Interest Rate Risk Interest rate risk arises from the fluctuations in market interest rates, which may have a negative effect on current and future operations of the Group. Management believes that exposure to interest rate risk is minimal because the floating interest rate according to the condition in the long-term loans agreements (Note 9) is included in the availability payment as specified in the Power Purchase Agreement (Note 20). Therefore, the Group does not enter into a hedging agreement to protect against such risk.
19. Related party transactions A major shareholder of the Company is the Electricity Generating Authority of Thailand (EGAT), which holds 45% of the Companyûs total ordinary shares, and EGAT Employeeûs Provident Fund, which holds about 3% of the Companyûs total ordinary shares. The Companyûs remaining shares are widely held. Information regarding the Companyûs subsidiaries and joint ventures is shown in Note 7. During the year, the Group has entered into a number of transactions with related parties; the terms are agreed in the agreement and are in the ordinary course of business and according to normal trade conditions. Purchases of fuel oil and electricity from EGAT are at market price. Details of the agreements made with the related parties are shown in Note 20. The following material transactions were carried out with related parties: (a) Sales, management service income, interest income and other income
2004 Bahtû000
2003 Bahtû000
39,714,033
35,528,314
-
-
29,527
2,222
1,522 29,527
1,583 2,222
9,133
-
10,704 9,133
1,739 -
83,811
12,208
-
-
Other income in the consolidated statement of income for the year ended 31 December 2004 included a claim for maintenance of machinery and equipment incurred during the warranty period which can be claimed from EGAT amounting to Baht 81.75 million. The Group recorded this as other receivables from related parties in the consolidated balance sheet as at 31 December 2004.
Annual Report 2004
Sales - Electricity Generating Authority of Thailand Management service income - Subsidiaries - Joint ventures Interest income - Subsidiaries - Joint ventures Other income - Electricity Generating Authority of Thailand
Company
Ratchaburi Electricity Generating Holding Public Company Limited
For the year ended 31 December
Consolidated 2004 2003 Bahtû000 Bahtû000
103