as well as to set up the early warning system. For new investment projects, risk analysis and associated mitigation measures reviewed by each relevant committee are required. The Board of Directors entrusted the Audit Committee to oversee the company’s compliance with agreed risk management policies and reporting requirements. The Risk Management Committee has been set up at the management level. This Committee comprises several of the EGCO Group’s top executives and the Managing Directors of EGCO subsidiaries. EGCO’s President serves as the chairman of the Committee. The subsidiaries such as REGCO and KEGCO also have individual risk management committees to help ensure that their particular risks will be managed adequately. A summary of key risk factors and associated mitigation measures is as follows: 1. New Development Project Risk 1.1 Risks from New Project Development The Company plans to expand its investment in order to maintain continuous growth, both in Thailand and in foreign countries. To achieve the objectives as planned, the Company has analyzed and identified all the key risks involved. These include intense competition among the growing number of companies, cost of capital, cost of machinery and construction, and political risks. The information and experience gained from the recent IPP bidding has been analyzed and incorporated to improve the strategic direction for our future investment projects both in Thailand and abroad. 1.2 Country Risk EGCO’s investment plan in 2007 would be more focused on developing opportunities in foreign countries than the previous years, both through existing projects in the Philippines and Lao PDR, and through prospective projects elsewhere in the Mekong and other Asean countries. For new investment projects, risk analysis and associated mitigation measures are required to be submitted to responsible committees for consideration. The countries’ macroeconomic, industry, uncertainty of political, economic, social policy and associated risks would be analyzed as the basis for investment consideration. In addition, the responsible personnel are generally assigned to review and monitor the political situations in our target countries. The progress reports of investment projects are submitted to the Board regularly. 2 Project Construction Risk The Company’s projects under construction are Khang Khoi 2 and Nam Theun 2, which are being developed pursuant to long-term Power Purchase Agreement (PPA) with EGAT and have contractually determined commercial operation date in March 2008 and December 2009 respectively. Therefore, major risk of project under construction is project construction delay and cost overrun. In case of project construction delays, project costs might be increased which could lead to a negative impact to the return on investment. In addition, delays in construction might also defer receipt of planned project revenues.


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For Khang Khoi 2, the construction of unit 2 is nearly complete with the Commercial Operation Date in March 2008 as planned, therefore the construction delay risk for Khang Khoi 2 is considered to be low. For Nam Theun 2, the project construction is on schedule. In addition the social and environmental work, which comprises a significant and important part of the project’s implementation, is also on schedule. The Company has imposed measures to help its staff monitor and mitigate potential risks including: - Employ fixed price construction contracts to the greatest extent possible and utilize

only qualified and experienced sub-contractors. In some special cases, the Company retains outside specialist advisors to provide its core staff with assistance on construction risk mitigation as appropriate.

- Assign responsible personnel to follow up the progress of construction as compared to the agreed construction schedule and budget. Such individuals are required to attend all regular project meetings and provide comments on management reports and insights from past experience.

- Prepare the project progress reports for the Board of Directors on a regular basis. - Perform regular internal audits of the operation of each project by the Company’s

internal audit division. 3 Operational Risks 3.1 Risk of Failure to Reach Target Return on Investment Investment in electricity generating plant is capital-intensive. Before making investment decisions, EGCO conducts thorough feasibility studies of each project, to confirm the range of likely return on investment. Such reports are then presented to the Board of Directors for approval before investments are undertaken. The Company has the responsibility to properly monitor and manage plant operations in order to reach or exceed targeted performance parameters. Typical measures imposed to mitigate such risks are as follows: - Where possible assign EGCO management and personnel to be representatives as

directors or management of its subsidiaries and new investment projects. - Utilize the Company’s Asset Management Division to regularly monitor operating

performances of each facility and its staff and review and report upon the actual return on investment against the set target.

- Prepare regular progress reports for 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.

3.2 Plant Performance Risks A commitment to generate and deliver electricity pursuant to a Power Purchase Agreement with EGAT entails the following performance risks:


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3.2.1 Plant efficiency There are various efficiency benchmarks under a Power Purchase Agreement 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. As such, the management has established systematic procedures to ensure that all relevant performance targets are met. These procedures include: - Include the key plant 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 have responsibility.

- Set up Early Warning Systems for critical information regarding the plant operation processes.

- Ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff.

- Ensure that spare part inventory is adequate and well managed. - Implement the Quality Management System (ISO: 9001:2000) at REGCO,

KEGCO and Roi-Et Green to ensure that those power plants operate in accordance with the terms of their PPAs

- Continuously develop the competencies of the firms’ human resources. 3.2.2 Raw water shortage for electricity generating The risks of a raw water shortage can result in plant stoppages which would in turn subject the company to fines and decreased revenues. Therefore, EGCO Groups’ power plants have developed measures to prevent and mitigate such risks by increasing their raw water storage capacity, seeking additional sources of raw water supply and setting measures to minimize raw water usage. 3.2.3 Fuel Shortage for Electricity Generating EGCO Group’s power plants which use natural gas have long term Fuel Supply Agreements with PTT, except REGCO and KEGCO. REGCO and KEGCO are supplied natural gas by EGAT under the terms of their PPAs. The quantity and quality of natural gas and other key parameters are all specified in the relevant project agreements. With PTT and/or EGAT being the main sources of supply, the risks of fuel shortage is considered low for the power plants which use natural gas. For BLCP power plant, a long term Coal Supply & Transportation Agreement has been entered into with Australian Coal Holdings Pty Ltd. (ACH). ACH is obliged to supply coal with the quantity and quality as specified in the agreement. In case that ACH fails to supply coal as specified, BLCP may purchase coal from other suppliers. The increased expenditure occurred would be responsible by ACH. However, BLCP strictly monitors and maintains a sufficient amount of reserve coal at site and through long-term arrangements and with potential alternative suppliers to ensure the adequacy under the terms of the PPA. Power plants which use biomass fuel such as rice husk and parawood may face the risk of fuel quantity shortage and price instability since they are the agricultural products which can have alternative uses in the market place. Long term fuel supply agreements can not be established as there are few creditworthy suppliers of such feedstock. The


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primary risk prevention measures are to reserve more fuel quantity and to seek alternative sources in surrounding areas. 3.2.4 Safety Health and Environment The Company realizes that the electricity generating process both using natural gas and coal as primary fuel could have certain impacts upon its employees, local communities and the environment. Consequently, the Company has taken the following actions to mitigate any potential impacts as follows: - Safety, Health and Environment (SHE) Management Manual have been developed

and is strictly enforced at all EGCO owned plant. The Manual contains SHE policy, work plans, practices, and review procedures for EGCO Group companies.

- Work manuals, training plans and emergency plans have been identified and the procedures contained therein implemented.

- Lists of related laws and regulations on SHE have been gathered and responsible persons for each procedure are clearly assigned.

- EGCO Group procures insurance policies against All Risks, Machinery Breakdown, Business Interruption and Third Party Liability to help ensure sufficient coverage in the case of unexpected events.

- REGCO and KEGCO have been certified and have maintained the Environment Management System (ISO: 14001) as well as Thai Industrial Standards for the Occupational Health and Safety Management (TIS: 18001 & OHSAS: 18001). These help us to ensure that the operations, waste disposal and related work processes are efficient and acceptable from a safety, health, and environment standpoint.

- Management also strongly encourages employees to prioritize safe, prudent working procedures to avoid accidents caused by carelessness.

4 Financial Risks The investment of EGCO Group is capital-intensive. Since our primary funding sources are loans from domestic and international bank loan markets, foreign exchange rate fluctuation and interest rate fluctuation are important risks to monitor and mitigate. Failure to do so could possibly lead to a decline in the group’s operating performance. Therefore, the mitigation measures are established as follows: 4.1 Foreign Exchange Rate Fluctuation EGCO Group has a policy to mitigate currency mismatches for each of its investment projects to prudent levels. In general, this is achieved by matching currencies of project development and construction costs with funding source currencies and subsequently matching the currency of long-term funding profiles with those of each project’s revenue stream during the operation phase. However, if the portions of foreign currency (US Dollar) of revenue and expenses are not matched, it might have a negative impact on the company in case of the depreciation or appreciation of Thai Baht against US Dollar occurred. This depends on the proportion of electricity revenue referenced to the dollar is over or under the debts in dollar. Therefore, EGCO Group uses “Revenue Swap” as an instrument to mitigate foreign exchange rate fluctuation risk. As a consequence, the Group’s revenues are stable and can be projected accurately.


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4.2 Interest Rate Fluctuation EGCO Group has a policy to manage risk of interest rate fluctuation by using financial hedging instrument to fix floating interest rate exposures to the maximum extent commercially possible to provide the most predictable cash flow of loan expenditure over its long-term power purchase contracts. If interest rate fixtures are not available for the full project terms required, EGCO would seek to enter into or cause its project company’s to enter into financial instruments that can best mitigate the interest rate risks subject to market availability and cost. As of December 31, 2007, most of EGCO Group’s loan floating interest rate was already fixed.

Part 2 Business Characteristics

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2. Business Characteristics

2.1 Background and Major Development EGCO is the first independent power producer in Thailand incorporated on May 12, 1992 by Electricity Generating Authority of Thailand (“EGAT”). Such incorporation marked the commencement of the Thai government’s privatization initiatives to allow broader private sector investment in the electricity generating sector. EGCO was transformed into a public company on March 23, 1994 and listed on the Stock Exchange of Thailand (SET) on January 16, 1995. On November 4, 1997, the Cabinet endorsed the National Energy Policy Council’s resolution to bolster the private sector’s role in energy business, thereby EGAT was to reduce its shareholding in EGCO by divesting part of the shares to strategic investors under the condition that EGAT and EGCO would allow strategic investors to increase their shareholding in EGCO in the future through either direct purchase from EGAT or purchase of newly issued shares. On June 30, 1998, CLP Power International Limited, engaging in energy business in the Asian region and being a subsidiary of CLP Holdings Limited which is listed on Hong Kong Stock Exchange, won the bid to purchase EGCO’s 78 million shares or 14.92% from EGAT, which were later on July 23, 1998 transferred by the latter to CLP Power Projects (Thailand) Limited which engages in energy business in Thailand and is also a subsidiary of CLP Power International Limited. As of December 31, 2002, shareholding of EGAT and CLP Power Projects (Thailand) Limited in EGCO accounted for 25.41% and 22.42% respectively.

On March 27, 2006 EGCO informed SET that it was notified by CLP Power Projects (Thailand) Limited (“CLPT”),a major shareholder, holding 22.42 per cent of the total issued share capital of the Company, that CLPT’s major shareholder (namely, CLP Power International Limited) transferred all of its shares in CLPT to OneEnergy Limited, which, on March 23, 2006, became a joint venture vehicle owned by CLP Holdings Limited and Mitsubishi Corporation on a 50:50 basis.

2.2 Overall picture of business operation

EGCO is a holding company with investment in power generation and supply as well as other related business. The holding structure has enabled EGCO to set up subsidiaries, which funds can be raised for new projects without any impact on the existing projects. Consequently, it is convenient for EGCO to expand its business and manage each of its portfolio. This will enhance the efficiency of each subsidiary with clarity in financial management and performance reporting. As a holding company. EGCO recognizes revenue from dividend income and profit sharing of investment in subsidiaries and joint ventures which operate in electricity generation and distribution business to EGAT and industrial users under the long term power purchase agreements (PPA). Its portfolio also covers the investment in related energy business.

The major responsibilities of EGCO as a holding company are business development, strategic and policy planning which includes human resources management, accounting and budgeting, and public relations of EGCO’s group. Besides, EGCO has also rendered internal audit and legal services to its


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subsidiaries which mainly undertake responsibilities on the power generation and sale, service provision, and operation and maintenance.


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Group Structure and Shareholders As of December 31, 2007

Gulf Power Generation Co., Ltd. (GPG) 99.99%

EGCO Engineering & Service Co., Ltd. (ESCO) 99.99%

EGCO International (BVI) Ltd. (EGCO BVI) 99.99%

Electricity Generating Authority of Thailand (EGAT) 25.41%

OneEnergy (Thailand) Ltd. 22.42%

The General Public 52.17%

Khanom Electricity Generating Co., Ltd. (KEGGO) 99.99%

Amata – EGCO Power Ltd. (AEP) 29.70%

Amata Power (Bang Pakong) Ltd. (APBP) 30.00%

EGCO Cogeneration Co., Ltd. (EGCO Cogen) 80.00%

EGCO Green Energy Co., Ltd. (EGCO Green) 74.00%

Western Mindanao Power Corporation (WMPC) 55.00%

Nong Khae Cogeneration Co., Ltd. (NKCC) 99.99%

Gulf Energy Co., Ltd. (GEN) 99.99%

Samutprakarn Cogeneration Co., Ltd. (SCC) 99.99%

Gulf Yala Green Co., Ltd. (GYG) 94.99%

Gulf Cogeneration Co., Ltd. (GCC) 99.99%

Alto Power Management Corporation (APMC) 60.00%

Northern Mindanao Power Corporation (NMPC) 50.78%

Alsing Power Holding Inc 80 .00%

EGCO Joint Ventures & Development Co., Ltd. (EGCO JD) 50.00%

Gulf Electric Public Co., Ltd. (GEC) 50.00%

Nam Theun 2 Power Co., Ltd. (NTPC) 25.00%

Eastern Water Resources Development & Management PCL. (EASTW) 18.96%

Roi-ET Green Co., Ltd. (RE ) 95.00%

Conal Holding Corporation (Conal) 40.00%

Amata Power – ESCO Service Co., Ltd. (AMESCO) 50.00%

Southern Philippines Power Corporation (SPPC) 55.00%

AMPC International Ltd. 100%

Egcom Tara Co., Ltd. (ET ) 70.00%

Gulf IPP Co., Ltd. (GIPP) 99.99%

Electricity Generating Public Co., Ltd.

(EGCO)

Part 2 Risk Factors

Page 18

2.3 Revenue Structure ( Million Baht )

Product Transaction % 2007** 2006** 2005Service Shareholding Revenue % Revenue % Revenue %

Electricity IPPREGCO 99.99%

Capacity Charge 3,515.63 21.12% 5,308.31 36.35% 4,950.15 29.37%Energy Charge 58.54 0.35% 83.96 0.57% 89.26 0.53%

KEGCO 99.99%Capacity Charge 4,033.36 24.23% 5,196.74 35.58% 4,284.40 25.42%Energy Charge 201.79 1.21% 76.14 0.52% 54.68 0.32%

SPPTLPC (EGCO Cogen) 80.00%

Energy Charge 1,925.74 11.57% 1,961.51 13.43% 1,726.65 10.24%EGCO Green (Roi-Et Green) 70.30%

Energy Charge 226.38 1.36% 232.54 1.59% 187.21 1.11%EGCO JD (APBP) 15.00%

Energy Charge - - - - 257.19 1.53%GEC 50.00%

Energy Charge - - - - 3,016.70 17.90%OverseasConal 40.00%

Energy Charge - - - - 801.91 4.76%

Service ESCO /1 99.99% 760.24 4.57% 787.66 5.39% 486.47 2.89%Water Egcom Tara 70.00% 217.71 1.31% 191.66 1.31% 167.66 0.99%Interest EGCO /2 62.97 0.38% 174.23 1.19% 96.16 0.57%income REGCO /3 99.99% 23.21 0.14% 234.24 1.60% 90.93 0.54%

KEGCO 99.99% 72.34 0.43% 147.49 1.01% 100.75 0.60%TLPC, EGCO cogen,EGCO Green, ESCO, Egcom Tara 37.25 0.22% 44.60 0.31% 34.92 0.21%EGCO JD, GEC, Conal, NTPC - - - - 30.44 0.18%

Others EGCO /4 434.57 2.61% 225.72 1.55% 381.47 2.26%REGCO 99.99% 2.13 0.01% 3.80 0.03% 1.00 0.01%KEGCO 99.99% 3.38 0.02% 2.07 0.01% 1.19 0.01%TLPC, EGCO cogen,EGCO Green, ESCO, Egcom Tara 19.09 0.11% 15.84 0.11% 20.65 0.12%EGCO JD, GEC, Conal, NTPC - - - - 47.07 0.28%

Share of BLCP 50.00% 3,906.76 23.47% - - - -profit (loss) GPG 50.00% 731.11 4.39% (52.37) (0.36%) - -

GEC (Excl. GPG) 50.00% 496.87 2.98% 0.75 0.01% - - EGCO JD (AEP, APBP) 14.85% 111.53 0.67% 124.38 0.85% 26.29 0.16%ESCO (AMESCO) 99.99% 2.29 0.01% 1.51 0.01% 0.77 0.00%NTPC 25.00% (249.71) (1.50%) (274.82) (1.88%) - - Conal 50.00% 52.53 0.32% 117.89 0.81% - -

Total revenues (revenues item in consolidated) 16,645.69 100% 14,603.86 100% 16,853.93 100%

/5

Notes /1 For year 2007, ESCO's service income was Baht 760,236,907 (excluding related party transactions which were the maintenance

service income of REGCO, KEGCO, EGCO Cogen, Roi-Et Green and Egcom Tara amounted to Baht 37,341,135, Baht 30,273,132,Baht 43,771,718, Baht 29,428,580 and Baht 10,824,553, respectively)

/2 EGCO's interest income for year 2007 was Baht 62,967,359 (excluding related party transactions which were Baht 6,401,763 of KEGCO'sdebenture and interest income from shareholders' loan from REGCO and ESCO amounted to Baht 141,853,626 and Baht 46,800,000,respectively)

/3 REGCO's interest income for year 2007 was Baht 23,208,199 (excluding related party transaction which was Baht 1,066,960 of KEGCO's debenture)

/4 EGCO's other income for year 2007 was Baht 434,567,937 (excluding related party transactions which were office rental and service incom from REGCO, KEGCO, ESCO, Egcom Tara, TLPC, EGCO Cogen, EGCO Green and Roi-Et Green amounting to Baht 25,654,800,

Baht 27,849,601, Baht 10,459,200, Baht 1,810,800, Baht 792,000, Baht 7,501,200, Baht 817,200 and Baht 25,334,219, respectively)/5 Share of profit of AEP

** Commencing January 1, 2007, the Group has changed its accounting policy for interests in joint ventures in the consolidated financial statement fromproportionate consolidation to equity method and adopted the accouting policy for employee benefits. The group has applied the retrospective adjustmentsin the consolidated financial statements for 2006.

Part 2 Risk Factors

Page 19

2.4 Business Target

EGCO focus to continue building upon its portfolio of power generation assets within both the

domestic and ASEAN markets by develop or buy the power plant projects upon the company

investment plan which concern in shareholders’ return maximization under the acceptable level of

risk. In essence, the Company’s corporate 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 environment

protection and social development support”

In this regard, EGCO has identified its key long term objectives as follows:

• Seek to grow at a rate higher than the average growth of electricity demand in our target markets,

• Achieve returns on equity (ROE) above the average of industry in Thailand,

• Create a healthy organization which excels in terms of good corporate governance and

acceptance from the communities.

Part 2 Section 3 Operation of Business Line

Page 20

3. Operation of Business Line

Since EGCO is a holding company, it has no product. It recognizes revenue from profit sharing of investment in subsidiaries and joint ventures, as well as dividend income from other businesses. EGCO’s business lines comprise the electricity business, service business and water business.

3.1 Electricity Business 3.1.1 Product or Services Electricity business which is considered the core business of the Company comprises the investment in IPP, SPP and the overseas investment. IPP Group EGAT welcomed private investors to invest in the power business under the IPP program. In 2007, 89.49% of EGCO’s total installed capacity of 3,509 MW was from IPP Groups, namely Rayong Electricity Generation Co., Ltd. (REGCO), Khanom Electricity Generating Co., Ltd. (KEGCO), BLCP Power Co., Ltd. (BLCP) and Gulf Power Generation Co., Ltd. (GEC). Details are as follows.

REGCO REGCO owns and operates 4 units of Rayong combined cycle power plant with the capacity of 308 MW each and the combined capacity of 1,232 MW, using gas as a primary fuel. Its campus covers the area of 472 rai 2 ngan 42.8 sq. wah at Tambon Huay Pong, Amphur Muang, Rayong Province. REGCO supplies the whole generation to EGAT under the Power Purchase Agreement (“PPA”) for 20-year contractual term at a net capacity of 1,180 MW commencing December 7, 1994. The net electricity output will be measured at the interconnection point between the power plant and EGAT’s transmission network.

EGAT’s minimum take obligation is at least 40% of the electricity generated by Rayong power plant each year. If EGAT purchases power at the rate lower than such minimum take obligation, which results in REGCO’s increasing variable O&M expenses (excluding fuel cost), EGAT had to bear all the increasing expenses. In case REGCO’s actual availability is higher than that specified by EGAT, REGCO will be merited the increase in capacity payment by EGAT proportionately. On the contrary, if such availability is lower than that specified by EGAT, REGCO shall be penalized proportionately.

During the year 2007, Rayong power plant generated and sold 3,895 million kilowatt-hours electricity to EGAT with its average Equivalent Availability Factor (“EAF”) of 91.85%, which was better than the target specified in PPA and merited a bonus payment from EGAT for the eleventh consecutive year.

KEGCO

KEGCO owns and operates two 75 MW thermal power plants and one 674 MW combined cycle power plant, with a total installed capacity of 824 MW using natural gas as primary fuel. Like REGCO, KEGCO sells to EGAT the whole generation under the PPA at the net capacity of 810 MW. The net electrical energy output will be measured at the point of


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interconnection between the power plant and EGAT’s transmission network. The contractual term is categorized according to the remaining useful life of each plant; 15 years for Barge 1 and 20 years for both Barge 2 and CCGT. The PPA was effective on June 19, 1996.

EGAT agrees to purchase electricity according to the net dependable capacity. In case KEGCO’s availability level is higher than that specified by EGAT, KEGCO shall receive bonus from EGAT based on the reserved capacity in the EGAT system. On the contrary, if such availability level is lower than that specified by EGAT, KEGCO shall be penalized proportionately.

During the year 2007, Khanom power plant generated and sold 6,006 million kilowatt-hours electricity to EGAT with its average EAF of 93.67%.

BLCP In January 30, 2007, EGCO bought the shares from CLP Power Limited and has directly held a 50% stake in BLCP since then. BLCP owns and operates BLCP power plant located in Rayong province. It is a 1,434-megawatt power plant comprises of two 717-megawatt pulverized coal-fired power units using high quality bituminous imported from Australia as primary fuel to generate and supply all electricity to EGAT under a 25-years power purchase agreement (IPP Award Round 1). The commercial operation dates (“COD”) for unit 1 and 2 was applied on October 1, 2006, and February 1, 2007, respectively. During the year 2007, BLCP power plant generated and sold 9,723 million kilowatt-hours electricity to EGAT with its average EAF of 89.99%.

GPG EGCO indirectly holds a 50% stake in this company through its 50% ownership stake in Gulf Electric Public Company Limited (“GEC”). GPG is developing and operating Kaeng Khoi 2 power plant located in Saraburi province. It is a 1,468-megawatt power plant comprised of two 734-megawatt combine cycle power units using natural gas as a primary fuel to generate and supply all electricity to EGAT under a 25-year power purchase agreement (IPP Award Round 1). The commercial operation dates (“COD”) for unit 1 was applied on May 5, 2007 and unit 2 was achieved on March 1, 2008. Since May 2007, unit 1 of Kaeng Khoi 2 power plant generated and sold 3,397 million kilowatt-hours electricity to EGAT with its average EAF of 94.76%. In addition to the PPA with EGAT, the Board of Investment also granted the tax privileges to all IPPs in the Group with significant information as follows:

Salient Privileges 1. Exemption of corporate income tax for net profit from promoted business for eight years

from the first date of income earnings (April 20, 1995-April 19, 2003). 2. Exemption of calculating dividend from the promoted business as taxable income

throughout the period of corporate income tax holiday. 3. Reduction of corporate income tax for net profit from investment by 50% of the normal

rate for five years from the date following the end of the corporate income tax holiday.


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Conditions: • Having shareholders who are Thai nationals holding shares in an aggregate amount of at

least 51% of the registered capital. • Having registered capital of at least Baht 4.7 billion.

Power plant locating in Rayong province for 15 years from the first date of operation. Relocation to other areas shall not be made unless with the BoI’s prior approval.

Description REGCO KEGCO Date of promotion granted

April 20, 1995 September 26, 1996

Promotion certificate No. 1440/2538 dated June 15, 1995 No. 1742/2539 dated November 6, 1996

Type of business promoted

Category 7.36 power business under Independent Power Producer (IPP) scheme

Category 7.36 power business under Independent Power Producer (IPP) scheme

Salient privileges and conditions

Salient Privileges 4. Exemption of corporate income tax

for net profit from promoted business for eight years from the first date of income earnings (April 20, 1995-April 19, 2003).

5. Exemption of calculating dividend from the promoted business as taxable income throughout the period of corporate income tax holiday.

6. Reduction of corporate income tax for net profit from investment by 50% of the normal rate for five years from the date following the end of the corporate income tax holiday.

Conditions: • Having shareholders who are Thai

nationals holding shares in an aggregate amount of at least 51% of the registered capital.

• Having registered capital of at least Baht 4.7 billion.

• Power plant locating in Rayong province for 15 years from the first date of operation. Relocation to other areas shall not be made unless with the BoI’s prior approval.

Salient Privileges 1. Exemption of corporate income

tax for net profit from promoted business for eight years from the first date of income earning (September 26, 1996-September 25, 2004).

2. Exemption of calculating dividend from the promoted business as taxable income throughout the period of corporate income tax holiday.

3. Reduction of corporate income tax for net profit from investment by 50% of the normal rate for five years from the date following the end of the corporate income tax holiday.

Conditions: • Having shareholders who are

Thai nationals holding shares in an aggregate amount of at least 51% of the registered capital.

• Having registered capital of at least Baht 4.710 billion.

• Power plant locating in Nakhon Sri Thammarat province for 15 years from the first date of operation. Relocation to other areas shall not be made unless with the BoI’s prior approval.


Page 23

Tariff Rate Both companies used the same tariff formula which consists of the following:

a. Capacity payment (in case of REGCO) or availability payment (in case of KEGCO) is a payment, which EGAT pays REGCO and KEGCO on a monthly basis for maintaining the availability of the power plants, regardless of whether the electric power will be supplied to EGAT or not. The capacity payment or the availability payment (as the case may be) will cover financial cost of investment in the power plants, principal repayments and interest, fixed operating and maintenance expenses, administrative expenses, major maintenance cost and internal rate of return on EGCO’s equity.

b. Energy payment is the payment for the actual net electrical output. It covers the variable operating and maintenance expenses.

SPP Group

EGAT also encourages investors to invest in small power plants of which a portion of the generation will be sold to EGAT under the SPP programs. EGCO’s investment in this area comprises the following companies.

EGCO Cogeneration Company Limited (“EGCO Cogen”) EGCO directly holds an 80% stake in EGCO Cogen which owns and operates EGCO Cogen power plant located in Rayong province (Initially, EGCO held totally 80% stake in EGCO Cogen – directly held a 40% stake and indirectly held a 40% stake via Thai LNG Power Company Limited (TLPC), EGCO’s wholly owned subsidiary. On September 26, 2007, TLPC shareholders unanimously confirmed minute of Extraordinary Shareholders’ Meeting no. 1/2007 to dissolve TLPC. The dissolution was registered on October 1, 2007 and the liquidation process was completed on December 28, 2007. Consequently, EGCO directly holds an 80% stake in EGCO Cogen.) EGCO Cogen is a 117-megawatt cogeneration power plant which can produce both electricity and steam (30 tons/hour) by using natural gas as primary fuel. Under the SPP’s cogeneration program, EGCO Cogen power plant generates and supplies 60-megawatt contracted capacity to EGAT under a 21-years power purchase agreement. Other net contracted capacity of 52.76 megawatt are generated and supplied to industrial users in Rayong Industrial Park under the long-term power purchase agreements.

During the year 2007, EGCO Cogen power plant generated and sold 744 million kilowatt-hours electricity comprises of 428 million kilowatt-hours electricity to EGAT and another 316 million kilowatt-hours electricity to industrial users. Its average EAF was 98.01% and the steam produced and sold to the industrial users was 50,378 tons.

Roi-Et Green Company Limited (Roi-Et Green) EGCO holds a 70.3% stake in Roi-Et Green via EGCO Green Energy Company Limited (EGCO Green). Roi Et Green owns and operates a 9.9-megawatt biomass power plant using rice husk as a primary fuel. Under the SPP’s renewable program, Roi-Et Green generates and supplies 8.8-megawatt contracted capacity to EGAT under a 21-year PPA.


Page 24

Roi Et Green also enjoys the BOI privilege and the financial support from the Global Environment Facility to support renewable energy especially the biomass project. It is also honored by the Energy for Environment Foundation to be the prototype of a biomass project with good environment management system. Roi Et Green is well supported by the local community During the year 2007, Roi-Et Green power plant generated and sold 56 million kilowatt-hours electricity to EGAT, with its average availability factor of 87.85%.

Gulf Cogeneration Company Limited (“GCC”) GCC owns and operates Gulf Cogen power plant located in Saraburi province. It is a 110-megawatt cogeneration power plant which can produce both electricity and steam (16 tons/hour) by using natural gas as primary fuel. It generates and supplies 90-megawatt contracted capacity to EGAT under a 21-year power purchase agreement. Other net contracted capacity of 20 megawatt are generated and supplied to industrial users under the long-term power purchase agreements. During the year 2007, Gulf Cogen power plant generated and sold 747 million kilowatt-hours to its customers, with its average EAF of 98.40%. The total steam produced and sold to industrial users was amounted 148,593 tons.

Nong Khae Cogeneration Company Limited (“NKCC”) NKCC owns and operates Nong Khae Cogen power plant located in Saraburi province. It is a 126-megawatt cogeneration power plant which can produce both electricity and steam (24 tons/hour) by using natural gas as primary fuel. It generates and supplies 90-megawatt contracted capacity to EGAT under a 21-year power purchase agreement. Other net contracted capacity of 36 megawatt are generated and supplied to industrial users under the long-term power purchase agreements. During the year 2007, Nong Khae Cogen power plant generated and sold 839 million kilowatt-hours to its customers, with its average EAF of 98.05%. The total steam produced and sold to industrial users was amounted 212,423 tons.

Samutprakarn Cogeneration Company Limited (“SCC”) SCC owns and operates Samutprakarn Cogen power plant located in Samutprakarn province. It is a 126-megawatt cogeneration power plant which can produce both electricity and steam (35 tons/hour) by using natural gas as primary fuel. It generates and supplies 90-megawatt contracted capacity to EGAT under a 21-year power purchase agreement. Other net contracted capacity of 36 megawatt are generated and supplied to industrial users under the long-term power purchase agreements. During the year 2007, Samutprakarn Cogen power plant generated and sold 791 million kilowatt-hours to its customers, with its average EAF of 95.85%. The total steam produced and sold to industrial users was amounted 130,221 tons.


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Gulf Yala Green Company Limited (“GYG”) GYG owns and operates Gulf Yala Green power plant located in Yala province. It is a 23-megawatt biomass-fired power plant using parawood residue as primary fuel. Under the SPP’s renewable program, it generates and supplies 20.2-megawatt contracted capacity to EGAT under a 25-year power purchase agreement. During the year 2007, Gulf Yala Green power plant generated and sold 131 million kilowatt-hours to EGAT, with its average availability factor of 81.78%.

Amata-EGCO Power Limited (“AEP”) EGCO holds 14.85% in AEP via EGCO JD. AEP owns and operates Amata-EGCO power plant located in Chonburi province. It is a 165-megawatt cogeneration power plant which can produce both electricity and steam (15-megawatt steam) by using natural gas as primary fuel. It generates and supplies 90-megawatt contracted capacity to EGAT under a 21-year power purchase agreement. Other net contracted capacity of 68.25 megawatt are generated and supplied to industrial users under the long-term power purchase agreements. During the year 2007, Amata-EGCO power plant generated and sold 1,103 million kilowatt-hours to its customers, with its average EAF of 89.80%.

Amata Power (Bang Pakong) Limited (“APBP”) EGCO holds 15% in APBP via EGCO JD. APBP owns and operates Amata Power (Bang Pakong) power plant located in Chonburi province. It is a 167-megawatt cogeneration power plant comprises of an initial unit 112-megawatt capacity and an expansion unit 55-megawatt capacity which can produce both electricity and steam (15-megawatt steam) by using natural gas as primary fuel. It generates and supplies 90-megawatt contracted capacity to EGAT under a 21-yearspower purchase agreement. Other net contracted capacity of 67.93 megawatt are generated and supplied to industrial users under the long-term power purchase agreements. The commercial operation dates (“COD”) for expansion unit was applied on April 25, 2007 During the year 2007, Amata Power (Bang Pakong) power plant generated and sold 960 million kilowatt-hours to its customers, with its average EAF of 95.05%.

Tariff Rate EGAT applies the power tariff formula to the SPPs as follows:

o Capacity payment is based on the monthly contracted capacity and charged on each customer regardless of whether such customer actually buys electricity or not. However, the capacity payment applicable to EGAT is different from that applicable to customers in general. The capacity payment in case of EGAT is based on its long run avoided capacity cost due to its purchase of power from SPPs while that applicable to customers in general is calculated from contracted capacity that will vary to the tariff structure of Provincial Electricity Generating Authority (PEA).

o Energy payment is the actual measured quantity of electricity delivered. Energy

payment charged on EGAT will cover variable operating and maintenance cost while


Page 26

that applicable to customers in general will change according to the tariff structure of PEA.

Overseas Investment Group EGCO holds a 40% stake in CHC via EGCO International (BVI) Limited (“EGCO BVI”). CHC is the largest IPP in the Mindanao Island, Philippines. CHC holds the shares in 2 electricity generating companies and 1 operation and maintenance service company. Western Mindanao Power Corporation (“WMPC”) WMPC operates and owns a 100-megawatt diesel power plant located in the island of Mindanao, Philippines. Under the Build-Operate-Own (“BOO”) scheme, WMPC generates and supplies all electricity to National Power Corporation (NPC) under an 18-year Energy Conservation Agreement (“ECA”) with the expiry in 2017. During the year 2007, WMPC power plant generated and sold 157 million kilowatt-hours electricity to NPC with its average availability factor of 96%.

Southern Philippines Power Corporation (“SPPC”) SPPC operates and owns a 50-megawatt diesel power plant located in Philippines. Under the BOO scheme, SPPC generates and supplies all electricity to NPC under an 18-year ECA with the expiry in 2016. During the year 2007, SPPC power plant generated and sold 175 million kilowatt-hours electricity to NPC with its average availability factor of 94%.

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

Tariff Rate Power tariff to be charged from NPC is divided into four main components as below: - Capital recovery fee is the remuneration payable by NPC to SPPC on a monthly basis.

It covers financial cost of investment in the power plant. - Fixed operation and management fee is the remuneration payable by NPC to SPPC on

a monthly basis. It covers fixed operating and maintenance expenses of the power plant.

- Infrastructure fee is the remuneration payable by NPC to SPPC on a monthly basis. It covers expenses on the transmission system owned by SPPC.

- Energy fee is the remuneration paid for the electricity actually delivered. It covers variable operating and maintenance expenses.

The tariff charged under the specified formula is calculated based on both the USD and the Peso. Unit 1 quotes the tariff in both the US Dollar and the Peso, while unit 2 in the German Mark and the Peso.


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3.1.2 Marketing and competition The Company has the strong intention to grow the business to meet the power demand. The marketing and competition status is as shown below.

Operating Assets

The subsidiary and joint venture companies supply power to EGAT under the long term PPA of which the revenue are fixed resulting in no competition between those companies and other private producers. As EGAT, the major customer, has strong financial standing, those companies bear no risk of major customer loss.

Future Competition

Future competition will be stronger. A slower demand growth rate and the tendency to purchase more power from cross border projects results in a lower number of domestic IPP and SPP projects to be developed. Since the site selection, the type of fuel used and the tariff rate are key success factors for winning power licenses, the Company has to enhance its competitiveness by continuously implementing the best practice for business management.

Details of the power industry status is as shown in Attachment 3.

3.1.3 Process

The Company has the policy to supply electricity or to provide related services with high quality. The Company will honor its promise to the customers and will continue to operate its business safely with environmental friendliness. In this regard, the description of the service of REGCO and KEGCO, the major power plants in EGCO Group, is provided as an example.

Capacity, Net Generation and capacity Factor

The capacity, net generation and capacity factor of REGCO and KEGCO during 2003-2006 is as shown below:

units 2006 2005 2004

REGCO

Available capacity/1 million KW/hour

10,103 10,103 10,103

Dispatching net generation/3

million KW/hour

5,837 6,393 7,269

Capacity Factor(%) % 57.17 63.02 67.36

Increasing rate of capacity factor (%)

% -8.70 -12.05 25.28

KEGCO


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units 2006 2005 2004

Available capacity/1 million KW/hour

5,553 6, 281 6,454

Dispatching net generation/3

million KW/hour

5.349 6,273 5,975

Capacity Factor (%) % 96.32 90.29 92.58

Increasing rate of capacity factor (%)

% 6.67 -2.47 -3.30

Notes /1 Available capacity of each plant in each year is calculated from the total number of hours deducted by the

number of hours of planned maintenance outage. 23 Dispatching net generation in each year depends on the generating availability of the plant and the order from

the control center of EGAT based on the electricity requirement at each period of time. In this regard, REGCO operate the power plant for 24 hours a day with 4 shifts of 16 operators each for 4 blocks of combined cycle plant. KEGCO run the power plants throughout 24 hours a day with 5 shifts of operators. Three operators are required for each shift of the thermal power plant while 4 are required for combined cycle plants.

Raw Material Major raw material for power generation is fuel. Besides natural gas and heavy oil which are primary fuels and diesel oil which is secondary fuel, other raw materials required for the generating process are water and chemicals, e.g. water treatment agent, fuel additive, etc., as can be summarized as follows: (1) Natural gas

Natural gas is a primary fuel used for both thermal and combined cycle plants. Under the PPAs, EGAT will initially procure natural gas for REGCO and KEGCO, the payment for which shall be made by EGAT directly to Petroleum Authority of Thailand (“PTT”). The heat rate in the power generation must not exceed that specified under the PPAs. In case the actual heat rate is higher, both companies have to bear the increase in the natural gas cost. Once they directly enter into fuel supply agreements with PTT, they would be responsible for the payment for the natural gas and pass it on to EGAT through the calculation formula of energy payment.

(2) Heavy oil

The Khanom power plant uses heavy oil as primary fuel like natural gas for its Barges 1 and 2 power plants. However, it will be used only when natural gas supply is insufficient. The plant reserves heavy oil for serving 7 days of full generation.

(3) Diesel oil

Diesel oil is reserved to cope with primary oil shortage and for use in case of machinery test-run and for operation after repair & maintenance. According to the PPAs, REGCO and


Page 29

KEGCO have to make available diesel oil reserve to serve 3 days of full generation. Both companies will operate the facility with the use of diesel oil only upon the instruction of EGAT.

(4) Water Apart from the water purchase from East Water Resources Development and Management Plc., Dok Krai reservoir in Amphur Pluak Daeng of Rayong, a reservoir covering an area of around 50 rai with a 0.2 million m3 capacity was constructed in the company’s premises for emergency use and can sustain a water reserve for about seven days. Moreover, REGCO has a tap water unit that can produce tap water of up to 43,200 cu.m3 a day. The water supply is required by the boilers and the cooling system of the power generation process.

For KEGCO, the water used in the thermal plant comes from Ban Klang canal as the primary source and Tha Tok canal as the secondary source. A reservoir has also been built to accommodate water reserve of 0.4 million m3 on an area of 85 rai 56 sq.wah. along the Ban Klang canal, 9-10 km. far from the power plant, which can well cope with water shortage during the dry season. KEGCO is constructing another reservoir with the capacity of 0.4 million m3 which is about 6 kilometer far from the plant.

(5) Chemicals Most chemicals used in power plants are for improving water quality, such as, hydrazene for boilers, and hydrochloric acid (HCL), sulfuric acid (H2SO4) and sodium hydroxide (NaOH) for use in regenerating resin and treating waste water, as well as kaolin and ferric chloride for tap water system. All these chemicals can be procured locally.

Generation Processes and technical and management assistance The generation processes of the combined cycle and thermal power plants are as described below:

- Combined cycle power plant. The plant involves two types of generators, i.e. gas turbine

and steam turbine generators. The generation process starts with gas turbine generator, from which the thermal energy will be used to boil water and hence produce high pressure steam to drive the rotor of the steam turbine and then the generator can generates electricity.

- Thermal power plant The plant uses thermal energy derived from combustion of fuel and air in the boiler to produce high pressure steam, which will further drive the rotor of the steam turbine and then the generator generates electricity.

The generated electricity will be dispatched to the switchyard to be transmitted to the nearby high voltage substation. Rayong power plant transmits electricity to EGAT’s Rayong substation 2 via 230 kV transmission line. The interconnection point is in front of the station. Meanwhile, Khanom power plant transmits electricity to Nakhon Sri Thammarat and Surat Thani substations using two circuits of 230 kV transmission lines through the interconnection point in front of EGAT’s Khanom substation.


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The power plants need regular maintenance to keep its availability at the level specified by EGAT. REGCO and KEGCO have thus renewed the major maintenance agreements (“MMA”) with EGAT for another six years, covering December 7, 2000-December 7, 2006 for REGCO and June 19, 2002-June 18, 2008 for KEGCO. REGCO has renewed the MMA with EGAST for another 8 years starting from January 1, 2007 to December 31, 2014. Under the agreements, EGAT will provide major repair and maintenance services for the power plants. EGAT will also give administrative service by assisting REGCO and KEGCO in preparing handbooks and projection of maintenance service, and additional services upon request, including provision of advisory service by specialists throughout 24 hours. 3.2 Service Business 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. 3.2.1 Service Power Plant Operation and Maintenance Services (O&M) ESCO aims to provide comprehensive operation and maintenance services with high efficiency, i.e., high equivalent availability factor and low heat rate with reasonable O&M cost. ESCO has extensive experiences to provide a full scope services to both thermal and combined cycle plants Maintenance Services With the strong and competent workforce, ESCO can provide a variety of professional maintenance services for power, petrochemical and oil & gas industries which covers the following areas:

♦ Planned Outage maintenance ♦ Contract maintenance services ♦ Individual equipment maintenance ♦ Field service and emergency troubleshooting

ESCO has extensive expertise in mechanical maintenance, electrical maintenance, and control and instruments maintenance services and can be on called on 24-hour basis Engineering & Construction Services ESCO has a qualified team of engineer to provide services on civil, mechanical, electrical and control and the testing and installation. The particular strength lies in erection and commissioning of power plant main system such as gas turbine, steam turbine, generator, HRSG, boiler and balance of plant. ESCO services also cover turn key of small to medium projects such as pumping stations and power distribution substations. In addition, ESCO also provides service on demand side management, technical and field testing and technical training.


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3.2.2 Market and Competition ESCO has the highest market shares of around 90% for the SPP maintenance segment. This was because the power plant maintenance work requires high expertise as the equipment is of high price. The players in this market then are EGAT, OEM and ESCO. With the customers’ trust in ESCO services, ESCO could attract and retain both existing and new customers who tend to be more interested in entering into a long term contract. For other maintenance work such as that of the industrial and petrochemical plants, ESCO still has to compete with other service providers. However, the market share is increasing. With regard to the O&M service, the market is still limited as most private power producers still prefer to use their own workforce. For the engineering and construction, ESCO is competitive in term of financing apart from the qualified workforce.

3.3 Water Business Egcom Tara Company Limited (“ET”) EGCO holds an indirect 70% stake in ET via ESCO. Under a 30-year agreement, ET produces tap water according to Thai Industrial Standard (“TIS”) and supplies it to the three water stations of the Provincial Waterworks Authority of Thailand (PWA), namely, Pak Tor Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station. 3.3.1 Product and Service ET supplies tap water that meets the industrial standard to the PWA to replace the usage of well water which may result in the mud slide. ET has supplied tap water to the waterworks office in Ratchaburi and Samut Songkhram provinces under the 30-year water purchase agreement with the combined capacity of 36,000 cubic metres per day starting from April 7, 2001. ET enjoys the BOI privileges with significant conditions as follows 1. Permission to use the foreign labor with expertise in the business as agreed by the BOI, 2. Exemption of import duty on machinery as approved by the BOI, 3. Exemption of corporate income tax for net profit from promoted business for eight years

from the first date of income earnings, 4. Exemption of calculating dividend from the promoted business as taxable income

throughout the period of corporate income tax holiday. 5. Permission to transfer the money in foreign currency out of the country. 3.3.2 Market and Competition Since ET supplies tap water to the PWA under the 30-year contract, there is no competition. ET focuses on maintaining the quality of water that meets the standard which was certified by TIS and the Health Department, Ministry of Health as drinkable tap water. In addition, ET commits to ensure that its production is environmental friendly without any pollution. Due to its contribution to maintain a good working environment, it also wins the award on “Distinguished Workplace” from the Health Department.


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3.3.3 Process Raw material used to produce tap water is the water from Mae Klong Rivier which incurs no cost. The production process is summarized below. • Raw water pumpting from Mae Klong River, • Chemical addition, • Sedimentation, • Filtration, • Chorination, • Storage in clear water tank, • Transport to PWA, ready for distribution.

Apart from ET, EGCO also holds shares in Eastern Water Resources Development and Management Public Company Limited (“East Water”). At the end of November 2006, EGCO holds 18.57% of shares in East Water which is responsible for supplying raw water in the Eastern Seaboard of Thailand covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad. 3.4 Environment Impact EGCO has the policy to conduct our business with commitment in compliance with relevant environmental laws and regulations including the rules and regulations of the local government such as a municipal authority, a tambon administration authority, etc. In case that no enforceable law exists, EGCO will apply appropriate standards with responsibilities by; • Encouraging employees to have strong concern and be responsible for the clean

environment, • Communicating with the public on environmental matters, share its experience with other

agencies to facilitate environmental improvements in industry performance, knowledge and operating practices,

• Managing our business with the goal to alleviate the adverse effects on the environment, undertake appropriate reviews and evaluations of its performance to measure and to ensure compliance with this environmental policy.

The reports on the measure to reduce the environment impacts and to follow up the environment quality of EGCO Group power plants indicated that the air quality and the emission in 2006 was better than the standard set forth by the National Environment Board.

3.5 Undelivered work There are three projects which are under the development phase which are elaborated on item 6: Future Project on page 43

Part 2 Section 4 Research and Development

Page 37

4. Research and Development EGCO, as a holding company, does not engage in research and development activities. In a bid to sharpen our workforce’s skills and knowledge necessary for future project development, we encourage our employees to attend training courses and follow up new technology with the manufacturers. With the increasing importance of alternative energy in Thailand’s future, the Company does conduct various studies on alternative fuels for power generation such as biomass, wind and LNG for power generation. EGCO believes that such studies will help mitigate the country’s dependence on fossil fuels for power generation.

Part 2 Section 5 Operational Assets

Page 38

5. Operational Assets 5.1 Fixed Assets The fixed assets of the company and subsidiaries as at December 31, 2007 comprise the following items.

Items Value/1 (Million Baht)

1. Land and Building Less Accumulated Depreciation Total

5,389.91 (1,985.71) 3,404.20

2. Power Plant and Transmission System Less Accumulated Depreciation Total

35,087.03 (20,024.32) 15,062.71

3. Office Equipment and Cars Less Accumulated Depreciation Total

476.88 (350.11) 126.77

4. Work under construction 43.95 Remark : /1 The number was shown in EGCO Group’s consolidated financial statement . Subsidiaries

KEGCO has mortgaged land and buildings and pledged power plant equipment to secure its debenture worth Baht 7,500 million and its long-term loans worth USD 265 million. EGCO Cogeneration Co., Ltd. has mortgaged land and buildings to secure its long-term loan worth USD 26.80 million and Baht 1,181.72 million. Roi-Et Green Co., Ltd. has mortgaged land and buildings and pledged power plant equipment to secure its long-term loan worth JPY 1,260 million.

Joint Ventures

BLCP Power Co., Ltd. (BLCP) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 558 million and Baht 22,063 million.

Gulf Power Generation Co., Ltd. (GPG) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 322.80 million and Baht 16,388 million.


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Amata EGCO Power Co., Ltd. (AEP) and Amata Power Bang Pakong (APBP) have mortgaged land and buildings and pledged power plant equipment to secure its long-term loans worth Baht 5,000 million and USD 45 million.

GCC, Nong Khae Cogeneration Co. Ltd. (NKCC) and SCC have mortgaged their land and buildings and pledged all power plant machinery and equipment including parts of their ordinary shares to secure its loan worth baht 5,800 million.

Gulf Yala Green Co., Ltd (GYG) has mortgaged land and buildings and pledged all power plant machinery and equipment to secure its long-term loans worth USD 23 million.

Southern Philippines Power Corporation (SPPC) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 44.80 million and Peso 164.4 million.

Western Mindanao Power Corporation (WMPC) has mortgaged land and building and pledged equipment to secure its long-term loans worth USD 74 million and Peso 265 million.

Nam Theun 2 Power Co., Ltd. (NTPC) has mortgaged company’s assets to secure its long-term loans worth USD 500 million and Baht 20,000 million.

5.2 Intangible Assets

- Concessions (Power Purchase Agreement and Water Supply Agreement)

Company Power/Water Purchaser Agreement’s characteristic Agreement

period

Enforcement/ Commercial

Operation Date1. REGCO EGAT Long term power purchase

agreement 20 years Dec 7, 1994

2. KEGCO EGAT Long term power purchaseagreement

15 and 20 years

Jun 19, 1996

EGAT Long term power purchase agreement

21 years Sep. 3, 1998

4 industrial customers Power purchase agreement 21 years Oct 18, 1998. and Oct 25,

1998 2 industrial customers Power purchase agreement 5 years Aug 24, 2005

3. GCC

4 industrial customers Steam supply agreement 5,7 and 10 years

During Jua 2004-Jan

2005 4. SCC EGAT Long term power purchase

agreement 21 years Aug. 23, 1999


Page 40


period


Operation Date2 industrial customers Power purchase agreement 13 years Aug 1, 1999

1 industrial customer Power purchase agreement 10 years Aug 17, 2005

3 industrial customers Steam supply agreement 10 and 13 years

Aug 1999 and Aug 17, 2005


21 years Oct. 12, 20005. NKCC

5 industrial customers Power purchase agreement 15 years Jan 15 2000 and Nov 1,

2000 2 industrial customers Steam supply agreement 15 years Nov 1, 2000


21 years Jan. 28, 2003

15 industrial customers Power purchase agreement 15 years Feb. 1– Sep 26, 2003

1 industrial customers Power purchase agreement 3 years Mar. 1, 2003

6. EGCO COGEN

1 industrial customers Power purchase agreement 3 years July 28, 2004

1 industrial customer Steam supply agreement 15 years Mar 1,2004

EGAT Long term power purchaseagreement

21 years Sep 17, 1998

40 industrial customers Power purchase agreement 5-15 years During May 28,1996 – Sep 20,

2005

7. AEP

1 industrial customer Steam supply agreement 15 years July 22, 1998


21 years Sep. 28, 2001

29 industrial customers Power purchase agreement 5 and 15 years During Oct 31, 1997-Sep 26,

2005

8. APB

2 industrial customers Steam supply agreement 15 years Apr 25, 2001 and Dec 26,

2001 9. Roi-Et Green


21 years May 29, 2003

10. GYG EGAT Long term power purchaseagreement

25 years Nov 28, 2006

11. Egcom Tara

PWA Long term water supplyagreement

30 years Apr 7, 2001

12. NMPC-1 National Power Corporation (Philippines)

Power purchase agreement 10 years Jul. 31, 1993


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period


Operation Date13. NMPC-2 National Power

Corporation (Philippines)

Power purchase agreement 12 years Dec 8, 1993

14. WMPC National Power Corporation (Philippine)

Power purchase agreement 18 years Dec 31, 1998

15. SPPC National Power Corporation (Philippines)

Power purchase agreement 18 years Apr. 28, 1998

- Good Will

One of EGCO’s tangible assets is a good will which occurred from businesses acquisition. In 2007, the net good will was worth 210.70 million baht.

5.3 Investment and Management Policy in Subsidiaries and Joint Ventures EGCO sets its corporate vision “to be the leading Thai integrated electric power Company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environment protection and social development support. In this regard, EGCO has identified its key long term objectives as follows. 1. Invest in the business in which EGCO Group has expertise to maximize profit and

create growth to the Group with the acceptable risks, 2. Allocate the appropriate shareholding proportion in its investment to possess the

governing right over joint venture companies, 3. Uphold the investment basis of Non-recourse or Limited Recourse Project Finance

with clear sponsor support and contingent liability, 4. Support Corporate Social Responsibility projects and comply to all governing laws.

The Company expects all of its subsidiaries and joint ventures to operate their business

in compliance with its corporate vision and mission, the code of conduct, the corporate governance principles and acceptable risk profiles. In addition, we expect all of the Group companies to carry out their business in accordance with the following values:

- To conduct business with honesty, integrity and ethics. - To carry out business in compliance with all applicable business and

commercial laws. - To show respect and take into account the local traditions and cultures. - To use natural resources in an efficient and environmentally responsible

manner. - To carry out their responsibilities in a professional manner and with team

spirit.


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The Board of Directors oversees the subsidiaries and joint ventures via the support of the Group Business Committee in accordance with the following guidelines.

- Implementing core policies via EGCO Group employees who are assigned to be directors, management or shareholders of those companies. These representatives must seek advance concurrence from the Board of Directors upon the substantial matter of events,

- Incentivizing Group companies to achieve corporate goal using a performance linked based KPI.

- Monitoring the progress and the operation of the subsidiaries and joint ventures via the Asset Management and Planning with monthly reports to the Board and the Group Business Committee. Should there be any urgent matters for which the immediate action is required; such matters will be duly reported to the Board on the first occasion.

Part 2 Section 6 Future Projects

Page 43

6. Future Projects

EGCO seeks to expand its market share through developing or acquiring IPP projects in Thailand and in the Asean region. It invests in well-structured projects taking into consideration of its areas of expertise and each project’s risk and return profile. EGCO focuses on projects that can generate sustainable long-term earnings growth while having capable management and good corporate governance.

In 2007, there are two projects that are under construction, representing an additional 635 equity MW as follows:

1. Unit 2 of Kaeng Khoi 2 (KK2) project, a 734 MW gas-fired power plant in which EGCO holds a 50% stake. The COD was successfully achieved on March 1, 2008.

2. Nam Theun 2 project, a 1,070 MW hydroelectric power plant in Laos PDR, in which EGCO has a 25% stake in Nam Theun 2 Power Co., Ltd. This project is targeted for COD in the second half of 2009 with the contracted capacity to EGAT of 995 MW and to the Electricity of Laos of 75 MW. At the end of 2007, the project progress was 76.2% and would achieve the COD within December 2009 as scheduled

EGCO’s business strategy will place more emphasis on expansion investment opportunities in ASEAN markets, including neighboring Mekong countries such as Lao PDR, Myanmar and Cambodia, with respect to projects that will supply electricity to Thailand, and also investment in a domestic project in Thailand relating to fuel storage and supply. As for renewable energy projects, EGCO will continue to pursue investment opportunities in prospective domestic projects using wind, waste and biomass as fuel sources. The projects in the pipeline include the following. 1. LNG Receiving Terminal Project: EGCO has entered into an MOU with PTT and

EGAT to conduct the feasibility study for developing the LNG Receiving Terminal Project in Thailand which is expected to lead to the signing of the joint development agreement among the three parties by mid 2008.

2. Nam Theun 1 Project: EGCO works with Gamuda Berhad to develop Nam Theun 1, a hydropower plant with the capacity of 523 MW and the commercial operation in 2014. EGCO will hold approximately 47.5% in this project. The tariff Memorandum of Understanding with EGAT was signed in December 2007. The concession agreement aswell as the EGAT PPA are under negotiations.

3. Koh Kong Project: EGCO signed the MoU to conduct the study for investment in the 3,660 MW Koh Kong Power Project (“Project”) in Cambodia with Ratchaburi Electricity Generating Holding Public Company Limited (“RATCH”) and Italian-Thai Power Company Limited (“IPC”). EGCO and RATCH would hold a combined stake of 70% while IPC would hold another 30% in the Project. The Project is in talks with EGAT about the power purchase. The construction is expected to start by 2012 with the commercial operation date by early 2016.

4. Waste to Energy Project: EGCO entered an MOU with PTT Plc., and SEPCO-ASIA Group on October 5, 2007 to conduct a feasibility study for a waste to energy project. The expected shareholding structure will comprise EGCO, PTT and SEPCO-ASIA at

Part 2 Section 6 Future Projects

Page 44

50%, 35% and 15%, respectively. Initial study revealed that there was adequate amount of waste to fuel the project. The COD of the power plant was expected on December 15, 2008.

5. Wind Power Project: EGCO joins hands with PTT PLC, Bangkok Co Generation Ltd., and Eurus Energy Japan Corporation to conduct a feasibility study on developing a wind power project with the capacity of 35 MW along the east coast between Songkla and Nakorn Srithammarat provinces.

Part 2 Section 7 Dispute

Page 45

7. Dispute

7.1 Legal cases which negatively impact the company’s assets

EGCO does not appeal and is not sued any legal cases of which the amount is higher than 5% of shareholder as at year end or which the amount is higher than 10% of asset as at year end.

7.2 Legal cases which negatively impact the company’s performance

EGCO does not appeal and is not sued any legal cases which negatively impact the company’s performance. However, such matter could not evaluate in the figure.

Part 2 Section 8 Capital Structure

Page 46

8. Capital Structure The Company’s securities (1). EGCO’s registered capital and paid up capitals as of December 31, 2006 is shown below. Registered Capital

: 5,300 million baht comprising 530,000,000 ordinary shares with the par value at 10 baht per share.

Paid Up Capital

: 5,264.65million baht comprising 526,465,000 ordinary shares with the par value at 10 baht per share.

As at February 29, 2007, the numbers of NVDR (Non-Voting Depository Receipt) amounted to 54,279,328 units or 10.31% of the registered shares. The NVDR holders have no voting right at the shareholders’meeting. Any shareholders who need additional information on the NVDR can look for the information at www.set.or.th/nvdr/ Comparing to 2006, EGCO’s shares had a lot movement in 2007 with the highest trading price at 125 baht on October 10, 2007 and October 11, 2007 and the lowest trading price at 92.50 baht on January 5, 2007. The average price/earning ( P/E ratio) was 6.8 in 2007.

(2) Other Securities

KEGCO’s Amortizing Secured Debenture No. 1 due in 2011. The details is shown below.

Type : Secured debentures in a registered form with collateral agent

Tenure : 15 years starting from the issuance Total Value of All Debentures Offered

: 7,500,000,000 baht

Total Debentures Issued : 750,000 units Par Value : 10,000 baht Offering Price/Share : 10,000 baht Issuance Date : June 14, 1996 Redemption Date : June 14, 2011 Interest Rate : 11.56% per annum Interest Repayment Date : Every 6 months on December 14, and

June 14 every year Principal Repayment Date : in installment every 6 months on

December 14, and June 14 every year with the first payment on December 14, 1996

The Outstanding Debentures as of December 31, 2007

: 750,000 units

The Outstanding Principal as of December 31, 2007

: 2,993,932,500 baht

Credit Rating as of December : AA- ( by Thai Rating and Information and


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31, 2007 Service Co., Ltd on December 27, 2007)

(2) Any commitment among major shareholders and the Company, which will affect the issuing and offering securities or the management of the Company

-None-

8.2 Shareholders

The top ten shareholders as of September 10, 2007, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 21, 2007, are as follows.

No. Shareholders /1 Shares % of Total

1. Electricity Generating Authority of Thailand 133,773,662 25.41 2. OneEnergy Thailand Ltd 109,126,806 20.73 3. State Street Bank and Trust Company, for London 22,378,978 4.25 4. Littledown Nominees Limited 21,395,613 4.06 5. Chase Nominees Limited 1 10,250,140 1.95 6. Thailand Securities Depository for investor 8,573,274 1.63 7. Bangkok Life Assurance co., Limited 6,665,700 1.27

8. Norbax Inc., 13 6,136,300 1.17 9. Social Security Office 4,887,100 0.93 10. Investors Bank and Trust Company 4,268,678 0.81

Remarks /1 • This amount includes the share of 109,126,806 held by OneEnergy Thailand Ltd which

accounted for 20.73% and the shares of 8,896,000 held by OneEnergy Thailand Limited which accounted for 1.69% since the two companies are the same company but there was an error in the registration process which had already been corrected on October 24, 2007.

• Excluding 65,649,282 shares under Thai NDVR which account for 12.47% of the total outstanding shares

Two major controlling shareholders are as follows. 1. Electricity Generating Authority of Thailand (“EGAT”): EGAT was incorporated under the criteria set forth in the State Enterprise Capital Act with the objectives to generate, purchase, transmit and distribute electricity. EGAT also provides the operation and maintenance services and invested in the electricity related business. As the major shareholder, EGAT has four representative directors of all 14 directors 2. OneEnergy (Thailand): OneEnergy (Thailand) is a a 50:50 joint venture between CLP Holding Limited and Mitsubishi Corporation. OneEnergy Limited has the objective to invest in power business in the Southeast Asia and Taiwan.


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As a major shareholder, OneEnergy (Thailand) has four representative directors in the Company.

8.3 Company’s dividend payment policy

In the absence of unforeseen circumstances, the Company has a policy to dividend approximately 40% of the net profit after taxation, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to the Company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the Company”.

The controlling subsidiaries have a policy to dividend to their shareholders 100% of the net profit after taxation and legal reserve.

The details of the dividend payment for the past 5 years.

Approval Date

XD Date Payment Date

Dividend (Baht/Share

)

Operation Period

August 25, 2007 September 5, 2007 September 21, 2007

2.25 January 1, 2007-June 30, 2007

February 26, 2007 March 28, 2007 May 8, 2007 2.00 July 1, 2006-December 31, 2006

August 28, 2006 September 7, 2006 September 26, 2006

2.00 January 1, 2006-June 30, 2006

March 20, 2006 March 29, 2006 May 10, 2006 1.75 July 1, 2005-December 31, 2005

August 22, 2005 September 1, 2005

September 20, 2005

1.50 January 1, 2005-June 30, 2005


September 23, 2004

September 1, 2004

September 22, 2004

1.50 January 1, 2004-June 30, 2004


August 25, 2003 September 3, 2003

September 22, 2003

1.25 January 1, 2003-June 30, 2003

March 26, 2003 April 3, 2003 May 19, 2003 1.25 July 1, 2002-December 31, 2002

REGCO and KEGCO have the policy to pay their dividend to their shareholders at 100% of the net profits after tax, legal reserve and other reserve accounts applied to terms and


Page 49

conditions of their credit facility documents. In addition, REGCO and KEGCO have to maintain their Debt Service Coverage Ratio for the previous six-month period not less than 1.2 and 1.1 respectively.

Part 2 Section 9 Management 2

Page 50

9. Management

1. Structure of the Board of Directors

• Electricity Generating Company Public Limited The Board of Directors has main responsibility to conduct a business in a way that will benefit the Company, shareholders and stakeholders including the employees and communities where the Company operates its business. The Board of Directors works with the Management in formulating the Company’s vision and policy and to approve the annual budget. Currently, the Board of Directors comprises 15 members:

• 14 non-executives (including six independent directors), and • President

The Board of Directors and their share ownership in the Company as of December 31, 2007 are as listed below:

No. of shares No. of Shares

Name Position Appointmen

t Date

December 31, 2006

December 31, 2007

Increase (Decrease)

Mr. Sanit Rangnoi Director November 27, 2006

- - -

Mr. Chaipat Sahasakul Independent Director

April 25, 2005

- - -

Mr. Aswin Kongsiri Independent Director

April 24, 2006

- - -

Mr. Chareon Prajumtan Independent Director

June 26, 2006 - - -

Mrs. Wattanee Phanachet Independent Director

December 1, 2006

- - -

Mr. Thanapit Mulapruk Independent Director

April 23, 2007

- - -

Mr. Chamnong Wongsawarng

Director April 23, 2007

- - -

Mr. Sombat Sarntijaree Director April 23, 2007

- - -

Mr. Narongsak Vichetpan Director June 29, 2007 Mr. Peter Albert Littlewood Director April 25,

2005 - - -

Mr. Richard McIndoe Director April 25, 2005

- - -

Mr. Hideaki Tomiku Director April 23, 2007

- - -

Mr. Mark Takahashi Director October 30. 2006

- - -

Mr. Visit Akaravinak President April 23, 2007

- - -


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The list of Directors whose terms expired or who resigned in 2007 together with their share ownership in the Company are as shown below.

No. of shares No. of Shares

Name Position Retiring/ Resigning

Date December

31, 2006 December

31, 2007 Increase

(Decrease) Mr. Pornchai Rujiprapa Chairman June 8, 2007 - - - Mr. Worawit Khamkanist Independent

Director October 17, 2007

48,100 38,100 -

Independent Directors The Board has defined the qualifications of independent directors which either meet or exceed the independence standard set forth in the Notification of the Stock Exchange of Thailand (“SET”) regarding the qualifications of independent directors, dated October 28, 1993 and the letter of the Securities Exchange Commission (“SEC”) no. SEC Jor. (Wor) 54/2004 dated December 1, 2004. To be considered “independent” for purposes of director qualification standards, the director must possess the following qualifications.

1. Holding shares not more than 2% of the paid-up capital with the voting right of the Company, affiliated company, associated company or related company, which shall be inclusive of the shares held by related persons. (including the connected persons as stipulated in section 258 of Securities and Exchange Act)

2. Not taking part in the management of the Company, affiliated company, associated company, related company or majority shareholder of the Company, and not being an employee, staff member or advisor who receives a salary from the Company, associated company, related company or majority shareholder of the Company.

3. Not being a person who is related by maternity and by registration in case of being parents, spouse, brother, sister, son and daughter, including son’s and daughter’s spouse of the management, or major shareholders or whoever that has the conflict of interests with the company or subsidiary.

4. Having no direct or indirect benefit or interest in finance and management of the Company, affiliated company, associated company, related company or majority shareholder of the company, including the benefit or interest of the said nature during the period of 1 year before his appointment as Independent director except where the board of directors has carefully considered that such previous benefit or interest does not affect the performance of duties and the giving of independent opinions.

5. Not being appointed as a representative to safeguard interests of the Company’s director, majority shareholders or shareholders who are related to the Company’s majority shareholders.

6. Being capable of performing duties, giving opinions or reporting the results of performance of work according to the duties delegated by the board of directors, free from the control of the management or the majority shareholders of the company including related persons or close relatives of the said persons.


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The Nomination and Remuneration Committee shall review the appropriateness of the definition. Currently, there are 6 independent directors of all 15 directors which accounts for more than one-third of all directors.

Authorized Directors

To maintain the independence of independent directors, the company determines that the authorized directors comprise Chairman or President to sign and affix the Company’s seal independently, or any two directors, excluding the independent directors, to sign jointly and affix the Company’s seal”.

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 the directors must reside in Thailand. If a directorship becomes vacant for any reason other than by rotation, the Board of Directors 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 the Company.

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 the Company • To devote time to the Company and conduct the business in compliance with the

governance principles and the Company’s code of conduct. • To demonstrate independent judgment in overseeing the Company 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 the Company. • To monitor the Company’s business and the compliance with the laws, rules, regulations

and contract provisions and will require the Management to submit report on the Company’s significant matters to ensure effective corporate performance.

2. Duties to the Shareholders • To endeavor to ensure that the Company 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 will ensure that true and accurate information regarding


Page 53

the operating results and financial position is reported in accordance with the disclosure requirements.

3. Duties to Creditors • To endeavor to ensure that the Company complies with the loan provision and the

Company’s financial status is correctly disclosed. • To seek professional advice 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. 4. Duties to other Stakeholders To endeavor to ensure that the Company complies with the governing laws and regulations while taking into account the impact on employees, other stakeholders, community, society and environment.

5. Due Diligence • To attend all Board meetings but where attendance at meetings is not possible, directors

will take appropriate step to obtain leave of absence. • To acquire knowledge about the Company, the statutory and regulatory requirements

affecting directors in the discharge of their duties as a director of the company, and to be aware of the environment that has the impact on the Company.

• To endeavor to ensure that necessary data are provided in advance to allow adequate time to analyze, make thorough judgment and so discharge the duties of care and diligence.

• To endeavor to ensure independent judgment and in case of dissent to any Board’s resolution, may request the record of objection in the Minutes of Meeting.

• To endeavor to ensure that the system is established within the company 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 the company 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 the Company’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 the Company’s expenses.

Board of Director Evaluation The Board approved the Board’s self appraisal form reviewed by the Nominating and Remuneration Committee. In 2007, the Board adopted the new 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 collective appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the CEO, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning.


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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. Result of the appraisals as well as directors’ recommendation will be used to enhance the Board’s performance each year.

1. Rayong Electricity Generating Company Limited (REGCO) As of December 31, 2007, REGCO’s Board of Directors comprised the following 8 directors.

Name Position Appointment Date 1 Mr. Visit Akaravinak Chairman February 26, 2007 2 Mr. Kitti Sirikwin/1 Director February 26, 2007 3 Mr. Kwok Wing Ho Director February 26, 2007 5 Mr. Sakda Sreesangkom Director February 26, 2007 6 Mr. Chankij Jearaphunt Director February 26, 2007 7 Mr. Rasda Pongpaew Director February 26, 2007 8 Mr. Sinchai Nerngjumnong Managing Director February 26, 2007

Remarks

1. Mr. Somyos Polachan resigned from the directorship on January 1, 2007. 2. Mr. Kitti Sirikwin resigned from the directorship on November 20, 2007.

Authorized Directors Either Mr. Visit Akaravinak, Chairman, or Mr. Sinchai Nerngjumnong, Managing Director, presents his signature with the affix of the company seal; or two of four following directors: Mr. Sakda Sreesangkom, Mr. Chankij Jearaphunt, Mr. Rasda Pongpaew, and Mr. Kwok Wing Ho present their signatures with the affix of the company seal.”

2. Khanom Electricity Generating Company Limited (KEGCO) As of December 31, 2007, KEGCO’s Board of Directors comprised the following 8 directors.

Name Position Appointment Date 1 Mr. Visit Akaravinak Chairman February 26, 2007 2 Mr. Kitti Sirikwin/1 Director February 26, 2007 3 Mr. Kwok Wing Ho Director February 26, 2007 5 Mr. Sakda Sreesangkom Director February 26, 2007 6 Mr. Sinchai Nerngjumnong Director February 26, 2007 7 Mr. Rasda Pongpaew Director February 26, 2007 8 Mr. Chankij Jearaphunt Managing Director February 26, 2007 Remarks


Authorized Directors Either Mr. Visit Akaravinak, Chairman, or Mr. Chankij Jearaphunt, Managing Director, presents his signature with the affix of the company seal; or two of four following directors: Mr. Sakda Sreesangkom, Mr. Sinchai Nerngchamnong, Mr. Rasda Pongpaew and Mr. Kwok Wing Ho, present their signatures with the affix of the company seal.


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3. EGCO Engineering and Service Company Limited (ESCO) As of December 31, 2007, KEGCO’s Board of Directors comprised the following 8 directors.

Name Position Appointment Date 1 Mr. Visit Akaravinak Chairman February 26, 2007 2 Mr. Kitti Sirikwin/1 Director February 26, 2007 3 Mr. Kwok Wing Ho Director February 26, 2007 5 Mr. Sakda Sreesangkom Director February 26, 2007 6 Mr. Sinchai Nerngjumnong Director February 26, 2007 7 Mr. Chankij Jearaphunt Director February 26, 2007 8 Mr. Rasda Pongpaew Managing Director February 26, 2007 Remarks


Authorized Directors Either Mr. Visit Akaravinak, Chairman, or Mr. Rasda Pongpaew, Managing Director, presents his signature with the affix of the company seal; or two of four following directors: Mr. Sakda Sreesangkom, Mr. Sinchai Nerngchamnong, Mr, Chankij Jearaphunt and Mr. Kwok Wing Ho, present their signatures with the affix of the company seal. 2. Standing Committees’ Structure

The board of directors has appointed 3 standing committees to help scrutinize significant matters. The details of the standing committees are as follows. Audit Committee The Audit Committee comprises 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. Since Mr. Worawit Khamkanist resigned from being EGCO Independent Director and Audit Committee member with effect on October 17, 2008, there were only two members in the Audit Committee as at December 31, 2007. No

. Name Position Remarks

1 Mr. Chaipat Sahasakul

Chairman Independent director with finance and accounting background

2 Mrs. Wattanee Phanachet Director Independent director with finance and accounting background

The Board, with the recommendation of the Nominating and Remuneration Committee, resolved to appoint Mr. Somphot Kanchanaporn as a new Audit Committee member with effect on January 28, 2008. 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.


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1. To review the accuracy and adequacy of EGCO’s financial reporting.

2. To review the appropriateness and effectiveness of internal control systems, Management Control and internal audit functions.

3. To monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET, and any other laws relevant to EGCO’s business.

4. To recommend the Board of Directors the external auditing firm as well as the audit fees for appointment by the shareholders to audit EGCO’s financial statements.

5. To consider the accuracy and adequacy of EGCO’s disclosure on related-party transactions or any transactions that may cause conflict of interest.

6. To review the Internal Audit Charter prior to submit to the Board of Directors for approval.

7. To approve the internal audit plan as well as budget and personnel.

8. To review the internal audit function, including independence of internal audit division and reporting obligation.

9. To approve the appointment, rotation, removal and performance appraisal of the Chief Internal Audit

10. To review or modify the code of conduct prior to submission to the Board of Directors for consideration.

11. To review with Management the methodology to encourage compliance with EGCO’s code of conduct.

12. To review with Management the preparation of Management’s Discussion and Analysis or MD&A and its disclosure on Annual Report.

13. To review with the Management the financial management and financial risk management.

14. To 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.

15. To direct and supervise an investigation into any matter as deemed necessary to accomplish the Committee’s responsibility

16. To review the Audit Committee Charter at least annually.

17. To perform any other act as assigned by the Board of Directors with approval of the Audit Committee.

The Audit Committee conducts the self-appraisal annually and reports the result to the Board. The result indicates that the composition, qualifications and performance of the Audit Committee are in line with the recommendations of the SET and the international best practice. There were 9 meetings in 2007 of which the attendance rate was 100%. Executive Committee The Executive Committee comprises 5 directors of which the office term is the same as their directorship. As at December 31, 2007, the Executive Committee comprises the following directors.


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No.

Name Position Remarks

1 Mr. Sanit Rangnoi Chairman Non-Executive Director 2 Mr. Sombat Santijaree Director Non-Executive Director 3 Mr. Richard McIndoe Director Non-Executive Director 4 Mr. Mark Takahashi Director Non-Executive Director 5 Mr. Visit Akaravinak Director Executive Director

The Executive Committee governs the Company’s business within its delegated authority as well as scrutinizes other matters to be proposed to the Board. The detailed responsibilities are described below.

1. To consider EGCO’s business plan and annual budget for presentation to the Board of Directors.

2. To consider and to approve investments and divestments of assets, credit, borrowings, debt restructuring, expenditures, other financing transactions and financial instruments, according to the Company’s table of authority approved by the Board.

3. To formulate the overall investment strategy and investment policies in line with the EGCO’ own policy, and to approve investment guidelines and investment requests in accordance with the Company’s regulations.

4. To consider and take action on other important issues relating to the Company’s operations.

5. To screen issues and make recommendations prior to their submission to the Board of Directors.

6. To propose the establishment and assessment of corporate KPI for approval by the Nominating and Remuneration Committee.

7. To propose/endorse the organizational structure, restructuring and governance of EGCO (Division level up)

8. To consider issues which are assigned by the Board. There were 16 meetings in 2007 of which the attendance rate was 100%.

Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises 4 directors for a 3-year term of service with one year for this purpose meaning the period between the AGM of shareholders when s/he is appointed and the next succeeding AGM. In order to maintain continuity, members may be re-elected. As at December 31, 2007 the Nomination and Remuneration Committee comprises the following directors. No

. Name Positon Remarks

1 Mr. Richard McIndoe Chairman Non-Executive Director 2 Mr. Narongsak Vichetp Director Non-Executive Director 3 Mr. Aswin Kongsiri Director Independent Director 4 Mr. Chareon Prajumtan Director Independent Director

The mission of the Nomination and Remuneration Committee is detailed as follows.


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1. To recommend the structure and composition of the Board and committee together with the

qualification of its members.

2. To recommend the list of nominees for the Board of Directors to be proposed to the shareholders’ annual general meeting in case of vacancies by rotation and to the board in case of casual vacancies.

3. To recommend committee members as well as directors to oversee the functions and participate as members in the Company’s risk management committee.

4. To scrutinize the list of nominees for the chief executive officer of the Company in case of vacancy including the establishment of the succession plan for executives.

5. To approve the appointment, promotion, rotation and removal of the senior executives of EGCO (Executive Vice Presidents and Senior Executive Vice Presidents) and to nominate senior executives of subsidiary/joint venture companies that EGCO had the right to nominate for a position equivalent to EGCO’s EVP level and upward.

6. To approve company representatives to be directors of the subsidiary or associated companies according to equity proportion or shareholders’ agreement.

7. To endorse the performance evaluation of EGCO President.

8. To endorse the performance evaluation of EGCO Management (Senior Executive Vice President and Executive Vice President).

9. To recommend the remuneration structure of the directors and senior executives of the Company and subsidiary and associated companies including meeting allowances, bonus, welfare and other benefits both in monetary and non-monetary terms.

10. To recommend policies and guidelines in determining the remuneration package of the senior executives on an annual basis.

11. To evaluate the corporate performance of the Company to determine the bonus and annual salary increase across the Company.

12. To recommend the Company’s salary structure and other benefits.

There were 8 meetings in 2007 of which the attendance rate was 98%.

Corporate Social Responsibility Committee (CSR Committee) The Corporate Social Responsibility Committee comprises 5 directors with the President as the Chairman. Two of the CSR members shall be directors/nominees and the other two shall be Management. The term of office of each CSR director member is three years and can be re-elected. The term of CSR management member is as deemed appropriate by the Board of Directors but should not exceeding their service term. In order to maintain continuity, members may be re-elected. As at December 31, 2007 the Corporate Social Responsibility Committee comprises the following directors.

No

. Name Position Remarks


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No.

Name Position Remarks

1 Mr. Visit Akaravinak Chairman Executive Director 2 Mr. Narongsak

Vichetpan Director Non-Executive Director

3 Dr. Chaiyod Bunyakidj Director Outside Director 4 Mr. Sakda Sreesangkom Director Management 5 Mr. Chankij Jearaphunt Director Management

The mission of the Corporate Social Responsibility Committee is detailed as follows. 1. To consider and endorse EGCO Group social, environment and ethical matters and policies for

Board’s approval. 2. To review and endorse Group’s strategies and activities to meet Group CSR goals and policies. 3. To endorse annual plan and budget for CSR activities for EXCOM and Board’s approval. 4. To review and monitor progress of CSR activities and to appraise the achievements and the

quality of CSR projects.

There were 1 meetings in 2007 of which the attendance rate was 100%.

3. Management Structure The President acts as the head of the Management team with 4 business units:

• 3 major business units namely Business Development, Asset Management and Planning and Finance with Senior Executive Vice President as a Group Head,

• 1 supporting business units namely Corporate Services with Executive Vice President as a Group Head,

• 4 divisions under the President’s supervision namely Corporate Communications, Controller, Internal Audit and Corporate Secretary. The last two divisions report administratively to the President, but directly report to the Audit Committee and the Board of Directors, respectively.

President

The President is responsible for governing the company’s business in consistent with the Company’s objectives, articles of associations, regulations and the resolution of the Board. The President is also in charge of supervising employees and complete activities assigned by the Board including the following activities.

• To operate Day-to day business,

• To hire, appoint, remove, transfer, promote, demote, assign, take disciplinary action against employees and workers from division managers downward (excluding the internal audit manager),

• 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 delegate. Management

The list of the Management team and their share ownership in the Company as at December 31, 2007 is as follows.


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9.6 No. of

Shares 9.7 No.

of Shares

9.4 Name 9.5 Title

December 31, 2006

December 31, 2007

Increase (Decrease)

1 Mr. Visit Akaravinak* President and acting as Senior Executive Vice President-Asset Management and Planning

- - -

2 Mr. Sakda SreesangkomSenior Executive Vice President-Finance

- - -

3 Mr. John Palumbo Senior Executive Vice President-Business Development

- - -

2 Mr. Somyos Polachan**

Senior Executive Vice President-Asset Management and Planning

2,000 - -

4 Mr. Sinchai Nerngjumnong

Senior Executive Vice President and Managing Director of REGCO

- - -

5 Mr. Chankij Jearaphun Senior Executive Vice President and Managing Director of KEGCO

- - -

Remark * Mr. Visit Akaravinak, President, acting as Senior Executive Vice President – Asset Management and Planning starting from January 1, 2007 ** Mr. Somyos Polachan’s contract as Senior Executive Vice President-Asset Management and Planning expired on December 31, 2007. Corporate Secretarial Work The Company has set up the Corporate Secretary Division with Ms. Busakorn Kakanumpornwong, Senior Vice President as the division manager to handle and carry out functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution: Management Committees The Company has set up the following committees to ensure the appropriateness and efficiency of business management.

Group Business Committee:

The Board of Director appoints the Group Business Committee which comprises outside professionals and Executives of EGCO Group in the appropriate number. The Committee is chaired by the President. The term of office for the outside professionals is 1 year, with a year for this purpose meaning the period between the AGM of REGCO KEGCO and ESCO’s shareholders when s/he is appointed as a director and the next succeeding AGM. The term of office for the executives is the same as their executive terms.


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As at December 31, 2007, the members of the Group Business Committee are as shown below:

Title Position

1. President Chairman

2. Senior Executive Vice President-Finance Member

3. Senior Executive Vice President-Asset Management and Planning Member

4. Senior Executive Vice President and Managing Director of REGCO Member

5. Senior Executive Vice President and Managing Director of KEGCO Member

6. Executive Vice President and Managing Director of ESCO Member

7. Mr. Kwok Wing Ho Member(outside professionals)

The Group Business Committee is accountable for the following responsibilities

1. To act as the Board of Directors of the 100% equity subsidiaries namely REGCO, KEGCO, and ESCO.

2. To oversee that the operating assets comply with laws, regulations, governing documents and the Company’s regulations.

3. To consider and endorse the business plan, annual budget and KPIs for the operating assets to the Executive Committee for its consideration.

4. To direct the Companies operations and asset management functions to comply with the corporate plan and budget and meet both the short-term and medium-term corporate targets.

5. To oversee the Company’s operating assets to ensure that the operating results and return on investment are in line with the plan and projection under the support of the Asset Management and Planning Group.

6. To propose/endorse the organizational structure, restructuring and governance of Group Companies (Division level up).

7. To recommend the appointment, rotation and removal of the Managing Directors and Deputy Managing Directors of the wholly owned subsidiaries for the Nomination and Remuneration Committee’s approval.

The Group Business Committee’ meetings are called as necessary. In 2007, there were 5 meetings.

EGCO Management Committee:

The President has set up EGCO Management Committee which currently comprises the following members.

Title Position




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Title Position





7. Executive Vice President-Corporate Service Member

8. Executive Vice President-Asset Management and Planning (EVP-AMP) Member

9. Senior Vice President-Corporate Secretary Secretary

EGCO Management Committee is responsible for formulating business policy of the Group, scrutinizing all proposals to be presented to the Board and standing committees and monitoring the operation of the Group.

The meeting of EGCO Management Committee is called on a weekly basis. In 2007, the committee held 31 meetings.

Good Governance Committee:

The President sets up the Good Governance Committee which currently comprises the following members.

Title Position



3. Senior Executive Vice President-Business Development Member




7. Executive Vice President-Corporate Service Member

8. Senior Vice President-Legal Member

9. Senior Vice President-Corporate Communications Member

8. Senior Vice President-Human Resources Member

9. Senior-Vice President-Corporate Secretary Member and Secretary

10. Senior-Vice President-Internal Audit Member and Secretary

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,


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2. To formulate the policy, guidelines and practices of the Group in compliance with the Good Corporate Governance, and

3. To revise the Code of Conduct to suit the business environment and convey it to all employees as well as providing cooperation to promote the practice in the Group.

The Good Corporate Governance Committee meets when necessary. In 2007, there was only one meeting.

Risk Management Committee:

The President establishes the Risk Management Committee which comprises of the following members.

Titles Position



3. Senior Executive Vice President-Business Development Member





8. Executive Vice President – Corporate Secretary Member

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 the Company and subsidiaries,

2. To determine the risk management evaluation and mitigation,

3. To monitor compliance with risk management framework

4. To revise the Company’s risk factors to comply with the regulations of Good Governance authorities, and

5. To report its performance to the Audit Committee and the Board of Director. In 2007, the Risk Management Committee held four meetings. 4. Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, the Company sets up the following framework. Director Election and Appointment The Company endeavors to select capable directors to oversee the Company, designate the corporate policies and sanction its business plans for the benefit of the Company and shareholders. With respect to this, the Company puts an emphasis on the director nomination and selection process taking into account the following qualifications and experiences in considering each individual candidates.


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1. 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 the Company’s business, 4. Trainings and experience at the policy making level in corporate governance, 5. Willingness to represent the best interests of all shareholders, 6. Willingness to devote time and effort to contribute to the Company’s development.

The Board has delegated to the Nominating 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 Nominating 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 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, the Company shall present details of a given nominee such as education background, occupation, directorship in other companies, relevant experiences, and illegal acts committed (if any) in the notice of shareholders’ meeting. In case of the re-election, the attendance records and performance during the past year shall also be presented. In the case of casual vacancies, the Nominating and Remuneration Committee will nominate a qualified candidate who does not possess any forbidden characteristics as stipulated under the Public Company Act for approval at the subsequent Board of Directors' meeting. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom 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 the Company treats shareholders equitably, the Board encourages minority shareholders to make recommendation on the director candidates with clear and transparent procedures as posted on the Company’s website. Director Orientation and Training All new directors must participate in the Company’s orientation program. This orientation will include presentations by senior management to familiarize new directors with the Company’s


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significant issues, Directors’ Manual and the Company’s Code of Conduct for Directors and Employees. Any sitting directors and other top management may attend the orientation program. The Company encourages directors to attend courses to enhance their knowledge and understanding on good corporate governance. Directors can apply for the training courses at the Thai Institute of Directors or relevant organizations on the Company’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 the Company’s 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.

5. Director and Management Remuneration The Company set the directors’ and management’s remuneration at the appropriate rate which is suitable for their liabilities and comparable to that of the leading companies in the same sector, with the approval of the Nomination and Remuneration Committee. Director Remuneration The principles for director remuneration are as follows.

1. The remuneration comprises monthly retainer fee, meeting allowance and bonus. 2. Directors who serve as committee members will be entitled to extra remuneration to match

the increased in responsibilities. 3. The Management who serve as directors and committee members shall refrain from

remuneration. In 2007, the Shareholders’ Meeting resolved that the directors’ remuneration comprised the monthly retainer fee and meeting allowance to reflect the liabilities, time devotion and meeting attendance of each director. On the other hand, the bonus payment was tied with the Company’s achievement. Details were as follows.

1. Monthly retainer fee at 30,000 baht and meeting allowance at 10,000 baht each. In case of director resignation, retainer fee would be paid to each director/ committee member in proportion of the service time in the month. Members who did not attend the Meeting would not receive the allowance, which would also affect the bonus remuneration. Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance.

2. Bonus of 17 million baht would be allocated taking into account the success of governing the operating assets, the progress of new projects and the recognition on good corporate governance. The allocation would be at the discretion of the Board.


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In this regard, the directors’ remuneration for 2007 is summarized below.

Total Remuneration in 2007

No. of months in service

(Monthly Retainer, Meeting Allowance) No. Name

Appoinment Date

2007 2006

Meeting Attendance

(9 Times/Year) Director

Standing Committee /1

Bonus /2 Total

Remuneration

1. Mr. Sanit Rangnoi November 27, 2006

12 2 9/9 505,500.0

0 566,000.00

120,330.0

0 1,191,830.00 2. Mr. Chaipat

Sahasakul April 25, 2005 12 12 9/9

450,000.00 575,000.00

1,250,570

.00 2,275,570.00 3. Mr. Aswin Kongsiri April 24, 2006 12 12 9/9

450,000.00 288,000.00

1,250,570

.00 1,988,570.00 4. Mr. Chareon

Prajumtan June 26, 2006 12 6 9/9

450,000.00 370,400.00

643,390.0

0 1,463,790.00 5. Mrs. Wattanee

Phanachet December 1, 2006

12 1 9/9 450,000.0

0 460,000.00

93,970.00 1,003,970.00 6. Mr. Thanapich

Mulapruk April 23, 2007 8 - 4/6

288,000.00

-

- 288,000.00

7. Mr. Chamnong Wongsawarng

April 23, 2007 12 1 7/9 430,000.0

0 640,000.00

329,580.0

0 1,399,580.00 8. Mr. Sombat

Sarntijaree April 23, 2007 12 1 8/9

440,000.00

-

123,400.0

0 563,400.00 9. Mr. Narongsak

Vichetpan June 29, 2007 6 - 4/4

222,000.00 193,600.00

- 415,600.00

10. Mr. Peter Albert Littlewood

April 25, 2005 12 12 4/9 390,000.0

0

-

1,326,350

.00 1,716,350.00 11. Mr. Richard

McIndoe April 25, 2005 12 12 3/9

380,000.00 1,000,000.00

1,152,660

.00 2,532,660.00 12. Mr. Hideaki Tomiku April 23,

2007 12 6 7/9

430,000.00

-

631,750.0

0 1,061,750.00 13. Mr. Mark Takahashi October 30,

2006 12 2 9/9

440,000.00 640,000.00

204,640.0

0 1,284,640.00 14. Mr. Visit

Akaravinak April 23, 2007 12 12 9/9 - - - -

The directors retired by rotation and tendered their resignation during 2006 1. Mr. Pornchai

Rujiprapa November 27, 2006

6 1 5/5 258,750.0

0 450,000.00

154,260.0

0 863,010.00 2. Mr. Worawit

Khamkanist April 23, 2007 10 12 7/7

356,000.00 283,600.00

1,250,570

.00 1,890,170.00 Total

5,940,250.00 5,466,600.00

8,532,040

.00

19,938,890.00


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/1 Standing Committee are 1. Executive Committee 2. Audit Committee 3. Nomination and Remuneration4. Corporate Social Responsibility Committee /2 Bonus for Board of Directors in 2006 was paid in May 2007, as resolved by the Shareholders in theAnnual General Meeting No.1/2007 on April 23, 2007

Management Remuneration

The Management’s remuneration which comprises both salary and bonus is determined to be linked with the corporate and individual achievement based on the remuneration structure approved by the Board. The Company periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to that of the peer companies.

In this regard, the Management’s remuneration for 2007 was summarized below.

(Unit : Baht)

2007 Remuneration Executive Director

(1 Person) /1 Management (6 Persons) /2

Total Remuneration

Total Salary 8,280,000.00 17,205,360.00 25,485,360.00 Bonus/3 3,450,000.00 7,168,900.00 10,618,900.00 Meeting Allowance

- - -

Total 11,730,000.00 24,374,260.00 36,104,260.00

/1 Executive Director is defined as director who is also management of the Company. In this regard, the President is the executive director. He is not entitled to the retainer fee or meeting allowance as members of the standing committees.

/2 These included 6 management namely the President, Senior Executive Vice President –Asset Management and Planning (SEVP-AMP) (President is acting as SEVP-AMP but he receives the remuneration only for the position of President), Senior Executive Vice President –Business Development, Senior Executive Vice President –Finance, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of REGCO and KEGCO. Since the MDs of REGCO and KEGCO are paid by those companies. EGCO is responsible for the remuneration of only four management.

/3 The 2007 Bonus were paid in January 2008

Total Remuneration of Core Subsidiaries’ Management

The remuneration of the Management of core subsidiaries (REGCO, KEGCO and EGCO Cogen) in 2007 is detailed below.

(Unit: Baht) Year 2007 REGCO KEGCO EGCO Cogen

Remuneration

Directors

(10 Persons)

Management

(7 Persons)

Total Remunera

tion

Directors

(10 Persons)

Management

(7 Persons)

Total Remune

ration

Directors (5

Persons)

Management

(1 Person)

/3

Total Remune

ration

Salary - 14,991,636.0 14,991,636.0 - 13,630,740.0 13,630,740 - 1,388,940 1,388,940


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0 0 0 .00 .00 .00Bonus /1 - 6,118,188.18 6,118,188.18 - 5,662,546.40 5,662,546.

40 - 578,725.00

578,725.00

Meeting

Allowance /2 - - - - - - - - -

Total - 21,109,824.18

21,109,824.18 - 19,293,286.4

0 19,293,286

.40 - 1,967,665.00

1,967,665.00

/1 The 2007 bonus was paid in January 2008. /2 EGCO was responsible for the meeting allowance of REGCO and KEGCO Board. /3 EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO COGEN.

Other Remuneration

In 2007, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Management as follows.

(Unit : Baht)

Year 2005 Company

Members Provident fund EGCO 3 860,268.00 REGCO 7 1,489,755.60KEGCO 7 1,349,344.70EGCO Cogen 1 125,004.60

6. Employees As of December 31, 2007, EGCO has 118 headcounts which include the President, three Senior Executive Vice Presidents, and nine executives who are seconded to be management of Group companies. The rest of 106 headcounts are attached to the following functions:

Key Areas Members (Persons)

1. President 21 2. Business Development 13 3. Asset Management and Planning 26 4. Finance 22 5. Corporate Services 24

Core Subsidiaries

A. REGCO and KEGCO Total (person) Employees

REGCO KEGCO 1. Operation 74 71 2. Maintenance 48 55 3. Others 30 33


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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.

The Company has the policy that the employees in the Group have fair remuneration which can be comparable to the peer companies. Remuneration of employees of the Company and core subsidiaries in 2007 is as shown below:

(Unit: Million Baht) Amount

Remuneration EGCO/1 REGCO KEGCO EGCO Cogen/2

Total Salary 106.28 98.57 122.75 2.51

Bonus /3 44.00 40.24 55.31 1.00

Provident Fund 9.08 9.71 12.36 0.65

Total 159.37 148.51 190.32 4.18

/1 Include salary and bonus of the executive on one year contract /2 Include the salary and bonus of the management of EGCO COGEN who is assigned by

EGCO to be the General Manager and the salaries of three permanent employees. /3 The 2007 bonus was paid in January 2008.

7. 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.

To ensure the consistent human resource development, the responsible unit prepares the human resource development plan to ensure clarity as well as efficient implementation. Employees are encouraged to attend both technical and managerial skills in order to compete with international competitors. The human resource development policies of the Group are as follow:

• Promote employees’ development in all areas including behaviors, knowledge, technical skills and expertise, and management in order to gain opportunities for accepting higher responsibilities.

• Promote employees’ development by continuously developing “On the Job Training Program”, attending seminar, and participating in professional training, and etc.

EGCO also set the key competencies for each position as a part of the career path development plan.

8. Other information related to the Board of Directors and Management

In 2006, no directors and management 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


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• Bankruptcy or receivership.

9. Corporate Governance Report The Board of Directors (Board) intends to conduct the business under the Good Corporate Governance Principles issued by the Stock Exchange of Thailand (“SET”) and the Best Practices for Directors of Listed Company issued by the Securities and Exchange Commission (“SEC”) to ensure efficient governance and sustainable business growth. The 2007 report on the Company’s implementation of the Principles of Good Corporate Governance for Listed Companies” issued by the SET was as briefed below. 1. Rights of Shareholders The Board strictly observes the basic rights of shareholders which are the right to secure methods of ownership registration, the right to convey and transfer shares, the right to obtain relevant and adequate information on the Company on a timely and regular basis, the right to participate and vote in the shareholder meetings, the right to elect or remove members of the Board, and the right to share in the profit of the Company. The Board will avoid any actions that will violate those rights. 1.1 Corporate Governance Policy The Board has established the written good corporate governance policies which includes the statutory rights of shareholders as well as the Best Practices issued by SET. The good corporate governance policies are comprised of 7 principles.

1. Structure and Responsibilities of the Board of Directors 2. Guiding Business Principles 3. Rights and Equitable Treatment of Shareholders 4. Rights of Stakeholders 5. Disclosure and Transparency 6. Internal Control, Risk Management and Code of Conduct 7. Conflict of Interest

The Board annually reviews the good corporate governance policies and discloses the policies on the Company’s website. In 2007, the Board endeavored to ensure that directors, Management and employees adopted the above policies as the guiding principles in discharging their duties. The Board also set the adherence to the good corporate governance policies as one of the key corporate performance indicators. The Board is proud to announce that there was no event in 2007 that was considered a breach to the governance policies. 1.2 Shareholders’ Meeting The Board ensures that the processes and procedures of the Shareholders’ Annual General Meeting (AGM) accommodate the shareholders to take part in the Company’s governance. With respect to this, the AGM Checklist issued by the Thai Investors Association, Listed Companies Association and SEC is used as the guidelines. Details are as follows. Before the Shareholders’ Meeting EGCO prepares and delivers the notice of the meeting as well as supporting document in advance so that shareholders 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 2007 were as follows.


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• EGCO disclosed the schedule and the agenda of the AGM via the SET’s Community Portal system and the Company’s web site on February 26, 2007, which was 56 days before the shareholder meeting date.

• EGCO delivered the notices of the meeting as well as the agenda document which included the objectives, Board’s opinions, and conditions to attend the meeting on March 23, 2008, which was 30 days before the AGM. All relevant information was posted on the Company’s website to facilitate shareholders to study the information in advance before receiving the hard copies.

• Shareholders who could not attend in person could vote by proxy. Four independent directors who did not have the conflict of interests with the AGM agenda were offered as alternatives for shareholders’ proxy.

• EGCO encouraged shareholders to forward their questions with regard to the meeting agenda in advance to [email protected] or at facsimile number 0-2995-0956 in order that the shareholders could gain the most benefits from the meeting and that their rights would be fully observed.

On Shareholders’ Meeting Date EGCO ensures that the meeting is conducted in a way that is convenient and transparent as well as encouraging shareholders for open discussion on Company’s business. The practices in 2007 were as follows: • Directors, management and the external auditor were encouraged to attend the shareholders’

meeting and answer shareholders’ questions. 13 out of 14 directors which included the Chairman attended the meeting which accounted for 92% of the Board members.

• Services to facilitate shareholders who attended the meeting were provided which included shuttle services between the meeting place and the subway, adequate registration counters and refreshments. Mini-exhibition was displayed in front of the meeting hall to provide information about the Company’s business.

• The Chairman convened the meeting in accordance with the priority notified in the agenda document.

• The bar code system was implemented for the first year to facilitate shareholders’ registration process.

• Voting cards were provided for all agenda items for transparency and future reference. Director election process allowed shareholder to vote on individual nominee.

• Shareholders were treated equitably and were allowed adequate time to address their concerns at the meeting. The Chairman paid attention to clarify all shareholders’ inquiries which would be recorded in the minutes of meeting.

• PricewaterhouseCoopers Legal & Tax Consultants Ltd., (PwCLT) were engaged as the inspectors to inspect registration documents, meeting quorum, compliance of the voting procedure with the Company’s Article of Association and the Chairman’s notification, voting card collection and vote counting. PwCLT reported that the meeting and the voting procedure of AGM 2007 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 2007 indicated that shareholders were satisfied with the quality of the meeting notice, meeting arrangement and meeting conduct.

After the Shareholders’ Meeting


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The Company posted the draft minutes of the meeting for shareholders’ review on the Company’s website www.egco.com on May 4, 2007 which was within 14 days after the meeting date as required by SET. As a result of the above efforts, EGCO AGM was rated the score of 104.63 out of the full score of 110. 2. Equitable Treatment of Shareholders 2.1 Fair Treatment The Board regularly reviews the governance structure and framework to ensure that the shareholders, which includes minority and foreign shareholders, are treated equitably and that the Company’s procedures does not make it unduly difficult or expensive to observe shareholders’ rights. The Board encourages shareholders to take part in the Company’s governance and ensures that they are well informed about the significant decisions of the Company as prescribed by laws and the Articles of Association. EGCO has a policy that shareholders with management positions should not add any agenda items without notifying other shareholders in advance, to make sure that other shareholders would have a good deal of time to study relevant information before making their decision. EGCO has established clear and transparent procedures for shareholders to recommend AGM agenda and to nominate director candidates to the Board, which had been announced via the Company’s website and the SET. Minority shareholders who held at least 100,000 shares for at least one year were welcomed to direct their recommendations to the Board within the period of February 1-15, 2007. In this regard, one minor shareholder proposed that the Articles of Association be revised to the effect that the resignation of directors elected at the Shareholders’ AGM be approved by the shareholders’ meeting. The Board declined to place such proposal on the AGM agenda as it was not practical. This was because the resignation from directorship was an individual right and could not be violated by the Company or the shareholders. 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. • Employees shall at all times observe the rules and regulations issued by the SET, the SEC and

other governing laws which include the equitable disclosure to shareholders and the public. • Using inside information for the benefit of their security trading when that information has not

been made public is considered violating the Code of Conduct. • Any information disclosure to the public that will affect the business and the Company’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 the information to the public while it is the responsibility of the information owner to provide the fact sheets.

Additionally, the Company has the policy that directors and Management should disclose to the Board their securities holdings at every Board meeting. It should be noted that during the past year, the Board did not receive any complaints regarding the violation of shareholders’ rights nor the abusive conduct by insiders. This proved the Board’s efficiency in this area.


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3. Role of Stakeholders Apart from observing the rights of the shareholders, the Board takes due regard of and deal fairly with various stakeholders and encourages active cooperation with them in creating wealth and the sustainability of financially sound enterprises. The Board has set up the guidelines to respond to the requirements of each stakeholder in “EGCO Group’s code of conduct” with the expectations that directors, management and employees shall be guided by those principles in discharging their duties. 3.1 Shareholders The Company respects the fundamental right of the shareholders to obtain adequate and timely information and will not act in a way that will violate the shareholders’ right. Moreover, the Company encourages the shareholders to attend and to vote in the shareholders’ meeting. The Company will strive to achieve growth based on its potential and core competencies so that shareholders, over the long term, will benefit from the productive performance and good operating results of the Company. In absence of unforeseen circumstances, the Company intends to distribute dividend at approximately 40% of the net profits after tax. This dividend policy may change in the light of investment opportunities that may become available to the Company, or as a result of other economic or financial factors, or when a dividend payment may have a significant impact on the normal operation of the Company. 3.2 Customers EGCO always commits to provide good quality and reliable services in accordance with the agreements with EGAT and all customers. To ensure consistent quality service, the ISO 9001:2000 has been implemented at REGCO, KEGCO, Roi-Et Green Co., Ltd. and Egcom Tara Co., Ltd. During the past year, EGCO and its subsidiaries can generate the contracted electricity with higher equivalent availability factors (EAF) than the value stipulated in the power purchase agreement. REGCO also made a superior record in being awarded the EAF bonus for 11 years consecutively. 3.3 Lenders, Suppliers and Contractors EGCO requires that all aspects of procurement of goods and services be conducted in compliance with ethical standards. In addition, EGCO aims at developing and securing sustainable relationship with suppliers and contractors on the bases of value for money, technical conformance and mutual trust. As such, the following guidelines, which are prescribed in the Regulation on Procurement and Supply and the Code of Conduct, are fully observed. • Competitive tendering with equal information, • Objective evaluation of tenders and selection of suppliers and contractors, • Appropriate forms of contract, • Effective monitoring systems and management controls to ensure the proper fulfillment of

contractual obligations, and to detect and prevent bribery, fraud or other malpractice throughout all stages of the procurement process,

• Prompt payment consistent with the mutually agreed terms of trade For 2007, there was no complaint from lenders, suppliers and contractors. 3.4 Employees EGCO believes that our employees are our most important resource. As such, we endeavor to structure the workforce in a manner that balances the business efficiency with employee happiness. As a part of this objective, we have a responsibility to provide our staff with a safe, healthy and


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fulfilling work environment, fair remuneration and ample opportunity for professional development so that our employees will look at the Company as the second home. Employment: We believe 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. We will take action to ensure that qualified applicants are given equal opportunity to be employed on a non-discriminatory basis Orientation: Executive team will provide orientation to new employees about the corporate vision, mission, value, working systems and the benefit schemes. The program includes the site visit to EGCO Group’s power plants to foster understanding about power generation, EGCO Group’s core business. Training and Development: We have developed the comprehensive employee training and development programs to improve the capabilities and knowledge of our workforce from top to bottom. The training and development courses include development and enhancement of core competencies, managerial competencies, and functional competencies to bring out the employees’ highest potential to retain our business excellence. Apart from competency training, we also set up programs to foster understanding and promote good relationship among Group employees. Training needs will be gathered and analyzed each year to develop a training road map and individual development plan. The training statistic in 2007 is 4.5 day/man/year comprising outside training of 3.4 days/man/year and in-house training of 1.1 days/man/year Performance Appraisal: EGCO employs an equitable and transparent performance appraisal system using Key Performance Indicators (KPIs) which are committed in advance to measure individual achievement. Competency measurement is also adopted to appraise the potential and behavior of each employee. Results of the performance appraisals are used for both individual development and career path advancement. Remuneration: We set up the remuneration system that is in line with the economic status and motivate employees toward long term corporate goals. To ensure that the remuneration package is comparable to those of peer companies, salary surveys and study on new salary management tools are conducted on a regular basis. Quality of Life: EGCO pays attention to the quality of life of our employees. We endeavor to provide a comfortable working environment. Employees are encouraged to promote healthy living through active participation in sports and exercise at facilities provided by the Company free of charge. In addition, EGCO contributes to the social welfare Fund and set up the Provident Fund for all employees. Safety and Health: EGCO seeks to promote a safe and healthy working environment for all employees. We are proud to report that no incident occurred which led to disabling injury in EGCO’s subsidiaries this year. In addition, Rayong Electricity Generating Co., Ltd. and Khahom Electricity Generating Co., Ltd. (“KEGCO”) passed the re-certificate audit for the TIS 18001 & OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series). KEGCO also won the”National Safety Awards” for Safety and Occupational Health for 8 years consecutively. Employee Involvement: EGCO is well aware that the working environment is a key success factor in human resource management. We then foster regular communication among employees and senior management in an effort to encourage employees to provide comments and suggestions on ways to improve the working environment and working procedures and practices. For these


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purposes, Communication Day is launched to keep the employees well informed of the Company’s activities. In addition, employees can voice their concerns to their immediate boss, the members of the Good Corporate Governance and Employees’ Welfare Committees as well as a suggestion box. The proposals will be considered and measures will be set to remedy the problem area and promote good relationship among the employees and the Management. Employee Volunteer Program: EGCO encourages the employees to run personal interest programs to enhance the working environment experience and promote teamwork. For example, there are currently internal programs covering sport and entertainment club, photo club, Buddhism club and smiling at library program. Apart from those, employees volunteer to work together in providing benefits to the society. Programs in 2007 included hosting lunches for orphans at Sra Kaew Temple and Phayathai Babies Home. We believe that the happy workforce will do their best to provide the benefits to the Company and all stakeholders. 3.5 Corporate Social Responsibility With the corporate philosophy to grow business over a long term, EGCO Group efficiently runs our electricity generating business while taking care of the environment and the society to maintain the balance between economics return and social and environment contribution which will lead to national sustainable development. Key CSR programs are as follows: Economy EGCO Group recognizes that, as a leading power producer, it is playing an essential part in Thailand’s overall economic development. EGCO Group focuses on integrated energy development while exploring opportunities to develop renewable and other fuel related projects to support the stability of the energy supply system. At present, EGCO Group, which is the first independent power producer in Thailand, owns and develops generation units which cover diversified fuels such as natural gas, coal, diesel oil, hydropower and biomass, in accordance with the government’s policy on fuel diversification to ensure energy stability. Environment Since generating electricity involves with the usage of natural resources, EGCO Group commits to make the best use of natural resources while minimizing the impact on environment. This can be achieved by using environment-friendly technology and actively fostering environment conservation awareness among our employees. To ensure that the corporate direction is adhered to, EGCO Group set up a Safety, Health and Environment (SHE) Committee in 2005 in order to develop a clear action plan for the management of these three key areas. In 2007, EGCO Group carried out a number of environment-friendly initiatives: Power savings

• Improvement of the building of Khanom Electricity Generating Company Ltd. (KEGCO) to be a demonstrated power saving building, and

• Demonstration to students and public on generating electricity from solar cells at KEGCO

Water resource management

• Implementation of a neutralization system for waste water management, and • Implementation of the ‘Zero Discharge Project’ by recycling waste water

from KEGCO’s power plants, buildings and residential houses for plant watering.


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Air pollution control and management

• Cross checking of stack emission measuring from on-line ‘Continuous Emission Monitoring System’ by third party certified by ‘Department of Industrial Work’ twice a year.,

• Checking of efficiency of air pollution control treatment equipment on a quarterly basis,

• Enhancement of air quality management such as the installation of an electrostatic precipitator at Roi-Et Green Company Ltd., and

• Reduction of Nitrogen Oxide (NOx) emission at Rayong Electricity Generating Company Ltd. (REGCO) by injection water into combustion chamber.

Noise pollution management

• Noise level measurement at worksites on a quarterly basis.

Waste management

• Re-use of various kinds of waste

Environment conservation

• Eight-year plan program (2007-2014) by REGCO to plant saplings in 120 rai of land at the Map Ta Phut Industrial Estate. (REGCO planted a total of 2,000 saplings over 30 rai of land in 2007), and

• Program to increase the marine lives by raising 5,000 sea basses in baskets at KEGCO’s cooling water discharge twice a year to be later released to the sea.

Social development Being aware of the importance of the society as the business supporters, EGCO Group pays attention to social development. This starts from our small community of which the members are our personnel. We develop the skills and knowledge of our employees, our key success factor, while encouraging them to take part in activities for communities and environment development. EGCO Group enlarges our contribution to cover outside societies. Our corporate social responsibility (CSR) programs focuses on three areas, namely environment conservation, development of public awareness among youth, and enhancement of community’s quality of life. On the auspicious occasion of His Majesty the King’s Eightieth Birthday Anniversary and the fifteenth anniversary of EGCO Group in 2007, EGCO has launched 15 CSR projects which cover the abovementioned objectives. Environment

1. Conservation of Thai Forest Youth Camp 2. Forest: The Circle of Life 3. How to Fight Global Warming with Sustainable Living

Education 4. Green Learning to cultivate environment conservation among youths Quality of life (for neighboring communities around both power plants and offices)

5. Cleaner Canal: Better Living 6. Pluak Daeng Heath Care Market 7. Vocational Student Volunteer for Community 8. Biological Agriculture: Sufficiency for Sustainability 9. Youth Development for Better Learning Ability 10. Breeding of Blue Swimming Crab 11. Fresh-Water Fish Farming Course for Youth 12. New Home for Undersea Livings 13. Building for Fostering Local Wisdom 14. Angel Mushroom Farming 15. Mobile Medical Unit Support


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With our commitment to operate with social responsibility and thanks to support from all concerned party, there has been no legal dispute between EGCO Group and the employees. Besides, there is no disabling injury in EGCO’s subsidiaries. REGCO and KEGCO are certified TIS 18001 & OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series). KEGCO also won two awards which is worth the pride of the Group companies, being the “National Distinguished Workplace in terms of Safety, Occupational Health and Environment” hosted by the Ministry of Labor and Social Welfare for 8 consecutive years and the EIA Monitoring Awards 2007 for the sixth year since 2000.1 Looking to the future, EGCO Group will continue to pursue its business growth while implementing social development programs in order to ensure Thailand’s future sustainability and business development. 3.6 Channel to Direct Corporate Issues to the Board of Directors To increase the value of the Company, the Stakeholders can direct their recommendations and concerns on corporate issue to the Board of Director. Electronic Mail [email protected] Mail Board of Directors

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 relating directors or the standing committees. Issues relating to accounting and financial statements, internal control, risk management and compliance will be forwarded to the Audit Committee. The Corporate Secretary will summarize all directors’ communications received during the most recent quarter to the Board. 4. Disclosure and Transparency 4.1 Information Disclosure Being aware of the impact of the Company’s information on the decision of investors and stakeholders, the Board set a policy to disclose the information via the SET’s Community Portal system and the Company’s web site at www.egco.com as well as the annual report and the annual registration statement. The disclosed information includes the following: • Corporate Direction, • Company’s operating results both financial and non-financial information, • Major Shareholders and the voting rights, • Remuneration policy for the Board of Directors and top management, • Directors’ information including their qualifications, selection process, details of the positions in

other companies and the definition of the independent directors, • Connected transactions, • Company’s risks, • Significant issues relating to the employees and the stakeholders, and • Corporate governance policies


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EGCO believes in keeping the investment community informed of all major developments in a timely and accurate manner and welcomes the recommendations from the shareholders. Investors and stakeholders can contact our investor relations directs at 662 998-5145-7 or e-mail address [email protected]. Furthermore, we arrange various communication channels and investor relations programs for our investment community as follows: a. Website Recognizing the importance of fair disclosure, therefore, EGCO’s website

(www.egco.com) can be accessed for recent announcements by the Company 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 the Company via our website to recommend the annual general meeting’s agenda and the candidates for director nominees before we submitted the meeting notice to the shareholders.

b. Analyst Meetings/EGCO Round Table Discussion

Analysts Presentations which SET calls “Opportunity Day” are held shortly after the Company announces financial results. Besides, EGCO round table discussions are also held by top management to explain our business to our investors.

c. Plant Visit

To enable our investment community to have a better understanding of the Company’s business and to meet our Management, we always bring our investment community to visit our power plant every year. In 2007, we organized four visits to BLCP Power Plant, 3 times under the “Company Visit” with SET and one by EGCO. Activities included touring the BLCP power plant, listening to presentation from EGCO Group’s senior executives. About 200 shareholders and investors joined the programs.

d. Roadshows

In 2007, our management participated in domestic roadshows organized by the SET such as “SET Money Channel Roadshow” in Phuket, Udonthani Chiang Mai, and Khon Kaen provinces, “Shareholders’ Day” organized by the Thailand Securities Depository Co.,Ltd., “Money Expo 2007 in Bangkok” and “Money Expo in Nakhon Ratchasima and Chiang Mai Province” organized by the Money and Banking Magazine. Our management also did international roadshows to meet institutional investors in Singapore.

e. Press Conferences and Media Relations

EGCO hosted four press conferences to announce the annual operating performance for 2006 and business direction for 2007, the operating result of the first half of 2007, re-branding kick-off project and the Memorandum of Understanding to conduct a feasibility study on landscape improvement by waste to energy project. Three media trips were also arranged to witness the Thai Forest Conservation Youth Camp no. 23 at Doi Inthanond National park, and the Forest: The Circle of Life at Doi Inthanond National park and Umphang Wildlife Sanctuary. During the past year, EGCO had arranged 23 exclusive interviews with the media with regard to the power industry trends, the overall picture of Thai power industry, the Company’s performance and the social and community activities. There were 37 press and photo releases.


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4.2 Financial Statement Preparation To foster the stakeholders’ confidence that the Company’s financial reports are accurate, complete and transparent and in line with the generally accepted accounting standards to protect the Company’s assets against fraud or abnormalities, the Board has entrusted the Audit Committee to assume key duties and responsibilities of reviewing the financial statements to ensure its correctness and adequacy. 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 2007, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited to be the auditor as their independent opinions, experiences and qualifications would foster the Board’s and shareholders’ trust that the Company’s financial statements truly reflected the financial status and operating result. It should be noted that SEC has never informed the Company to re-state the financial statements. 4.3 Feed Back Form Feed back forms sent out with our annual report is our means to obtain shareholders’ views on the report and on additional information that they would like to receive in the following year’s annual report, together with questions that they would like the President to answer at the Annual General Meeting. The feed back forms were well received by shareholders. EGCO thanks all the shareholders who provided feedbacks via the feedback forms and other various channels for us to improve our corporate performance and add value to the Company and the shareholders. 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 Article 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 1, 2007, the Board comprises 14 directors, 13 of whom were outside directors while 5 were classed as independent. The Board with the recommendation of the Nomination and Remuneration Committee had considered the composition of the Board and the number of independent directors that would suit the Company’s governance and resolved to propose to the shareholders to elect one more independent director to represent all shareholders equitably and to ensure adequate number of independent directors to serve the Board’s committees. The shareholders’ meeting approved the proposal. At present, the Board is comprised of 15 directors. 14 are outside directors which accounts for 93% of the Board. From these outside directors, 6 are qualified as independent directors which accounts 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 of engineering, economics and finance, laws and political science, and accounting at the ratio of 50%, 33%, 13% and 7%, respectively, was appropriate with useful mix of skills and experience and an appropriate balance of power.


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Term and Age Limit One third of the directors shall retire by rotation at the annual general meeting as prescribed in the Public Limited Company Act. The Board views that there should not be limit on the number of terms a director may serve. Term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high functioning members able to keep the commitments to Board service, the Nomination and Remuneration Committee 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. Sanit Rangnoi, a representative director of the Electricity Generating Authority of Thailand (EGAT), as the Chairman because of his knowledge in both finance and engineering together with his leadership to lead the Company 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: • 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 conducted efficiently by encouraging involvement by all directors and providing recommendations to management via the President. The Board will not intervene with any routine activities under the President’s responsibilities;

• The Chairman is not an EGAT’s employee but is entrusted by the Finance Ministry to be on EGAT Board of Directors to protect the national benefits. The Board believes that the Chairman will act in the best interest of all shareholders and stakeholders.

• The Board is mostly comprised of non-executive directors; • The Board has assigned Board committees to oversee task where there is a potential for conflict

of interest and to balance the need of each stakeholders. With respect to this, the Audit Committee is entrusted for oversight of the integrity of financial and non-financial reporting and review and management of related party transaction. The Nomination and Remuneration Committee is assigned to take care of selection of Board members and key executives and their remuneration; and

• There are effective mechanisms to take into account the recommendations of other stakeholders such as enabling stakeholders to contact the Board directly and allowing minority shareholders to recommend annual meeting agenda and director candidates to the Board via both mail and emails.

Definition of Independent Director The Board has defined the qualifications of independent directors which exceed the independence standard set forth in the Notification of SET by defining that independent directors shall hold shares not more than 2% of the paid-up capital with the voting right of the Company. Independent directors set up the policy to call meetings as needed at least 2 time/year to discuss and exchange their views regarding the corporate governance and interesting issues without the Management and will report the result to the Board with a copy to the Management. (Please see the definition of independent director in the article “Shareholding and Management Structure”.) Policy and the Procedure for Other Positions of Directors


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To ensure that the Board will be able to devote time for the efficient governance of the Company, the Board agrees that a director should not serve more than 4 companies if being executive director and 6 companies if being non-executive director. Management should not hold directorship in more than 3 companies excluding the wholly owned subsidiaries to ensure sufficient time for the Company’s governance. Corporate Secretary EGCO has set up the Corporate Secretary Division with Ms. Busakorn Kakanumpornwong as the division manager to handle and carry out functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution: • To provide primary advice pertaining to the Company’s regulations and Articles of Associations,

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 the Company’s articles of associations and procedures,

• To prepare meeting minutes of shareholders and the Board of Directors, and 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 and the Company’s information, and • To facilitate the Board activities. 5.2 Board Committees With the objective to enhance the governance efficiency, the Board assigns directors with knowledge and expertise to be the members of the Board committees namely Audit Committee, Executive Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee. Each Board committee has its own charter which prescribes functions, composition, term of office, responsibilities and meeting. The charter, which is approved by the Board, will be reviewed as deemed appropriate. Each Committee can retain outside counsels, experts and professional advisors, as deems appropriate at the Company’s expense. The Audit Committee comprises 3 independent directors. The Audit Committee’s mission covers the review of the financial statements, legal compliance, internal control, disclosure of connected transaction or conflicts of interest and appointment of auditor. The Nomination and Remuneration Committee comprises 4 non-executive directors, two of whom are independent. The Board with the recommendation of the Nomination and Remuneration Committee appointed Mr. Richard McIndoe, 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 recommendation 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 the Company and the shareholders.


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The Executive Committee comprises 5 directors and has the responsibility to govern the Company’s business and endorse recommendations to the Board of Directors. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board is appointed the Chairman of the Executive Committee. He has proven to be efficient chairman who conducts the meeting efficiently and be attentive to other members’ recommendation. The Corporate Social Responsibility Committee comprises 5 members with the President as the Chairman of the Committee. Two of the CSR members shall be directors/nominees and the other two shall be management. The Corporate Social Responsibility Committee has the responsibility to oversee EGCO’s positions and practices on issues of corporate social responsibilities, principally in relation to social and environmental matters that affect shareholders and other key stakeholders. The structure and duties and responsibilities of each Board committees as well as the number of meetings are reported in the other article on “Shareholding and Management Structure”.

5.3 Role and Responsibility of the Board of Directors Duty and Responsibilities The Board has significant responsibilities as follows. • 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;

• Recruit, set the remuneration rate, monitor the performance and if necessary change the key management and plan for a smooth succession plan;

• Review the remuneration of directors and key management and ensure that the director selection process is procedural and transparent;

• Monitor and resolve the conflict 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;

• Monitor the effectiveness of the existing governance tools and instruments and implement change if necessary;

• Monitor the information disclosure and communications; and • Direct self - appraisal annually and declare in the annual report how well they carry out their

duties and oversee the Company 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. The Code of Conduct covers guiding principles, making the system work, compliance with laws and regulations, business ethics, human resources, safety, health and environment and accountability. EGCO continuously conducts the training program for the employees as well as provides clarification on frequently asked questions. Directors, management and employees must obey and respect the spirit of the Code of Conduct. Managers at all levels are required to promote the compliance with the Code of Conduct and act as role models. Internal Control The Board is responsible for ascertaining that internal control systems of the Company and our subsidiaries including financial control, operating control, and compliance control are in place and in accordance with the SET’s guidelines and COSO’s Internal Control Framework (The Committee of Sponsoring Organizations of the Treadway Commission). In respect of this duty, the Board has entrusted the Audit Committee to review the effectiveness and efficiency of the internal control and


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Management Control systems as well as the internal audit. The internal audit division discharges its duties and functionally reports to the Audit Committee. The internal control system and the control operations of the Company are as follows: Control Environment The Board sets the Company’s vision, mission, and objectives. Organization structure allows improvement to suit the changing environment. Short term and long term business goals as well as Key Performance Indicators are identified and clearly communicated throughout the Company to help ensure that operations are carried out in a manner consistent with our vision, mission and objectives. Written policy, procedures, and approval authority including authorization of each level of management are established. EGCO also prepares the Code of Conducts for directors and employees which are reviewed as deemed appropriate. Risk Management The Risk Management Committee comprising top management of the Company and subsidiaries is established in order that risks will be managed at the Group level using the same guidelines. Risk management activities have been performed at the Group, companies, and divisions level. The process has been designed to identify risks that may prevent us from achieving our objectives. The root causes of risks and their impact upon us has been thoroughly analyzed in order that mitigated and preventive measures can be developed and implemented. Risk owners are assigned to each key risk area and an early warning system is also provided to ensure timely corrective actions to risk events. EGCO has set up a Risk Management Section which is responsible for following up the risk management activities, reviewing performance in this regard, and regularly reporting results to the Risk Management Committee. Moreover, the Board has entrusted the Audit Committee to review the risk management policy and ensure compliance with the Company’s risk management policy guidelines. The objective is to oversee that the practice is in line with the regulated policy. Risk management reports are required to be presented to the Board. Control Activities To ensure that the guidance and the policies provided by the Board is adhered to, the Management has set up the control system for accounting, finance, operation and governance which covers the regulations, procedures, and job description for each job. The transaction will be approved in accordance with the authority set forth in the Table of Authority. The process for making decision on business and financial investment are clearly and adequately defined. The measures to prevent the conflict of interest and the penalty for violation are set forth in the Code of Conduct. Responsible units are assigned to follow up and report on the operations of the Company and its subsidiaries to ensure the Group’s operations are in compliance with the Company’s objectives. The Corporate Secretary Division has been assigned to ensure that the Company’s and the Board’s practices are in line with SET’s and SEC’s related laws and regulations. A list of rules and regulations associated with EGCO and subsidiaries are maintained and periodically updated by the Legal Division for reference. Information and Communication

At EGCO, information are maintained and communicated in a form and time frame that enables directors and management to carry out their responsibilities and to make decision. For instance, power plants operation, budget, financial, and accounting data are maintained within the Management Reporting System. This reporting system is regularly updated and secured against unauthorized use.


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During meetings, discussions and inquiries are recorded and minutes of meeting are produced

for future reference. Accounting records and supporting documents are also completed and kept in an orderly manner as supporting data for preparing Financial Statement. There has been no deficiency informed by the auditor. The meeting among the Audit Committee, external auditors and related management are held to review accounting records complying with General Accepted Accounting Principles and to consider significant issues in the Management Letter from the external auditor. The communication system among the Company, subsidiaries, and overseas associates has been improved for better performance monitoring efficiency.

Public and shareholder information is disseminated through several channels. For example,

updated information is posted on EGCO’s website so that shareholders and investors can have access to the Company’s information on a real time basis. Employees can also communicate with management and suggest ideas for improvement of Company systems and operations. Monitoring

Responsible units are assigned to follow up whether the Company’s operation results are in line with the plan and meet the corporate KPIs. Gap analysis is carried out and scheduled reports are submitted to management and the Board.

The Internal Audit Division reviews the internal control system to provide management with

assurances about the effectiveness of this system. Exceptions found are reported to the Audit Committee and the Board, and followed up through regular scheduled meetings. Reports have included recommendations (if any) to improve internal control system together with management’s responses to the recommendations. Besides the above mentioned systems and practice, EGCO has set up the internal audit division of which audit scope covers accounting and finance, operation, compliance, information technology, and management audit of the Company and subsidiaries. The Internal Audit Manager reports functionally to the Audit Committee and administratively to the President. Duties and responsibilities of the Internal Audit Division as described in the Internal Audit Charter are endorsed by the Audit Committee and approved by the Board.

The Board set the policy to annually evaluate the quality of the internal control using the evaluation form developed in line with COSO’s and the SET’s guidelines. The internal audit division reports the evaluation results to the external auditor, the Audit Committee and the Board. The 2007 survey indicated that the internal control of the Company and subsidiaries are sufficient and appropriate.

To ensure compliance with internal control systems, rules and regulations, and Code of

Conduct, employees of the Company and subsidiaries at senior vice president level and upward are required to thoroughly review their 2007 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to their managers up to the President. The President also signed the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board.

In reviewing the financial statements, the external Auditor has also reviews the internal control

on accounting and finance to define the audit approach, duration and scope of work. In 2007, no significant finding regarding the improvement on internal control systems has been found.


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The Board has focused on the likelihood of irregularities, risk mitigation and early warning systems. The Board meeting on February 25, 2008, which was attended by all independent directors, has considered the Company’s above mentioned practices, the internal control evaluation of the Group companies as well as the evaluation form. The Board agreed with the Audit Committee that the internal control system of the Company and subsidiaries was sufficient, appropriate and safeguarding of asset. Until now, the Audit Committee and the Board have not received significant deficiency report from external auditors and internal audit division. Conflicts of Interest EGCO has set the policy 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 the Company. Acknowledgment by the Board must be sought before taking such engagement;

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 Company's customers/suppliers or from individuals or firms having business dealings other than financial institutions as it may influence the way they handle EGCO business; and

Transaction that may induce the conflict of interest shall be reported to the Board for consideration. The details of such transaction such as transaction price, contractors, and rationale are to be disclosed in compliance with the requirements of the SEC and SET. The Corporate Secretary will identify the type of transaction and the approval body and will submit the reports on connected transactions and any conflict of interests to the Audit Committee for acknowledgement twice a year and disclose the information in the annual report and annual registration form (Form 56-1).

To foster trust among all concerned parties that the connection transactions are aimed at optimizing the benefits of the Company and the shareholders, the Audit Committee is assigned to review the information and provide comment with regard to the connected transaction that needs to be approved by the Board and the shareholders and to ensure that the disclosure is adequate. 5.4 Board Meeting To ensure that the Board takes full responsibility to meet the expectations of the shareholders, the Board reviews significant business policy and corporate calendar. In this regard, it is determined that the Board meeting 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. To facilitate the directors, the Company plans the meeting dates and the agenda for the whole year in advance. The Chairman and President fixes the agenda for the Board’s meeting. Each director can propose the agenda to the Chairman and can deliver their independent judgment. The Corporate Secretary delivers the notice, agenda, and meeting document to the directors for


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consideration well in advance. Agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, Matter for Information to ensure that items that need the most careful deliberation are given adequate time. The Chairman allocates adequate time for management to present their issues and to permit directors to conduct extensive discussion of agenda items and other topics of interest. The minutes of meeting are draft for the Board’s review within 14 days after the meeting prior to the adoption at the next meeting. The Board had called 9 meetings in 2007 comprising 7 scheduled and 2 extra meeting. Each meeting took approximately 2 hours and a half. The average attendance rate is 88%. The Board encourages the President to invite 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 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 the Company’s expenses. Since four OneEnergy representative directors reside outside Thailand, they sometimes could not attend the Board’s meeting in person. As such, they requested the Board to allow them to attend the meeting by teleconference. Viewing that the statutory requirements permit only directors who attended the meeting in person to constitute a quorum, the Board declined such request. Later the Selection Committee for the Board of the Year Contest advised that directors who resided outside Thailand could be allowed to attend the meeting by teleconference without being counted as a quorum or being eligible for voting. To enable the Board to get insights from those directors, the Board agreed that from November 2008 onwards, directors were allowed to attend the meeting by teleconference. Mr. Peter Albert Littlewood, Mr. Mark Takahashi and Mr. Richard McIndoe attended the meeting by teleconference once. 5.5 Board Self Assessment The Board regularly conducts self assessment for future improvement. In 2007, the Board adopted the new self appraisal form based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. There are two parts, the collective appraisal form and the individual appraisal form. The result of the appraisal is concluded as follows. Collective Self appraisal The collective self appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the President, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The result can be concluded that the Board believes that it has fulfilled its duties to the Board, stakeholders and the Company due to the following practices. • The Company’s objectives reflect shareholders’ expectation and full and accurate reporting on

Company affair had been made; • The Board understands who the key stakeholders are and have good relationship with them;


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• The strategic plan is carried out of sufficient quality and content and is well reflected at operational level with key performance indicators;

• The Board communicates proper ethical and legal responsibilities to its members and ensures ethical behavior and proper compliance standards throughout the organization. The board also sets the right “tone at the top” by its own behavior, and monitors compliance systems to ensure that all legal/ethical requirements met satisfactorily. The board also feels that the Company is a “good employer” ;

• The Board defines its roles and responsibility and communicates the scope of its authority, identifies, prioritizes and schedules the issues that it believes should be discussed/reviewed by the Board on a regulator basis. The Board also effectively monitors operation and financial performance including the integrity of the processes involved and the Company’s internal control system;

• The Board is sufficiently independent of management; • The Board has defined and communicated its expectations concerning its expectations

concerning director responsibilities. New directors are provided with adequate information about the Company and the Board. Director receives proper training in corporate governance matters. Directors should receive continuing education on the issues;

• The Board has leadership both at the Board and the committee level and effectively manages the conduct of Board business as a team;

• The job description of the President is clearly defined. The Board works well with the President and other managers to create an open culture that encourages frank discussion. The Board avoids excessive intrusion in the President and/or management’s responsibility;

• The Board and committee meeting are productive. The number of scheduled meeting is sufficient. The number of committees is still appropriate and they are fulfilling their terms of reference;

• The Chairman carries out the role satisfactory and encourages director participation in a debate; • Directors, committees and the Board regularly and effectively evaluated. Directors are properly

compensated. However, the Board should also learn from other Boards’ practices and considered benchmarks by which to gauge Board performance;

• The Board regularly evaluates the performance of the President and created an appropriately designed management compensation plan;

• The Board has a company wide succession plan in place; and • The Board has a working knowledge of competitors in the sector and plays a role in public

service and lead the Company in charitable, educational and cultural activities. The Board viewed that plan should be made to ensure that the succession planning and the management evaluation are perfect. Since only the independent directors hold meeting among themselves without the attendance of the Management, the Board views that all outside directors should have an opportunity to periodically meet without the President. 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. Result of the appraisals indicates that they have appropriate deliberations and contributions in accordance with the recommended best practices. 5.6 Remuneration for Directors and Management The Company 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 the Company’s achievement.


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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 additional remuneration. The non-executive directors shall appraise the President’s performance annually in accordance with the established corporate goals including his competencies and the comparison with peers. The Nominating and Remuneration Committee shall appraise the performance of senior executive vice presidents and executive vice presidents based on each individual achievement. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to that of the peer companies and adequate to attract and motivate the qualified executives. The remuneration of directors and management is disclosed under the topic of shareholding and management structure in this annual report. 5.7 Board and Management Training The Board pays attention to continuous development of directors and management. In 2007, major activities are as follows. Director Orientation and Trainings EGCO arranged Directors’ orientation and updated Directors’ manual to equip incoming directors with knowledge about the Company, governing laws and regulations as well as having a chance to meet with the Management. Directors were encouraged to attend training programs at the Institute of Thai Directors (IOD) or other relating academic institutes on the Company’s expenses to enlarge and enrich their understanding on governance issues. List of directors who passed the training courses arranged by IOD and other institutes is shown in Table 2. 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. The Board determines policies and principles for selection of the President and his successor in the event of an emergency or the retirement of the President taking into account educational background, experience, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications endorsed by the Nomination and Remuneration Committee and selection process stated in the Company’s Regulation on Human Resource Management B.E. 2550 and the resolution of the Board as follows. 3. 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 have the right to nominate for a position equivalent to EGCO’s EVP level and upward.

4. The President shall appoint the division and section managers. 5. The appointment of Secretary and the Assistant Secretary to the Board shall be approved by the

Board while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee.


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6. Achievements The Board of Directors consists of knowledgeable, capable, and experienced professionals from diverse related fields, thereby enabling the Company to perform efficiently. The Board’s efficiency was evidenced as it won the Board of the Year for Distinctive Practice for 2006/2007 and Board of the Year with Consistent Practice organized by Institute of Directors, SET, Board of Trade of Thailand, Federation of Thai Industries, Thai Bankers Association, Listed Companies Association Federation of Thai Market Capital Association. Table 1: Board and Committee Meeting Attendance Report

Name Meeting (time) Board Meeting

9 times/year Audit

Committee 9

times/year

Executive Committee

16 times/year

Nomination and Remuneration

Committee 8 times/year

Corporate Social

Responsibility Committee 1 time/year

Mr. Sanit Rangnoi1 Chairman

9/9 7/7 6/6

Mr. Pornchai Rujiprapa2 Chairman

5/5 9/9

Mr. Chaipat Sahasakul Independent Director

9/9 9/9

Mr. Aswin Kongsiri Independent Director

9/9 8/8

Mr.Worawit Khamkanist3 Independent Director

7/7 3/4 5/5

Mr. Thanapich Mulapruek 4 Independent Director

4/6

Mr. Charoen Prajumtan Independent Director

9/9 3/3

Mrs. Wattanee Phanachet Independent Director

9/9 9/9

Mr. Chamnong Wongsawang Director

7/9 16/16

Mr. Sombat Sarntijaree Director

8/9

Mr. Narongsak Vichetpan Director

4/4 2/2 1/1

Mr. Peter Albert Littlewood Director

4/9

Mr. Richard McIndoe Director

3/9 16/16 5/8

Mr. Hideaki Tomiko Director

7/9

Mr. Mark Takahashi Director

9/9 16/16

Mr. Visit Akaravinak Director and President

9/9 16/16 1/1

1 Being appointed chairman on June 29, 2007 2 Resigning on June 8, 2007

3 Resigning on October 17, 2007


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4 Being appointed director on April 23, 2007. Note: Audit Committee members are no. 3, 5, 8 Executive Committee members are no. 1,2,9,13,15,16

Nominiation and Remuneration Committee are no. 1,4,5,7,11,13

Corporate Social Responsibility Committee are no. 11, 16

Directors who attended Board meeting by teleconference are the followings

• Mr. Richard McIndoe in the meeting no. 8/2007

• Mr. Peter Albert Littlewood and Mr. Mark Takahashi in the meeting no. 9/2007

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

Course Names Chairman

2000 Directors’

Certification Program

The Role of Chairman Program

Audit Committee Program

Raising the Awareness of

Corporate Fraud in Thailand

Accounting for non-

accounting : Audit

Committee

Quality of Financial Report

1. Mr. Sanit Rangnoi Chairman

√

2. Mr. Chaipat Sahasakul Independent Director

√

√

3. Mr. Aswin Kongsiri Independent Director

√

√

4. Mrs. Wattanee Phanachet Independent Director

√

√

5. Mr. Chareon Prajumtan Independent Director

√

√

√

6. Mr. Thanapich Mulapruek Independent Director

√

7. Mr. Chamnong Wongsawang Director

√

8. Mr. Sombat Sarntijaree Director

√

9. Narongsak Vichetpan Director

√

10. Mr. Visit Akaravinak Director and President

√

√

√ √

Part 2 Section 10 Internal Control

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10 Controlling System and Internal Audit The Board of Directors is responsible for ascertaining that internal control systems of the Company and its subsidiaries including financial control, operating control, and compliance control are in place and in accordance with those established pursuant to the SET guidelines and COSO’s Internal Control Framework (The Committee of Sponsoring Organizations of the Treadway Commission). In respect of this duty, the Board has entrusted the Audit Committee with the responsibility to review the effectiveness and efficiency of the internal control systems and internal audit. The internal audit division discharges its duties and functionally reports to the Audit Committee.

The Board of Directors is responsible for ascertaining that internal control systems of the Company and its subsidiaries including financial control, operating control, and compliance control are in place and in accordance with those established pursuant to The Stock Exchange of Thailand’s (SET) guidelines and COSO’s Internal Control Framework (The Committee of Sponsoring Organizations of the Treadway Commission). In respect of this duty, the Board has entrusted the Audit Committee with the responsibility to review the effectiveness and efficiency of the internal control and Management Control systems as well as the internal audit. The internal audit division discharges its duties and functionally reports to the Audit Committee.

The internal control system and the control operations of the Company are as follows: ● Control Environment

The Board sets the Company’s vision, mission, and objectives. Organization structure has been also set properly and changed to suit the changed environment. Short term and long term business goals as well as Key Performance Indicators are identified and clearly communicated throughout the Company to help ensure that operations are carried out in a manner consistent with the Company’s vision, mission and objectives. Written policy, procedures, and approval authority including authorization of each level of management are used as management tools as is a written code of conduct for directors and employees, and compliance with code of conduct is reviewed on a timely basis. ● Risk Management

The Risk Management Committee comprising executive management of the Company and subsidiaries was established in order that risks would be managed at the Group level using the same guidelines.

Risk management activities have been performed at the Group, companies, and divisions level.

The process has been designed to identify risks that might prevent the Company from achieving its objectives. The root causes of risks and their impact upon the Company has been thoroughly analyzed in order that mitigated and preventive measures can be developed and implemented. Risk owners are assigned to each key risk area and an early warning system is also provided to ensure timely corrective actions to risk events. The Company has a Risk Management Section which is responsible for following up the risk management activities, reviewing performance in this regard, and regularly reporting results to the Risk Management Committee. Moreover, the Board has entrusted the Audit Committee to review the risk management policy and ensure compliance with the company’s risk management policy guidelines. The objective is to oversee that the practice is in line with the regulated policy. Risk management reports are required to be presented to the Board.


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● Control Activities Control activities are policies and procedures used to ensure that the Board and management

directives are met. They are divided into three categories, based on the nature of the objectives to which they relate, i.e., financial and accounting reporting, operations or compliance. Scope of authority and specific limits of authorization of each level of management were clearly written into the Table of Authority and communicated throughout the organization. Financial investment and project investment procedures are adequately and properly set up to be performed before approval by authorized management. Conflict of interest and penalties in the event of violations are defined in the Company’s Code of Conduct and other Company regulations. In addition, the management has set up a monitoring unit to assign responsible persons to follow up and report on the operations of the Company and its subsidiaries in an effort to ensure the Group’s operations are in compliance with the Company’s objectives.

The Corporate Secretary Division has been assigned to oversee the Company’s and the

Board’s operation and activities and to ensure that these comply with SET and Securities and Exchange Commission, Thailand (SEC) related laws and regulations. A listing of rules and regulations associated with EGCO and subsidiaries are maintained and periodically updated by the Legal Division for reference. ● Information and Communication

At EGCO, information are maintained and communicated in a form and time frame that enables the directors and the management to carry out their responsibilities and to make decision. For instance, power plants operation, budget, financial, and accounting data are maintained within the Management Reporting System. This reporting system is regularly updated and secured against unauthorized use.

During meetings, discussions and inquiries are recorded and minutes of meeting are produced.

Accounting records and supporting documents are also completed and kept in an orderly manner as supporting data for preparing Financial Statement. There is no deficiency informed by the auditor.

The meeting among the Audit Committee, external auditors and related management were

held to review accounting records complying with General Accepted Accounting Principles and to consider significant issues in the Management Letter from the external auditor.

The communication system among the Company, subsidiaries, and oversea associate has been

improved for more efficiency of performance monitoring. Public and shareholder information is disseminated through several channels. For example,

updated information is posted on the Company’s website so that shareholders and investors can have access to the Company’s information on a real time basis. Employees can also communicate with management and suggest ideas for improvement of Company systems and operations. ● Monitoring

The Planning Division was assigned to follow up whether the Company’s operation results are in line with the plan and meet the corporate KPIs. Gap analysis is carried out and scheduled reports are submitted to the Management and the Board.

The Internal Audit Division reviews the internal control system to provide management with

assurances about the effectiveness of this system. Exceptions found are reported to the Audit Committee and the Board, and followed up upon through regularly schedule meetings. Reports have


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included recommendations (if any) to improve internal control system together with management’s responses to the recommendations.

Besides the above mentioned systems and practice, the Company has set up the internal audit function at the division level of which audit scope covers accounting and finance, operation, compliance, information technology, and management audit of the Company and subsidiaries. The Internal Audit Manager reports functionally to the Audit Committee and administratively to the President. Duties and responsibilities of the Internal Audit Division are set by the Board and described in the Internal Audit Charter endorsed by the Audit Committee and approved by the Board of Directors.

The Board has ordered to have the internal control evaluation performed annually to assure compliance practice with the set system. The evaluation form has been designed following 5 components of SET’s internal control guidelines and COSO’s internal control framework. The evaluation results have been reported to the external auditor, the Audit Committee and the Board of Directors by the internal audit division. The 2007 evaluation results can be concluded that the internal control of the Company and subsidiaries are sufficient and appropriate.

To ensure the compliance with internal control systems, rules and regulations, and code of

conduct, Senior Vice President and above of the Company and subsidiaries are required to thoroughly review their 2007 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to his/her managers up to the President. The President also signed the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board.

For financial statements audit by the external auditor, internal control on accounting and

finance are reviewed to define the audit approach, duration and scope of work. In 2007, no significant finding, regarding the improvement on internal control systems, has been found.

The Board has focused on the likelihood of the irregularities, risk mitigation and early warning

systems. In the Board meeting on February 25, 2008, which attended by all independent directors, the meeting has considered the Company’s above mentioned practice together with the internal control evaluation of the Company group as well as the evaluation form and agreed with the Audit Committee that the internal control system of the Company and subsidiaries is appropriate and sufficient safeguard the Company’s assets from. The Audit Committee and the Board have not received significant deficiency report from external auditors and internal audit division yet.

Part 2 Section 11 Connected Transactions

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11. Related Transactions In conducting the normal business courses, there are related transactions between the Company or its subsidiaries and persons who may have potential conflict of interest. The Company endeavors to ensure that these transactions are justified as being normal business and business supporting transactions of which the general trading terms and conditions are applied. In addition, the transaction pricing could be calculated from the assets or the referenced price which complied with the rules of the Stock Exchange of Thailand (SET). All transactions were approved by the authorized person in accordance with the Company’s Table of Authority and disclosed in item 29 and 30 of the Notes to 2007 Financial Statements for the period ended December 31, 2007. Procedure to Approve the Related Transactions The Company lives by the following policies and guidelines in treating and approving the related transactions. o In case of entering into any contracts or any related transactions between the Company, the

subsidiaries, joint venture companies, associated companies and/or outside parties, the Company will consider the necessity and appropriateness of such transactions taking into account the best interest of the Company. Transaction prices are charged at faire market price like the transactions with other outside parties.

o Related transactions that are considered the 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 and must be reviewed by the Audit Committee.

o The financial support provided to subsidiaries and joint ventures such as loan or guarantee must be charged with fair return such as using the market interest rate.

o Directors with potential conflict of interest will not be allowed to vote or attend the meeting.

o In case that the normal business transactions or the supporting normal business transactions are under the authority of the Management, the same price and conditions as the transaction with outside parties will be applied. If there is no such price, the Company will apply the price of similar market transactions as references. The Company 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. Approval will be sought from authorized persons in accordance with the Company’s Table of Authority. Management with potential conflict of interest will not approve such transaction.

o 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 will be charged using the market rate as at the transaction date.

o In a case of a connected transaction which needs to be approved by three-fourths majority votes of shareholders attending the meeting and having voting right, 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.

Guidelines for Treating Future Related Transactions The Company will seek to ensure that all the future related transactions are normal business transactions with no objective to siphon profits between the Company or its subsidiaries and parties with potential conflict of interest. The Company will assign the Audit Committee, the auditor or independent consultants to review and recommend the appropriateness of the pricing and the justification of those transactions. In addition, material information about such


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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. The Company will also provide the updated information, rules and regulation with regard to the related transaction to relevant parties to foster understanding which will lead to full compliance, transparency and the benefit of the shareholders. Details of related transactions in 2007 are as summarized below. 1. Power Sold to EGAT Group companies sold electricity to EGAT, a major shareholder which have 4 representative directors on EGCO Board. Such transactions were based on the agreed prices in the standard contracts which have been endorsed by relevant government agencies.

Transaction value for the period ended December 31, 2007

(million baht)

Companies Relationship

Company Only Consolidated REGCO - 3,574.17 KEGCO - 4,235.16 EGCO Cogen - 1,103.41 Roi Et Green

Subsidiaries

- 226.38 The value of the related transactions between joint venture companies with EGAT are as shown in the following table. Since the Company had recorded the share of profit from joint venture companies using equity method, the value of such transactions was not shown on the consolidated financial statements. Companies Relationship Transaction value

for the period ended December 31, 2007 (million baht)

GEC(including subsidiaries)

6,221.56

BLCP 10,052.17APBP 223.90AEP

Joint

Ventures

213.07 2. Maintenance Service to EGAT

ESCO, an O&M service provider, entered into two Maintenance Agreements with EGAT to provide major and service maintenance work including other administrative and relating services to the power plants. The price is charged on a “cost plus basis”. The agreement is effective for a period of six years and eight years commencing July 26, 2002 and September 24, 2007, respectively.


(million baht)


Company Consolidated ESCO Subsidiary - 86.44


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3. Maintenance Service by EGAT

Group companies have entered into the agreements with EGAT for the latter to provide maintenance services. These transactions are considered the transactions to support normal business of which the general trading terms and conditions were applied and the agreed price could be calculated from the assets or the referenced price in accordance with SET’s guidelines.

• REGCO and KEGCO extended the Major Maintenance Agreement (MMA) with EGAT for the latter to provide major maintenance services, repair services, administrative services, and additional services related to their power plants for another 8 years and 6 years with the execution date on December 7, 2006 and June 19, 2002, respectively.


(million baht)


Company Consolidated REGCO - 114.02 KEGCO

Subsidiary - 140.91

• GEC has engaged EGAT as advisor for maintenance work. The fee is charged in accordance with the agreed price.

Companies Relationship Transaction value for the period ended December 31, 2007 (million baht)

GEC Subsidiary 0.26

4. EGCO and Subsidiaries

EGCO has entered into three agreements with subsidiaries and joint venture companies, namely the agreements to provide office space, the agreements to provide building services and the agreements to provide management services which include internal audit, legal counseling, Board’s secretarial work, technology, public and community relations and financial work (exclude ESCO). Such transactions are well grounded because those Group companies do not have internal staff to take care of such work while the Company has the capability to provide the services. The office space is charged in accordance with the agreed price on an annual basis. The management service is charged in accordance with the actual operating hours based on the cost plus basis.


(million baht)


Company Consolidated REGCO 25.65 - KEGCO 22.76 - ESCO 10.46 - TLPC 0.79 - EGCO Cogen 7.50 - EGCO Green 0.82 - Roi Et Green 6.86 - EGCOM Tara

Subsidiary

1.81 -


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EGCO BVI 0.50 - EGCO JD Joint Venture 1.37 -

5. Financial Support

EGCO provides the financial support to subsidiaries and joint ventures in accordance with our shareholding in such respective companies which are normal business practices to optimize shareholders’ return. Such transactions were approved by the Board in accordance with the Table of Authority and disclosed in the notes to financial statements as at December 31, 2007.

2.1 Inter-company Loan

REGCO On 26 December 2006, EGCO entered into an agreement to provide loan to REGCO in the amount of 2,600 million baht. Principal and interest payment is scheduled semi-annually on June 7, and December 7, commencing June 2007 to December 2009. The interest rate is fixed at 6% per annum. The outstanding loan amount as at December 31, 2007 was 1,787.24 million baht. ESCO On 22 November 2006, EGCO entered into an agreement to provide loan to ESCO in the amount of 780 million baht. Principal payment of 45,882,350 baht each is scheduled annually commencing December 2009 to December 2025. The interest rate is MLR minus a certain margin and payable on a semi-annual basis. The outstanding loan amount as at December 31, 2007 was 780 million baht

2.2.1 Loan Guarantee

The Company provided the loan guarantee to subsidiary, joint venture and associated companies with significant information as follows.

2.2.1 Contingent Liabilities

EGCO Cogen As of December 31, 2007, EGCO Cogen’s sponsors had a commitment to provide the loan guarantee covering the outstanding loan and interest payment in the amount not exceeding 200 million baht. Since EGCO holds an 80% stake in EGCO Cogen, its guarantee portion was not exceeding 160 million baht. Roi-Et Green EGCO had a commitment to provide the loan guarantee in the amount not exceeding the total outstanding loan and interest payment. As at December 31, 2007, the total commitment amounted to 879.55 million yen or equivalent to 263.62 million baht.

2.2.2 Letter of Guarantee

EGCO had the commitment to the banks which issued the letter of guarantee or the Standby Letter of Credit (SBLC) to the subsidiaries and joint ventures as detailed below.


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EGCO As at December 31, 2007, EGCO has the commitment as requestor for the Standard Chartered Bank (Thai) Public Company Limited to issue the bank guarantee for the IPP bidding with the face value of 1,200 million baht. EGCO and KEGCO As at December 31, 2007, EGCO has the commitment as requestors for the Standard Chartered (Thailand) Bank Co., Ltd to issue the bank guarantee for the IPP bidding with the face value of 200 million baht. 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, 200, the value of the SBLC was US 6.15 million dollars (equivalent to 208.50 million baht) and 572.28 million baht, respectively. NTPC The Nam Theun II project’s finance was structured in a way that would allow sponsors who invested in Lao PDR to inject equity on a back-end basis while lenders would allow loan drawn down during the first phase. As such, lenders requested the banks on behalf of the sponsors to issue the SBLC to guarantee future capital injection. The face value of the SBLC will reduce in accordance with each capital injection. With respect to the above, EGCO requested Sumitomo Mitsui Banking Corporation to issue SBLC under the Shareholders’ Support Agreement. As at December 31, 200, the guarantee value was US 93.92 million dollars (equivalent to 3,182.51 million baht).

Part 2 Section 12 Financial Position and Operational Performance

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12. Financial Position and Operational Performance

12.1 Financial statements

1. Auditor’s report The Management prepares the consolidated and company’s financial statements for the year ended December 31, 2006 in compliance with the Generally Accepted Accounting Principles under the Accounting Profession Act B.E. 2547, appropriate accounting policies and consistencies with adequate disclosure of significant information in the notes of the financial statements. Being well aware of its duties and responsibilities to ensure the effective oversight of the financial statements, the Board of Directors has issued the Company’s regulation on accounting, financial and budget B.E. 2544 to be adhered to by the Management. In addition, the Audit Committee has been appointed to oversee that the Company’s financial statemens be prepared in a justified and prudent manner. Also, the Audit Committee has reviewed internal control system to ensure its adequacy and effectiveness to safequard the Company’s assets from unauthorized persons and reveal the weakness to protect from unlawful conduct and abnormalities. During the past three year (2004-2006), the Auditor provised the opinion that the consolidated and company financial statements present fairly, in all material respects, the consolidated and company financial position, and the consolidated and company results of operations, and cash flow of EGCO and its subsidiaries and of EGCO, in accordance with generally accepted accounting principles. The Audit Committee, the auditor and the Management jointly reviewed the Company’s quaterly and annaul financial statements. The Audit Committee also questioned, commented and suggested some significant points to ensure that the Company’s finanical statements and disclosure were accurate, complete, reliable and in compliance with related governing rules and regulations and the generally accepted accounting principles. According to the practice and oversight mentioned above, the Board of Directors is of the opinion that the consolidated and company’s financila statememts of the year 2006, presented the company’s fiancial position and operating reults in a courrect and reliable manner and in compliance with the generally accepted accounting principles and all governing rules and regulations.


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2. Summary of Financial Statements Balance Sheets (Please see details in the Annual Report)


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Balance Sheets (Con’t)


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Consolidated Balance Sheet (Please see details in the Annual Report)


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Consolidated Balance Sheet (Con’t)


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Profit and Loss (Please see details in the Annual Report)


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Consolidated Profit and Loss (Please see details in the Annual Report)


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Change in Equity (Please see details in the Annual Report)


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Consolidated Change in Equity (Please see details in the Annual Report)


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Cash Flow (Please see details in the Annual Report)


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Consolidated Cash Flow (Please see details in the Annual Report)


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12.2 Explanation and analysis of financial position and oeprational performance 12.2.1 Management Discussion and Analysis

1. Executive Summary The Electricity Generating Public Company Limited (EGCO) is an Independent Power

Producer (IPP) with 14 operating plants, totaling 3,509 equity MW at present. In 2007, EGCO’s significant events are summarized as follows:

i. The 50% share of profit in the joint venture BLCP Power Limited (BLCP), a 1,434 MW coal-fired power plant, has been recognised since January 2007.

ii. The Amata Power Bang Pakong Expansion (APBP-Expansion Project), a 55 MW combined cycle gas turbine power plant, achieved Commercial Operation Date (COD) on April 25, 2007.

iii. Unit 1 of the Kaeng Khoi 2 (KK2) combined cycle gas turbine IPP project of the joint venture Gulf Power Generation Co., Ltd (GPG), with capacity of 734 MW, was completed and achieved its COD on May 5, 2007.

EGCO Group’s consolidated net profit for 2007 ended December 31, 2007, was Baht 8,402 million, an increase of Baht 2,386 million or 40% compared to 2006. Excluding the impact of foreign exchange on EGCO and subsidiaries, the net profit was Baht 8,281 million, representing an increase of Baht 2,982 million or 56% as compared to the previous year; the details of the change are as follows:

• EGCO’s net loss of Baht 394 million, representing an increase in the loss of Baht 289 million, resulted from higher administrative expenses and an increase of interest expenses from short-term loans.

• IPP Group, consisting of Rayong Electricity Generating Co., Ltd. (REGCO), Khanom Electricity Generating Co., Ltd. (KEGCO), the joint venture BLCP and the joint venture GPG, showed a net profit and share of profits from joint ventures totaling Baht 7,735 million, up Baht 2,869 million thanks to the recognition of the share of profit from BLCP since January 2007 as well as the share of profit from GPG thanks to Unit 1 of KK2 which was completed and achieved its COD since May 2007.

• Small Power Producer (SPP) Group, which is comprised of three joint ventures including Gulf Electric Public Company Limited (GEC)(excluding GPG), Amata-EGCO Power Ltd. (AEP), Amata Power (Bang Pakong) Ltd. (APBP); and two subsidiaries including EGCO Cogeneration Co., Ltd. (EGCO Cogen) and Roi-Et Green Co., Ltd. (Roi-Et Green), reported a net profit of Baht 882 million, an increase of Baht 446 million that mainly resulted from GEC’s higher net profit owing to a gain from foreign exchange rate.

• Overseas Group, which is comprised of two joint ventures including the Conal Holdings Corporation (Conal) and Nam Theun 2 Power Co., Ltd. (NTPC). The net loss from this group was Baht 197 million, an increase in the loss by Baht 40 million from 2006 mainly resulting from Conal’s net profit of Baht 53 million, down by Baht 65 million, caused by a decrease in electricity sales after transferring the Northern Mindanao Power Corporation (NMPC) to National Power Corporation (NPC) in February 2006 as well as the Peso appreciation. Meanwhile, NTPC’s loss decreased by Baht 25 million from lower foreign exchange loss.

• Other Business Group includes two subsidiaries, EGCO Engineering & Service Co., Ltd. (ESCO) and Egcom Tara Co., Ltd. (ET) and one joint venture, Amata Power-ESCO Service Co.,Ltd. (AMESCO), that showed net profit totaling Baht 255 million, a decrease of Baht 4 million due mostly to the decline in ESCO’s net profit by Baht 17 million from lower service income. Meanwhile, ET’s net profit increased by Baht 13 million from higher water sales.


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2. Business Expansion Analysis

EGCO is the first IPP in Thailand established on May 12, 1992. EGCO is structured as a holding company with a number of subsidiaries. The company’s vision is to be the leading Thai integrated electric power company with comprehensive energy services in Thailand and in the ASEAN region, and full commitment to environmental protection and social development.

Our major business is to produce electricity and supply it to EGAT under long-term power purchase agreements (PPA). EGCO focuses its investment on pursuing opportunities in power generation in Thailand and also seeks to expand its business in ASEAN countries with the aim to provide strong returns to shareholders by improving the profitability of our existing assets and acquiring new projects with acceptable risk and return profile.

As at the end of December 2007, Thailand’s total generating capacity was reported at 28,250.25 MW1, of which 12.42% was attributable to EGCO. During the year 2007, the peak demand reached 22,586.1 MW1 on April 24, 2007, which was 7.23% higher than the peak demand in May 2006.

On November 16, 2007, the Ministry of Energy resolved that 17 bids, out of 20 bids, were qualified for the initial round (Technical Proposal) of IPP bidding, and all 3 bids from EGCO passed this round. Later on, on December 7, 2007, the Ministry of Energy announced the winner in the second round of IPP Bidding (Financial Proposal). Four companies, except EGCO, have won in this round of bidding with electricity generating capacity totaling 4,400 MW (increased from 3,200 MW) and coming on line during 2012-2014.

For EGCO, our business strategy will place more emphasis on expansion investment opportunities in ASEAN markets, including neighboring Mekong countries such as Lao PDR, Myanmar and Cambodia, with respect to projects that will supply electricity to Thailand, and also investment in a domestic project in Thailand relating to fuel storage and supply. As for renewable energy projects, EGCO will continue to pursue investment opportunities in prospective domestic projects using wind, waste and biomass as fuel sources.

As of December 31, 2007, EGCO has 14 operating plants with capacity totaling 3,509 equity MW, of which 59% comprises two natural gas-fired IPPs which are the 1,232 MW REGCO plant and the 824 MW KEGCO plant. EGCO has another 717 equity MW representing 20% of EGCO’s total equity MW portfolio from the BLCP Power facility, a 1,434 MW coal-fired power plant located in Map Ta Phut Industrial Estate in Rayong Province. The BLCP facility uses high quality imported coal from Australia.

In 2007, EGCO commenced the commercial operation of the 734-MW KK2 project Unit 1 on May 5. EGCO has a 50% stake in this project, by holding 50% of shares in GEC which owns 99.99% of GPG. KK2 project is a 1,468 MW gas-fired power plant located in Saraburi province.

In addition to the operating assets, EGCO is a partner in two additional power plant projects that are under development. These projects represent an additional 635 equity MW. Each is summarized briefly below:

1 Source: EGAT


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1. The Unit 2 of KK2 project, a 734 MW gas-fired power plant. The COD for Unit 2 is scheduled to occur in March 1, 2008. Currently, the overall progress of this project is 99.5%; and on January 25, 2008, EGAT has approved the purchase of additional power prior to the COD of KK2 Unit 2 after a successful commissioning.

2. Nam Theun 2 project is a 1,070 MW hydroelectric power plant located in the Lao PDR. EGCO holds a 25% ownership in the project company, NTPC. This project’s COD is targeted for December 2009 with EGAT contracted to take off 995 MW and the balance will be sold to the Lao PDR. At the end of December 2007, the overall project progress was 78% complete.

In the absence of unforeseen circumstances, the company has a policy to dividend 40%

of the consolidated net profit after taxation, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to the company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the company. The dividend payment shall not exceed the retained earnings of the company financial statements.

3. Accounting Policies The early adoption and two changes in accounting policies, which were implemented

on January 1, 2007, are as follows:

1. The draft Thai Accounting Standard (TAS): Employee Benefits The Federation of Accounting Profession has drafted TAS regarding Employee Benefits which is in accordance with the International Accounting Standard (IAS) 19: Employee Benefits. The draft TAS is expected to become effective in 2009. Therefore, the Board of Directors considered and resolved to early adopt this standard commencing 2007 onwards which is considered to better reflect the financial position and operating results of the EGCO group and also better reflect liabilities and expenses that shall be paid in exchange for services rendered by employees.

Commencing January 1, 2007, the Group has adopted the accounting policy according to the draft TAS: Employee Benefits for the post employment benefits, payable to employees under the labour laws applicable in Thailand and countries in which the Group has operations. The Group has applied retrospective adjustments for the adoption of new accounting policy which is to adjust the employee costs associated with past services against retained earnings brought forward and recognise the employee costs associated with services of the current year in the statement of income. The effects of the adoption of the new accounting policy on the consolidated balance sheet as at December 31, 2006 and the consolidated statements of income for the year ended December 31, 2006 are as follows:

Consolidated balance sheet as at December 31, 2006 Unit : Million Baht

Increase in retirement benefits obligation (116)Decrease in interests in joint ventures (2)Increase in net liabilities in a joint venture (3)Decrease in retained earnings as at 31 December 2006 (121)


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Consolidated statements of income for the year ended December 31, 2006 Unit : Million Baht

Decrease in net profit (20)Decrease in basic earnings per share (Baht) (0.03)

2. Accounting standard for investment in subsidiaries, associates and interests in joint ventures presented in the company financial statements

According to the notification of the Federation of Accounting Professions dated May 2, 2007 relating to amendment of TAS 44 “Consolidated financial statements and separate financial statements” and TAS 45 “Investments in associates” which require a change from the equity method of accounting to the cost method of accounting for investments in subsidiaries and associates and interests in joint ventures presented in the company financial statements, income from investments will be recorded when dividends are declared under the cost method. The notification is mandatory for financial statements on or after January 1, 2007 . The cost method of accounting was implemented within EGCO Group from January 1, 2007 onwards and retrospective adjustments have been made for the purpose of comparison.

Accordingly, in 2007, EGCO’s Group had net income of Baht 8,402 million, or Baht 15.96 per share in the consolidated financial statements, and a net profit of Baht 8,584 million, or Baht 16.31 per share, in the company financial statements. The difference of net income in these statements was due to the change in accounting for investment in subsidiaries and interests in joint ventures reported in the company financial statements. The performance of subsidiaries and interests in joint ventures has been proportionately recorded in the consolidated financial statements, whereas the net profit in the company financial statements is solely from the performance of the parent company and the dividends declared from subsidiaries and joint ventures. In this case, the EGCO Holding Company had an operational loss of Baht 31 million and its subsidiaries and joint ventures declared their dividends in the amount of Baht 8,615 million.

Moreover, the effects of the change on the company’s balance sheet as at December 31, 2006 is as follows:

Unit : Million Baht

Decrease in investments in subsidiaries (4,033) Decrease in net interests in joint ventures (280) Decrease in net liabilities in a joint venture (620)

Decrease in other liabilities (911) Increase in translation adjustments 14 Decrease in Retained earnings as at December 31, 2006 (2,796)

The change in such accounting policy has an impact on the company financial statements only and does not have any impact on the consolidated financial statements.

3. Accounting policy for interests in joint ventures in the consolidated financial statements

From January 1, 2007, the Group has changed the accounting policy for interests in joint ventures in the consolidated financial statements from “Proportionate Consolidation” to the “Equity Method”. The Group is of the view that the use of equity accounting provides a better understanding among investors of the company’s business and financial position since


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Remarks: - Net profit consolidated under the equity method does not separate out foreign exchange impact from joint ventures. - IPP : REGCO, KEGCO, BLCP, GPG - SPP : GEC (excluding GPG), AEP, APBP, EGCO Cogen, Roi-Et Green

- Overseas : Conal, NTPC - Others : ESCO, ET, AMESCO

IPP87%

Others3%

SPP10%

the joint venture entity, which invested in power plant business, raised debt secured against its own assets with limited recourse to its shareholders. The group has restated the consolidated financial statements to reflect the change in this accounting policy.

The consolidated balance sheet as at December 31, 2006 and the consolidated statement of income for 2006 ended December 31, 2006, were adjusted for the purpose of comparison. Accordingly, this new accounting policy has been applied to the interests in seven joint ventures namely BLCP, GEC, APBP, AEP, Conal, NTPC and AMESCO.

4. Report and Analysis of the Operating Results EGCO is structured as a holding company and it invests primarily in electricity

generation and energy service businesses. The main sources of its income are dividends from investments in its subsidiaries, joint ventures, and associates. The objective of the holding company structure is to provide flexibility for business expansion and to facilitate financing of new projects without recourse to existing ones.

This report contains the analysis of the financial statements of EGCO, and its subsidiaries and interests in joint ventures as follows: 4.1 Operational Results

EGCO Group’s consolidated net profit for 2007 ended December 31, 2007 was Baht 8,402 million, an increase of Baht 2,386 million or 40% compared to 2006; this was caused mainly by an increase of the share of profits from joint ventures amounting to Baht 5,134 million, primarily from BLCP, GPG and GEC.

The gross profit was reported at Baht 5,229 million, down by Baht 2,795 million or 35% as compared to last year, as a result of lower contracted electricity sales of REGCO and KEGCO. The operating profit was reported at Baht 4,938 million, a decrease of Baht 3,624 million or 42% as compared to 2006. The fall in electricity sales, foreign exchange gain and interest income, at EGCO and subsidiaries, was the main factor behind the drop in the gross profit and the operating profit.

Unit : Million Baht

Net Profit of 2007 Net Profit of 2006

Before FX After FX Before FX After FX EGCO (394) (394) (104) (104) IPP Group 7,735 7,804 4,866 5,418 SPP Group 882 939 436 598 Overseas (197) (197) (157) (157) Others 255 250 258 261 Total 8,281 8,402 5,299 6,016

Net Profit after FX - 2007


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The net profit of EGCO Group in 2007 included foreign exchange gains from EGCO and subsidiaries of only Baht 121 million whereas it incurred a foreign exchange gain of Baht 716 million in 2006. An unrealized foreign currency exchange gain in the amount of Baht 70 million is an accounting number in accordance with the Thai accounting standard. It incurs from the difference of the translation of the net debt denominated in foreign currency to the Thai Baht equivalent amount using the foreign exchange rate at the end of this accounting period (December 31, 2007) and the previous period (December 31, 2006).

Excluding the effect of foreign currency exchange gain from EGCO and subsidiaries, the profit was Baht 8,281 million, representing an increase of Baht 2,982 million or 56% as compared to 2006.

Excluding the effect of foreign currency exchange gain from EGCO and subsidiaries of Baht 121 million, interest expenses of Baht 819 million, income tax of Baht 634 million and depreciation and amortization of Baht 2,190 million, the earnings before interest, tax, depreciation and amortization (EBITDA) would be Baht 11,924 million1, representing an increase of Baht 2,187 million or 22% as compared to 2006, in which the EBITDA was Baht 9,737 million, excluding the effect of foreign currency exchange gain of Baht 716 million, interest expenses of Baht 1,166 million, income tax amounting to Baht 1,130 million and depreciation and amortization amounting to Baht 2,142 million. Important Financial Ratios for the period were as follows:

- Gross Profit Ratio was 47.80% - Operating Profit Ratio was 45.14% - Net Profit Ratio was 50.48% - Net Profit Ratio (excluding the effect of foreign exchange from EGCO and

subsidiaries) was 49.75% - Earnings per share (EPS) was Baht 15.96 - Earnings (excluding the effect of foreign exchange from EGCO and subsidiaries) per

share (EPS) was Baht 15.73 - Return on Equity (ROE) was 21.89%

The gross profit margin of 47.80% was lower than last year’s margin of 57.98% due to a decrease in net profit of REGCO and KEGCO from lower electricity sales; whereas the net profit ratio (excluding the effect of foreign exchange from EGCO and subsidiaries) was reported at 49.75%, higher than 2006 ratio of 36.29% mainly due to the recognition of BLCP and GPG’s net profit as share of profit from joint ventures.

4.2 Income, Expense and Share of profits from Joint Ventures Analysis

In 2007, operating results of EGCO and subsidiaries (Subs), excluding the effect of foreign currency exchange rate (Fx) and profit attributable to minorities (MI), are as follows:

- Total revenues were Baht 11,594 million, a decrease of Baht 3,092 million or 21% compared to 2006.

- Total expenses were Baht 8,230 million, a decrease of Baht 906 million or 10% from last year.

The share of profits from joint ventures for 2007 were Baht 5,051 million (including a gain from foreign exchange of Baht 890 million), an increase of Baht 5,134 million compared to last year which showed the share of loss totaling Baht 83 million. The details according to their groups of business are as follows: 1 Excluding the effect of foreign currency exchange, interest expenses, income tax , depreciation and amortization of joint ventures, EBITDA was Baht 14,934 million.


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Total Revenues, Total Expenses and Share of Profits (Loss) from JVEs: EGCO IPP SPP Overseas Others Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Total Revenues 497 400 7,910 11,053 2,186 2,231 - - 1,000 1,002 11,594 14,686 Total Expenses 891 504 4,813 6,134 1,822 1,791 - - 703 706 8,230 9,135 Profits bf Share of Profits (Loss) from JVEs (394) (104) 3,097 4,919 364 440 297 296 3,364 5,551 Share of Profits (Loss) from JVEs - - 4,638 (52) 608 125 (197) (157) 2.29 1.5 5,051 (83) Net Profit bf Subs’s Fx and MI (394) (104) 7,735 4,866 972 565 (197) (157) 300 298 8,416 5,468

1) EGCO’s total revenues in 2007, amounting to Baht 497 million, were comprised of

dividend income from financial investment of Baht 134 million, interest income of Baht 63 million and other income of Baht 301 million. Compared to 2006, this showed an increase of Baht 98 million or 24%, which mainly resulted from higher other income of Baht 243 million thanks to gain from the redemption of Krung Thai Dividend Selected Flexible Portfolio Fund (KTSF) amounting to Baht 258 million. However, interest income decreased by Baht 111 million, or 64% as a result of lower interest rate and deposit amounts. Moreover, dividend income also decreased by Baht 34 million or 20% mainly a result of the drop in dividends from KTSF by Baht 78 million. Meanwhile, dividends from Eastern Water Resources Development and Management Public Company Limited (EASTW) were up by Baht 31 million and dividend from other open-end funds up by Baht 13 million.

Total expenses of EGCO, including administrative expenses and interest expenses, were Baht 891 million, an increase from 2006 by Baht 387 million or 77%. This resulted mainly from the increase of interest expenses totaling Baht 186 million, incurred from the short-term loans of Baht 4,350 million from two Thai commercial banks; the first drawdown of the short-term loans was on January 29, 2007 and the repayment of the whole amount was made on December 28, 2007. In addition, there was an increase of advertising expenses for the re-branding project and project development expenses which included consulting fees.

2) IPP Group consisting of two principal subsidiaries, REGCO and KEGCO; and two principal joint ventures, BLCP and GPG. Total revenues were Baht 7,910 million, a decrease of Baht 3,142 million or 28% as compared to last year, meanwhile the total expenses were Baht 4,813 million, down by Baht 1,321 million or 22%. The share of profits from joint ventures were reported at Baht 4,638 million (including a gain from foreign exchange of Baht 728 million), up by Baht 4,690 million as compared to 2006 which showed the share of loss totaling Baht 52 million. The details are as follows:

Total Revenues, Total Expenses and Share of Profits(Loss) from JVEs of IPP Group: Unit: Million Baht

REGCO KEGCO BLCP GPG Total

2007 2006 2007

2006

2007

2006

2007

2006

2007

2006

%Chg

Total revenues 3,599 5,630 4,

5,

- - - - 7,

11,

(2

Unit : Million Baht


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311

422

910

053

8%)

Total expenses 2,183 2,947 2,630

3,187

- - - - 4,813

6,134

(22%)

Profits bf Share of Profits (Loss) from JVEs 1,416 2,683 1,681

2,235

- - - - 3,097

4,919

(37%)

Share of Profits (Loss)from JVEs - - - - 3,907

- 731

(52)

4,638

(52)

n.

a.

Net Profit bf Subs’s Fx and MI 1,416 2,683 1,681

2,235

3,907

- 731

(52)

7,735

4,866

59%

• Sales of electricity of IPP Group were Baht 7,809 million, representing a decrease of

Baht 2,856 million or 27% compared to last year. The decrease was a result of REGCO’s lower electricity sales by Baht 1,818 million to register Baht 3,574 million due to a decrease in the Capacity Rate and Baht appreciation. To minimize exchange rate risk, REGCO has entered into a revenue swap contract with a financial institution to fix the exchange rate to be used in the conversion of part of the USD-linked revenue provided in the PPA. As at December 31, 2007, the electricity revenue under the foreign currency forward contract of USD 47.82 million has a fixed exchange rate of Baht 33.80 per 1 USD. The contract is effective from November 8, 2007 to January 5, 2010. Moreover, KEGCO’s lower electricity sales by Baht 1,038 million to register Baht 4,235 million was caused by a decrease in the Base Availability Credit for KEGCO which partly resulted from Baht appreciation. These decreases were in accordance with the capacity payment formula calculated on a "Cost Plus Basis" under the PPAs and in line with the company's projection.

Sales of Electricity – IPP Group:

2007 2006 %Changes

REGCO 3,574 5,392 (34%)

KEGCO 4,235 5,273 (20%)

Unit : Million Baht


Page 120

Total Sales of Electricity - IPP 7,809 10,665 (27%)

The PPAs cover the full amount of the projected fixed costs, debt financing charges and major maintenance charges, which are used in calculating the electricity tariff for each period. Moreover, the calculation of the capacity payment is adjusted to include compensation for the exchange rate effect from debt services and expenses of major maintenance parts denominated in US Dollar. REGCO and KEGCO receive the compensation monthly for each billing period. They receive higher capacity charge than that stated in the original PPAs before the inclusion of foreign exchange indexation if the exchange rate is above Baht 28 per US Dollar and vice versa.

In 2007, REGCO and KEGCO received compensation for the exchange rate effect of Baht 393 million.

• Interest income and others amounted to Baht 101 million, a decrease of Baht 287 million or 74%, mainly from REGCO’s decreased interest income in the amount of Baht 211 million. It resulted from lower interest rates and lower amount of deposits at banks and financial institutions due to a capital reduction at REGCO from Baht 9,220 million to Baht 4,702 million in December 2006. KEGCO’s interest income decreased by Baht 75 million resulting from lower interest rates.

• Cost of sales totaled Baht 3,433 million, a decrease of Baht 120 million or 3% compared to 2006, mainly because KEGCO’s cost of sales in 2007 decreased by Baht 223 million or 12% due to a high major maintenance cost in 2006. Meanwhile, REGCO’s cost of sale increased by Baht 103 million or 6%, from major maintenance cost in 2007.

Cost of Sales – IPP Group: 2007 2006 %Changes

REGCO 1,841 1,738 6%

KEGCO 1,592 1,815 (12%)

Total Cost of Sales – IPP Group: 3,433 3,553 (3%)

• Administrative expenses and income taxes were Baht 841 million, a decrease of Baht 685 million or 45%, mainly from lower REGCO’s administrative expenses of Baht 207 million or 63% compared to last year when REGCO incurred a make-whole premium payment from a loan prepayment; and tax payment at REGCO and KEGCO decreased by Baht 507 million from lower revenues. REGCO and KEGCO currently enjoy 50% corporate tax reduction privilege on profits from power generation, ending on April 19, 2008 and September 25, 2009, respectively.

• Interest expenses were Baht 539 million, a decrease of Baht 515 million or 49%, resulting from REGCO’s payment of all of its debt with financial institutions in December 2006 and KEGCO’s lower principal amounts of loans and debentures.

• Share of profits from joint ventures, BLCP and GPG, were recognised in the amount of Baht 4,638 million. BLCP’s recognition of net profit since January 2007 amounted to Baht 3,907 million, which included a foreign exchange gain of Baht 591 million, and GPG’s net profit was Baht 731 million, which included a foreign exchange gain of Baht 137 million, thanks to KK2 Project-Unit 1’s sales of electricity to EGAT after achieving its COD in May 2007, plus other income from KK2 Project-Unit 1’s liquidated damage claim on the EPC contractor owing to the delayed COD.

Unit : Million Baht


Page 121

3) SPP Group incorporates five companies, namely: GEC (excluding GPG), AEP, APBP, EGCO Cogen and Roi-Et Green. The total revenues were reported at Baht 2,186 million, a decrease of Baht 45 million or 2% compared to 2006. The expenses were Baht 1,822 million, an increase from last year by Baht 31 million or 2%. The share of profits from joint ventures were reported at Baht 608 million (including a gain from foreign exchange of Baht 360 million), an increase of Baht 483 million or 386% compared to last year. The details are as follows:

Total Revenues, Total Expenses and Share of Profits(Loss) from JVEs of SPP Group: Unit : Million Baht

EGCO Cogen

Roi-Et Green

GEC

(exclude GPG)

APBP and AEP

Total

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

% Ch

g

Total revenues 1,944

1,985

242

246

- - - - 2,186

2,231

(2%)

Total expenses 1,670

1,648

152

143

- - - - 1,822

1,791

2%

Profits bf Share of Profits (Loss) from JVEs 274

337

90

103

- - - - 364

440

(17%)

Share of Profits (Loss)from JVEs - - - - 497

0.75

111

124

608

125

386%

Net Profit bf Subs’s Fx and MI 274

337

90

103

497

0.75

111

124

972

565

72%

• Sales of electricity of the SPP Group were Baht 2,152 million, representing a decrease of Baht 42 million or 2% compared to last year. Most of the decrease of SPP group’s electricity sales was from EGCO Cogen in the amount of Baht 36 million, resulting mainly from lower electricity sales to industrial users as well as the Baht appreciation which caused a drop in revenue from EGAT. Roi-Et Green’s electricity sales decreased by Baht 6 million from lower tariff, as its tariff formula is linked to the price of fuel oil which experienced a drop.


Page 122

Sales of Electricity – SPP Group:

2007 2006 %Changes

EGCO Cogen 1,926 1,961 (2%)

Roi-Et Green 226 233 (3%)

Total Sales of Electricity – SPP Group 2,152 2,194 (2%)

• Interest income and others amounted to Baht 34 million, a decrease of Baht 3 million or 9%, mainly from lower interest income totaling Baht 7 million cause by lower interest rates.

• Cost of Sales of SPP Group were reported at Baht 1,677 million, an increase of Baht 22 million as compared to 2006. This was substantially driven by an increase in cost of sales of Roi-Et Green and EGCO Cogen amounting to Baht 17 million and Baht 5 million, respectively, due to higher fuel costs. Cost of Sales – SPP Group: 2007 2006 %Changes

EGCO Cogen 1,546 1,541 0.30%

Roi-Et Green 131 114 15%

Total Cost of Sales – SPP Group 1,677 1,655 1%

• Administrative expenses and income taxes were Baht 53 million, up by Baht 24 million or 82% as compared to 2006. This mainly resulted from EGCO Cogen’s penalty payment to EGAT amounting to Baht 16 million, since its thermal process ratio did not meet the requirement in accordance with the PPA; and the income tax payment following Thai LNG Power Co., Ltd. (TLPC)’s liquidation amounting to Baht 13 million.

• Interest expenses were Baht 92 million, a decrease of Baht 14 million or 13%, mainly from a decrease in EGCO Cogen’s interest expenses amounting to Baht 13 million due to lower principal.

• Share of profits from joint ventures, GEC (excluding GPG), APBP and AEP, totaled Baht 608 million, up by Baht 483 million or 386% as compared to 2006. The share of profit from the joint venture GEC contributed the most in the amount of Baht 497 million, an increase of Baht 496 million as compared to last year. This was primarily a result of an increase of gain on foreign exchange rate, up by Baht 373 million, and higher sales of electricity.

Meanwhile, the share of profits from joint ventures, APBP and AEP, totaled Baht 111 million, down by Baht 13 million or 10%, which was primarily from AEP’s lower electricity sales to EGAT and higher maintenance expenses.

4) Overseas Group refers to Conal and NTPC, of which their share of losses from joint ventures were reported at Baht 197 million, an increase in loss of Baht 40 million compared to 2006. Conal’s share of profit was reported at Baht 53 million, a decrease of Baht 65 million compared to 2006, mainly from a decrease of electricity sales after transferring NMPC, a 40 MW power plant, to NPC in February 2006 and the Peso appreciation. NTPC’s share of loss was Baht 250 million (including a loss from foreign exchange of Baht 210 million), a decrease in loss of Baht 25 million as compared to 2006, caused mainly by lower foreign exchange loss.

Unit : Million Baht

Unit : Million Baht


Page 123

5) Other Business Group includes two subsidiaries, ESCO and ET and a joint venture, AMESCO. Total revenues were Baht 1,000 million, a decrease by Baht 2 million or 0.23% as compared to 2006 and total expenses totaled Baht 703 million, a decrease of Baht 3 million or 0.45%. The share of profit from a joint venture was reported at Baht 2.29 million, an increase of Baht 0.78 million or 51% as compared to the last year. The details are as follows:

Total Revenues, Total Expenses and Share of Profits(Loss) from JVEs of Other Business Group: Unit : Million Baht

ESCO ET Total

2007

2006

2007

2006

2007

2006

% Chg

Total revenues 773

802

228

201

1,000

1,003

(0.23%)

Total expenses 631

643

72 63 703

706

(0.45%)

Profits bf Share of Profits (Loss) from JVEs 142

159

156

138

297

297

0%

Share of Profits (Loss)from JVEs 2.29

1.51

- - 2.29

1.51

51%

Net Profit bf Subs’s Fx and MI 144

160

156

138

300

298

0.33%

• Service income from ESCO amounted to Baht 760 million, down by Baht 27 million or

3%, resulting mostly from lower maintenance service income from Granite Services International Co., Ltd., which is the subsidiary of GE and a decrease of spare parts sale to Elgali 2 Power Plant in Sudan.

• Sales of water from ET, were Baht 218 million, up by Baht 26 million, or 14%, thanks to the increase of the minimum take and tariff under the long-term Water Purchase Agreement with Provincial Waterworks Authority.

• Interest income and others amounted to Baht 22 million, a decrease of Baht 1 million or 4%, mainly from a decrease in ESCO’s other income amounting to Baht 1 million.

• Cost of services were Baht 536 million, a decrease of Baht 13 million or 2%, resulting from a decrease in the cost of maintenance services and the cost of ESCO’s spare parts sale to customers which were consistent with its decreased revenues.

• Cost of water sales of ET was Baht 66 million, up Baht 7 million or 12% mainly from an increase of operating and maintenance service costs which was consistent with its increased revenues.

• Administrative expenses and income taxes totaled Baht 101 million, an increase of Baht 6 million or 6% compared to 2006, mostly from an increase in ESCO’s administrative expenses by Baht 6 million.

• ESCO’s share of profit from a joint venture totaled Baht 2.29 million, an increase of Baht 0.78 million from AMESCO.


Page 124

5. Report and Analysis of Financial Position

5.1 Asset Analysis

As at December 31, 2007, total assets of EGCO, its subsidiaries and interests in joint ventures amounted to Baht 53,600 million, an increase of Baht 3,141 million or 6% from December 31, 2006. The important details are as follows :

53,600

5,492915

20,233 18,638

8,3222,300

8,777

50,459

12,376

20,139

6,867

0

10,000

20,000

30,000

40,000

50,000

60,000

Total Assets Cash,ST & LTInvestment

ST & LT Investmentas Collateral

Inv. in Sub.&Interests in JV

Property, Plant andEquip (net)

Others

2007 2006

1) Cash and deposits at financial institutions, and short-term and long-term marketable securities were Baht 5,492 million or 10% of the total assets, down Baht 3,284 million or 37%. This resulted mainly from a decrease of cash and cash equivalent by Baht 1,851 million and a decrease of long-term investments in marketable securities by Baht 1,468 million from the redemption of KTSF. The decrease in cash and cash equivalent was from EGCO’s payment for the acquisition of shares in BLCP amounting to Baht 4,645 million to CLP Power (BLCP) Ltd., a subsidiary of CLP Holdings Limited, and EGCO’s payment for additional paid-up shares in BLCP and GEC amounting to Baht 5,588 million. In addition, EGCO repaid loan and debenture amounting to Baht 2,196 million and paid dividend to shareholders in the amount of Baht 2,214 million. Meanwhile, EGCO received operating cash of Baht 6,318 million, drew down long-term financing of Baht 4,000 million from local banks, received net cash from ST&LT investment of Baht 1,618 million and received dividends from joint ventures totaling Baht 985 million.

2) Short-term and long-term investments used as collateral were Baht 915 million or 2% of the total assets, down Baht 1,385 million or 60%. This decrease mainly came from the use of cash to repay the principal and pay the interest of KEGCO’s debt.

3) Investment in subsidiaries and interests in joint ventures recorded under the equity method in the consolidated financial statements as at December 31, 2007 amounted to Baht 20,233 million or 38% of the total assets, up Baht 7,857 million or 63%. The major change can be defined as follows :

Unit : Million Baht


Page 125

USD14% JPY

3%

THB51%

THB Debenture

32%

3.1) an investment in the additional paid-up shares amounting to Baht 5,588 million, GEC of Baht 2,330 million and BLCP of Baht 3,258 million.

3.2) an increase in share of profit from investment according to the equity method amounting to Baht 5,301 million.

3.3) dividend received from BLCP, Conal and EGCO Joint Venture and Development Co.,Ltd. totaling Baht 3,140 million.

3.4) profit from translation adjustment totaling Baht 107 million.

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, 2007 was Baht 29,653 million, up Baht 5,543 million or 23%, thanks to the additional paid-up shares in joint ventures, GEC and BLCP. Meanwhile, after transfering the shareholding in EGCO Cogen from under TLPC to under EGCO following TLPC’s liquidation, the value of EGCO Cogen was lower than EGCO’s investment in TLPC by Baht 45 million.

4) Property, plant and equipment (net) totaled Baht 18,638 million or 35% of the total assets. They were down Baht 1,502 million or 7% due to the decrease in property, plant and equipment from the depreciation of EGCO and subsidiaries’ assets totaling Baht 2,129 million and the reclassification of unutilised capital spare parts from property, plant and equipment to spare parts and supplies at REGCO and KEGCO totaling Baht 230 million. Meanwhile, there was a recording of capital spare parts as property, plant and equipment following the major maintenance at REGCO and KEGCO in the amount of Baht 590 million and net purchase of property, plant and equipment totaling Baht 267 million.

5) Other assets were Baht 8,322 million or 15% of the total assets, up Baht 1,455 million or 21% mainly from an increase of dividend receivable from a joint venture by Baht 2,075 million which was partially offset by a decrease of trade receivable from a related party by Baht 266 million, a decline in spare parts and supplies by Baht 219 million and a decrease of shareholder’s loan to GEC by Baht 100 million.

5.2 Liability Analysis

As at December 31, 2007, the EGCO Group's total liabilities were Baht 11,605 million, down Baht 3,056 million or 21%. The total liabilities consist of the following:

1) Long-term loans and debentures totaled Baht 9,238 million, or 80% of total liabilities, up Baht 1,724 million or 23%. This mainly came from EGCO’s drawdown of a long-term loan with a local commercial bank in the amount of Baht 4,000 million on December 28, 2007 to repay short-term loan’s that EGCO borrowed in the amount of Baht 4,350 million from two local commercial banks on January 29, 2007. In addition, the long-term loans and debentures repayment from KEGCO, EGCO Cogen and Roi-et Green totaled Baht 2,196 million. The details are as follows :

- USD loans in the amount of USD 39 million - Yen loans in the amount of Yen 873 million


Page 126 Equity

78.35%

Debt21.65%

- Baht loans in the amount of Baht 4,715 million - Baht debentures in the amount of Baht 2,957 million

Maturity of long-term loans and debentures as of December 31, 2007 Unit: Million Baht EGCO KEGCO EGCO Cogen Roi-Et Green

Within 1 Year - 1,379 150 30

1-5 Years - 2,227 968 120

> 5 Years 4,000 - 255 109

Total 4,000 3,606 1,373 259

Long-term loans and debentures are secured liabilities over land, buildings, power plants and equipment of subsidiaries and joint ventures. The subsidiaries and joint ventures have to maintain cash reserves for the purpose of repayment of principal and interest due within one year and as a reserve for minimising the foreign exchange risk.

2) Other liabilities amounted to Baht 2,367 million or 20% of total liabilities, representing a decrease of Baht 4,781 million or 67% which mostly resulted from EGCO’s payment for the acquisition of BLCP of Baht 4,645 million to CLP Power (BLCP) Ltd. in return for the share transfer on January 30, 2007. In addition, income tax payable was down Baht 315 million due to a decrease of REGCO and KEGCO. Meanwhile, net liabilities in a joint venture increased by Baht 200 million from recognising NTPC’s share of loss.

5.3 Shareholders' Equity Analysis

As at December 31, 2007, Shareholders' Equity amounted to Baht 41,996 million, which was Baht 6,198 million or 17% higher than the amount as at December 31, 2006. This was due mainly to the following reasons:

- the net profit in the consolidated financial statements that amounted to Baht 8,402 million.

- at the Annual General Shareholders’ meeting on April 23, 2007, it was unanimously resolved to pay dividends in respect of the operating results for the six-month period ended December 31, 2006 at Baht 2 per share, totaling Baht 1,053 million. These dividends were paid to shareholders on May 8, 2007. - the EGCO Board of Directors’ meeting on August 25, 2007 approved to pay an interim dividend in respect of the operating results for the six-month period ended June 30, 2007 at Baht 2.25 per share, totaling Baht 1,185 million. These dividends were paid to shareholders on September 21, 2007. The analysis of the company's capital structure as at December 31, 2007 can be summarized as follows:

Shareholders' equity was Baht 41,996 million or 78.35%.


Page 127

Liabilities were Baht 11,605 million or 21.65%.

Important financial ratios were as follows:

- Debt to equity ratio was 0.28 times, lower than 0.41 times at the end of 2006. - Book value per share was Baht 78.78, higher than Baht 67.03 at the end of 2006.

6. 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, 2007, the ending balance of the cash and the cash equivalent was Baht 3,750 million, down Baht 1,851 million. The details of the sources and uses of funds are as follows:

-Net cash received from operating activities totaled Baht 6,318 million. This was cash received from operating activities and working capital that amounted to Baht 5,236 million and Baht 1,082 million, respectively. -Net cash payment for investing activities was Baht 7,758 million. Cash payment for the investment in the additional shares in joint ventures amounted to Baht 2,330 million at GEC and Baht 3,258 million at BLCP; and, cash payment for the acquisition of shares in BLCP amounted to Baht 4,645 million. Meanwhile, the net cash inflow from dividend from joint ventures amounted to Baht 985 million and net cash from the short-term and long-term investments amounted to Baht 1,618 million. In addition, the cash receipt from repayment of shareholder’s loan by GEC amounted to Baht 100 million and dividends of EASTW and the other open-end funds amounted to Baht 61 million and Baht 73 million, respectively.

- Net cash payment for financing activities was Baht 411 million. The payment includes the loan repayment of KEGCO, EGCO Cogen and Roi-Et Green that totaled Baht 1,544 million and debenture repayment of KEGCO that totaled Baht 652 million. In addition, dividend payment to shareholders amounted to Baht 2,214 million. Meanwhile, EGCO drew down a long-term loan of Baht 4,000 million from a local bank on December 28, 2007.

In 2007, the analysis of the company’s liquidity ratios is as follows :

- Current ratio was 4.22 times, compared to 1.65 times in 2006 - Quick ratio was 2.26 times, compared to 1.18 times in 2006

Both ratios were higher than the ratios in 2006 due to the payment for shares acquisition in BLCP totaling Baht 4,645 million to CLP Power (BLCP) Ltd.

Part 2 Section 13 Others

Page 132

13. Others

13.1 Referenced Persons Regulator Securities and Exchange Commission, Thailand

93/1 15th Floor, Diethelm Towers B, Wireless Road, Lumpini, Patumwan Bangkok 10330, Thailand Tel 66 0 2695-9999 Corporate Affairs Department ext. 6008, 9509 E-mail: [email protected] Website: www.sec.or.th

Regulator The Stock Exchange of Thailand 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel 66 0 2229-2000, 0 2654-5656 Fax. 66 0 2229-2030, 0 2654-5649 S-E-T Call Center 66 0 2229-2222 E-mail: [email protected] Website: www.set.or.th

Share and Debenture registrar Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel 66 0 2229-2800 Fax. 66 0 2359-1259 Call Center 0 2229 2888 E-mail: [email protected] Website: www.tsd.co.th

Auditor 1. Mr. Suchart Luengsuraswat Certified Public Accountant (Thailand) No.2807 2. Mrs. Nataporn Pan-udom, Certified Public Accountant (Thailand) No. 3430 3. Mr. Kajornkiat A-roonpairotekul Certified Public Accountant (Thailand) No. 3445 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120, Thailand Tel 66 0 2286-9999, 66 0 2344-1000 Fax. 66 0 2286-5050


Page 133

13.2 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 EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Sector Energy & Utilities Industry Resources Foreign Limit 44.81% Share of Minor Shareholder (% Free Float) 51.90% Website www.egco.com

Holding Company focusing on Power business and others related to power business

5,300 10 5,264.65 -

Subsidiaries Company

Business Registered


Par Value (Baht)



(%)

Rayong Electricity Generating Company Limited (REGCO) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0931 Site Office 35 Rayong Highway No. 3191 Huay Pong, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-1012, 66 0 3868-1016, 66 0 3868-1020 Fax 66 0 3868-1784

Independent Power Producer (IPP) Electricity Generating and supply business

4,702 10 4,702 99.99

Khanom Electricity Generating Company Limited (KEGCO) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0932 Site Office 112 Moo 8, Tongnean District, Amphur Khanom Nakhon Sri Thammarat 80210, Thailand Tel. 66 0 7552-9173, 66 0 7552-9179 Fax 66 0 7552-8358

IPP Electricity Generating and supply business

5,000 10 4,850 99.99


Page 134



Par Value (Baht)



(%)

EGCO Engineering & Service Company Limited (ESCO) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0933 Site Office 35 Rayong Highway No. 3191 Huay Pong, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-2611-4 Fax 66 0 3868-2823

Engineering, operation and maintenance services for power plants and manufacturers

400 10 400 99.99

EGCO International (BVI) Limited (EGCO BVI) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Oversea office Romasco Place, Wickhams Cay 1, PO Box 3140, Road Town, Tortola, British Virgin Islands

Holding company focusing on investment in electricity generating companies in foreign countries

2 /1

(50,000 USD)

39.952886 /1

(1 USD)

2 /1

(50,000 USD)

100

EGCO Cogeneration Company Limited (EGCO COGEN) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Site Office 222 Moo 8, Mabkha District,Amphur Nikhom Phattana Rayong 21180, Thailand Tel. 66 0 3863-7051-8 Fax 66 0 3863-7063

Small Power Producer (SPP) Electricity and steam generating and supply business

1,060 10 1,060 80

EGCO Green Energy Company Limited Office EGCO Tower Tel. 66 0 2998-5000

Fax 66 0 2955-0956-9

Holding company focusing on power business

175 10 175 74

Roi-Et Green Energy Company Limited (EGCO Green Energy Company Limited is the company’s 95.00% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 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

SPP utilizing Biomass as fuel 180 10 180 70.30


Page 135



Par Value (Baht)



(%)

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

Trading/delivery service of fuel from natural scrap

2 10 2 99.99

Egcom Tara Company Limited (ET)

(ESCO is the company’s 70.076% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0945 Site office - Plant 1 332 Moo 2, Pongsawai, Amphur Muang Ratchburi 70000, Thailand - Plant 2 250 Moo 1, Pangpuay, Amphur Damneansaduak, Ratchburi 70130, Thailand

Piped water generating and supply business

345 10 345 70.076

Joint Ventures:



Par Value (Baht)



(%)

Gulf Electric Public Company Limited (GEC) Office 11th FL., M. Thai Tower I, All Seasons Place, 87 Wireless Road, Lumpini, Phathumwan, Bangkok 10330, Thailand Tel’ 66 0 2654-0155 Fax 66 0 2654-0156-7 Website www.gulf.co.th

Holding company focusing on IPP and SPP 14,000 10 13,784.35 50


Page 136

Amata Power (Bang Pakong) Limited (APBP) (EGCO JD is the company’s 30% shareholder ) Office 33 Soi Lertnava, Krungthepkreetha Rd, Huamark Bangkapi, Bangkok 10240, Thailand Tel. 66 0 2379-4333, 66 0 2379-4246 66 0 2710-3400, 66 0 2710-3000

Fax 66 0 2379-4245, 66 02379- 4257

SPP Electricity and steam generating and supply business

1,060 10 1,060 15

Amata Power - ESCO Service Company Limited (AMESCO)

(ESCO is the company’s 50% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9

Power plant operation and maintenance services

2 10 2 50

Conal Holding Corporation (Conal) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Oversea office Alsons Building, 2286 Pasong Toma Extension, Makati City, Metro Manila, Philippines Tel. 816-6740, 892-4632 Fax 814-0625

Holding company focusing on power business in the Philippines

729.32 /2

(800,000,000 PESO)

91.17 /2

(100 PESO)

729.32 /2

(800,000,000 PESO)

40

BLCP Power Limited (BLCP) (Since January 30, 2007) Office No. 9, I-8 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Rayong 21150 Tel. 0 3892-5100, Fax. 0 3892-5199


12,000 100 12,000 50

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


13,945.80 /3

330,000,000 USD Million

4,226 /3

100 USD

42.26 /3

1,000,000 USD Million

25


Page 137

Other:



Par Value (Baht)


Ownership Interest (%)

Eastern Water Resources Development and Management Public Company Limited (EASTW) Office 9/9 Vibhavadi Rangsit Road, Talad Bangkhen, Laksi Bangkok 10210, Thailand Tel. 66 0 2940-9974-6 Fax 66 0 2561-3793 Website www.eastwater.com

Water resources development and management for supplying raw water to the customers

1,665 10 1,299.69 18.92

Note : The Exchange rate as of Investment Date /1 1 USD = Baht 39.952886 (July 13, 21, 2000) /2 1 PESO = Baht 0.91165 (August 25, 2000) /3 1 USD = Baht 42.26 (August 30, 2002)


Page

Part 3

The Certification of Information

We, the Executive Committee or the highest ranking management in Accounting, have thoroughly reviewed all information in this annual registration statement and hereby certify that all information is true, accurate and not misleading nor does it fail to disclose material facts that should be stated therein which may cause damage to the purchasers of securities. In addition, we certified that:

(1) The financial statement and the financial information in this annual registration statement has accurately disclosed the financial status, the performance, and the cash flow of the company and its subsidiaries.

(2) We account for providing the good disclosure system to ensure that the company and its subsidiaries have disclosed the accurate information as well as overseeing the compliance with such system.

(3) We account for providing the good internal control system as well as overseeing the compliance with such system. In addition, we have already disclosed the information on the internal control appraisal to the auditor and the company’s audit committee on …………………. The information consists the deficiency and significant change of the internal control as well as the incorrect practice that may affect the preparation of the financial statement of the company and its subsidiaries.

To certify that all documents are the same paper as we had certified correctness; we, hereby assigned Ms. Busakorn Kakanumpornwong to affix her signature on every single page of all same certified series. If any page is not signed by Ms. Busakorn Kakanumpornwong, we assume that such information is not certified.

Name Position Signature

1. Mr. Visit Akaravinak C President ____________________

2. Mr. Sakda Sreesangkom Senior Executive Vice President - Finance

____________________


Appointee Ms. Busakorn Kakanumpornwong

Senior Vice President-Corporate Secretary

________________________


Page

The Certification of Information

We have thoroughly reviewed all information in this annual registration statement and hereby certify that all information is true, accurate and not misleading nor does it fail to disclose material facts that should be stated therein.

To certify that all information are the same as I had reviewed and having no inquiries that such information are incomplete, false, and misleading or failing to disclose material facts that should be stated therein; I, hereby assigned Ms. Busakorn Kakanumpornwong to affix her signature on every single page of all same certified series. If any page is not signed by Ms. Busakorn Kakanumpornwong, we assume that such information is not certified.


Mr. Sanit Rangnoi Chairman ________________________


Appointee Mrs. Busakorn Kakanumpornwong


________________________


Page

The Certification of Information We have thoroughly reviewed all information in this annual registration statement and hereby certify that all information is true, accurate and not misleading nor does it fail to disclose material facts that should be stated therein.



Mr. Chaipat Sakasakul Director ________________________




________________________


Page




Mr. Aswin Kongsiri Director ________________________




________________________


Page




Mr. Somphot Kanchanaporn Director ________________________




________________________


Page




Mr. Chareon Prajumtan Director ________________________




________________________


Page




Mrs. Wattanaee Phannachet Director ________________________




________________________


Page




Mr. Chamnong Wongsawarng Director ________________________




________________________


Page




Mr. Sombat Sarntijaree Director ________________________




________________________


Page




Mr. Narongsak Vichetphan Director ________________________




________________________


Page




Mr. Richard McIndoe Director ________________________




________________________


Page




Mr. Peter Albert Littlewood Director ________________________




________________________


Page




Mr. Hideaki Tomiku Director ________________________




________________________


Page




Mr.Mark Takahashi Director ________________________




________________________


Page




Mr. Visit Akaravinak President ________________________




________________________

เอกสารแนบ 1

The positions of EGCO’s Board of Directors as of January 2, 2008

Working Experience Name and Position Age Education Dispute Family Relationship

between the management

Amount of Shares (%) Year Position Company

1. Mr. Pornchai Rujiprapa ♦ Chairman ♦ Chairman, Executive

Committee (Authorized Director)

Vacating the office by resignation on June 8, 2007

55 - Ph.D. (Urban & Regional Economics.), University of Pennsylvania, USA

- M.Sc. (Urban & 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 Directors Accrediation Program, Thai Institute of Directors Association

- - 0.000 October 2006-Present December 2006-Present 2006-Present 2003-2006 1999-2003

Chairman Director Permanent Secretary, Ministry of Energy Deputy Permanent Secretary, Ministry of Energy Deputy Secretary –General, The National Economic and Social Development Board (NESBD)

Electricity Generating Authority of Thailand PTT Public Company Limited Ministry of Energy Ministry of Energy Office of the Prime Ministry


2. Mr. Sanit Rangnoi • Chairman of the Board of

Directors • Chairman of Executive

Committee (Authorized Director)

59 - M.Sc. (Industrial Engineering) from Pennsylvania State University, USA - B.Eng. (Industrial Engineering) from Chulalongkorn University. - B.A. (Economics), Sukhothai Thammathirat University - National Defence Course (NDC 43) , National Defence College - Certificate of Directors Accrediation Program, Thai Institute of Directors Association - Certificate of Directors Finance for Non-Finance Directors, Thai Institute of Directors Association - Certificate of Directors Certification Program, Thai Institute of Directors Association - Senoir Executive Program, Sasin Graduate Institute of Business

- - 0.000 2007-Present 2 0 0 6 -Jan 2007 2004 2003 2002

Director-General, Department of Revenue Director-General, Department of Excise Deputy Permanent Secretary Director-General, Department of the Comptroller General Inspector-General, Ministry of Finance

Ministry of Finance Ministry of Finance Ministry of Finance Ministry of Finance Ministry of Finance


3. Mr. Chaipat Sahasakul • Independent Director • Chairman, Audit Committee

53 - Ph.D. in Economics, University of Rochester, USA

- M.A. in Economics, Thammasat University

- B.A. in Economics, Thammasat University

- Certificate of Directors Certification Program, Thai Institute of Directors Association

- - 0.000 2005-Present 2001 – Present 2005 - 2006 1998 – 2001 1991 – 1996 1989 - 1991

Independent Director, Audit Committee Member Secretary - General Director, Audit Committee Member and Chairman of Risk Management Committee Senior Executive Vice President Senior Vice President and Spokesman Executive Vice President

Pylon Public Company Limited Agricultural Futures Trading Commission Government Housing Bank MFC Asset Management Public Company Limited Stock Exchange of Thailand Morgan Grenfell Thai Co., Ltd.

4. Mr. Aswin Kongsiri • Independent Director • Nomination and Remuneration

Committee Member

63 - Bachelor’s Degree ( Honours) in Philosophy, Politics and Economics, Oxford University, England

- Banff School of Advanced Management, Alberta, Canada

- National Defence College, The National Defence Course for the Joint State-Private Sectors, Class 6

- Certificate of Chairman 2000 Program, Thai Institute of Directors Association


- - 0.000 Oct 2007-Present 2005 – Present

2005 – Present 2003 – Present 1999 – Present

1993 – Present

2003 – November 2008 1992 – March 2006

1981 - Present

Chairman Director and Chairman of Risk Management Committee Director and Executive Director Director Director and Chairman of Audit Committee Director and Audit Committee Member Member Director and Audit Committee Member, Risk Management Committee Member and Chairman of Nomination and Remuneration Committee Director and Audit Committee

Ch. Karnchang Public Company Limited Bangkok Aviation Fuel Services Public Company Limited Krung Thai Bank Public Co., Ltd. Thai-German Ceramic Industry Public Company Limited The Oriental Hotel (Thailand) Public Company Limited Thai Reinsurance Public Company Limited Thai Rating and Information Services Company Limited Muang Thai Life Assurance Company Limited Padaeng Industry Public Company Limited


1994 – Sept 2007

Member Director

Ch. Karnchang Public Company Limited

5. Mr. Worawit Khamkanist • Independent Director • Audit Committee Member Vacating the office by resignation on October 17, 2007

68 - M.Sc. (Mechanical Engineering), University of Alabama, USA

- B.Eng. (Mechanical), Chulalongkorn University


- - 0.009 2005-Present 2005-2006

2005-Present 2001 - 2004 1997 – 2000

1996 – 1997

1990-1995

Chairman Chairman Chairman Managing Director Managing Director President, Mining Business Assistant Governor, Mae Moh Power Plant

Golden Land Wood Co., Ltd. Sahakarn Wisawakorn Co., Ltd. Aqua Plus Company Limited Aqua Plus Company Limited Electricity Generating Public Company Limited Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

6. Mr. Thanapich Mulapruk • Independent Director

59 - National Defence College, 1998 (Class 41st)

- LL.B., Chulalongkorn University - Thai Bar Certificate, Thai Barrister

at law of Thailand - LL.M., Chulalongkorn University - Certificate of Directors

Certification Program (class 79th ) , Thai Institute of Directors Association

- - 0.000 16 Oct. 2007-Present

1 Dec. 2006 - Present 2006

2004-2006

2003-2004

Director Director General of Department of Economic Crime Litigation Director General of Department of Administrative Litigation Deputy Director General of Department of Administrative Litigation Executive Director of Office of Economic Crime Litigation 1

The Marketing Organization for Farmers, Ministry of Agriculture and Cooperatives Office of Attorney-General

7. Mrs. Wattanee Phanachet • Independent Director • Audit Committee Member

70 - M.A. Degree in Accounting, University of Alabama, USA

- Bachelor Degree in Accounting, Chulalongkorn University, Bangkok, Thailand

- Certified Public Accountant (CPA), Thailand License No. 1091

- - 0.000 October 2007-Present 2005 – Present

Director and Audit Committee Member Head, Sub-Committee on Certified Public Accountant’s Qualification, appointed by the Federation of Accounting Professions.

ESSO (Thailand) Public Company Limited Federation of Accounting Professions



1999 – Present 1999 – Present 2006 – 2007 1999 – 2007

Director and Audit Committee Member Independent Director and Audit Committee Committee on Curriculum Quality Guarantee, Faculty of Commerce and Accountancy Independent Director and Audit Committee,

Thai Poly Acrylic Public Company Limited Capital Nomura Securities Chulalongkorn University Delta Electronics (Thailand) Public Company Limited


8. Mr. Chareon Prajumtan • Independent Director • Nomination and Remuneration

Committee Member

61

- B.Eng. (Civil Engineering), King Mongkut’s University of Technology Thonburi,

- B.A. (Law), Sukhothai Thammatirat Open University

- MPA, Thammasat University - Certificate of High Level of

Engineering Management, Chulalongkorn University and Public Works

- Certificate of High Level Administration, The Institute of Administration Department of Provincial Administration

- Certificate of Executive Department of The Civil Service Commission

- Certificate of Change Management, RIPA International, London


- Certificate of Audit Committee Program

- - 0.000 2006-30 September 2007 2003-2005 2002 2001 1999

Inspector-General, Ministry of Energy Deputy Director-General (level 9), Department of Business Energy Policy and Plan Specialist (Public Works) Inspector General Director of Fuel and Gas Control Division (Engineer level 8)

Ministry of Energy Ministry of Energy Ministry of Energy Ministry of Energy Ministry of Energy


9. Mr. Chamnong Wongsawarng • Director • Executive Committee Member ( Being the Executive Committee Member until December 17, 2007) (Authorized Director)

61 - B.Eng. (Electrical Power Engineering), 2nd Class Honors, Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association

- - 0.000 2006-30 September 2007

2005

2003-2005

2001-2003

Deputy Governor-Transmission System Senior Executive Vice President-Transmission System Deputy Governor-Transmission System Assistant Governor-Transmission System Operation

Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

10. Mr. Sombat Sarntijaree • Director • Executive Committee Member (Being the Executive Committee starting from December 17, 2007) (Authorized Director)

58 - Master of Engineering (Mechanical Engineering), Lamar University, USA - B.Eng. (Mechanical Engineering), Kasetsart University - Certificate of Directors Certification Program, Thai Institute of Directors Association

- - 0.000 November 12, 2007-Present

October , 2006-November 11,

2007 March , 2006-

Sept 2006 Aug , 2005-March 2006 June, 2005-Oct.July 2006 October 1, 2003-June 2005Oct. 2000-Sept

2003

Governor Deputy Governor-Generation Deputy Governor – Operation and Maintenance Senior Executive Vice President – Operation and Maintenance Executive Vice President-Power Plant 1 Assistant Governor – Power Plant 1 Vice President – Generation Business 1-Power Plant

Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

11. Mr. Narongsak Vichetpan • Director • Nomination and Remuneration

Committee Member • Corporate Social

Responsibility Committee

62 - Bachelor of Civil Engineering, Chulalongkorn University - Master of Hydraulic Engineering, Asian Institute of Technology (AIT) - Senior Executive Program (SEP 14), Sasin

- - 0.000 May 8, 2007-Present

Nov. 2006 – June2007

Oct. 2005-Sept. 2006

Oct. 2003-Sept.

Director Advisor Advisor Director

Electricity Generating Authority of Thailand Electricity Generating Public Company Limited Electricity Generating Authority of Thailand Ratchaburi Electricity Generating Holding


Member (Authorized Director)

- Advanced Management Program (AMP 163), Harvard Business School , U.S.A. - Certificate of Directors Certification Program, Thai Institute of Directors Association

2005 3 Apr. - 5 Sep.2004 1 Jan.2004 - 23 Jun.2005 Oct. –Dec 2003 Oct. 2000-Sept. 2003

Acting Governor Senior Deputy Governor - Development Group Deputy Governor – Policy and Planning President - Fuel Business

Public Company Limited Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

12. Mr. Peter Albert Littlewood • Director (Authorized Director)

58 MA (1st Class Honours), Cambridge University, UK

- - 0.000 2003 – Present

2001-Present 2000 - 2005

2000 - 2005 2000 - 2005 1999 – 2003

1998

Executive Director and Chief Operating Officer Director Director Director Director Project Manager for CLP’s generating plant projects General Manager for CLP’s generation business group and later for CLP strategic development

CLP Power Asia Limited, Hong Kong BLCP Power Limited Rayong Electricity Generating Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering & Service Co., Ltd. CLP Group CLP Group

13. Mr. Richard McIndoe • Director • Chairman, Nomination and

Remuneration Committee (Authorized Director)

43 - Insead Business School (France), Master of Business Administration - Cambridge University (U.K.), Master of Arts, Modern History

- - 0.000 2006 – present

2005- 2006

2003 – 2005 2002

1998 – 2002 1998 – 2002

Group Director and Managing Director, TRUenergy Australia Group Director & Managing Director-Asia Pacific Managing Director Finance Director Managing Director Vice President - Development

CLP Group and TRUenergy Australia CLP Power Asia Limited, Hong Kong CLP Power Asia Limited, Hong Kong CLP Power International Ltd., Hong Kong InterGen, China InterGen, China


1998 – 2002

and Finance Director

UBS Warburg, Hong Kong

14. Mr. Hideaki Tomiku • Director (Authorized Director)

50 International Law, Tokyo University - - 0.00 2006 –Present 2003 – 2006 2001 –2003

Director and Executive Vice President Deputy General Manager, Head of International IPP Assistant General Manager, Power, Generation & Marketing for Japanese Market

OneEnergy Limited Mitsubishi Corporation Mitsubishi Corporation

15. Mr. Mark Takahashi • Director • Executive Committee Member (Authorized Director)

49 - MBA, Wharton School, University of Pennsylvania, USA

- BSc. (civil engineering) from the University of Colorado, USA

- - 0.00 October 2006-Present

July 2006

December 2003-July 2006 1995-2003

Managing Director Group Director – Corporate Development Director of Group Treasury Regional Finance VP/Corporate Treasurer

OneEnergy Limited CLP Holdings Limited CLP Holdings Limited Intergen (Hong Kong) Intergen, Boston, USA

16. Mr. Visit Akaravinak • Director and President • Executive Committee Member • Chairman, Risk Management

Committee • Chairman, Group Business

Committee • Chairman, Good Corporate

Governance Committee • Chairman, Corporate Social

Responsibility Committee (Authorized Director)

59 - B.Eng. (Electrical) Chulalongkorn University

- Master of Management from SASIN, Chulalongkorn University.

- Certificate of Management of Public Economy” at the King Prajadhipok’s Institute

- Certificate of the Directors Certificate Program, Thai Institute of Directors Association (IOD).

- Certificate of the Role of the Chariman Program, Thai Institute of Directors Association (IOD).

-

- - 0.00 August 2005-Present

August 2005-Present August 2005-

Present 2003-July 2005

2003-July 2005

2003-July 2005

Nov. 2006-

Present

Chairman Chairman Chairman Director Director Director Director

Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Service Company Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Services Company Limited BLCP Power Co., Ltd.


June 28, 2005-August 30, 2005

2003-2005

1999-2003

1997-1999

Senior Executive Vice President –Operation and Maintenance Senior Executive Vice President – Operation and Maintenance Assistant Governor –Bangpakong Power Plant Director, Thermal Power Plant Construction

EGAT Public Company Limited Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

The positions of the Management and the Control Persons as of January 7, 2008

Working Experience Name and Position Age Education Dispute

Family Relationship between the management


1. Mr. Visit Akaravinak • Director and President • Executive Committee Member • Chairman, Risk Management

Committee • Chairman, Group Business

Committee • Chairman, Good Corporate

Governance Committee • Chairman, Corporate Social

Responsibility Committee (Authorized Director)

59 - B.Eng. (Electrical) Chulalongkorn University

- Master of Management from SASIN, Chulalongkorn University.

- Certificate of Management of Public Economy” at the King Prajadhipok’s Institute

- Certificate of the Directors Certificate Program at Thai Institute of Directors Association (IOD).

- Certificate of the Role of the Chairman Program (RCP) 14/2006 at Thai Institute of Directors Association (IOD).

- - 0.00 August 2005-Present

August 2005-Present August 2005-

Present 2003-July 2005

2003-July 2005

2003-July 2005

Nov. 2006-

Present June 28, 2005-August 30, 2005

2003-2005

1999-2003

Chairman Chairman Chairman Director Director Director Director Senior Executive Vice President –Operation and Maintenance Senior Executive Vice President – Operation and Maintenance Assistant Governor –Bangpakong Power Plant

Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Service Company Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Services Company Limited BLCP Power Co., Ltd. EGAT Public Company Limited Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand




1997-1999 Director, Thermal Power Plant Construction

Electricity Generating Authority of Thailand

2. Mr. John M. Palumbo ♦ Senior Executive Vice

President -Business Development

♦ Risk Management Committee Member

♦ Good Corporate Governance Committee Member

44 - Bachelor of Science in Mechanical Engineering (Honors), Columbia - University, School of Engineering and Applied Science, New York.

- - 0.000 2005-Present

2004 – Present 2004 – April 07

30 Jan 07-Present2003 – 2004

2003 - 2004

2003

1995 – 2003

Director Director Director Director Independent Consultant to the Managing Director and the Head of the Southeast Asia Business Team Leader & Infrastructure Specialist, Independent Consultant to Chief Executive Officer Principal and Managing Director

EGCO Joint Ventures & Development Company Limited Gulf Electric Public Company Limited Nam Theun 2 Power Company Limited BLCP Power Co., Ltd. China Light & Power Group (Hong Kong) ADB Technical Assistance Program International Power PLC. Delta Associates (Thailand) Limited

3. Mr. Sakda Sreesangkom ♦ Senior Executive Vice

President - Finance ♦ Risk Management Committee

Member ♦ Group Business Committee

Member ♦ Good Corporate Governance

Committee Member

46 - M.A. (Economics), Keio University, Japan

- B.A. (Economics), Thammasat University

- - 0.000 2004- Present 2002 – Present

2002 – Present

2002 – Present

2002 – Present 2002 – April 07

Director Director Director Director Director Director

Gulf Electric Public Company Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited EGCO International (BVI) Limited EGCO Joint Ventures & Development




♦ Corporate Social Responsibility Committee Member

30 Jan 07-Present

2005- April 06 2002 – 2005

2002 – April 07 2002 – 2003

2001 -2002

2000 -2001

1999-2000 1997 -1999 1990-1997 1987-1989

Director Chairman Director Director Director Senior Vice President Asian Development Bank Consultant to Public Debt Management Office, Ministry of Finance Financial Consultant Executive Director Vice President Analyst

Company Limited BLCP Power Co., Ltd. Egcom Tara Company Limited Egcom Tara Company Limited Amata-EGCO Power Company Limited Amata Power (Bangpakong) Company Limited Glow Company Limited, Tractebel Group ADB Technical Assistance Program Debt management consultancy to EGAT and PEA SBC Warburg (Hong Kong, Bangkok) Credit Suisse First Boston (New York, Singapore, Bangkok) Nikko Securities (Tokyo)

4. Mr. Sinchai Nerngjumnong ♦ Senior Executive Vice President ♦ Risk Management Committee

Member ♦ Good Corporate Governance

Committee Member

60 - B. Eng. (Mechanical Engineering), 2nd Class Honors, Chulalongkorn University

- - 0.000 2002 – Present

2001 – 2002 (Mar 17, 2002)

1997 - 2001 (Mar 25, 01)

Director and Managing Director Director and Managing Director Deputy Managing Director

Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited Rayong Electricity Generating Company Limited




1994 – 1996 Operation Division Manager Rayong Electricity Generating Company Limited

5. Mr. Chankij Jearaphunt ♦ Senior Executive Vice

President ♦ Risk Management Committee

member ♦ Good Corporate Governance

Committee Member ♦ Corporate Social

Responsibility Committee Member

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

- - 0.000 2004 – Present (Mar 20, 2004)

April 07-Present April 07-Present 2006-April 07 2006-April 07 2002 – Present 2002 – Present 2002 – Present

1998 – 2004 (Mar 19, 04) 1996 – 1998

Director and Managing Director Chairman Chairman Director Director Director Director Director Deputy Managing Director-Operation, Manager – Production Control Division

Khanom Electricity Generating Company Limited Roi-Et Green Company Limited EGCO Green Energy Company Limited EGCO Green Energy Company Limited Roi-Et Green Company Limited Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited Khanom Electricity Generating Company Limited Khanom Electricity Generating Company Limited

6. Mr. Piya Jetasanon ♦ First Senior Vice President –

Finance Division

51 - MBA, Ramkhamhaeng University - B.A. (Economics), Thammasat University

- - 0.000 2007 - Present 2007

2005-Present

2003-2005

1996 – 2003

Director Director First Senior Vice President – Finance Senior Vice President – Finance Manager – Finance Division

EGCO Cogeneration Company Limited Thai LNG Power Corporation Ltd. Electricity Generating Public Company Limited Electricity Generating Public Company Limited Khanom Electricity Generating Company Limited




1994 – 1996 Manager- Treasury Management Section

Electricity Generating Public Company Limited

7. Mr. Suvapan Chomchalerm ♦ Senior Vice President -

Accounting and Budget Division

48 - M.Sc. (Accounting), Thammasat University

- - 0.000 2000 - Present

1994 – 2000

Senior Vice President - Accounting and Budget Division Manager-Accounting and Budget Analysis Section, Accounting and Budget Division

Electricity Generating Public Company Limited Electricity Generating Public Company Limited

เอกสารแนบ 2 : ขอมูลการดํารงตําแหนงของผูบริหารและผูมีอํานาจควบคุม

The Positions of EGCO's Management and the Control Persons in the Subsidiaries and Other Related Companies as of December 31, 2007EGCO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 271 Mr. Sanit Rangnoi DD, XX D2 Mr. Aswin Kongsiri I, N3 Mr. Chaipat Sahasakul I, AA4 Mr. Chareon Prajumtan I, N5 Mrs. Wattanee Phanachet I, A6 Mr. Thanapich Mulapruk I7 Mr. Narongsak Vichetpan D, N D8 Mr. Chamnong Wongsawarng D9 Mr. Sombat Sarntijaree D, X Governor

10 Mr. Peter Albert Littlewood D11 Mr. Richard McIndoe D, NN12 Mr. Mark Takahashi D, X13 Mr. Hideaki Tomiku D

14Mr. Visit Akaravinak D, President, X, SS, GG

Engineering Level 14 DD DD DD D D

15 Mr. John Palumbo SEVP-Business Development, G D DD D D D D D D D16 Mr. Sakda Sreesangkom SEVP-Finance, S, G D D D D D D17 Mr. Sinchai Nerngjumnong SEVP, S, G D, Managing Director D D18 Mr. Chankij Jeraphunt SEVP, S, G D D, Managing Director D DD DD D D D19 Mr. Piya Jetasanon FSVP-Finance D D20 Mr. Suvapan Chomchalerm SVP-Accounting and Budget21 Mrs. Vasana Vongpromek Secretary to Board of Directors

RemarkA. DD = Chairman D = Director XX = Chairman of Executive Committee X = Executive Committee Member I = Independent Director AA = Chairman of Audit Committee A = Audit Committee Member NN = Chairman of Nomination and Remuneration Committee N = Nomination and Remuneration Committee Member

SS = Chairman of Group Business Committee S = Group Business Committee Member GG = Chairman of Good Corporate Governance Committee G = Good Corporate Governance Committee MemberB. 1 = Electricity Generating Authority of Thailand 9 = EGCO Green Energy Co., Ltd. 17 = EGCO Joint Ventures & Development Co., Ltd. 25 = Southern Philippines Power Corporation

2 = OneEnergy Thailand Limited 10 = Roi-Et Green Co., Ltd. 18 = Amata EGCO Power Ltd. 26 = Western Mindanao Power Corporation3 = Rayong Electricity Generating Co., Ltd. 11 = Egcom Tara Co., Ltd. 19 = Amata Power (Bangpakong) Ltd. 27 = BCLP Power Limited4 = Khanom Electricity Generating Co., Ltd. 12 = Gulf Electric Public Company Limited 20 = Nam Theun 2 Power Co., Ltd.5 = EGCO Cogeneration Co., Ltd. 13 = Gulf Power Generation Co., Ltd. 21 = Conal Holdings Corporation6 = EGCO Engineering and Service Co., Ltd. 14 = Gulf Cogeneration Co., Ltd. 22 = Northern Mindanao Power Corporation7 = EGCO International (BVI) Ltd. 15 = Nongkhae Cogeneration Co., Ltd. 23 = Alsing Power Holdings, Inc.8 = Thai LNG Power Corporation Ltd. 16 = Samutprakarn Cogeneration Co., Ltd. 24 = Alto Power Management Corporation

Thai LNG Power Corporation Ltd. was dissolved on October 1, 2008.

Name Major Shareholders Joint VenturesSubsidiaries (Core Business) Subsidiaries


The Positions of REGCO's Management and the Control Persons in EGCO Group Companies as of December 31, 2007REGCO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 171 Mr. Visit Akaravinak DD DD DD D D2 Mr. Sakda Sreesangkom D D D D D D D D3 Mr. Kwok Wing Ho D D D4 Mr. Chankij Jearaphunt D D, Managing Director D DD DD D D D5 Mr. Rasda Pongpaew D D D, Managing Director DD6 Mr. Sinchai Nerngjumnong D, Managing Director D D7 Mr. Chumsak Desudjit Deputy Managing Director - Operation DD DD8 Ms. Warunee Tuntiwong Deputy Managing Director - Finance and Administration9 Mr. Narong In-Eav Maintenance Division Manager10 Mr. Pasagorn Sasanawin Operation Division Manager11 Mrs. Jaratsri Sawartsut Account & Budget Division Manager12 Mr. Supachai Pongthong General Affairs Division Manager

RemarkA. DD = Chairman D = DirectorB. 1 = Khanom Electricity Generating Co., Ltd. 9 = Gulf Electric Public Co., Ltd. 17 = BLCP Power Limited

2 = EGCO Cogeneration Co., Ltd. 10 = Gulf Power Generation Co., Ltd.3 = EGCO Engineering & Service Co., Ltd. 11 = Gulf Cogeneration Co., Ltd.4 = EGCO International (BVI) Ltd. 12 = Nongkhae Cogeneration Co., Ltd.5 = Thai LNG Power Corporation Ltd. 13 = Samutprakarn Cogeneration Co., Ltd.6 = EGCO Green Energy Co., Ltd. 14 = EGCO Joint Ventures & Development Co., Ltd.7 = Roi-Et Green Co., Ltd. 15 = Amata EGCO Power Ltd.8 = Egcom Tara Co., Ltd. 16 = Amata Power (Bangpakong) Ltd.


Name Other Subsidiaries


The Positions of KEGCO's Management and the Control Persons in EGCO Group Companies as of December 31, 2007KEGCO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 171 Mr. Visit Akaravinak DD DD DD D D2 Mr. Sakda Sreesangkom D D D D D D3 Mr. Kwok Wing Ho D D D4 Mr. Sinchai Nerngjumnong D D, Managing Director D5 Mr. Rasda Pongpaew D D D, Managing Director DD6 Mr. Chankij Jearaphunt D, Managing Director D D DD DD D D D7 Mr. Mana Vitvaskul Deputy Managing Director - Operation8 Mrs. Ngamphis Chitphromphan Deputy Managing Director - Finance and Administration9 Mr. Tanit Kalunkul Maintenance Division Manager

10 Mr. Amnat Tippayasak Operation Division Manager11 Mr. Apichai Komhint Account & Budget Division Manager12 Mr. Pairote Boonmak General Affairs Division Manager

RemarkA. DD = Chairman D = Director B. 1 = Rayong Electricity Generating Co., Ltd. 9 = Gulf Electric Public Co., Ltd. 17 = BLCP Power Limited

2 = EGCO Cogeneration Co., Ltd. 10 = Gulf Power Generation Co., Ltd.3 = EGCO Engineering & Service Co., Ltd. 11 = Gulf Cogeneration Co., Ltd.4 = EGCO International (BVI) Ltd. 12 = Nongkhae Cogeneration Co., Ltd.5 = Thai LNG Power Corporation Ltd. 13 = Samutprakarn Cogeneration Co., Ltd.6 = EGCO Green Energy Co., Ltd. 14 = EGCO Joint Ventures & Development Co., Ltd.7 = Roi-Et Green Co., Ltd. 15 = Amata EGCO Power Ltd.8 = Egcom Tara Co., Ltd. 16 = Amata Power (Bangpakong) Ltd.


Name บริษัทอื่นๆ ในกลุม บผฟ.


The Positions of EGCO Cogen's Management and the Control Persons in EGCO Group Companies as of December 31, 2007EGCO Cogen

1 2 3 4 5 6 7 8 9 10 11 12 13 14 151 Mr. Chumsak Desudjit DD DD2 Mr. Voravit Potisuk D D3 Mr. Piya Jetasanon D D4 Mr. Supoth Chantavilartkul D, General Manager5 Mr. Jotaro Higuchi D D D

RemarkA. DD = Chairman D = DirectorB. 1 = Rayong Electricity Generating Co., Ltd. 9 = Gulf Power Generation Co., Ltd.

2 = Khanom Electricity Generating Co., Ltd. 10 = Gulf Cogeneration Co., Ltd.3 = EGCO Engineering & Service Co., Ltd. 11 = Nongkhae Cogeneration Co., Ltd.4 = Thai LNG Power Corporation Ltd. 12 = Samutprakarn Cogeneration Co., Ltd.5 = EGCO Green Energy Co., Ltd. 13 = EGCO Joint Ventures & Development Co., Ltd.6 = Roi-Et Green Co., Ltd. 14 = Amata EGCO Power Ltd.7 = Egcom Tara Co., Ltd. 15 = บริษัท อมตะ เพาเวอร (บางปะกง) จํากัด8 = Gulf Electric Public Co., Ltd. 16 = Amata Power (Bangpakong) Ltd.


Name บริษัทอื่นๆ ในกลุม บผฟ.

Nomination &Remuneration Committee

Executive Committee

Board of DirectorsCorporate Social Responsibility Committee

EVP Business Development

SEVP Business Development

SEVP Asset Management&

Planning

EVP Project Management

Corporate Planning

AssetManagement

EVP AssetManagement &

Planning

SEVP Finance

Finance

AccountingAnd Budget

EVP Finance

Controller

EVP CorporateServices

HumanResources

MISLegal

CorporateSecretary Procurement

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PRESIDENT

Domestic Teams

Assigned Staffs To JV Companies

Seconded ManagementTo Subsidiaries

ProjectManagement

Assigned Staffs to Project Companies

International Teams

EGCO’s Organization Chart

Effective April 1,2007

Audit Committee

REGCO’s Organization Chart as of December 31, 2007

Board of Directors

Managing Director

Deputy Managing Director- Operation Deputy Managing Director- Administration and Finance

Operation Maintenance Administration Accounting and Finance

KEGCO’s Organization Chart as of December 31, 2007

Board of Directors

Managing Director

Deputy Managing Director- Operation Deputy Managing Director- Administration and Finance

Operation Maintenance Administration Accounting and Finance

EGCO Cogen’s as of December 31, 2007

Board of Directors

General Manager

Engineer Accountant Procurement Officer

AUDIT COMMITTEE’S REPORT

The Board of Directors of the Electricity Generating Public Company Limited

(the Company) appointed the Audit Committee. The Audit Committee is composed

of three independent directors whose qualifications are in compliance with those

specified by the Stock Exchange of Thailand (SET). The compositions,

qualifications, terms of office, and responsibilities of the Audit Committee are

specified in the Audit Committee Charter and approved by the Board.

The Audit Committee held 9 meetings in 2007 with a 100% attendance rate.

The Audit Committee always submitted the Audit Committee’s Minutes of Meeting to

the Board of Directors.

The summary of major activities is as follows:

- Review the 2007 quarterly financial statements and the annual financial

statements with both the external auditor and the Management. This was

accomplished by asking questions and providing comments and useful

recommendations to ensure that the process to prepare the financial

statements and major disclosures were complete, accurate, reliable, in

compliance with related laws and regulations, and in accordance with the

generally accepted accounting principles which were consistently applied.

- Review two changes in accounting policies and agree that these issues

could be submitted to obtain approval from the Board of Directors. These

changes in accounting policies complied with the Federation of

Accounting Professions’ announcement on the amendment of TAS 44

and 45. They were effective from January 1, 2007.

- Review the compliance with draft of TAS for employee benefits and agree

that this issue could be submitted to obtain approval from the Board of

Directors. The Board then resolved to early adopt this new standard with

effect from 2007 in order that EGCO’s financial statements would better

reflect the true financial status and operating performance.

- Consider the accuracy and adequacy of EGCO’s disclosure on related-

party transactions or any transactions that may cause conflict of interest.

- Review with the management the risk management policy, the practice

compliance with such policy, as well as EGCO’s risk management

guidelines.

- Review the sufficiency and effectiveness of the internal control systems.

The Committee considered the internal auditor’s and the external auditor’s

reports, 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 Internal Audit

Division was also requested to perform a management control audit to

ensure that the Company has sufficient and appropriate procedures and

practices in place to prevent and mitigate risks that might occur. Also

reviewed was the transaction approval authority (and the levels thereof) to

ensure compliance with policy.

- Review and acknowledge the Code of Conduct Compliance Statement

and General Representation Letter prepared by the President as well as

to review the statements’ preparation process which provided assurances

to the Committee that the Company’s operations were in compliance with

the internal control systems and that the financial information and

disclosures were accurate, complete and reliable.

- Approve the audit plan, the scope of work, the budget and the manpower

of the Internal Audit Division. The Committee also conducted the

performance appraisal of the internal audit manager who functionally

reported to the Committee.

- Review with Management the Company’s compliance procedures to

ensure that the Management and operations complied with the securities

and exchange laws and regulations of the SET or laws relating to the

business of the Company.

- Review and select the external auditor and determine their remuneration

for the year 2007 by considering the compliance of the selection

procedure with the guidelines approved by the Committee, taking into

account the qualifications of the audit firm and the auditors. In order to

increase assurance that the auditor was independent, the Committee

formulated a policy in conformity with the Securities and Exchange

Commission’s (SEC) notification to rotate the Company’s auditors every

five years.

- Consider other services performed by the audit firm’s group companies

for EGCO and its subsidiaries during 2007. It was determined that the

scope of work and fees for other services were not significant in that they

would influence the independence of the auditor.

- Hold exclusive meeting with the external auditors to ensure their

independence.

- Review the Management Discussion and Analysis (MD&A) with

Management to ensure its accuracy, adequacy and usefulness to

shareholders and investors for their investment-making decisions.

- Review the Audit Committee Charter to ensure that the duties entrusted to

them in 2007 were achieved and complied with international practices and

those specified by the SET’s Audit Committee Best Practice Guidelines,

while also being appropriate for the Company’s business.

- Assess the Audit Committee’s performance for the year 2007 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.

The Committee is of the opinion that the Company’s 2007 internal control and

management control systems are adequate and appropriate. All procedures are

followed to ensure that the Company has conducted its business consistent with

related laws and that information disclosure in the financial statements is accurate,

complete and reliable.

The Committee reviewed the auditors’ performance in the past year as well

as the audit fee and recommended to the Board of Directors that

PricewaterhouseCoopers ABAS Ltd., Mr. Suchart Luengsuraswat Certified Public

Accountant (Thailand) No. 2807, Ms. Nataporn Pan-udom Certified Public

Accountant (Thailand) No. 3430 and Mr.Kajornkiat Aroonpairotekul Certified Public

Accountant (Thailand) No. 3445, be re-appointed by the shareholders as the

Company’s auditors for 2008 due to their professional practices, knowledge of

business, fairness, independence and always discharging their duties on time.

Mr. Chaipat Sahasakul

Chairman of the Audit Committee

Documents

As of December 31, 2007 - egco.co.th · As of December 31, 2007 ... Content Page Part 1 Executive Summary 1 Part 2 Listed company 8 ... Section 4 Research and Development 37