annual registration statement · 1. companies ae agro energy company limited apmc alto power...

-Translation-

Annual registration statement

As of December 31, 2011

Electricity Generating Public Company Limited

Content Page

Part 1 Executive Summary 1

Part 2 Listed Company 2 Section 1 Risk Factors 12 Section 2 Business Characteristic 17 Section 3 Operation of Business Line 29 Section 4 Research and Development 58 Section 5 Operational assets 59 Section 6 Future projects 63 Section 7 Dispute 64 Section 8 Capital Structure 65 Section 9 Management 67 Section 10 Internal Control 120 Section 11 Connected Transaction 124 Section 12 Financial Status and Operational Results 132 Section 13 Others 160

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 Audit Committee’s Report Attachment 4 The Position of EGCO’s Board of Directors and Management in standing Committees and Management Committee

Glossary 1. Companies AE Agro Energy Company Limited APMC Alto Power Management Corporation APPC Absolute Power P Company Limited BLCP BLCP Power Limited BV New Growth B.V. Chaiyaphum Chaiyaphum Wind Farm Company Limited Conal Conal Holdings Corporation Coop New Growth Cooperatief U.A. CPOI Covanta Philippines Operating Inc. DGA Diamond Generating Asia, Limited East Water East Water Resources Development and Management Public

Company Limited EGCO Electricity Generating Public Company Limited EGCO BVI EGCO International (B.V.I.) Limited EGCO Cogen EGCO Cogeneration Company Limited EGCO Green EGCO Green Energy Company Limited Egcom Tara Egcom Tara Company Limited ESCO EGCO Engineering and Service Company Limited GCC Gulf Cogeneration Company Limited GEC Gulf Electric Public Company Limited GECC General Electric Capital Corporation GEN Gulf Energy Company Limited GIDEC GIDEC Company Limited GIPP Gulf IPP Company Limited GPG Gulf Power Generation Company Limited GPIQ GPI Quezon Company Limited GPS G-Power Source Company Limited Group companies, EGCO Group

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

Gunkul, Gunkul Engineering Public Company Limited GYG Gulf Yala Green Company Limited KEGCO Khanom Electricity Generating Company Limited IMS Intergen Management Services (Philippines) Limited MME PT Manambang Muara Enim Company Limited NED Natural Energy Development Company Limited NED Wind NED Wind Company Limited NKCC Nong Khae Cogeneration Company Limited NMPC Northern Mindanao Power Corporation North Pole North Pole Investment Company Limited NTPC Nam Theun 2 Power Company Limited OneEnergy OneEnergy Thailand Limited OPDCI Ogden Power Development Cayman Inc. PEPOI Pearl Energy Philippines Operating Inc. PGS Power Generation Services Company Limited QMS Quezon Management Service Inc. Quezon Quezon Power (Philippines) Limited Company REGCO Rayong Electricity Generating Company Limited

Roi-Et Green Roi-Et Green Company Limited SCC Samutprakarn Cogeneration Company Limited SK Cogen & TP Cogen

Banpong Utilities Company Limited

Solarco, Solarco Company Limited SPP2 SPP Two Company Limited SPP3 SPP Three Company Limited SPP4 SPP Four Company Limited SPP5 SPP Five Company Limited SPPC Southern Philippines Power Corporation TEPDIA TEPDIA Generating B.V. Theppana, Theppana Wind Farm Company Limited TJ Cogen Klongluang Utilities Company Limited WMPC Western Mindanao Power Corporation XPCL Xayaburi Power Company Limited Yanhee EGCO, Yanhee EGCO Holding Company Limited Yanhee Power, Yanhee Power Holding Company Limited Yanhee Solar, Yanhee Solar Power Company Limited 2. Government Organizations EGAT Electricity Generating Authority of Thailand EPPO Energy Policy and Planning Office ERC Energy Regulatory Commission NEPC National Energy Policy Council PEA Provincial Electricity Authority PWA Provincial Waterworks Authority SEC Security and Exchange Commission, Thailand SET Stock Exchange of Thailand 3. Other Institutions COSO The Committee of Sponsoring Organizations of the Treadway

Commission IOD Thai Institute of Directors JBIC Japan Bank for International Corporation 4. Technical Terms Associated Company A company that:

A) Listed company or its subsidiaries hold 20.00% (twenty percent) or more, but not more than 50.00% (fifty percent) of its overall voting stock.

B) Listed company or its subsidiary has influence, but not controlling power, over its monetary and operational policies. (The company is not deemed to be a subsidiary or joint venture.)

Shareholdings referred to above include those held by related persons.

Controlling Person A shareholder or person who, through its behavior, can significantly influence the policy, management and operations of a listed company. This is irrespective of the source of its authority: through its rights, contracts, or any others.

Specially a “controlling person” includes, but it is not limited to, one who:

A) Has direct or indirect voting rights exceeding 25.00% (twenty-five percent) of the total company votes.

B) Through its behavior, has control over the appointment or removal of company directors.

C) Through its behavior, has de facto control or undue influence over policy, controlling those company members authorized to determine management and operational policies.

D) Through its behavior, acts or has the power to act in the same manner as the company management. This includes those who hold other positions in the company, but are able to act in the same manner as the company management.

IPP Independent Power Producer Major Shareholder A shareholder, whose shares in a listed company exceeds

10.00% (ten percent) of the listed company’s overall voting shares.

PDP Power Development Plan SPP Small Power Producer Subsidiary Company A) Listed company holds over 50.00% (fifty percent) of its

total voting shares. B) A company referred to in (A) holds over 50.00 (fifty

percent) of its total voting shares. C) Is held by another company in a chain of ownership, no

matter how many number in the chain, ending with the company referred to in (B) and

D) A company that the company referred to in (A), (B), or (C) hold over 50.00% (fifty percent) of its overall voting stock, either directly or indirectly.

E) A company that the company referred to in (A), (B), (C) or (D) have controlling power over its monetary and operational policies, and are able direct and gain interest on its activities.

The holding of (A), (B), (C), or (D) is included those held by related persons.

VSPP Very Small Power Producer

Part 1 Executive Summary

1

Part 1 Executive Summary

The Notification of the Capital Market Supervisory Board No. Tor Jor 11/2009 Re: Criteria, Conditions and Procedures of Reporting Disclosure of Financial Status and Results of Business Operations of Issuance Companies dated March 13, 2009 revoked this part.

Part 2 Listed Company

2

Part 2

Listed Company

1. EGCO Information 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 : 44.82% % of Free Float : 50.65% as of March 16, 2013 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 Fax : 66 0 2955-0956-7 Board of Directors : Email address : [email protected] Audit Committee : Email address : [email protected] Corporate Secretary : 0 2998-5020-5 Email address : [email protected] IR Contact : 0 29985145-8 Email address: [email protected]

mailto:[email protected]


3

2. Referenced Persons Regulator The Securities and Exchange Commission, Thailand

GPF Witthayu Building, 93/1 Wireless Road, Lumpini, Patumwan, Bangkok 10330, Thailand Tel +66 (0) 2695 9999, +66 (0) 2263 6499 Fax. +66 (0) 2256-7711 Corporate Affairs Department ext. 9535, 9509 E-mail: [email protected] Website: www.sec.or.th

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

Share and Debenture registrar

Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel +66 (0) 2229 2800 Fax. +66 (0) 2359 1259 Call Center +66 (0) 2229 2888 E-mail: [email protected] Website: www.tsd.co.th

Auditor 1. Ms. Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044 2. Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051 3. Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120, Thailand Tel +66 (0) 2286 9999, +66 (0) 2344 1000 Fax. +66 (0) 2286 5050


http://www.sec.or.th/

http://www.set.or.th/


http://www.tsd.co.th/


4

3. 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)

Holding Company focusing on Power business and others related to power business Independent Power Producer (IPP) Electricity Generating and supply business

5,300 10 5,264.65 -

Registration Head Office Rayong Power Plant Bangkok Office Rayong Office Sector Industry Foreign Limit Share of Minor Shareholder (% Free Float) Website

0107537000866 (No.BorMorJor.333) 14th, 15th Floor EGCO Tower, 222, Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 12th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0931 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. +66 (0) 3868 1012, +66 (0) 3868 1016, +66 (0) 3868 1020 Energy & Utilities Resources 44.81% 51.90% www.egco.com

http://www.egco.com/


5

Subsidiaries Company Business Registered

Shared Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)

Ownership Interest (Direct+

Indirect)%

Khanom Electricity Generating Company Limited (KEGCO)

IPP Electricity Generating and supply business

5,000 10 4,850 99.99

Office 12th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0932

Site Office 112 Moo 8, Tongnean District, Amphur Khanom, Nakhon Sri Thammarat 80210, Thailand Tel. +66 (0) 7552 9173, +66 (0) 7552 9179 Fax +66 (0) 7552 8358

EGCO Engineering & Service Company Limited (ESCO)

Engineering, operation and maintenance services for power plants and manufacturers

400 10 400 99.99


Site Office 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. +66 (0) 3868 2611-4 Fax +66 (0) 3868 2823

North Pole Investment Company Limited (North Pole)

Holding company focusing on investment in electricity generating companies in foreign countries

25,571.95/1

(837,046,921

USD)

30.5502/1

(1 USD)

25,571.95/1

(837,046,921

USD)

100

Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Oversea office

6th Floor, Tower A, 1 CyberCity, Ebene, Republic of Mauritius

EGCO International (B.V.I.) Limited (EGCO B.V.I.)


10.69/1

(350,000 USD)

30.5502/

1

(1 USD)

10.69/1

(350,000 USD)

100


Oversea office

Akara Bldg., 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola,British Virgin Islands, P.O. Box 3136

New Growth Cooperatief U.A. (Coop)


22,782.95/1

(745,754,647 USD)

22,782.95/1

(745,754,647 USD)

100


Oversea office

De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands

New Growth B.V. (BV)


1.11/1

(36,284 USD)

1.11/1

(36,284 USD)

100


Oversea office

De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands


6

Company Business Registered Shared Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)


Indirect)%

Quezon Power (Philippines), Limited Co. (Quezon) (North Pole is the company’s 98% indirect shareholder)


6,343.48/1

(207,641,268 USD)

6,343.48/1

(207,641,268 USD)

98

Office Oversea office

26/F Orient Square Building, Ortigas Center, pasig City, 1605 Philippines Barangay, Cagsiay I, Mauban Quezon Province, Philippines 4330

Pearl Energy Philippines Operating, Inc. (PEPOI)

Operation and Maintenance of QPL

6.11/1

(200,000 USD)

6.11/1

(200,000 USD)

100


EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Barangay, Cagsiay I, Mauban, Quezon, Philippines 4330

Quezon Management Service Limited (QMS) Management service for Quezon Power Plant

3.88/3

(5,260,000 PESO)

3.88/3

(5,260,000 PESO)

100


EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 26/F Orient Square Building, Ortigas Center, pasig City, 1605 Philippines

EGCO Cogeneration Company Limited (EGCO Cogen)

Small Power Producer (SPP) Electricity and steam generating and supply business

1,060 10 1,060 80

Office Site Office

13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 222 Moo 8, Mabkha District, Amphur Nikhom Phattana, Rayong 21180, Thailand Tel. +66 (0) 3863 7051-8 Fax +66 (0) 3863 7063

EGCO Green Energy Company Limited (EGCO Green)

Holding company focusing on power business

175 10 175 74


Roi-Et Green Energy Company Limited (Roi-Et Green) (EGCO Green is the company’s 95.00% shareholder)

SPP utilizing Biomass as primary fuel

180 10 180 70.30

Office 13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Site Office

222 Moo 10, Nua-Muang District, Amphur Muang, Roiet 45000, Thailand Tel. +66 (0) 4351 9825-6 Fax +66 (0) 4351 9827


7

Company Business Registered Shared Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)


Indirect)%

Agro Energy Company Limited (AE) (ESCO is the company’s 99.99% shareholder)

Trading/delivery service of fuel from natural scrap

2 10 2 99.99


Egcom Tara Company Limited (Egcom Tara) (ESCO is the company’s 74.19% shareholder)

Piped water generating and supply business

345 10 345 74.19


Site office - Plant 1

332 Moo 2, Pongsawai District, Amphur Muang, Ratchburi 70000, Thailand

- Plant 2

250 Moo 1, Pangpuay District, Amphur Damneansaduak Ratchburi 70130, Thailand

SPP Two Company Limited (SPP2) VSPP Electricity Generating and Supply Business using Solar Power

196.7 10 196.7 99.99 Office EGCO Tower

Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Site Office

Salangpan District, Amphur Wang Muang, Saraburi 18220, Thailand

SPP Three Company Limited (SPP3) VSPP Electricity Generating and Supply Business using Solar Power

197.5 10 197.5 99.99

Office

EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Site Office

Tha-Klor District, Amphur Benjaluck, Srisaket 33110, Thailand

SPP Four Company Limited (SPP4) VSPP Electricity Generating and Supply Business using Solar Power

148.7 10 148.7 99.99


Site Office

Tha-Klor District, Amphur Benjaluck, Srisaket 33110, Thailand

SPP Five Company Limited (SPP5) VSPP Electricity Generating and Supply Business using Solar Power

198.4 10 198.4

99.99

Office Site Office

EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Roi-Et, Thailand

Theppana Wind Farm Company Limited VSPP Electricity Generating and Supply Business using Solar Power

157.32 100 103.42

90

Office EGCO Tower 0956-9 Tel. +66 (0) 2998 5999 Fax +66 (0) 2955

Yanhee EGCO Holding Company Limited VSPP Electricity Generating and Supply Business using Solar Power

10 100 10

49


Solarco Company Limited VSPP Electricity Generating and Supply Business using Solar Power

1,650 100 660.6

49



8

Joint Ventures: Company Business Registered

Share Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)

Ownership Interest (Direct+ Indirect)

(%) Gulf Electric Public Company Limited (GEC)

Holding company focusing on IPP and SPP

14,000 10 13,784.35 50

Office Website

No.87, 11th Floor, M. Thai Tower 1, All Seasons Place, 87 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel. +66 (0) 2654 0155 Fax +66 (0) 2654 0156-7 http://www.gulfelectric.co.th

Gulf Power Generation Company Limited (GPG) (GEC is the company’s 100% shareholder)

Independent Power Producer (IPP) Electricity Generating and supply business

9,607 10 9,607 50

Site office

64 Moo 2 Ban Pa District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. +66 (0) 3624 8305 Fax. +66 (0) 3624 8314, +66 (0) 3625 1344

Gulf Cogeneration Company Limited (GCC) (GEC is the company’s 100% shareholder)


850 10 850 50

Site office

79 Moo 3, Tandeow District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. +66 (0) 3624 6531 Fax +66 (0) 3624 8020

Nong Khae Cogeneration Company Limited (NKCC) (GEC is the company’s 100% shareholder)


1,241.72 74 1,241.72 50

Site office

111/11 Moo 7 Nongplamor District, Amphur Nong Khae, Saraburi 18140, Thailand Tel. +66 (0) 3637 3676 Fax +66 (0) 3637 3691

Samutprakarn Cogeneration Company Limited (SCC) (GEC is the company’s 100% shareholder)


981.54 76 981.54 50

Site office

745 Moo 2 Bang Pu Mai District, Amphur Muang, Samutprakarn 10280, Thailand Tel. +66 (0) 2709 0751 Fax +66 (0) 2709 1842

Gulf Yala Green Company Limited (GYG) (GEC is the company’s 100% shareholder)

SPP utilizing Biomass as primary fuel

460 10 460 50

Site office

80 Moo 1, Pron District, Amphur Muang, Yala 95160, Thailand Tel. +66 (0) 7325 2721 Fax +66 (0) 7325 2722

Conal Holding Corporation (Conal) (EGCO B.V.I. is the company’s 40% shareholder)

Holding company focusing on power business in the Philippines

239.95/1

(7,854,423

99.90/1

(3.27

239.95/1

(7,854,423

40


9

Company Business Registered Share

Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)


(%) Office

Oversea office

EGCO Tower Tel. +66 (0) 2998-5000 Fax +66 (0) 2955-0956-9 4th Floor, Alphaland Southgate Tower 2258 Chino Roces Avenue Corner EDSA Makati City, 1232 Philippines Tel. (632) 836 4940, (632) 836 4403 Fax (632) 801 0593

USD) USD) USD)

Alto Power Management Corporation (APMC) (Conal is the company’s 60% shareholder)

Operation and maintenance services for power plants and consulting

15.16/1

(496,278 USD)

75.76/1

(2.48 USD)

7.58/1

(248,139 USD)

24

Oversea office

4th Floor, Alphaland Southgate Tower 258 Chino Roces Avenue Corner EDSA Makati City, 1232 Philippines Tel. (632) 836 4940 Fax (632) 801 0593

Western Mindanao Power Corporation (WMPC) (Conal is the company’s 44% indirect shareholder)


118.92/1

(3,892,661 USD)

79.43/1

(2.60 USD)

107.41/1

(3,515,851

USD)

17.6

Oversea office

2258 Chino Roces Avenue Corner EDSA Makati City, 1232 Philippines Tel. (632) 836 4940 Fax (632) 801 0593

Site office

4th Floor, Alphaland Southgate Tower, Sitio Malasugat, Sangali, Zamboanga City, Philippines

Southern Philippines Power Corporation (SPPC) (Conal is the company’s 44% indirect shareholder)


74.73/1

(2,445,986 USD)

83.10/1

(2.72 USD)

68.87/1

(2,254,384 USD)

17.6

Oversea office

4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue Corner EDSA, Makati City, 1232 Philippines Tel. (632) 836 4940 Fax (632) 801 0593

Site office

Bo. Baluntay, Alubel, Sarangani, Philippines


10


Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)


(%) BLCP Power Limited (BLCP) IPP

Electricity Generating and supply business

12,010 100 12,010 50

Office No. 9, I-8 Road, Map Ta Phut Industrial Estate, Amphur Map Ta Phut, Rayong 21150, Thailand Tel. +66 (0) 3892 5100, Fax. +66 (0) 3892 5199

Nam Theun 2 Power Company Limited (NTPC)


13,747.59/1

(450,000,00

0 USD)

3,055.02/1

(100 USD)

11,410.50/1

(373,500,000

USD)

35

Office Unit 9, Tat Luang Road Nongbone Village, P.O. Box 5862 Vientiane, Lao PDR Tel. (856-21) 263 900 Fax (856-21) 263 901

Natural Energy Development Company Limited (NED)

SPP Electricity Generating and Supply Business using Solar Power

2,304 10 2,283 33.33

Office 999/9 Central World, Rama 1 Road, Pathumwan, Bangkok 10330, Thailand

Site Office

188 Moo 3, Wang Ploeng Sub-District, Khok Samrong District, Lopburi 15120, Thailand Tel. +66 (0) 3641 8400 Fax +66 (0) 3641 8401

G-Power Source Company Limited (GPS)

VSPP Electricity Generating and Supply Business using Solar Power

930 100 894 60

Office 1046 Nakornchaisri Rd., Nakornchaisri, Dusit, Bangkok 10300 Thailand Tel +66 (0) 2242 5800 Fax +66 (0) 2242 5832

Site Office - Branch 1

- 11/1,111,111/1 Moo 11 Tumbon Dong Khon, Amphoe Sankhaburi, Chai Nat 17140

- Branch 2 11/1,11/11 Moo 5 Tumbon Ta Khit, Amphoe Banphot Phisai, Nakhon Sawan 60180

- Branch 3 - 11,11/1 Moo 2 Tumbon Ta Sang, Amphoe Banphot Phisai, Nakhon Sawan 60180

- Branch 4 311,311/1 Moo 2 Tumbon Sap Samo Thot, Amphoe Bueng Sam Phan, Phetchabun 67160

Absolute Power Company Limited (APPC)

Biodiesel business, Biodiesel production and trading

100 100 100 50

Office EGCO Tower +66 (0) 2998 5000 +66 (0) 2955 0956-9

Site Office

8/1 Moo 11, Nong Bua District, Ban Khai, Rayong 21120, Thailand


11


Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)


(%) GIDEC Company Limited VSPP

Electricity Generating and Supply Business using waste

400 100 400 50

Office 408/70 Paholyothin Place Tower 16th Floor Paholyothin Road, Samsennai, Phyathai, Bangkok 10400 Thailand

Site Office

Sanambin Panij Road, Moo 3 Kuanlung, Hat Yai, Song Khla 90110, Thailand

PT Manambang Maura Enim (MME) COAL MINING industry, covering coal mining, coal concession development, coal trading and shipping.

2,325.08/2

750,000,000 (Thousand

Rupiah)

3,100.10/2

1,000

(Thousand

Rupiah)

581.27/2

187,500,000 (Thousand

Rupiah)

40

Head Office

BRI2 Building, 30th Floor, Jalan Jendral Sudirman Kavling 44-46, Jakarta 10210 Indonesia

Site Office

Lawang Kidul and Tanjung Enim, Muara Enim City, Sumatera Selatan (South Sumatra) Province, Indonesia

Other:

Company Business

Registered Share

Capital (Million

Baht)

Par Value (Baht)

Paid-up Share

Capital (Million

Baht)

Ownership Interest

(%)

Eastern Water Resources Development and Management Public Company Limited (EASTW)

Water resources development and management for supplying raw water to the customers

1,663.73 1 1,663.73 18.72

Office 23-26/F Eastwater Building, 1 Vibhavadi Rangsit Road, Jomphol, Chatuchak, Bangkok 10900, Thailand Tel. +66 (0) 2272-1600 Fax +66 (0) 2272-1601-3 Website www.eastwater.com

Xayaburi Power Company Limited (Xayaburi)

Feasibility study on Hydroelectric project in Lao PDR

1,000 10 1,000 12.50

Office 215 Lanexang Avenue, Ban Siang Yuen Chantaburi District, Vientiane, Lao PDR

Note : The Exchange rate as at December 28, 2012 /1 1 USD = Baht 30.5502

/2 1 Rupiah = Baht 3.1001 /3 1 PESO = Baht 0.7370


Part 2 Section 1 Rick Factors

12

1. Risk Factors To create long term value for shareholders, EGCO recognizes the importance of properly

analyzing and managing its business risks. The Board of Directors entrusted the Audit Committee to review the Company’s risk management policies while the Management has the responsibility to implement such policies and report the progress to the Audit Committee and the Board.

In this regard, the Risk Management Committee has been set up at the Management level which comprises EGCO’s top executives and the Managing Directors of EGCO subsidiaries. EGCO’s President serves as the chairman of the Committee. Rayong Power Plant and EGCO subsidiaries such as KEGCO, and ESCO also have their own risk management committees to help ensure that their particular risks will be managed adequately.

EGCO Group has setup the risk management policy in a Risk Management Manual which serves as a guideline for the EGCO Group.

A summary of key risk factors and associated mitigation measures is as follows:

1. Investment Risk EGCO invests in power and energy related businesses in both domestic and international

markets and its main sources of income are dividends from subsidiaries and joint ventures. In creating shareholders’ value, EGCO's strategic plan includes the continuous investment in new projects. Such acquiring and developing projects may entail risks that may affect EGCO’s investment target as follow: 1.1 Risks from Project Development

EGCO plans to expand its investment to maintain continuous growth. Potential projects of both domestic and overseas are listed in the investment plan so that EGCO can appropriately allocate resources to those projects. Since project selection is very important in making investment decision, EGCO incorporates prudent project selection process as

Business development units are assigned to be responsible for the project analysis which includes factors on economic, political and social policies of the target countries, economy, industry, cost of finance, equipment and construction costs, as well as governing laws and regulations. Moreover, analysis of the changing environmental factors (Sensitivity Analysis) that affect the projects is also considered so that risk prevention and compensation are accounted in the return of investment analysis.

Moreover, EGCO has due process for investment scrutiny that new investment opportunities are to be reviewed by EGCO Management Committee which comprise EGCO top management as well as the Investment Committee which is the sub-committee of the Board of Directors, to ensure that all material risks are identified and managed before submitting investment opportunities to the Board of Directors for their consideration.

1.2 Risk from entering the related businesses

EGCO embarks its strategic plan to expand its investment to the related businesses to increase business opportunities, enhance competitiveness and support existing business. However, expanding into related businesses may incur risks. Therefore, the management set the investment due process which includes the assessment of new investment opportunities in all aspects such as economic situation, industry situation, investment promotion policy and governing laws and


13

regulations. Professional consultants are also sought to ensure that those projects would yield the expected return within acceptable risks.

In 2012, EGCO had successfully expanded into two new related businesses, a coal mine in South Sumatra, Indonesia, and a biodiesel production plant in Rayong, Thailand. Since these two projects had price and market risks to be managed, EGCO therefore set up control measures which included the appointment of representative directors to closely monitor their business operation. 3. Operating Risk 3.1 Risk from the declining revenue from subsidiaries and joint ventures

Revenue from PPA generally declines over the period of power plant operation. To manage such risk, EGCO’s strategic plan and measures are to secure additional earning to compensate the declined earning and increase the overall total net profit by acquiring additional operating assets, negotiating with relevant parties to expand EGCO’s stake in the existing projects, seeking the opportunities to invest and develop new projects that will generate medium to long term return.

In 2012, EGCO successfully acquired the additional shares in Quezon Power project in the Philippines and invested in several solar projects which would generate earning quickly. EGCO also expanded into energy related business by investment in a biodiesel in a biodiesel production plant in Rayong and a coal mine in South Sumatra, Indonesia and most of the projects are in operation phase which contributed to EGCO’s increase of net profit, despite the projected decline in 2012. 3.2 The risk of failure to obtain forecasted earnings and dividend

The company has given high priority to the risk related to operating assets to ensure that they would meet the expected performance. Asset Management Division is assigned to be responsible for the follow up and performance monitoring of each invested company as well as including the analysis and comparison between the actual return on investment and the planned target.

Typical measures imposed to mitigate relevant risks are as follows: - Establish asset management policies and, where possible, delegate management and

personnels to be representatives’ directors or management of subsidiaries and invested projects. - Prepare regular reports on joint venture companies’ performance to senior management and

the Board of Directors to ensure the timely and appropriate actions. - Coordinate with partners for joint-audit in invested companies to ensure the adequacy and

effectiveness of internal control system. According to the 2012 operating performance report, most of EGCO’s joint ventures

achieved their return of investment as targeted. 3.3 Plant Performance Risks

In meeting the PPAs’ commitment, EGCO Group’s power plants may encounter plan to performance risks, caused by personnel, equipment and management approach. The significant performance risks are as summarized below:

3.3.1. Plant Efficiency PPAs stipulated various plant efficiency such as heat rate and failure to meet these performance requirements would result in penalties and higher cost.

The cause of such risk could be power plant aging. Therefore, preventive maintenance was carried out continuously in the professional manner, together with other work procedures placed by


14

plants’ management could ensure that all relevant performance targets are met. These procedures are as follows:

- Scheduled preventive maintenance of power plant equipment by professional staffs. - Early Warning Systems for critical information regarding the plant operation processes. - Adequate and well managed of plant spare parts - Implementation of the Quality Management System (ISO: 9001:2008) to ensure efficient

plant operation and comply with PPA. - Continuously development of staff competencies. The implementation of such mitigation actions in the previous year resulted in the low

efficiency risk.

3.3.2. Raw Water Shortage for Electricity Generation Raw water shortage can result in plant stoppages, revenue shortfall, or penalty payments.

The risk could be caused by climate change, the delay of rainy season in some years which may affect the sufficient reserve of raw water.

The measures were set to prevent and mitigate such risks by increasing the raw water storage capacity, seeking additional sources of raw water supply and setting measures to optimize the benefit of water usage. Rayong power plant, as an example, has its own water reservoir with the volume sufficient for 7-days continuous operation. With this measure, EGCO has never experienced any water shortage situation.

3.3.3 Fuel Shortage for Electricity Generation Fuel shortage can result in plant stoppages, revenue shortfall or penalty payments. The

shortage of “coal and biomass” fuel, in particular, could be caused by increasing demand or price fluctuation. Therefore, measures are set to prevent and mitigate such risk as follows:

- Quezon coal fired power plant has the long term coal supply & transportation agreement where suppliers must supply quality coal with the quantity as specified in the agreement, sufficient for continuous operation. The power plant also has coal stockpiles sufficient for 45-days continued operation.

- Roi-Et Green power plant, which use rice husk as a fuel, possibly faces the fuel risk in terms of inadequate supply and volatile pricing due to uncertainty nature of agricultural product. Its mitigation action is to expand areas of fuel sourcing so to secure rice husk in advance when large amount is available at lower price. The power plant also reserves rice husk sufficient for 30-days continued operation.

3.3.4 Safety, Health, Environment and Social EGCO realizes that the electricity generating process which uses natural gas, coal, and

biomass as primary fuel could have certain impacts on the safety, environment and quality of life of employees and surrounding communities. The cause of risk may arise from the inefficiency of power plant or the inadequate management measurement. Consequently, EGCO has taken the following actions to mitigate any potential negative impacts and reduce the likelihood of such risks as follows:

- Implement EGCO Group’s Corporate Social Responsibility policy - Implement safety, health and environment measures at all EGCO Group’s power plants,

according to SHE Management Manual which includes guidelines for implementation and audit.


15

- Develop the work manuals and emergency plan, implement training and testing of plan, equipment and warning system while ensuring strict compliance with the manuals.

Complying with the above measures constantly, such risks could be properly managed.

3.3.5. Accident, Resistance, and Sabotage In conducting its business, EGCO may face risk from accident that may cause fire as well as

community resistance if the electricity generating process incur negative impact on the community. Such risks could be caused by the power plant aging condition, personnel’s operation, or sabotage event.

With existing mitigation measures and situation monitoring, suchrisk likelihood is quite low. However, the Management is well aware of theserisks and has set the following measures to mitigate and reduce the likelihood of those risks.

- Regular communication with staffs to realize that carelessness may lead to significant damages.

- Scheduled maintenance of all equipment to ensure its efficiency. - Strengthen relationship with surrounding communities to foster the right perception about

EGCO business. - Strengthen relationship with local government authorities. - Set the security plan, regular drills and provide equipment such as closed circuit TV. - Secure the insurance policy that covers all risks, machinery breakdown, business

interruption and third party liability to assure that loss from damages in the unexpected case would be properly and adequately protected.

In 2012, EGCO has procured the political violence insurance policy which covered the effects of political violation and terrorist attack. The insurance covered EGCO’s power plants and subsidiaries i.e. Rayong power plant, Khanom power plant, EGCO Cogen power plant, Roi-Et Green power plant, and Quezon power plant including EGCO tower and the water treatment plant of Egcom tara. In addition, the insurance policies on terrorist attack have already been procured for most of EGCO’s joint venture power plants. 4. Financial Risks

The investments of EGCO Group are capital-intensive. Since the primary funding sources are loans from domestic and international financial institutions, foreign exchange rate fluctuation and interest rate fluctuation, are important risks to be monitored and mitigated. These risks may be caused by the mismatch of revenue and loan structure including the change of foreign currency and interest rate. The negative impact from the change of foreign currency and interest rate would lead to the decline in the Group’s financial result. 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 investment projects to prudent levels by matching currencies of project development and construction costs with funding source currencies and subsequently matching the currencies of long-term funding profiles with those of each project’s revenue stream during the operation phase. For EGCO’s new projects, EGCO will arrange the currencies of the fund to match with that of the dividend from project.


16

4.2 Interest Rate Fluctuation EGCO Group has a policy to manage interest rate fluctuation by setting the guideline of

interest rate exposure mitigation by swapping floating interest rate to fixed interest rate at an appropriate level when the swap market is favorable. The purpose of hedging transaction is not for speculation.

4.3 Failure to enhance shareholder’s wealth

EGCO’s income had declined due to PPA aging over a last few years. As a result, EGCO’s share price did not increase as shareholders’ expectation and shareholders were concerned that EGCO could not maintain its dividend payment level.

Therefore, the 2012 EGCO strategic plan focused on investment expansion in order to create the value of shareholders both of short term and long term. Also when EGCO has investment expansion, the management communicated sufficient and timely information of the new investment and financial status to shareholders and investors through various channels such as analysts meeting, roadshows company visits, and plant visit etc.

With these measures, EGCO successfully mitigated such risk as share price on 28, December 2012 compared with January 3, 2012 rose up from 96.25 baht to 151 baht, increased by 63.74%. And also EGCO has approved the interim dividend payment for the first half year operation of 2012 at 2.75 baht per share, increasing 0.25 baht per share from the previous year. 5. Compliance Risk

At present, the governing laws and regulations compliance of operating power plant are enforced more strictly and breaching can impact EGCO’s operation and corporate image. Thus, EGCO Group has been well aware and completely complied with the related laws and regulations, including environment and SHE regulations.

In 2012, EGCO Group has no record of failures to comply with related laws and regulations that involves in our business. In addition, EGCO Group has followed up the new laws and regulations to acknowledge all concerned units through the legal database and study the effect of the changing laws and regulation on EGCO business.

Part 2 Section 2 Business Characteristics

17

2. Business Characteristics 2.1 Background and Major Development The Electricity Generating Public Company Limited or EGCO is the first independent power producer in Thailand registered on May 12, 1992 by the Electricity Generating Authority of Thailand (“EGAT”). Such incorporation marked the commencement of the Thai government’s privatization initiatives to allow broader private sector investment in the electricity generating sector. On March 23, 1994, EGCO was transformed into a public company and then listed on the Stock Exchange of Thailand (“SET”) on January 16, 1995. Since EGCO is a holding company, its main source of revenue is from the dividend income from subsidiaries and share of profits from joint ventures which are located in both Thailand and the Asian region. EGCO Group companies either operate in the power sector with long term Power Purchase Agreement (“PPA”) or conduct other related business. 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. On February 23, 2011, EGCO informed SET that it was notified by OneEnergy , a major shareholder, OneEnergy Thailand Ltd. (“OneEnergy”), holding 23.49 per cent of the total issued share capital of the Company, that CLP Holdings Limited would divest its approximately 50% effective interest in OneEnergy while Tokyo Electric Power Company (“TEPCO”) will be joining Mitsubishi Corporation (“MC”) as its 50:50 partner. TEPCO is the largest electric power company in Japan and the largest privately owned electric utility in the world. TEPCO aims to promote further development of Thailand’s electricity sector in accordance with its plan to prioritize overseas business to stimulate future core growth and to make a global impact in the creation of low-carbon societies. 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.


18

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 subsidiaries which mainly undertake responsibilities on the power generation and sale, service provision, and operation and maintenance. 2.3 Business Lines EGCO businesses can be categorized into 5 groups as follows:

1. Independent Power Producer (“IPP”) Group: This Group comprises Rayong Power Plant, Khanom Electricity Generating Co., Ltd., (KEGCO) BLCP Power Ltd., (BLCP) and Gulf Power Generation Co., Ltd. (GPG). The combined megawatt equity calculated on December 31, 2012 is 3,453 megawatt which accounts for 73.35% of EGCO’s total asset capacity. 2. Small Power Producer (“SPP”) Group: This Group comprises EGCO Cogeneration Co., Ltd., (EGCO Cogen), Roi-Et Green Co., Ltd., (Roi-Et Green), Gulf Cogeneration Co., Ltd., (GCC), Nong Khae Cogeneration Co., Ltd., (NKCC), Samutprakarn Cogeneration Co., Ltd., (SCC), Gulf Yala Green Co., Ltd.(GYG), and Natural Energy Development Co., Ltd. (NED), The combined capacity is 311.39 megawatt equity, representing 6.61% of EGCO’s total asset capacity. The combined megawatt equity is more than the last year by 15.66 megawatt due to the Commercial Operation Date (“COD”) of all 7 stages of Lopburi Solar power plant. 3. Very Small Power Producer (“VSPP”) Group: This Group SPP2 Co., Ltd., (SPP2) SPP3 Co., Ltd., (SPP3) SPP4 Co., Ltd., (SPP4) SPP5 Co., Ltd.,(SPP5) and G-Power Source (GPS). The combined capacity is 41.7 megawatt equity, representing 0.89% of EGCO’s total asset capacity. 4. Overseas Power Producer Group: This Group comprises Western Mindanao Power Corporation (WMPC), Southern Philippines Power Corporation (SPPC), Quezon Power (Philippines) Ltd., Co., (Quezon) in Philippines and Nam Theun 2 Power Co., Ltd.,(NTPC) in Lao PDR. The combined megawatt equity is 901.76 megawatt, representing 19.15% of EGCO’s total asset capacity. The combined megawatt equity at the end of 2012 is higher than last year by 230.52 megawatt due to the additional acquisition of 45.875% interest in Quezon Power (Philippines) Ltd., Co., which made 98% of EGCO’s interest in Quezon. 5. Other Business Group: This Group comprises 2 operation and maintenance companies being EGCO Engineering & Service Co., Ltd., (ESCO) and Pearl Energy Philippines Operating, Inc. (PEPOI). There are 2 water supply companies being Egcom Tara Co., Ltd., (Egcom Tara) and the Eastern Water Resources Development and Management Public Co., Ltd. (East Water ). In addition, there is 1 Bio Diesel company being Absolute Power P Co., Ltd, (APPC) and also 1 Coal Mine being PT Manambung Maura Enim Co., Ltd. (MME). Details of each project are shown in the table at the end of this part. 2.4 Revenue Profile The major source of income is from IPP group. The revenue structure of EGCO Group of each business line as is shown below.


19

Revenue Structure

( Million Baht )

Product Transaction % 2011 2010 (Restated)

Service Shareholding Revenue % Revenue % Revenue %

Electricity IPP 41.47% 33.27% 35.25%

Rayong power plant (formerly REGCO)

Capacity Charge 2,043.26 8.39% 2,201.28 16.54% 2,454.12 16.25%

Energy Charge 123.35 0.51% 57.05 0.43% 81.16 0.54%

KEGCO 99.99%

Capacity Charge 1,696.70 6.97% 2,098.32 15.77% 2,772.83 18.36%

Energy Charge 65.96 0.27% 72.08 0.54% 15.61 0.10%

Quezon 98%/A and North Pole

/B 98.00%

Energy Charge 6,173.09 25.34%

SPP 8.33% 17.95% 15.26%

EGCO Cogen 80.00%

Energy Charge 1,631.00 6.70% 2,064.46 15.51% 2,002.04 13.25%

Roi-Et Green 70.30%

Energy Charge 396.89 1.63% 324.60 2.44% 302.85 2.01%

VSPP 1.94%

SPP2/C 99.99%

Energy Charge 104.70 0.43%

SPP3/D 99.99%


SPP4/E 99.99%


SPP5/F 99.99%


Service ESCO 99.99% 819.05 3.36% 375.93 2.82% 721.54 4.78%

PEPOI/G 100.00% 310.30 1.27% 198.75 1.49%

QMS/H 100.00% 33.00 0.14%

Water Egcom Tara/I 74.19% 290.54 1.19% 268.56 2.02% 258.83 1.71%

Interest EGCO 113.71 0.47% 141.21 1.06% 67.05 0.44%

income Rayong power plant 0.79 0.00% 4.38 0.03% 5.37 0.04%

KEGCO 6.02 0.02% 9.71 0.07% 6.56 0.04%

Quezon 98% and North Pole 2.56 0.01%

EGCO cogen, EGCO Green, SPP2, SPP3,

SPP4, SPP5, Yanhee EGCO/J, Theppana

/K,

ESCO, Egcom Tara, PEPOI and QMS 30.48 0.13% 21.10 0.16% 9.90 0.07%

Others EGCO 4,506.28 18.50% 208.91 1.57% 236.16 1.56%

Rayong power plant 48.81 0.20% 49.20 0.37% 47.99 0.32%

KEGCO 2.18 0.01% 1.12 0.01% 3.08 0.02%

EGCO cogen, EGCO Green, SPP2, SPP3,

SPP4, SPP5, Yanhee EGCO, Theppana,

ESCO, Egcom Tara, PEPOI and QMS 14.18 0.06% 13.48 0.10% 10.08 0.07%

2012


20

Notes

/A EGCO acquired an additional 45.875% in Quezon Power (Philippines) Limited Co. (Quezon) on May 11, 2012. The acquisition were completed on June 11, 2012. Revenue of Northpole included with Quezon98% in the year 2012.

/B EGCO purchased ordinary shares in North Pole on July 16, 2010, increasing its ownership 100% /C EGCO acquired 99.99% stakes in SPP2 Company Limited (SPP2) on May 23, 2012. /D EGCO acquired 99.99% stakes in SPP3 Company Limited (SPP3) on February 29, 2012. /E EGCO acquired 99.99% stakes in SPP4 Company Limited (SPP4) on January 23, 2012. /F EGCO acquired 99.99% stakes in SPP5 Company Limited (SPP5) on June 18, 2012. /G EGCO purchased ordinary shares in PEPOI on March 25, 2011, increasing its ownership 100%

/H EGCO acquired 100% ownership interest in Quezon Management Services Inc. (QMS) (formerly InterGen Management Services (Philippines), Ltd. (IMS)) on May 11, 2012. The acquisition were completed on June 11, 2012.

/I ESCO purchased additional ordinary shares in Egcom Tara on January 6, 2010, increasing its ownership interest from 70.07% to 74.19%.

/J EGCO signed a Shareholder Agreement with Yanhee Solar Power Company Limited for the acquisition of 49% in Yanhee EGCO Holding Company Limited (Yanhee EGCO) on February 27, 2012.

/K EGCO acquired 90% stakes in Theppana Wind Farm Company Limited (Theppana) on January 18, 2012. /L EGCO purchased additional ordinary shares in NTPC on September 29, 2010, increasing its ownership interest from 25% to 35%

/M EGCO purchased additional ordinary shares in Quezon on March 25, 2011, increasing its ownership interest from 26% to 52.125%.

/N EGCO acquired 60% stakes in G-Power Source Company Limited (GPS) from Gunkul Engineering Public Company Limited on March 23, 2012.

/O EGCO invested in a Biodiesel Plant through the acquisition of 50% stakes in Absolute Power P Co., Ltd. (APPC) on May 15, 2012.

/P EGCO Invested in Hat Yai Municipal Waste Power Plant Project through the acquisition of 50% stakes in GIDEC Company Limited (GIDEC) on September 28, 2012.

/Q EGCO has entered into the Share Purchase Agreement to acquire 40% of ownership interest in PT Manambang Muara Enim (MME) which is the open-pit coal mine on August 16, 2012.

( Million Baht )

Product Transaction % 2011 2010 (Restated)

Service Shareholding Revenue % Revenue % Revenue %

Share of BLCP 50.00% 2,193.36 9.00% 1,849.03 13.89% 2,851.98 18.88%

profit (loss) GEC 50.00% 2,033.47 8.35% 1,836.18 13.80% 2,450.32 16.22%

NED 33.33% 160.14 0.66% (28.21) (0.21%) (22.69) (0.15%)

NTPC/L 35.00% 618.28 2.54% 1,045.62 7.86% 107.27 0.71%

Conal 40.00% 54.56 0.22% 19.66 0.15% 139.58 0.92%

Quezon 52.125%/M 52.125% 479.52 1.97% 477.41 3.59% 582.76 3.86%

GPS/N 60.00% 38.82 0.16%

APPC/O 50.00% (15.81) (0.06%)

GIDEC/P 50.00% (4.10) (0.02%)

MME/Q 40.00% 19.35 0.08%

Total revenues (revenues item in consolidated) 24,359.14 100% 13,309.84 100% 15,104.40 100%

2012


21

2.5 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. Table 1. EGCO’s Business Line: I. IPP Group 1.1 Rayong Power Plant

Rayong power plant is the first IPP in Thailand located in Rayong province. It is a 1,232-megawatt (MW) power plant comprising four identical 308-MW combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 20-year Power Purchase Agreement (“PPA”).

In 2012, Rayong power plant generated and sold 4,004.20 million kilowatt-hour (kWh) electricity output to EGAT. Its annual average Equivalent Availability Factor (“EAF”) was 94.54%.

1.2 Khanom Electricity Generating Company Limited (“KEGCO”)

EGCO directly holds a 100% stake in KEGCO which owns and operates Khanom Power Plant which is known as the largest independent power plant in the southern area of Thailand located in Nakhon Si Thammarat province. It is a 749-MW power plant combining of two 75 MW barge-mouthed power units and one 674 MW combined cycle power block using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 15-year PPA for barge-mouthed power unit 1 and the 20-year PPA for barge-mouthed power unit 2 and combined cycle power block. On June 19, 2011, barge-mouthed power unit 1 was permanently shut down due to the expiration of the PPA.

In 2012, Khanom Power Plant generated and sold 5,310.84 million kWh electricity output to


22

EGAT. Its annual average EAF was 88.44%.

1.3 BLCP Power Limited (“BLCP”) EGCO directly holds a 50% stake in BLCP which owns and operates an IPP coal-fired power plant located in Rayong province. It is a 1,434-MW power plant comprising two identical 717-MW pulverized coal-fired power units using high quality bituminous imported from Australia as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA.

In 2012, BLCP power plant generated and sold 10,769.54 million kWh electricity output to EGAT, while its annual average EAF for unit 1 and unit 2 were 93.08% and 93.86%, respectively.

1.4 Gulf Power Generation Company Limited (“GPG”)

EGCO indirectly holds a 50% stake in GPG via its 50% ownership in Gulf Electric Public Company Limited (“GEC”). GPG owns and operates an IPP gas-fired power plant, called Kaeng Khoi 2 (“KK2”), located in Saraburi province. It is a 1,510-MW power plant composed of two 755-MW combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 25 years PPA. In 2012, KK2 power plant generated and sold 10,848.25 million kWh electricity output to EGAT. The annual average EAF for block 1 and block 2 were 94.7% and 95.3%, respectively.

II. SPP Group 2.1 EGCO Cogeneration Company Limited (“EGCO Cogen”)

EGCO directly holds an 80% stake in EGCO Cogen which owns and operates a SPP cogeneration power plant located in Rayong province. It is a 117-MW cogeneration power plant with steam supply of 30 tons per hour using natural gas as a primary fuel. EGCO Cogen can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed a 60-MW contracted capacity with EGAT under the 21 years PPA, while the rest of capacities were signed with the industrial users in Rayong Industrial Park under the long-term PPAs.

In 2012, EGCO Cogen power plant generated and sold 509.79 million kWhelectricity output to its customers. Its annual average EAF was 63.66% and the steam output to the industrial user was 48,628 tons.

2.2 Roi-Et Green Company Limited (Roi-Et Green)

EGCO indirectly holds a 70.30% stake in Roi-Et Green via EGCO Green Company Limited. Roi-Et Green owns and operates a SPP renewable power plant located in Roi-Et province. It is a 9.9-MW biomass-fired power plant using rice husk as a primary fuel. Under the SPP firm renewable program, it signed an 8.8-MW contracted capacity with EGAT under the 21-year PPA. In 2012, Roi-Et Green power plant generated and sold 66.07 million kWh electricity output


23

to EGAT, while its annual average EAF was 89.73%. 2.3 Gulf Cogeneration Company Limited (“GCC”)

EGCO indirectly holds a 50% stake in GCC via GEC. GCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 110-MW cogeneration power plant with steam supply of 16 tons per hour using natural gas as a primary fuel. GCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-MW contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2012, GCC power plant generated and sold 732.72 million kWh electricity output to EGAT and Industrial units, while its annual average EAF was 96.35% and the steam output to the industrial users was 138,377 tons.

2.4 Nong Khae Cogeneration Company Limited (“NKCC”)

EGCO indirectly holds a 50% stake in NKCC via GEC. NKCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 126-MW cogeneration power plant with steam of 24 tons per hour using natural gas as a primary fuel. NKCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-MW contracted capacity with EGAT under the 21 years PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2012, NKCC power plant generated and sold 490.44 million kWh electricity output to EGAT and Industrial units, while its annual average EAF was 45.13% and the steam output to the industrial users was 78,412 tons.

2.5 Samutprakarn Cogeneration Company Limited (“SCC”)

EGCO indirectly holds a 50% stake in SCC via GEC. SCC owns and operates a SPP cogeneration power plant located in Samutprakarn province. It is a 126-MW cogeneration power plant with steam of 24 tons per hour using natural gas as a primary fuel. SCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-MW contracted capacity with EGAT under the 21 year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2012, SCC power plant generated and sold 829.07 million kWh electricity output to EGAT and Industrial units, while its annual average EAF was 99.10% and the steam output to the industrial users was 132,259 tons.

2.6 Gulf Yala Green Company Limited (“GYG”)

EGCO indirectly holds a 50% stake in GYG via GEC. GYG owns and operates a SPP renewable power plant located in Yala province. It is a 23-MW biomass-fired power plant using parawood residue as a primary fuel. Under the SPP firm renewable program, it signed 20.2-MW contracted capacity with EGAT under the 25 years PPA. In 2012, GYG power plant generated and sold 154.74 million kWh electricity output to EGAT, while its plant annual average EAF was 92.41%.


24

2.7 Natural Energy Development Company Limited (“NED”) EGCO directly holds a 33.33% stake in NED which owns and operates a 55-MW thin film solar power plant (“Lopburi Solar”) located in Lopburi province. NED signed a PPA with EGAT for the sale of all net electricity output generated. The term of the PPA is 5 years from the Commercial Operation Date (“COD”) and will be renewed for 5-years contract each time. NED is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. Since March 29, 2012, the full scale generation of all seven phases has been achieved. In 2012, NED has started the construction of another solar power plant project, called Wang Ploeng Solar, located in Lopburi province. It is an 8 MW solar power plant, which sells all net electricity to PEA under 5 years Non-firm PPA and the contract can be renewed for 5 years each time. NED is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff starting from its COD on December 1, 2013. In 2012, the Lopburi Solar Power Plant generated and sold 97.71 million kWh electricity output to EGAT, while its plant annual average EAF was 99.87%.

III. VSPP Group 3.1 SPP Four Company Limited (“SPP4”)

EGCO directly holds a 100% stake in SPP4 which owns and operates the 6 MW solar power plant located in Srisaket province from MEMC Singapore Pte Ltd. SPP4 has entered into a non-firm PPA with PEA under VSPP. The project is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. The COD was scheduled on January 24, 2012. Additionally, the plant is the first private solar power project equipped with the tracking system. In 2012, SPP4 Power Plant generated and sold 11.63 million kWh electricity output to PEA, while its plant annual average EAF was 99.25%.

3.2 SPP Three Company Limited (“SPP3”) EGCO directly holds a 100% stake in SPP Three Company Limited (“SPP3”) which owns and operates the 8 MW solar power plant located in Srisaket province from MEMC Singapore Pte Ltd. SPP3 has entered into a non-firm PPA with PEA under VSPP. The project is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. The COD was scheduled on February 21, 2012. Additionally, the plant is equipped with the tracking system. In 2012, SPP3 Power Plant generated and sold 13.64 million kWh electricity output to PEA, while its plant annual average EAF was 98.96%.

3.3 G-Power Source Company Limited (“GPS”)

EGCO directly holds a 60% stake in GPS with Gunkul Engineering Public Company Limited which owns and operates 4 solar power plants under 4 PPAs with the PEA with capacity of 6.5 MW each, total capacity of 26 MW. GPS is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. GPS has started supplying the electricity to the EGAT in the beginning of March 2012 according to 3 PPAs from the following solar power projects namely 1) Ta Khit Solar Power Project, Nakhon Sawan Province 2) Ta Sang Solar Power


25

Project, Nakhon Sawan Province 3) Dong Khon Solar Power Project, Chai Nat Province. The commercial operation of the 4th Solar Power Project is expected to be operating in January 2013. In 2012, Ta Khit Solar Power Project, Ta Sang Solar Power Project, and Dong Khon Solar Power Project generated and sold 25.22 million kWh electricity output to PEA, while its plant annual average EAF was 98.85%.

3.4 SPP Two Company Limited (“SPP2”) EGCO directly holds a 100% stake in “SPP2” which owns and operates the 8 MW solar power plant located in Saraburi province from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP2 has entered into a non-firm PPA with PEA under VSPP. The project is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. The COD was scheduled on May 2, 2012. Additionally, the plant is equipped with the tracking system. In 2012, SPP2 Power Plant generated and sold 10.74 million kWh electricity output to PEA, while its plant annual average EAF was 99.69%.

3.5 SPP Five Company Limited (“SPP5”) EGCO directly holds a 100% stake in SPP5 which owns and operates the 8 MW solar power plant located in Roi-Et province from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP5 has entered into a non-firm PPA with PEA under VSPP. The project is subsidized with adder of 8 baht per kWh on top for 10 years of its wholesale tariff. The COD was scheduled on June 22, 2012. Additionally, the plant is equipped with the tracking system. In 2012, SPP5 Power Plant generated and sold 8.48 million kWh electricity output to PEA, while its plant annual average EAF was 99.56%.

IV. Overseas Group 4.1 Conal Holdings Corporation (Conal)

EGCO indirectly holds a 40% stake in Conal via EGCO International (B.V.I.) Limited (“EGCO BVI”). Conal is the largest IPP in the Mindanao Island, Philippines. Conal holds the shares in 2 electricity generating companies and 1 operation and maintenance service company. Western Mindanao Power Corporation (“WMPC”) EGCO indirectly holds a 17.6% stake in WMPC via Conal. WMPC owns and operates an IPP power plant located in Zamboanga city, Philippines. It is a 109.6-MW diesel power plant using a bunker-c fuel oil as a primary fuel. Under the Build-Operate-Own (“B-O-O”) scheme, it generates and sells all net electricity output to National Power Corporation (“NPC”) under the 18-year Energy Conservation Agreement (“ECA”). In 2012, WMPC power plant generated and sold 572.29 million kWh electricity output to NPC, while its annual average EAF was 91.75%.


26

Southern Philippines Power Corporation (“SPPC”) EGCO indirectly holds a 17.6% stake in SPPC via Conal. SPPC operates and owns an IPP power plant called Gen Santos located in Sarangani province, Philippines. It is a 54.8-MW diesel power plant using bunker-c fuel oil as a primary fuel. Under the B-O-O scheme, it generates and sells all net electricity output to NPC under the 18-year ECA. In 2012, SPPC power plant generated and sold 315.67 million kWh electricity output to NPC, while its annual average EAF was 93.01%.

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

4.2 Quezon Power (Philippines) Limited Company (“Quezon”)

On June 11, 2012, EGCO increased its stake from 52.13% to 98% in Quezon via North Pole Investment Company Limited (“North Pole”) and EGCO BVI. This transaction gave it complete management control under its 25 year power purchase agreement. EGCO is also taking 100% ownership of Quezon Management Services Ltd. (formally named Intergen Management Services (Philippines) Ltd). Quezon owns and operates a 502.50-MW pulverized coal-fired power plant using the high quality coal imported from Indonesia as a primary fuel. Under the 25-year PPA, it generates and sells net electricity output to Manila Electric Company (“MERALCO”), the country's largest power distribution company, and also provides additional load stability of Luzon power grid. In 2012, Quezon power plant generated and sold 2,959.44 million kWh electricity output to MERALCO, while its annual average EAF was 82.73%.

4.3 Nam Theun 2 Power Company Limited (“NTPC”)

EGCO directly holds 35% stake in NTPC, which owns and operates a 1,086.80-MW hydroelectric power plant located in Lao PDR. It generates and sells 948-MW contracted capacity to EGAT and 75-MW contracted capacity to Electricité du Laos (EDL) under the 25-year PPAs starting from its COD. In 2012, NT2 power plant generated and sold 5,463.13 million kWh electricity output to EGAT and 307.31 million kilowatt-hours electricity output to EDL, while its annual average EAF for EGAT was 97.26 and 92.63 for EDL.

V. Other Businesses 5.1 EGCO Engineering & Service Company Limited (“ESCO”)

ESCO is EGCO’s wholly owned subsidiary which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries including the Group companies.

5.2 Pearl Energy Philippines Operating, Inc. (“PEPOI”)

EGCO holds the acquisition of 100% of the outstanding shares of PEPOI (formally named


27

“Covanta Philippines Operating Inc.”), the entity which provides operation and maintenance services to Quezon power plant through a long-term operation and maintenance agreement.

5.3 Quezon Management Services Ltd (“QMS”) EGCO completed the acquisition of 100% of QMS, the entity which provides management services to Quezon power plant through a long-term management service agreement.

5.4 Egcom Tara Company Limited (“Egcom Tara”) EGCO holds 74.19% stake in Egcom Tara via ESCO. Under a 30-years agreement, Egcom Tara produces tap water according to Thai Industrial Standard (“TIS”) and supplies to the 3 water stations of the Provincial Waterworks Authority of Thailand (PWA), namely, Lak Muang Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station.

5.5 Eastern Water Resources Development and Management Public Company Limited (“East Water”)

EGCO holds 18.72% of shares in East Water which is responsible for developing and operating the main raw water pipe network in the Thailand Eastern Seaboard area covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad.

5.6 Absolute Power P Company Limited (“APPC”)

EGCO invested in a Biodiesel Plant Project through the acquisition of 50 percent stakes in Absolute Power P Co. Ltd. (“APPC”). The project with the total capacity of 300,000 litres per day (or 100,000 tons per year) has been commercially operated since February 2012. In 2012, APPC produced and sold approximately 17 million litres of biodiesel.

5.7 PT Manambang Muara Enim (“MME”) EGCO indirectly holds 40% stake in MME via New Growth B.V. in Netherlands. MME owns and operates a Coal Mine Project, which is an open-bit coal mine located in South Sumatra, Republic of Indonesia, with the concession agreement from the government of the Republic of Indonesia for 28 years since March 2010 to March 2038. MME has mineable coal reserves of 140 million tons and has been operated since March 2010. The sales volume of MME in the end of 2012 was at 1.2 million tons which was approximately 41% higher than 2011.


28

Group Structure and Shareholders as of December 31, 2012

90% Th

eppa

na

100%

TP C

ogen

100%

SK C

ogen

EGCO

Gr

een

Roi-E

t G

reen

60%

GPS

100%

TJ C

ogen

60%

EGCO

Co

gen

APM

C

74%

95%

SPP5

YEH

Sola

rco

CONA

L

NMPC

WM

PC

SPP4

GIDE

C

Alsin

gSP

PC

100%

49%

100%

40%

64.5

0%55

%80

%

100%

50%

90%

80%

55.0

0%

73.3

4%

98%

SPP3

East

Wat

erGY

GGP

IQQG

CQP

IQP

L

100%

18.7

2%10

0%10

%10

0%26

.65%

40%

SPP2

Egco

m T

ara

NED

Gulf

Ener

gyGu

lf IP

PGP

GM

ME

100%

74.1

9%33

.33%

100%

100%

100%

PEPO

I

100%

100%

50%

100%

13%

100%

100%

ESCO

AEGE

CSC

CXP

CLGP

I-I

OPDC

I

100%

50%

100%

100%

100%

1%

KEGC

OAP

PCNK

CCNT

PC

EGAT

25.4

1%TE

PDIA

23.9

4%Ge

nera

l Pub

lic50

.65%

As o

f 31

Dece

mbe

r 201

2

EGCO

GRO

UP

Who

lly/M

ajor

ity

Owne

dEq

ually

/Min

ority

Ow

ned

Over

seas

100%

50%

100%

35%

99%

100%

100%

100%

EGCO

Rayo

ngBL

CPGC

CNo

rth

Pole

EGCO

BVI

CoOp

New

Gr

owth

BV

QMS

Part 2 Section 3 Operation of Business Line

29

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.

1. Significant Events

As at December 31, 2012, EGCO Group operated 20 power plants with 4,707.85 megawatt equity. The power sold to EGAT was 3,879.86 megawatt which accounts for 12% from total installed capacity sold to EGAT at 32,600 megawatt. EGCO Group also operated and sold power to PEA at 41.70 megawatt. Highlights of the events in 2012 were as follows: 1. January 18, 2012, EGCO had signed the Share Purchase Agreement to invest in the

wind-power project in Chaiyaphum through the acquisition of 90% stakes in Theppana Wind Farm Company Limited, a very small power producer.

2. January 23, 2012, EGCO completed the acquisition of 100% stakes in SPP Four Company Limited (“SPP4”) from MEMC Singapore Pte Ltd. SPP4 owns and develops the solar power plant project with the installed capacity of 6 megawatt. The COD of the project was on January 24, 2012.

3. February 27, 2012, EGCO had signed the Shareholder Agreement with Yanhee Solar Power (“Yanhee Solar”) for the acquisition of 49% stakes in Yanhee EGCO Holding Company Limited (“Yanhee EGCO”). YEH owns 100% stakes in Solarco Company Limited (“Solarco”) which is the project developer of the 6 solar power plant projects with the total capacity of 57 megawatt. The projects are located in Nakornpathom and Suphanburi. The CODs are scheduled in December 2013.

4. February 29, 2012, EGCO completed the acquisition of 100% stakes in SPP Three Company Limited (“SPP3”) from MEMC Singapore Pte Ltd. SPP4 owns and develops the solar power plant project with the installed capacity of 8 megawatt. The COD was on February 21, 2012.

5. March 23, 2012, EGCO signed the Share Purchase Agreements with Gunkul Engineering Public Company Limited (“Gunkul”) regarding the investment in Solar Power Plant Projects through the acquisition of 60% stakes in G-Power Source Company Limited (“GPS”). GPS has entered into 4 non-firm PPAs with PEA with capacity of 6.5 MW each, total capacity 26 MW. The COD of the project was in March 2012.

6. May 15, 2012, EGCO signed the Shareholder Agreement with Absolute Power P Co., Ltd. (“APPC”) regarding the investment in a Biodiesel Plant Project through the acquisition of 50% stakes in Absolute Power P Co., Ltd. (“APPC”). APPC has started its operation in October 2011.


30

7. June 8, 2012, EGCO signed the Share Purchase Agreement with SunEdison Energy Holding (Singapore) Pte. Ltd. and completed the acquisition of 100% stakes in SPP Two Company Limited (“SPP2”). SPP2 owns and develops the solar power plant project with the installed capacity of 8 megawatt. The COD was on May 2, 2012.

8. June 11, 2012, EGCO Group signed the Share Purchase Agreements regarding the 45.875% additional investment in Quezon Power Plant from Intergen. Its stake has increased to 98% which will give it complete management control under its 25 year power purchase agreement. EGCO is also taking 100% ownership in Quezon Management Service Inc. (“QMS”) (formerly Intergen Management Services (Philippines) Ltd., (“IMS”) which provides and maintenance and services for Quezon project.

9. June 28, 2012, EGCO signed the Share Purchase Agreement with SunEdison Energy Holding (Singapore) Pte. Ltd. and completed the acquisition of 100% stakes in SPP Five Company Limited (“SPP5”). SPP5 owns and develops the solar power plant project with the installed capacity of 8 megawatt. The COD was on June 22, 2012.

10. August 16, 2012, EGCO signed the Share Purchase Agreement to invest in PT Manambang Muara Enim Company Limited (“MME”) through the acquisition of 40 percent via New Growth B.V., which is an open-bit coal mine located in Kabupaten Muara Enim, South Sumatra with the concession agreement from the government of the Republic of Indonesia for 28 years from March 2010 to March 2038. MME has been operating since March 2010.

11. September 28, 2012, EGCO signed the Share Purchase Agreement to invest in the Hat Yai Municipal Waste Power Plant Project through the acquisition of 50 percent stakes in GIDEC Company Limited (“GIDEC”). The project, which is located in Songkhla Province, generates electricity from Hat Yai Municipal’s waste in the capacity of 6.7 megawatt. The scheduled COD was in April 2013.

2. Electricity Business EGCO businesses can be divided into 5 groups namely Independent Power Producer (“IPP”) Group, Small Power Producer (“SPP”) Group, Very Small Power Producer (“VSPP”), Oversea Power Producer Group and Other Business Group: This Group comprises 2 types of business that is maintenance and operation business and tap water business as the following details.


31

2.1 Power Energy 2.1.1 Nature of Product/Service

Electrical power is a clean processing power that is easy to use and to transform into other types of energy. Electrical power is vital to business operations, whether it be industry, agriculture, communication or tourism. To generate sufficient electrical energy to satisfy demand is therefore important. The manufacturing of electricity in Thailand at present can be divided into two categories:

1. Non-fuel electricity such as hydro power plants, and natural energy power plants using inexhaustible sources of natural energy like solar power, wind power and geothermal power. 2. Fuel-based electricity such as steam power plants, gas turbine power plants and combined cycle power plants.

A. Types of Power Plant

The types of power plant operated by the EGCO Group are:

1. A hydro power plant generates electricity by the use of force and water compression to rotate water turbines.

A power plant under this category is the Nam Theun 2 Power Plant.

2. A thermal power plant produces electricity using heat derived from combustion. The fuels used in this type of plant can be natural gas, coal, or fuel oil which generate heat to water until it becomes high-pressure steam. This steam will force the electricity generator to rotate, creating electricity. It takes several hours each time to operate such a process from boiling the water in a kiln to starting up the power generator. Therefore, it is suitable for use as a base load plant.

Power plants under this category are Khanom Power Plants 1 and 2, BLCP Power Plants 1 and 2, and Quezon.

3. A combined cycle power plant combines the use of a gas turbine machine and a steam turbine machine by transporting heat from exhaust gases coming out from a hot gas turbine machine to the boiler, then transferring the heat to water, boiling it, and turning it into steam. This steam will later rotate the steam turbine attached to the shafts of the power generator where electricity is produced.

Power plants under this category are Rayong Power Plants 1-4, Khanom Combined Cycle Power Plant 3, GPG Power Plants 1 and 2.

4. A diesel power plant is a thermal power plant using oil as fuel. This type of power plant operates in the same manner as a car engine adopting the combustion


32

principles of diesel injected in the engine cylinder in which air is compressed to obtain high temperature. This is called a compression stroke. In the meantime, injected diesel combusts with heat and then explodes, forcing the pistons to move the crankshaft which is connected to the engine shaft making it move the power generator where electricity is produced.

Power plants under this category are WMPC Power Plant and SPPC Power Plant in the

Republic of the Philippines.

5. A cogeneration power plant is a medium-size power plant producing both electrical power and thermal energy at the same time. At the plant, primary energy is converted to electrical power and the thermal energy which will become useful heat energy following the same process according to thermodynamics.

Power plants of this type are EGCO Cogen Power Plant, GCC Power Plant, KNCC Power Plant and SCC Power Plant.

6. A renewable energy power plant uses non-conventional energy such as wind energy, solar power and mini hydro. It can also be agricultural waste or waste materials, waste from agricultural or industrial product manufacturing, products made from agricultural waste or waste materials, garbage, woods from reforestation for fuel. It can also be waste fuel, for example, steam left from the manufacturing process of industrial, agricultural products such as heat exhaust gases, or by-product energy such as dynamic power which is a product from reducing the pressure of natural gas.

Power plants under this type are Roi-et Green Power Plant where chaff is used as fuel, and GYG Power Plant where lumber from rubber trees is used as fuel, whereas GPS Power Plant, SPP 2, SPP 3, SPP 4, and SPP 5 is used solar power.

IPP Group Electricity business which is considered the core business of the Company comprises the investment in IPP and SPP as follows:

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, BLCP, and GPG) 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


33

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.

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

a. 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).

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

payment charged on EGAT will cover variable operating and maintenance cost while that applicable to customers in general will change according to the tariff structure of PEA.

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

a. Energy payment is the actual measured quantity of electricity delivered. The 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).

b. The adder from SPP power purchasing price of fuel and technology due to production cost of renewable energy will vary to technology, fuel type, production capacity and investment details affecting variety of adder level.

Overseas Investment Group

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.


34

- 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.

In addition to the PPA with EGAT, the Board of Investment also granted the tax privileges to all IPPs and SPP 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. 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 as indicated. • 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. Tax privileges to all IPPs are details as follows.

Power Plant Date of Promotion Granted

Promotion Certificate

Salient Privileges

Registered Capital of at

Least

Location

REGCO April 20, 1995

No. 1440/1995 dated June 15, 1995

April 20, 1995-April 19, 2003

Baht 4,700 million

Rayong Province

KEGCO September 26, 1996

No. 1742/1996 dated November 6, 1996

September 26, 1996-September 25, 2004

Baht 4,710 million

Nakorn Sri Thammarat Province

BLCP October 10, 1997

No. 1499/2000 dated August 21, 2000

October 1, 2006-September 30, 2014

Baht 12,000 million

Rayong Province

GPG June 28, 2005 No. 1660(2)/2005

November 3 2006-

Baht 1,850 million and

Saraburi Province


35

dated July 25, 2005

November 2, 2014

shall increase the registered capital of at least Baht 9,030 million

Tax privileges to all SPPs are details as follows. Power Plant Date of

Promotion Granted


Salient Privileges


Least

Location

EGCO Gogen

January 10, 2003

No. 1230/1999 dated June 7, 1999 and the revised version No. 5106/2000 (3-1230/1999 and 6753/2002) (4-1230/1999) dated May 31, 2000, October 3, 2002 and November 2002, respectively

January 10, 2003-January 9, 2011

Baht 1 million Rayong Province

Roi-Et Green April 25, 2003

No. 1660(1) 2001 dated October 19, 2001 and revised version No. 6871/2003 (2-1660 (1) 2001) dated November 7, 2003

May 28, 2003-May 27, 2011

Baht 180 million

Roi-Et Province

GCC July 21, 1998 No. 1279/2540 dated May 2, 1997 and 3 revised versions - No. 4553/1999 (2-1279/1997) - No 6013/2542 (3-1279/1997) Dated December 2, 1999 - No. 5279/2000 (4-1279/1997)

July 21, 1998-July 20, 2004

- Saraburi Province


36

Power Plant Date of Promotion Granted


Salient Privileges


Least

Location

dated June 20, 2000

NKCC June 1, 2000 No. 1594/1998 dated December 28, 1998 and a revised version, No. 4735/2001 (2-1594/1998) dated March 7, 2001

August 1, 2000-May 31, 2008

- Saraburi Province

SCC April 1, 1999 No. 1761/1998 dated December 15, 1998 and a revised version, No. 4100/2001 (2-1761/1998) dated January 17, 2001

April 30, 1999-April 29, 2007

- Samutprakarn Province

GYG November 7, 2007

No. 1549(2)/2004 dated July 9, 2004

November 7, 2004-November 6, 2014

Baht 1 million Yala Province

NED March 10, 2010

No. 1443(1) 2553 dated April 12, 2010

The Project is during the construction.

Baht 1,990 million

Lopburi Province

2.1.2 Marketing and competition

1.1 Electricity generation and transmission system

EGAT is responsible for electricity generation and transmission to respond to demand countrywide. It has its own power plants for power generation and also purchases power supply from private producers, Laos and Malaysia. It then sells electricity to Metropolitan Electricity Authority (MEA), Provincial Electricity Authority (PEA), and other direct customers (some industrial plants designated by the Royal Decree). EGAT dispatchs electricity through high-voltage power stations. MEA and PEA will undertake the distribution and retailing to the general public. Electricity is purchased from EGAT at the interconnection point and then transmitted to substations for further distribution to consumers.

At present, EGAT has altogether 39 power plants scattering in many regions across the country. Most of EGAT’s plants are hydroelectric power plants and the second


37

and the third are combined cycle power plants and thermal power plants, respectively. The combined installed capacity of the thermal power plants is the largest installed capacity.

Since 1992, the government has encouraged private sector to take part in electricity generating. The National Energy Policy Council approved the establishment of Electricity Generating Co., Ltd. (EGCO) and the regulations for the purchase of power from Small Power Producers (SPP) as well as policy regarding the purchase of power from Independent Power Producers (IPP). Power purchase from SPPs and IPPs helps provide the reduction of EGAT’s investment burden in power generating facility.

1.2 Power purchase from SPPs

Electricity generated by SPPs is partially for its own use or for sale to nearby factories, and the remaining is sold to EGAT under the regulations for the purchase of power from SPPs. There is currently also purchase of power from projects using other forms of energy, i.e. residue or waste. The purchase agreements are of non-firm type, under which no volume and time of purchase is specified. The purchase of electricity depends on the consideration of EGAT’s threshold capability of power transmission and distribution systems.

EGAT has regulation to purchase electricity from SPPs each at 60 MW, but that may be extended to as high as 90 MW. From the beginning of the regulation to purchase power from SPPs in 1992 fiscal year until December 2010, there were 87 producers approved by EGAT with a total contracted capacity of 4,712.92 MW. Of the total, 61 producers with 3,786.30 MW capacity have been contracted on a firm type basis (with power purchase agreement term of 5 years up and defined capacity), and the other 26 producers with 926.62 MW capacity on a non-firm type basis (no defined capacity). Of these 87 producers, 59 producers have already dispatched 2,479.92 MW electricity to the system (43 producers, with 2,182.30 MW, have firm contracts and 16 producers, with 297.62 MW, have non-firm contracts).

Firm Non - Firm Total Power

Plant MW Power

Plant MW Power Plant MW

Already dispatched 46 2,444.60 20 523.92 66 2,968.52

Non dispatch 54 4,792.00 22 1,257.00 76 6,049.00 Total 100 7,236.60 42 1,780.92 142 9,017.52

1.3 Power purchase from IPPs

The seventh National Economic and Social Development Plan has allowed for the private sector’s investment in power generation under the IPP scheme. The IPPs can submit their own proposals thereby competition is encouraged in respect of technology, location, generation source, type of fuel used, and power tariff.


38

Currently, there are IPPs that has begun commercially dispatching electricity to the system:-

IPP Installed

capacity (MW) Fuel

1. Electricity Generating PCL. - Rayong Power Plant 1,174.99 natural gas - Khanom Electricity Generating Co.,Ltd. 748.20 heavy oil, natural gas

2. Ratchaburi Electricity Generating Co., Ltd. 3,481.00 heavy oil, natural gas

3. Independent Electricity Generating (Thailand) Co., Ltd. 700.00 natural gas

4. Tri Energy Co., Ltd 700.00 natural gas 5. Glow IPP Co., Ltd 713.00 natural gas 6. , Eastern Power Co., Ltd 350.00 natural gas 7. BLCP Power Co., Ltd. (EGCO investment 50%) 1,346.50 Coal

8. Gulf Power Generation Co., Ltd. (EGCO investment 50%) 1,468.00 natural gas

9. Ratchaburi Power Co., Ltd 1,400.00 natural gas 10. Gheco-One Co. 660.00 coal

Total 12,741.69

IPPs that has not commercially dispatch electricity to the system :- No. Company Fuel Type Capacity

( MW) Commercial

Operating Date (COD)

1 Siam Energy natural gas 1,600.00 Mar. / Sept. 2013 2 National Power Supply coal 540.00 Nov. 2013/ Mar. 2014 3 Power Generation Supply natural gas 1,600.00 June / Dec. 2014

Total 3,740.00

1.4 Thailand’s total capacity

As of December 31, 2010, the total installed capacity of the Thailand’s power system accounted for 30,920.01 MW, coming from:

Power plant Installed

capacity (MW) Fuel

1. Total installed capacity of EGAT Plc. 15,010.12 heavy oil, natural gas, diesel, lignite

2. IPP 12,741.69 heavy oil, natural gas, coal

3. Small Power producers – Firm type 2,443.80 heavy oil, natural gas, coal

4. Foreign Country


39

- Nam Theun – Hin Bun hydroelectric power plant

434.00/1 -

- Huay Hoh hydroelectric power plant 126.00/1 - - Nam Ngum hydroelectric power plant 596.60/1 - - Thailand-Malaysia transmission lines 300.00 - - Nam Theun 2 Power Co., Ltd 948.00/1 -

Total installed capacity 32,600.21 Source: EGAT

Note /1 Capacity at the interconnection point 1.5 Total power demand

(1) Statistics of power demand

Peak load demand is the maximum power required in the system during the day in each year, and electricity generation refers to total units of electricity generated in a certain period. Both values depend on weather condition, period of power consumption, number of consumers, economic condition, etc. The historical data of Peak load power demand and electricity generation are as follows:

Peak load demand Electricity generation

Fiscal year MW Increase Million

Increase

MW % units Million units

%

1988 5,444.00 710.10 15.00% 31,996.94 3,803.78 13.49% 1989 6,232.70 788.70 14.49% 36,457.09 4,460.15 13.94% 1990 7,093.70 861.00 13.81% 43,188.79 6,731.70 18.46% 1991 8,045.00 951.30 13.41% 49,225.03 6,036.24 13.98% 1992 8,876.90 831.90 10.34% 56,006.44 6,781.41 13.78% 1993 9,730.00 853.10 9.61% 62,179.73 6,173.29 11.02% 1994 10,708.80 978.80 10.06% 69,651.14 7,471.41 12.02% 1995 12,267.90 1,559.10 14.56% 78,880.37 9,229.23 13.25% 1996 13,310.90 1,043.00 8.50% 85,924.14 7,043.77 8.93% 1997 14,506.30 1,195.40 8.98% 92,724.66 6,800.52 7.91% 1998 14,179.90 -326.40 -2.25% 92,134.44 -590.22 -0.64% 1999 13,712.40 -467.50 -3.30% 90,413.99 -1,720.45 -1.87% 2000 14,918.30 1,205.90 8.79% 96,780.72 6,366.73 7.04% 2001 16,126.40 1,208.10 8.10% 103,165.20 6,384.48 6.60% 2002 16,681.10 554.70 3.44% 108,382.46 5,217.26 5.06% 2003 18,121.40 1440.30 8.63% 116,669.98 8,280.70 7.64% 2004 19,325.80 1,204.40 6.64% 127,756.41 11,086.43 10.22% 2005 20,537.50 1,211.70 6.26% 134,893.25 9,097.85 5.58% 2006 21,064.00 526.50 2.57% 142,112.18 7,218.93 5.35% 2007 22,586.10 1,522.10 7.22% 146,884.92 4,722.74 3.35% 2008 22,568.20 -17.90 -0.08% 148,435.98 1,551.60 1.05% 2009 22,044.90 -523.30 -2.32% 145,214.62 -3,221.36 -2.17% 2010 24,009.90 1,965.00 8.91% 160,138.47 14,924.91 10.28%


40

2011 23,900.21 -109.68 -0.46% 158,899.80 -1,238.67 -0.77% 2012 26,121.10 2,220.89 9.29% 168,378.94 9,479.14 5.97%

Source: EGAT

(2) Power demand forecast

Power demand can be forecasted based on possession and power consumption of electrical appliances (end use). This requires a large amount of information, on macro-level, e.g., economic growth, population size, number of households, government’s principle in power, etc. and micro-level, e.g. power consumption to value added of small business and industries, type of residence, income level, consumption and efficiency of electrical appliances, applications for power consumption and investment promotional privileges, power consumption to facility service areas, temperature, etc.

Power demand is identified in two terms, i.e. energy demand and peak load demand. Forecast of energy demand takes into account the above information with mathematical models applied. Meanwhile, peak load demand forecast is figured out by considering the derived energy demand forecast together with nature of consumption by each user.

1.6 Dependable capacity

Dependable capacity refers to the maximum generating capacity sustained by the system in a period of time under circumscribed environment. Dependable capacity of hydroelectric power plants is the electricity generating capacity with reservoir water availability and past water supply statistics taken into account. Dependable capacity of thermal power plants is the electricity generating capacity when taking into account various circumstances and their constraints, which can hinder thermal plants’ achievement of their full electricity generating capacity.

1.7 Reserve margin

Reserve margins come from the event when dependable capacity is higher than peak load demand. In calculation term, it is the difference between dependable capacity and peak load demand divided by peak load demand, expressed in percentage. In general, EGAT will maintain the reserve margin at 15% to ensure adequate generating capacity.

The following table presents EGAT’s reserve margin during fiscal years of 1991-2010. During 1991-1997, the country’s power demand expanded rapidly thereby the reserve margin in the system falling below the level to be maintained by EGAT. In 1998, due to the economic meltdown and baht volatility, several businesses had to close down or suspend their production and expansion indefinitely. As such, domestic power demand consumption dropped sharply resulting in increase in reserve margins. To contain the excessive reserve margins, EGAT negotiated with SPPs and IPPs for their postponement of power plant construction for 1-4 years and revised the power


41

generating capacity development plan by postponing the projects, which have not yet begun their construction and temporarily shut down some power plants (cold standby)

Fiscal year Reserve margins (%)

1992 14.00 1993 17.42 1994 15.08 1995 12.69 1996 17.54 1997 14.77 1998 22.44 1999 34.46 2000 33.44 2001 35.64 2002 28.0 2003 35.1 2004 26.8 2005 19.9 2006 13.7 2007 21.9 2008 23.8 2009 22.4 2010 25.0 2011 26.5 2012 16.0

Source: EGAT

1.8 Thailand Power Development Plan (PDP)

The Thailand Power Development Plan or PDP 2010 embraces the horizon of 2010 to 2030. PDP 2010 was approved by the Cabinet on 23 March 2010.

For the first adjustment, the electricity demand is higher than the Plan and the construction problem of IPP due to postpone commissioning date. This plan accelerates the EGAT owned power plants and reviews the amount of power purchase from SPPs. The first adjustment PDP 2010 was approved by the Cabinet on 30 November 2010.

In early 2011 the earthquake and tsunami on the east coast of Japan. The nuclear crisis of a power plant Fukushima Daiichi had affected to the confidence and acceptance in the development of nuclear power plants in Thailand. The Ministry of Energy has delayed the development of nuclear power plants for three years to review the security system, preparation of governing laws and regulations. The second adjustment PDP 2010 was approved by the Cabinet on 3 May 2011.

The third adjustment PDP 2010 has been correspondingly revised with the government policies. To reach the target at 25% reduction of energy intensity (ratio of


42

energy consumption to GDP) is provided in the 20-Year Energy Efficiency Development Plan. Likewise, the alternative and renewable energy development plan is prepared to replace fossil fuels at least 25% in 10 years. As it mentioned, the third adjustment PDP 2010 was approved by the Cabinet on 19 June 2012.

2. Power Industry in Central Region The central region of EGAT system, covering 22 provinces in four main areas: 1) Bangkok outskirts and nearby provinces 2) Eastern area 3) Western area 4) Lower central area

At present, the generating capacity of the central region derives from EGAT’s power plants and other large private producers that EGAT has purchased electricity from. Besides, there is supplementary capacity from North Bangkok power plant and transmission facilities from the northern region. As of December 31, 2012, the generating capacity of the Central region is 23,071.12 MW, consisting of:

Total generating capacity of EGAT 8,800.13 MW Rayong Electricity Company Limited (REGCO) 1,174.99 MW Ratchaburi Electricity Generating Plc. 3,481.00 MW Tri Energy Co., Ltd. 700.00 MW Independent Electricity Generating (Thailand) Co., Ltd

700.00 MW

Glow IPP Co., Ltd. (Bowin) 713.00 MW Eastern Power Co., Ltd. 350.00 MW BLCP Power Co., Ltd 1,346.50 MW Gulf Power Generation Co.,Ltd 1,468.00 MW Ratchaburi Power Co., Ltd 1,400.00 MW Gheco-One Co. 660.00 Small Power producers 2,277.50 MW Total power generating capacity 23,071.12 MW

3. Power Industry in Southern Region Power generating capacity in the southern region comes principally from EGAT’s power plants, KEGCO and transmission network connecting to the central region. There is also supplementary capacity during peak period from Bang Lang and Ratchaprapa hydroelectric plants. In addition, the southern power network also links with that of Malaysia to allow for their power exchange in case of emergency or necessity.


43

Power generating capacity in the south as of December 31, 2012 was 2,415.68 MW:

Total generating capacity of EGAT 1,338.48 MW Thai-Malaysian transmission networks 300.00 MW KEGCO 748.10 MW Small Power producers 29.00 MW Total power generating capacity 2,485.58 MW

4. Competition

4.1 EGCO’s market share compared with competitors’

As of December, 31 2012, EGCO has 20 operating plants with capacity totaling 4,707.85 equity MW, of which 3,879.86 equity MW is dispatched to EGAT under long-term PPAs. This 4,707.85 equity MW represents 11.90% of Thailand’s total installed capacity.

Power Plant Portion of investment

Install Capacity

Capacity dispatched to

EGAT (MW)

% of Capacity

dispatched to EGAT

(MW)

IPP

1. Rayong Power Plant 100% 1,232.00 1,174.99 30.28% 2. Khanom Electricity Generating Co., Ltd. 100% 749.00 748.20 19.28%

3. BLCP Power Co., Ltd. 50.0% 717.00 673.25 17.35%

4. Gulf Power Generation Co., Ltd. 50.0% 755.00 734.00 18.92%

3,453.00 3,330.44 85.84%

SPP

5. EGCO Cogeneration Co., Ltd. 80.0% 93.60 48.00 1.24%

6. Roi-Et Green Co., Ltd. 70.0% 6.96 6.19 0.16%

7. Gulf Cogeneration Co., Ltd. 50.0% 55.00 45.00 1.16% 8. Samutprakarn Cogeneration Co., Ltd. 50.0% 63.00 45.00 1.16%

9. Nong Khae Cogeneration Co., Ltd. 50.0% 63.00 45.00 1.16%

10. Gulf Yala Green Co., Ltd. 50.0% 11.50 10.10 0.26% 11. Natural Energy Development Co., Ltd. 33.3% 18.33 18.33 0.47%

311.39 217.62 5.61%

VSPP

12. SPP Two Co., Ltd. 100% 8.00 - -

13. SPP Three Co., Ltd. 100% 8.00 - -


44

Power Plant

Portion of investment

Install Capacity

Capacity dispatched to

% of Capacity

14. SPP Four Co., Ltd. 100% 6.00 - -

15. SPP Five Co., Ltd. 100% 8.00 - -

16. G-Power Source Co., Ltd. 60% 11.70 - -

41.70 - -

Foreign Country

17. Nam Theun 2 Power Co., Ltd. 35.0% 380.40 331.80 8.55% 18. Quezon Power (Philippines) Limited Co. 98.0% 492.45 - -

19. Western Mindanao Corporation 17.6% 19.29 - - 20. Southern Philippines Power Corporation 17.6% 9.64 - -

901.76 331.80 8.55%

Total 4,707.85 3,879.86 100.00%

4.2 Competition situation

As a prototype privatization, EGCO has enjoyed several privileges initiated to encourage the private sector’s participation which makes EGCO to be at advantage in view of the following

1. EGCO is creditable among the financial source and investors. 2. EGCO’s personnel are transferred from EGAT, which is the country’s sole

source of personnel in power industry, thus contributing to efficient operations. Its rivals, which are just set up, on the contrary, need to recruit personnel that may have no enough expertise or be costly or take time for training.

4.3 Opportunity of new entrants At present, there may be new entrepreneurs, especially the international power company, entering this industry. However, there are several obstacles due to the following:

1. Investment capital restriction: Since power plant construction is capital

intensive, the New entrants must have a very strong financial position. 2. Human resource restriction: Personnel with expertise in this area are scarce,

so recruitment is difficult and costly.

It is noted that some strong international power companies has entered the Thailand’s power industry. EGCO has prepared the plan to enhance its competitiveness by sharpening the skills and knowledge of its personnel, studying the domestic and overseas market analysis, and conducting the strengths, weaknesses, opportunities and threats of EGCO in order to set up the appropriate strategic plan to maintain its leadership and investment opportunities in the market which will add value to shareholders and other stakeholders.


45

2.1.3 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 2006-2008 is as shown below:

units 2012 2011 2010

REGCO

Available capacity/1 Million kWh 9,454 9,303 9,460

Dispatching net generation/3

Million kWh 4,004 2,127 4,783

Capacity Factor(%) % 42.32 22.86 50.56

Increasing rate of capacity factor (%)

% +88.25 -55.53 +19.06

KEGCO

Available capacity/1 Million kWh 4,922 6,498 6,880


Million kWh 5,310 5,816 5,655

Capacity Factor (%) % 107.88 89.50 82.19


% -8.70 2.85 +1.84

BLCP

Available capacity/1 Million kWh 10,581 10,599.65 10,288.61


Million kWh 10,769 10,616.59 10,035.79

Capacity Factor (%) % 101.78 100.16 97.54


% +1.44 5.79 0.18

GPG

Available capacity/1 Million kWh 9,564 11,428.38 11,275.71


Million kWh 10,848 8,813.30 9,857.32

Capacity Factor (%) % 113.43 77.12 87.42


% +23.09 (10.59) 5.66


46

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. /2Dispatching 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.

/3 In 2006-2007, it was the testing period for operating GPG power plant, unit 1, and GPG received the commission fuel payment, which was the compensation for the fuel used during the testing period. The commercial operation date for unit 1 and unit 2 was on May 5, 2007 and March 1, 2008 respectively.

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) Coal

Bituminous is the primary fuel for BLCP power plant. This high quality coal is shipped to the deep sea port of BLCP from oversea contracted suppliers. Its price is varying shipment to shipment depends on its calorific value. According to PPA with EGAT, BLCP is obliged to stock the coal for 30 days continuous operation.

(3) 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.

(4) 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 KEGCO have to make available diesel oil reserve to serve 3 days of full generation.


47

Both companies will operate the facility with the use of diesel oil only upon the instruction of EGAT.

(5) Water

REGCO purchases raw water from East Water Resources Development and Management Plc., Dok Krai reservoir in Amphur Pluak Daeng of Rayong. Within its premises, a reservoir of 0.2 million cubic meters covering an area of around 50 rai was constructed as a holding pond for raw water. In case of shortage of raw water from the supplier, REGCO is able to sustain its normal operation for seven days. Moreover, REGCO has water treatment plant to produce tap water up to 43,200 cubic meters per day. The treated water 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 had been built to accommodate water reserve of 0.4 million cubic meters upon area of 112 rai along the Ban Klang canal, 9-10 km. from the power plant, which can well cope with shortage of water during dry season. Moreover, the additional reservoir was located 6 kilometers from the plant with the capacity of 0.4 million cubic meters. BLCP purchases the water from the Industrial Estate Authority of Thailand (“IEAT”) with the water is reserved for using in the power plant for 3 days. Moreover, BLCP has the desalination plant as the back up source to use in case IEAT cannot deliver the water to the power plant. For GPG, the water used in the power plant comes from Pasak River as the primary source. A reservoir has also been built to accommodate water reserve of 1.3 million cubic meters upon area of 120 rai. Within this reserved capacity, the power plant is able to sustain its normal operation 30 days. Moreover, GPG has water treatment plant to produce tap water with the capacity of 54,413 cubic meters per day.

(6) Chemicals Most chemicals used in power plants are for improving water quality, such as, hydrazine 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. 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.


48

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. 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”)


49

EGCO holds an indirect 74.19% 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 starting from April 7, 2001. Presently, total contract capacity is 42,000 cubic meters per day. 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 Department of Health. 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 February 8 2010, EGCO holds 18.72% 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


50

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.

Safety, Occupational Health and Environment To align our efforts and to extend our scope of responsibility to cover future power plants, EGCO has included the projects on safety, health and environment in the strategic plan and budget. With respect to this, the Safety, Health and Environment (SHE) Committee, has been shored up comprising representatives from Group companies. The responsibilities of the SHE Committee are to prepare the action plan on SHE implementation in alignment with the corporate policy and goals as well as the strategic plan and to monitor and appraise the quality of SHE program. At present, the Executive Vice President- Project Management from Asset Management and Planning Group is the Chairman of the Committee EGCO group considers SHE management as an essential part of our business to deliver our commitment of “constantly adopting the best practices to continuously increase the competitiveness and being sensitive to community and environment concerns”. In this regard, the SHE Committee has set the EGCO Group’s SHE guidelines. In 2008, the SHE Committee had cascaded the practice to EGCOM Tara, a subsidiary that supplies tap water that meets the industrial standard to the Provincial Waterworks Authority. SHE Committee’s Working Process The SHE Committee has established the EGCO Group’s SHE guidelines and cascaded the practices down to EGCOM Tara, a subsidiary supplying tap water that meets the industrial standard to the Provincial Waterworks Authority. The crucial principle of safety, occupational health and environmental management is developed on the ‘knowledge and expertise sharing’ basis in order to pass on experience, knowledge and skills to ensure standard practice across the board. The SHE Committee monitors and assesses the working practices using EGCO’s assessment criteria with Khanom and Rayong power plant being admired as the role models.

In addition, the SHE Committee has developed the SHE Management System Database which is used for knowledge sharing on SHE policies and practices among Group companies. Participations and feed backs from the Group companies are welcome of which the information will be used for continuous improvement.


51

With a commitment to ensure that our SHE management system meet the international standard, EGCO continues to study the best practices and relevant laws and standards in order to update our SHE guidelines. Safety and Occupational Health Management As mention above, EGCO Group, which operates in the energy sector, put our priority on the SHE management to ensure the compliance with the international standards. Our SHE management covers not only our employees but also our partners and all relevant parties. With this in mind, we set a policy that contractors must attend the SHE training and testing under OHSAS 18001/TIS 18001 before discharging their duties.

EGCO Group realizes that preparation is the key success factor for safety management. Consequently, risk management principles are applied to prepare all relevant units for any unexpected incidents. Annual fire drills, regular check-up of workplace safety, safety equipment trainings are carried out regularly. In addition, work place safety exhibitions are organized to promote understanding on SHE management system to employees and contractors alike. Highlights of activities to promote the SHE consciousness in the year 2009 are as follows.

• Safety Projects in 2010

- Suggestion system for workplace improvement campaign at Khanom power plant - ZERO Accident Campaign at Khanom power plant - Safety exhibition in collaboration with governments units to provide knowledge to

students, private and government organizations, and the general public at Khanom power plant.

- Project to reduce accidents at work at Roi-Et Green power plant. - Project to encourage employees to wear full safety gear while working at Roi-Et

Green power plant

• Occupational Health Projects in 2010 EGCO Group believes that the healthiness of the employees reflect the healthiness of the organization. In this regard, EGCO takes care that all of our employees are in good shape. Apart from such campaign, EGCO Group also ran the following occupational health projects in 2012.

- Annual physical check-up for employees - First-aid training for the employees - Employees’ physical exercise for weight loss to promote physical fitness by providing

facilities for daily exercise, supporting the budget to the Sport Club to run sport programs for employees and regularly host sport events for employees.

- Sport campaign with private and government units including local communities. - Health and life insurance for employees and their families.

• Safety Records With the commitment to high standard of SHE management, there is no labor dispute between EGCO and the employees. In addition, there is no event that leads to loss time injury in 2012. The accumulated safety hours of each company is shown below.


52

Power plants Working hours

Period

Rayong power plant 4,368,194 11 September 1999 to 31 December 2012 Khanom power plant 5,698,550 17 May 1998 to 31 December 2012

EGCO COGEN power plant 657,691 28 January 2003 to 31 December 2012 Roi-Et Green power plant 1,219,159 29 May 2003 to 31 December 2012

Energy Management EGCO Group puts high priority on efficient energy usage by running energy saving campaign which includes introducing energy efficient facilities, maintaining all equipment in a ready to use stage and studying and developing the energy management system to meet the international standard. Moreover, we promote the culture of sustainable energy use. In this regard, Khanom power plant converted one of the existing buildings to be the demonstration center for energy conservation powered by solar energy. This building is open as a learning center for renewable energy usage for employees, students, and the general public. Roi-Et Green has set the measure to clean the boiler heating surface during the planned outage 4 times a year. Since Roi-Et Green is a biomass power plant using rice husk as fuel, there is slag in the boiler tubes. As such, the oxygen level in the exhausted gas and the boiler blow down rate is adjusted down to maintain the boiler efficiency which results in a better heat rate. Environmental Management With the awareness that natural resources are major source for power generation, EGCO Group put the prime focus on efficient use of natural resources and see to that the impacts on the environment are well managed to reduce the impact from our operation. Such environment management includes water resource management, water treatment from production process, air pollution management, noise pollution management, waste management, green house gas management, and biodiversity management. Water resource management and Water treatment from production process EGCO Group supports the efficient use of water resource. Apart from reducing the water usage, we also adopt new technology in water treatment using sediment forming catalyst to treat waste water from office building and implement a neutralization system to treat chemical contaminated water from the operation process. In parallel, EGCO Group adheres to the water management plan.

• Construction of reservoirs to reserve water for power generation process - Khanom power plant has constructed two water reservoirs with the capacity

of 400,000 cubic meters and internal reservoir with the capacity of 35,000 cubic meters. KEGCO has set the water level above the check dam so that it can pump in water without disturbing the water consumption of communities around the reservoir and above the check dam.

• Using treated water for fish farming or plant watering


53

- Khanom power plant has run the Zero Discharge Program to re-use waste water from office buildings, power plant and employees’ residences to water the plants.

- Rayong, EGCO COGEN and Roi-Et power plants used the waste water from office buildings for watering plants. This helps cut 30% of the water consumption.

• The monthly monitoring of water quality was carried out to ensure that the waste water is treated to the level that meets the standard before being discharged to reduce the impact on the water resources. In addition, regular monitoring of the ecological system is conducted.

• Quarterly monitoring of the water treatment system to ensure efficient treatment - Khanom power plant implements the grease and chemical trap in the water

drainage system to increase the efficiency of separating oil from discharged water.

The tables below demonstrate water consumption of raw water and waste water during the last three years.

A. Water consumption Raw water consumption (M3/GWh)

2012 2011 2010 Remarks

Rayong power plant 1260.04 1,347.54 1,260.04 Khanom power plant 82.40 81.40 82.40 ECGO COGEN power plant 1,432.00 1,361.00 1,346.00 Roi-Et Green power plant 4,647.67 4,465.26 4,766.33

B. Temperature of cooling water of the discharge

Temperature of cooling water of the discharge

2012 2010 2009 Remarks

Rayong power plant 30.40 29.30 29.80 Legal requirement

<= 40.00 C Khanom power plant 39.30 37.80 37.80 ECGO COGEN power plant 36.00 36.00 36.00 Roi-ET Green power plant 27.95 27.11 28.63

Air Pollution Management With the efficient monitoring of the power generation process, the quality of air emission of all power plants in EGCO Group is better than the legal requirements. EGCO Group has also implemented continuous air quality control measures as follows:

• Bi-annual cross-checking of stack emission measuring. • Checking of efficiency of air pollution control treatment equipment on a quarterly

basis. • Enhancing of air quality management as follows:

- Rayong power plant reduced Nitrogen Oxide emission by spraying water into the combustion chamber.

- Khanom power plant constructed a sandblasting room using Uncentrator and cartridge to control the dust from the sandblasting process in order to maintain a good working environment and control the air pollution in the nearby area.


54

- Roi-Et Green power plant, a biomass power plant using rice husk as fuel, installed an electrostatic precipitator to trap flying ash in the fuel to be kept in the ash silo before being transported by a truck with full cover and water spray to prevent dusting. Ash is transported via conveyor belt to the storage for future distribution to farmers in nearby areas to be used as fertilizers.

The table below demonstrates air emission from EGCO Group during the last 3

years.

Air emission from power plants Oxide Nitrogen Emission

2012 2011 2010

Remarks

Rayong power plant 115.31 112.66 131.11

Legal requirements <= 200.00 ppm

Khanom power plant 162.00 154 167.00 EGCO COGEN power plant 72.8จ 86.7 71.80

Roi-Et Green power plant

1.10

1.30

4.20

<1.00 Sulfur dioxide (ppm) 2012 2011 2010 Legal requirements

<= 60.00 ppm Remarks: The measurement of SO2 is not required for REGCO, KEGCO and EGCO COGEN power plants due to the use of natural gas as fuel.

Noise Management Noise measurement is made at all power plants in EGCO Group on a quarterly basis. The measurement is made at three areas being the original source in the power plants, the control room and the boundary. It is found that the noise level at the control room and the boundary areas are within the limit while the noise at the source will be controlled to be within the limit. For example, employees who have to work in the operation area are required by internal regulation to strictly follow the regulations and wear safety gadgets in order to reduce the noise level. Warning signs are also displayed at the area.

In addition, KEGCO has increased the noise measurement at the residential area in the power plant campus to ensure the safety and occupational health of the employees. The result indicated that the noise level is within the limit. The table below demonstrates noise emission during the last 3 years.

Noise emission from power plants 2012 2011 2010 Remarks Noise level at the production site

Legal requirement <= 90 dB(A)


55

Rayong power plant 80.6 66.2 79.1 Khanom power plant 100.7 101.4 102.3 EGCO COGEN power plant 84.2 84.8 83.7 Roi-Et Green limited power plant 88.7 88.0 90.1

(dB(A)) Noise level at the control room

Legal requirement <= 80 dB(A) Rayong power plant 61.4 61.4 62.1 Khanom power plant 63.2 65.9 69.8 EGCO COGEN power plant 62.8 63.1 59.2 Roi-Et Green limited power plant 64.6 66.5 67.6 * In 2006 and 2007, noise level which was below 80 DB(A) was not calculated for cumulative noise levels at work. Noise level at the boundary area (dB(A))

2010 2009 2008 Legal requirement <= 70 dB(A)

REGCO power plant 53.2 48.1 48.7 Checked at a Security Kiosk KEGCO 57.6 57.2 57.8 EGCO COGEN power plant 65.7 65.2 69.3 Roi-Et Green limited power plant 59.9 60.9 60.1 Unchecked

Waste Management With the commitment to make the best use of natural resources, EGCO Group set the procedure for waste management under the following principles.

• Employees must bear in mind to produce as minimum waste as possible and to recycle waste.

o Khanom power plant organized project to produce organic instead of chemical fertilizers.

o Roi-Et Green power plant has used ash from rice husk which is the by product from the combustion process as fertilizers. Such knowledge is introduced to local villagers to replace the usage of chemical fertilizers with the environmental friendly one.

• Appropriate waste management procedures are set up starting from separation, transportation and disposal.

• Advisors will be engaged to manage contaminated and hazardous waste which may affect the environment to comply with the environmental laws.

Greenhouse gases and biodiversity management With the awareness that climate change will significantly affect ecological and natural systems, we at EGCO are determined to alleviate this problem by establishing a long term plan for greenhouse gas and biodiversity management together with the following projects.

• Youth Camp Project at Rayong Power Plant Youth Camp Project was settled in Rayong Power Plant area and Khao Leam Ya – Mu Ko Samet National Park. The objectives of the project are to educate the young generation in the vicinity of Map Ta Phut Sub-District, Rayong the electricity generating process in actual environment and to build sense of environmental conservation.

• Expand Green Area for Community around Rayong Power Plant - Rayong Power Plant staff and people of Huay Pong County grew trees in the

county to increase the green areas.


56

- Nam Cha Canal, the canal next door to Rayong Power Plant. In addition to the expanding green area, the canal was dredged and cleaned.

• Big Cleaning Day for Mae Rumpheung Beach As World Environment Day, Rayong Power Plant staff, the Huay Pong students and Khao Leam Ya – Mu Ko Samet National Park cleaned Mae Rumpheung Beach – one of the famous beaches in Rayong. This activity is to create public mind.

• Organic Way for Sustainable Development Project Khanom Power Plant organized this activity for 11 schools in Khanom District. The activity educated and demonstrate how to produce homemade organic fertilizer for agriculture.

• Increase Blue Crab in Natural Project Blue crab is local maritime animal and food from Khanom sea. Khanom Power Plant and Nakhon Si Thammarat Coastal Fisheries Research and Development Center developed a project to increase the population of blue crab in natural resource by breeding, nurturing and releasing the growing crabs to Khanom sea. Also, the mature breeders carrying spawn are released.

• Increase Population of Fresh Water Fish Khanom Power Plant staff and people of Klong Ban Klang released various kinds of growing fish to natural canal.

• Forest Reservation Youth Camp Project Youth Camp Project was settled at Kao Loung National Park, Phipun District, Nakhon Si Thammarat. The objective of the project is to educate and build the sense of environmental conservation for the young generation from Phipun and Nopphitam Districts.

Compliance with Environment Laws and Regulations EGCO Group has the policy to conduct our business with commitment to strictly complying with relevant environmental laws and regulations. We will also try to go beyond the legal requirement. For new project, we will adopt the EGCO’s SHE standard which will be in line with the local requirement of such project. Safety, Occupational Health and Environmental Operation Efficiency With continuous effort in ensuring efficient SHE implementation, EGCO Group power plants are well recognized by various institutions as shown below:

• Khanom Power Plant - Outstanding Corporate Governance Award 2011 as the 10 million baht

registered capital company by the Ministry of Commerce - National Safety Award for the 13th consecutive year, at the 26th National

Work Safety Week by Ministry of Labor - Zero Accident for 5 million hours as participating in Zero Accident

Campaign by the Ministry of Labor - Outstanding Establishment in the year 2012 for Achievement on Labor

Relations and Welfare for the 6 consecutive years, by the Ministry of Labor - EIA Monitoring Awards 2011 for the Establishment participating in EIA

analysis report - CSR - DIW Continuous Award 2012 for the 2nd year by the Ministry of

Labor • Roi-Et Green


57

- National Safety Awards for the third consecutive years, at the 26th National Work Safety Week by Ministry of Labor

- Outstanding Establishment in the year 2012 for Achievement on Labor Relations and Welfare for the second consecutive years by the Ministry of Labor

• EGCOM Tara - Certificate of Standard for Excellent Healthy Workplace (Outstanding

Level) by Ministry of Public Health - Awards in support of 8,220 gallons or 41,110 liters of drinking water to help

victims of flooding in the end of 2012 by Friends in Need (Pa) Volunteer Foundation Thai Red Cross

- Certificate for Quality of Drinking Water by Ministry of Public Health for 10 consecutive years

- Certificate of Standard for Corporate Social Responsibility (CSR-DIW Continuous) B.E. 2555

• ESCO - Safety Auditor of the Department of Labor Protection and Welfare in audit

Establishment who lead in safety managements in Rayong province - Registered in Safety training center list on criteria, Procedure and Training

curriculum on occupational safety in confine space Number 11 in Thailand by The Department of Labor Protection and Welfare. Ministry of Labor

4. Undelivered work There are 9 power plant projects under developing as following:

Project Contract Capacity (MW)

SCOD

1. Wang Ploeng Solar Power Plant, Lopburi Province 8.00 April 2013

2. Hat Yai Municipal Waste Powerr Plant, Songkla Province

6.50 April 2013

3. Theppan Wind Farm Power Plant, Chaiyaphom Province 6.90 August 2013

4. Sai Kyo Solar Power Plant, Suphanburi Province 9.50 December 2013

5. Sai Yai 1 Solar Power Plant, Nakhonpathom Province 9.50 December 2013

6. Sai Yai 2 Solar Power Plant, Nakhonpathom Province 9.50 December 2013

7. Sai Phet 1 Solar Power Plant, Nakhonpathom Province 9.50 December 2013



Total 78.40

Part 2 Section 4 Research and Development

58

4. Research and Development


Part 2 Section 5 Operational Assets

59

5. Operational Assets 5.1 Fixed Assets The fixed assets of the company and subsidiaries as at December 31, 2012 comprise the following items.

Items Value/1 (Million Baht)

1. Land and Building Less Accumulated Depreciation Total

8,667.46 (3,888.60) 4,778.86

2. Power Plant and Transmission System Less Accumulated Depreciation Total

67,677.88 (34,350.92) 33,326.96

3. Office Equipment and Cars Less Accumulated Depreciation Total

599.10 (484.98) 114.12

4. Work under construction 335.82 Remark : /1 The number was shown in EGCO Group’s consolidated financial statement . EGCO Group has recorded interest from joint ventures in the financial statement. Therefore, the values of land, buildings and pledged of joint ventures were not shown in the financial statement. Subsidiaries

EGCO Cogeneration Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth USD 27 million and Baht 1,182 million. Roi-Et Green Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth JPY 1,260 million. SPP 2 Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth Baht 868 million. SPP 3 Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth Baht 904 million. SPP 4 Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth Baht 684 million.


60

SPP 5 Co., Ltd. has mortgaged land, buildings, and pledged power plant equipment to secure its long-term loan worth Baht 830 million.

Quezon Power (Philippines), Limited Co. (QPL) has mortgaged company’s assets to secure its long-term loans worth USD 425 million.

Joint Ventures BLCP Power Co., Ltd. (“BLCP”) has mortgaged land, buildings, and pledged equipment to secure its long-term loan worth USD 558 million and Baht 20,663 million.

Gulf Power Generation Co., Ltd. (“GPG”) has mortgaged land, buildings, and pledged equipment to secure its long-term loan worth USD 323 million and Baht 16,388 million.

GCC, Nong Khae Cogeneration Co. Ltd. (“NKCC”) and SCC have mortgaged their land, 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, buildings, and pledged all power plant machinery and equipment to secure its long-term loans worth USD 23 million and Baht 585 million.

Southern Philippines Power Corporation (SPPC) has mortgaged land, buildings, and pledged equipment to secure its long-term loan worth USD 12 million.

Western Mindanao Power Corporation (WMPC) has mortgaged land, buildings, and pledged equipment to secure its long-term loans worth USD 20 million.

Nam Theun 2 Power Co., Ltd. (NTPC) has mortgaged company’s assets to secure its long-term loans worth USD 361 million and Baht 15,927 million.

Natural Energy Development Co., Ltd. (NED) has mortgaged company’s assets to secure its long-term loans worth Baht 5,216 million.

GIDEC Co., Ltd. (GIDEC) has mortgaged company’s assets to secure its long-term loans worth Baht 400 million.


61

G-Power Source Co., Ltd. (GPS) has mortgaged company’s assets to secure its long-term loans worth Baht 2,381 million.

Absolute Power Co., Ltd. (APPC) has mortgaged company’s assets to secure its long-term loans worth Baht 130 million.

5.2 Intangible Assets - Concessions (Power Purchase Agreement and Water Supply Agreement)

Right in long-term power and tap water purchase represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertaking or joint ventures at the date of acquisition. The EGCO Group expected to receive benefits and bonus from the subsidiaries in return. Hence, right in long-term power and tap water purchase is amortized using the straight-line method over its estimated useful life. Management determines the estimated useful life of long-term power and tap water purchase within 16-25 years, based on the evaluations of EGAT and PWA , respectively.

One of EGCO’s intangible assets is a good will which occurred from businesses acquisition. On December 31, 2012, the net good will was worth Baht 5,215 million.

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 plans to perform the higher share in the electricity generating business by developing or purchasing the new projects which comprise of investment structure and decent equipment and technology. 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 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


62

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.

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

63

6. Future Projects


Part 2 Section 7 Dispute

64

7. Dispute EGCO is not involved in any legal dispute based on the following definition.

• Legal case that has negative impact on EGCO and its subsidiaries with the size larger than 5% of the shareholders’ equity as at the end of the accounting year.

• Legal case that has significant impact on EGCO business.

• Legal case which is not related to EGCO’s normal business.

Part 2 Section 8 Capital Structure

65

8. Capital Structure

8.1 The Company’s securities

(1) EGCO’s registered capital and paid up capitals as of December 31, 2012 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.

The average stock price in 2012 was 110.88 baht per stock, an increase of 16.83 % from 2011. The highest closing price was 151.00 baht on 28 December 2012, the lowest closing price at 90.50 baht on 20 January 2012, and the Price-Earnings ratio (P/E ratio) is 13.17 times.

(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 11, 2012, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 21, 2012, are as follows.

No. Shareholders Shares % of Toal 1 Electricity Generating Authority of Thailand 133,773,662 25.410 2 TEPDIA Generating B.V. 126,054,178 23.94 3 Thai NVDR Company Limited 57,626,888 10.95 4 Littledown Nominees Limited 31,921,628 6.06 5 Bangkok Life Assurance Public Company Limited 10,206,200 1.94 6 HSBC (Singapore) Nominees PTE Limited 8,652,850 1.64 7 State Street Bank Europe Limited 7,234,479 1.37 8 Social Security Office (Two-types) 6,387,300 1.21 9 Bualuang LTF 6,203,500 1.18 10 Bualuang LTF 75/25 6,033,500 1.15

The ultimate shareholders of EGCO’s major controlling shareholders are as follows.

1.Electricity Generating Authority of Thailand (EGAT): EGAT is a state utility with the objectives to generate, purchase, transmit and distribute electricity. EGAT also provides the operation and maintenance services and invests in electricity related business. EGAT holds 25.41% of EGCO’s outstanding shares. EGAT has four representative directors of all 15 directors in EGCO.

Part 2 Section 8 Capital Structure

66

2.Diamond Generating Asia (“DGA”), a Mitsubishi Corporation (“MC”)’s subsidiary, MC is a technology development and trading company in industrial and energy sector. MC indirectly holds 11.972% of EGCO’s outstanding shares via TEPDIA Generating B.V.. MC has two representative directors of all EGCO’s 15 directors

3.Tokyo Electric Power Company Inc (“TEPCO”): TEPCO is the largest electric power company in Japan and one of the largest privately owned electric utilities in the world. TEPCO indirectly holds 11.972% of EGCO’s outstanding via TEPDIA Generating B.V.. TEPCO has two representative directors of all EGCO’s 15 directors.

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 details of the dividend payment for the past 5 years

Approval

Date XD Date Payment Date

Dividend

(Baht/

Share)

Operation Period

August 27, 2012 September 11, 2012 September 21, 2012 2.75 January 1, 2012-June 30, 2012

February 27, 2012 March 16, 2012 May 4, 2012 2.25 July 1, 2011-December 31, 2011








February 25, 2008 April 1, 2008 May 7, 2008 2.50 July 1, 2007-December 31, 2007



The controlling subsidiaries have the policy to pay their dividend four times a year to their shareholders at 100% of the net profits after tax, legal reserve and other reserve accounts applied to terms and conditions of their credit facility documents.

Part 2 Section 9 Management

67

9. Management

Organization Structure

At the top of EGCO’s organization structure is the Board of directors, the standing committees, the President and the top management.

9.1 Structure of the Board of Directors

The Board of Directors has main responsibility to conduct business in a way that will benefit EGCO, shareholders and stakeholders including the employees and communities where EGCO operates its business. In this regard, the Board works with the Management in formulating EGCO’s vision and policy and to approve the corporate budget.

Currently, the Board comprises 15 members:

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

• President, the only one executive member.

The Board of Directors and their share ownership in EGCO as of December 31, 2011 are as listed below:

No. Name Position Appointment Date No. of shares No. of Shares

December 31, 2012

December 31, 2011

Increase (Decrease)

1 Mr. Pornchai Rujiprapa Chairman April 25, 2012 - - - 2 Mr. Phaiboon Siripanoosathien Independent

Director April 21, 2011 - - -

3 Police Lieutenant General Pansiri Prapawat

Independent Director

March 1, 2012 - - -

4 Mr. Pasan Theparak Independent Director

March 1, 2012 - - -

5 Mr. Thanapich Mulapruk Independent Director

April 25, 2012 - - -

6 Mr. Pongstorn Kunanusorn Independent Director

April 25, 2012 - - -

7 Mr. Sorajak Kasemsuvan Independent Director

April 25, 2012 - - -

8 Mr. Surasak Supavitipatana Director November 16, 2011 - - - 9 Mr. Thawat Vadjanapornsithi Director January 30, 2012 - - -

10 Mr. Kulit Sombatsiri Director April 25, 2012 - - - 11 Mr. Toshiro Kudama Director February 28, 2011 - - - 12 Mr. Satoshi Yajima Director January 30, 2012 - - - 13 Mr. Hideo Kuramochi Director March 1, 2012 - - - 14 Mr. Shigeru Inano Director March 1, 2012 - - - 15 Mr. Sahust Pratuknukul2 President April 22, 2010 1,890 1,890 -


68

The lists of directors who retired or resigned in 2012 together with their share ownership in EGCO are as shown below.

No. Name Position Retiring/ Resigning Date

No. of shares No. of Shares

December 31, 2012

December 31, 2011

Increase (Decrease)

1. Mr. Vinij Tangnoi Director January 1, 2012 - - - 2. Mr. Akio Matsuzaki Director January 29,

2012 - - -

3. Mr. Somphot Kanchanaporn Independent Director

March 1, 2012 - - -

4. Mr. Chaipat Sahasakul Independent Director

March 1, 2012 - - -

5. Mr. Hideaki Tomiku Director March 1, 2012 - - - 6. Mr. Ryota Sakakibara Director December 1,

2011 - - -

7. Mr. Aswin Kongsiri Independent Director /

Vice Chairman

April 25, 2012 - - -

8. Police Lieutenant General Pijarn Jittirat

Independent Director

April 25, 2012 - - -

Independent Director The Board in the meeting no. 7/2008 on September 8, 2008 had early adopted the definition of independent directors to comply with the qualifications of independent directors stated in the notification of the Capital Market Supervisory Board no. 14/2008 re: “Filling for and Approval of Newly Issued Shares” before the effective date and the Board in the meeting no. 2/2011 on February 28, 2011 had resolved to reduce the shareholding under this item from not more than 1% to 0.5%. Under such definition, EGCO independent director shall have the following qualifications.

1. Holding shares not more than 0.5% of the paid-up capital with the voting right of EGCO, parent company, subsidiary company, associated company or any legal entity that may have the conflict of interest (including the connected persons as stipulated in section 258 of securities laws),

2. Not being a director that takes part in the management (executive director, director who has the same responsibility as management except for the signature in transactions approved by the Board and the joint signing with other directors), employees, advisors who receive regular salary, and controlling person of EGCO, parent company, subsidiary company, associate company and fellow subsidiary (subsidiary of the same holding company) or any entity that may have a conflict of interest during the period of two years before his/her appointment,

3. Not being a person who is related by maternity and by registration as parents, spouse, brother, sister, and son and daughter including their spouses of the management, or major shareholders, controlling persons or persons who will be nominated to be the Management or controlling persons of EGCO or its subsidiaries,


69

4. Not having business relationship with and not being a major shareholder, non-independent director or management of EGCO, parent company, subsidiary company, associate company or any entity that may have a conflict of interest in a way that would affect the giving of independent opinions during the period of two years before the filing date,

5. Not being an auditor or a major shareholder, director, management or partner of the audit firm that provides auditing services to EGCO, parent company, subsidiary company, associate company or any entity that may have a conflict of interest during the period of two years before the filing date,

6. Not providing any professional service or being a major shareholder, non- independent director, management or partner of the company that provide professional service which include financial and legal advices with the fee higher than 2 million baht per year during the period of two years before the filing date,

7. Not being appointed as a representative to safeguard interests of EGCO director, majority shareholders or shareholders who are related to EGCO’s majority shareholders, and

8. Not having any constraint that would affect the performance of giving independent judgment on EGCO.

The terms of independent directors The Board with the Nomination and Remuneration Committee’s approval in the meeting no. 2/2011 on February 28, 2011 has adopted the term of independent directors is limited at 3 terms, of which the counting of the term would start from the 2012 Annual General Shareholders’ Meeting on wards. The Nomination and Remuneration Committee shall review the appropriateness of the independent director definition. Currently, there are 6 independent directors of all 15 directors who meet the above qualifications which accounts for more than one-third of all directors. The lists of independent directors as of December 31, 2012

No. Name Position

1. Mr. Thanapich Mulapruk Independent Director 2. Mr. Phaiboon Siripanoosathien Independent Director 3. Police Lieutenant General

Pansiri Prapawat Independent Director

4. Mr. Pasan Theparak Independent Director 5. Mr. Pongstorn Kunanusorn Independent Director 6. Mr. Sorajak Kasemsuvan Independent Director


70

The lists of independent directors who retired or resigned in 2012 are as shown below.

No. Name Position Retiring/ Resigning Date

1. Mr. Somphot Karnchanaporn Independent Director March 1, 2012

2. Mr. Chaipat Sahasakul Independent Director March 1, 2012

3. Mr. Aswin Kongsiri Independent Director / Vice Chairman

April 25, 2012

4. Police Lieutenant General Pijarn Jittirat

Independent Director April 25, 2012

Authorized Directors EGCO determines that the authorized directors comprise the President to sign and affix the company’s seal independently, or any two directors to sign jointly and affix the company’s seal. Such authorized directors shall exclude (1) independent directors to maintain their independence under the good corporate governance principle, (2) Chairman who is a senior government officer, and (3) directors who are also directors of the financial institutions to avoid the limitation that such financial institutions cannot provide future financial service to EGCO. Appointment, Resignation, and Dismissal of Directors The Board of Directors, which comprises not less than five and not more than 15 directors, shall be elected by shareholders, provided that not less than half of them must reside in Thailand. If a directorship becomes vacant for any reason other than by rotation, the Board in the subsequent meeting shall elect a person who is qualified to fill in the vacancy by the votes of not less than three-forth (3/4) of the remaining directors. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom s/he replaces. At every annual ordinary meeting, one-third of the directors shall retire from office. If the number of directors is not a multiple of three, the number nearest to one-third must retire from office. Additionally, any director who wishes to resign from office may do so by submitting a resignation letter to the company. Such resignation shall be effective from the date the resignation letter reaches EGCO. In voting for the dismissal of any directors from office before the expiration of his or her term of directorship, a four-fifth (4/5) vote of eligible shareholders present at the meeting shall be required. Board of Directors’ Durties and Responsibilities The duties and responsibilities of the Board of Directors are as prescribed below. 1. Duties to EGCO • To devote time to EGCO and conduct the business in compliance with the governance

principles and EGCO’s Code of Conduct. • To demonstrate independent judgment in overseeing EGCO business. • To have full ethical and legal responsibility towards shareholders while taking into

account the interests of other stakeholders. • To endeavor to recruit competent key management who will fully devote themselves for

the benefit of EGCO.


71

• To monitor EGCO’s business and the compliance with the laws, rules, regulations and contract provisions and will require the Management to submit report on EGCO’s significant matters to ensure effective corporate performance.

2. Duties to the Shareholders • To endeavor to ensure that EGCO is financially viable, properly managed and constantly

improved so as to protect and enhance the interests of the shareholders. • To endeavor to ensure that the information disclosure is materially correct, complete,

transparent and timely. • To endeavor to ensure that shareholders are treated on equitable basis. • Not to submit fault information and to ensure that true and accurate information regarding

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

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

EGCO’s financial status is correctly disclosed. • To seek professional advice in case of doubt about the likely impact on lenders

such as when EGCO’s financial position is uncertain or insolvency may be pending.

4. Duties to other Stakeholders • To endeavor to ensure that EGCO complies with the governing laws and

regulations while taking into account the impact on employees, other stakeholders, community, society and environment.

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

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

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

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

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

• To endeavor to ensure that the system is established within EGCO to provide the Board, on a regular and timely basis, with necessary data to enable directors to make a reasoned and careful judgment.

• To endeavor to make sure that relations between the Board and the auditors are open and that the auditor can work independently and efficiently with the full co-operation from management and the internal auditors.

• To strive to ensure that EGCO complies with the governing laws, rules, regulations and business standard and ethics.

• In any case of doubt in the capacity of directors and committee members, to seek advise


72

from EGCO’s advisors who are experts in each areas and to engage independent advisors for the governance benefits such as legal advisors, financial advisors, HR advisors, other professional advisors on EGCO’s expenses.

2.Standing Committees’ Structure The Board of Directors has appointed 4 standing committees to help scrutinize significant matters. The details of the standing committees are as follows. Audit Committee The Audit Committee comprises at least 3 independent directors for a 3-year term of service, with one year for this purpose meaning the period between the Annual General Meeting (“AGM”) of shareholders when s/he is appointed and the next succeeding AGM. One of the members shall have finance and accounting background. (At present, Mr. Pongstorn Kunanusorn is the Audit Committee member that has such qualification.) The Audit Committee undertakes its responsibilities as described in the Audit Committee Charter, which is reviewed annually to be consistent with the changing internal and external environment. The responsibilities of the Audit Committee are detailed below. 1. Review the accuracy and adequacy of EGCO’s financial reporting. 2. Review the appropriateness and effectiveness of internal control systems, and internal audit

functions and determine the Internal Audit Division’s independence. 3. Approve the appointment, rotation and removal of the Chief Internal Audit. 4. Monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET,

and any other laws relevant to EGCO’s business. 5. Recommend the Board of Directors an independent person to be EGCO’s auditor as well as the

audit fees. 6. Review the Audit Division’s independence in terms of non-audit services. 7. Consider and endorse the revision on EGCO and Subsidiaries’ accounting policy prior to

submission to the Board of Directors for approval. 8. Attend a non-management meeting with an auditor at least once a year. 9. Consider the connected transactions or any transactions that may cause conflict of interest

complying with Securities and Exchange Acts and Regulations. 10. Review the Internal Audit Charter prior to submission to the Board of Directors for approval. 11. Approve the internal audit plan as well as budget and personnel. 12. Review the internal audit function, including: independence of internal audit division and

reporting obligation. 13. Review with the Management the preparation of the Management’s Discussion and Analysis or

MD&A and its disclosure in the Annual Report. 14. Review with the Management the risk management policy, the practice compliance with such

policy, as well as EGCO’s risk management guidelines.


73

15. Prepare a report that describes the Audit Committee’s activities and responsibilities. This report shall be signed by the Chairman of the Audit Committee and published in the annual report to the shareholders. The Audit Committee’s Report shall consist of at least the following information:

(a) an opinion on the accuracy, completeness and creditability of EGCO’s financial report, (b) an opinion on the adequacy of EGCO’s internal control system,

(c) an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or the laws relating to EGCO’s business,

(d) an opinion on the suitability of an auditor, (e) an opinion on the transactions that may lead to conflicts of interests, (f) the number of the Audit Committee meetings, and the attendance of such meetings by each

committee member, (g) an opinion or overview comment received by the Audit Committee from its performance of

duties in accordance with the charter, and (h) other transactions which, according to the Audit Committee’s opinion, should be known to

the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Board of Directors.

16. Inspect any suspiciousness reported by EGCO’s auditor, that the President, the Management or any person responsible for EGCO’s operation commits an offence under the Securities and Exchange Act (No. 4) B.E. 2551 and report the result of preliminary inspection to the Office of the Securities and Exchange Commission and the auditor within thirty days after being informed by the auditor.

17. Review the Audit Committee Charter at least annually. 18. Perform any other act as assigned by the Board of Directors with approval of the Audit

Committee. 19. With regard to the above responsibilities, the Committee is accountable to EGCO Board of

Directors whereas the Board of Directors remains responsible for EGCO’s actions against the third parties.

The Audit Committee conducts the self-appraisal annually and reports the result to the Board. For 2012, the Audit Committee conducted the group appraisal by using the questionnaire which was adapted from the SET’s Booklet for Audit Committee. There are two parts in the questionnaire; the overall duties of the Audit Committee and duties on other specific assignment including the auditing on financial report, the auditing on internal control, reviewing the internal audit division’s independence, reviewing EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET and any other laws relevant to EGCO’s business, appointing the Chief internal audit and the determining on the retainer fee, and reviewing on the committee’s qualifications as well as the scope for the committee’s responsibility. There were 14 meetings in 2012 of which the attendance rate was 93%.


74

Investment Committee The Investment Committee comprises 5 directors. The office term is the same as their directorship. The Investment Committee has the responsibilities to scrutinize and endorse for the Board’s consideration the Management’s proposals especially on investment and funding along with other related activities except for the small and medium size transaction which it has the authority to approve with subsequent acknowledgement by the Board. According to the meeting no. 9/2012 held on September 25, 2012, the Board approved the present Table of Authorities indicating the authorities of the Committee to be responsible for business investment under the Board of Directors’ assignment. The Investment Committee’s responsibilities are described below. 1. To consider EGCO’s strategic plan, business plan and annual budget for presentation to the

Board, 2. To formulate the overall investment strategy and investment policies in line with the EGCO’s

policy, 3. To review major acquisition, investment, divestment and funding requests, 4. To review the financial operations of EGCO, including Group-wide financial and treasury

management policies and major financing transaction, 5. To approve activities in accordance with EGCO’s regulations, 6. To consider issues which are assigned by the Board, and 7. To review risks associated with investment and finance and other related issues.

There were 12 meetings in 2012 of which the attendance rate was 95%. Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises 5 directors being 3 independent directors, for a 3-year term of service with one year for this purpose meaning the period between the AGM of shareholders when s/he is appointed and the next succeeding AGM. In order to maintain continuity, members may be re-elected. The mission of the Nomination and Remuneration Committee is detailed below. 1. To recommend the structure and composition of the Board and committees together with the

qualification of its members, 2. To recommend the list of nominees for the Board of Directors to be proposed to the

shareholders’ annual general meeting in case of vacancies by rotation and to the board in case of casual vacancies,

3. To approve EGCO representatives to be directors of the subsidiary or associated companies according to equity proportion or shareholders’ agreement,

4. To scrutinize the list of nominees for EGCO President in case of vacancy including the establishment of the succession plan for executives,

5. To approve the appointment, promotion, rotation and removal of the senior executives of EGCO (Executive Vice Presidents and Senior Executive Vice Presidents) and to nominate


75

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 recommend the corporate secretary for consideration and adoption by the Board, 7. To endorse the performance evaluation of EGCO President for consideration and adoption by

the Board, 8. To endorse the performance evaluation of EGCO Management (Senior Executive Vice

President and Executive Vice President), 9. To recommend the remuneration structure of the directors and senior executives of EGCO and

subsidiary and associated companies including meeting allowances, bonus, welfare and other benefits both in monetary and non-monetary terms,

10. To endorse the remuneration structure for employees and other welfare and benefits for consideration and adoption by the Board,

11. To recommend remuneration policies and guidelines as well as other welfare and benefits for EGCO’s subsidiaries.

12. To evaluate and approve the corporate performance of EGCO and the Group companies to determine the bonus and annual salary increase across the whole Group,

13. To endorse the succession plan for EVPs upwards for consideration and adoption by the Board, 14. To approve the employees’ early retirement for EGCO and subsidiaries. 15. To review risks associated with people management and initiate the preventive plans. 16. To consider other issues assigned by the Board of Directors.

There were 7 meetings in 2012 of which the attendance rate was 97%. Corporate Governance and Corporate Social Responsibility Committee The Corporate Governance and Corporate Social Responsibility Committee (“CC Committee”) comprises 5 directors being 3 independent directors, 1 non-executive director and President. The term of office of each CC director member is three years and can be re-elected. In order to maintain continuity, members may be re-elected. The mission of the CC Committee comprises 2 catagories detailed as follows.

1. Corporate Governance 1.1 The Corporate Govenance means to comply with the practice of SET’s regulations, 1.2 To consider and endorse corporate governance policy for consideration and adoption by

the Board, 1.3 To monitor compliance with that policy, 1.4 To review and recommend the revision on such policy on continual basis as appropriate.

2. Social Responsibiliy 2.1 To endorse policy and framework for activities for EGCO Group’s CSR for

consideration and adoption by the Board, 2.2 To approve the action plan for CSR projects and activities.

There was 3 meeting in 2012 of which the attendance rate was 94%.


76

9.3 Management Structure According to the new organization structure approved in the Board’s meeting no. 1/2012 with the effect on April 1, 2012, the President acts as the head of the Management team which comprises 5 groups as shown below:

• Business Development -International Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there is one Executive Vice Presidents (EVP) who supervise the business development (international).

• Business Development – Domestic Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there are two Executive Vice Presidents (EVP) who supervise the business development (domestic).

• Finance and Corporate Services Group: This group is headed by SEVP with two EVPs to supervise finance and corporate services performance.

• Strategy and Asset Management Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there are two Executive Vice Presidents (EVP) who supervise asset management and strategy and corporate management.

• President’s Direct Report Group: This group comprises the legal division and information technology division headed by an EVP. There are also two divisions which are under the President’s supervision namely Internal Audit and Corporate Secretary. The Internal Audit report administratively to the Audit Committee, but functionally to the President. The Corporate Secretary report administratively to the Board, but functionally to the President.

President The President is responsible for managing EGCO’s business in consistent with the objectives, articles of associations, regulations and the resolution of the Board. The President is also in charge of supervising employees and completing activities assigned by the Board including the following activities. • To manage EGCO’s day-to day business, • To hire, appoint, remove, transfer, promote, demote, assign, and take disciplinary action against

employees and workers from division managers downward (excluding the internal audit manager and corporate secretary), and

• To ensure the implementation of the policies, plans, and budgets approved by the Board.

In this respect, the President is allowed to delegate his authority to other employees but is still accountable for the decision of his delegates. Management Team The list of the Management team and their share ownership in EGCO as at December 31, 2012 is as follows.


77

No. Name Title No. of Shares No. of Shares December 31, 2012

December 31, 2011

Increase (Decrease)

1 Mr. Sahust Pratuknukul President 1,890 1,890 -

2 Mr. John Palumbo Senior Executive Vice President-Business Development - International

- - -

3 Mr. Voravit Potisuk Senior Executive Vice President-Business Development - Domestic

- - -

4 Mr. Piya Jetasanon Senior Executive Vice President-Finance & Accounting

- - -

5 Mr. Sakul Pochanart Senior Executive Vice President-Strategy & Asset Management

- - -

6 Mr. Chumsak Desudjit Director – Rayong Power Plant - - -

7 Mr. Chankij Jearaphunt Managing Director of KEGCO - - - 8 Mr. Wajarapong

Palakawong Na Ayudhaya

Managing Director of ESCO - - -

9 Mr. Suvapan Chomchalerm Executive Vice President - Accounting

- - -

10 Ms. Pantipa Moolasart Executive Vice President -Finance

11 Mr. Nattanont Meesuksabai

Senior Vice President –Accounting and Budget Division

- - -

12 Ms. Somsiri Yoosuk First Senior Vice President –Finance Division

- - -

Corporate Secretary The Board in the meeting no. 3/2012 appointed Ms. Kulkanok Leongsoithong the Corporate Secretary effective April 1, 2012 with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Kulkanok also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution. The Corporate Secretary directly report to the Board. The Board also delegates the Nomination and Remuneration Committee to appraise the performance of the Corporate Secretary. Management Committees EGCO has set up the following committees to ensure the appropriateness and efficiency of business management. EGCO Management Committee: EGCO Management Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. EGCO Management Committee is responsible for


78

formulating business policy of EGCO Group, scrutinizing all proposals to be presented to the Board and standing committees and monitoring the operation of the Group. The EGCO Management Committee meetings are called as necessary. In 2012, the Committee held 8 meetings. Good Governance Committee: The Good Corporate Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. The Good Corporate Committee is in charge of the following responsibilities. 1. To consider international criteria and practices of Good Corporate Governance and those of the

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

Corporate Governance, and 3. To revise the Code of Conduct to suit the business environment and to educate employees about

the Codes as well as providing cooperation to promote the practice in the Group. The Good Corporate Governance Committee meets when necessary. In 2012, there were two meetings. Risk Management Committee: The Risk Management Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. The Risk Management Committee meets when necessary and directly reports to the Audit Committee. Its responsibilities are as follows. 1. To determine the risk management criteria for EGCO and subsidiaries, 2. To determine the risk management evaluation and mitigation, 3. To monitor compliance with risk management framework, 4. To revise EGCO’s risk factors to comply with the regulations of the governing authorities, and 5. To report its performance to the Audit Committee and the Board of Director. In 2012, the Risk Management Committee held two meetings. Safety Health and Environment Committee: The Safety Health and Environment Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by EVP-Asset Management. The Safety Health and Environment Committee is in charge of the following responsibilities. 1. To determine the policy and plan regarding safety, health and environment (“SHE”) of EGCO

Group to be in compliance with the strategic plan, 2. To implement the SHE action plan for EGCO Group, 3. To monitor and evaluate the SHE performance of EGCO Group, and 4. To improve and develop the SHE implementation of EGCO Group.

The Safety Health and Environment Committee meets when necessary. In 2012, there was no meeting.


79

9.4 Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, EGCO sets up the following framework. Director Election and Appointment EGCO endeavors to select capable directors to govern the company, designate the corporate policies and sanction its business plans for the benefit of EGCO and shareholders. With respect to this, EGCO puts an emphasis on the director nomination and selection process taking into account the following qualifications and experiences in considering each individual candidates. 1. Legal requirement and regulations and notifications of SET and SEC regarding the directors’

qualifications, 2. Directors’ qualifications prescribed in Directors’ Code of Conduct namely honesty, virtue,

initiative and achievement, excellence, accountability, justice, independence, equality of shareholder opportunity,

3. Knowledge and experiences beneficial to EGCO’s business, 4. Trainings and experience at the policy making level in corporate governance, 5. Willingness to represent the best interests of all shareholders, and 6. Willingness to devote time and effort to contribute to EGCO’s development. The Board has delegated to the Nomination and Remuneration Committee the duty of selecting and recommending prospective nominees, whether they are to become the shareholders’ representatives or independent directors, for the Board’s approval. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria as deemed necessary. The nomination of directors to succeed those who retire by rotation must be individually approved at the shareholders’ meeting based on the voting guidelines in the Articles of Association as follows. 1. Each shareholder shall be entitled to the number of votes equivalent to the number of shares

held by him/her; one share shall have one vote. 2. Each shareholder shall elect one or more directors, provided that they shall not exercise their

votes in excess of the number of directors required at such time. 3. In a case that a shareholder elects more than one director, s/he may exercise all the votes s/he

has, provided that s/he may not split his votes among any such persons. 4. The persons receiving the highest number of votes in respective order shall be appointed

directors depending on the requirements of directors set at such time. In the event that a number of persons receive an equal number of votes for the last directorship, the Chairman of the meeting shall have a casting vote.

5. Directors must be appointed by the vote not less than four-fifth of the shareholders present and having the right to vote.

To ensure that shareholders have adequate information to make their selection, EGCO shall present details of a given nominee such as education background, occupation, directorship in other companies, relevant experiences, and illegal acts committed (if any) in the notice of shareholders’


80

meeting. In case of the re-election, the attendance records and performance during the past year shall also be presented. In the case of casual vacancies, the Nomination and Remuneration Committee will nominate a qualified candidate who does not possess any forbidden characteristics as stipulated under the Public Company Act for approval at the subsequent Board of Directors' meeting. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom s/he replaces. The resolution of the Board of Directors in this respect shall consist of not less than three-fourth the votes of the remaining directors. Right of Minority Shareholders To ensure that EGCO treats shareholders equitably, the Board encourages minority shareholders to make recommendation on the director candidates and suggest agendas during AGM between September 1 to December 31, 2012 with clear and transparent procedures as posted on EGCO website. Director Orientation and Training All new directors must participate in EGCO’s orientation program. This orientation will include presentations by senior management to familiarize new directors with EGCO’s significant issues, Directors’ Manual and EGCO’s Code of Conduct for Directors and Employees. Any sitting directors and other top management may attend the orientation program. The information of the directors’ manual comprises role, duty and responsibility, Securities’ Dealing by Directors, Notification of Personal Interest of Director, Meeting Management, Disclosure Policy, Contact with management, Board’s and Committees’ Remuneration and Fringe Benefits, Table of Authority and EGCO general information. EGCO encourages directors to attend both in-house and external courses to enhance their knowledge and understanding on good corporate governance. Directors can apply for the training courses at the Thai Institute of Directors or relevant organizations on EGCO’s expenses. Management Selection and Appointment The Board determines policies and principles for selection of the President and policies regarding succession in the event of an emergency or the retirement of the President taking into account educational background, experiences, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications and selection process stated in EGCO Regulation on Human Resource Management B.E. 2554 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.


81

9.5 Director and Management Remuneration EGCO sets the policy to reward directors and management with appropriate remuneration. In this respect, the Nomination and Remuneration Committee is entrusted to review the appropriate rate that takes into account the responsibility and the company’s financial status while being in line with the peer practices. Director Remuneration Director remuneration is appropriately set at a rate comparable to that of peer companies. The remuneration comprises (1) monthly retainer fee to reflect directors’ responsibilities, (2) meeting allowance to reflect time devotion and meeting attendance, and (3) bonus which is paid in accordance with the shareholder value creation. The Nomination and Remuneration Committee will endorse the director remuneration for the Board’s endorsement before seeking the shareholders’ approval on an annual basis. The guidelines are as follows: • Retainer fee and meeting allowance will be set in accordance with peer practices, EGCO

operating performance, business size, and responsibility, knowledge, competencies and experience of the directors as required by the company.

• Bonus will be considered from the Company’s net profit or dividend paid to shareholders. In 2012, the Shareholders’ Meeting resolved the directors’ remuneration as shown below: 1. Monthly retainer fee of 30,000 baht and meeting allowance of 10,000 baht each. Members who

do not attend the meeting will not receive the allowance. Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance.

2. 2012 Bonus of 20 million baht, equal to 2012’s approved amount, taking into account the Company’s growth, the recognition in terms of good corporate governance, the increasing of share price, peers’ director bonus, and dividend payout ratio. Such bonus payment accounted for 0.40% of the net profit and 0.72% of 2012 annual dividend payment.

3. Remuneration for Board’s Committees being Investment Committee, Audit Committee, Nomination and Remuneration Committee, and Corporate Governance and Social Responsibility Committee as follows.

Committee Retainer Fee (baht) Meeting Allowance (baht)

Chairman Member Chairman Member Investment Committee 25,000 20,000 25,000 20,000 Audit Committee 25,000 20,000 25,000 20,000 Nomination and Remuneration Committee

25,000 20,000 25,000 20,000

Corporate Governance and Social Responsibility Committee

- - 30,000 24,000


82

No. Name Appoinment Date

No. of months in

service

Meeting Attendance

(12 Times/Year)

Total Remuneration in 2012

Total Remuneration

(Monthly Retainer, Meeting Allowance) Bonus /2

2012 2011 Director Standing Committee /1

1. Mr. Pornchai Rujiprapa

January 1, 2009

12 12 12/12 600,000.00 596,666.67 1,758,840.00 2,955,506.67

2. Mr. Phaiboon Siripanoosatien

April 21, 2010

12 9 11/12 470,000.00 452,000.00 1,407,070.00 2,329,070.00

3 Police Lieutenant General Pansiri Prapawat

March 1, 2012 10 - 9/10 390,000.00 308,000.00 - 698,000.00

4 Mr. Pasan Theparak March 1, 2012 10 - 7/10 370,000.00 360,000.00 - 730,000.00 5 Mr. Thanapich

Mulapruk April 24, 2009 12 12 12/12 480,000.00 601,000.00 1,407,070.00 2,488,070.00

6 Mr. Pongstorn Kunanusorn

April 25, 2012 9 - 9/9 336,000.00 304,000.00 - 640,000.00

7 Mr. Sorajak Kasemsuvan

April 25, 2012 9 - 8/9 326,000.00 284,000.00 - 610,000.00

8 Mr. Surasak Supavitipatana

November 16, 2011

12 2 12/12 480,000.00 440,000.00 175,880.00 1,095,880.00

9 Mr. Kulit Sombatsiri December 13, 2011

12 1 11/12 470,000.00 72,000.00 74,260.00 616,260.00

10 Mr. Thawat Vadjanapornsithi

January 30, 2012

12 - 12/12 452,000.00 341,333.33 - 793,333.33

11 Mr. Satoshi Yajima January 30, 2012

12 - 12/12 452,000.00 400,000.00 - 852,000.00

12 Mr. Toshiro Kudama February 28, 2010

10 11 10/10 400,000.00 - 882,352.49 1,342,352.49

13 Mr. Hideo Kuramochi March 1, 2012 10 - 10/10 400,000.00 775,000.00 - 1,175,000.00 14 Mr. Shigeru Inano March 1, 2012 10 - 9/10 390,000.00 - - 390,000.00 15 Mr. Sahust

Pratuknukul/3 April 22, 2010 12 12 12/12 - - - -

The summary of remuneration of Retired and resigned directors during 2011-2012 is as shown below

No. Name Retirement/ Resigning

Date

No. of months in service Meeting

Attendance (12

Times/Year)

Total Remuneration in 2012

Total Remuneration

(Monthly Retainer, Meeting Allowance) Bonus /2

2012 2011 Director Standing Committee /1

1 Mr. Peter Albert Littlewood

February 23, 2011

- 2 - - - 203,240.00 203,240.00

2 Mr. Mark Jobling February 23, 2011

- 2 - - - 203,240.00 203,240.00

3 Mr. Shinji Tsuchiya February 23, 2011

- 2 - - - 203,240.00 203,240.00

4 Mr.Wisudhi Srisuphan

February 28, 2011

- 2 - - - 222,790.00 222,790.00

5 Mr. Sahust Pratuknukul

September 30, 2011

- 9 - - - 1,055,300.00 1,055,300.00

6 Mr. Somboon Arayaskul

October 1, 2011

- 8 - - - 1,055,300.00 1,055,300.00

7 Mr. Kurujit Nakornthap

December 1, 2011

- 9 - - - 1,176,470.00 1,176,470.00

8 Mr. Akio Matsusaki January 29, 2012

1 10 - 29,000.00 - 1,176,470.00 1,205,470.00

9 Mr. Vinit Tangnoi/3 January 1, 2012

- 4 - - - 351,770.00 351,770.00


83

10 Mr. Chaipat Sahasakul

March 1, 2012

2 12 2/2 80,000.00 150,000.00 1,407,070.00 1,637,070.00

11 Mr. Somphot Karnchanaporn

March 1, 2012

2 12 2/2 80,000.00 220,000.00 1,407,070.00 1,707,070.00

12 Mr. Hideaki Tomiku March 1, 2012

2 12 2/2 80,000.00 180,000.00 1,755,502.51 2,015,502.51

13 Mr. Ryota Sakakibara March 1, 2012

2 10 2/2 80,000.00 60,000.00 1,176,470.00 1,316,470.00

14 Mr. Aswin Kongsiri April 25, 2012

4 12 3/3 159,500.00 205,833.33 1,547,780.00 1,913,113.33

15 Police Lieutenant General Pijarn Jittirat

April 25, 2012 4 12 3/3 145,000.00 136,666.67 1,407,070.00 1,688,736.67

Total 6,669,500.00 5,886,500.00 20,054,255.00 32,610,255.00

/1 Standing Committees are 1. Investment Committee 2. Audit Committee, 3. Nomination and Remuneration Committee, 5. Corporate Governance and Social Responsibility Committee /2 Bonus for Board of Directors in 2011 was paid in May 2012, as resolved by the Shareholders in the Annual General Meeting No.1/2011on April 25, 2011 /3 The retainer fee and meeting allowance be paid to Mr. Vinit Tangnoi during October 1, 2011- December 31, 2011 as the director. Management’s Remuneration The Management’s remuneration which comprises both salary and bonus are designed in a way that will reflect the corporate and individual achievement based on the remuneration structure approved by the Board and the Key Performance Indicators (KPIs). EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to their work and those of the peer companies. The summary of the Management’s remuneration for 2012 as shown below. (Unit: Baht)

2012 Remuneration Executive Director

(1 Person) /1 Management (8 Persons) /2

Total Remuneration

Total Salary - 28,736,640.00 28,736,640.00

Bonus /3 - 12,107,500.00 12,107,500.00

Meeting Allowance - - -

Total - 40,844,140.00 40,844,140.00

/1 Executive Director is defined as director who is also management of EGCO. In this regard, the

President is the executive director. He is not entitled to the retainer fee or meeting allowance as member of the standing committees.

/2 These included 8 management namely the President, Senior Executive Vice President –Business Development -International, Senior Executive Vice President – Business Development –Domestic, Senior Executive Vice President – Accountant & Finance, Senior Executive Vice President – Strategy and Asset Management, Director-Rayong Power Plant, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of


84

KEGCO and ESCO. Since the salaries of MDs of KEGCO and ESCO are paid by those companies. EGCO is responsible for the remuneration of only six managements.

/3 The 2011 Bonus was paid in January 2012. Total Remuneration of Core Subsidiaries’ Management In 2012, the remuneration of the Management of core subsidiaries (subsidiaries of which the revenue account for more than 10% of the consolidated revenue) consists of KEGCO and EGCO Cogen. Details are as follows: (Unit: Baht) Year 2012 KEGCO EGCO Cogen

Remuneration Director (1 Person)

Management (7 Persons)

Total Remuneratio

n

Directors (5 Persons)

Management (1 Person) /3

Total Remuneratio

n Salary - 9,510,720.00 9,510,720.00 - 1,616,400.00 1,616,400.00 Bonus /1 - 4,538,991.12 4,538,991.12 - 690,845.40 690,845.40 Meeting Allowance /2 - - - - - - Total - 14,049,711.12 14,049,711.12 - 2,307,245.40 2,307,245.40 /1 The 2011 bonus was paid in January 2012. /2 EGCO was responsible for the meeting allowance of KEGCO Board. /3 EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO COGEN. Other Remuneration In 2012, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Managements as follows.

(Unit : Baht)

Company Year 2012 Members Provident fund

EGCO 6 2,218,107.00 KEGCO 3 951,072.00 EGCO Cogen 1 172,476.00

9. 6 Employees EGCO As of December 31, 2012, EGCO has 269 headcounts which include the President, six Senior Executive Vice Presidents, six executives who are seconded to be management of Group companies and 257 staffs. The number of staffs in each reporting line is as shown below:

Key Areas Members (Persons) 1. President 34 2. Business Development - International 9 3. Business Development -Domestic 11 4. Finance and Corporate Services 66 5. Strategic and Corporate Management 46


85

Key Areas Members (Persons) 6. Rayong Power Plant 103 Total 269

Core Subsidiaries A. KEGCO

B. EGCO Cogen There are four permanent staff members who serve EGCO Cogen. The general manager is assigned from EGCO under the service agreement between EGCO and EGCO Cogen. The Operation and Maintenance staffs of 31 headcounts are ESCO employees who work under the O&M service agreement between ESCO and EGCO Cogen. There has been no significant turnover and no illegal labor dispute during the past three years. Employee Remuneration EGCO has the policy that the employees in the Group have fair remuneration which is comparable to the peer companies. Remuneration of employees of EGCO and core subsidiaries in 2011 is as shown below: (Unit: Baht)

Remuneration Amount

EGCO/1 KEGCO EGCO Cogen/2

Total Salary 118,929,296.27 16,301,653.00 1,724,760.00 Bonus /3 38,123,010.50 8,210,058.39 673,500.00 Provident Fund 11,049,952.27 1,627,085.30 172,476.00

Total 168,102,259.04 26,138,796.69 2,570,736.00

/1 Include salary and bonus of the executives on one year contract /2 Include the salary and bonus of the General Manager who is seconded by EGCO and four

permanent employees. /3 The 2012 bonus was paid in January 2013.

Human Resource Development Policy EGCO Group believes in the value of our human resources and will strive to be the employer of choice by promoting the participative management with equal opportunity for career advancement. Employees are encouraged to enter the development program to enhance their capabilities to bring out their highest working potentials to undertake tasks in competent manner and maintain our leadership in the business. EGCO Group puts high priority on continuous development of the employee's ability and proficiencies which includes core, functional, and managerial/leadership competencies. In this regard, various projects and training courses have been developed covering individual studies, training with experts or resource persons, and sharing of experiences among peers. As a result, we

Employees Total (person) 1. Operation 66 2. Maintenance 53 3. Others 30 Total 149


86

can develop our employees in all dimensions including intelligence quotient (“IQ”), emotional quotient (“EQ”), moral quotient (“MQ”), and adversity quotient (“AQ”). To ensure that the implementation of human resource development plan is a successful one, EGCO will prepare a list of required skill sets for each position as a part of the career path development plan. Other information related to the Board of Directors and Management In 2012, there were no director and management who were recorded to be prosecuted by the following cases. • Criminal prosecution, except the violation of traffic rules, minor offence or in respect of the

same offence • Bankruptcy or receivership. 9.7 Corporate Governance EGCO has the belief that business management with the good corporate governance would be the key indicator of the efficiency, fairness and transparency as well as the responsibility towards social and environment which in turn would boost trust and confidence of shareholders, investors, and other stakeholders towards the company. Moreover, good corporate governance would lead to EGCO’s sustainable growth in financial investment, and competitiveness. To materialize such principle, the Board of Directors oversees and controls the company to follow the good corporate governance framework of the Stock Exchange of Thailand (“SET”) and the rules and regulations of Listed Company issued by the Securities and Exchange Commission (“SEC”) as well as the Capital Market Supervisory Board (“CMSB”) in order to raise the company’s corporate governance to the international standard which would result in the efficient management systems and sustainable growth to achieve its vision as to become the Thai leading company in power and energy related business. Establishment of the Corporate Governance Policies The Board of Directors has established the written corporate governance policies as guidelines for directors, management and employees which adhere to SET’s good corporate governance and the best practice framework.. The Board annually reviews the company’s corporate governance policies to ensure adherence with the following core issues:

• Policy setting with the fair and equitable treatment to all stakeholders; • Continuous improvement to enhance risk management efficiency • Maintaining trust and confidence of the public ; • Enhancing employees’ loyalty and morale and improving the safety and health of

employees; • Productivity improvement including efficient resource management and waste

reduction • Foster sustainable development to enhance EGCO’s long term value.


87

Communication of Corporate Governance Policies The Board discloses the corporate governance policies on EGCO website: www.egco.com. Shareholders and investors who want to receive a hard copy can submit the form attached in the annual report to the corporate secretary. To strengthen the good corporate governance EGCO issued the code of conduct to be practicing guidelines for directors, management and employees. Communication and activities were provided to employees to enhance understanding of the good governance principles comprising

Promotion of Best Practice Responsibility Equitable Treatment Accountability Creation of Long Term Value Transparency

During the past year, main activities conducted were the followings :

• Message : News and information on good corporate governance were regularly communicated to employees as well as updates on director information, best practices of other companies, the resolution of the Board of directors and SET.

• Training : Good corporate governance trainings were conducted, including new employees’ orientation.

Compliance Monitoring EGCO corporate governance policies are strictly complied by the Board, management and staffs and progress are monitored regularly. As the result, there was no report of any breach to the corporate governance policies in 2012. Based on the EGCO’s determination on good corporate governance, the company was well recognized as an excellent showcase and awarded by various institutions.

• Excellent in the assessment of the 2011 AGM with the full score of 100 by CMSB. • Corporate Social Responsibility Award for listed company with the market capitalization

over 10,000 million baht from the SET Awards hosted by the Stock Exchange of Thailand (“SET”) and the Finance and Banking Magazine;

• Excellent Corporate Governance Performance by IOD with the score of 94 and full scores in the “rights of shareholders” category.

To accord SET’s requirement that listed companies adopt SET’s Good Corporate Governance Principles Year 2006 as deemed appropriate and to notify with reasons and substitute measures/ actions to the SET for items which cannot be complied, The Board then prepares this report according to such principles.


88

9.7.1 Rights of Shareholders EGCO values the good corporate governance and respects the shareholders’ rights as an investor and an owner of the Company in an acceptable and reliable manner. Therefore, EGCO encourages the shareholders to exercise their rights which include the legal basic rights such as the right to share in the profit, the right to receive adequate information, and the right to attend and vote for significant matters at the shareholders’ meeting including the appointment or removal of directors, directors’ remuneration , appointment of auditors and their remuneration and other significant issues which impact EGCO.

Beyond such basic rights, EGCO endeavors to provide timely and significant information to shareholders via the website, newsletters and shareholders’ site visit.

A. Shareholders Meeting The Board considers that the Annual General Meeting (“AGM”) is the important event. AGM is held within 4 months from the company’s closing date of accounting period to accommodate shareholders’ participation in the monitoring of the company’s performance. Extraordinary meeting of the shareholders is to be called to consider the special agenda which affect shareholder’s interests or involve conditions that requires shareholders’ approval. For 2012, EGCO’s AGM was held on April 25, 2013 at Vibhavadee Ballroom, Centara Grand at Central Ladprao Hotel and there was no extraordinary meeting of the shareholders. EGCO’s AGM was arranged in accordance with AGM Checklist issued by the Thai Investors Association, Listed Companies Association and SEC was follows:

Before the Shareholders’ Meeting

EGCO provided shareholders with meeting documents, complete and adequate in advance to support their decision. Shareholders were encouraged to attend the meeting, either in persons or by proxy.

• Meeting schedule and agendas were announced via the SET portal and EGCO website since March 20, 2012, 35 days in advance of the AGM date to enable shareholder to plan their schedule to attend the meeting

• Notice of the meeting as well as the agenda documents were sent to shareholders on March 20, 2012 which was 35 days before the AGM date. Agendas were set in accordance with EGCO’s articles of association and as guidelined by SET and SEC, the appointment of directors and directors’ remuneration were under separate agendas, the former with full information of the nominated directors. Each agenda incorporated rationale, board’s opinions, and conditions to attend the meeting. Also provided were the annual report and 3 proxy forms, conformed with guidelines of the Department of Business Development, Ministry of Commerce. Notice and supporting information was published for 3 consecutive days in both Thai and English newspaper to notify shareholders in advance so to have all significant information before receiving the hard copies or to assign the proxy if unable to attend in person. Contact number was also provided for any relating inquiries.


89

• Coordinated with the Thailand Securities Depository Co., Ltd (“TSD”) to allow shareholders to notify their intention to attend the shareholder’s meeting in advance via IVR system so that EGCO would properly facilitate the meeting.

• To facilitate the institutional investors’ attendance, Investor relation unit coordinated with the institutional investors for their submission of registration documents to EGCO 7 days in advance for document checking so to shorten the administrative procedures at the meeting date

• Provided channel for shareholders to forward their questions on meeting agendas in advance to [email protected] or facsimile number 0-2995-0956-7 ext 5020-5025 to ensure at shareholders’ utmost benefits for meeting attendance is gained and rights are protected.

On Shareholders’ Meeting Date EGCO provides full facilities for shareholders to exercise the right to attend and vote at the shareholders’ meeting. The meeting is conducted fairly and transparent and shareholders’ enquiries and opinion are well taken. Directors, management and the external auditor were encouraged to attend the AGM and answer shareholders’ questions. For 2012 AGM, fourteen directors including the chairman and all committees’ chairmen attended the meeting which accounted 93% of the Board members. Chairman and committees’ members also presented information to shareholders and answer shareholders’ questions. One director was absent with apologies

• Shareholders’ facilitation was given priority and. for 2012, map of the meeting venue was attached to the AGM notice and several registration counters were provided for shareholders’ convenience.

• Exhibition on EGCO business and shareholders’ corner were arranged. Shareholders were welcome and Management, investor relations and accounting and finance units prompted for their inquiries.

• TSD’s counter was provided to service shareholders for the possible inquiries on dividend cheque and share certificates.

• The barcode system was implemented to facilitate shareholders’ registration process. • Shareholders who registered after the meeting was declared open were allowed to vote for

the ongoing and the remaining agenda items. • Shareholders’ meeting was convened according to the order of the agenda. Presentation for

each agenda included the background, supporting rationale and proposal. • Shareholders were equitably treated and were allowed adequate time to raise their inquiries

and opinions. All questions were addressed and clarified, and subsequently recorded in the minutes of meeting

• Baker & Mekenzie Co., Ltd., were engaged as the inspectors to audit shareholders’ registration, meeting quorum, compliance of the voting procedure with EGCO articles of association and the Chairman’s notification, voting card collection and vote counting. In this regard, the inspector reported that the meeting and the voting procedure in2012 AGM was transparent and complied with the governing laws, the articles of association, and SET’s best


90

practice of good governance of SET. The inspector also reported that EGCO well regarded the right of its shareholders to participate in the meeting and give recommendations.

• One shareholder volunteer was invited to inspect the vote counting. • AGM quality assessment questionnaire was disseminated to gather feedbacks for future

improvement. The result of the 2012 survey indicated that shareholders’ satisfaction for the quality of the notice to the meeting, meeting arrangement and meeting conduct.

There were 542 and 753 shareholders attending the 2012 AGM in person and by proxy, respectively, representing 407,525,838 shares which accounted for 77.408% of the total outstanding shares. The attendance rate increased from 2011 AGM, of 411 and 544 shareholders attended the meeting in person and by proxy, representing 395,885,697 shares or 75.577% of outstanding shares. After the Shareholders’ Meeting

• Draft minutes of the meeting was posted for shareholders’ review on EGCO website “www.egco.com” on May 10, 2012 which was within 14 days after the meeting date as required by SET. The minutes of meeting included the significant matters of each agenda, shareholders’ inquiries and clarifications by the Board and management, resolution and the voting for each proposal. The minutes of meeting were properly filed for future reference.

• Shareholders’ meeting was broadcasted on the web site to facilitate shareholders who could not attend the meeting and for the recorded CD was provided on request.

• EGCO announced the meeting resolutions on dividend payment via SET’s portal. EGCO also coordinated with the registrar to ensure that all the shareholders received the dividend.

• Recommendations from shareholders and inspectors were taken for further improvement of the AGM.

As a result of the above efforts, EGCO was honored as an excellent showcase for AGM of listed companies with the full score of 100 for the fourth year successively. B. Shareholders’ and Investors’ Visits Under the Board’s policy to provide shareholders and investors the better understanding of EGCO business several shareholders’ investors’ visits were arranged with details as follows -Analysts’ and investors’ visit to Khanom Power Plant -Shareholders’ visit the Lopburi Solar Power Plant 9.7.2 Equitable Treatment of Shareholders A. Fair Treatment The Board regularly reviews the governance structure and framework to ensure that the shareholders, including minority and foreign shareholders, are treated equitably and that EGCO procedures do not make it unduly difficult or expensive to observe shareholders’ rights. The Board


91

encourages shareholders to take part in EGCO’s governance and ensures that they are well informed about the significant decisions of EGCO as prescribed by laws and the Articles of Association.

• EGCO preserves right of all shareholders and no agenda item is added at the shareholders’ meeting without advance notification to ensure shareholders have adequate information ahead of time. Shareholders have the right to vote according to the numbers of shares on “a one share one vote” basis and no share has special privilege which limits the rights of other shareholders.

• EGCO adheres to the best practice as recommended by the SET to allow minority shareholders the right to propose meeting agenda items and director nomination and criteria are announced in EGCO website and SET Portal. For 2011, EGCO’s Board in its meeting no.5/2011 on August 22, 2111 resolved to entitle minority shareholders with the combined shareholding of 0.05% of company’s share (equal in 263,232.5 shares as at September 1, 2011) the right to propose AGM agenda items and director nomination during September 1 to December 31, 2011 (8 months before the AGM date) which was beyond SET’s recommendation of 5% shareholding. Candidates in AGM no. 1/2012 during the period of September 1, 2011. However, it attracted no proposal of AGM agenda item nor director Nomination.

• Voting cards were used in vote counting for all agenda items for transparency and audit trail. Director election also allowed shareholders to vote on individual nominees.

• Shareholders who could not attend in person could vote by proxy. The three proxy forms as introduced by Department of Business Development, Ministry of Commerce were provided and three independent directors who did not have the conflict of interests with the AGM agenda were offered as volunteer proxies. In a bid to facilitate the shareholders, the proxy forms could be downloaded from EGCO’s website.

• Since most shareholders attending the meeting were Thai, the meeting was therefore conducted in Thai. However, to facilitate foreign shareholders, EGCO prepared the notice of meeting in both Thai and English and English interpreting service was also provided at the meeting room.

• With the awareness that some shareholders might not be able to access the minutes of meeting on the SET and EGCO website, a hard copy of the minutes of AGM 1/2012 were mailed to each shareholder for review.

B. Prohibition of Abusive Conduct by Insiders EGCO has set up the written guidelines in the code of conduct for directors and employees to prohibit improper insider trading and abusive conduct by insiders to ensure fairness to all shareholders.

Directors • Directors must not make improper use of information acquired by virtue of the directors’

position.


92

• Directors must not disclose matters such as trade secrets, or sensitive business information to outsiders.

• Directors, spouses and minor children must not buy or sell EGCO shares while in possession of internal information, which, if disclosed publicly, would be likely to materially affect EGCO share price.

• Directors must not provide to anyone any information which is not publicly available and which would have a material effect on the price or value of EGCO’s securities.

Employees • Employees shall at all times observe the rules and regulations issued by SET, SEC and other

governing laws which include the equitable information disclosure to shareholders and the public.

• Information disclosure to the public that will affect the business and EGCO’s stock must be approved by the President. Only the President or the assigned personnel is authorized to disclose such information.

• The Corporate Communications Division, the Corporate Secretary Division and the Investor Relations Division are responsible for disclosing EGCO information to the public while it is the responsibility of the information owner to provide the fact sheets.

EGCO also sets the policy that Management and employees who have the inside information relating to financial statements must refrain from their own security trading within 45 days before and 24 hours after the information disclosure. For other significant inside information, they must refrain from security trading from the day of acknowledgement until 24 hours after disclosure to public. In addition, EGCO has put in place the internal control system to prevent the leakage of any information before the public disclosure. Such measure was a part of significant risk management. Supervisors also have the responsibility to ensure that the measure to safeguard inside information is effective. Using the undisclosed inside information for own or others’ benefits of security trading is considered violating the code of conduct C. Disclosure of Directors and Management’s Interest in EGCO’s Business The Board sets the guidelines on disclosure of directors and management’ interest to ensure transparency and to prevent conflicts of interest as follows:

• Directors will promptly notify EGCO if they or their family member involves or holds shares in any entity which may incur benefits or conflicts of interest with EGCO, acquire a direct or indirect interest in any contract made with EGCO or hold shares or debentures of EGCO or any affiliate. Directors or management with potential conflict of interest shall refrain from discussing and voting on such agenda item.

• Directors and management’s securities’ holding was reported as a routine agenda at the board meeting, with notification that directors, management including their spouses, minor children and related persons under Section 258 of the Securities and Exchange Act have the


93

responsibility to prepare and disclose any change in shareholding of the Company to the SEC within three days.

Since 2009, the Board set the policy for directors and management including related persons to report their interest in the Company to comply with the Notification of the CMSB no. Tor Jor 2/2009, effective from July 1, 2009 as follows:

1. That directors and management submit the quarterly report on interest in EGCO business. 2. Changes in the interest during the quarter are to be informed to the Corporate Secretary as

soon as possible. 3. Corporate Secretary shall submit such report to the Chairman and the Chairman of the Audit

Committee within 7 days after getting such report. 9.7.3 Role of Stakeholders A. Rights of Stakeholders Apart from preserving rights of the shareholders, the Board takes due regard of and deal fairly with all stakeholders and encourages active cooperation with them which include both business and corporate social responsibility matters. The Board has set up the guidelines to respond to the requirements of each stakeholder in the corporate governance principle and “EGCO Group’s Code of Conduct” with the expectations that directors, management and employees shall be guided by those principles in discharging their duties. Employees EGCO believes in the value of its human resources which is the key success factor of the company’s prospect the company therefore promotes the participative management, supporting the employees’ career development and providing fair remuneration and suitable benefit schemes. EGCO strives to prevent accident, injury and occupational illnesses. Physical checkup was provided in accordance with the occupational health risks. It should be noted that during the past year, there was no legal dispute between the employees and EGCO and there was no disabling injury in all subsidiaries. In addition, Rayong, KEGCO and Egcom Tara were certified TIS 18001:1999 (Thai Industrial Standard) & OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series) .KEGCO has been honored as a national distinguished workplace in terms of safety, occupational health and environment for 13 consecutive years and Roi-Et Green for 3 consecutive years, the latter also awarded a national best practice workplace on labor and relation welfare for the second year. 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 9001:2008 has been implemented at Rayong, KEGCO, Roi-Et Green and Egcom Tara.


94

During the past year, EGCO and its subsidiaries could generate the contracted electricity with higher equivalent availability factors (“EAF”) than committed in the power purchase agreement which entitled Rayong the EAF bonus for 16 years consecutively. EGCO also prepared its power plant to meet any system emergency. It is notable that Rayong is put as the priority plant in EGAT’s blackout restoration plan to power up the eastern region in case of national blackout situation by using its black start emergency diesel. Creditors EGCO endeavors to ensure that it complies with the loan provision and that the company’s financial status is correctly disclosed. During the past year, EGCO and all the subsidiaries well observed the conditions in the loan agreement and there was no event of default. Suppliers and Contractors EGCO treats suppliers and contractors fairly, not seeking undue benefit from them and complies with the conditions in the agreements in order to develop and secure the sustainable relationship with suppliers and contractors on the bases of value for money, technical conformance and mutual trust. Competitors EGCO conducts its business on a fair play basis. The company does not use a disgraceful approach to gain competitiveness such as bribery in order to get competitors’ sensitive confidential information or attacking competitors with false allegations. Community, Society and Environment EGCO has a policy to operate the business with commitment to social contribution and environment conservation. In this regard, EGCO fosters the corporate culture that employees at all levels be fully responsible for any social and environment impact when discharging their duties. The company’s code of conduct also specifies that employees must deliver their duties in a safe manner to avoid any impact on themselves as well as people living and working in communities near our facilities, and the environment. Employees shall comply with relevant laws, prevent accident and pollution, and use the natural resources in an efficient and environmentally responsible manner. In addition, EGCO has implemented the social projects which cover the following area:

• Promotion and Development of Community's “Quality of Life”: EGCO Group put the prime focus on the quality of life of the surrounding communities both at the head office and at the power plants. In this regard, EGCO has initiated and provided supports to projects relating to education, villagers’ occupation and environment.


95

• Conservation of “Watershed Forest: Source of Life”: Apart from taking care of the working environment and surrounding communities, EGCO Group plays a vital role in conserving the natural resources with the focus on watershed forests, which nourish the well-being of all lives.

• Promotion of Learning and fostering a Public Mindedness among “Youths” for Sustainable Social Development: EGCO recognizes that education is the key to national development. With the awareness that development starts from early childhood, EGCO has supported the projects to encourage youths from pre-elementary, elementary to high school level to learn from both inside and outside the classroom to children. Since such learning is the starting point for social and moral quotient, essential factors for long term national development.

It should be noted that in 2012 there was no claim against EGCO from the stakeholders. Detailed information on corporate social responsibility is presented in the Stakeholders’ report. B. Observation and Human Rights EGCO requires that its directors, management and employees fully observe the following human rights. • EGCO treats employees with respect and honor. • EGCO provides a communication channel for employees to submit questions and complaints

relating to work which will be seriously considered and remedy the problem to benefit and to promote good relations among all concerned parties.

• EGCO encourages all employees to exercise their rights of citizenship in accordance with the constitution and relevant laws.

• Employees’ personal information shall be kept with discretion and confidentiality. Disclosure of personal information such as employee’ biodata, health record, work experience or any other personal information to non-related party without the permission of such employee is considered a violation of the code of conduct and may result in a range of disciplinary action except when it is done in accordance with the company’s regulations or legal requirements.

• EGCO does not support the violation of human rights and frauds. • Employees must refrain from any deliberate discrimination or harassment in word or action

against others on the basis of race, gender, religion, age, and physical or mental disability. EGCO also set clear guidelines for labor engagement for the Company and its business partners to strictly comply with the labor act for refraining from child labor or abusive hiring. In addition, the working system is designed to put priority on safety and occupational health. There has never been any report on the violation of human rights by EGCO. C. Intellectual Property EGCO shall comply with the legal requirements on intellectual property and copy rights. Using the work or information that belongs to third parties requires checking to prevent the violation of intellectual property.


96

D. Measure against Corruption and Bribery EGCO set the policy to work against corruption and bribery. In this regard, EGCO’s code of conduct prescribes that employees are prohibited from soliciting or accepting any advantage from third parties that may impair their objectivity or weaken their ability to promote the best interests of EGCO Group. Employees shall refrain from offering the advantage to outside persons as a motive for him to do or refrain from doing any illegal and wrongful act. Since 2010, EGCO joined the project on Collective Action Coalition to fight against corruption in the private sector. Such coalition was initiated by the IOD, the Thai Chamber of Commerce, international chambers of commerce and Thai Listed Companies Association. Such project was national project being supported by the government and the Office of the National Anti-Corruption Commission. In 2012, EGCO delegated responsible Management and employees to attend the anti-corruption seminars, organized by governance agencies. E. Responsibility towards Environment and Resources EGCO Group endeavors to optimize the usage of natural resources, taking into account the

impacts on the environment. In this regard, EGCO has monitored the situation and set the measures to alleviate such impacts. In addition, Rayong and Khanom power plants as well as Egcom Tara water plant implemented ISO 14001 : 2004 environment management system and the TIS 18001:1999 & OHSAS 18001 : 2007 Occupational Health and Safety management system. EGCO Group also factors in the following activities to ensure that EGCO business has taken into account the social and environment issues for sustainable development. Conduct business with environment concern and strict adherence to relevant laws and regulations including the regulations of local administrative agencies.

Support the efficient resource consumption by optimizing resource utilization as well as the recycling such as waste water, energy conservation and paper recycling.

Support economic and social development while respecting the local tradition and culture. EGCO supports the government policy and take a good care of communities surrounding the power plants so that they will not only be protected from the negative impact of EGCO business, but will also have a better quality of life.

F. Communication Channel Al stakeholders can direct their recommendations and concerns on corporate issues to EGCO at the following address.

Electronic mail Telephone numbers Board of Directors [email protected] - Audit Committee [email protected] - Corporate Secretary [email protected] 0 2998 5020-5 Corporate Communications [email protected] 0 2998 5130-7 Investor Relations [email protected] 0 2998 5148






97

The mailing address is Electricity Generating Public Company Limited, EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok, 10210. The Corporate Secretary is responsible for forwarding communications directed to the Board to the relevant committees or relating directors. Issues and recommendations would be summarized and submitted to the Board on quarterly basis, except for mails addressed to the Audit Committee which would be directly forwarded to the Audit Committee without screening. E-mail sent to ‘[email protected]’ would be directly accessed by the Audit Committee. G. Whistleblower System and Whistleblower Protection The Board has set the channels for whistle blower programs at both management and director levels. For management channel, the report on any suspected violation or crime shall be made to the supervisor and the Good Corporate Governance Committee. For the Board’s channel, such report can be directed to either the Board or the Audit Committee. It is the responsibility of the management to coach employees to meet their responsibilities under the requirements of relevant laws and regulations. Failure to observe the code of conduct will result in a range of disciplinary actions. The procedure to protect the whistleblower is also put in place so to keep reported information confidential and will be acknowledged only among the responsible parties. The whistleblowers can identify themselves or keep their identities anonymous but they must provide adequate information for the Company to investigate the claims In 2012, EGCO was honored the Corporate Governance Award and he CSR Award for listed company with the market capitalization over 10,000 million baht from the 2012 SET Awards. Moreover, EGCO’s subsidiaries were honored the National CRS Award and Safety, Health and Environment Management Award as details in 2012 Highlights of Award and Recognition. 9.7.4 Disclosure and Transparency A. Disclosure Channel Being aware of the impact of EGCO’s information on the decision of investors and stakeholders, the

company provides channels to disclose material information in a timely and transparent manner in

accordance with the requirements of the SEC and SET as follows:

Disclosure on website

In order that shareholders and investors would be able to retrieve the public disclosure information

promptly. EGCO has disclosed the significant information on website as follows:

A. SET’s Community Portal system and SEC

B. Company’s web site at www.egco.com both in Thai and English as details below:

Corporate Profile: History, Vision, Mission, and Organization Structure


98

Corporate Governance: CG Principle, Board of Directors, Board’s Committees, and Senior

Management

Investor Relations: Finance Report, Ownership Structure, and IR Calendar

Corporate Communication: Brand and Press Release

Corporate Social Responsibilities: Social Contribution Activities

2. Public channels such as newspapers, magazines, television, and corporate news;

3. Company’s visits;

4. Road shows for both domestic and overseas investors;

5. Analyst meetings; and

6. EGCO news via post

Only the President or the assigned staff members are authorized to disclose the company’s

information. EGCO has established a Disclosure Committee comprising President, SEVP- Business

Development Domestic, SEVP-Business Development International, SEVP- Strategy and Asset

Management, SEVP-Finance, SVP-Corporate Secretary, SVP- Corporate Communication and SVP-

Investor Relations. In 2012, EGCO has communicated significant information and activities as

communication plan conforming to the Company’s strategy and Business direction consistently with

correct and efficient disclosure via Company division as follows:

Investor Relations

Investor Relations Division is responsible for communication with institutional and individual

investors, and analysts on an equitable basis. In this regard, annual Investor relations plan is

prepared.

EGCO puts priority on sharing information via investor relations activities. Senior management

always takes parts in providing information to investors and analysts to create understanding on the

Company, promote the relationship, and encourage them to provide the feedback to the Company.

Significant activities in 2012 included

• Quarter Analyst Meeting : 4 meetings

• Lopburi Solar Power Plant visits for shareholders and investors : 3 trips

• Khanom Power Plant visits for analyst and investor: 1 trip


99

• Roadshows and conferences with the institutional investors and analysts in Bangkok and

Singapore

• Newsletter “Life”, quarterly publishing as the significant channel to communicate of the

company’s performance to shareholders

Shareholders and investors’ activities are detailed in 2012 Highlight, and the responsibilities to

Stakeholders in Relationship Management with Shareholders and Investors. Corporate Communications The Corporate Communications Division is responsible for communicating the movement of the Company to media for public disclosures. Major events in 2012 included 4 press conferences on corporate results and directions, 8 media trips, 1 Press visit, 15 executive Interviews and 29 pieces of press releases. Corporate Secretary The Corporate Secretary Division discloses information as required by the SET and SEC on a correct and transparent basis. In 2012, 25 notifications were submitted to the SET. To ensure the full compliance on disclosure, information in EGCO website is constantly updated and quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for further improvement. In addition, EGCO also attached with the annual report and notice to the AGM, the feedback form for shareholders to provide feedback on the quality of the annual report, additional document required, and questions for the President to answer in the next AGM which was well received by shareholders. B. Financial Statement Preparation EGCO aims at fostering the stakeholders’ confidence that EGCO’s financial reports are accurate, complete and transparent in line with the generally accepted accounting standards to protect EGCO assets against fraud or abnormalities. In this regard, the Board has entrusted the Audit Committee to assume key duties and responsibilities of reviewing the financial statements to ensure its correctness and adequacy and compliance with the accounting standards and relevant regulations. . The Audit Committee sets its policy to meet the external auditors in the absence of the management at least once a year to ask questions and discuss with them on significant issues. Apart from disclosing the Auditor Report in the annual report, the Board also prepares the report on Board of Directors’ Responsibilities on Financial Statements which covers important topics as prescribed in the SET’s Best Practices for Directors of Listed Companies. In 2012, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited as the Company’s auditors given that they had professional knowledge and had no conflicts of interest to defect their independent judgment. This was aimed at fostering the Board’s and shareholders’ trust that EGCO’s financial statements truly reflected the actual financial status and operating result. EGCO also prepares the report on Management Discussion and Analysis to provide analytic information on the company’s financial status, operating results and major changes to investors and


100

analysts on a quarterly basis. Such report is submitted via SET portal along with the company’s financial statements. It should be noted that SEC has never demanded EGCO to re-state the financial statements. In addition, the quarterly and annual financial statements are disclosed ahead of the due time. 9.4.5 Responsibility A. Board’s Structure Structure, Composition and Directors’ Selection Currently, the Board comprises not less than 5 directors and not more than 15 directors as stipulated in the articles of associations. The number of the directors are reviewed periodically to fit its duties and responsibilities. The change in number of directors requires the shareholders’ approval with the four-fifth majority votes of shareholders who attend the meeting and have the rights to vote. As at January 31, 2012, EGCO Board comprised 15 directors, 14 of whom were non-executive directors which accounted for 93% of the Board. From these outside directors, 6 were qualified as independent directors which accounted for 40% of the total directors.

The Nomination and Remuneration Committee is entrusted to select and recommend prospective nominees, whether they are to become the shareholders’ representatives or independent directors based on the individual’s skills and experiences that would contribute to the Board’s efficiency, work profile, moral and professionalism. The Nomination and Remuneration Committee is also responsible for the annual review the board structure. The present structure and composition of the Board which comprises the mix of directors’ knowledge and experiences in engineering, economics and finance, and laws and political science at the ratio of 46.67%, 26.67%, and 26.67% respectively, is viewed appropriate for business operation with an appropriate balance of power.


101

Term and Age Limit One third of the directors shall retire by rotation at the AGM as prescribed in the Public Limited Company Act. The Board in its meeting no. 2/2012 on February 28, 2012, has specified the term of independent directors to be limited to 3 terms in order that the independent directors be independent from the management as conforming to the best practices which took effect from the 2011 AGM date. For age limit policy, director candidates would not stand for election after age 72. Given such age limit on the election date, directors would be able to serve on the Board until the expiry of their terms. Chairman The Board elected Mr. Pornchai Rujiprapa, a representative director of EGAT, as the Chairman from his proven knowledge in energy sector together with his leadership to lead EGCO towards the corporate vision and mission. Although the Chairman is not an independent director, the Board remains independent and makes decisions on due care and responsible to all shareholders through the following mechanisms:

1. The Chairman is a non-executive director, 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 oversight and day-to-day business administrative roles. The Chairman took the lead role and conducted board meetings efficiently by encouraging involvement by all directors and providing recommendations to Management via the President. The Board does not intervene with any routine activities under the President’s responsibilities

2. The Chairman is not an EGAT’s employee but is entrusted by the government 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

Engineering 46.67%

Finance & Economics

26.67%

Law & Political Sciences 26.67%

Educational Bakcground of EGCO's Board of Directors

4

4 7


102

3. Most of the Board members are non-executive directors and the Board’s seats are allocated in accordance with the shareholding in the Company comprising 4 EGAT representative directors, 4 TEPDIA representative directors, and 6 independent directors which indicates a proper balance of power

4. The Board has assigned Board committees to oversee tasks where there may be a potential for conflict of interest and to balance the need of each stakeholder. With respect to this, the Audit Committee is entrusted for the oversight of the integrity of financial and non-financial reporting and review and management of related party transaction. The Nomination and Remuneration Committee is assigned to take care of selection of Board members and key executives and their remuneration.

The result of the Board’s performance appraisal in 2012 indicated that the Chairman was excellent in leading the meeting and encouraging directors to participate in the debate around the Board table. Independent Director There are six independent directors on Board which is larger than one/third of the whole Board, as set by the CMSB and the independent directors set up the policy to call meetings among themselves as deemed appropriate. Segregation of Duties The Board clearly segregates the Board’s responsibilities of policy making and oversight from the day-to-day operation which is the responsibility of the Management in the Table of Authority. In practice, the Board does not intervene with any routine activities under the President’s responsibilities. Such Table of Authority is reviewed periodically to accord the changing board and company’s structure. The present Table of Authority has been revised in September 2012. Policy and the Procedure for Other Positions of Directors and Management To ensure that directors are able to devote due time for the efficient oversight of EGCO, the Board has the opinion that a company’s director should not serve more than 4 listed companies if being executive director and 6 companies if being non-executive director and all of the present directors well comply with such guidelines.. The Board considers directors’ meeting attendance as one of the criteria for his or her re-election. Corporate Secretary The Board has appointed Ms. Kulkanok Leongsoithong as the Corporate Secretary with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Kulkanok also serves as the secretary of the Board of Directors and Committees being Investment Committee, Nomination and Remuneration Committee and Corporate Governance Committee. Corporate Secretary also handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution.

• Provide primary advice pertaining to EGCO’s regulations and articles of associations, and to monitor to ensure regulatory compliance on a regular basis, and report any significant changes to the directors.

• Arrange meetings of shareholders and the Board in accordance with the laws and regulations, including EGCO’s articles of associations and best practices.


103

• Prepare minutes of shareholders’ and the Board of Directors’ meetings, and monitor to ensure compliance with resolutions of shareholders’ and Board meetings;

• Ensure that corporate information disclosure to regulatory agencies is in accordance with the laws and the SEC’s and SET’s regulations

• Communicate with shareholders of their legitimate rights including EGCO’s news; • Facilitate board’s activities including director orientation • Safeguard EGCO’s records such as directors’ registration, meeting notices, minutes of

meetings, annual reports, notice to shareholders’ meetings, shareholders’ minutes of meetings and reports on directors’ and management’ interest. In 2012, the Corporate Secretary attended seminars and provided opinion on the hearings

hosted by the list company regulators so that information should be used to enhance the efficiency of corporate governance. B. Subcommittee With the objective to enhance the governance efficiency, the Board assigns directors with knowledge and expertise to be the members of the Board committees namely Audit Committee, Investment Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee. Each Board committee has its own charter which prescribes functions, composition, term of office, responsibilities and meeting conduct. The committee’s charter, which is approved by the Board, would be reviewed as deemed appropriate. For 2012, Committees’ Charter were reviewed to better suit the environment. In performing the duties, each committee can retain outside counsels, experts and professional advisors, as deems appropriate at EGCO’s expense. All committees shall report their activities to the Board. Audit Committee : comprises 3 independent directors. Its mission covers the review of the financial statements, legal compliance, risk management policy, internal control and internal audit systems and the appointment of external auditors. The Audit Committee also reviews the connected transaction or transaction with conflicts of interest to ensure that such transaction is in compliance with the SET’s requirement, well-grounded and be for the best interest of EGCO. Nomination and Remuneration Committee : comprises 5 non-executive directors, three of whom are independent directors. NRC appointed Mr. Hideo Kuramochi, TEPDIA representative director as the Chairman of the Committee for his knowledge and experiences in strategic and human resources management as well as international corporate governance. Although the NRC Chairman is not an independent director, the Board ensures that NRC has its due process for directors and senior management’s selection which is in line with the best practices, taking recommendations from all shareholders. Directors and senior management’s remuneration is considered with transparent and clear guidelines, comparable to those of the peer companies and aligned with the long term benefit of EGCO and the shareholders. Investment Committee : comprises 5 directors and has the responsibility to screen and endorse for the Board’s consideration the Management’s proposals especially on the investments, funding and relating activities while medium and small sized transactions are to be reported for Board’s


104

acknowledgement after the committee’s decision is made.. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board is appointed the Chairman of the Investment Committee. He has proven to be efficient chairman and conducted the meetings efficiently and be attentive to other members’ recommendations both at the Board’s and the committee’s meeting Corporate Governance and Social Responsibility Committee : comprises 4 members being three non-executive directors and the President. The Chairman of the Committee shall be independent director. The Corporate Governance and Social Responsibility Committee has the responsibility to endorse the corporate governance principle and the positions and practices on issues of corporate social responsibilities, principally in relation to social and environmental matters that affect shareholders and other key stakeholders. The structure and duties and responsibilities of each Board committee as well as the number of meeting are reported in section: “Shareholding and Management Structure.” C. Roles and Responsibility of the Board of Directors Duties and Responsibilities All Board members well understand their role and responsibilities and EGCO businesses. They well serve the Company with honesty and prudent judgments for the utmost benefit of the Company and the fairness to all shareholders. Directors exercised their independent judgment and devoted time in discharging their duties in accordance with the Corporate Governance Principle as follows

• Set the corporate vision, target and business strategies including risk management policy, business plan and annual budget and oversee corporate performance, approve key investments, acquisition and disposal of the assets;

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

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

• Monitor and resolve the conflicts of interests which may incur by management, directors and shareholders, and to ensure the independent audit and internal control with the focus on risk monitoring, financial control and legal compliance;

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

• Monitor the information disclosure and communications; and • Direct Board’s performance self - appraisal annually and declare in the annual report its

duties and oversight of EGCO. Leadership and Vision The Board works with the management in setting the vision, mission, strategies, goals and business plans both over a short and long term. The corporate KPIs are designated for each key area being growth, financial and organization excellence. The Board also endeavors to ensure that the


105

significant working system such as the internal control and risk management are in place. Management performance is also monitored through the President’s report which is prepared on a monthly basis to ensure that EGCO business is carried out in an efficient manner Code of Conduct To maintain high ethical standards, EGCO has set up a code of conduct as the guidelines so that directors, management and employees perform their duties with regard to ethical values. Directors’ Code of Conduct focuses on business conduct, ethics for directors, directors’ commitment, duties and responsibilities, conflicts of interest and use of information. Employees’ Code of Conduct which is reviewed annually covers 1. Guiding principles, 2. Making the system work, 3. Responsibilities to Stakeholders, 4. Responsibilities to the Company, 5.Procurement and Transactions, 6. Prevention of Conflicts of Interest, 7. Employee, 8. Safety, Health and Environment, 9. Whistleblower Policy, and 10. Closing EGCO continuously conducts the training on adherence to the code of conduct for the employees as well as provides clarification on their frequently asked questions. Directors, Management and employees must follow and respect the spirit of the code of conduct. Supervisors at all levels are required to promote the compliance with the code of conduct and act as role models. All employees shall review their compliance with the code of conduct and sign their representation letter to the respective supervisors annually. Internal Control and Internal Audit Realizing the importance of having sufficient and suitable internal control at all levels, EGCO clearly determines responsibilities and authority of management and employees in writing, taking into account the segregation of duties to ensure check and balance, and the safeguarding of company’s assets. EGCO also set a correct and timely financial reporting systems. EGCO sets up an Internal Audit division which directly reports to the Audit Committee in order to make sure of its transparent audit process. Ms. Jutatip Mahaveera has been appointed Internal Audit Division Manager and secretary to the Audit Committee and entrusted for the audit work of EGCO and its subsidiaries. The internal audit functions include giving consultation to concerned units to prevent any possible shortfalls and enhance preventive internal auditing. The Audit Committee has a responsibility to approve the internal audit plan, endorse the appointment and performance appraisal of the internal audit division manager tp ensure the independence and the audit reporting of the internal audit division. EGCO emphasizes on developing the capabilities of internal auditors by self-development, experience and knowledge sharing and attending inside and outside seminars, and encouraged the internal auditors to have the professional certificate and the internal audit section manager was certified the Certified Internal Auditor (“CIA”) and Certified Professional Internal Audit of Thailand (“CPIAT”). EGCO reviews EGCO’s internal control system annually, using the questionnaires that were developed in line with the guidelines of the SET and the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Employees from section managers and upward are assigned to evaluate the quality of the internal control of which the result be proposed to each subsidiary’s Board of Directors, the Audit Committee and EGCO Board of Directors, respectively. The


106

evaluation result in 2012 showed that EGCO and its subsidiaries had sufficient and appropriate internal control systems. To ensure compliance with internal control systems, and rules and regulations, all employees of EGCO and subsidiaries are required to thoroughly review their 2012 work practices and submit the general representation letter to their supervisors up to the President. The President also signed the general representation letter to the Chairman of the Board. Risk Management The Board of Directors entrusts the Audit Committee to review with the management the risk management policy, implementation and guidelines. The Audit Committee reports the update on risk management issues to the Board twice a year to consider the adequacy and effectiveness of risk management system so that strategies, plans and measures can be adjusted to correspond timely to the changing situation. EGCO has established the risk management framework as follows:

• EGCO Risk Management Committee is shored up comprising top management of the Group companies with the President as the Chairman of the Committee. The objectives are to closely monitor the risk management of the Group and to report to the Audit Committee and the Board. In addition, Risk Management Committee is set up at each power plant to set up the policy and monitor the risk management implementation to meet the overall policy and the business characteristic of each power plant

• Risk Management Section was set up under the Corporate Planning Division to enhance the alignment of business plan and risk profiles.

• Risk management process is embedded into the working process. Management and employees are encouraged to take part in the process and to efficiently use the resources to identify, appraise and manage risks

• Risk management is implanted into the corporate culture. EGCO has adopted the risk management policy and risk management manuals as guidelines since 2001. Risk Management implementation is also included as one of the elements for internal control assessment. The result of such assessment in 2012 indicated that EGCO Group has appropriately implemented risk management system

Conflicts of Interest EGCO has set the policy in the code of conduct for directors and employees to avoid the conflicts between the personal interest and the corporate interest as follows

• Directors and employees shall not be engaged as directors or advisors of other companies, organizations, and associations that may conflict with the interest and the business of EGCO. Acknowledgment by the Board must be sought before engaging in any organization.

• Directors shall promptly notify the Board of any conflict of interest as the case arises and shall consider whether to refrain from participating in the debate and/or voting on the matter,


107

absent from the particular agenda, arranging 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 shall report the change in their security holding to the regulatory agencies The corporate secretary is assigned to report the security holdings of directors and management at the Board meeting

• Employees shall not borrow money from the customers/suppliers or from individuals or firms having business dealings other than financial institutions as it may influence the way they handle EGCO business; and

• The step for implementing connected transaction along with the approval authority and the disclosure of such transaction shall be as required by the SET and SEC. The corporate secretary shall identify the type of transaction and the approval body and submit the reports on connected transactions and any conflict of interests to the Audit Committee for acknowledgement and disclose the information in the annual report and annual registration form (Form 56-1).

Directors and management are required to prepare the report on the interest of their own and related parties to the company to enable the corporate secretary to ensure transparent practices. The corporate secretary shall submit a copy of such report to the Chairman and the Chairman of the Audit Committee

To foster trust among all concerned parties that the connection transactions are aimed at optimizing the benefits of EGCO and the shareholders, the Audit Committee is assigned to review the information and provide comment with regard to the connected transaction that needs to be approved by the Board and the shareholders and to ensure that the disclosure is adequate Fraud Risk Management With a view that fraud is a significant corporate risk, the Board set a measure to manage fraud risk as follows

• Preventive Measures: The organization is well designed for the purpose of governing and managing business. The code of conduct is prepared in writing and the compliance with the code is promoted. The internal control systems are established and appraised. The whistleblower program is in place.

• Monitoring: Each supervisor assumes responsibility to prevent and monitor fraud risks and operation errors. The internal audit unit works independently from senior management to review the compliance with the regulations and test the early warning signals

• Fairness: The fraud investigation would be conducted by a panel to ensure fairness to the defenders while whistleblowers would be appropriately protected

• Lesson Learn: Case studies on fraud risks both in Thailand and overseas are presented as to educate supervisors on fraud prevention.


108

Due to the above efficient preventive measures, there was no claim or any fraud found in EGCO Group in year 2012. D. 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 and determined to have monthly Board meeting. 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. The Board also instructed management to provide monthly performance report so that the Board can follow up the business progress and give recommendations in case of deviation from plan or budget. The Board set its meeting dates and agendas for the whole year in advance to enable directors to plan their schedules accordingly. The Chairman and President fix the agenda for the Board’s meeting while each director can propose the agenda to the Chairman and discuss deliberately at the meeting.. The notice calling for the Board meeting is submitted to the Board at least 7 days in advance except in urgent case to preserve the rights or benefits of the Company Meeting document are sent to the directors in advance to allow adequate time for digesting such information. Agenda is set according to the priority i.e., Matter Arising, Matter for Consideration, and Matter for Information to optimize the meeting time of the directors. The Chairman allocates adequate time for the management to present their issues and to permit directors to conduct extensive discussion of agenda items and other topics of interest. The draft minutes of meeting are submitted for the Board’s review within 14 days after the meeting prior to the adoption at the next meeting. The Board had called 12 meetings in 2012. Each meeting took approximately 2 hours and a half and the average attendance rate was 92%. Since EGCO has a number of directors who do not reside in Thailand, EGCO has set the policy to allow those directors to attend the meeting by teleconference so that EGCO and the Board will benefit from their opinions and recommendations. Such attendance is not considered the meeting quorum though, and those who attend the meeting by teleconference do not have the right to vote. The Board encourages the President to invite senior management being the senior executive vice presidents to attend all the Board’s meeting. Other managements are also invited to join the meeting to provide additional information on their relevant meeting agenda items which in turn, enable the Board to know the individuals and subsequently, benefit the succession planning scheme. The Board can also request for additional necessary information from the President or the corporate secretary or other assigned management within the extent of the established policy. The Board and committees can engage independent advisor for the benefits of the business on EGCO’s expenses. Details of directors’ attendance in 2012 are illustrated in Table 1.


109

E. Board Self Assessment The Board regularly conducts self assessment to consider their performance for further improvement. For 2012, the Board used the self appraisal form which was based on the forms recommended by SET and reviewed by the Nomination and Remuneration Committee to adjust and incorporate certain areas to cover all facets of board performance and to fit the Corporate’s business characteristics. The self appraisal forms are of two parts, the collective appraisal form and the individual appraisal form. The grading code is “excellent” for the score above 90, “very good” for the score of 81-90, “good” for the score of 71-80, “fair” for the score of 55-70 and “poor” for the score below 55. The result of the appraisal is concluded as follows Collective Self appraisal The collective self appraisal form comprised 6 sections, namely (1) Roles, Duties and Responsibilities of the Board, Risk Management, Internal Control, Duties and Ethical, and Monitoring Performance, (2) Structure and Qualification of the Board and Independent (3) Board Meeting and Meeting Participation (4) The relationship with the Management (5) The Evaluation, Compensation of directors, committee, and Board (6) The Management Evaluation and Compensation and Succession Plan. The result can be concluded that the Board performed its duties in compliance with the good governance principles and the code of conduct. The Board took part in establishing the company’s policy, vision, business plan, and annual budget. The structure and composition of the Board were appropriate and board meetings were arranged efficiently. The average score was 95% which was in the excellent level. Issues for further improvement include directors’ development plan, management development and succession plan and remuneration schemes. Individual Self Appraisal The individual appraisal form comprised 5 sections, namely (1) Strategic Thought and Corporate Governance. (2) Competence and Experiences in Company’s business and Individual Abilities. (3) Independent (4) Self Preparation as Director (5) Self Development of the Director. From the individual self appraisal, scores in all areas exceeded 97% which could be concluded that the directors had appropriate qualifications, deliberately performed their duties and responsibilities in accordance with the recommended best practices. Audit Committee Self Appraisal Apart from the Board, the Audit Committee also appraises themselves annually. The result of the self appraisal in 2012 indicated that the composition, qualifications and roles and responsibilities of the Audit Committee were well in line with the Audit Committee’s Charter B.E. 2553, SET guidelines and the international best practices.


110

F. Performance Appraisal of President and Top Executives President’s performance is collectively appraised by all non-executive directors against the corporate goals and the individual’s competencies. Indicators include the followings:

• Qualitative indicators being leadership, relationship with the Board, risk management and internal control, human resources management, good corporate governance and code of conduct

• Corporate achievements based on the committed key performance indicators. • Capabilities to enhance business development.

The Nomination and Remuneration Committee is responsible for endorsing the performance appraisal of the senior executive vice presidents and executive vice presidents based on the individual achievement against the set performance indicators. G. Remuneration for Directors and Management EGCO set 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 to shareholders’ value.. NRC is responsible for the recommendation of the remuneration scheme to be endorsed by the Board before proposing to the shareholders’ meeting on the annual basis. EGCO transparently disclose the remuneration of each director. Directors who serve as committee members are also entitled to extra remuneration to match the increase in responsibilities. Executive director is not entitled to any director remuneration. The non-executive directors collectively designed the remuneration scheme of the President, taking into account the performance appraisal and the peer payment. The Board also approves the pay structure of the company. EGCO periodically conducts the survey of the management remuneration to ensure that its pay rate is comparable to the market and adequate to attract and motivate the qualified executives. The remuneration of directors and management is disclosed in section “Shareholding and Management Structure”. H. Board and Management Development The Board pays attention to continuous development of directors and management. In 2012, The following development plan was implemented to foster directors’ efficiency and effectiveness Director Development Continued development was encouraged for all directors:


111

New Directors: Directors’ orientation was arranged to give directors the first hand information of the company as well as governing laws and regulations and the opportunity to meet the management team. Directors’ manual is updated to equip incoming directors with knowledge about EGCO. Directors are also encouraged to attend training programs arranged by the Institute of Thai Directors (“IOD”). Existing Directors: The Board encourages continued development covering in-house and outside trainings at the IOD or other relating academic institutes. In 2012, EGCO arranged a lecture on Strategic Plan : Present and Future and a plant visit to solar power plant in Lopburi as well as site visits to overseas renewable power plants to enhance directors’ understanding on power business and future trend. EGCO directors have distinguished knowledge on company’s business to perform their duties and responsibilities as directors. The list of directors who attended the courses at IOD and outside institutes as of December 2012 is shown in Table 2. Management Development and Succession Plan The Board oversees to ensure that EGCO has the management development program in place to enhance management’s capacities to perform their duties efficiently and that suitable and challenging job are assigned appropriately. The Board determines policies and principles for selection of the President and his/her successor in the event of an emergency or the retirement of the President. The President’s selection has the clear and transparent process with the candidates’ assessment from education, knowledge, experiences, competencies, ethics and leadership. NRC is accountable for President’s nomination. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications endorsed by NRC. The appointment of management follows the company’s regulation on Work Rules B.E. 2550 and the resolutions of the Board as follows.

• NRC shall approve the appointment of senior executive vice president, executive vice president, subsidiaries’ and nominate senior executives of subsidiary/joint venture companies that EGCO has the right to nominate for a position equivalent to EGCO’s EVP level and upward.

• The President shall appoint the division and section managers, whereby the appointment of internal audit manager shall be endorsed by the Audit Committee.

• The appointment of Corporate Secretary shall be by the Board.

The NRC has assigned the management to prepare the succession plan for SEVP and EVP positions along with the executive development plan to ensure that qualified employees would be ready to


112

succeed such position holders. The prospect candidates shall possess the required competencies, under the D-R-I-V-E value as follows:

D : Dedication to Excellence R : Result Oriented I : Initiation and Dynamic V : Value Difference and Work as a Team E : Environment, Social and Safety Concern

The Management development plan is prepared to enhance management and employees’ capabilities and potentials in core, managerial/leadership, and functional competencies. In 2012, numbers of trainees for each course are as shown below:

Courses No. of participants Executive, Capital Market Academy (“CMA”) 1 Director Certification Program (“IOD”) 7 Executive Development Program (“TLCA”) 2 Management Development Program (“TMA”) 2


113

Table 1 : Meeting Attendance

No. Name Meeting (time)

Board Meeting

12 times/year

Audit Committee

14 times/year

Investment Committee

12 times/year

Nomination and

Remuneration committee

7 times/year

Good Corporate

Governance and Corporate

social Responsibilities Committee 3 times/year

1 Mr. Pornchai Rujiprapa Chairman 12/12 12/12

2 Mr. Thanapich Mulapruek Independent Director 12/12 14/14

3 Mr. Paiboon Siripanoosatien Independent Director 11/12 7/7 3/3

4 Police Lieutenant General Pansiri Prapawat1 Independent Director 9/10 3/5 2/2

5 Mr. Pasan Teparak2 Independent Director 7/10 8/10

6 Mr. Pongstorn Kunanusorn Independent Director 9/9 7/8

7 Mr. Sorajak Kasemsuvan3 Independent Director 8/9 3/4 2/2

8 Mr. Surasuk Supavitipatana Director 12/12 10/12

9 Mr. Thawat Vadjanapornsithi4 Director 12/12 6/6

10 Mr. Kulit Sombatsiri Director 11/12 3/3

11 Mr. Toshiro Kudama Director 10/10

12 Mr. Satochi Yajima5 Director 12/12 10/10

13 Mr. Hideo Kuramochi6

Director 10/10 9/10 5/5 14 Mr. Shigeru Inano7

Director 9/10 15 Mr. Akio Matsusaki

Director 0/1 1/1 16 Mr. Somphot Kanchanaporn

Independent Director 2/2 4/4 17 Mr. Chaipat Sahasakul8

Independent Director 2/2 4/4 18 Mr. Hideaki Tomiko

Director 2/2 2/2 2/2 19 Mr.Ryota Sakakibara

Director 2/2 1/2


114

20 Mr.Aswin Kongsiri 9 Vice Chairman 3/3 2/2 2/2

21 Police Lieutenant General Pijarn Jittirat10 Independent Director 3/3 3/3 0/1

22 Mr. Sahust Pratuknukul President 12/12 12/12 7/7 3/3

1 Being appointed as director on March 1, 2012 2 Being appointed as director on March 1, 2012 3 Being appointed as director on April 25, 2012 4 Being appointed as director on March 1, 2012 and resigned on October 1, 2012 5 Being appointed as director on January 30, 2012 6 Being appointed as director on March 1, 2012 7 Being appointed as director on March 1, 2012 8 Resigned on March 1, 2012 9 Resigned on March April 25, 2012 10 Being appointed as director on March 1, 2012 Note: 7 Members in Audit Committee comprising no. 2, 5, 6, 16, 17, 20, 22 7 Members in Investment Committee comprising no. 1, 8, 12, 13, 18, 19, 22 9 Members in Nomination and Remuneration Committee comprising no. 3, 4, 7, 9, 13, 18, 20, 21, 22 7 Members in Corporate Social Responsibility Committee comprising no. 3, 4, 7, 10, 20, 21, 22


115

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


116

EGCO’s organization structure as of December 31, 2012


117

KEGCO’s organization structure as of December 31, 2012


118

EGCO Cogen’s organization structure as of December 31, 2012


119

Part 2 Section 10 Internal Control

120

10. Internal Control

The Board of Directors has entrusted the Audit Committee the responsibility to review the appropriateness and effectiveness of the internal control system provided by the management. This is to ensure that EGCO’s internal control system is adequate, appropriate and in line with the guidelines of The Stock Exchange of Thailand’s (SET) and the internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). EGCO’s internal control covers management control, operational control, financial control, and compliance control. The Board set out the duties and responsibilities of the Internal Audit Division in the Internal Audit Charter which was reviewed by the Audit Committee and approved by the Board. The Internal Audit Division independently discharges its duties and functionally reports to the Audit Committee while administratively reports to the President. The internal audit scopes of EGCO, subsidiaries, and joint ventures are set in the annual internal audit plan which is approved by the Audit Committee. The Audit Committee reviews the internal control system and risk management continuously, and considers the audit reports of Internal Audit Division as well as comments of the external auditors on the company’s internal control system and reports its activities to the Board on a regular basis. Considering the above factors together with the company’s established internal control and work systems, the Board agreed with the Audit Committee that the internal control system of EGCO and its subsidiaries is considered appropriate and sufficient to safeguard EGCO’s and subsidiaries’ assets from significant damage of misuse or unauthorized use by the Management and employees . The Audit Committee and the Board have not received any significant deficiency report on the internal control system from external auditors and Internal Audit Division.

The 2012 Audit Committee’s activities is reported in this Annual Report. The Audit Committee’s and the Board’s consideration on the adequacy and appropriateness

of EGCO’s internal control and work systems are based on the following factors : Control Environment

- Clear vision, mission statements, and business objectives are set as guidelines for the management and employees. Operation is carried out with fair treatment to stakeholders and is periodically reviewed to ensure target achievements for long-term benefit of EGCO.

- Organization structure is designed by the Board, which is adjusted over time to fit the business environments.

- Code of Conduct and the good corporate governance principles are written and reviewed periodically. New employees are oriented to understand their roles and responsibilities in upholding the best practices and to avoid the conflict of interest.

- Regulations, orders and Table of Authority for accounting, finance, budget, procurement, and human resource functions are established and announced for


121

employees’ acknowledgment and practices. Failure to comply with the regulations and orders may result in disciplinary actions.

Risk Assessment and Risk Management The Risk Management Committee (RMC) has been set up at the Management level which comprises EGCO’s top executives, chaired by the President. RMC reviews risk management of EGCO and subsidiaries and regularly reports to the Audit Committee and the Board. The Audit Committee was assigned by the Board to review with the management the risk management policy and implementation.

- Risk management function is responsible by the Corporate Planning Division for the benefit of linking business plan with corporate risks.

- Details of risk assessment and risk management of EGCO Group are disclosed under “Risk Factors” in the annual report.

Control Activities To ensure that corporate directions and policies set by the Board and the management are

executed, efficient control of accounting, finance, operation, and governance are implemented as follows:

- Transactions and amount of management’s approval authority are classified in the Table of Authority.

- Responsible units for transaction approval, operation or account recording, and asset safeguarding are clearly segregated.

- EGCO’s subsidiaries and joint ventures’ performance is regularly monitored by the Asset Management Division.

- Sound process for connected transactions so that such transactions are approved by the authorized approvers who have no conflicts of interest for the best interest of EGCO.

- The Corporate Secretary Division is responsible for the compliance, including information disclosure, of EGCO and the Board, with the Securities and Exchange Acts, SET notifications and regulations, Securities and Exchange Commission (SEC), and other related laws and regulations. The Legal Division provides legal advice as the case may be.

- Ensuring EGCO’s compliance with Computer Related Crime Acts through internal communication with employees, who in turn sign the IT Compliance Statement to confirm their non-violation.

Information and Communication

EGCO has established information system to maintain adequate important information for committees’ and management’s decision making via communication channels as follows:

- Board and committees’ members receive the meeting notice together with the meeting documents which contain necessary and sufficient information in advance of the


122

meeting. Discussion, recommendations, or remarks of the directors and meeting resolutions are recorded in the minutes of meetings for future reference or audit trail.

- Meetings among the Audit Committee, external auditors, and concerned Management are held to review the compliance of financial accounting with the General Accepted Accounting Principles and International Accounting Standards.

- Business Update Meetings between the President and the management team of each group are held for progress monitoring and problem solving (if any)which enable all team members to have adequate information to perform their tasks and make decisions.

- For internal communication, all employees reach corporate information including policies, regulations and orders, and good corporate governance via intranet. Various internal meetings also supported employees’ feedback and sharing of ideas for the improvement of productivity and operation efficiency.

- Accounting records and supporting documents of the financial statements are completely kept in orderly manner. There was no report on the deficiency in those documents from the auditors.

- The compliance database has been developed for reference and tracking. The Legal Division is responsible for updating the compliance database and providing consultations to employees.

- For external communication, EGCO provides communication channel through EGCO website at www.egco.com to reach corporate information, in addition to the quarterly shareholder and analyst meetings, press conference, and EGCO newsletters.

- Whistleblower system is set to provide shareholders and employees the channel to report suspected violations of EGCO’s Code of Conduct to the Management, the Audit Committee, and the Board of Directors while message providers would be protected.

Monitoring

To ensure that the established internal control systems are sufficient and appropriate, the following activities are implemented.

- Responsible unit is assigned for the follow up, monitoring, and appraisal of EGCO Group’s performance against the KPIs and periodically reports to the Management and the Board together with the gap analysis.

- External auditors perform their tasks independently and regularly report to the Audit Committee.

- Internal control systems are evaluated annually, using the internal control assessment form which is aligned with SEC’s guidelines. The 2012 evaluation results, reported to the Audit Committee and the Board by the Internal Audit Division, revealed the adequacy and appropriateness of EGCO internal control systems.



123

- Management and employees of EGCO signed the representation statement to confirm their compliance with the company’s Code of Conduct. The President and the Managing Directors of EGCO’s subsidiaries in turn signed the Code of Conduct Compliance Statement to their respective Chairman of the Board.

- The adequacy and appropriateness of internal control systems is regularly reviewed by the Internal Audit Division, following the annual audit plan.

- External auditors’ review of the financial statements included the review of internal control on accounting and finance to define the audit approach, timing and scope of work. For 2012, there was no significant finding for improvement on internal control systems.

Part 2 Section 11Connected Transactions

124

11. Related Transactions

In conducting our business activities and services, there are related transactions between EGCO or its subsidiaries and persons or parties who may have potential conflicts of interest. EGCO endeavors to ensure that these transactions are justified and in compliance with the Stock Exchange of Thailand (“SET”) and the Capital Market Supervisory Board’s rules and regulations. Apart from designating the authorized persons to approve the transaction in accordance with the Table of Authority, the Audit Committee is entrusted to review the related transactions that need to be approved by the Board of Directors. The details of the related transactions are disclosed under the items 34 and 35 of the Notes to 2012 Financial Statements for the year ended December 31, 2012. Procedures to Approve the Related Transactions EGCO has materialized the following policies and guidelines in treating and approving the related transactions. • In case of involvement in any agreements or any related transactions with EGCO, subsidiaries,

joint venture companies, associated companies and/or any concerned parties, EGCO will consider the necessity and justification of such transactions for the best interest of the Company. Costs are charged at the market price like transactions with any other outside parties (Arm’s Length Basis). If there is no such price, EGCO will apply the price of similar market transactions. EGCO may also compare the price with the one recommended by an independent appraiser to ensure that such price is reasonable to maximize the Company’s benefits.

• Business transactions that are considered connected transactions according to the SET’s rules and regulations, have to strictly comply with the requirements of the SET’s and the Capital Market Supervisory Board. They are also to be reviewed by the Audit Committee in case that such transactions must be approved by the Board of Directors.

• Financial assistance to Group companies or business partners such as loans, guarantee, etc. will be conducted prudently to ensure the utmost benefits of the Group companies. Fees will be charged at the market rate as at the transaction date.

• For business transactions having terms and agreements that any ordinary person will agree with the counterpart under similar circumstances, EGCO always ensures its bargaining power without any influential privileges resulted from holding administrative titles as the director, executive or related authority. Such transactions shall be reported to the Audit Committee and the Board of Directors. This is aimed to ensure that such transactions are properly carried out and provide optimal benefits to the Company and in line with the procedures.

• In case that the shareholders’ approval is needed, the major shareholders who may have conflicts of interest can attend the meeting in order to constitute a quorum but will not have voting rights, thus does not affect the quorum and the vote counting.

• Directors and management personnel with potential conflicts of interest are not allowed to vote or attend the meeting.


125

Related Transactions in 2012 EGCO’s related transactions in 2012 were normal business transactions and there was no profit siphoning between EGCO or its subsidiaries and parties with potential conflicts of interest. Each transaction was duly approved under the transparent process and the persons with potential conflicts of interests were not involved in the decision making. Such transactions were well justified that they were carried out for the best interest of the Company like the transactions with any third parties. The checking and audit systems also ensured that all transactions were carried out in line with the established process. Details of related transactions in 2012 that may pose conflicts of interest are as follows: 1. Related Transactions with EGAT In carrying out EGCO Group’s businesses and services, there were transactions relating to the power sales and maintenance services between EGCO Group and EGAT, a major shareholder which owns 25.41 per cent of EGCO stakes and has 4 representative directors on EGCO Board. However, all the transactions followed the established process and were in line with the disclosure and other requirements of the SET and SEC. The following are the transactions in 2012 in detail: 1.1 Power sales with EGAT EGCO (Rayong Power Plant) and the three subsidiaries namely KEGCO, EGCO Cogen and Roi Et Green were engaged in the Power Purchase Agreement (“PPA”) with EGAT. The PPA terms for EGCO (Rayong Power Plant) and KEGCO are twenty years while the terms for EGCO Cogen and Roi Et Green are twenty one years, respectively.

Such transactions were justified as power generation is EGCO Group’s core business and EGAT is the sole wholesale buyer in Thailand. In addition, the pricing and conditions of those transactions were in accordance with the standardized contracts endorsed by concerned government agencies.

Companies Relationship Transaction value by December 31, 2012 (million baht) Sales Revenue Trade Receivables

EGCO (Rayong Power Plant)

2,167 189

KEGCO Subsidiaries

1,763 90 EGCO Cogen 672 213 Roi Et Green 396 66

Since EGCO has recorded the share of profits from joint venture companies using equity method, the value of such transactions is not shown in the consolidated financial statements. The values of the related transactions between joint venture companies and EGAT are shown in the following table.


126

Transaction value by December 31,2012 (million baht)

Companies Relationship Sale Revenue Traded Receivables GEC Group Joint Venture 1,7861 3,280 BLCP 9,212 1,161 NTPC 2,710 117 NED 369 74

1.2 Maintenance Services for EGAT ESCO, EGCO’s subsidiary which is an O&M service provider, has engaged in a Maintenance Agreements with EGAT to provide major maintenance and repair works including other facilitating and additional services related to the power plants.

Such transaction was justified as the price was charged on a “cost plus basis” with the annual CPI escalation which is the same standard as the price charged to any other third parties. The agreement is effective for a period of eight years commencing September 24, 2007.

Companies Relationship Transaction value by December 31, 2012 (million baht)

Maintenance Fee Trade Receivables ESCO Subsidiary 58 22

1.3 Maintenance Services with EGAT EGCO Group has engaged in the operation and maintenance agreements with EGAT which are defined as the normal transactions to support its business operations of which the general trading terms and conditions are applied. The fee can be calculated from the value of assets or the referred price in accordance with SET’s guidelines. The details are as follows

• EGCO (Rayong Power Plant) and KEGCO have engaged in the Major Maintenance Agreement (“MMA”) with EGAT for the latter to provide major maintenance services, repair services, administrative services, and additional services to their power plants. The service fees are charged on a “cost plus basis” with the annual CPI escalation. The contracts have been extended for another 8 years for EGCO (Rayong Power Plant) taking effect from December 7, 2006 and another 4 years for KEGCO taking effect from August 1, 2008.

Companies Relationship Transaction value

by December 31, 2012 (million baht)

O&M Fee Trade Payables EGCO (Rayong Power Plant)

27 79

KEGCO Subsidiaries 74 5 • GEC Group has engaged EGAT as its advisor for maintenance works. The fee was charged in

accordance with the EGAT’s standard price for contractual fees.


127

Companies Relationship Transaction value by December 31, 2012

(million baht) Maintenance Advisory Fee Account Payables

GEC Group Joint Venture 0.13 - 2. Related Transactions between EGCO and Group Companies EGCO has engaged in the following agreements with Group Companies, which EGCO holds major shares and has its executives sit on their boards.

2.1 Agreements to lease office space and Agreements for building services for 5 companies namely KEGCO, ESCO, EGCO Cogen, Roi Et Green and EGCOM Tara. The provision of space and the scope of services are specified in the one-year contract.

Such transactions were considered justified as it maximized EGCO building space usage and the fee was charged at the market rate which was the same rate charged to any third parties.

2.2 Agreements to provide management services to KEGCO, ESCO, EGCO Cogen, Roi Et Green, EGCOM Tara, EGCO BVI, PEPOI, Theppana, SPP2, SPP3, SPP4, SPP5, Yanhee EGCO, Solar Co. and APPC. The scope of work covers internal audit, legal counseling, Board’s secretarial work, IT, public and community relations and financial work, including personnel secondment to NTPC BLCP and NED. The financial work is not included in the scope of work rendered to ESCO and EGCOM Tara.

Such transactions were justified as those Group companies do not have internal staff to take care of such work while EGCO had the expertise and capability to provide the services and the service fee was charged in accordance with the actual operating hours based on the cost plus basis.

Companies Relationship Transaction values

by December 31, 2012 (million baht)

Financial Statements KEGCO

Subsidiaries

17 ESCO 10 EGCO Cogen 7 EGCO Green 1

Roi Et Green 7 Egcom Tara 2 EGCO BVI 1 PEPOI 22 Quezon 5 Theppana 2 SPP2 2 SPP3 3

SPP4 3 SPP5 2 Yanhee EGCO 1 Solar Co. 3


128

Companies Relationship Transaction values by December 31, 2012

(million baht) Financial Statements

Total for subsidiaries 88 NTPC

Joint Ventures 17

BLCP 13 NED 3 APPC 1 Total for joint ventures

34

3. Financial Support to related business partners EGCO has provided financial support to subsidiaries and joint ventures in proportional to its ownership in such companies. Such supports are normal business practices and are aimed at optimizing shareholders’ returns. The transactions were approved by the Board and disclosed in the notes to financial statements as of December 31, 2012.

Companies

Relationship Transaction values by December 31, 2012

(million baht)

Terms and conditions

ESCO Subsidiaries 596 On November 22, 2005, EGCO signed the loan agreement providing 780 million baht to ESCO. The principal payment of 46 million baht is made on yearly basis from December 2009 to December 2025 at the interest rate, being charged in accordance with the market condition, at MLR minus a certain margin, payable on a semi-annual basis.

SPP 2 Subsidiaries

103 EGCO signed the assignment agreement transferring the right of MEMC Singapore Pte. Ltd as the lender of long-term loan of SPP2, SPP3 and SPP4. The principal payment date is 25-year anniversary from the agreement date, at the fixed interest rate, payable on a quarterly basis.

SPP3 104 SPP4 79

SPP5 78 EGCO signed the assignment


129

Companies


(million baht)


agreement transferring the right of Sun Edison Energy Holding (Singapore) Pte. Ltd as the lender of 78 million baht long-term loan of SPP5. The principal payment date is 25-year anniversary from the agreement date, at the fixed interest rate, payable on a quarterly basis.

Yanhee EGCO Subsidiaries 700 On October 22, 2012, EGCO

signed the loan agreement of 1,720 million baht, 12-year tenor with 2-year grace periods from the commercial operation date. The current outstanding loan is 700 million baht. The principal payment will be made at equal installment on a yearly basis at the interest rate of MLR, payable on a yearly basis.

Theppana Subsidiaries

21 On October 8, 2012, EGCO signed the loan agreement providing 31 million baht to Theppana, currently 21 million baht been drawn. The principal will be paid at a lump sum on the 10th anniversary of the COD, at the interest rate of MLR minus a certain margin, payable on a semi-annual basis from the COD.

GPS Joint Ventures

31 On May 10, 2012, EGCO signed the loan agreement providing 31 million baht to GPS. The principal will be paid at a lump sum on April 5, 2013 at the fixed rate, payable on a semi-annual basis scheduled on October 5, 2012 and April 5, 2013

APPC Joint Ventures 25 - On August 1, 2012, EGCO

signed the loan agreement


130

Companies


(million baht)


providing 10 million baht to APPC. The principal is due on 6 months after the agreement date.

- On December 24, 2012, EGCO

signed the agreement providing loan of 15 million baht. The principal payment will be made at a lump sum on January 23, 2013 at the interest rate of MLR plus a certain margin, payable on the payment date of principal.

3.2 Commitments and Liabilities EGCO has commitments under the Sponsor Support Agreements from loan guarantees provided to subsidiaries and joint ventures as follows.

3.2.1 Guarantee of Loan

Company Relationship Transaction value by December 31,2012

Terms and Conditions

EGCO Cogen

Subsidiary 160 baht Million

EGCO, a sponsor of EGCO Cogen, signed the agreement providing loan to EGCO Cogen in case of facing the liquidity problem and unable to pay debt and expenses specified in the agreement in the aggregate amount supporting by shareholders of up to 200 million baht.

EGCO’s obligation, according to the stake’s portion, is not exceeding 160 million baht. Roi-Et Green

Roi-Et Green Subsidiary 367 million yen or EGCO signed the agreement


131

Company Relationship Transaction value by December 31,2012

Terms and Conditions

equivalent to 131 million baht

guaranteeing outstanding loan including accrued interest of Roi-Et Green

Such financial support was justified as it complied with the terms and conditions in the loan agreements and business development agreements, and was provided on EGCO’s share proportion.

3.2.2 Letter of Guarantee EGCO’s liability under Counter Guarantee, Standby Letter of Credit and Bank Guarantee for its subsidiaries and joint ventures as at December 31, 2012 as follows: Ratchasima Wind Farm EGCO’s liability under the Letter of Guarantee for the electricity sales proposal from the project for the amount of 6 million baht. 3 SPP projects (TJ Cogen, TP Cogen and SK Cogen) EGCO was liable under the Letter of Guarantee for the electricity sales proposal from the three projects for an amount of 270 million baht. Theppana EGCO’s liability under the Letter of Guarantee for the electricity sales proposal to EGAT and PEA, land lease to the Agricultural Land Reform Office, the rental of reserved land to the Department of Forestry and the land lease to Agricultural Land Reform Office, Chaiyaphum province altogether in the amount of 87 million baht. NTPC Dated December 31, 2012, EGCO has the liability under the 2 standby letters of credit issued by Mizuho Corporate Bank to guarantee the debt obligation in reserve accounts for Nam Theun II project, in the amount of US 5 million dollars (equivalent to 146 million baht) and 601 million baht, respectively. Policy and Tendency of Future Related Transactions EGCO’s existing related transactions tends to continue and EGCO will seek to ensure that all of the related transactions be conducted transparently, fair and beneficial to the Company. The Audit Committee, external auditors or independent consultants shall be assigned by the Board to review and give their independent opinions on the pricing and justifications of those transactions. Disclosure of related transactions shall strictly follow the notifications of SET and SEC. In addition, EGCO will continue to provide the updated information, rules and regulations on related transactions to concerned staffs for thorough understanding which will certainly lead to full compliance and transparency for the optimal benefits of the shareholders.

Part 2 Section 12 Financial Status and Operational Results

132

12. Financial and Operational Results

Financial Statement

1. Auditor’s report The Management prepares the consolidated and company’s financial statements for the year ended December 31, 2012 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.

The Board of Directors has also issued the Company’s regulation on accounting, finance and budgeting B.E. 2550 to which the Management must adhere. In addition, the Audit Committee has been entrusted to ensure that the Company’s financial statements have been prepared in a justified and prudent manner in compliance with such rules and regulations. The appropriate accounting policies were consistently applied. Also, the Audit Committee has reviewed the Company’s internal control systems to ensure its adequacy and effectiveness as a means to safeguard the company’s assets from unauthorized persons and reveal the weakness to prevent unlawful conduct and abnormalities.

The Management has prepared both consolidated and Company financial statements for the year ended 31 December 2012 in compliance with the Thai Generally Accepted Accounting Principles under the Accounting Profession Act B.E. 2547. The appropriate accounting policies were consistently applied and the financial statements were prepared in a prudent and justified manner with adequate disclosure of significant information in the notes of the financial statements.

The Board of Directors is of the opinion that both the consolidated and company financial statements for the year 2012, present the company’s financial position, operating results, changes in shareholders’ equity and cash flows in a correct and reliable manner and that such statements are in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations.


133

2. Summary of Financial Statements


134

Electricity Generating Public Company LimitedStatements of Financial PositionAs at 31 December 2012 and 2011

Consolidated Company2012 2011 2012 2011

Notes Baht Baht Baht Baht

Liabilities and shareholders’ equity

Current liabilities

Short-term loans from financial institutions 20 10,673,650,000 - 10,633,250,000 -Trade payables 1,142,218,414 253,078,447 23,076,173 27,636,013Trade payable to a related party 34.4 84,045,636 64,551,410 78,820,644 55,751,959Amounts due to related parties 34.5 10,265,114 9,701,695 5,367,940 4,458,738Current portion of long-term loans from financial institutions, net 21 1,050,700,537 535,728,282 559,590,904 289,380,906Other current liabilities

- Interest payable 260,098,636 18,222,832 14,833,849 9,659,749- Value added tax payable 386,250,983 78,063,073 30,184,259 35,525,577- Corporate income tax payable 273,386,700 35,810,629 - -- Others 891,089,059 720,905,424 284,374,284 286,883,840

Total current liabilities 14,771,705,079 1,716,061,792 11,629,498,053 709,296,782

Non-current liabilities

Long-term loans from financial institutions, net 21 24,165,114,877 11,521,387,363 10,238,363,645 10,893,809,094

Retirement benefit obligations 22 198,954,170 199,408,660 90,063,890 91,767,927Provision for decommissioning costs 23 1,088,849,809 972,895,496 402,643,668 386,414,269Other non-current liabilities 24 779,227,871 13,267,003 26,382,349 30,590,721

Total non-current liabilities 26,232,146,727 12,706,958,522 10,757,453,552 11,402,582,011

Total liabilities 41,003,851,806 14,423,020,314 22,386,951,605 12,111,878,793


135

Electricity Generating Public Company LimitedStatements of Financial PositionAs at 31 December 2012 and 2011


Notes Baht Baht Baht BahtLiabilities and shareholders’ equity (continued)

Shareholders’ equity

Share capitalAuthorised share capital- 530,000,000 ordinary shares at par of Baht 10 per share 5,300,000,000 5,300,000,000 5,300,000,000 5,300,000,000

Issued and paid-up share capital- 526,465,000 ordinary shares paid-up at Baht 10 per share 5,264,650,000 5,264,650,000 5,264,650,000 5,264,650,000

Premium on share capital 8,601,300,000 8,601,300,000 8,601,300,000 8,601,300,000Premium on treasury stock 47,373,035 47,373,035 47,373,035 47,373,035Retained earnings

Appropriated- Legal reserve 25 530,000,000 530,000,000 530,000,000 530,000,000Unappropriated 50,765,745,766 42,681,867,762 38,933,260,572 37,274,695,405

Other components of shareholders’ equity 2,224,291,129 852,834,463 3,150,126,328 1,063,456,955

Total equity attributable to the owners of the parent 67,433,359,930 57,978,025,260 56,526,709,935 52,781,475,395

Non-controlling interests 26 886,862,458 555,026,907 - -

Total shareholders’ equity 68,320,222,388 58,533,052,167 56,526,709,935 52,781,475,395

Total liabilities and shareholders’ equity 109,324,074,194 72,956,072,481 78,913,661,540 64,893,354,188- - - -


136

Electricity Generating Public Company LimitedIncome StatementsFor the years ended 31 December 2012 and 2011


Notes Baht Baht Baht Baht

Sales and service income 34.1, 34.2 14,056,539,177 7,661,035,192 2,166,613,171 2,258,324,928Cost of sales and services (9,672,800,113) (5,588,768,660) (1,673,335,632) (1,806,013,523)

Gross profit 4,383,739,064 2,072,266,532 493,277,539 452,311,405Other income 27 414,585,464 449,118,661 5,192,597,438 5,892,735,667Accounting gains on a business combination

achieved in stages, net 14.1.1 4,310,427,223 - - -Currency exchange gains (losses) 205,089,164 21,978,720 (4,238,299) 7,412,030Administrative expenses 34.9 (2,361,691,424) (1,678,317,514) (992,856,735) (921,361,651)Finance costs 29 (703,268,565) (694,204,857) (134,312,293) (536,606,508)Share of profit from interests in

joint ventures, net 14 5,577,586,306 5,199,684,409 - -

Profit before corporate income tax 11,826,467,232 5,370,525,951 4,554,467,650 4,894,490,943Corporate income tax (779,193,252) (254,702,346) (382,878) -

Profit for the year 11,047,273,980 5,115,823,605 4,554,084,772 4,894,490,943

Attributable to:Owners of the parent 10,979,397,609 4,989,534,456 4,554,084,772 4,894,490,943Non-controlling interests 67,876,371 126,289,149 - -


Earnings per share for the year 30Basic earnings per share 20.85 9.48 8.65 9.30 Diluted earnings per share 20.85 9.48 8.65 9.30


137

Electricity Generating Public Company LimitedStatements of Comprehensive IncomeFor the years ended 31 December 2012 and 2011

Consolidated Company2012 2011 2012 2011Baht Baht Baht Baht


Other comprehensive incomeUnrealised gains (losses) on investments in marketable securities - available-for-sale 2,096,181,016 (146,130,436) 2,086,669,373 (149,566,139)Translation adjustments (748,281,184) 1,077,987,078 - -

Other comprehensive income (loss) for the year 1,347,899,832 931,856,642 2,086,669,373 (149,566,139)

Total comprehensive income for the year 12,395,173,812 6,047,680,247 6,640,754,145 4,744,924,804

Total comprehensive income attributable to:Owners of the parent 12,350,854,275 5,921,391,098 6,640,754,145 4,744,924,804Non-controlling interests 44,319,537 126,289,149 - -

Total comprehensive income for the year 12,395,173,812 6,047,680,247 6,640,754,145 4,744,924,804


138

Electricity Generating Public Company LimitedStatements of Cash FlowsFor the years ended 31 December 2012 and 2011


Notes Baht Baht Baht BahtCash flows from operating activitiesProfit before corporate income tax for the year 11,826,467,232 5,370,525,951 4,554,467,650 4,894,490,943Adjustments to reconcile profit before corporate income tax to net cash provided by operations:

- Depreciation and amortisation 2,810,751,914 1,972,553,321 1,053,402,897 1,053,132,812- Allowance for obsolescence 208,619,811 217,216,514 105,536,365 121,740,689- Retirement benefit expenses 22 30,974,679 25,988,046 10,342,608 10,310,096- Interest income (153,560,682) (176,396,514) (192,521,377) (189,063,659)- Interest expenses 1,018,185,447 466,647,642 476,524,713 380,541,269- Provision for decommissioning costs 41,499,562 50,892,632 16,229,399 15,575,239- Unrealised (gains) losses on exchange rates (382,249,382) 163,988,568 (358,441,818) 140,490,000- Gain on exchange rate from the decreasing in registered share capital of a joint venture 14.1.2 (118,537,874) - - -- Gains on a business combination

achieved in stages, net 14.1.1 (4,310,427,223) - - -- Losses from write-off and disposal of spare parts

and supplies 21,515 68,627 21,515 68,627- (Gains) losses on write-off and disposal of equipment 928,158 5,357 (847,783) (69,774)- Gains from discontinued operation of a subsidiary - - - (6,982,607)- Dividends received from other company (155,721,595) (115,233,980) (155,721,595) (115,233,980)- Dividends received from subsidiaries and joint ventures 14.4 - - (4,646,428,386) (5,364,452,040)- Share of profit from interests in joint ventures, net 14.1 (5,577,586,306) (5,199,684,409) - -

Cash flows before changes in operating assets and liabilities 5,239,365,256 2,776,571,755 862,564,188 940,547,615

Changes in operating assets and liabilities:(excluding the effects of acquisition and

disposal of subsidiaries)- Other current assets (447,199,086) (56,747,588) (133,232,503) (69,231,794)- Other non-current assets (13,815,436) 77,353,857 72,442,428 78,512,080- Short-term and long-term investments

used as collateral (3,202,217) 620,824,463 - -- Trade receivables and trade receivable from a related party (258,993,848) (3,360,613) 12,747,673 17,928,067- Amounts due from related parties (102,330,168) 8,946,332 653,978 (3,225,854)- Spare parts and supplies 268,242,855 (117,590,329) 49,634,355 28,693,005- Trade payables and trade payable to a related party 6,666,458 (7,911,130) 18,508,845 28,290,932- Amounts due to related parties (6,356,467) (4,062,337) 909,202 (1,852,898)- Retirement benefit paid 22 (31,441,215) (7,112,522) (12,046,645) (701,660)- Other current liabilities and other non-current liabilities 97,847,272 (66,972,599) (42,406,245) 1,385,482

Cash generated from operations 4,748,783,404 3,219,939,289 829,775,276 1,020,344,975- Interest received 191,642,825 152,419,869 197,163,095 166,871,516- Tax paid (733,462,441) (171,659,875) (382,878) (9,657,280)

Net cash receipts from operating activities 4,206,963,788 3,200,699,283 1,026,555,493 1,177,559,211


139



Notes Baht Baht Baht BahtCash flows from investing activitiesInvestments in subsidiaries and interests

in joint ventures, net of cash and cash equivalentstransferred as part of acquisition (19,650,603,912) (6,570,001,495) (17,052,152,138) (6,237,422,000)

Net cash receipts (payments) from short-term investments 1,805,573,082 (1,489,463,592) 1,797,098,405 (1,448,832,809)Net cash receipts from long-term investments 1,448,526 156,075,075 - 158,000,000Acquisition of other long-term investments (120,750,000) (125,000,000) (120,750,000) (125,000,000)Net cash payments in purchases of equipment (357,464,017) (76,474,101) (21,634,755) (21,302,557)Cash payments in short-term loans to related parties (93,855,031) - (574,855,031) -Cash receipts from short-term loans to related parties 34,155,031 - 564,537,381 45,882,350Cash payments in long-term loans to related parties - - (721,367,258) -Cash payments for receipt of long-term loan

receivables and interest receivables (369,088,173) - (369,088,173) -Cash received from discontinued operation of a subsidiary - - - 6,982,607Dividends received from subsidiaries and joint ventures 14.4 4,087,746,612 6,403,252,203 3,619,379,450 5,455,968,612Dividends received from other company 155,721,595 115,233,980 155,721,595 115,233,980Proceeds from decreasing in registered share capital

of a joint venture 14.1.2 376,015,329 - - -

Net cash payments in investing activities (14,131,100,958) (1,586,377,930) (12,723,110,524) (2,050,489,817)

Cash flows from financing activitiesPayments on finance leases (2,739,443) (3,257,977) (1,062,724) (1,062,724)Interests paid (1,003,944,657) (460,923,941) (471,149,992) (373,477,533)Proceeds from short-term loans from financial institutions 11,027,400,000 - 10,987,000,000 -Payments on short-term loans from financial institutions (663,072,400) - (100,000,000) -Proceeds from long-term loans from financial institutions 21.3 334,628,051 3,042,700,000 - 3,042,700,000Payments on long-term loans from

financial institutions and debentures 21.3 (915,304,113) (724,073,518) (280,543,634) -Proceeds from increasing in share capital of subsidiary

from another shareholder 4,100,000 - - -Dividends paid to shareholders (2,999,665,205) (2,844,842,618) (2,894,994,649) (2,762,235,948)

Net cash receipts from (payments in) financing activities 5,781,402,233 (990,398,054) 7,239,249,001 (94,076,205)

Net increase (decrease) in cash and cash equivalents (4,142,734,937) 623,923,299 (4,457,306,030) (967,006,811)Beginning balance 8,401,866,377 7,748,266,006 5,674,226,709 6,641,233,520Effect of exchange rate changes (111,637,899) 29,677,072 - -

Ending balance 4,147,493,541 8,401,866,377 1,216,920,679 5,674,226,709


140


Consolidated Company2012 2011 2012 2011Baht Baht Baht Baht

Cash and cash equivalents are made up as follows:- Cash in hand and deposits at financial institutions -

maturities within three months 2,235,776,053 2,539,090,823 39,349,851 339,646,491- Short-term investments in promissory notes -

maturities within three months 1,911,717,488 5,862,775,554 1,177,570,828 5,334,580,218

4,147,493,541 8,401,866,377 1,216,920,679 5,674,226,709

Non-cash transactions- Purchases of fixed assets by finance lease liabilities - 27,512,619 - 3,998,070- Reclassification of utilised capital spare parts to

property, plant and equipment 451,149,214 242,058,511 185,760,381 141,847,753- Reclassification of unutilised capital spare parts from

property, plant and equipment (267,471,090) (258,683,278) (66,417,165) (133,061,844)- Increase in property, plant and equipment by other payables 96,041,986 10,877,070 4,229,080 8,344,308


141

Elec

tricit

y Gen

erati

ng Pu

blic C

ompa

ny Li

mited

State

ment

s of C

hang

es in

Sha

reho

lders’

Equi

ty

For t

he ye

ars e

nded

31 D

ecem

ber 2

012 a

nd 20

11

Cons

olida

ted

Total

othe

r

Issue

d and

comp

onen

ts of

Total

paid-

up sh

are

Prem

ium

onPr

emiu

m on

Lega

lAv

ailab

le-for

-sale

Tran

slatio

nsh

areh

older

s'To

tal ow

ners

Non-

cont

rolli

ngsh

areh

older

s'

capit

alsh

are c

apita

ltre

asur

y stoc

k re

serve

Unap

prop

riated

inve

stmen

ts ad

justm

ents

equi

tyof

the p

aren

tin

teres

tseq

uity

Note

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Open

ing b

alanc

e as a

t 1 Ja

nuar

y 201

15,2

64,65

0,000

8,601

,300,0

0047

,373,0

3553

0,000

,000

40,45

5,123

,354

1,209

,587,3

91(1,

288,6

09,57

0)(79

,022,1

79)

54,81

9,424

,210

509,0

94,47

955

,328,5

18,68

9

Chan

ges i

n sha

reho

lders'

equi

ty for

the y

ear

Total

comp

rehen

sive i

ncom

efor

the y

ear-

--

-4,9

89,53

4,456

(146,1

30,43

6)1,0

77,98

7,078

931,8

56,64

25,9

21,39

1,098

126,2

89,14

96,0

47,68

0,247

Divid

ends

paid

--

--

(2,76

2,790

,048)

--

-(2,

762,7

90,04

8)(80

,356,7

21)

(2,84

3,146

,769)

Clos

ing b

alanc

e as a

t 31 D

ecem

ber 2

011

5,264

,650,0

008,6

01,30

0,000

47,37

3,035

530,0

00,00

042

,681,8

67,76

21,0

63,45

6,955

(210,6

22,49

2)85

2,834

,463

57,97

8,025

,260

555,0

26,90

758

,533,0

52,16

7

Open

ing b

alanc

e as a

t 1 Ja

nuar

y 201

25,2

64,65

0,000

8,601

,300,0

0047

,373,0

3553

0,000

,000

42,68

1,867

,762

1,063

,456,9

55(21

0,622

,492)

852,8

34,46

357

,978,0

25,26

055

5,026

,907

58,53

3,052

,167

Chan

ges i

n sha

reho

lders'

equi

ty for

the y

ear

Total

comp

rehen

sive i

ncom

efor

the y

ear-

--

-10

,979,3

97,60

92,0

96,18

1,016

(724,7

24,35

0)1,3

71,45

6,666

12,35

0,854

,275

44,31

9,537

12,39

5,173

,812

Divid

ends

paid

31-

--

-(2,

895,5

19,60

5)-

--

(2,89

5,519

,605)

(112,9

91,36

3)(3,

008,5

10,96

8)

Acqu

isitio

ns of

inve

stmen

ts in

subs

idiari

es-

--

--

--

--

400,5

07,37

740

0,507

,377

Clos

ing b

alanc

e as a

t 31 D

ecem

ber 2

012

5,264

,650,0

008,6

01,30

0,000

47,37

3,035

530,0

00,00

050

,765,7

45,76

63,1

59,63

7,971

(935,3

46,84

2)2,2

24,29

1,129

67,43

3,359

,930

886,8

62,45

868

,320,2

22,38

8

Othe

r com

pone

nts o

f sha

reho

lders’

equi

ty

Othe

r com

preh

ensiv

e inc

ome

(loss)

Retai

ned e

arni

ngs

Attri

butab

le to

owne

rs of

the p

aren

t


142

Elec

tricit

y Gen

erati

ng Pu

blic C

ompa

ny Li

mited

State

ment

s of C

hang

es in

Sha

reho

lders’

Equi

tyFo

r the

year

s end

ed 31

Dec

embe

r 201

2 and

2011

Comp

any

Othe

r com

preh

ensiv

e in

come

Issue

d and

Total

othe

r To

talpa

id-up

shar

e Pr

emiu

m on

Prem

ium

onLe

gal

Avail

able-

for-sa

leco

mpon

ents

ofsh

areh

older

s'ca

pital

shar

e cap

ital

treas

ury s

tock

rese

rveUn

appr

opria

tedin

vestm

ents

shar

ehold

ers'

equi

tyeq

uity

Note

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Open

ing b

alanc

e as a

t 1 Ja

nuar

y 201

1 5,

264,6

50,00

0 8,

601,3

00,00

0 47

,373,0

35 53

0,000

,000

35,14

2,994

,510

1,21

3,023

,094

1,21

3,023

,094

50,79

9,340

,639

Chan

ges i

n sha

reho

lders'

equi

ty for

the y

ear

Total

comp

rehen

sive i

ncom

e for

the ye

ar-

--

- 4,

894,4

90,94

3(14

9,566

,139)

(149,5

66,13

9) 4,

744,9

24,80

4Di

viden

ds pa

id-

--

-(2,

762,7

90,04

8)-

-(2,

762,7

90,04

8)

Clos

ing b

alanc

e as a

t 31 D

ecem

ber 2

011

5,26

4,650

,000

8,60

1,300

,000

47,37

3,035

530,0

00,00

0 37

,274,6

95,40

5 1,

063,4

56,95

5 1,

063,4

56,95

5 52

,781,4

75,39

5

Open

ing b

alanc

e as a

t 1 Ja

nuar

y 201

2 5,

264,6

50,00

0 8,

601,3

00,00

0 47

,373,0

35 53

0,000

,000

37,27

4,695

,405

1,06

3,456

,955

1,06

3,456

,955

52,78

1,475

,395

Chan

ges i

n sha

reho

lders'

equi

ty for

the y

ear

Total

comp

rehen

sive i

ncom

e for

the ye

ar-

--

- 4,

554,0

84,77

2 2,

086,6

69,37

3 2,

086,6

69,37

3 6,

640,7

54,14

5Di

viden

ds pa

id31

--

--

(2,89

5,519

,605)

--

(2,89

5,519

,605)

Clos

ing b

alanc

e as a

t 31 D

ecem

ber 2

012

5,26

4,650

,000

8,60

1,300

,000

47,37

3,035

530,0

00,00

0 38

,933,2

60,57

2 3,

150,1

26,32

8 3,

150,1

26,32

8 56

,526,7

09,93

5

Othe

r com

pone

nts o

f sha

reho

lders’

equi

ty

Retai

ned e

arni

ngs


143

12.2 Explanation and analysis of financial position and operational performance

12.2.1 Management Discussion and Analysis

1. Economy and Industry affecting to the buisness operation

The amount of electricity used in 2012 was 173,133 GWh, increasing by 14,233 GWh or 8.96% from the year 2011. This was caused by economic growth after the flood disaster in 2011. In addition, there were supporting policies of the Government and favourable financial situation. Although the recession of global economy had an impact on Thai economy, it affected only export and production for export. Therefore, the peak demand of electricity usage in 2012 was 26,121 MW, rising by 2,221 MW or 9.29% from the year 2011 (23,900 MW). This is because of the higher power consumption according to the emerging economy. In 2012, EGCO could generate electricity which higher than the Company’s projection by 3,997 GWh or 12.25%. This led to an increase in electricity sales. Total electricity usage, 2011-2012

Source: Electricity Generating Authority of Thailand

2. Significant events in 2012

2.1 The purchase of operating assets - On January 23, 2012, EGCO acquired 99.99% stakes in SPP4 Company Limited

(SPP4) from MEMC Singapore Pte Ltd. SPP4 owns and develops solar power plant project with installed capacity of 6 MW. SPP4, located in the boundary between Srisaket province and Ubon Ratchatani province, has entered into the Power Purchase Agreement (PPA) with the Provincial Electricity Authority (PEA) under the very small power producer scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the Power Department Fund Management Division, Office of the Energy Regulatory Commission (OERC). In addition, the plant is the first private solar power project equipped with the tracking system. The commercial operation was on January 24, 2012.

- On February 29, 2012, EGCO acquired 99.99% stakes in SPP3 Company Limited (SPP3) from MEMC Singapore Pte Ltd. SPP3 owns and develops solar power plant project with installed capacity of 8 MW. SPP3, located in Srisaket province, has entered into PPA with PEA

20,000

21,000

22,000

23,000

24,000

25,000

26,000

27,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MW

20112012

http://mail.egat.co.th/


144

under the very small power producer scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the OERC. In addition, the plant is equipped with the tracking system with commercial operation on February 21, 2012.

- On March 23, 2012, EGCO acquired 60% stakes in G-Power Source Company Limited (GPS) from Gunkul Engineering Public Company Limited. GPS is a solar power generator which has been awarded 4 PPAs with capacity of 6.5 MW each, totaling 26 MW, from PEA. GPS is subsidized with an adder of 8 baht per KWh for 10 years from the OERC. GPS has started supplying the electricity to PEA in the beginning of March 2012 according to 3 PPAs from the following solar power plants namely Ta Khit Solar Power Projects in Nakhon Sawan province, Ta Sang Solar Power Project in Nakhon Sawan province, and Dong Khon Solar Power Project in Chai Nat province. The commercial operation of the 4th Solar Power Plant, Bueng Sam Pan Solar Power Project in Petchaboon province, was on February 1, 2013.

- On May 11, 2012, EGCO acquired an additional 45.875% in Quezon Power (Philippines) Limited Co. (Quezon) and 100% ownership interest in Quezon Management Services Inc. (QMS) (name changed from InterGen Management Services (Philippines), Ltd. (IMS)). Quezon owns, operates and maintains a 503 MW (gross) coal fired electric generation and transmission facility in the Republic of the Philippines. QMS provides project management and administrative services and support to Quezon under a long-term Project Management Service Agreement. The acquisition were completed on June 11, 2012.

- On May 15, 2012, EGCO invested in a Biodiesel Plant through the acquisition of 50% stakes in Absolute Power P Co., Ltd. (APPC). The Biodiesel Plant is located in Rojana Industrial Park, Rayong provice. The total capacity of this project is 300,000 litres per day (100,000 tons per year). The project has operated since October 2011.

- On May 23, 2012, EGCO acquired 99.99% stakes in SPP2 Company Limited (SPP2) from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP2 owns and develops the solar power plant project with the capacity of 8 MW. SPP2, located in Saraburi province, has entered into the PPA with PEA under the very small power producer scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the OERC. The commercial operation was on May 2, 2012. The acquisition were completed on June 8, 2012.

- On June 18, 2012, EGCO acquired 99.99% stakes in SPP5 Company Limited (SPP5) from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP5 owns and develops the solar power plant project with the capacity of 8 MW. SPP5, located in Roi Et province, has entered into the PPA with PEA under the very small power producer scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the OERC. The commercial operation was on June 22, 2012. The acquisition was completed on June 28, 2012.

- On August 16, 2012, EGCO has entered into the Share Purchase Agreement to acquire 40% of ownership interest in PT Manambang Muara Enim (MME), an opeartor in the open-pit coal mine located in Muara Enim Regency, South Sumatra in Republic of Indonesia with the concession agreement from the government of Republic of Indonesia for 28 years starting from March 2010 to March 2038. The operating area covers 1,587 hectares or about 9,920 rais, with reserve coal of 140 million tons, and has been operated since March 2010.

2.2 Development of new projects EGCO performs business strategy which places emphasis on expanding its investment

in power generation in Thailand and the ASEAN countries, as well as an investment in related energy projects or renewable energy, including hydropower, solar, wind, biomass and etc. The


145

target is to provide optimum returns to shareholders by improving the profitability of our existing assets and acquiring new projects with reasonable risk and return profiles, to maintain market share as a leading energy company and to strengthen its financial position and operating results for EGCO Group.

The development of new projects and the progress of constructions in 2012 can be summarized as follows:

- On January 18, 2012, EGCO acquired 90% stakes in Theppana Wind Farm Company Limited (Theppana). Theppana is the very small wind power plant, located in Chaiyaphum province. The project is subsidized with an adder of 3.50 baht per KWh for 10 years from the OERC. The commercial operations are schedule in July 2013.

- On February 27, 2012, EGCO signed a Shareholder Agreement with Yanhee Solar Power Company Limited for the acquisition of 49% in Yanhee EGCO Holding Company Limited (Yanhee EGCO). Yanhee EGCO owns 100% stakes in Solarco Company Limited (Solarco), a project developer of 6 solar power plants with the total capacity of 57 MW (AC). Solarco located in Nakorn pathom province and Suphan buri province, has entered into PPAs with PEA under the contract very small power producer scheme. Solarco is subsidized with an adder of 8 baht per KWh for 10 years from the OERC. The commercial operations are scheduled in December 2013.

- On September 28, 2012, EGCO has signed the Investment Agreement and Shareholder Agreement regarding the investment in Hat Yai Municipal Waste Power Plant Project through the acquisition of 50% stakes in GIDEC Company Limited (GIDEC). The power plant is located in Hat Yai Municipality’s sanitary landfill, Khuan Lang District, Songkhla Province with the installed capacity of 6.7 MW to generate the electricity to the grid. GIDEC has entered into PPA with PEA under the contract very small power producer scheme. The project is subsidized with an adder of 3.50 baht per KWh for 7 years from the OERC. The commercial operations are scheduled in April 2013.

- The project of NED 8 MW, is scheduled the commercial operations in April 2013, has PPA with PEA under the contract very small power producer scheme and subsidized with an adder of 8 baht per KWh for 10 years from the OERC.

- The project of Xayaburi has been preparing area and starting some part of construct. The commercial operations are scheduled in January 2019.

3. Future Plans

EGCO sets goal for continuous growth with the strategy of new projects development and domestic or regional projects acquisition, by taking into account the feasibility of the projects, EGCO’s experiences and business expertise to increase the value to the projects, costs of capital and the acceptable risks in managing the projects. In addition, the asset management of the commercial operating projects is necessary to ensure that the operating results meet the estimation.

The projects under development and study of investment opportunities are as follows:

3.1 In the process of development of Small Power Producer (SPP) in Pathum Thani province and Ratchaburi province.

3.2 In preparing the proposals of electricity sale offering of new Khanom power plant for submitting to Energy Regulatory Commission (ERC).


146

3.3 In preparing the proposals of Independent Power Producer (IPP) Projects development for submitting to ERC in April 2013, which is in accordance with IPP Bid Solicitation, announced on December4, 2012.

3.4 In negotiation for agreement of investment in Quezon Expansion project development, which is thermal power plant, with installed capacity about 500 MW and good quality coal as the main fuel.

3.5 Study on investment and jointly business of renewable energy projects such as solar and wind power plant projects.

3.6 Study on the opportunities to invest in overseas power generation projects since EGCO has potentials of techniques and capital.

Moreover, EGCO has also developed the knowledge on energy market, investment opportunities and governance structure of other countries in ASEAN to identify new investment projects which eventually would increase the value of the shareholders.

4. Business overview

EGCO Group has invested in the Independent Power Producer (IPP), Small Power Producer (SPP), Very Small Power Producer (VSPP), Biodiesel, Coal Mining, Operating and Maintenance (O&M), Management and Administrative Services (Management Services) and Rayong power plant as an operating company, details of each plant are as follows:

(1) Subsidiaries which can be categorized into 2 businesses: Power Generation

Khanom Electricity Generating Co., Ltd. (KEGCO) Quezon Power (Philippines) Limited Co. (Quezon)

IPP IPP

EGCO Cogeneration Co., Ltd. (EGCO Cogen) SPP Roi-Et Green Co., Ltd. (Roi-Et Green) SPP2 Co., Ltd. (SPP2) SPP3 Co., Ltd. (SPP3) SPP4 Co., Ltd. (SPP4) SPP5 Co., Ltd. (SPP5) Yanhee EGCO Holding Co., Ltd. (Yanhee EGCO), which invested in

Solarco Company Limited (Solarco) Theppana Wind Farm Co., Ltd. (Theppana)

SPP VSPP VSPP VSPP VSPP Holding Co. VSPP VSPP

Others EGCO Engineering and Service Co., Ltd. (ESCO), which invested in

O&M

Egcom Tara Co., Ltd. (Egcom Tara) Water Pearl Energy Philippines Operating Inc. (PEPOI) Quezon Management Services Inc. (QMS)

O&M Management Services

(2) Joint Ventures which can be categorized into 2 businesses: Power Generation

Gulf Electric Public Company Limited (GEC), which invested in

Holding Co.


147

Gulf Cogeneration Co., Ltd. (GCC) SPP Nong Khae Cogeneration Co., Ltd. (NKCC) SPP Samutprakarn Cogeneration Co., Ltd. (SCC) SPP Gulf Yala Green Co., Ltd. (GYG) SPP Gulf Power Generation Co., Ltd (GPG) IPP

BLCP Power Co., Ltd. (BLCP) IPP Conal Holdings Corporation (Conal), which invested in Holding Co.

Western Mindanao Power Corporation (WMPC) IPP Southern Philippines Power Corporation (SPPC) IPP Alto Power Management Coporation (APMC) O&M

Nam Theun 2 Power Co., Ltd. (NTPC) IPP Natural Energy Development Co., Ltd. (NED) G-Power Source Co., Ltd. (GPS) GIDEC Company Limited (GIDEC)

SPP VSPP VSPP

Others Absolute Power P Co., Ltd. (APPC) Manambang Muara Enim coal mine Company (MME)

Biodiesel Coal Mining

(3) Other investments Other investments, which are long-term investment in securities : - EGCO holds 18.72% of the outstanding shares in East Water Resources

Development and Management Public Company Limited (East Water). - EGCO holds 12.50% of the outstanding shares in Xayaburi Power Company

Limited (XPCL).

As of December 31, 2012, EGCO Group’s portfolio comprises 20 operating plants with total contracted capacity with Electricity Generating Authority of Thailand (EGAT) under long-term PPAs of 3,862 MW. This resulted in EGCO Group’s market share in Thailand of 12% from a total installed capacity of 32,600 MW.

5. Report and Analysis of the Operating Results

The analysis of the financial statements of EGCO is as follows: Summary of operating results before FX for the year 2012 Unit : Million Baht Power Generation Others Total Change 2012 2011 2012 2011 2012 2011 Increase/

(Decrease)

%

Total Revenues 13,346 7,451 1,126 658 14,472 8,109 6,363 78% Total Expenses (12,817) (7,301) (801) (456) (13,618) (7,757

) 5,861 76%

Share of Profit (Loss) 5,255 5,083 10 - 5,265 5,083 182 4% NCI* before FX (19) (93) (40) (41) (59) (134) (75) (56%

) Profit (Loss) before FX 5,765 5,140 295 161 6,060 5,301 759 14% FX 741 (324) (4) 13 737 (311) 1,048 337% Profit (loss) after FX 6,506 4,816 291 174 6,797 4,990 1,807 36%


148

Gain on business combination 4,182 - - - 4,182 - 4,182 100%

Net Profit (loss) 10,688 4,816 291 174 10,979 4,990 5,989 120% * NCI: Non-Controlling Interest

Profit from operating of EGCO Group before FX and accounting gain on business

combination for the year 2012 was 6,060 million baht, increased 759 million baht compared to the year 2011, which came from an increase in power generation business of 625 million baht and other businesses of 134 million baht. See more details in 5.1 and 5.2 as follows;

5.1 The Analysis of the Operating results in Power Generation business Profit before FX for the year 2012 in power generation business increased from the year 2011 of 625 million baht. Mainly due to operating results of Quezon, GPG, NED and Rayong power plant increased, while the operating results from KEGCO, EGCO Cogen and GEC decreased as follows: Quezon 52.125% (Former portion and PEPOI) : Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 5,863 5,110 753 15% Other income 195 194 1 1% Total revenues 6,058 5,304 754 14% Cost of sale (3,576) (3,149) 427 14% Other expenses (1,391) (1,896) (505) (27%) Total expenses (4,967) (5,045) (78) (2%) Profit (Loss) before FX 1,091 259 832 321%

- Former portion of Quezon (52.125%) : In the year 2012, other expenses of Quezon decreased by 505 million baht (due to an increase in prepayment fee from refinancing of 440 million in the year 2011) and electricity revenue increased by 753 million baht because in the year 2011, EGCO recognized revenue in the portion of 52.125% for 9 months and the portion of 26% for 3 months (due to EGCO additionally acquired 26.125% shares of Quezon in March 2011). Therefore, the total operating result of the year 2012 increased from the year 2011 by 832 million baht. If excluded withholding tax from dividend which increased in the year 2012 of 34 million baht, resulted in the operating result increased of 866 million baht.


149

Quezon 45.875% (Additional portion in the year 2012 and QMS) : Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 2,917 - 2,917 100% Other income - - - - Total revenues 2,917 - 2,917 100% Cost of sale (1,689) - 1,689 100% Other expenses (663) - 663 100% Total expenses (2,352) - 2,352 100% Profit (Loss) before FX 565 - 565 100%

- Additional portion of Quezon (45.875%) : The increased profit of 565 million baht came from 45.875% share of profit of Quezon which EGCO acquired in Quarter 2. If excluded withholding tax from dividend of 78 million baht, resulted in the profit increased of 643 million baht.

GPG: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 14,824 11,327 3,497 31% Other income 68 54 14 26% Total revenues 14,892 11,381 3,511 31% Cost of sale (12,514) (9,149) 3,365 37% Other expenses (493) (573) (80) (14%) Total expenses (13,007) (9,722) 3,285 34% Profit (Loss) before FX 1,885 1,659 226 14%

- GPG : Higher electricity generation compared to the year 2011 led to an increase in Energy Payment (EP) net from fuel cost of 141 million baht, while Availability Payment (AP) decreased by 64 million baht according to PPA; therefore, net revenue increased by 77 million baht. Meanwhile, scheduled maintenance costs decreased by 55 million baht and interest expenses decreased by 65 million baht. These were resulted in the operating result increased of 226 million baht.

NED: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 369 3 366 12,200% Other income 1 4 (3) (75%) Total revenues 370 7 363 5,186% Cost of sale (95) - 95 100% Other expenses (115) (23) 92 400%


150

Total expenses (210) (23) 187 813% Profit (Loss) before FX 160 (16) 176 1,100%

- NED : Electricity revenue increased by 366 million baht since it started the commercial operation on December 22, 2011 and completed in the first quarter of the year 2012. Meanwhile, costs of sales were 95 million baht and interest expenses was 92 million baht. These were resulted in the operating result increased of 176 million baht.

Rayong Power Plant: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 2,167 2,258 (91) (4%) Other income 50 54 (4) (7%) Total revenues 2,217 2,312 (95) (4%) Cost of sale (1,673) (1,805) (132) (7%) Other expenses (236) (264) (28) (11%) Total expenses (1,909) (2,069) (160) (8%) Profit (Loss) before FX 308 243 65 27%

- Rayong power plant : Higher electricity generation compared to the year 2011 led to an increase in Energy Payment (EP) of 66 million baht, while Availability Payment (AP) decreased by 157 million baht according to PPA; therefore, net revenue decreased by 91 million baht. Moreover, costs of sales decreased by 132 million baht due to a drop of major maintenance costs of 96 million baht. In addition, other expenses decreased from general administrative expenses decreased by 28 million baht. These were resulted in the total operating result increased of 65 million baht.

KEGCO: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 1,763 2,170 (407) (19%) Other income 8 11 (3) (27%) Total revenues 1,771 2,181 (410) (19%) Cost of sale (1,533) (1,475) 58 4% Other expenses (280) (432) (152) (35%) Total expenses (1,813) (1,907) (94) (5%) Profit (Loss) before FX (42) 274 (316) (115%)

- KEGCO : Lower electricity generation compared to the year 2011 led to a decrease in Energy Payment (EP) of 6 million baht, and a decrease in Availability Payment (AP) of 401 million baht according to PPA. Moreover, costs of sales increased due to major maintenance costs increased by 41 million baht. Although, other expenses decreased from interest expenses and income tax by 152 million baht. These were resulted in the total operating result decreased of 316 million baht.


151

EGCO Cogen: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 1,631 2,064 (433) (21%) Other income 7 13 (6) (46%) Total revenues 1,638 2,077 (439) (21%) Cost of sale (1,732) (1,748) (16) (1%) Other expenses (48) (157) (109) (69%) Total expenses (1,780) (1,905) (125) (7%) Profit (Loss) before FX (142) 172 (314) (183%)

- EGCO Cogen : The damage of plant’s equipment on February 11, 2012 caused the plant operated at the lower of its normal operation. This incident led to the operating result decreased of 314 million baht. The plant began normal operation on October 12, 2012.

GEC (GCC, NKCC, SCC, GYG): Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Electricity revenue 3,855 3,906 (51) (1%) Other income 23 33 (10) (30%) Total revenues 3,878 3,939 (61) (2%) Cost of sale (3,515) (3,270) 245 7% Other expenses (334) (263) 71 27% Total expenses (3,849) (3,533) 316 9% Profit (Loss) before FX 29 406 (377) (93%)

- GEC : The damage of NKCC’s plant equipment on April 7, 2012 caused the plant operated at the lower of its normal operation. This incident led to the operating result decreased of 377 million baht. NKCC’s plant began normal operation on September, 25 2012.

EGCO and Other Subsidiaries in Power Generation business: Unit : Million Baht EGCO Roi-et Green SPP2 SPP3 SPP4

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Electricity revenue - - 397 325 105 - 149 - 127 - Other income 324 350 8 8 3 - 4 - 2 - Total revenues 324 350 405 333 108 - 153 - 129 - Cost of sale - - (168) (116) (31) - (40) - (35) - Other expenses (1,559) (1,152) (95) (82) (34) - (78) - (52) - Total expenses (1,559) (1,152) (263) (198) (65) - (118) - (87) - Profit (Loss) before FX (1,235) (802) 142 135 43 - 35 - 42 -


152

EGCO and Other Subsidiaries in Power Generation business (continued): Unit : Million Baht SPP5 Others* Total Change 201

2 2011 2012 2011 2012 2011 Increase/ (Decrease) %

Electricity revenue 93 - - - 871 325 546 168%

Other income 1 - 3 - 345 358 (13) (4%) Total revenues 94 - 3 - 1,216 683 533 78% Cost of sale (27) - - - (301) (116) 185 159% Other expenses (28) - (9) - (1,855) (1,234) 621 50% Total expenses (55) - (9) - (2,156) (1,350) 806 60% Profit (Loss) before FX 39 - (6) - (940) (667) (273) (41%)

* Yanhee EGCO and Theppana : Under construction Other Joint Ventures in Power Generation business: Unit : Million Baht GPS Conal NTPC BLCP 2012 2011 2012 2011 2012 2011 2012 2011 Electricity revenue 157 - 616 586 2,710 2,685 9,252 8,934 Other income 1 - 46 312 15 18 77 103 Total revenues 158 - 662 898 2,725 2,703 9,329 9,037 Cost of sale (59) - (254) (244) (766) (714) (6,293) (6,001) Other expenses (60) - (374) (651) (1,217) (1,223) (996) (996)

Total expenses (119) - (628) (895) (1,983) (1,937) (7,289) (6,997)

Profit (Loss) before FX 39 - 34 3 742 766 2,040 2,040

Other Joint Ventures in Power Generation business (continued): Unit : Million Baht GIDEC* Total Change 2012 2011 2012 2011 Increase/

(Decrease) %

Electricity revenue - - 12,735 12,205 530 4% Other income - - 139 433 (294) (68%) Total revenues - - 12,874 12,638 236 2% Cost of sale - - (7,372) (6,959) 413 6% Other expenses (4) - (2,651) (2,870) (219) (8%)

Total expenses (4) - (10,023) (9,829) 194 2%

Profit (Loss) before FX (4) - 2,851 2,809 42 1% * GIDEC : Under construction


153

5.2 The Analysis of the Operating results in Other businesses Profit before FX for the year 2012 in other businesses increased from the year 2011 by 134 million baht, mainly from the operating result of ESCO as followed: ESCO: Unit : Million Baht Change 2012 2011 Increase/(Decrease) % Service income 819 376 443 118% Other income 11 8 3 38% Total revenues 830 384 446 116% Cost of sale (568) (275) 293 107% Other expenses (98) (73) 25 34% Total expenses (666) (348) 318 91% Profit (Loss) before FX 164 36 128 356%

- ESCO : An increase in services led to service revenue increased from the year 2011 by 443 million baht. By the gross profit of maintenance services increased by 34 million baht, from operation and maintenance services increased by 53 million baht, and from engineering & energy services increased by 63 million baht. These were resulted in the net operating result after income tax increased of 128 million baht.

Other Subsidiaries and joint ventures in other businesses: Unit: Million Baht EGCOM

TARA MME APPC Total Change

2012 2011 2012 2011 2012 2011 2012 2011

Increase/ (Decrease

) %

Revenue 290 269 96 - 127 - 513 269 244 91% Other income 5 5 - -

- - 5 5 - -

Total revenues 295 274 96 - 127 - 518 274 244 89%

Cost of sale (81) (48) (70) - (135) - (286) (48) 238 496%

Other expenses (93) (101) - - (8) - (101) (101) - -

Total expenses (174) (149) (70) - (143) - (387) (149) 238 160%

Profit (Loss) before FX 121 125 26 - (16) - 131 125 6 5%


154

6. Report and Analysis of Financial Position

Comparing the Statements of Financial Position as at December 31, 2012 to the Statements of Financial Position as at December 31, 2011 as shown below:

Consolidated Financial Statement (Million Baht)

Year Change

2012 2011 Increase/ (Decrease) %

Assets

Current Assets 19,846 20,119 (273) (1.36%)

Interests in joint ventures, net 34,578 36,444 (1,866) (5.12%)

Property, plant and equipment, net 38,556 13,023 25,533 196.06%

Other non-current assets 16,344 3,370 12,974 384.99%

Total Assets 109,324 72,956 36,368 49.85%

Liabilities

Current Liabilities 13,721 1,180 12,541 1,062.80%

Long-term loans (including current portion of long-term loans)

25,216 12,057 13,159 109.14%

Other non-current liabilities 2,067 1,186 881 74.28%

Total Liabilities 41,004 14,423 26,581 184.30%

Shareholders’ Equity

Parent’s shareholders’ equity 67,433 57,978 9,455 16.31%

Non-controlling interests 887 555 332 59.82%

Total Shareholders’ Equity 68,320 58,533 9,787 16.72%

Total Liabilities and Shareholders’ Equity

109,324 72,956 36,368 49.85%

6.1 Asset Analysis As at December 31, 2012 the total assets were 109,324 million baht, increasing by 36,368

million baht or 49.85% from the year 2011. The details are as follows:

• Current Assets decreased by 273 million baht or 1.36%. The resulted mainly from cash, cash equivalents and short-term investments decreased by 5,716 million baht due to the investment in subsidairies and joint ventures. Whereas, trade receivables increased by 1,589 million baht, spare parts and supplies increased by 1,169 million baht and other current assets increased by 1,174 million baht owing to Quezon’s


155

55.08% 44.41%

0.51%

assets (changing its status from a joint venture to a subsidiary company). Moreover, dividend receivable increased 1,511 million baht.

• Interests in joint ventures (net) decreased by 1,866 million baht or 5.12% due to the change of Quezon’s status from a joint venture to a subsidiary company. This is because the Company purchased additional ordinary shares in the portion of 45.875% in June 2012. This led to a decrease in investment in the amount of 8,711 million baht. However, there were the additional investment in joint ventures which are GPS, APPC and MME increased by 6,924 million baht.

• Property, plant and equipment (net) increased by 25,533 million baht or 196.06% because of Quezon’s assets (changing its status from a joint venture to a subsidiary company), and the additional investment in the subsidiaries in 2012.

• An increase in other non-current assets in the amount of 12,974 million baht or 384.99% due to the right of PPA increased by 4,529 million baht and goodwill increased by 6,141 million baht. This is because the additional investment in Quezon, SPP2, SPP3, SPP4 and SPP5. Moreover, long-term investments in marketable securities increased by 2,087 million baht owing to an increase in share price of East Water.

6.2 Liability Analysis As at December 31, 2012 the total liabilities were 41,004 million baht, increasing by

26,581 million baht or 184.30% from the year 2011. The mainly details are as follows:

• An increase in current liabilities in the amount of 12,541 million baht or 1,062.80% because of short-term loan for the investments in Quezon and MME projects. The details are shown as follows:

- USD loans in the amount of 300 million Us dollars - Baht loans in the amount of 1,400 million baht

• An increase in long-term loans in the amount of 13,159 million baht or 109.14% mainly came from the long-term loan of Quezon (changing its status from a joint venture to a subsidiary company) and the additional investment in the subsidiaries in 2012. The details are as follows: - USD loans in the amount of 461 million Us dollars - JPY loans in the amount of 367 million Yen - Baht loans in the amount of 11,374 million baht

YEN

BAHT

USD


156

Loan maturities schedule as at December 31, 2012 Unit : Million Baht Maturity EGCO Quezon EGCO Cogen Roi-Et Green SPP 2,3,4,5 Within 1 year 560 - 223 37 231 2-5 years 10,238 4,588 247 93 1,195 More than 5 years - 6,141 - - 1,663 Total 10,798 10,729 470 130 3,089

• Non-current liabilities increased by 881 million baht or 74.28%. The resulted mainly

from provision for decommissioning costs increased by 116 million baht, other non-current liabilities increased by 198 million baht, tax liabilities of Quezon (changing its status from a joint venture to a subsidiary company) increased by 567 million baht.

6.3 Shareholders’ Equity Analysis

As at December 31, 2012, total Shareholders’ Equity were Baht 68,320 million increasing by 9,787 million baht or 16.72% from the year 2011 due to an increase in total equity attributable to EGCO in the amount of 9,455 million baht or 16.31%. This was mainly caused by net operating profit in consolidated financial statements was 10,979 million baht and the additional unrealised gains on investments in marketable securities was 2,097 million baht. Whereas, the decreasing portion came from dividend payment was 2,896 million baht. Additionally, the effect from the translation adjustment of foreign currencies to Thai Baht in foreign subsidiaries and joint ventures decreased by 725 million baht.

6.4 Investment structure

Debt to Equity Ratio (Time) Change 2012 2011 Increase/(Decrease) Consolidated 0.61 0.25 0.36 Company 0.40 0.23 0.17

An increase in debt to equity ratio was mainly from Quezon’s debt (changing its status from a joint venture to a subsidiary company) and the additional subsidiaries which EGCO Group invested in 2012. Additionally, EGCO has new long-term loans in order to invest in subsidiaries and joint ventures.

6.5 Cash Flow Analysis As at December 31, 2012 cash and cash equvalents were 4,147 million baht, decreasing by

4,255 million baht from 2011. The details are as follows: Unit: Million Baht

Net cash received from operating activities 4,207

Net cash payment for investing activities (14,131)

Net cash received from financing activities 5,781

Net decrease in cash from the effect of foreign exchange (112)


157

rate

Net decrease in cash (4,255)

- Net cash received from operating activities was 4,207 million baht.

This was mainly due to cash received from operation of EGCO and its subsidiaries.

- Net cash payment for investing activities was 14,131 million baht mainly due to cash payment for investing in subsidiaries and joint ventures, amounting to 19,651 million baht and the acquisition of Property, plant and equipment in the amount of 362 million baht. Whereas, cash received from joint ventures’ dividend was 4,088 million baht, and redemption of deposits at bank and financial institution were 1,595 million baht.

- Net cash received from financing activities was 5,781 million baht. The main reasons were drew down loans in the amount of 10,927 million baht. Whereas, cash payment for dividend of shareholders was 2,999 million baht, interest payment of loans was 1,004 million baht and the principal repayment of loans was 1,198 million baht.

7. Financial Ratios

Profitability Ratios Change 2012 2011 Increase/(Decrease) Return on Assets (ROA) 7.46%* 7.13% 0.33 Return on Equity (ROE) 10.84%* 8.85% 1.99 Gross Profit Ratio 31.19% 27.05% 4.14 Operating Profit Ratio before FX 19.41%* 14.60% 4.81 Profit Ratio before FX 19.15%* 12.45% 6.70 Profit before FX per share (Baht) 11.51* 10.07 1.44 *Excluding accounting gain on business combination amount 4,180 million baht of 52.125% of Quezon before the company purchased the additional shares in the portion of 45.875%. This method was performed in accordance with the accounting standard.

Trade receivables aging summary Aging periods of trade receivables as at December 31, 2012 are shown in the table below:

Unit: Million Baht Change 2012 2011 Increase/(Decrease) % Current 1,724 159 1,565 984% Overdue less than 3 months 46 21 25 119% Overdue between 3 – 6 months 21 - 21 100% Overdue between 6 – 12 months 17 6 11 183% Overdue more than 12 months 26 59 (33) (56%) 1,834 245 1,589 649% Less Allowance for Doubtful Accounts - - - -


158

Trade receivables, net 1,834 245 1,589 649%

Leverage Ratio and Liquidity Ratio Change 2012 2011 Increase/(Decrease) Current Ratio (Time)

Consolidated 1.34 11.72 (10.38) - Company 0.89 22.15 (21.26)

Quick Ratio (Time) Consolidated 0.50 6.69 (6.19)

- Company 0.12 10.82 (10.70) Interest Coverage Ratio(Time)

Company 10.24 13.35 (3.11)

In the year 2012, EGCO invested in subsidiaries and joint ventures by its internal cash and short-term loans from banks and financial institutions. These were resulted in the current and quick ratio decreased.


159

Audit Fee for the year 2012 Audit Fee In 2012, EGCO and its subsidiaries paid the audit fee of 5,426,500 baht to the Office of the Auditors, comprising EGCO’s and subsidiaries’ audit fees of 2,432,390 baht and 2,994,110 baht, respectively. No other audit fee had been paid to the auditors or related parties to the auditors and the Auditors’ office.

Non-Audit Fee EGCO’s and subsidiaries’ total non-audit fee was 19,922,608 baht which was already paid of 13,005,259 baht. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 6,917,349 baht. The details of the non-audit fee were as follows:

1. Payment to the Office of the Auditors:

In 2012, the non-audit fee for the advisory services on International Financial Reporting Standards, the accounting purpose review and BOI auditing at EGCO and its subsidiaries offices was 1,267,590 baht which was already paid of 897,590 baht to the Office of the Auditors. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 370,000 baht.

2. Payment to Other Related Parties of the Auditors’ Office:

In 2012, the non-audit fee for the special purpose review and advisory services on offshore investment structure was 18,655,018 baht which was already paid of 12,107,669 baht to other related parties of the Auditors’ office. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 6,547,349 baht.

The engagements of the office of the Auditors and its related parties to provide the non-audit work were reported to the Audit Committee to ensure that it would not involve any conflict of interest or any review of their own work which would contaminate the independence judgment of the auditors.

Part 2 Section 13 Others

160

13. Others

As at December 31, 2012, there is no information which may significant impact to investors’ decision making.


Part 3

The Certification of Information We, the Board of Directors 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 January 28, 2013. 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 Mrs. Kulkanok Leongsoithong to affix her signature on every single page of all same certified series. If any page is not signed by Mrs. Kulkanok Leongsoithong, we assume that such information is not certified.

Name Position Signature

1. Mr. Sahust Pratuknukul President .......................................................

2. Mr. Piya Jetasanon Chief Finance Officer .......................................................


Appointee Mrs.Kulkanok Leongsoithong Corporate Secretary .........................................................


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 Mrs. Kulkanok Leongsoithong to affix her signature on every single page of all same certified series. If any page is not signed by Mrs. Kulkanok Leongsoithong, we assume that such information is not certified.


Mr. Sahust Pratuknukul President ………………………………….


Appointee Mrs. Kulkanok Leongsoithong Corporate Secretary .………………………………...

Attachment 1 The positions of EGCO’s Board of Directors as of December 31, 2012

Name and Position Age Education Dispute

Family Relationship between the management

Amount of Shares (%)

Working Experience (during the recent 5 years)

Year Position Company

1. Mr. Pornchai Rujiprapa ♦ Chairman ♦ Chairman of Investment

Committee

60 - Ph.D. (Regional Economics.), University of Pennsylvania, USA

- Master of Science (Regional Economics.),University of Pennsylvania, USA

- Master of Public Administration (Programming Planning Administration), National Institute of Development Administration (NIDA)

- Bachelor of Science (Agro-Industry), Kasetsart University

- Certificate of Executive Program, Capital Market Academy

- Certificate of Directors Accreditation Program, Thai Institute of Directors Association

- Certificate of National Defense Course, National Defense College

- - 0.000

2008-2011

Dec2006-2008

2005 – 2009

present

Jul2012-present

2009-present

Oct2006- Feb 2013

Oct2010 - Sep 2012

2006-

Sep 2010

Chairman Chairman Chairman Advisor Chairman Honorable Committee Member Chairman Permanent Secretary Permanent Secretary

Listed Companies in SET PTT Aromatics and Refining Public Company Limited PTT Public Company Limited PTT Chemical Public Company Limited Other Organizations Board of Investment (BOI) National Innovation Agency Kasetsart University Council Electricity Generating Authority of Thailand Ministry of Science and Technology Ministry of Energy

2. Mr. Thanapich Mulapruk • Independent Director • Chairman of Audit

Committee

63 - Master of Laws, Chulalongkorn University

- Bachelor of Laws, Thammasart University

- Certificate of Thai Bar, Thai Barrister at law of Thailand

- Certificate of National

- 0.000

Feb2009-Present

Director

Listed Companies in SET The Airports of Thailand Public Company Limited






Defense Course, National Defense College

- Certificate of Directors Certification Program, Thai Institute of Directors Association


- Certificate of Audit Committee and Continuing Development Program, Thai Institute of Directors Association

- Certificate of Monitoring Fraud Risk Management, Thai Institute of Directors Association

- Certificate of Monitoring the System of Internal Control and Risk Management, Thai Institute of Directors Association

- Certificate of Monitoring the Quality of Financial Reporting, Thai Institute of Directors Association

- Certificate of Monitoring the Internal Audit Function, Thai Institute of Directors Association

Oct2011-present

Oct2005-Present

Oct2009-

2011

Apr2008-Jun2011

Oct2008-Feb2009

Dec2006 – Sep2009

Apr2008- Oct 2008

Oct2007- Feb 2008

Senior Prosecutor Director Director General of Department of Special Litigation Director Director Director General of Department of Economic Crime Litigation Executive Director Director

Other Organizations Office of Attorney -General The Transport Company Limited Office of Attorney-General The Port Authority of Thailand The Government Lottery Office Office of Attorney-General The Bangkok Mass Transit Authority The Marketing Organization for Farmers, Ministry of Agriculture and Cooperatives

3. Mr. Pasan Teparak • Director • Audit Committee

Member (Authorized Director)

52 - Master of Political Science (Public Admistration), Thammasart University

- Bachelor of Polotical Science (International Relations), Thammasart University

- - 0.000

Mar2012- Oct2012

Director

Listed Companies in SET Krungthai Bank Public Company Limited






- Government Executive Course

- Certificate of Financial Institutions Governance Program, Thai Institute of Directors

- Certificate of Successful Formulation and Execution of Strategy, Thai Institute of Directors

Oct2012– present

Nov2011 – Sep2012

Apr2011 – Nov2011

Apr2006 – Apr2011

Ambassador Extraordinary and Plenipotentiary Ambassador Attached to Ministry of Foreign Affairs Minister Consul-General

Other Organizations Royal Thai Embassy, London, UK Ministry of Foreign Affairs Royal Thai Embassy, Canberra, Australia Royal Thai Consulate-General, Dubai, U.A.E

4. Pol. Gen. Pansiri Prapawat • Director • Corporate Governance

and Social Responsibility Committee

• Nomination and Remuneration Committee

(Authorized Director)

59 - Master of Political Science, Thammasart University

- Master of Science Police Administration Criminal Justice, Eastern Kentucky University U.S.A

- Bachelor of Public Administration (Police Science), Royal Police Cadet Academy

- Certificate of Capital Market Course, Capital Market Academy

- Certificate of Director Certification Program, Thai Institute of Directors Association

- Certificate of Program for Executive on Criminal Justice Administration, Judicial Training Institute

- Diploma of the National Defense Course, the National Defense College

- - 0.000 Mar2010 – Present

2009–Present

2007–2009

2005–2007

2005-2006

2005-2006

Chairman of Settlement Committee under the Securities and Exchange Act, B.E. 2535(1992) Deputy Commissioner General Advisor (Level 10), equivalent to Deputy Commissioner General Assistant Commissioner General Independent Director Independent Director

Securities and Exchange Commission, Thailand Royal Thai Police Royal Thai Police Royal Thai Police Metropolitan Electricity Authority Metropolitan Waterworks Authority

5. Mr. Pongstorn Kunanusorn ♦ Independent Director ♦ Audit Committee

Member

61 - Master of Business Administration, North Texas State University, Denton, Texas USA

- Mini MBA (Joint Program between Finance Associate and Thammsart University)

- Bachelor of Business Administration, Chiangmai University


- Certificate of Audit Committee Program, Thai Institute of Directors Association

- Certificate of Public Director Certification Program, Public Director Institute

- Advanced Grid Seminar: Effective Resources Management

- - 0.000 Present Present Present Present Present Present Mar2005– Sep2011 Jun2010– Jan2011 Jun2010– Jan2011 Apr2008– Sep2009

Director Chairman – Ministering in Treasury and Asset Chairman Director Director Senior Executive Vice President Chairman Director Director Director

Listed Companies in SET The Amanah Leasing Public Company Limited Other Organizations The Church of Christ in Thailand The Bangkok Christian Hospital The World Vision Foundation of Thailand The Mass Rapid Transit Authority of Thailand (MRTA) Islamic Bank of Thailand CAT Wireless Network Company Limited CAT Mobile Company Limited CAT Contact Center Company Limited Dhanarak Asset Development Company Limited

6. Mr. Sorajak Kasemsuvan • Independent Director • Chairman of Corporate

Governance and Social Responsibility Committee

• Nomination and Remuneration Committee Member


57 - Ph.D. in International Law, London School of Economics, University of London, UK

- Master of Laws, University College, London, University of London, UK

- Bachelor of Politics and Laws (Hon.), University College of Wales, Aberystwyth, UK

- - 0.000

Present

Dec. 2011 – Oct. 2012

Present

President Chairman Advisor

Listed Companies in SET Thai Airways International Public Company Limited MCOT Public Company Limited Other Organizations Suntaraporn Foundation






- Certificate of Democratic Politics and Governance for High-Level Administrators, King Prajadhipok Institute



Present

Present

2010 – 2011

2009 -2010 2007 - 2009

Vice-Chairman Vice-Chairman Advisor to Deputy Minister of Education President Executive Director

Saranrom Institute of Foreign Affairs Foundation Senior Artists’ Welfare Foundation Ministry of Education Stamford International University International Institute for Trade and Development

7. Mr. Phaiboon Siripanoosatien • Independent Director • Corporate Governance

and Social Responsibility Committee Member


50 - Master of Political Science, Sukhuthai Thammathirat University

- Bachelor of Engineering, Chulalongkorn University


- Certificate of Public Law and Management, King Prajadhipok’s Institute

- Certificate of Democratic Politics and Governance for High-Level Administrators, King Prajadhipok Institute


0.000

2008-Present

2008-

Present

2009-Present

2011-Present

Independent Director and Audit Committee Member Independent Director Independent Director Executive Director

Listed Companies in SET Finansia Syrus Securities Public Company Limited Metrostar Property Public Company Limited Other Organizations Asia Credit Securities Company Limited Office of Small and Medium Enterprises

8. Mr. Kulit Sombatsiri • Director • Corporate Governance

and Social Responsibility

48 - Master of Business Administration, University of Southern California, USA

- Master of Public

- - 0.000

2009-Present

Director

Listed Companies in SET Krung Thai Asset Management Public Company Limited






Committee Member (Authorized Director)

Administration, San Diego State University, USA

- Bachelor of Public Administration, Ramkhamhaeng University



2554-Present

Oct2011-Present

Oct2010- Sep 2011

Sep2008- Sep 2010

2007- Aug 2008

2005-2007

Director Inspector General Advisor to State Enterprise Development Deputy- Director General Director, Bureau of Monetary Management Deputy Secretary General

Other Organizations Electricity Generating Authority of Thailand Ministry of Finance The State Enterprise Policy Office, Ministry of Finance The State Enterprise Policy Office, Ministry of Finance The Treasury Department, Ministry of Finance The National Telecommunications Commission






9. Mr. Surasak Supavititpatana • Director • Investment Committee


60 - Bachelor of Electrical Engineering, Kasetsart University

- Certificate of Management of Public Economy for Executive, King Prajadhipok’s Institute


- Certificate of Finance for Executive Decision, Continuing Education Center, Chulalongkorn University

- Certificate of Positioning Utility Executives for Change, University of Idaho

- - 0.000 Jan2010-Present

Oct2006- Jan2010

Nov2000- Sept2006

Deputy Governor –Generation Assistant Governor –Power Plant 2 Mae Moh Power Plant Production Division Manager

Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

10. Mr. Thawat Vadjanapornsithi • Director • Nomination and

Remuernation Committee Member


60 - Bachelor of Electrical Engineering, Chulalongkorn University

- Certificate of Management of Public Economy for Executive, King Prajadhipok’s Institute


- Certificate of Finance for Executive Decision, Continuing Education Center, Chulalongkorn University

- Certificate of Masterful Coaching Workshop, Hay Group

- - 0.000 Oct2010 – Sep2012

Jan2010- Sep 2010

Oct2008- Dec2009

Dec2007- Sep 2008

Deputy Governor – Corporate Social Responsibility, Acting EGAT Spokesman Assistant Governor – Human Resources Assistant Governor – Corporate Social Responsibility Assistant Governor – Administration Development Area

Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand






- Certificate of Senior Executive Development Program-2, Foundation for International Human Resource Development

11. Mr. Hideo Kuramochi • Director • Chairman of

Nomination and Remuneration Committee

• Investment Committee Member


50 Bachelor of Engineering (Electronics and Communication), Waseda University, Tokyo

- - 0.000

2008-2009

Apr2012 - present

Apr2012 -

present

Mar2012 - present

2011

2010

2009

2007

Director Chief Executive Officer Managing Director Director Deputy General Manager, EMEA Business Unit Deputy General Manager, New Energy Power Generation Unit Head of International IPP, Power Generation and Marketing International Unit Head of Southeast Asia IPP, Power Generation and Marketing International Unit

Listed Companies in SET Electricity Generating Public Company Diamond Generating Asia, Limited TEPDIA Generating B.V. Natural Energy Development Company Limited Mitsubishi Corporation Mitsubishi Corporation Mitsubishi Corporation Mitsubishi Corporation

12. Mr. Shigeru Inano • Director (Authorized Director)

42 Bachelor of Commerce, Waseda University, Tokyo

- - 0.000 present

Director of the Business Development & Head of Asset Management

Diamond Generating Asia, Limited






Present 2010 2008 2005

Director Director of the Business Development & Head of Asset Management Power Generation and Marketing International Unit Director of Business Development Electricidad Aguila de Tuxpan

Natural Energy Development Company Limited Diamond Generating Asia, Limited Mitsubishi Corporation Electricidad Augila de Tuxpan /Electricidad Sol de Tuxpan

13. Mr. Toshiro Kudama • Director (Authorized Director)

54 - Master of Mechanical Engineering, Tokyo Institute of Technology, Japan

- Bachelor of Mechanical Engineering, Tokyo Institute of Technology, Japan

- - 0.000 2010 - present 2006 - 2010

Executive Officer, Executive General Manager, International Affairs Department Executive General Manager, International Affairs Department

Tokyo Electric Power Company, Inc. Tokyo Electric Power Company, Inc.

14. Mr. Satoshi Yajima • Director • Investment Committee


45 - Bachelor of Electrical Engineering, Waseda University, Japan

- - 0.000 2002 - present

General Manager, Overseas Business Group 2 International Affairs Department

Tokyo Electric Power Company, Inc.






15. Mr. Sahust Pratuknukul • President • Chairman of Risk

Management Committee

• Chairman of Group Business Committee (October 1, 2011 – July 1, 2012)

• Chairman of Good Corporate Governance Committee

• Chairman of EGCO Management Committee


• Corporate Governance and Social Responsibility Committee Member


57 - Bachelor of Electrical Engineering, Chulalongkorn University

- Certificate of the Joint Public-Private Sectors Regular Course, National Defence College

- Certificate of Senior Executive Program, Capital Market Academy

- Certificate of Senior Executive Development Program-1, GE Co., Ltd.

- Certificate of Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University


- - 0.000

Apr2012-Present

Apr2012-Present

Apr2012-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct 2010- Sep 2011

Jan 2009- Dec 2010

Oct 2006

Director Chairman Chairman Chairman Chairman Chairman Chairman Director Director Director Deputy Governor-Policy and Planning Director Assistant Governor-Policy

Listed Companies in SET East Waster Public Company Limited Yanhee EGCO Holding Company Limited Solarco Company Limited Natural Energy Development Company Limited NED Wind Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Service Company Limited Xayaburi Power Company Limited Gulf Electric Public Company Limited BLCP Power Company Limited Electricity Generating Authority of Thailand EGAT International Company Limited Electricity Generating Authority of Thailand






16. Mr. Aswin Kongsiri • Independent Director • Vice Chairman • Chairman of Audit

Committee • Chairman of Corporate

Governance and Social Responsibility Committee


(vacating the office by rotation in AGM on April 25, 2012)

67 - Bachelor of Philosophy, Politics and Economics (Honours), Oxford University, UK

- Certificate of Banff School of Advanced Management, Alberta, Canada

- Certificate of the National Defense Course for the Joint State-Private Sectors, Class 6, National Defence College

- Certificate of Chairman 2000 Program, Thai Institute of Directors Association


-

0.000

Oct2007-Present

2005 – Present

1999-

Present

1993-Present

1981-

Present

2010-2012

Jan2009-Oct2010

2005–

Aug2010

Nov2011-Present

Oct2010-Present

2007-

Present

2010-2012

Chairman Independent Director Independent Director Independent Director Independent Director Chairman Director and Audit Committee Member Independent Director Member of Monetary Policy Committee Chairman Chairman Governor

Listed Companies in SET Ch. Karnchang Public Company Limited Bangkok Aviation Fuel Services Public Company Limited The OHTL Public Company Limited (Mandarin Oriental Hotel) Thai Reinsurance Public Company Limited Padaeng Industry Public Company Limited Thoresen Thai Agencies Public Company Limited Thoresen Thai Agencies Public Company Limited Krung Thai Bank Public Company Limited Other Organizations Bank of Thailand Thai Orix Leasing Company Limited (TOLC) Ton Poh Thailand Fund The Stock Exchange of Thailand






Apr2010-Nov2011

2003–

Nov2007

Chairman Independent Director

Krungthai - Axa Life Insurance Company Limited (KAL) Thai Rating and Information Services Company Limited

17. Mr. Chaipat Sahasakul • Independent Director • Chairman of Audit

Committee (vacating the office by resignation on March 1, 2012)

58 - Ph.D. in Economics, University of Rochester, USA

- M.A. in Economics, Thammasat University

- B.A. in Economics, Thammasat University

- Certificate of Senior Executive Program, Capital Market Academy

- Certificate of the National Defense Course for the Joint Public-Private Sectors, Class 21, National Defence College

- Certificate of Politics and Governance in Democratic Systems for Executives Course 11, King Prajadhipok’s Institute


- Certificate of Audit Committee and Continuing Development Program, Thai Institute of Directors Association

- Certificate of Monitoring

- - 0.000

May 2010-Present

Jul 2005-Present

2012-present

May 2009-

Present

2010-2012

2001 – Apr2009

2005 - 2006

Independent Director and Audit Committee Member Independent Director and Audit Committee Member Chairman Chairman, University Research policy Committee Governor Secretary - General Director, Audit Committee Member and Chairman of Risk Management Committee

Listed Companies in SET Thai Vegetable Oil Public Company Limited Pylon Public Company Limited Other Organizations ALT InterCorporation Company Limited Bangkok University The Stock Exchange of Thailand Agricultural Futures Trading Commission Government Housing Bank






Fraud Risk Management, Thai Institute of Directors Association



18. Mr. Somphot Kanchanaporn • Independent Director • Audit Committee

Member (vacating the office by resignation on March 1, 2012)

66 - Master of Business Administration, National Institute of Development Administration (NIDA)

- Bachelor of Police Science and Administration, California State University at Los Angeles

- Certificate of Directors Cerification Program, Thai Institute of Directors Association


- Certificate of National Defense Course, National Defense College


- Certificate of Monitoring Fraud Risk Management, Thai Institute of Directors Association

- - 0.000

Aug2012 – present

2008-

Apr2009

2007

2008- Nov2010

Jan2009-Jun2010

Oct2006-

2008

Dec2006-2008

Advisor to Audit Committee Independent Director Independent Director Chairman of the Inspector General Director Member Chairman of Standing Committee on Energy

Listed Companies in SET Electricity Generating Public Company Limited PTT Aromatics and Refining Public Company Limited Aromatics (Thailand) Public Company Limited Other Organizations Ministry of Energy B N B Inter Group Public Company Limited The National Legislative Assembly The National Legislative Assembly








- Certificate of Finance for Non-Finance Directors, Thai Institute of Directors Association

19. Police Lieutenant General Pijarn Jittirat • Independent Director • Corporate Governance

and Social Responsibility Committee Member


(vacating the office by rotation in AGM on April 25, 2012)

64 - Master of Public Administration, Chulalongkorn University

- Bachelor of Public Administration, Police Cadet Academy

- Certificate of Advanced Course in Administration, Department of Provincial Administration, Ministry of Interior

- Certificate of Advanced Course in Police Administration

- Certificate of National Defense, National Defense College

- Certificate of The Board’s Role on Fraud Presentation and Detection , Thai Institute of Directors Association

- Certificate of Role of the Compensation Committee, Thai Institute of Directors

- - 0.000 2006-2008

2005-2006

Deputy Inspector-General Commissioner, Office of Legal and Investigation

Royal Thai Police Royal Thai Police






Association - Certificate of Directors

Certification Program, Thai Institute of Directors Association

20. Mr. Akio Matsuzaki • Director (Authorized Director) (Vacating the Office by resignation on January 29, 2012)

56 - Master of Energy Science, Tokyo Institute of Technology, Japan

- Bachelor of Applied Physics, Tokyo Institute of Technology, Japan

- - 0.00 2011–present

2010 – 2011

2007 – 2010

1999 – 2007

General Manager, Chiba Thermal Power Station, East Thermal Power Office General Manager, Overseas Power Business, Thermal Power Department Executive Vice President and Chief Operation Officer, TeaM Energy Corporation, the Philippines General Manager, Overseas Project Group, Thermal Power Plant Engineering Center, Thermal Power Department

Tokyo Electric Power Company, Inc. Tokyo Electric Power Company, Inc. Tokyo Electric Power Company, Inc. Tokyo Electric Power Company, Inc.

21. Mr. Hideaki Tomiku • Director • Chairman of

Nomination and Remuneration Committee


(resigned on March 1, 2012)

55 International Law, Tokyo University

- - 0.00 Apr2012 - present

2009- Mar2012

May2009 - Mar2012

2006 –2011

General Manager of Asia & Oceania Business Unit Director Chief Executive Officer Director and Executive Vice President

Mitsubishi Corporation Natural Energy Development Company Limited Diamond Generating Asia, Limited OneEnergy Limited






2003-2006

Deputy General Manager, Head of International IPP

Mitsubishi Corporation

22. Mr. Ryota Sakakibara • Director • Investment Committee


40 Bachelor of Economics, The University of Tokyo

- - 0.00 Apr2011-present

Apr2009 - Apr2011

Sep2009 - Mar2011

Jul2006 - Apr2009

Assistant General Manager, Asia & Oceania Business Unit New Energy & Power Generation Division Director Director Director

Mitsubishi Corporation Diamond Generating Asia, Limited Natural Energy Development Company Limited OneEnergy Services Limited

23. Mr. John M. Palumbo ♦ Senior Executive Vice

President -Business Development -International

♦ Risk Management Committee Member

♦ Good Corporate Governance Committee Member

♦ Group Business Committee Member

♦ EGCO Management Committee

49 - Bachelor of Science in Mechanical Engineering (Honors), Columbia - University, School of Engineering and Applied Science, New York.

- - 0.000 2011 - Present

2011 - Present

2011 – Present

2009 - 2010

2004 – 2010

2007 - 2008 2005-2008

Director Director Director Director Director Director Director

Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited North pole Investment Company Limited Natural Energy Development Company Limited Gulf Electric Public Company Limited BLCP Power Company Limited EGCO Joint Ventures &






2004 - 2007

2003 - 2004

2003 - 2004

2003

1995 - 2003

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

Development Company Limited Nam Theun 2 Power Company Limited China Light & Power Group (Hong Kong) ADB Technical Assistance Program International Power PLC. Delta Associates (Thailand) Limited

24. Mr. Voravit Potisuk ♦ Senior Executive Vice

President -Business Development-Domestic





55 - MBA, The University of The Thai Chamber of Commerce

- B.Eng. (Electrical & Communication) Chulalongkorn University


- Executive Leadership Program (ELP-NIDA Wharton)

- - 0.000 Apr. 2012-Present

Apr. 2012-

Present

Apr. 2012-Present

2011-Present

2011Present

2011- Present

2011- Present

Director Director Director Director Director Director Director

Klong Luang Utilities Company Limited Banpong Utilities Company Limited Solarco Company Limited Theppana Wind Farm Company Limited Chaiyaphum Wind Farm Company Limited EGCO Engineering & Service Company Limited Khanom Electricity Generating Company Limited Gulf Electric Public Company






2011-Present

2011- Present

2011- Present

2010 - 2011 2010- 2011

2004 - 2011

1996 - 2004

2002 - 2003

Director

Director Director Director Director Executive Vice President-Business Development Senior Vice President - Engineering Business Division Acting Managing Director

Limited BLCP Power Company Limited Nam Theun 2 Power Company Limited Quezon Generating Company Ltd, Philippines Conal Holdings Corporation, Philippines Electricity Generating Public Company Limited Electricity Generating Public Company Limited Egcom Tara Company Limited

25. Mr. Piya Jetasanon ♦ Senior Executive Vice

President – Finance and Corporate Services


55 - MBA, Ramkhamhaeng University

- B.A. (Economics), Thammasat

University - Certificate of Directors

- - 0.000 2012 2012

Director Director

Yanhee Solar Power Company Limited Solarco Company Limited PT Manambang Muara Enim, Indonesia









Certification Program, Thai Institute of Directors Association

- Certificate of TLCP Executive Development Program, Thai Listed Companies Association

2012 2012 2012 2012 2011- Present

2011-Present

2011-Present

2011- Present

2011- Present

2011- Present

2007- Present

2007-2005

Present

2003-2005

Commissioner Director Director Director Director Director Director Director Director Director Director Director First Senior Vice President – Finance Senior Vice President – Finance

Klong Luang Utilities Company Limited Banpong Utilities Company Limited Subyai Wind Farm Company Limited Gulf Electric Public Company Limited BLCP Power Company Limited EGCO International (BVI) Limited North pole Investment Company Limited EGCO Engineering & Service Company Limited Khanom Electricity Generating Company Limited EGCO Cogeneration Company Limited Thai LNG Power Corporation Ltd. Electricity Generating Public Company Limited Electricity Generating Public Company Limited Khanom Electricity Generating Company Limited






1996 - 2003

Manager – Finance Division


26. Mr. Sakul Pochanart ♦ Senior Executive Vice

President –Strategy and Asset Management



♦ Group Business Committee Member (Apr. 4 - Jun. 30 2012)


55 - D.Sc.(Civil Engineering), Sever Institute of Technology, Washington University, USA

- M. Eng. (Civil Engineering) Chulalongkorn University

- B. Eng. (Civil Engineering) Chulalongkorn University

- - 0.000 2012-Present

2012-

Present

2012-Present

2012-

Present

2012-Present

2012-

Present

2012-Present

2012-

Present

2008-Present

2012-

Present 2009-2012

2006-2009

Director Director Director Director Director Director Commissioner Director Director Senior Executive Vice President-Strategy and Asset Management Executive Vice President-Strategy Executive Vice President-Project Managemnt

EGCO Engineering & Service Company Limited Khanom Electricity Generating Company Limited Gulf Electric Public Company Limited Nam Theun 2 Power Company Limited Absolute Power P Company Limited Quezon Generating Company Ltd, Philippines PT Manambang Muara Enim, Indonesia SPP 2, SPP 3, SPP 4, SPP 5 BLCP Power Company Limited Electricity Generating Public Company Limited Electricity Generating Public Company Limited Electricity Generating Public Company Limited






2004-2006

2003-2004

1997-2003

Executive Vice President-Business Development Senior Vice President- Business Development General Manager-Power plant Business

Electricity Generating Public Company Limited Electricity Generating Public Company Limited Electricity Generating Public Company Limited

27. Mr. Chumsak Desudjit ♦ Senior Executive Vice

President ♦ Director-Rayong Power

Plant ♦ Risk Management

Committee Member ♦ Group Business

Committee Member ♦ Good Corporate

Governance Committee Member


59 - B. Eng. (Mechanical Engineering), Chulalongkorn University


- Certificate in Executive Leadership Program, Joint Program NIDA-Wharton, University of Pennsylvania

- Graduate Diploma in Management of Public Economy(MPE-7) , King Prajadhipok’s Institute

- - 0.000 2011 – Present

2008- 2009

2009- Present

2009 – Present

2007 – Present

2009 - Present

2009 - Present

2008 - 2009

2006- 2005

2001- 2007

Director Director and Managing Director Chairman Chairman Chairman Director Director Director Director

BLCP Power Company Limited Rayong Electricity Generating Company Limited Roi-Et Green Company Limited EGCO Green Energy Company Limited EGCO Cogeneration Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration






1998 - 2000

Deputy Managing Director Operation Group Operation Division Manager

Company Limited EGCO Cogeneration Company Limited

28. Mr. Wajarapong Palakawong Na Ayudhya ♦ Managing Director- Egco

Engineering & Service Company Limited





59 - Bachelor Degree of Mechanical Engineering, Chulalongkorn University


- Certificate of NIDA Executive Leadership Program, Joint Program NIDA-Wharton of University of Pensylvania

- Certification of The Senior Executive Program, Sasin Graduate Institue of Business Administration of Chulalongkorn University

- - 0.000 2011- Present

2011-Present

2011- Present

2011- Present

2008-Present

1999Present

1997- Feb

2011

Director Director Director Managing Director Chairman Director Deputy Managing Director - Operation

Khanom Electricity Generating Company Limited Egco Engineering and Service Company Limited Covanta Philippines Operating Inc. EGCO Engineering & Service Co.,Ltd. EGCOM Tara Co., Ltd. Agro Energy Co.,Ltd. EGCO Engineering & Service Co.,Ltd.

29. Mr. Chankij Jearaphunt ♦ Senior Executive Vice

President ♦ Managing Director –

Khanom Electricity Generating Company Limited


♦ Good Corporate

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

- - 0.000 2004- Present

2004- Present

2004- 2009

2008 -Present

Director and Managing Director Director Director

Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited Rayong Electricity Generating Company Limited Gulf Energy Company Limited; Gulf IPP Company Limited; and Gulf Power Generation Company Limited






Governance Committee Member


2007 - 2009 2002 - 2008 2006- 2007

Director Chairman Director

Roi-Et Green Company Limited; and EGCO Green Energy Company Limited Gulf Cogeneration Company Limited; Nongkhae Cogeneration Company Limited; and Samutprakarn Cogeneration Company Limited Roi-Et Green Company Limited; and EGCO Green Energy Company Limited

30. Mr. Suvapan Chomchalerm ♦ Executive Vice

President – Accounting

52 - M.Sc. (Accounting), Thammasat University

- B.Sc. (Accounting), Chulalongkorn University

- - 0.000 2011 - 2012

2010 - 2011

2000- 2010

1994 - 2000

Executive Vice President – Finance Chief Financial Officer ( EGCO’s Representative) Senior Vice President - Accounting and Budget Division Manager-Accounting and Budget Analysis Section, Accounting and Budget Division

Electricity Generating Public Company Limited BLCP Power Limited Electricity Generating Public Company Limited Electricity Generating Public Company Limited

31. Mr. Nattanont Meesuksaba ♦ Senior Vice President -

Accounting and Budget

52 - Master of Business Administration (MBA), Chulalongkorn Univerity

- B.Sc. (CostAccounting), Chulalongkorn University

- - 0.000 2011 – Present

2009 - 2011

2005 - 2009

Senior Vice President- Accounting and Budget Division Manager Administration Division Manager) Internal Audit Section Manager

Electricity Generating Public Company Limited EGCO Engineering and Service Company Limited Electricity Generating Public Company Limited






1997 - 2005

Accounting Section Manager


32. Ms. Somsiri Yoosook ♦ Senior Vice President -

Finance

48 - Master of Business Administration (Finance), Youngstown State University U.S.A. - Bachelor of Science (Accounting) (2nd Class Honors), Kasetsart University

- - 0.000 2011 – Present

2003- 2011

2001 – 2002

1996 – 2003

1994 - 1995

Senior Vice President - Finance Vice President–Subsidiaries Finance Vice President–Project Finance Manager - Loan Section Manager – Disbursement Section

Electricity Generating Public Company Limited Electricity Generating Public Company Limited Electricity Generating Public Company Limited Khanom Electricity Generating Company Limited Electricity Generating Public Company Limited

The Position of EGCO's Management and the Control Persons in the Subsidiaries and Other Related Companies as of December 31, 2012

EGCCO Joint Ventures1 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 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

1 Dr.Pornchai Rujiprapa DDD, XX DDD

2 Mr.Thanapich Mulapruk I,AA

3 Mr.Pongstorn Kumanusorn I, A

4 Dr.Sorajak Kasemsuvan I,N,CC

5 Mr.Pasan Teparak I, A

6 Pol. Gen. Pansiri Prapawat I, N, C

7 Mr.Phaiboon Siripanoosatien I,N,C

8 Mr.Kulit Sombatsiri D,C D

9 Mr.Thawat Vadjanapornsithi D, N Deputy Governor

10 Mr.Surasak Supavitipatana D,X

11 Mr.Hideo Kuramochi D,X,NN

12 Mr.Shigeru Inano D D

13 Mr.Satochi Yajima D,X

14 Mr.Toshiro Kudama D, N Engineer Level 14

15 Mr.Sahust Pratuknukul D, President, X, C, SS, GG Engineer Level 14 DDD DDD DDD D DDD D D D D

16 Mr.John Palumbo SEVP - Business Development - International D D D D D D D D D

18 Mr.Voravit Potisuk SEVP - Business Development - Domestic Engineer Level 14 D D D D D D D D D

19 Dr.Sakul Pochanart SEVP - Strategy and Corporate Management D D D D

20 Mr.Piya Jettasanon SEVP - Finance and Corporate Services D D D D D D D D D D D D

21 Mr.Chumsak Desudjit SEVP D DDD D DDD DDD D

22 Mr.Chankij Jearaphunt SEVP D, Managing Director D D D D D

23 Mr.Wajarapong Palakawong Na Ayudhya

SEVP D, Managing Director D DDD D

24 Mr.Suvapan Chomchalerm EVP - Accounting and Budget Division D D D D D

25 Ms.Somsiri Yoosook EVP - Finance Division D D D D

26 Mr. Nattanont Meesuksabai SVP - Accounting and Budget Division

27 Ms.Kulkanok Leongsoithong Corporate Secretary, SVP - Corporate Secretary Division

RemarkA. DDD = Chairman D = Director XX = Chairman of Investment Committee X = Investment 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

CC = Chairman of Corporate Governance and Social Responsibility Committee C= Corporate Governance and Social Responsibility 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 Member

B. 1 = Electricity Generating Authority of Thailand 9 = Roi-Et Green Co., Ltd. 17 = Quezon Generating Co., Ltd. 25 = BLCP Power Limited 33 = Absolute Power P Co., Ltd. 41= PT Manambang Muara Enim Co., Ltd.2 = TEPDIA Generating B.V. 10 = Nam Theun 2 Power Co., Ltd. 18 = Quezon Power Inc. 26 = Natural Energy Development Co., Ltd. 34 = Theppana Wind Farm CO., Ltd. 42 = East Water Resources Development and Management Co., Ltd.3 = Khanom Electricity Generating Co., Ltd. 11 = Gulf Electric Public Company Limited 19 = Conal Holdings Corporation 27 = Egcom Tara Co., Ltd. 35 = Chaiyaphum Wind Farm Co., Ltd. 43 = Intergen Management Services (Philippines) Co., Ltd.4 = EGCO Cogeneration Co., Ltd. 12 = Gulf Power Generation Co., Ltd. 20 = Northern Mindanao Power Corporation 28 = SPP Two Co., Ltd. 36 = Sub Yai Wind Farm (1) Co., Ltd. 44 = Xayaburi Power Co., Ltd.5 = EGCO Engineering and Service Co., Ltd. 13 = Gulf Cogeneration Co., Ltd. 21 = Alsing Power Holdings, Inc. 29 = SPP Three Co., Ltd. 37 = G-Power Source Co., Ltd.6 = EGCO International (BVI) Ltd. 14 = Gulf Energy Co., Ltd. 22 = Southern Philippines Power Corporation 30 = SPP Four Co., Ltd. 38 = Yanhee EGCO Holding Co., Ltd7 = EGCO Green Energy Co., Ltd. 15 = Gulf IPP Co., Ltd. 23 = Alto Power Management Corporation 31 = SPP Five Co., Ltd. 39 = Solarco Co., Ltd.8 =North Pole Investment Co., Ltd. 16 = GPI Quezon Ltd. 24 = Peral Energy Philippines Operating Inc. 32 = KlongLuang Utilities Co., Ltd. 40 = Algro Energy Co., Ltd.

Name Major Subsidiaries Subsidiaries (Core Business Subsidiaries

The Positions of KEGCO's Management and the Control Persons in EGCO Group Companies as of December 31, 2012

KEGCO1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1 Mr. Sahust Pratuknukul DD DD DD D DD2 Mr. Piya Jetasanon D D D D D D3 Mr. John Palumbo D D D4 Mr. Voravit Potisuk D D D D D5 Mr. Chumsak Desudjit D DD D DD DD

6 Mr. Wajarapong Palakawong Na Ayudhya

D D, Managing Director DD

7 Mr.Sakul Pochanart D D D D8 Mr. Chankij Jearaphunt D, Managing Director D D D D D D9 Mr. Mana Vitvaskul Deputy Managing Director - Operation

10 Mrs. Krisna Pinkaew Deputy Managing Director - Finance and Administration

11 Mr. Tanit Kalunkul Maintenance Division Manager12 Mr. Amnat Tippayasak Operation Division Manager13 Mr. Apichai Komhint Account & Budget Division Manager14 Mr. Pairote Boonmak General Affairs Division Manager

RemarkA. DD = Chairman D = Director B. 1 = EGCO Cogeneration Co., Ltd. 8 = Gulf Power Generation Co., Lt 16 = Eastern Water Resources Development and Management Public Co., Ltd.

2 = EGCO Engineering & Service Co., Ltd. 9 = Gulf Cogeneration Co., Ltd. 17= Natural Energy Development Co., Ltd.3 = EGCO International (BVI) Ltd. 10 = Nongkhae Cogeneration Co., 18= North Pole Investment Co., Ltd.4 = EGCO Green Energy Co., Ltd. 11 = Samutprakarn Cogeneration Co., Ltd.5 = Roi-Et Green Co., Ltd. 12 = Gulf Energy Co., Ltd.6 = Egcom Tara Co., Ltd. 13 = Gulf IPP Co., Ltd.7 = Gulf Electric Public Co., Ltd. 14 = Nam Thuen 2 Power Co., Ltd.

15 = BLCP Power Limited Ltd.

Name Other Companies in EGCO Group

Attachment 2

The Positions of EGCO Cogen's Management and the Control Persons in EGCO Group Companies as of December 31, 2012

EGCO Cogen1 2 3 4 5 6 7 8 9 10 11 12 13 14

1 Mr. Chumsak Desudjit DD D D DD DD2 Mrs. Wimolwan Sasanawin D3 Mr. Piya Jetasanon D D D D D4 Mr. Supoth Chantavilartkul D, General Manager5 Ma.Somsiri Yookook D6 Mr. Yasuhiro Koide D D D

RemarkA. DD = Chairman D = DirectorB. 1 = Khanom Electricity Generating Co., Ltd. 8 = North Pole Investment Co.,Ltd.

2 = EGCO Engineering & Service Co., Ltd. 9 = Nam Theun 2 Power Co., Ltd.3 = EGCO Green Energy Co., Ltd. 10 = BLCP Power Limited4 = Roi-Et Green Co., Ltd. 11 = Gulf Energy Co., Ltd.5 = Egcom Tara Co., Ltd. 12 = Conal Holdings Corporation6 = Gulf Electric Public Co., Ltd. 13 = Northern Mindanao Power Corporation7 = EGCO International (BVI) Ltd. 14 = Quezon Generating Co., Ltd.

Name Other Companies in EGCO Group

AUDIT COMMITTEE’S REPORT The Audit Committee of EGCO consists of 3 independent directors who are knowledgeable and experienced in law, accounting and finance, management and energy business. The Committee is chaired by Mr. Thanapich Mulapruk, with Mr. Pongstorn Kunanusorn and Mr. Pasan Teparak as members.

The Audit Committee has performed its duties assigned by the Board, as prescribed in the Audit Committee Charter which aligned with the regulations of the Stock Exchange of Thailand (SET): the Audit Committee’s Qualification and Scope of Duties and Responsibilities B.E. 2551 and regularly reports the Committee’s meeting resolutions to the Board.

In 2012, the Audit Committee held 14 meetings. The Committee Meeting Attendance Report is shown in Table : Meeting Attendance, Subject : Corporate Governance Report for 2012

In carrying out its duties in the year 2012, the Committee has the opinion that; 1. EGCO’s financial reports were accurate, complete, and reliable. 2. EGCO’s internal control systems were appropriate and adequate. 3. EGCO had fully complied with the Securities and Exchange Acts, regulations of the SET, as well as other laws relating to EGCO’s business. 4. EGCO’s auditors were qualified, knowledgeable and independent. 5. Information disclosure of the connected transactions or any conflict of interest was

accurate and adequate. 6. In performing its assigned duties, the Committee had the opinion that its composition,

qualifications, and responsibilities aligned with the Audit Committee’s Charter. 7. The Committee enhanced the good corporate governance by providing the channel for

shareholders and employees to directly access the Audit Committee in reporting complaints or suspect in financial reports or internal control systems. The Whistleblower system has been set up as well.

Summary of the Audit Committee’s Activities :

Review of financial statements

- Reviewed the quarterly and annual financial statements with the external auditors and the Management. The Committee asked the auditors on the accuracy and completeness of the financial statements and significant adjustments which effected the financial statements to ensure that the financial statements complied with the generally accepted accounting principles and that the information disclosed in the financial statements were adequate, accurate, reliable, and complied with governing laws and regulations.

- Considered the adoption of the new accounting standards, the new financial reporting standards, the new interpretation and amendments to accounting standards, and the adjusted accounting standards and accounting frameworks relating to EGCO (referred to as the new accounting standards) and adopted the new accounting standards which were mandatory for the year 2012 and 2013.

- Reviewed the Management Discussion and Analysis (MD&A) with the Management to ensure its accuracy, completeness, adequacy and that the disclosed information benefitted the investment decision of the shareholders and investors.

- Held exclusive meetings with the external auditors in the absence of the Management to ensure their independence.

- Considered other services performed by the audit firm’s group companies for EGCO Group and determined that the scope of work and service fees were not significant to potentially influence the independence of the auditor.

Attachment 3

Review of the internal control systems Reviewed the sufficiency and effectiveness of the internal control systems from the

internal auditors’ and the external auditors’ reports. The external auditors agreed that there was no significant shortcoming in the year 2012. In addition, the Committee and the Board evaluated EGCO’s internal control system, using the internal control assessment form of by the Securities and Exchange Commission (SEC) and the result for the year 2012 showed that EGCO and its subsidiaries had sufficient and appropriate internal control systems.

Oversight of internal audit

- Approved the scope of work and annual audit plan which included management audit. - Reviewed the internal audit report of the Internal Audit Division, which directly

reported to the Audit Committee. - Reviewed budget, manpower, the performance assessment of the Internal Audit

Division, and endorsed the appointment of the new Chief Internal Auditor to ensure the Internal Audit Division’s independence.

Compliance Review

Reviewed with the Management to ensure that EGCO’s activities were conducted in compliance with the Securities and Exchange Acts, SET Regulations as well as other laws relating to EGCO’s business. It also acknowledged the representation statements of the employees and management up to the President that their respective tasks and duties well complied with the governing laws.

Review of connected transactions Considered the accuracy and adequacy of EGCO’s disclosure on connected transactions

and transactions that might cause the conflict of interest to ensure EGCO’s compliance with business conditions and requirements of SEC.

Review of risk management

Reviewed with the Management EGCO policies on risk management, implementation plan and risk management guidelines and recommended the alignment of the risk management plan with and the strategic plan in presenting to the Board.

Review of good corporate governance

Further enhanced EGCO’s good corporate governance practices such as providing the channel for employees and shareholders to direct their complaints, reports on suspected violation of laws and Code of Conduct and questions about the financial statements and internal control systems by email to the Audit Committee via [email protected]. Whistleblower system was also set up.

Considered and acknowledged the Compliance Statement of the President the Chairman, The process in preparing and the content of the Compliance Statement ensured that EGCO’s operations complied with the Code of conduct and relevant laws.

Audit Committee’s self assessment

The Audit Committee conducted its annual self assessment using the Audit Committee’s Self-Assessment Form which aligned with SET’s guidelines. The findings that composition, qualifications, and performance of the Audit Committee well aligned with the Audit Committee Charter and the Stock Exchange of Thailand’s guidelines were reported to the Chairman.


Annual review of the Audit Committee Charter The Audit Committee reviewed the Audit Committee Charter to ensure that its assigned

duties in 2012 were achieved and that its performance aligned with international practices, SET’s Audit Committee Best Practice Guidelines and appropriated for EGCO’s business.

Appointment of the external auditors In 2012, the Audit Committee recommended the auditor selection from the leading audit

firms, by considering qualifications and the service fees, to be appointed as EGCO Group’s auditors for the year 2013.

Through the procurement process, PricewaterhouseCoopers ABAS Ltd. (PwC) was selected by the procurement committee to be EGCO group’s auditors.

Considering the result of the auditor selection proposed by the Management and PwC auditors’ performance, the Committee was of the opinion that PwC auditors are independent, qualified with appropriate experience and good performance and would propose the appointment of Mr. Somchai Jinnovart Certified Public Accountant (Thailand) No. 3271, Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977, and Ms. Amornrat Pearmpoonvatanasuk Certified Public Accountant (Thailand) No. 4599 of PwC as 2013 EGCO’s auditor to the Board, which will submit the proposal for the shareholders’ approval.

Mr. Thanapich Mulapruk

Chairman of the Audit Committee

Attachment 4

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

Audit Committee

Investment Committee

Nomination and

Remuneration Committee

Corporate Governance

& Social Responsibility

Committee

Group Business

Committee

EGCO Management Committee

Good Governance Committee

Risk Management Committee

Safety Health and

Environment Committee

Pornchai Rujiprapa Chairman Non-Executive Director

Mr. Phaiboon Siripanoosathien Member Chairman Idependent DirectorPolice Lieutenant General Member Idependent DirectorPansiri Prapawat Member Idependent DirectorMr. Pasan Theparak Chairman Independent Director

with finance and accounting background

Mr. Thanapich Mulapruk Member Member Idependent DirectorMr. Pongstorn Kunanusorn Member Member Idependent DirectorMr. Surasak Supavitipatana Member Idependent DirectorMr. Thawat Vadjanapornsithi Member Idependent DirectorMr. Kulit Sombatsiri Member Idependent DirectorMr. Toshiro Kudama Member Idependent DirectorMr. Satoshi Yajima Non-Executive

DirectorMr. Hideo Kuramochi Member Chairman Non-Executive

DirectorMr. Shigeru Inano Non-Executive

DirectorMr. Sahust Pratuknukul Member Member Chairman Chairman Chairman Chairman PresidentPresident Member Member Chairman Chairman Chairman ManagementSenior Executive Vice President - Financial & Accounting

Member Member Member Management

Senior Executive Vice President - Business Development Domestic


Senior Executive Vice President - Business Development International


Senior Executive Vice President - Strategy and Asset Management


Director - Rayong Power Plant Member Member Member ManagementManaging Director of KEGCO Member Member Member ManagementManaging Director of ESCO Member Member Member ManagementExecutive Vice President - Strategy & Corporate Management


Executive Vice President - Strategy & Asset Management

Chairman Management

Senior Vice President - Legal MemberSenior Vice President - Corporate Communication

Member

Senior Vice President - Human Resources

Member

Senior Vice President - Corporate Secretary

Secretary Member and Secretary

Senior Vice President - Internal Audit

Secretary Member and Secretary

Secretary

Vice President - Human Resources of Rayong Power Plant

Member

Vice President - Safety of KEGCO

Member

Vice President - Safety of ESCO MemberPower Plant Manager - EGCO Cogen

Member

Power Plant Manager - Roi Et Green

Member

Manager - Tap Water of Egcom Tara

Member

Senior Vice President - Asset Management

Member and Secretary

Assistant Vice President - Asset Management

Member and Assistant Secretary

Standing Committee Management Committee Remark

annual registration statement · 1. companies ae agro energy company limited apmc alto power...

Documents