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Annual Report

2009


With a strong believe that “a good start will lead to a successful outcome”, we, EGCO staff, focus on doing the right thing from the beginning. We always live by this belief when discharge our duties. For electricity generating, we start the process by choosing environmental-friendly technology. We have created myriad projects using our knowledge to help people create a self sufficient society with understanding of how to help preserve nature and the environment. We embed the awareness to protect the watershed forests as a way to develop learning ability along with public mindedness among youths. All of the objectives we have carried out are to bring about smiles of happiness to all stakeholders, be it the growing business, stronger society and sustainable environment. This is simply because “we will never stop creating energy for life”


A good start will lead to a successful outcome Strong Business

Sustained Quality of Life

Healthy Environment

Good Corporate governance

Quality of Life

Safety and Occupational Health Management

Transparency

Natural Resource and Environment Conservation

Environment Management and Energy Saving

Promising Return Learning and Public mindedness

Water Resource Management Air and Noise Pollution Management Control of Energy Usage Green Company


EGCO’s Path of Fuel Diversification

Continuous SUCCESS comes from commitment and dedication of all EGCO staff along with the support from stakeholders. Our success from past to present is due mainly to our adherence to the good corporate governance, our faith and respect in people and our commitment to our shareholders, society and the environment. To continue our path for future success, we will strictly adhere to our philosophy of creating “energy for life” to ensure the reliable power supply that brings about benefits to all stakeholders along with creating a society that is self sufficient with good and lasting quality of life and environment.


Fostering of learning ability and public mindedness in youths

Conserving natural resources and watershed forests

Enhancing quality of life

Smile and Happiness is an inspiration for all of us at EGCO to carry out our work. To develop an organization, and a community and society that are both happy and strong require the responsibilities, understanding and full attention in every detail and aspect. We conserve the natural resources to protect the origin of life and energy resources. We foster a learning society to ingrain energy and environment conservation among youths. At the same time, we work hand in hand with the community to enhance quality of life and foster a self sufficient economy. We simply want to see everybody living together in a good society with lasting happiness.


Energy for Long Lasting Society


Environment Management

Safety Management Occupational Health Management Environment Management Energy Management

We used to ask what the source of sustainability was. The answers always bring back the happiness because they are the things that we adhere to in conducting our business. They are our creativity and commitment to quality of life and environment. We at EGCO have learned and realized that “a healthy environment� like clean air and water, is the essential factor to foster organic growth and to keep all lives in blossom. We, therefore, have never foregone our responsibilities to care for the environment as a part of our care for the society.


Energy for Healthy Environment


010

Annual Report 2009


Electricity Generating Public Co., Ltd.

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

011


012

Annual Report 2009

2009 Highlights EGCO Group’s philosophy is to conduct the business ethically for the benefits of the stakeholders namely shareholders, customers, suppliers, employees, communities and environment for sustainable development.

Awards and Recognition EGCO May

• 10th best listed companies in Thailand and 4th best public companies in energy and utility sector in a poll conducted by Finance and Banking Magazine • Lowest risk company in one-year ahead with the full score of 100 in terms of quality of good corporate governance and financial status in an assessment by Siam City Research Institute (“SCRI Rating”) August An excellent showcase for shareholder meeting with the full score of 100 in the quality assessment of 2009 Annual General Shareholders’ Meeting organized by the Thai Investors Association. November • Receiving the SET Awards hosted by the Stock Exchange of Thailand (“SET”) and the Finance and Banking Magazine - Top Corporate Governance Report Award - One of final shortlisted candidate for best CSR awards • “Board of Directors for Distinctive Practices” for 2008 - 2009 and “Board with Consistent Best Practice” in a contest organized by the Thai Institute of Directors, SET, the Thai Chamber of Commerce, the Federation of Thai Industries, the Thai Bankers’ Association, the Listed Companies Association and the Federation of Thai Capital Market Organizations • Certificate of Excellence from IR Magazine, Singapore • Distinguish exhibition booth in the 2009 SET in the City December • Excellent Corporate Governance Performance in 2009 by IOD with the score of 94 and full score in two categories being the rights of shareholders and role of stakeholders Rayong Power Plant September 22 Certificate on Standard for Corporate Social Responsibility (CSR-DIW) by the Ministry of Industry Khanom Electricity Generating Co., Ltd. (“KEGCO”) April 9 “EIA Monitoring Awards 2009” for the 7 consecutive year, by the Ministry of Natural Resources and Environment July 2 “National Safety Awards for 2009” for the 10 consecutive year, at the 23rd National Work Safety Week by Ministry of Labor September 18 “Outstanding Establishment in the Year 2009 for Achievement on Labor Relations and Welfare” for the 3 consecutive year, by Ministry of Labor


Electricity Generating Public Co., Ltd.

EGCO Engineering and Services Co., Ltd. (“ESCO”) August 31 Gold Certificate for HIV/AIDS and TB Prevention and Management in the Workplace by Ministry of Labor and Ministry of Public Health Roi Et Green Co., Ltd (“Roi Et Green”) July 2 “Provincial Safety Award” for the 2 consecutive year in Provincial Level at the 23rd National Work Safety Week by Ministry of Labor EGCOM Tara Co., Ltd. (“EGCOM Tara”) September 22 Certificate for Quality of Drinking Water by Ministry of Public Health for the 7 consecutive year November 24 Certificate audit for Environment Management System : EMS Stage I by Ministry of Industry December 4 Excellent Healthy Workplace by Ministry of Public Health for the 3 consecutive year

Business Activities A. Acquisition/Business Transfer March 30 EGCO International (B.V.I) Ltd. purchased 100% of the outstanding shares of GPI-I, Ltd (“GPI-I”) from GPSF Cayman I LDC (“GPSF”) July 30 Acquiring newly issued shares in the Natural Energy Development Co., Ltd., (“NED”) to hold 33% in the company October 1 Accept the entire business transfer of Rayong Power Plant from Rayong Electricity Generating Co., Ltd. (“REGCO”) October 2 Filing of Dissolution of REGCO December 17 Acquiring a 50% ownership in Power Generation Services Company Limited (“PGS”) from CLP Power (Southeast Asia) Operation Limited (“CLP-SEA”) B. Accreditation of Standard Systems April 22 - 24 KEGCO passing re-certificate audits for ISO 9001:2008 (Quality Management), TIS 18001:1999 & OHSAS 18001:2007 (Occupational Health and Safety Management), and ISO14001:2004 (Environmental Management) by TUV NORD May 18 - 19 REGCO passing re-certificate audit for ISO 9001:2008 by TUV NORD June 9 - 11 REGCO passing surveillance audit for TIS 18001:1999 & OHSAS 18001: 2007 and ISO14001:2004 by MASCI (Management System Certification Institute-Thailand) July 9 ESCO passing surveillance audit no. 1 for ISO 9001:2000 in the provision of Management of Operation and Maintenance of Power Plant and

013


014

Annual Report 2009

Factory by SGS July 29 EGCOM TARA passing certificate audit for ISO 9001:2000 by Moody International (Thailand) Ltd. August 11 EGCOM TARA passing re-certificate audit for the ISO14001:2004 by United Registrar of Systems (Thailand) Limited (URS : UKAS) September 17 - 18 KEGCO passing surveillance audit for ISO 9001:2008 by TUV NORD December 9 ESCO passing surveillance audit no. 2 for ISO 9001:2000 in the provision of Management of Operation and Maintenance of Power Plant and Factory by SGS December 15 Roi-Et Green passing surveillance audit for ISO 9001:2008 by Moody International Certification Group

Activities for Shareholders and Investors A. Shareholders’ Meeting April 24 2009 Annual General Shareholders’ Meeting May 6 2008 Final Dividend Payment at 2.50 baht per share September 17 2009 Interim Dividend Payment at 2.50 baht per share B. Opportunity Day/Analyst Meeting February 24 Opportunity Day/Analyst Meeting No. 1/2009 to announce 2008 annual performance May 18 Opportunity Day/Analyst Meeting No. 2/2009 to announce 2009’s first quarter performance August 20 Opportunity Day/Analyst Meeting No. 3/2009 to announce 2009’s second quarter performance November 18 Opportunity Day/Analyst Meeting No. 4/2009 to announce 2009’s third quarter performance C. Investor Meeting February 9 - 11 CLSA Asia Investors’ Forum, Las Vegas USA. May 20 - 22 CLSA Corporate Access Forum, Singapore May 28 TISCO Corporate Day at TISCO Building June 20 “SET in the City” in Nakornrachasima Province July 28 - 29 Non-deal Road show for institutional investors in Hong Kong by Deutsche Bank August 1 “SET in the City” in Chiang Mai Province November 12 - 15 “SET in the City 2009” at Paragon Hall, 5th Floor, Siam Paragon, Bangkok


Electricity Generating Public Co., Ltd.

D. Knowledge Sharing and Site Visit January 15 - 18 Site Visit to Nam Theun 2 Power Plant, in Laos PDR June 3 Site Visit to Kaeng Khoi 2 Power Plant, at Saraburi Province September 9 Company Visit to Kaeng Khoi 2 Power Plant, at Saraburi Province hosted by Thai Investors Association

Activities for Employees January - December January 29 June 5 August 26 December 2 February 20 May 15 April 1, 8 April 27 - 28 June 7 - 8 June 24 - 26 June 29 July 29 - 31 August 3 October 2 August 27 - 28 September 8 October 17 - 19 October 30 November 6 November 11 - 13 December 21 - 22 December 25

Activity “Smile @ Library” Communication Day no 1 - 4

Activity “Get 2 Gether no.1 - 2” Annual Physical Check up for Employees Orientation for New Employees Knowledge sharing on “Social Security … can help you more than you expect.” Training on “Awake @ Work” Seminar on “White Ocean” Training on “How about Awake @ Team” Seminar workshop on “Great Coach helping others succeed”

Annual fire drill Family Trip “Adventure @ Kanchanaburi” Seminar on “Work Life Balance” Seminar on “Corporate Good Governance” EGCO Group Sport Day Training on “The 7 Habits of Highly Effective People” EGCO Sport Day and New Year Party

Activities for Society and Environment General April 2, 6 - 8, and How to Fight Global Warming with Sustainable Living Project : Leading 21 - 23 teachers from 21 “Fight against global warming with sustainable living” learning centres and networking schools from 5 regions to visit BLCP,

015


016

Annual Report 2009

Roi Et Green and Khanom Power Plant Central April 23 - 26 July 3 - 8

North January 10

EGCO Green Blood Festival : Presenting energy saving and environmental friendly exhibition at Siam Paragon’s Life Style zone. Change Now for All Tomorrow Festival : Presenting edutainment exhibition and activities on “How to Fight Global Warming with Sustainable Living” at TK Park, Central World, Bangkok

A warm caring…sharing for our little friends : Children’s day activity at Baan Pha Tak School, Ampher Mae Tang, Chiangmai province by EGCO Green Blood in Northern regions. March 19 - 23 and EGCO Forest Conservation Youth Camp : Youth camp no. 29th and 26 - 30 30th at Doi Inthanon National Park, Chiangmai Province September 26 - 29 Forest : The Circle of Life 3rd Year : Organizing tree planting activity at Pha Hin Tung, Doi Inthanon National Park, Chiang Mai province. East January - December Mobile Medical Unit Project : Organizing 6 mobile medical units, providing free medical check up services for 8 communities in Mab Ka District, Rayong province. Together… to save the environment : Coral cultivation activity at January 30 February 1 Samaesarn Beach, Chonburi province by EGCO Green Blood in central regions May 19 - 22, and Khao Chamao - Khao Wang Youth Camp : Youth camp no 3rd - 4th at November 5 - 8 Khao Chamao - Khao Wong Natural Park, Rayong Province. May 20, and Coral Cultivation : at Khoo Kham, and Kho Samed, Rayong province. November 6 December 9 -18 Electricity system check up service : Electricity system check up and maintenance services for Huay Pong Community, Rayong Province South January - December • Biological Agriculture for Sustainable Living Project : seminar and demonstration workshops on “How to use Effective Microorganisms (EM) for agricultural purpose” for 12 schools in Khanom District, Nakorn Sritharmrat province. • Research on dolphin population and behaviors at Khanom District : Supporting dolphin conservation and to promote ecological tourism of Khanom and nearby communities.


Electricity Generating Public Co., Ltd.

• Breeding of Blue Swimming Crab Project : Breeding and releasing 4,148,500 blue swimming crabs into the sea, Khanom beach, Nakorn Srithamarat province. Youth Development Project : Hosting 10th Knowledge Competition at January 19, February 6 and 27 primary school level and presenting annual scholarship to the finalists. May 12 - June 2 Dolphin Name Contest : One of the activities under the project “Research on dolphin population and behaviors. June 2 The Land of Pink Dolphins container painting competitions, and Shining Beach : Beach cleaning activity to promote pink dolphin conservation and good environment along Khanom Beach June 9 New Home for undersea Livings Project 3nd Year : Organizing annual event, placing 18 containers into the sea to be an artificial coral reef. July 9 Annual donation for youth development : Khanom Power Plant : Presenting 210 scholarships and sport equipment sets to 21 schools in Khanom District, Nakorn Sritharmarat. October 13 - 16 EGCO Forest Conservation Youth Camp : 31st Youth Camp at Khao Luang Natural Park, Nakorn Sritharmarat Province. Northeast January - December • Green Learning Project : The Miracle of Biomass mobile learning camps for Primary School students, covering 9 provinces in Northeast. • Local Wisdom Learning Centre Project : Organizing demonstration workshops and study trips on “Biological way of life under the Royal Initiative on self sufficient development” for 23 communities in Muang District, Roi-et province.

017


Financial Overview Consolidated Financial Statements

20091

2008

20072

2006

2005

2004

2003

2002

2001

2000

9,145

10,320

10,939

13,839

16,022

15,620

15,378

11,463

10,732

9,697

349

378

655

848

805

852

898

669

880

854

FINANCIAL PERFORMANCE (Million Baht) Sales and service income Other income Cost of sales and cost of services

5,411

5,872

5,711

5,815

8,151

7,593

6,017

4,926

4,033

3,462

Administrative expenses and others

1,772

1,776

1,680

2,154

2,202

1,894

1,323

963

936

1,031

Impairment charge

-

-

-

-

-

(34)

170

342

-

-

568

630

839

1,166

1,859

2,220

2,631

2,807

3,299

3,325

6,273

4,619

5,051

(83)

27

29

(545)

(73)

35

(77)

114

86

134

169

264

232

303

236

203

(38)

7,903

6,952

8,281

5,299

4,378

4,595

5,287

2,784

3,175

2,694

33

(25)

121

716

(285)

67

707

174

7,936

6,927

8,402

6,016

4,093

4,662

5,994

2,958

Total Assets

62,920

58,330

53,600

50,459

61,250

55,066

56,437

55,824

52,965 55,112

Total Liabilities

11,826

12,788

11,604

14,661

29,136

25,963

29,736

34,876

33,780 37,664

Parent's shareholders' equity

50,572

45,066

41,475

35,289

31,041

28,173

25,895

20,276

18,544 16,979

521

476

521

509

1,073

982

859

724

641

469

-

-

-

-

-

(52)

(52)

(52)

-

-

5,265

5,265

5,265

5,265

5,265

5,265

5,265

5,265

5,259

5,244

Finance costs Share of profit (loss) from subsidiaries, an associate and joint ventures Net Profit (loss) attributable to Minority interest Net Profit (loss) before Fx Fx gain (loss)

(236) (1,478)

Net Profit (loss) attributable to Equity holders of the Company

2,939

1,217

FINANCIAL POSITION (Million Baht)

Minority Interest Treasury Stock Issued and paid-up share capital

PER SHARE DATA (Baht) Net Profit (loss) before Fx

15.01

13.21

15.73

10.07

8.32

8.75

10.07

5.30

6.04

5.14

Net Profit (loss)

15.07

13.16

15.96

11.43

7.78

8.88

11.41

5.62

5.60

2.32

Book Value

96.06

85.60

78.78

67.03

58.96

53.55

49.21

38.51

35.26

32.28

5.25

5.00

4.75

4.00

3.25

3.00

2.75

2.50

2.25

2.00

Dividend

RATIO ANALYSIS Liquidity ratio (Time)

8.30

2.58

4.22

1.65

2.27

3.25

2.19

2.21

2.80

2.85

Cashflows liquidity ratio (Time)

1.06

1.11

1.20

1.58

1.29

1.33

1.01

1.02

1.01

0.97

Gross profit ratio (%)

40.83

43.10

47.80

57.98

49.13

51.39

60.88

57.02

62.42

64.30

Earnings ratio (%)

50.33

45.22

50.48

41.19

24.28

28.25

38.10

24.53

25.23

11.62

Return on equity ratio (%)

16.60

16.01

21.89

18.14

13.83

17.28

26.02

15.26

16.55

7.21

Return on assets ratio (%)

13.09

12.38

16.15

10.77

7.04

8.36

10.68

5.44

5.44

2.32

Debt to equity ratio (Time)

0.23

0.28

0.28

0.41

0.91

0.89

1.11

1.66

1.76

2.16

Remarks : 1 According to the announcement published by the Department of Business Development regarding the 2009 financial statements format, the Group is required to present directors and management remuneration that used to include in cost of sales. Therefore, comparative figures have been adjusted to conform with changes in presentation in the current year. 2 From January 1, 2007, EGCO Group has changed the accounting policy for interests in joint ventures in the consolidated financial statements from "Proportionate Consolidation" to the "Equity Method"; and adopted the accounting policy regarding Employee Benefits. The retrospective adjustments have been made on 2006 financial statements.


Unit : Million Baht

Total Revenues

16,827

16,471

16,276

14,687

20,000 99,495 ,495

10,698 10 0,698

11,594 1,594

20091

2008

20072

12,132 2,132

11,612 1,612

10,551

2002

2001

2000

000 15,000 000 10,000 000 5,000 0

Share of profit (loss) from subsidiaries, an associate and joint ventures 7,000 6,000 000 5,000 000 4,000 000 3,000 000 000 2,000 1,000 000 0 (1,000) 00)

2006

2005

2004

2003

Unit : Million Baht

6,273 4,619

20091

2008

5,051

20072

(83)

27

29

(545)

(73)

35

(77)

2006

2005

2004

2003

2002

2001

2000

Unit : Million Baht

Total Expenses Excluding Currency Exchange Gains or Losses 15,000

8,279

8,230

9,135

7,751

20091

2008

20072

2006

12,212

11,673

10,141

9,039

8,268

7,818

2002

2001

2000

10,000 5,000 0

Net Profit Excluding Currency Exchange Gains or Losses

2005

2004

2003

Unit : Million Baht

8,281

7,903 6,952

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

5,287 ,

5,299 44,378 ,378

4 4,595 33,175 ,175 2 2,784

20091

2008

20072

2006

2005

2004

2003

2002

2,694

2001

2000

Unit : Million Baht

Total Assets

62,920

58,330

53,600

50,459

20072

2006

61,250

55,066

56,437

55,824

52,965

55,112

2005

2004

2003

2002

2001

2000

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

20091

2008


020

Annual Report 2009

Message from the Chairman

“...EGCO, the first independent power producer in Thailand, realize our duties to sustain our businesses...�


Electricity Generating Public Co., Ltd.

2009 was a testing year for all of us as we have to adjust our strategies and set measures to cope with the global ďŹ nancial depression, resulting from the economic crisis in the United States. The erosion of conďŹ dence within the country also dampened down both investment opportunities and domestic consumption. Fortunately, with the efforts of all sectors including the rebounding global economy, we saw the light at the end of the tunnel with improvement in overall economic and investment opportunities at the end of the year. At the same time, environmental problems especially that of the climate change caused by the greenhouse effect, has become an issue which requires everyone to ďŹ nd ways to ameliorate and solve the problems. If frivolous consumption can be discouraged while effective and conscientious use of resources is encouraged, the problem situation would be reduced. If only all of us can adjust our lives in accordance with the principles of the sufďŹ ciency economy by living self sufďŹ ciently with justiďŹ cation and self-immunity, true sustainability can be achieved. Electricity Business Situation As regards the energy business situation, particularly that of electricity generation, the government is in the process of developing a power development plan (“PDPâ€?) for the next 20 years, starting from 2010, placing priority on the stability of electricity supply system and fuel diversiďŹ cation. Since this PDP promotes the development of renewable energy in line with the target under the 15-year alternative power development plan prepared by the Ministry of energy while encouraging the efďŹ cient power generation via the co-generation system, it is considered as a green PDP. EGCO’s Growth We, Electricity Generating Public Company Limited or EGCO, the ďŹ rst independent power producer in Thailand, realize our duties to sustain our businesses. Due to limited growth opportunities in Thailand, EGCO navigates into the regional markets of which power demand remains high. For the domestic market, we will invest in fuel related and renewable energy projects to be in line with the state’s policy to ensure the system security. Our business plan is designed in a way that ensures sustainable return to all stakeholders while strengthening EGCO’s growth. In this regard, EGCO acquired newly issued shares which accounted for 33.3% of the outstanding shares in the Natural Energy Development Co., Ltd (“NEDâ€?), a company dedicated to the development of renewable energy with primary focus on wind and solar energy development. EGCO has also bought another 2.6 percent ownership in the Quezon Power Plant in the Philippines, increasing the total ownership in such company to 26%. As at the end of 2009, EGCO owns 13 power plants with a combined Megawatt equity of 3,980.7, an increase of 13.1 megawatts from 2008. Overall, we are conďŹ dent that we will be able to maintain our market shares while contributing to energy security in Thailand in a continuous and stable manner. Social Responsibility Business cannot be sustained in a failed society. We believe that our corporate social responsibility is a key success factor for the co-development of the Company and the society we live in. The two are interwined. From the beginning, EGCO has constantly taken care of the impacts from the operation of our core business on the society and the environment. From EGCO’s begining, we have embedded into our corporate culture the social awareness and public mindedness. Also, we have continuously implemented projects for the community and the society. With a collaborative effort between EGCO employees and allied agencies from both the public and private sectors, we believe that we can create a better tomorrow for all of us. Our projects in this regard cover environment and natural resources conservation, learning and public mindedness among youths, and the quality of life within the communities. Financial Result EGCO’s ďŹ nancial report in 2009 beat our expectation with the annual net proďŹ t of 7,936 million baht representing earnings per share of 15.07 baht. The interim dividend payment was made at 2.50 baht per share. We are conďŹ dent that we can maintain our dividend payment in a satisfactory and consistent level. Success The effectiveness of our business operations have been recognized by various associations and institutions. For example, EGCO was honored by the Banking and Finance Magazine as the tenth best listed companies in Thailand, and fourth in the energy and utility sector. In addition, EGCO Board of Directors was awarded the “Board of the Year for Distinctive Practicesâ€? for 2008/2009 and the “Board with Consistent Best Practiceâ€? in a contest hosted by the Thai Institute of Directors and its alliances. EGCO also received the award of Top Corporate Governance Report from the Stock Exchange of Thailand and was nominated for the award of Corporate Social Responsibility. In addition, our power plants’ achievements have been well recognized by various institutions. Our Khanom Power Plant received the EIA Monitoring Awards from the Ministry of Natural Resources and Environment for seven consecutive years. It also won the National Safety Award for ten years and Outstanding Achievement on Labor Relations and Welfareâ€? from the Ministry of Labor for three years in a row. Roi Et Green Power Plant is another good example as it received the Provincial Safety Award for the second year. EGCO’s success is based on the support of all sectors, including shareholders, customers, business partners, the communities and society which enable us to conduct our businesses efďŹ ciently. On behalf EGCO, I wish to express my appreciation to our shareholders as well as to all of our supporters. Your continued conďŹ dence and support have helped us bring out the best of our capabilities to develop the business and to optimize the return for the shareholders with business integrity and fairness to all stakeholders along with the sustainable development of the Thai society.

-R0ORNCHAI2UJIPRAPA #HAIRMAN

021


022

Annual Report 2009

     

Board of Directors

  

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023


024

Annual Report 2009

The positions of EGCO’s Board of Directors as of December 31, 2009 Name and Position 1. Mr.Pornchai Rujiprapa • Chairman • Chairman, Executive Committee

Age 57

2. Mr.Aswin Kongsiri 64 • Independent Director • Vice Chairman of the Board of Directors • Nomination and Remuneration Committee Member

Education - Ph.D. (Regional Economics.), University of Pennsylvania, U.S.A. - M.Sc. (Regional Economics.), from University of Pennsylvania, U.S.A. - M.P.A. (Programming Planning Administration) from National Institute of Development Administration (NIDA) - B.Sc. (Agro-Industry) from Kasetsart University - Certificate of Executive Program, Class 7, Capital Market Academy - Certificate of Directors Accreditation Program, Thai Institute of Directors Association - National Defense Course (Class of 41), National Defense College - Bachelor’s Degree (Honours) in Philosophy, Politics and Economics, Oxford University, England - Banff School of Advanced Management, Alberta, Canada - National Defense College, The National Defense Course for the Joint State-Private Sectors, Class 6 - Certificate of Chairman 2000 Program, Thai Institute of Directors Association - Certificate of Directors Certification Program, Thai Institute of Directors Association

3. Mr.Chaipat Sahasakul • Independent Director • Chairman, Audit Committee

55

-

4. Mr.Thanapich Mulapruk • Independent Director • Audit Committee Member

60

-

Ph.D. in Economics, University of Rochester, U.S.A. M.A. in Economics, Thammasat University B.A. in Economics, Thammasat University Certificate of Directors Certification Program, Thai Institute of Directors Association

National Defence College, 1998 (Class 41) LL.B., Chulalongkorn University Thai Bar Certificate, Thai Barrister at law of Thailand LL.M., Chulalongkorn University Certificate of Directors Certification Program (class 78), Thai Institute of Directors Association - Certificate of Executive Program, Class 7, Capital Market Academy

Family Relationship Dispute between the management -

-

-

-

-

-

-

-


Electricity Generating Public Co., Ltd.

Amount of

Working Experience

Shares (%)

Year

Position

Company

0.000

October 2006 - Present 2006 - Present December 2006 - 2008 2005 - 2009 2003 - 2006 1999 - 2003

Chairman Permanent Secretary, Ministry of Energy Director Chairman Deputy Permanent Secretary, Ministry of Energy Deputy Secretary - General, The National Economic and Social Development Board (NESBD)

Electricity Generating Authority of Thailand Ministry of Energy PTT Public Company Limited PTT Chemical Public Company Limited Ministry of Energy OfďŹ ce of the Prime Ministry

0.000

January 2009 - Present Director and Audit Committee Member October 2007 - Present Chairman 2005 - Present Director and Chairman, Risk Management Committee 2005 - Present Director, Executive Director and Chairman, Risk Management Committee 1999 - Present Director and Chairman, Audit Committee 1993 - Present

The OHTL Public Company Limited (Mandarin Oriental Hotel) Thai Reinsurance Public Company Limited

1992 - March 2006 1981 - Present

Thai Rating and Information Services Company Limited Muang Thai Life Assurance Company Limited Padaeng Industry Public Company Limited

Director, Audit Committee Member And Nomination Committee Member 2003 - November 2008 Director and Audit Committee Member

0.000

May 2009 - Present July 2005 - Present 2001 - March 2009 2005 - 2006 1998 - 2001

0.000

Thoresen Thai Agencies Public Company Limited Ch. Karnchang Public Company Limited Bangkok Aviation Fuel Services Public Company Limited Krung Thai Bank Public Company Limited

Director Director, Audit Committee Member and Nomination and Remuneration Committee Member Chairman, University Research policy Committee Independent Director, Audit Committee Member Secretary - General Director, Audit Committee Member and Chairman of Risk Management Committee Senior Executive Vice President

1991 - 1996 Senior Vice President and Spokesman 1989 - 1991 Executive Vice President February 2009 - Present Director April 2008 - Present October 2005 - Present April 2008 - October 2008 October 2007 February 2008 November 2008 Present

Director Director Director Director Spokesperson

Bangkok University Pylon Public Company Limited Agricultural Futures Trading Commission Government Housing Bank MFC Asset Management Public Company Limited Stock Exchange of Thailand Morgan Grenfell Thai Company Limited The Airports of Thailand Public Company Limited The Port Authority of Thailand The Transport Company Limited The Bangkok Mass Transit Authority The Marketing Organization for Farmers, Ministry of Agriculture and Cooperatives OfďŹ ce of Attorney-General

025


026

Annual Report 2009

Family Relationship Dispute between the management

Name and Position

Age

Education

5. Mrs.Wattanee Phanachet • Independent Director • Audit Committee Member (Vacating the office by rotation in AGM on April 24, 2009)

72

- M.A. Degree in Accounting, University of Alabama, U.S.A. - Bachelor Degree in Accounting, Chulalongkorn University, Bangkok, Thailand - Certified Public Accountant (CPA), Thailand License No. 1091 - Certificate of Directors Certification Program, Thai Institute of Directors Association

-

-

6. Police Lieutenant General Pijarn Jittirat • Independent Director

61

-

-

7. Mr.Somphot Kanchanaporn • Independent Director • Audit Committee Member

63

- Master of Public Administration, Chulalongkorn University - Bachelor of Public Administration, Police Cadet Academy - Advanced Course in Administration, Class 29, Institute of Administration Development - Advanced Course in Police Administration, Class 13 - National Defense College Class 44 - MBA, National Institute of Development Administration (NIDA) - B.S. (Police Science and Administration), California State University at Los Angeles - Certificate of Directors Accreditation Program (DAP), Thai Institute of Directors Association - National Defense College, (Class 41) - Certificate of Executive Program, Class 7, Capital Market Academy

-

-

- Master of Political Science, Sukhuthai Thammathirat University - Bachelor of Engineering, Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of Public Law and Management, Class 1, King Prajadhipok’s Institute - Certificate of Democratic Politics and Governance for HighLevel Administrators, Class 7, King Prajadhipok Institute - Certificate of Management of Public Economy, Class 1, King Prajdhipok’s Institute - Certificate of Executive Program, Class 3, Capital Market Academy

-

-

8. Mr.Phaiboon Siripanoosatien 46 • Independent Director • Nomination and Remuneration Committee Member


Electricity Generating Public Co., Ltd.

Amount of Shares (%)

0.000

0.000

0.000

0.000

Working Experience Year

Position

October 2009 - Present Director General of Department of Special Litigation December 2006 Director General of Department of Economic September 2009 Crime Litigation 2006 Director General of Department of Administrative Litigation 2004 - 2006 Deputy Director General of Department of Administrative Litigation 2003 - 2004 Executive Director of Office of Economic Crime Litigation 1 October 2007 - Present Independent Director and Audit Committee Member 1999 - Present Director and Audit Committee Member 1999 - Present Independent Director and Audit Committee Member 1999 - 2006 Independent Director and Audit Committee Member 2006 - 2007 Committee on Curriculum Quality Guarantee, Faculty of Commerce and Accountancy 2005 - 2007 Head, Sub-Committee on Certified Public Accountant’s Qualification, appointed by the Federation of Accounting Professions 2006 - 2008 Deputy Inspector-General 2005 - 2006 Commissioner, Office of Legal and Investigation 2004 - 2005 Deputy Commissioner, Office of Human Resources 2002 - 2004 Assistant Commissioner, Office of Human Resources January 2009 - Present Director 2008 - Present Chairman of the Inspector General Committee 2008 - April 2009 Independent Director 2007 October 2006 - 2008 December 2006 - 2008 November 2003 November 2005 August - November 2003 2009 - Present 2009 - Present 2008 - Present 2008 - Present 1998 - Present

Company Office of Attorney-General Office of Attorney-General Office of Attorney-General Office of Attorney-General Office of Attorney-General ESSO (Thailand) Public Company Limited Thai Poly Acrylic Public Company Limited Capital Nomura Securities Delta Electronics (Thailand) Public Company Limited Chulalongkorn University Federation of Accounting Professions

Royal Thai Police Royal Thai Police Royal Thai Police Royal Thai Police

Independent Director Member Chairman of Standing Committee on Energy Deputy Director (Executive Level 10)

B N B Inter Group Public Company Limited Ministry of Energy PTT Aromatics and Refining Public Company Limited Aromatics (Thailand) Public Company Limited The National Legislative Assembly The National Legislative Assembly The National Intelligence Agency

Deputy Secretary-General

The Office of the National Security Council

Director Independent Director Independent Director and Audit Committee Member Independent Director Managing Director

Government Saving Bank Asia Credit Securities Company Limited Finansia Syrus Securities Public Company Limited Metrostar Property Public Company Limited Trinity Plus Company Limited

027


028

Annual Report 2009

Name and Position 9. Mr.Wisudhi Srisuphan • Director (Authorized Director)

Age 60

Education -

Family Relationship Dispute between the management

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

-

-

10. Mr.Apichart Dilogsopon 60 • Director • Executive Committee Member (Authorized Director)

- Master of Business Administration, Kasetsart University - Bachelor of Engineering (Civil Engineering), Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association

-

-

11. Mr.Somboon Arayaskul 56 • Director • Nomination and Remuneration Committee Member • Corporate Social Responsibility Committee Member (Authorized Director)

- Master of Engineering (Mechanical Engineering) Villanova University, U.S.A. - Bachelor of Engineering (Mechanical Engineering) Mapua Institute of Technology, Philippines - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of the General Manager Program, Harvard Business School

-

-

12. Mr.Peter Albert Littlewood • Director (Authorized Director)

- MA (1st Class Honours), Cambridge University, UK

-

-

-

58


Electricity Generating Public Co., Ltd.

Amount of

Working Experience

Shares (%)

Year

0.000

December 2009 Present October 2008 - Present July 2008 - Present October 2006 - Present August 2004 - Present 2009 2008 - 2009 2007 - 2008 2007 2006 - 2009 2006 - 2009

Chairman of the Board

Siam City Bank Public Company Limited

Director Duty Chairman Director Chairman of the Board Director-General Deputy Permanent Secretary Director-General Director-General Chairman of the Board Director

2006 - 2008

Chairman of the Board

2005 - 2006 2003 - 2007 2002 - 2006

Chairman of the Board Director-General Director

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

Director-General Chairman of the Board Director Comptroller-General

October 2009 - Present October 2007 September 2008 October 2006 December 2007 October 2005 September 2006 October 2004 September 2005 December 2007 Present October 2006 December 2007 April 2008 - January 2009

Deputy Governor to Office of the Governor Deputy Governor-System Control

The Electricity Generating Authority of Thailand Dhipaya Insurance Public Company Limited Office of the Council of State Real Estate Information Center The Custom Department, Ministry of Finance Ministry of Finance The Custom Department, Ministry of Finance The Excise Department, Ministry of Finance The Government Saving Bank Thai Airways International Public Company Limited Thailand of Tobacco Monopoly, Ministry of Finance CAT Telecom Public Company Limited The Treasury Department, Ministry of Finance PTT Exploration and Production Public Company Limited Fiscal Policy Office, Ministry of Finance The Government Saving Bank PTT Public Company Limited The Comptroller’s Department, Ministry of Finance Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

0.000

0.000

0.000

Position

Company

Deputy Governor-Administration and Acting EGAT Spokesman Assistant Chief Executive Officer-Services

Electricity Generating Authority of Thailand

Assistant Governor-Demand Side Management

Electricity Generating Authority of Thailand

Deputy Governor-Development

Electricity Generating Authority of Thailand

Electricity Generating Authority of Thailand

Vice President-Thermal Power Plant Construction Electricity Generating Authority of Thailand Director

Ratchaburi Electricity Generating Holding Public Company Limited

2003 - Present 2001 - Present 2000 - 2005

Executive Director and Chief Operating Officer Director Director

2000 - 2005

Director

2000 - 2005

Director

1999 - 2003

Project Manager for CLP’s generating plant projects General Manager for CLP’s generation business group and later for CLP strategic development

CLP Power Asia Limited, Hong Kong BLCP Power Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited CLP Group

1998

CLP Group

029


030

Annual Report 2009

Name and Position

Age

Education

Family Relationship Dispute between the management

13. Mr.Hideaki Tomiku 52 • Director • Executive Committee Member (Authorized Director)

- International Law, Tokyo University

-

-

14. Mr.Mark Takahashi 51 • Director • Executive Committee Member • Chairman, Nomination and Remuneration (Authorized Director) (Vacating the office by resignation on June 22, 2009) 15. Mr.Hideo Kuramochi 47 • Director (Authorized Director) (Vacating the office by resignation on June 22, 2009)

- MBA, Wharton School, University of Pennsylvania, U.S.A. - BSc. (civil engineering) from the University of Colorado, U.S.A.

-

-

- B.Sc. (Electronics and Telecommunication), Waseda University, Tokyo

-

-

16. Mr.Mark Jobling 38 • Director • Executive Committee Member • Chairman, Nomination and Remuneration (Authorized Director) 17. Mr.Shinji Tsuchiya 39 • Director (Authorized Director)

-

Bachelor of Economic, Monash University Bachelor of Laws (Honours), Monash University Barrister and Solicitor (Victoria) Solicitor (Hong Kong)

-

-

- Bachelor of Engineering (Mechanical Engineering), Keio University

-

-

- Master of Science (Industrial Engineering), University of Texas at Arlington, U.S.A. - B.Eng. (Mechanical), Kasetsart University - Certificate of Advance Management Program, Harvard Business School, Harvard University, U.S.A. - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Certificate of Army War College Regular Program, Institute of Army Academics - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of Leader Program, Capital Market Academy

-

-

18. Mr.Vinit Tangnoi 58 • Director • Executive Committee Member • Chairman, Risk Management Committee • Chairman, Group Business Committee • Chairman, Good Corporate Governance Committee • Chairman, Corporate Social Responsibility Committee (Authorized Director)


Electricity Generating Public Co., Ltd.

Amount of

Working Experience

Shares (%)

Year

Position

0.000

May 2009 - Present 2006 - Present 2003 - 2006

Chief Executive OfďŹ cer Director and Executive Vice President Deputy General Manager, Head of International IPP Assistant General Manager, Power Generation & Marketing for Japanese Market CLP Group CFO Managing Director

Diamond Generating Asia, Limited OneEnergy Limited Mitsubishi Corporation

Group Director - Corporate Development Director of Group Treasury

CLP Holdings Limited CLP Holdings Limited Intergen (Hong Kong) Intergen, Boston, U.S.A. Mitsubishi Corporation

0.000

2002 2009 - Present 2006 - 2009 2003 - 2006

Regional Finance VP/Corporate Treasurer Deputy General Manager and Head of Southeast Asia IPP, Power Generation and Marketing International Unit, Executive Committee Member Head of Southeast Asia IPP, Power Generation and Marketing International Unit Head of International IPP, Power Generation and Marketing International Unit Power Generation and Marketing International Unit Managing Director-Southeast Asia Senior Vice President - Business Development General Counsel

0.000

April 2009 - Present

Head of Southeast Asia IPP

November 2005 March 2009 November 2005

Manager

2001 - 2003 0.000

0.000

April 2009 - Present October 2006 - April 2009 July 2006 December 2003 July 2006 1995 - 2003 2008

2007 2006

0.000

Commercial Director

August 2009 - Present Chairman October 2008 - Present Chairman

October 2008 September 2009 January 2009 - Present October 2008 - Present December 2007September 2008 2006 - 2008

Chairman

March 31, 2006 October 1, 2005 June 24, 2005 October 1, 2004 October 1, 2003

Deputy Governor-System Control Senior Executive Vice President-System Control Assistant Chief Executive OfďŹ cer-Planning Assistant Governor-Policy and Planning Assistant Governor-Fuel Management

Director Director Deputy Governor-Generation Director

Company

Mitsubishi Corporation CLP Holdings Limited OneEnergy Limited

OneEnergy Limited Mitsubishi Corporation Mitsubishi Corporation Mitsubishi Corporation CLP Holding OneEnergy CLP Power Asia

Power Generation and Marketing Internatinal Unit of Mitsubishi Corporation Power Generation and Marketing Internatinal Unit of Mitsubishi Corporation Electricidad Aguila de Tuxpan (co.) Elctricidad Sol de Tuxpan Natural Energy Development Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Service Company Limited Rayong Electricity Generating Company Limited Gulf Electric Company Limited BLCP Power Company Limited Electricity Generating Authority of Thailand EGAT International Company Limited Ratchaburi Electricity Generating Holding Public Company Limited Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

031


032

Annual Report 2009











Company’s Management  -R2ASDA0ONGPAEW p 3ENIOR%XECUTIVE6ICE0RESIDENT

 -R#HANKIJ*EARAPHUNT p 3ENIOR%XECUTIVE6ICE0RESIDENT

 -R*OHN-0ALUMBO p 3ENIOR%XECUTIVE6ICE0RESIDENT

p -ANAGING$IRECTOR %'#/ %NGINEERINGAND3ERVICE #OMPANY,IMITED p 2ISK-ANAGEMENT#OMMITTEE -EMBER p 'OOD#ORPORATE'OVERNANCE #OMMITTEE-EMBER p 'ROUP"USINESS#OMMITTEE -EMBER

p -ANAGING$IRECTOR +HANOM %LECTRICITY'ENERATING#OMPANY ,IMITED p 2ISK-ANAGEMENT#OMMITTEE MEMBER p 'OOD#ORPORATE'OVERNANCE #OMMITTEE-EMBER p #ORPORATE3OCIAL2ESPONSIBILITY #OMMITTEE-EMBER p 'ROUP"USINESS#OMMITTEE -EMBER

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p $IRECTOR 2AYONG0OWER0LANT p 2ISK-ANAGEMENT#OMMITTEE -EMBER p 'OOD#ORPORATE'OVERNANCE #OMMITTEE-EMBER p 'ROUP"USINESS#OMMITTEE -EMBER

"USINESS$EVELOPMENT p 2ISK-ANAGEMENT#OMMITTEE -EMBER p 'OOD#ORPORATE'OVERNANCE #OMMITTEE-EMBER


Electricity Generating Public Co., Ltd.

  

  

 -R3AKUL0OCHANART p %XECUTIVE6ICE0RESIDENT

 -R6ORAVIT0OTISUK p %XECUTIVE6ICE0RESIDENT

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3TRATEGYAND#ORPORATE -ANAGEMENT p 2ISK-ANAGEMENT#OMMITTEE -EMBER

p 'OOD#ORPORATE'OVERNANCE #OMMITTEE-EMBER

"USINESS$EVELOPMENT $OMESTIC

"USINESS$EVELOPMENT )NTERNATIONAL

 -R+IATICHAI3ILJITSONG p %XECUTIVE6ICE0RESIDENT

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!SSET-ANAGEMENT

&INANCE

#ORPORATE3ERVICES

033


034

Annual Report 2009





 -R0IYA*ETASANON p &IRST3ENIOR6ICE0RESIDENT

 -R3UVAPAN#HOMCHALERM p 3ENIOR6ICE0RESIDENT

&INANCE

!CCOUNTINGAND"UDGET


Electricity Generating Public Co., Ltd.

 



  

 -R.ARONG)N %AV p 2%'#/$EPUTY$IRECTOR

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/PERATION

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 -R-ANA6ITAVASAKUL p +%'#/$EPUTY-$

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035


036

Annual Report 2009

The positions of the Management and the Control Persons as of December 31, 2009 Name and Position

Age

Education

Family Relationship Dispute between the management

1. Mr.John M. Palumbo 45 • Senior Executive Vice President - Business Development • Risk Management Committee Member • Good Corporate Governance Committee Member

- Bachelor of Science in Mechanical Engineering (Honors), Columbia University, School of Engineering and Applied Science, New York

-

-

2. Mr.Sakda Sreesangkom 47 • Senior Executive Vice President - Finance • Risk Management Committee Member • Group Business Committee Member • Good Corporate Governance Committee Member • Corporate Social Responsibility Committee Member (Vacating the office by resignation on August 24, 2009)

- M.A. (Economics), Keio University, Japan - B.A. (Economics), Thammasat University

-

-

3. Ms.Pikul Srisastra 58 • Senior Executive Vice President - Finance and Corporate Services • Risk Management Committee Member • Group Business Committee Member • Good Corporate Governance Committee Member • Corporate Social Responsibility Committee Member

- B.Sc. (Accounting), Chulalongkorn University - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Executive Leadership Program (ELP-NIDA Wharton)

-

-


Electricity Generating Public Co., Ltd.

Amount of

Working Experience

Shares (%) 0.000

Year August 2009 - Present Director 2004 - Present Director 2005 - May 2008 Director 2004 - April 2007 30 Jan 2007 November 2008 2003 - 2004 2003 - 2004 2003 1995 - 2003

0.000

Position

April 2008 - August 2009 30 Jan 2007 - August 2009 2004 - Present 2002 - August 17, 2009

Director Director

ADB Technical Assistance Program International Power PLC. Delta Associates (Thailand) Limited

Director Director

Nam Theun 2 Power Company Limited BLCP Power Company Limited

Director Director

Gulf Electric Public Company Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited EGCO International (BVI) Limited EGCO Joint Ventures & Development Company Limited Egcom Tara Company Limited Egcom Tara Company Limited Amata-EGCO Power Company Limited Amata Power (Bangpakong) Company Limited Gulf Electric Public Company Limited BLCP Power Company Limited EGCO International (BVI) Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited Electricity Generating Public Company Limited EGCO Joint Ventures & Development Company Limited Electricity Generating Public Company Limited

2002 - August 17, 2009 Director 2002 - August 2009 2002 - April 2007

Director Director

2005 - April 2006 2002 - 2005 2002 - April 2007 2002 - 2003

Chairman Director Director Director

August 2009 - Present Director

2007 - August 2009 2007

Executive Vice President - Finance Director

2006 2002 - 2005 2002 - 2005

Executive Vice President - Controller Executive Vice President - Finance Deputy Managing Director - Finance & Administration Director Director

2002 - 2003 2002 - 2003 2001 - 2002 2001

Natural Energy Development Company Limited Gulf Electric Public Company Limited EGCO Joint Ventures & Development Company Limited Nam Theun 2 Power Company Limited BLCP Power Company Limited

Independent Consultant to the Managing Director and the Head of the Southeast Asia Business Team Leader & Infrastructure Specialist Independent Consultant to Chief Executive OfďŹ cer Principal and Managing Director

2002 - August 17, 2009 Director

0.000

Company

Deputy Managing Director - Finance & Administration Director

China Light & Power Group (Hong Kong)

Rayong Electricity Generating Company Limited Gulf Electric Public Company Limited EGCO Joint Ventures Development Company Limited Khanom Electricity Generating Company Limited Amata-EGCO Power Company Limited

037


038

Annual Report 2009

Name and Position

Age

Education

Family Relationship Dispute between the management

4. Mr.Chumsak Desudjit 55 • Senior Executive Vice President • Director-Rayong Power Plant • Risk Management Committee Member • Good Corporate Governance Committee Member • Group Business Committee Member

- B. Eng. (Mechanical Engineering), Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate in Executive Leadership Program, Joint Program NIDA-Wharton, University of Pennsylvania - Graduate Diploma in Management of Public Economy (MPE-7), King Prajadhipok’s Institute

-

-

5. Mr.Chankij Jearaphunt 55 • Senior Executive Vice President • Managing Director - Khanom Electricity Generating Company Limited • Risk Management Committee member • Good Corporate Governance Committee Member • Corporate Social Responsibility Committee Member • Group Business Committee Member

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

-

-

6. Mr.Rasda Pongpaew 59 • Senior Executive Vice President • Managing Director - Egco Engineering and Service Company Limited • Risk Management Committee Member • Good Corporate Governance Committee Member • Group Business Committee Member 7. Mrs.Ngamphis Chitphromphan 54 • Executive Vice President Finance

- B.Sc (Mech.Eng), Prince of Songkla University - NDT Level 2 : Sperry School for NDT Columbus, Ohio, U.S.A. - NDT Lever 3 : Combustion Engineering Training Centre Connecticut, U.S.A. - MINI MBA : Chulalongkorn University - NIDA - Wharton : Executive Leadership Program (ELP), Wharton, University of Pennsylvania, U.S.A. - Director Certification Program : Thai Institute of Directors Association (IOD)

-

-

- Master of Business Administration, Catholic University of Leuven, Belgium (Governmental Scholarship) - Master of Science - Accounting, Thammasat University - Bachelor of Accountancy (Honors), Chulalongkorn University - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - MBA, Ramkhamhaeng University - B.A. (Economics), Thammasat University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of TLCP Executive Development Program, Thai Listed Companies Association

-

-

-

-

-

-

8. Mr.Piya Jetasanon • First Senior Vice President Finance

52

9. Mr.Suvapan Chomchalerm • Senior Vice President Accounting and Budget

49

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


Electricity Generating Public Co., Ltd.

Amount of Shares (%) 0.000

0.000

Working Experience Year

Position

2008 - September 2009 Director and Managing Director 2008 - present Director April 2009 - Present April 2009 - Present 2007 - Present April 2008 - June 2009

Chairman Chairman Chairman Director

2006 - 2007 2001 - 2007 1998 - 2000 2004 - Present 2004 - Present April 2008 - Present

Director Deputy Managing Director Operation Group Operation Division Manager Director and Managing Director Director Director

2004 - September 2009 Director April 2007-April 2009 Chairman

0.000

2002 - April 2008

Director

2006 - April 2007

Director

1998 - 2004

Deputy Managing Director-Operation

2008 - Present

Director

2006 - Present

Director and Managing Director Director

2006 - September 2009 Director

0.000

1998 - 2005

Deputy Managing Director

1996 - 1998

Project Director Amata

2008 - Present

1997 - 2005

Deputy Managing Director & Chief Financial Officer (EGCO’s Representative) Deputy Managing Director - Finance and Administrative Accounting & Finance Division Manager

2001 - Present 2007 - Present 2007 2005 - Present 2003 - 2005 1996 - 2003 1994 - 1996

Certified Public Accountant (CPA) Director Director First Senior Vice President - Finance Senior Vice President - Finance Manager - Finance Division Manager - Treasury Management Section

2000 - Present

Senior Vice President - Accounting and Budget Division Manager-Accounting and Budget Analysis Section, Accounting and Budget Division

2005 - 2008

0.000

0.000

1994 - 2000

Company Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited Roi-Et Green Company Limited EGCO Green Energy Company Limited EGCO Cogeneration Company Limited Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited EGCO Cogeneration Company Limited Rayong Electricity Generating Company Limited Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering & Service Company Limited Gulf Energy Company Limited Gulf IPP Company Limited Gulf Power Generation Company Limited Rayong Electricity Generating Company Limited Roi-Et Green Company Limited EGCO Green Energy Company Limited Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited Roi-Et Green Company Limited EGCO Green Energy Company Limited Khanom Electricity Generating Company Limited Eastern Water Resources Development and Management Public Company Limited Egco Engineering and Service Company Limited Khanom Electricity Generating Company Limited Rayong Electricity Generating Company Limited Egco Engineering and Service Company Limited Amata-Egco Power Limied BLCP Power Limited Khanom Electricity Generating 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 Electricity Generating Public Company Limited Electricity Generating Public Company Limited

039


Mr.Pornchai Rujiprapa Mr.Aswin Kongsiri Mr.Chaipat Sahasakul Pol Lt Gen Pijarn Jittirat Mr.Somphot Kanchanaporn Mr.Phaiboon Siripanoosatien Mr.Thanapich Mulapruk Mr.Wisudhi Srisuphan Mr.Somboon Arayaskul Mr.Peter Albert Littlewood Mr.Mark Jobling Mr.Hideaki Tomiku Mr.Shinji Tsuchiya Mr.Apichart Dilogsopon Mr.Vinit Tangnoi

Mr.Chumsak Desudjit Mr.Chankij Jeraphunt Mr.Rasda Pongpaew Mrs.Ngamphis Chitphromphan

FSVP - Finance SVP - Accounting and Budget Company Secretary, SVP - Corporate Secretary

SEVP - Business Development & Management, G SEVP - Finance & Corporate Services, S, G SEVP, S, G SEVP, S, G SEVP, S, G EVP

DDD, XX DD, I, N I, AA I I, A I, N I, A D D, N D D, NN, X D, X D D, X D, President, X, SS, GG

EGCO

Engineering Level 14

D Deputy Govenor

1 DDD

D, X

2

Major Shareholders

D

DDD

5

D

D

6

8

DDD DDD

7

Subsidiaries

D DDD D D, Managing Director D D D, Managing Director

D

DDD

Subsidiaries (Core Business) 3 4 Joint Ventures

D

D

D

D D D D

D D D D D D D D D

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

D Deputy Managing Director

D

D

D

D

24

D

DD

D

25 26

Remark A. DDD = Chairman DD = Vice Chairman D = Director XX = Chairman of Executive Committee X = Executive Committee Member I = Independent Director AA = Chairman of Audit Committee A = Audit Committee Member NN = Chairman of Nomination and Remuneration Committee N = Nomination and Remuneration Committee Member SS = Chairman of Group Business Committee S = Group Business Committee Member GG = Chairman of Good Corporate Governance Committee G = Good Corporate Governance Committee Member B. 1 = Electricity Generating Authority of Thailand 8 = Roi-Et Green Co., Ltd. 15 = GPI Quezon Ltd. 22 = Alto Power Management Corporation 2 = OneEnergy Thailand Limited 9 = Egcom Tara Co., Ltd. 16 = Quezon Generating Co., Ltd. 23 = Western Mindanao Power Corporation 3 = Khanom Electricity Generating Co., Ltd. 10 = Gulf Electric Public Company Limited 17 = Quezon Power Inc. 24 = BCLP Power Limited 4 = EGCO Cogeneration Co., Ltd. 11 = Gulf Power Generation Co., Ltd. 18 = Conal Holdings Corporation 25 = Nautral Energy Development Co., Ltd. 5 = EGCO Engineering and Service Co., Ltd. 12 = Gulf Cogeneration Co., Ltd. 19 = Northern Mindanao Power Corporation 26 = Eastern Water Resources Development and Management Plc. 6 = EGCO International (BVI) Ltd. 13 = Gulf Energy Co., Ltd. 20 = Alsing Power Holdings, Inc. 7 = EGCO Green Energy Co., Ltd. 14 = Gulf IPP Co., Ltd. 21 = Southern Philippines Power Corporation

22 Mr.Piya Jetasanon 23 Mr.Suvapan Chomchalerm 24 Miss Busakorn Kakanumpornwong

18 19 20 21

17 Mrs.Pikul Srisastra

16 Mr.John Palumbo

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

Name

The Positions of EGCO’s Management and the Control Persons in the Subsidiaries and Other Related Companies as of December 31, 2009

040 Annual Report 2009


Mr.Vinit Tangnoi Mr.Pikul Srisastra Mr.Kwok Wing Ho Mr.Nopporn Phansaengdao Mr.Wattanee Phanachet Mr.Chumsak Desudjit Mr.Rasda Pongpaew Mr.Chankij Jearaphunt Mr.Mana Vitvaskul Mrs.Krisna Pinkaew

KEGCO

DD

1 2 DD D D D D D D, Managing Director D DD

4

DD

5

6

7 D D

11 = Samutprakarn Cogeneration Co., Ltd. 12 = Gulf Energy Co., Ltd. 13 = Gulf IPP Co., Ltd. 14 = Nam Thuen 2 Power Co., Ltd. 15 = BLCP Power Limited Ltd.

D

3

D

8

10

11

D

12

D

13

14

Mr.Chumsak Desudjit Mr.Voravit Potisuk Mr.Piya Jetasanon Mr.Supoth Chantavilartkul Mr.Jotaro Higuchi

EGCO Cogen 1 D

2 D

5 = Egcom Tara Co., Ltd. 6 = Gulf Electric Public Co., Ltd. 7 = Gulf Power Generation Co., Ltd. 8 = Gulf Cogeneration Co., Ltd.

DD D D D, General Manager D

Remark A. DD = Chairman D = Director B. 1 = Khanom Electricity Generating Co., Ltd. 2 = EGCO Engineering & Service Co., Ltd. 3 = EGCO Green Energy Co., Ltd. 4 = Roi-Et Green Co., Ltd.

1 2 3 4 5

Name

D

D

5

6

7

9

10

11

13 = Northern Mindanao Power Corporation 14 = Quezon Generating Co., Ltd.

8

Other Companies in EGCO Group

9 = Nongkhae Cogeneration Co., Ltd. 10 = Samutprakarn Cogeneration Co., Ltd. 11 = Gulf Energy Co., Ltd. 12 = Conal Holdings Corporation

4 DD

3 DD

D

15 D D

D

16

17 DD

D

12

D

13

D

14

16 = Eastern Water Resources Development and Management Public Co., Ltd. 17 = Natural Energy Development Co., Ltd.

9

Other Companies in EGCO Group

The Positions of EGCO Cogen’s Management and the Control Persons in EGCO Group Companies as of December 31, 2009

6 = Egcom Tara Co., Ltd. 7 = Gulf Electric Public Co., Ltd. 8 = Gulf Power Generation Co., Ltd. 9 = Gulf Cogeneration Co., Ltd. 10 = Nongkhae Cogeneration Co., Ltd.

DD D D D D D D D, Managing Director Deputy Managing Director - Operation Deputy Managing Director Finance and Administration Maintenance Division Manager Operation Division Manager Account & Budget Division Manager General Affairs Division Manager

11 Mr.Tanit Kalunkul 12 Mr.Amnat Tippayasak 13 Mr.Apichai Komhint 14 Mr.Pairote Boonmak Remark A. DD = Chairman D = Director B. 1 = EGCO Cogeneration Co., Ltd. 2 = EGCO Engineering & Service Co., Ltd. 3 = EGCO International (BVI) Ltd. 4 = EGCO Green Energy Co., Ltd. 5 = Roi-Et Green Co., Ltd.

1 2 3 4 5 6 7 8 9 10

Name

The Positions of KEGCO’s Management and the Control Persons in EGCO Group Companies as of December 31, 2009

Electricity Generating Public Co., Ltd.

041


042

Group Structure and Shareholders As of December 31, 2009 Natural Energy Development Co., Ltd. (NED)

33.33% Khanom Electricity Generating Co., Ltd. (KEGCO)

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

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

Electricity Generating Authority of Thailand (EGAT)

100.00%

25.41%

EGCO Cogeneration Co., Ltd. (EGCO Cogen)

80.00% OneEnergy Thailand Ltd.

EGCO Green Energy Co., Ltd. (EGCO Green) Electricity Generating Public Co., Ltd.

22.42%

74.00% Gulf Electric Public Co., Ltd. (GEC)

50.00% General Public

52.17%

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

25.00% BLCP Power Limited (BLCP)

50.00% Eastern Water Resources Development & Management Public Co., Ltd. (EAST Water) 18.72% Power Generation Services Co., Ltd. (PGS)

50.00%


043

Agro Energy Co., Ltd. (AE)

99.99% Egcom Tara Co., Ltd. (ET)

70.00% Conal Holding Corporation (Conal)

40.00% GPI Quezon Ltd. (GPIQ)

100.00%

Alto Power Management Corporation (APMC)

60.00%

APMC International Ltd.

100.00%

Northern Mindanao Power Corporation (NMPC)

64.50% Alsing Power Holding Inc. (Alsing)

80.00% Quezon Power (Philippines) Limited Co., (QPL)

26.00%

Western Mindanao Corporation (WMPC)

55.00% Southern Philippines Power Corporation (SPPC)

55.00%

Roi-Et Green Co., Ltd. (Roi-Et Green)

95.00% Gulf Yala Green Co., Ltd. (GYG)

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

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

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

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

99.99%

Gulf IPP Co., Ltd. (GIPP)

99.99%

Gulf Power Generation (GPG)

99.99%


044

Organization Chart As of December 31, 2009

Corporate Social Responsibility Committee Nomination & Remuneration Committee Executive Committee Corporate Secretary Division

Audit Committee

Internal Audit Division

SEVP - Business Development & Management

Rayong Power Plant

EVP - Business Development (International)

EVP - Business Development (Domestic)

EVP - Asset Management

Project Developers

Project Developers

Asset Management Division

Development Team

Project Management Division

Engineering Division

Assigned Staffs to Project / JV Companies Report Functionally Report Administratively Remark : SEVP = Senior Executive Vice President EVP = Executive Vice President


045

Board of Directors

President

Seconded Management To Subsidiaries

SEVP - Finance & Corporate Services

EVP - Finance

EVP - Corporate Services

Finance Division

Procurement & Administration Division

Corporate Planning Division

Accounting & Budget Division

Legal Division

Human Resources Division

MIS Division

Corporate Communication Division

EVP - Strategy & Corporate Management

Controller Division


046

Annual Report 2009

“...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...�


Electricity Generating Public Co., Ltd.

Business Characteristics The Electricity Generating Public Company Limited or EGCO is the first independent power producer in Thailand incorporated on May 12, 1992 by the Electricity Generating Authority of Thailand (“EGAT”). Such incorporation marked the commencement of the Thai government’s privatization initiatives to allow broader private sector investment in the electricity generating sector. On March 23, 1994, EGCO was transformed into a public company and then listed on the Stock Exchange of Thailand (SET) on January 16, 1995. Since EGCO is a holding company, its main source of revenue is from the dividend income from subsidiaries and share of profits from joint ventures which are located in both Thailand and the Asian region. EGCO Group companies either operate in the power sector with long term PPA or conduct other related business.

Business Lines EGCO businesses can be categorized into 4 groups as follows : 1. Independent Power Producer (“IPP”) Group : This Group comprises 4 power plants being Rayong Power Plant, Khanom Electricity Generating Co., Ltd., BLCP Power Ltd., and Gulf Power Generation Co., Ltd. The combined MW equity is 3,528 MW which accounts for 88.63% of EGCO’s total operating assets capacity. 2. Small Power Producer (“SPP”) Group : This Group comprises 6 power plants being EGCO Cogeneration Co., Ltd., Roi-Et Green Co., Ltd., Gulf Cogeneration Co., Ltd., Nong Khae Cogeneration Co., Ltd., Samutprakarn Cogeneration Co., Ltd., and Gulf Yala Green Co., Ltd. The combined capacity was 293.06 MW equity, representing 7.36% of EGCO’s total operating assets capacity. 3. Overseas Power Producer Group : This Group comprised 4 power plants being Western Mindanao Power Corporation, Southern Philippines Power Corporation, Quezon Power (Philippines) Ltd., Co., in Philippines and Nam Theun 2 Power Co., Ltd., in Lao PDR. The combined MW equity (excluding NTPC of which the project is under construction) was 159.58 MW, representing 4.01% of EGCO’s total operating assets capacity. 4. Other Business Group : This Group comprises 2 operation and maintenance companies being EGCO Engineering and Service Co., Ltd., and Power Generation Services Co., Ltd. and two water supply companies being Egcom Tara Co., Ltd., and the Eastern Water Resources Development and Management Public Co., Ltd.

047


048

Annual Report 2009

Details of each project are shown in the table at the end of this report.

Revenue Profile The major source of income is from IPP group. The 2009 net profit before foreign exchange gain and loss of each business line is as shown below. Unit : Million baht Overseas 9% SPP 6%

Others 2%

2009 EGCO IPP SPP Overseas

Profit before FX - 2009

IPP 83%

Before FX After FX (550) (550) 6,680 7,169 516 634 693 523

Other Business Total

166 7,5051

160 7,936

Remarks : Profits before FX had separated out foreign exchange impact from EGCO, subsidiaries and joint ventures. - IPP : REGCO, KEGCO, BLCP, GPG - SPP : GCC, SPCC, NKCC, GYG, EGCO Cogen, Roi-Et Green - Overseas : Conal, NTPC, Quezon - Others : ESCO, Egcom Tara, NED

Detail of the revenue profile analysis is shown in the Management Discussion and Analysis on page 116.

Significant Events As at December 31, 2009, EGCO Group operated 13 power plants with 3,980.64 MW equity. The power sold to EGAT under a long term PPA was 3,599.60 MW which accounted for 12.32% of the national installed capacity of 29,212 MW. EGCO’s MW equity in 2009 increased from 2008 by 13.07 MW. Highlights of the events in 2009 were as follows : 1. On March 30, 2009, EGCO International (B.V.I) Ltd. (“EGCO BVI”), a wholly owned subsidiary of EGCO, purchased 100% of the outstanding shares in GPI-I, Ltd. (“GPI-I”) from GPSF Cayman I LDC (“GPSF”). These acquisition provided EGCO BVI with an indirect ownership in the following portfolio of assets: a. 10% of shares in GPI Quezon Ltd. (“GPIQ”), an investing holding company, which holds 2.6% stake in Quezon Power (Philippines) Limited Co. (“QPL”), representing capacity of 13.07 MW equity and b. 13.72% ownership in Northern Mindanao Power Corporation (“NMPC”). As a result, EGCO BVI would own a 25.8% indirect stake in NMPC which was in the liquidation process. 2. On July 30, 2009, EGCO acquired newly issued shares in the Natural Energy Development Co., Ltd., (“NED”), a company which is dedicated to development of renewable energy projects in Thailand. EGCO now owns a 33.33% direct stake in NED. 3. EGCO accepted the entire business of Rayong Generating Co., Ltd. (REGCO), a wholly owned subsidiary of EGCO on October 1, 2009 which was followed by the registration of REGCO dissolution on October 2, 2009. 1

Profit before Fx shown in the table is different from profit before FX calculated from the consolidated financial statements because the consolidated financial statements show currency exchange gains (losses) of EGCO and Subsidiaries, but not those of joint ventures. The share of profit (loss) from interests in joint ventures is a figure net of currency exchange gains (losses).


Electricity Generating Public Co., Ltd.

4. On December 17, 2009, EGCO purchased a 50% of the ordinary shares of Power Generation Service Co., Ltd. (“PGS”), a company providing operation and maintenance services to BLCP power plant under a long term O&M Agreement. EGCO planned to transfer entire business of PGS to BLCP.

EGCO’s Business Line : 1. IPP Group 1.1 Rayong Power Plant EGCO accepted the transfer of the entire business of Rayong Generating Co., Ltd. (REGCO), a wholly owned subsidiary of EGCO, on October 1, 2009. The dissolution of REGCO was registered on October 2, 2009. Rayong power plant is the first IPP in Thailand located in Rayong province. It is a 1,232-megawatt power plant comprising of four identical 308-megawatt combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 20-year power purchase agreement (“PPA”). In 2009, Rayong power plant generated and sold 2,952.02 million kilowatt-hours electricity output to EGAT. Its annual average Equivalent Availability Factor (“EAF”) was 94.73%. 1.2 Khanom Electricity Generating Company Limited (“KEGCO”) EGCO directly holds a 100% stake in KEGCO which owns and operates Khanom power plant which is known as the largest independent power plant in the southern area of Thailand located in Nakhon Sri Thammarat province. It is a 824-megawatt power plant combining of two 75-megawatt thermal power units and one 674-megawatt combined cycle power unit all using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 15-year and 20-year PPAs. In 2009, Khanom power plant generated and sold 5,643.41 million kilowatt-hours electricity output to EGAT. Its annual average EAF was 94.27%. 1.3 BLCP Power Limited (“BLCP”) EGCO directly holds a 50% stake in BLCP which owns and operates an IPP coal-fired power plant located in Rayong province. It is a 1,434-megawatt power plant comprises of two identical 717-megawatt pulverized coal-fired power units using high quality bituminous imported from Australia as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA. In 2009, BLCP power plant generated and sold 10,018.13 million kilowatt-hours electricity output to EGAT, while its annual average EAF were 87.50% for unit 1 and 92.20% for unit 2. 1.4 Gulf Power Generation Company Limited (“GPG”) EGCO indirectly holds a 50% stake in GPG via its 50% ownership in Gulf Electric Public Co., Ltd. (“GEC”). GPG owns and operates an IPP gas-fired power plant, called Kaeng Khoi 2 power plant (“KK2”), located in Saraburi province. It is a 1,510megawatt power plant combining of two 755-megawatt combine cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA. In 2009, Kaeng Khoi 2 power plant generated and sold 9,329.09 million kilowatt-hour electricity output to EGAT. The annual average EAF for block 1 and block 2 were 88.43% and 96.31%, respectively.

049


050

Annual Report 2009

2. SPP Group 2.1 EGCO Cogeneration Company Limited (“EGCO Cogen”) EGCO directly holds an 80% stake in EGCO Cogen which owns and operates a SPP cogeneration power plant located in Rayong province. It is a 117-megawatt cogeneration power plant with steam supply of 30 tons per hour. EGCO Cogen can sell both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed a 60megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users in Rayong Industrial Park under the long-term PPAs. In 2009, EGCO Cogen power plant generated and sold 672.26 million kilowatt-hour electricity output to the customers. Its annual average EAF was 92.40% and the steam output to the industrial user was 49,781 tons. 2.2 Roi-Et Green Company Limited (“Roi-Et Green”) EGCO indirectly holds a 70.3% stake in Roi-Et Green via EGCO Green Co.,Ltd. Roi-Et Green owns and operates an SPP renewable power plant located in Roi-Et province. It is a 9.9-megawatt biomass-fired power plant using rice husk as a primary fuel. Under the SPP firm renewable program, it signed an 8.8-megawatt contracted capacity with EGAT under the 21-year PPA. In 2009, Roi-Et Green power plant generated and sold 58.34 million kilowatt-hour electricity output to EGAT, while its annual average EAF was 89.80%. 2.3 Gulf Cogeneration Company Limited (“GCC”) EGCO indirectly holds a 50% stake in GCC via GEC. GCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 110-megawatt cogeneration power plant with steam supply of 16 tons per hour. GCC can sell both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs. In 2009, GCC power plant generated and sold 680.54 million kilowatt-hour electricity output to the customers, while its annual average EAF was 91.51% and the steam output to the industrial user was 171,627 tons. 2.4 Nong Khae Cogeneration Company Limited (“NKCC”) EGCO indirectly holds a 50% stake in NKCC via GEC. NKCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs. In 2009, NKCC power plant generated and sold 816.09 million kilowatt-hour electricity output to the customers, while its annual average EAF was 96.31% and the steam output to the industrial user was 201,901 tons. 2.5 Samutprakarn Cogeneration Company Limited (“SCC”) EGCO indirectly holds a 50% stake in SCC via GEC. SCC owns and operates a SPP cogeneration power plant located in Samutprakarn province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted


Electricity Generating Public Co., Ltd.

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 2009, SCC power plant generated and sold 822.18 million kilowatt-hour electricity output to the customers, while its annual average EAF was 99.14% and the steam output to the industrial user was 150,471 tons. 2.6 Gulf Yala Green Company Limited (“GYG”) EGCO indirectly holds a 50% stake in GYG via GEC. GYG owns and operates a SPP renewable power plant located in Yala province. It is a 23-megawatt biomass-fired power plant using parawood residue as a primary fuel. Under the SPP firm renewable program, it signed 20.2-megawatt contracted capacity with EGAT under the 25-year PPA. In 2009, GYG power plant generated and sold 149.31 million kilowatt-hour electricity output to EGAT, while its plant annual average EAF was 93.69%. 3. Overseas Group 3.1 Conal Holdings Corporation (“CHC”) EGCO indirectly holds a 40% stake in CHC via EGCO International (B.V.I.) Ltd., (“EGCO BVI”). CHC is the largest IPP in the Mindanao Island, Philippines. CHC holds the shares in 2 electricity generating companies and 1 operation and maintenance service company. Western Mindanao Power Corporation (“WMPC”) EGCO indirectly holds a 17.6% stake in WMPC via CHC. WMPC owns and operates an IPP power plant located in Zamboanga city, Philippines. It is a 109.6-megawatt diesel power plant using a bunker-c fuel oil as a primary fuel. Under the BuildOperate-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 2009, WMPC power plant generated and sold 219.39 million kilowatt-hours electricity output to NPC, while its annual average EAF was 85.52%. Southern Philippines Power Corporation (“SPPC”) EGCO indirectly holds a 17.6% stake in SPPC via CHC. SPPC operates and owns an IPP power plant called Gen Santos located in Sarangani province, Philippines. It is a 54.8-megawatt diesel power plant using bunker-c fuel oil as a primary fuel. Under the B-O-O scheme, it generates and sells all net electricity output to NPC under the 18-year ECA. In 2009, SPPC power plant generated and sold 226.14 million kilowatt-hours electricity output to NPC, while its annual average EAF was 94.38%. Alto Power Management Corporation (“APMC”) APMC provides operation and maintenance services including plant management and consulting to the two abovementioned power plants and also third-party power plants. 3.2 Quezon Power (Philippines), Limited Co. (“QPL”) EGCO BVI indirectly holds 26% stake in QPL, which owns and operates a 502.5-megawatt pulverized coal-fired power plant using a high quality coal imported from Indonesia as a primary fuel. Under the 25-year PPA, QPL generates and sells net

051


052

Annual Report 2009

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 2009, QPL power plant generated and sold 2,723.96 million kilowatt-hours electricity output to the customer, while its annual average EAF was 83.85%. 3.3 Nam Theun 2 Power Company Limited (“NTPC”) NTPC has the installed capacity of 1,086.8-megawatt located in Lao PDR. It has an initial registered capital of USD 1 million. Currently, EGCO holds a 25% stake of NTPC, while EDF International (a subsidiary of Electricite de France), Laos State Holdings Enterprise (“LHSE”), and Italian-Thai Development Public Company Limited own 35%, 25%, and 15%, respectively. NTPC signed a 25-year Concession Agreement with the Government of Lao PDR on October 3, 2002. NTPC also signed PPAs with EGAT and EDL on November 8, 2003 to supply 995 megawatts to EGAT and additional 75 megawatts to EDL for 25 years after the COD. On April 29, 2004, the project achieved the Financial Close and the first drawdown was on June 15, 2005. At the end of 2009, the overall project progress was 99.9% which slightly behind than plan. It was expected that the project could achieve the COD within March 2010. 4. Other Businesses 4.1 EGCO Engineering & Service Company Limited (“ESCO”) ESCO is EGCO’s wholly owned subsidiary which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries including the Group companies. 4.2 Egcom Tara Company Limited (“ET”) As at December 31, 2009, EGCO holds 70% in ET via ESCO. Under a 30-year agreement, ET produces tap water according to Thai Industrial Standard (“TIS”) and supplies to the 3 water stations of the Provincial Waterworks Authority of Thailand (“PWA”), namely, Lak Muang Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station. 4.3 Eastern Water Resources Development and Management Public Company Limited (“East Water”) As at December 31, 2009, 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. 4.4 Power Generation Service Co. Ltd. (“PGS”) On December 17, 2009, EGCO purchased 50% of the ordinary shares in PGS, a company providing operation and maintenance services to BLCP power plant under the long term O&M Agreement. EGCO planned to transfer PGS’s entire business to BLCP and dissolve of PGS.


Electricity Generating Public Co., Ltd.

Revenue Structure of EGCO and Subsidiaries Product Service

Transaction

IPP REGCO/Rayong power plant Capacity Charge Energy Charge KEGCO Capacity Charge Energy Charge SPP EGCO Cogen Energy Charge Roi-Et Green Energy Charge Service ESCO /1 Water Egcom Tara Interest EGCO /2 REGCO/Rayong power plant /3 KEGCO EGCO cogen, EGCO Green, ESCO, Egcom Tara Others EGCO /4 REGCO/Rayong power plant KEGCO EGCO cogen, EGCO Green, ESCO, Egcom Tara Share of BLCP profit (loss) GEC EGCO JD (AEP, APBP) AMESCO NTPC Conal Quezon NED Total revenues (revenues item in consolidated)

% Shareholding

2009 Revenue

Electricity

Notes

/1

%

2008 Revenue

38.31%

%

2007 Revenue

46.39%

% 46.92%

99.99% 3,674.60 47.49

23.30% 0.30%

3,858.86 35.38

25.19% 0.23%

3,515.63 58.54

21.12% 0.35%

2,304.26 13.55

14.61% 0.09% 14.12%

3,163.53 47.15

20.65% 0.31% 14.47%

4,034.05 201.11

24.23% 1.21% 12.93%

1,927.49

12.22%

1,934.98

12.63%

1,925.74

11.57%

99.99% 99.99%

298.94 611.41 267.33 66.50 9.03 10.15

1.90% 3.88% 1.70% 0.42% 0.06% 0.06%

280.56 769.84 229.37 110.32 15.45 30.77

1.83% 5.03% 1.50% 0.72% 0.10% 0.20%

226.38 760.24 217.71 62.97 23.21 72.34

1.36% 4.57% 1.31% 0.38% 0.14% 0.43%

99.99% 99.99%

11.71 175.46 55.38 9.34

0.07% 1.11% 0.35% 0.06%

28.55 138.58 42.78 1.09

0.19% 0.90% 0.28% 0.01%

37.25 434.57 2.13 3.38

0.22% 2.61% 0.01% 0.02%

11.88 3,226.45 2,535.21 (38.83) 63.07 498.36 (10.91) 15,767.89

0.08% 20.46% 16.08% (0.25%) 0.40% 3.16% (0.07%) 100%

10.37 2,968.89 1,542.26 46.96 3.68 (93.53) 100.20 50.20 15,316.21

0.07% 19.38% 10.07% 0.31% 0.02% (0.61%) 0.65% 0.33% 100%

99.99%

80.00% 70.30% 99.99% 70.00%

50.00% 50.00% 14.85% 99.99% 25.00% 50.00% 26.00% 33.33%

19.09 0.11% 3,906.76 23.47% 1,227.98 7.38% 111.53 0.67% 2.29 0.01% (249.71) (1.50%) 52.53 0.32% 16,645.69 100%

For year 2009, ESCO’s service income was Baht 611,406,512.93 (excluding related party transactions which were the maintenance service income of KEGCO, EGCO Cogen, REGCO/Rayong power plant, Roi-Et Green and Egcom Tara amounted to Baht 247,278,678.96, Baht 81,584,199.98, Baht 77,756,256.91, Baht 31,293,080 and Baht 2,283,336, respectively) /2 EGCO’s interest income for year 2009 was Baht 66,504,576.49 (excluding related party transactions which were interest income from shareholders’ loan from ESCO and REGCO/Rayong power plant amounted to Baht 50,683,658.37 and Baht 32,934,196.76, respectively and KEGCO’s debenture amounted to Baht 3,724,404.39) /3 REGCO/Rayong power plant’s interest income for year 2009 was Baht 9,028,280.01 (excluding related party transaction which was Baht 699,974.40 of KEGCO’s debenture) /4 EGCO’s other income for year 2009 was Baht 175,464,384.86 (excluding related party transactions which were office rental and service income from KEGCO, REGCO/Rayong power plant, ESCO, EGCO Cogen, Roi-Et Green, Egcom Tara and EGCO Green amounting to Baht 26,756,630.08, Baht 19,648,800, Baht 10,299,200, Baht 7,930,905, Baht 7,296,000, Baht 2,502,000 and Baht 831,600, respectively)

053


Annual Report 2009

Power Industry and Competition The economic downturn dampened down the power demand growth in Thailand. As a result, the peak demand of 22,045 megawatts which occurred on April 24, 2009 was, 2.32% lower than the peak demand of 22,568 MW in 2008. (Figure 1) As regards the power consumption in 2009, the total electricity sold by the Electricity Generating Authority of Thailand (“EGAT”) was slightly up by 0.07% from that of 2008. The power consumption which continued to contract from the end of 2008 hit the bottom in January 2009, being 13.45% lower than the same period a year earlier. However, the situation started to improve with a clear positive signal in August 2009. The power consumption in December 2009 was up by 16.64% compared with the same month in 2008. (Table 1) Such continued improvement was in line with the global and domestic economic recovery which resulted in growth in manufacturing and export sectors and the higher consumers’ confidence. In 2010, EGAT expects that the country’s power demand will resume the growth of 4% as a result of the economic recovery. Figure 1 : Peak Power Demand 2005 - 2009 24,000 23,000 22,000

MW

054

21,000 20,000 19,000 18,000 17,000

Jan

Feb

Mar

Apr

May 2005

Jun

Jul 2006

Aug

Sep 2007

Oct

Nov

Dec

2008

2009

Source : EGAT

Table 1 Electricity sold by EGAT Months January February March 1st Quarter April May

2009 (million units)

2008 (million units)

9,851.30 10,527.59 12,259.12 32,638.01 11,579.46 12,246.78

11,382.02 10,989.74 12,675.53 35,047.29 11,973.61 12,500.03

+ increase, - decrease Increase/decrease (million units) (%) -1,530.72 -462.15 -416.41 -2,409.28 -394.15 -253.25

-13.45 -4.21 -3.29 -6.87 -3.29 -2.03


Electricity Generating Public Co., Ltd.

Months June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Total Source : EGAT

2009 (million units)

2008 (million units)

12,116.07 35,942.31 12,272.00 12,604.31 12,249.13 37,125.44 12,552.05 11,734.33 11,664.20 35,950.58 141,656.34

12,221.02 36,694.66 12,511.53 12,479.87 11,862.90 36,854.30 12,144.52 10,818.08 9,999.82 32,962.42 141,558.67

+ increase, - decrease Increase/decrease (million units) (%) -104.95 -752.35 -239.53 +124.44 +386.23 +271.14 +407.53 +916.25 +1,664.38 +2,988.16 +2,988.16

-0.86 -2.05 -1.91 +1.00 +3.26 +0.74 +3.36 +8.47 +16.64 +9.07 +0.07

As of December 31, 2009, the total installed capacity of Thailand was 29,212 MW, comprising 14,328 MW (49%) from EGAT’s owned power plants, 14,244 MW (49%) from private producers (IPPs and SPPs) and 640 MW (2%) from power purchases from Lao PDR and Malaysia. EGCO Group is currently operating 13 IPPs and SPPs plants with the combined MW equity of 3,980.70, of which 3,599.60 is dispatched to EGAT under long-term PPAs which accounted for 12.32% of Thailand’s total installed capacity. (Figure 2) Figure 2 : Installed Capacity of Thailand’s Power System 2009 SPP 6.48% EGCO 12.32%

Import 2.19% EGAT 49.05%

Other IPP 29.96%

Source : EGAT

Currently, the Energy Policy and Planning Office (“EPPO”) is revising the Power Development Plan (“PDP”) to cope with the changing circumstances. The new version of the PDP which was a revision of the PDP 2007 (revision 2) will cover a 20-year period starting from 2010. Once the draft is completed, EPPO will call the public hearing on the PDP assumptions before submitting the PDP to the National Energy Policy Council (“NEPC”). The drafting process should be completed in January 2010 and the new PDP should be in effect in April the same year.

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The new PDP will emphasize on the stability of the country’s power system by exploiting fuel diversification. In addition, renewable energy development would be promoted in line with the Energy Ministry’s renewable power development plan which makes it become a green PDP. Another area that the new PDP will touch on is the enhancement of the power generation by co-generation units. The last IPP bidding was called in 2007 in which four IPPs were selected the winners with the combined capacity of 4,200 MW. All of them are facing the problem of construction delay caused by the requirement of conducting the Health Impact Assessment (“HIA”) to comply with the Constitution. Such delay, however, would not impact the national power supply over a short term as the power consumption growth in the year 2010 is projected at 4% while the reserve margin is higher than 20%.

EGCO’s Competitiveness The power demand is not fully recovered. In the meantime, the energy policy which focuses on efficiency and renewable energy development along with the stringent requirements on social and environment responsibility results in limited growth outlook in Thailand. Since each company will try to compete on growth, the market competition will become stronger. However, EGCO’s position as the first IPP with efficient power plant operation and corporate social responsibility put us at advantage especially from the following : 1. Strategic location, 2. Qualified and skillful workforce, 3. Reputation on corporate social responsibility which earns the trust from the government and the public at large. Due to limited investment opportunity in Thailand over a short term as mentioned above, EGCO adjusts its strategy to invest in quality overseas projects, fuel related project and domestic renewable energy projects which includes the solar, wind power and biomass plants to maintain its leadership and market shares and to strengthen EGCO Group. EGCO prudently prepares to cope with volatile situations by way of cost control and expense reduction. EGCO also keeps up monitoring the energy and economic circumstances in a bid to foster the appropriate strategy to foster EGCO’s growth.


Electricity Generating Public Co., Ltd.

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

No. of Shares (million shares) Amount (million baht)

Registered Capital Paid Up Capital

530 526.465

5,300 5,264.65

The top ten shareholders as of September 8, 2009, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 17, 2009, are as follows. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

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

Shares 133,773,662 118,023,606 19,226,428 16,209,700 10,019,300 9,055,100 8,030,572 6,716,500 6,679,229 6,377,200

% of Total 25.41 22.42 3.65 3.08 1.90 1.72 1.53 1.28 1.27 1.21

Remarks /1 Excluding 51,990,730 shares under Thai NVDR which account for 9.87% of the total outstanding shares. Such NVDR holders do not have the right to vote at the shareholders’ meeting. Information of investors under Thai NVDR Co., Ltd. is shown on the website: www.set.or.th/nvdr/

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EGCO’s two 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. As a major shareholder, EGAT has four representative directors of all 15 directors. 2. OneEnergy Thailand Limited : OneEnergy Thailand Limited is a 50 : 50 joint venture between CLP Holdings Limited and Mitsubishi Corporation. OneEnergy Limited has the objective to invest in power business in the Southeast Asia and Taiwan. As a major shareholder, OneEnergy Thailand Limited has four representative directors in EGCO.

Organization Structure At the top of EGCO’s organization structure is the Board of directors, the standing committees, the President and the top management. 1. Board of Directors The Board of Directors has main responsibility to conduct business in a way that will benefit EGCO, shareholders and stakeholders including the employees and communities where EGCO operates its business. In this regard, the Board works with the Management in formulating EGCO’s vision and policy and 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, 2009 are as listed below : No.

Name

1 Mr.Pornchai Rujiprapa 2 Mr.Aswin Kongsiri 3 4 5 6

Mr.Chaipat Sahasakul Police Lieutenant General Pijarn Jittirat Mr.Thanapich Mulapruk Mr.Somphot Kanchanaporn

7 Mr.Phaiboon Siripanoosathien 8 Mr.Apichart Dilogsopol 9 Mr.Somboon Arayaskul 10 Mr.Wisudhi Srisuphan

Position

Appointment Date

No. of shares December 31, December 31, 2009 2008 Chairman January 1, 2009 Independent Director April 24, 2009 / Vice Chairman Independent Director April 24, 2009 Independent Director April 24, 2009 Independent Director April 23, 2007 Independent Director January 28, 2008 Independent Director September 9, 2008 Director January 1, 2009 Director January 1, 2009 Director January 1, 2009

Increase (Decrease) -


Electricity Generating Public Co., Ltd.

No.

11 12 13 14 15

Name

Mr.Peter Albert Littlewood Mr.Hideaki Tomiku Mr.Mark Jobling Mr.Shinji Tsuchiya Mr.Vinit Tangnoi

Position

Director Director Director Director President

Appointment Date April 21, 2008 April 23, 2007 June 22, 2009 June 22, 2009 October 1, 2008

No. of shares December 31, December 31, 2009 2008 -

Increase (Decrease) -

The lists of directors who retired or resigned in 2009 together with their share ownership in EGCO are as shown below. No.

1 2 3 4 5 6

Name

Mr.Sombat Santijaree Mr.Narongsak Vichetpan Mr.Visit Akaravinak Mrs.Wattanee Phanachet Mr.Mark Takahashi Mr.Hideo Kuramochi

Position

Retiring / No. of shares Resigning Date December 31, December 31, 2009 2008 Director January 1, 2009 Director January 1, 2009 Director January 1, 2009 Independent Director April 24, 2009 Director June 22, 2009 Director June 22, 2009 -

Increase (Decrease) -

Independent Directors The Board in the meeting no. 7/2008 on September 8, 2008 had early adopted the definition of independent directors to comply with the qualifications of independent directors stated in the notification of the Capital Market Supervisory Board no. 14/2008 re : “Filling for and Approval of Newly Issued Shares” before the effective date. Under such definition, EGCO independent director shall have the following qualifications. 1. Holding shares not more than 1% of the paid-up capital with the voting right of EGCO, parent company, subsidiary company, associated company or any legal entity that may have the conflict of interest (including the connected persons as stipulated in section 258 of securities laws) 2. Not being a director that takes part in the management (executive director, director who has the same responsibility as management except for the signature in transactions approved by the Board and the joint signing with other directors), employees, advisors who receive regular salary, and controlling person of EGCO, parent company, subsidiary company, associate company and fellow subsidiary (subsidiary of the same holding company) or any entity that may have a conflict of interest during the period of two years before his/her appointment. 3. Not being a person who is related by maternity and by registration as parents, spouse, brother, sister, and son and daughter including their spouses of the management, or major shareholders, controlling persons or persons who will be nominated to be the Management or controlling persons of EGCO or its subsidiaries. 4. Not having business relationship with and not being a major shareholder, non-independent director or management of EGCO, parent company, subsidiary company, associate company or any entity that may have a conflict of interest in a way that would affect the giving of independent opinions during the period of two years before the filing date.

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Annual Report 2009

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, nonindependent 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. 8. Not having any constraint that would affect the performance of giving independent judgment on EGCO. The Nomination and Remuneration Committee shall review the appropriateness of the independent director definition. Currently, there are 6 independent directors of all 15 directors who meet the above qualifications which accounts for more than one-third of all directors. Authorized Directors EGCO determines that the authorized directors comprise 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 and (2) directors who are also directors of the financial institutions to avoid the limitation that such financial institutions cannot provide future financial service to EGCO. Appointment, Resignation, and Dismissal of Directors The Board of Directors, which comprises not less than five and not more than 15 directors, shall be elected by shareholders, provided that not less than half of them must reside in Thailand. If a directorship becomes vacant for any reason other than by rotation, the Board in the subsequent meeting shall elect a person who is qualified to 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.


Electricity Generating Public Co., Ltd.

Board of Directors’ Duties and Responsibilities The duties and responsibilities of the Board of Directors are as prescribed below. 1. Duties to EGCO • To devote time to EGCO and conduct the business in compliance with the governance principles and EGCO’s Code of Conduct. • To demonstrate independent judgment in overseeing EGCO business. • To have full ethical and legal responsibility towards shareholders while taking into account the interests of other stakeholders. • To endeavor to recruit competent key management who will fully devote themselves for the benefit of EGCO. • To monitor EGCO’s business and the compliance with the laws, rules, regulations and contract provisions and will require the Management to submit report on EGCO’s significant matters to ensure effective corporate performance. 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 EGCO’s financial status is correctly disclosed. • To seek professional advice in case of doubt about the likely impact on lenders such as when EGCO’s financial position is uncertain or insolvency may be pending. 4. Duties to other Stakeholders • To endeavor to ensure that EGCO complies with the governing laws and regulations while taking into account the impact on employees, other stakeholders, community, society and environment. 5. Due Diligence • To attend all Board meetings but where attendance at meetings is not possible, directors 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.

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Annual Report 2009

• To endeavor to ensure independent judgment and in case of dissent to any Board’s resolution, may request the record of objection in the Minutes of Meeting. • To endeavor to ensure that the system is established within EGCO to provide the Board, on a regular and timely basis, with necessary data to enable directors to make a reasoned and careful judgment. • To endeavor to make sure that relations between the Board and the auditors are open and that the auditor can work independently and efficiently with the full co-operation from management and the internal auditors. • To strive to ensure that EGCO complies with the governing laws, rules, regulations and business standard and ethics. • In any case of doubt in the capacity of directors and committee members, to seek advise from EGCO’s advisors who are experts in each areas and to engage independent advisors for the governance benefits such as legal advisors, financial advisors, HR advisors, other professional advisors on EGCO’s expenses. Board of Directors’ Performance Appraisal The Board shall approve the self appraisal form which will be reviewed and endorsed by the Nomination and Remuneration Committee. In 2009, the Board adopted the same self appraisal form as 2008. Such form is based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. The self appraisal form comprises two parts: collective appraisal form and individual appraisal form. The collective appraisal form comprises 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the CEO, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The individual appraisal form comprises 7 sections, namely (1) strategic thought, (2) good corporate governance, (3) competence, (4) independence, (5) preparedness as a director, (6) personal attributes and (7) awareness of stakeholders. Result of the appraisals as well as directors’ recommendations will be used to enhance the Board’s performance each year. 2. Standing Committees’ Structure The Board of Directors has appointed 4 standing committees to help scrutinize significant matters. The details of the standing committees are as follows. Audit Committee The Audit Committee comprises at least 3 independent directors for a 3-year term of service, with one year for this purpose meaning the period between the Annual General Meeting (“AGM”) of shareholders when s/he is appointed and the next succeeding AGM. The Audit Committee undertakes its responsibilities as described in the Audit Committee Charter, which is reviewed annually to be consistent with the changing internal and external environment. The responsibilities of the Audit Committee are detailed below. 1. Review the accuracy and adequacy of EGCO’s financial reporting. 2. Review the appropriateness and effectiveness of internal control systems, and internal audit functions and determine the Internal Audit Division’s independence, as well as to approve the appointment, rotation and removal, and performance development and appraisal of the Chief Internal Audit.


Electricity Generating Public Co., Ltd.

The Chief Internal Audit shall present the appointment, rotation, promotion, removal, and performance development as well as appraisal of internal audit staff to the Audit Committee to consider whether the motion of dissent would be raised. 3. Monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET, and any other laws relevant to EGCO’s business. 4. Recommend the Board of Directors an independent person to be EGCO’s auditor as well as the audit fees for appointment by the shareholders to audit EGCO’s financial statements. 5. Attend a non-management meeting with an auditor at least once a year. 6. Consider the connected transactions or any transactions that may cause conflict of interest complying well as the audit fees for appointment by the shareholders to audit EGCO’s financial statements. 7. Review the Internal Audit Charter prior to submission to the Board of Directors for approval. 8. Approve the internal audit plan as well as budget and personnel. 9. Review the internal audit function, including: independence of internal audit division and reporting obligation. 10. Review or modify code of conduct prior to submission to the Board of Directors for consideration. 11. Review with the Management to ensure that the Management will act as the role models in complying with the code of conduct, and that the staffs comply with EGCO’s Code of Conduct. 12. Review with the Management the preparation of the Management’s Discussion and Analysis or MD&A and its disclosure in the Annual Report. 13. Review with the Management the risk management policy, the practice compliance with such policy, as well as EGCO’s risk management guidelines. 14. 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.

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Annual Report 2009

15. 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. 16. Review the Audit Committee Charter at least annually. 17. Perform any other act as assigned by the Board of Directors with approval of the Audit Committee. With regard to the above responsibilities, the Committee is accountable to EGCO Board of Directors whereas the Board of Directors remains responsible for EGCO’s actions against the third parties. The Audit Committee conducts the self-appraisal annually and reports the result to the Board. For 2009, the Audit Committee used the questionnaire which was adapted from the Booklet : “Audit Committee - Good practices for meeting market expectations - 2nd edition” which was studied by PricewaterhouseCoopers’ Global Corporate Reporting. There were 15 meetings in 2009 of which the attendance rate was 97.77%. Executive Committee The Executive Committee comprises 5 directors of which the office term is the same as their directorship. The Executive 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 is under approval authority of this committee with subsequent acknowledgement by the Board. The Executive Committee’s detailed responsibilities are described below. 1. To consider EGCO’s business plan and annual budget for presentation to the Board. 2. To consider and to approve investments and divestments of assets, credit, borrowings, debt restructuring, expenditures, other financing transactions and financial instruments, according to EGCO’s table of authority approved by the Board. 3. To formulate the overall investment strategy and investment policies in line with the EGCO’ s own policy, and to approve investment guidelines and investment requests in accordance with EGCO’s regulations. 4. To consider and take action on other important issues relating to EGCO’s operations. 5. To screen issues and make recommendations prior to their submission to the Board. 6. To propose the establishment and assessment of corporate KPI for approval by the Nomination and Remuneration Committee. 7. To propose/endorse the organizational structure, restructuring and governance of EGCO (Division level up) 8. To consider issues which are assigned by the Board. There were 12 meetings in 2009 of which the attendance rate was 96.66%. Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises 4 directors for a 3-year term of service with one year for this purpose meaning the period between the AGM of shareholders when s/he is appointed and the next succeeding AGM. In order to maintain continuity, members may be re-elected.


Electricity Generating Public Co., Ltd.

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 recommend committee members as well as directors to oversee the functions and participate as members in EGCO’s risk management committee. 4. To scrutinize the list of nominees for EGCO President in case of vacancy including the establishment of the succession plan for executives. 5. To approve the appointment, promotion, rotation and removal of the senior executives of EGCO (Executive Vice Presidents and Senior Executive Vice Presidents) and to nominate senior executives of subsidiary/joint venture companies that EGCO had the right to nominate for a position equivalent to EGCO’s EVP level and upward. 6. To nominate EGCO representatives to be directors of the subsidiary or associated companies according to equity proportion or shareholders’ agreement. 7. To endorse the performance evaluation of EGCO President. 8. To endorse the performance evaluation of EGCO Management (Senior Executive Vice President and Executive Vice President). 9. To recommend the remuneration structure of the directors and senior executives of EGCO and subsidiary and associated companies including meeting allowances, bonus, welfare and other benefits both in monetary and non-monetary terms. 10. To recommend policies and guidelines in determining the remuneration package of the senior executives on an annual basis. 11. To evaluate the corporate performance of EGCO to determine the bonus and annual salary increase across EGCO Group. 12. To recommend EGCO’s salary structure and other benefits. There were 9 meetings in 2009 of which the attendance rate was 97.22%. Corporate Social Responsibility Committee The Corporate Social Responsibility Committee (“CSR Committee”) comprises 5 directors with the President as the Chairman. Two of the CSR Committee members shall be directors/director nominees and the other two shall be Management. The term of office of each CSR director member is three years and can be re-elected. The term of CSR management member is as deemed appropriate by the Board of Directors but should not exceed their service term. In order to maintain continuity, members may be re-elected.

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Annual Report 2009

The mission of the CSR Committee is detailed as follows. 1. To consider and endorse EGCO Group social and environment policies for Board’s approval. 2. To review and endorse Group’s strategies and activities to meet Group CSR goals and policies. 3. To endorse annual plan and budget for CSR activities for the Executive Committee and Board’s approval. 4. To review and monitor progress of CSR activities and to appraise the achievements and the quality of CSR projects. There were 2 meetings in 2009 of which the attendance rate was 100%. 3. Management Structure The President acts as the head of the Management team which comprises 3 groups as shown below : • Business Development and Management Group : This group is headed by Senior Executive Vice President (“SEVP”). Under the SEVP, there are three Executive Vice Presidents (EVP) who supervise the business development (international), business development (domestic) and asset management. • Finance and Corporate Services Group : This group is headed by SEVP with two EVPs to supervise finance and corporate services performance. • President’s Direct Report Group : This group comprises the strategy and corporate management group headed by an EVP. There are also three divisions which are under the President’s supervision namely Controller, Internal Audit and Corporate Secretary. The last two divisions report administratively to the President, but functionally to the Audit Committee and the Board of Directors, respectively. 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), • To ensure the implementation of the policies, plans, and budgets approved by the Board.


Electricity Generating Public Co., Ltd.

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, 2008 is as follows. No.

Name

1 Mr.Vinit Tangnoi 2 Mrs.Pikul Srisastra 3 4 5 6 7 8 9

Title

President Senior Executive Vice President - Finance & Corporate Services Mr.John Palumbo Senior Executive Vice President - Business Development & Management Mr.Chumsak Desudjit Director - Rayong Power Plant Mr.Chankij Jearaphunt Managing Director of KEGCO Mr.Rasda Pongpaew Managing Director of ESCO Mrs.Ngamphis Chitphromphan Executive Vice President - Finance Mr.Piya Jetasanon First Senior Vice President - Finance Division Mr.Suvapan Chomchalerm Senior Vice President - Accounting and Budget Division

No. of Shares No. of Shares December 31, December 31, Increase 2009 2008 (Decrease) -

-

-

-

-

-

Corporate Secretary The Board in the meeting no. 6/2008 appointed Ms. Busakorn Kakanumpornwong the Corporate Secretary effective August 18, 2008 with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution. Management Committees EGCO has set up the following committees to ensure the appropriateness and efficiency of business management. Group Business Committee : The Board of Directors appoints the Group Business Committee which comprises outside professionals and executives of EGCO Group in the appropriate number. The Committee is chaired by the President. The term of office for the outside professionals is 1 year, with a year for this purpose meaning the period between the AGM of KEGCO and ESCO’s shareholders when s/he is appointed as a director and the next succeeding AGM. The term of office for the executives is the same as their executive terms. The Group Business Committee is accountable for the following responsibilities 1. To act as the Board of Directors of the 100% equity subsidiaries namely KEGCO and ESCO. 2. To oversee that the operating assets comply with laws, regulations, governing documents and company’s regulations.

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Annual Report 2009

3. To consider and endorse the business plan, annual budget and KPIs for the operating assets to the Executive Committee for its consideration. 4. To direct asset management function to comply with the corporate plan and budget and meet both the short-term and medium-term corporate targets. 5. To oversee EGCO’s operating assets to ensure that the operating results and return on investment are in line with the plan and projection under the support of the Asset Management and Planning Group. 6. To propose/endorse the organizational structure, restructuring and governance of Group Companies (Division level up). 7. To recommend the appointment, rotation and removal of the Managing Directors and Deputy Managing Directors of the wholly owned subsidiaries for the Nomination and Remuneration Committee’s approval. The Group Business Committee’ meetings are called as necessary. In 2009, there were 9 meetings. EGCO Management Committee : EGCO Management Committee is responsible for formulating business policy of EGCO Group, scrutinizing all proposals to be presented to the Board and standing committees and monitoring the operation of the Group. The EGCO Management Committee meetings are called as necessary. In 2009, the Committee held 14 meetings. Good Governance Committee : The Good Corporate Committee is in charge of the following responsibilities. 1. To consider international criteria and practices of Good Corporate Governance and those of the SET and SEC, 2. To formulate the policy, guidelines and practices of the Group in compliance with the Good Corporate Governance, and 3. To revise the Code of Conduct to suit the business environment and convey it to all employees as well as providing cooperation to promote the practice in the Group. The Good Corporate Governance Committee meets when necessary. In 2009, there were two meetings. Risk Management Committee : The Risk Management Committee 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 2009, the Risk Management Committee held ten meetings.


Electricity Generating Public Co., Ltd.

Safety Health and Environment Committee : The Safety Health and Environment Committee is in charge of the following responsibilities. 1. To determine the policy and plan regarding the 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. 4. To improve and develop the SHE implementation of EGCO Group. In 2009, there were 3 Safety Health and Environment Committee meetings. 4. Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, EGCO sets up the following framework. Director Election and Appointment EGCO endeavors to select capable directors to govern the company, designate the corporate policies and sanction its business plans for the benefit of EGCO and shareholders. With respect to this, EGCO puts an emphasis on the director nomination and selection process taking into account the following qualifications and experiences in considering each individual candidates. 1. Legal requirement and regulations and notifications of SET and SEC regarding the directors’ qualifications, 2. Directors’ qualifications prescribed in Directors’ Code of Conduct namely honesty, virtue, initiative and achievement, excellence, accountability, justice, independence, equality of shareholder opportunity, 3. Knowledge and experiences beneficial to EGCO’s business, 4. Trainings and experience at the policy making level in corporate governance, 5. Willingness to represent the best interests of all shareholders, 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.

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Annual Report 2009

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’ 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 with clear and transparent procedures as posted on EGCO website. Director Orientation and Training All new directors must participate in EGCO’s orientation program. This orientation will include presentations by senior management to familiarize new directors with EGCO’s significant issues, Directors’ Manual and EGCO’s Code of Conduct for Directors and Employees. Any sitting directors and other top management may attend the orientation program. The information of the directors’ manual comprises role, duty and responsibility, Securities’ Dealing by Directors, Notification of Personal Interest of Director, Meeting Management, Disclosure Policy, Contact with management, Board’s and Committees’ Remuneration and Fringe Benefits, Table of Authority and EGCO general information. EGCO encourages directors to attend both in-house and external courses to enhance their knowledge and understanding on good corporate governance. Directors can apply for the training courses at the Thai Institute of Directors or relevant organizations on EGCO’s expenses. Management Selection and Appointment The Board determines policies and principles for selection of the President and policies regarding succession in the event of an emergency or the retirement of the President taking into account educational background, experiences, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications and selection process stated in EGCO Regulation on Human Resource Management B.E. 2550 and the resolution of the Board as follows.


Electricity Generating Public Co., Ltd.

1. The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice President, Executive Vice President, the subsidiaries’ Managing Director and Deputy Managing Director. 2. The President shall appoint the division and section managers. The appointment of Secretary to the Board and the Assistant Secretary to the Board shall be approved by the Board of Directors while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee. 5. Director and Management Remuneration EGCO sets the policy to reward directors and management with appropriate remuneration. In this respect, the Nomination and Remuneration Committee is entrusted to review the appropriate rate that takes into account the responsibility and the company’s financial status while being in line with the peer practices. Director Remuneration The guidelines for director remuneration are as follows. • The remuneration comprises monthly retainer fee, meeting allowance and bonus. • Directors who serve as committee members will be entitled to extra remuneration to match the increase in responsibilities. • The Management who serve as directors and committee members shall refrain from remuneration. In 2009, the Shareholders’ Meeting resolved that the directors’ remuneration comprised the monthly retainer fee and meeting allowance to reflect the liabilities, time devotion and meeting attendance of each director. On the other hand, the bonus payment was tied with the company’s achievement. In conclusion, directors’ remuneration in 2009 comprised the following: 1. Monthly retainer fee of 30,000 baht and meeting allowance of 10,000 baht each. In case of director resignation, retainer fee would be paid to each director/ committee member in proportion of the service time in the month. Members who did not attend the meeting would not receive the allowance, which would also affect the bonus remuneration. Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance. 2. Bonus of 17.5 million baht which took into account the success of governing the operating assets, the progress of new projects and the recognition on good corporate governance. The allocation would be at the Board’s discretion. The absolute amount of directors’ bonus was 2.5 million baht lower than the 2007’s approved amount of 20 million baht. The overall directors’ remuneration for 2009 is summarized below. No.

Name

1. Mr.Pornchai Rujiprapa

Appoinment Date

No. of months Meeting in service Attendance 2009 2008 (9 Times/ Year)

Total Remuneration in 2009 (Monthly Retainer, Meeting Allowance) Bonus /2 Director Standing Committee /1

Total Remuneration

January 1, 2009

12

-

8/8

548,500.00 550,000.00

-

1,098,500.00

2. Mr.Aswin Kongsiri

April 24, 2009

12

12

6/8

449,700.00 288,000.00 1,243,340.00

1,981,040.00

3. Mr.Chaipat Sahasakul

April 21, 2008

12

12

7/8

430,000.00 637,500.00 1,243,340.00

2,310,840.00

4. Police Lieutenant General Pijarn Jittirat

April 24, 2009

8

-

6/8

297,000.00

-

-

297,000.00

071


072

Annual Report 2009

No.

Name

5. Mr.Thanapich Mulapruk

Appoinment Date

No. of months Meeting in service Attendance 2009 2008 (9 Times/ Year)

Total Remuneration in 2009 (Monthly Retainer, Meeting Allowance) Bonus /2 Director Standing Committee /1

Total Remuneration

April 23, 2007

12

12

6/8

420,000.00 490,000.00 1,243,340.00

2,153,340.00

January 28, 2008

12

12

8/8

440,000.00 510,000.00 1,153,550.00

2,103,550.00

7. Mr.Phaiboon Siripanoosatien September 9, 2008

12

4

8/8

440,000.00 288,000.00

390,270.00

1,118,270.00

8. Mr.Apichart Dilogsopol

January 1, 2009

12

-

8/8

440,000.00 480,000.00

-

920,000.00

9. Mr.Somboon Arayaskul

January 1, 2009

12

-

7/8

430,000.00 288,000.00

-

718,000.00

January 1, 2009

12

-

8/8

440,000.00

-

-

440,000.00

11. Mr.Peter Albert Littlewood

April 21, 2008

12

12

7/8

430,000.00

- 1,243,340.00

1,673,340.00

12. Mr.Hideaki Tomiku

April 23, 2007

12

12

8/8

440,000.00 480,000.00 1,243,340.00

2,163,340.00

13. Mr.Mark Jobling

June 22, 2009

12

-

4/4

229,000.00 429,000.00

-

658,000.00

14. Mr.Shinji Tsuchiya

June 22, 2009

12

-

4/4

229,000.00

-

-

229,000.00

15. Mr.Vinit Tangnoi

April 21, 2008

12

9

8/8

-

-

552,585.00

552,585.00

6. Mr.Somphot Kanchanaporn

10. Mr.Wisudhi Srisuphan

The summary of remuneration of Retired and resigned directors during 2008 - 2009 is as shown below 1. Mr.Chareon Prajumtan

April 21, 2008

-

4

-

-

-

379,910.00

379,910.00

2. Mr.Richard McIndoe

April 21, 2008

-

4

-

-

-

379,910.00

379,910.00

3. Mr.Chumnong Wongsawarng

April 21, 2008

-

4

-

-

-

379,910.00

379,910.00

4. Mr.Witoon Simachokedee

August 1, 2008

-

4

-

-

-

345,370.00

345,370.00

5. Mrs.Wattanee Phanachet

April 24, 2009

4

12

2/2

134,000.00 174,000.00 1,243,340.00

1,551,340.00

6. Mr.Mark Takahashi

June 22, 2009

6

12

3/4

201,000.00 371,000.00 1,243,340.00

1,815,340.00

7. Mr.Hideo Kuramochi

June 22, 2008

6

9

4/4

211,000.00

1,074,430.00

Total /1

/2

-

863,430.00

6,209,200.00 4,985,500.00 13,148,315.00 24,343,015.00

Standing Committee are 1. Executive Committee, 2. Audit Committee, 3. Nomination and Remuneration Committee and 4. Corporate Social Responsibility Committee Bonus for Board of Directors in 2008 was paid in May 2009, as resolved by the Shareholders in the Annual General Meeting No.1/2009 on April 24, 2009

Management’s Remuneration The Management’s remuneration which comprises both salary and bonus are designed in a way that will reflect the corporate and individual achievement based on the remuneration structure approved by the Board. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to their work and those of the peer companies.


Electricity Generating Public Co., Ltd.

The summary of the Management’s remuneration for 2009 was as shown below. (Unit : Baht) Remuneration Total Salary Bonus /3 Meeting Allowance Total /1

/2

/3

Executive Director (1 Person) /1 -

2009 Management (6 Persons) /2 17,650,840.00 4,007,737.26 21,658,577.26

Total Remuneration 17,650,840.00 4,007,737.26 21,658,577.26

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. These included 6 management namely the President, Senior Executive Vice President - Business Development and Management, Senior Executive Vice President - Finance & Corporate Services, Director-Rayong Power Plant, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of KEGCO and ESCO. Since the salaries of MDs of KEGCO and ESCO are paid by those companies. EGCO is responsible for the remuneration of only four managements. The 2008 Bonus was paid in January 2009.

Total Remuneration of Core Subsidiaries’ Management The remuneration of the Management of core subsidiaries (subsidiaries of which the revenue account for more than 10% of the consolidated revenue (KEGCO and EGCO Cogen) in 2009 is detailed below. (Unit : Baht) Year 2009 Remuneration Salary Bonus /1 Meeting Allowance /2 Total /1 /2 /3

Directors (9 Persons) -

KEGCO Management (7 Persons) 14,610,192.00 6,696,338.00 21,306,530.00

Total Remuneration 14,610,192.00 6,696,338.00 21,306,530.00

EGCO Cogen Management (1 Person) /3 1,416,000.00 552,004.00 1,968,004.00

Directors (5 Persons) -

Total Remuneration 1,416,000.00 552,004.00 1,968,004.00

The 2008 bonus was paid in January 2009. EGCO was responsible for the meeting allowance of KEGCO Board. EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO COGEN.

Other Remuneration In 2009, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Managements as follows.

(Unit : Baht) Year 2009 Company EGCO KEGCO EGCO Cogen

Members 4 7 1

Provident fund 1,229,274.00 1,461,019.20 141,600.00

073


074

Annual Report 2009

6. Employees EGCO As at December 31, 2009, EGCO has 267 headcounts which include the President, ďŹ ve Senior Executive Vice Presidents and 261 staffs. The number of staffs in each reporting line is as show below : Key Areas 1. 2. 3. 4. 5.

President Business Development and Management Finance and Corporate Services Strategic and Corporate Management Rayong Power Plant - Operation - Maintenance - Others Total

Members (Persons) 24 27 51 15 69 46 35 267

Core Subsidiaries A. KEGCO Employees 1. Operation 2. Maintenance 3. Others Total

Total (person) KEGCO 76 54 25 155

B. EGCO Cogen There are three permanent staff members who serve EGCO Cogen. The general manager is assigned from EGCO under the service agreement between EGCO and EGCO Cogen. The Operation and Maintenance staffs of 31 headcounts are ESCO employees who work under the O&M service agreement between ESCO and EGCO Cogen. There has been no signiďŹ cant turnover and no illegal labor dispute in EGCO and core subsidiaries during the past three years. 7. Employee Remuneration EGCO has the policy that the employees in the Group have fair remuneration which is comparable to the peer companies. Remuneration of employees of EGCO and core subsidiaries in 2009 is as shown below :


Electricity Generating Public Co., Ltd.

(Unit : Baht) Remuneration

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

Amount EGCO /1

KEGCO

222,545,433.33 83,822,436.38 20,588,420.40 326,956,289.85

131,054,424.00 60,066,611.00 13,079,720.40 204,200,755.40

EGCO Cogen /2 2,633,000.00 1,033,426.85 2,271,50.00 3,893,576.85

Include salary and bonus of the executives on one year contract. Include the salary and bonus of the General Manager who is seconded by EGCO and three permanent employees. The 2008 bonus was paid in January 2009.

8. Human Resource Development Policy EGCO Group believes in the value of our human resources and will strive to be the employer of choice by promoting the participative management 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 include core, functional, and managerial/leadership competencies. In this regard, various projects and training courses have been developed covering individual studies, training with experts or resource persons, and sharing of experiences among peers. As a result, we can develop our employees in all dimensions including intelligence quotient (“IQ”), emotional quotient (“EQ”), moral quotient (“MQ”), and adversity quotient (“AQ”). To ensure that the implementation of human resource development plan is a successful one, EGCO will prepare a list of required skill sets for each position as a part of the career path development plan. 9. Other information related to the Board of Directors and Management In 2009, there were no director and management who were recorded to be prosecuted by the following cases. • Criminal prosecution, except the violation of traffic rules, minor offence or in respect of the same offence • Bankruptcy or receivership.

075


076

Annual Report 2009

“...The Board has established the written good corporate governance policies as guidelines for directors, management and employees...�

s


Electricity Generating Public Co., Ltd.

Corporate Governance Report The Board of Directors (“Board”) intends to conduct the business under the Good Corporate Governance Principles issued by the Stock Exchange of Thailand (“SET”) and the Best Practices for Directors of Listed Company issued by the Securities and Exchange Commission (“SEC”) to ensure efficient governance and sustainable business growth. Corporate Governance Policies The Board has established the written good corporate governance policies as guidelines for directors, management and employees. The Policies include the statutory rights of shareholders as well as the Best Practices issued by SET. The good corporate governance policies are comprised of 7 principles. 1. Structure and Responsibilities of the Board of Directors sion 2. Guiding Business Principles 3. Rights and Equitable Treatment of Shareholders 4. Rights of Stakeholders 5. Disclosure and Transparency 6. Internal Control, Risk Management and Code of Conduct 7. Conflict of Interest The Board annually reviews the good corporate governance policies. In 2009, the Board revised the Good Corporate Governance Policy as follows : • To add policy on directorship holding in other companies to comply with the best practices recommended by the SET that a director should not serve more than 4 companies if being executive director and 6 companies if being non-executive director except for appropriate case, • To clearly spell out the principle for considering the director remuneration to be in line with SET’s recommendation on best practices, • To add the practice that the Vice Chairman would work with the Chairman in reviewing the content of the meeting agenda to comply with the Board’s resolution in appointing the Vice Chairman, • To add policy on duties to creditors on the section of “rights of stakeholders”,

077


078

Annual Report 2009

• To add the policy on disclosure of Directors and Management’s Interest in EGCO’s Business to comply with the Securities and Exchange Act’s requirement, the notification of the Capital Market Supervisory Board and the Board’s resolution in the meeting no. 9/2009. Communication of Corporate Governance Policies The Board discloses the Corporate Governance Policies on EGCO website. Shareholders who want to receive a hard copy can submit the form attached in the annual report to the Corporate Secretary. During the past year, the Company communicates the Corporate Governance Policies to its employees via various channels as follows : • Good corporate governance E-newsletter was issued every Monday, Wednesday and Friday to communicate news on good corporate governance, director information and best practices of other companies. • Six trainings on good corporate governance were provided to the employees. The topics included EGCO’s corporate governance framework, white ocean strategy, work-life balance, overall risk management, fraud risk management and efficient communications. Good corporate governance was also included in the orientation presentation kit for new employees. • Contest on corporate governance slogan was launched. The winning English slogan is “PREACT” (P- Promotion of Best Practices, R- Responsibility, E-Equitable Treatment, A-Accountability, C- Creation of Long Term Value and T-Transparency.) The winning Thai slogan was “To live by corporate governance principles with accountability and responsibility for sustainable development”. EGCO Group will use both slogans to promote corporate governance awareness across the Group. Monitoring of the Compliance with Corporate Governance Policies The Board designated compliance with the Corporate Governance Policies as one of the key performance indicators of EGCO Group of which the progress was monitored on a quarterly basis. In 2009, the Board endeavored to ensure that directors, Management and employees adopted the above policies as the guiding principles in discharging their duties. There is no report of any breach to the Corporate Governance Policies. Based on the above commitment, EGCO is well recognized as an excellent showcase of good corporate governance companies by various institutions. • SET Awards 2009 : Top Corporate Governance Report Award hosted by the SET and the Money and Banking Magazine. • An excellent showcase for shareholder meeting with the full score of 100 in the quality assessment of 2009 Annual General Shareholders’ Meeting organized by the Thai Investors Association. • “Board of Directors for Distinctive Practices” for 2008 - 2009 and “Board with Consistent Best Practice” in a contest organized by the Thai Institute of Directors (“IOD”), SET, the Thai Chamber of Commerce, the Federation of Thai Industries, the Thai Bankers’ Association, the Listed Companies Association and the Federation of Thai Capital Market Organizations • Excellent Corporate Governance Performance in 2009 by IOD with the overall score of 94 and full score in two categories being the rights of shareholders and role of stakeholders • Lowest risk company in one-year ahead with the full score of 100 in terms of quality of good corporate governance and financial status in an assessment by Siam City Research Institute (“SCRI Rating”) • 10th best listed companies in Thailand and 4th best public companies in energy and utility sector in a poll conducted by


Electricity Generating Public Co., Ltd.

Finance and Banking Magazine The SET asks listed companies to adopt the SET’s Good Corporate Governance Principles for year 2006 as deemed appropriate and to notify with reasons and substitute measures/ actions to the SET for items which can not be complied. The Board then prepares this report accordingly.

1. Rights of Shareholders EGCO realizes the importance of Good Corporate Governance and respects the shareholders’ rights as an investor and an owner of EGCO based on acceptable and reliable standard. EGCO encourages the shareholders to exercise their rights including legal basic rights. Examples are the right to share in the profit, the right to receive adequate information, and the right to attend and vote for significant matters at the shareholders’ meeting such as appointment or removal of directors, remuneration of directors, appointment of auditor, auditors’ remuneration and other significant issues which impact on EGCO. Beyond such basic rights, EGCO endeavors to provide significant information to shareholders via the website, newsletters and shareholders’ site visit. 1.1 Shareholders’ Meeting The Board ensures that the processes and procedures of the Shareholders’ Annual General Meeting (“AGM”) accommodate the shareholders to take part in EGCO’s governance. With respect to this, the AGM Checklist issued by the Thai Investors Association, Listed Companies Association and SEC is used as the guidelines. Details are as follows. Before the Shareholders’ Meeting EGCO prepares and delivers the notice of the meeting as well as supporting document in advance so that shareholders will have adequate information to support their judgments. The Board also encourages shareholders to attend the meeting either in persons or by proxy. The practices in 2009 were as follows. • EGCO disclosed the schedule and the agenda of the AGM via the SET’s Community Portal system and EGCO website on February 23, 2009, which was 62 days before the shareholder meeting date. • EGCO delivered the notices of the meeting as well as the agenda document on March 24, 2008, which was 30 days before the AGM. The notices included the objectives, Board’s opinions, and conditions to attend the meeting. All relevant information was posted on EGCO’s website to facilitate shareholders to study the information in advance before receiving the hard copies. Contact phone number was also provided for any relating inquiries. • EGCO joined hands with the Thailand Securities Depository Co., Ltd (“TSD”) to invite shareholders to notify the intention to attend the shareholder’s annual general meeting in advance via IVR system so that EGCO would provide adequate facilities to accommodate shareholders. • EGCO encouraged shareholders to forward their questions with regard to the meeting agenda in advance to directors@egco.com or facsimile number 0-2995-0956 in order that the shareholders could gain the utmost benefits from the meeting and that their rights would be fully observed. On Shareholders’ Meeting Date EGCO ensures that the meeting is conducted in a way that is convenient and transparent as well as encouraging shareholders for open discussion on EGCO business. The practices in 2009 were as follows :

079


080

Annual Report 2009

• Directors, Management and the external auditor were encouraged to attend the shareholders’ meeting and answer shareholders’ questions. Fourteen directors which included the Chairman attended the meeting which accounted for 93.33% of the Board members. The chairman and members of each standing committee also presented information to shareholders and answer shareholders’ questions. • Services to facilitate shareholders who attended the meeting were provided. Map for meeting venue was attached in the notice to the AGM. There were adequate registration counters and refreshments were provided. Mini-exhibition was displayed in front of the meeting hall to provide information about EGCO business. • An officer from TSD, the company registrar, provided the shareholder services and answered questions regarding dividend cheque and share registration and certificates in front of the meeting room. • The barcode system was implemented for the third year to facilitate shareholders’ registration process. • The shareholders who came late were allowed to vote for the ongoing agenda item and the remaining agenda items • The Chairman convened the meeting in accordance with the priority notified in the agenda document. Presentation for each agenda item included the background, supporting rationale and proposal. • The meeting was broadcasted via closed circuit television so that shareholders who were outside the meeting room could follow up the meeting proceedings. • Shareholders were treated equitably and were allowed adequate time to address their concerns at the meeting. The Chairman paid attention to clarify all shareholders’ inquiries which would be recorded in the minutes of meeting. • PricewaterhouseCoopers Legal & Tax Consultants Ltd., (“PwCLT”) were engaged as the inspectors to look over registration documents, meeting quorum, compliance of the


Electricity Generating Public Co., Ltd.

voting procedure with EGCO Articles of Association and the Chairman’s notification, voting card collection and vote counting. In this regard, PwCLT reported that the meeting and the voting procedure of 2009 AGM was transparent and in compliance with the governing laws and the Articles of Association. • The form to assess the quality of the AGM was disseminated to gather feedbacks for future improvement. The result of the survey in 2009 indicated that shareholders were satisfied with the quality of the notice to the meeting, meeting arrangement and meeting conduct. In AGM 2009, there were 456 and 681 shareholders attending the meeting in person and by proxy, respectively, representing 412,805,276 shares which accounted for 78.411% of the total units of shares. The attendance rate was better than 2008 AGM in which 298 and 529 shareholders attended the meeting in person and by proxy, respectively, representing 397,459,277 shares which accounted for 75.496% of the total units of shares. After the Shareholders’ Meeting • After the AGM no. 1/2009 on April 24, 2009, EGCO posted the draft minutes of the meeting for shareholders’ review on EGCO website www.egco.com on May 7, 2009 which was within 14 days after the meeting date as required by SET. The minutes of meeting had included the significant matter of each agenda items, shareholders’ inquiries and answers by the Board including the resolution and the voting for each proposal. The minutes of meeting was duly filed for future reference. • EGCO broadcasted on its web site that shareholders who could not attend the meeting could request for VDO tape of the meeting for free of charge. • EGCO notified the meeting resolution on dividend payment via SET’s portal. EGCO also coordinated with the registrar to ensure that all the shareholders would receive the dividend. • EGCO took all the recommendations of the shareholders for consideration and improvement of the AGM. As a result of the above efforts, EGCO was honored as an excellent showcase for AGM of listed companies with the full score of 100. Such score was higher than the score in 2008 of 105 from the full score of 110. 1.2 Shareholders’ Visit The Board sets the principle that shareholders will be invited to visit the Company and meet the management to better understand EGCO business and monitor EGCO’s performance. In 2009, there are 3 shareholders’ visits as follows : • Shareholders’ visit to Kang Khoi 2 Power Plant in Saraburi province • Shareholders’ and investors’ visit to Kang Khoi 2 Power Plant organized by the Thai Investors Association • Investors’ and analysts’ visit to Nam Theun 2 Power Plant.

2. Equitable Treatment of Shareholders 2.1 Fair Treatment The Board regularly reviews the governance structure and framework to ensure that the shareholders, including minority and foreign shareholders, are treated equitably and that EGCO procedures do not make it unduly difficult or expensive to observe shareholders’ rights. The Board encourages shareholders to take part in EGCO’s governance and ensures that they are well informed about the significant decisions of EGCO as prescribed by laws and the Articles of Association.

081


082

Annual Report 2009

• EGCO strictly follows its policy not to raise any agenda items which had not been submitted to the shareholders in advance, to make sure that other shareholders would have a great deal of time to study relevant information before making their decision. Every shareholder has a right to cast vote according to their numbers of shares on “a one share one vote” basis. EGCO has never granted a privilege for some specific shares which limits the rights of other shareholders. • To adhere to the best practice as recommended by the SET regarding the right of minority shareholders, EGCO announced via EGCO’s website and the SET’s portal the clear and transparent procedures for shareholders to recommend AGM agenda and to nominate director candidates to the Board during the period of December 17, 2008 - January 31, 2009. The shareholders who would like to propose the agenda or director candidates should hold not less than 100,000 shares which are lower than the SET’s recommended practice of holding not less than 0.5% of the total voting rights of the company. In 2009, no minor shareholders recommended AGM agenda nor nominate director candidates in advance. • Voting cards were provided for all agenda items for transparency and future reference. Director election also allowed shareholders to vote on individual nominees. • Shareholders who could not attend in person could vote by proxy. The three proxy forms as introduced by Department of Business Development, Ministry of Commerce were provided which included the form that allowed the shareholders to direct the voting. Three independent directors who did not have the conflict of interests with the AGM agenda were offered as volunteer proxies. In a bid to facilitate the shareholders, the proxy forms could be downloaded from EGCO’s website. • Since most of the shareholders attending the meeting were Thai, the meeting was conducted in Thai. However, to facilitate foreign shareholders, EGCO prepared the notice of meeting in both Thai and English. English interpreting service was also provided at the meeting room. • With the awareness that some shareholders might not be able to read the minutes of meeting on the SET’s and EGCO’s website, a hard copy of the minutes of meeting no. 1/2009 were delivered to each shareholder for review. 2.2 Prohibition of Abusive Conduct by Insiders EGCO has set up the written guidelines in the Code of Conduct for Directors and employees to prohibit improper insider trading and abusive conduct by insiders to ensure fairness to all shareholders. Directors • Directors must not make improper use of information acquired by virtue of the directors’ position. • Directors must not disclose matters such as trade secrets, or sensitive business information to outsiders. • Directors must not buy or sell shares as a director of EGCO while in possession of information, which, if disclosed publicly, would be likely to materially affect EGCO share price. • Directors must not provide to anyone any information which is not publicly available and which would have a material effect on the price or value of EGCO’s securities.


Electricity Generating Public Co., Ltd.

Employees • Employees shall at all times observe the rules and regulations issued by the SET, the SEC and other governing laws which include the equitable disclosure to shareholders and the public. • Any information disclosure to the public that will affect the business and EGCO’s stock must be approved by the President. Only the President or the assigned staff member is authorized to disclose such information. • The Corporate Communications Division, the Corporate Secretary Division and the Investor Relations Section are responsible for disclosing EGCO information to the public while it is the responsibility of the information owner to provide the fact sheets. EGCO has put the internal control system in place to prevent the leakage of any information before the public disclosure. Such measure was a part of significant risk management. Supervisors also have the responsibility to ensure that the measure to safeguard inside information is effective. Using inside information for own or other benefits of security trading when that information has not made public is considered violating the Code of Conduct. 2.3 Disclosure of Directors and Management’s Interest in EGCO’s Business The Board sets the guidelines that directors and Management discloses to the Board whether they have a material interest in any transaction or matter affecting EGCO to ensure transparency and to prevent conflicts of interest. • Directors will promptly notify EGCO when they or their family member is a partner or shareholder of any entity which may incur benefits or conflicts of interest with EGCO, acquire a direct or indirect interest in any contract made with EGCO or hold shares or debentures of EGCO or any affiliate. Directors or management with potential conflict of interest shall refrain from discussing and voting on such agenda item. • Directors and Management should disclose to the Board their securities holdings at every Board meeting. There is also a statement informing directors at every meeting that directors, management including their spouses, minor children and related persons under Section 258 of the Securities and Exchange Act have a responsibility to prepare and disclose any change in shareholding of the Company to the SEC within three days. In 2009, the Board also set the policy for directors and management including related persons to report their interest in the Company to comply with the Notification of the Capital Market Supervisory Board no. Tor Jor 2/2009 as follows : 1. Directors and executives should submit the form to report their interest to the Corporate Secretary on a quarterly basis. 2. In case of any change during the quarter, the updated form should be submitted to the Corporate Secretary as soon as possible. 3. The Corporate Secretary shall submit the form to the Chairman and the Chairman of the Audit Committee within 7 days after getting such report. In 2009, the Board did not get any complaints for not respecting shareholders’ rights or any accusation regarding director’ and Management’s insider trading. This shows the efficient control of the Board on such matter.

083


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Annual Report 2009

3. Role of Stakeholders 3.1 Rights of Stakeholders Apart from observing the rights of the shareholders, the Board takes due regard of and deal fairly with various stakeholders and encourages active cooperation with them which include both business and corporate social responsibility matters. The Board has set up the guidelines to respond to the requirements of each stakeholder in the Corporate Governance Principle and “EGCO Group’s Code of Conduct” with the expectations that directors, Management and employees shall be guided by those principles in discharging their duties. Employees A. Rights of the Employees EGCO believes in the value of its human resources and will strive to be the employer of choice. This is achieved by promoting the participative management, supporting the employees’ professional development and providing fair remuneration and suitable benefit scheme. B. Observation of Human Rights It is prescribed in the Code of Conduct that EGCO will treat our employees with respect and honor. At the same time, employees must also refrain from any deliberate discrimination or harassment in word or action against others based on the basis of race, gender, religion, age, and physical or mental disability. EGCO also set clear guidelines for labor engagement of the Company and its business partners to strictly comply with the Labor Act such as no engagement of child labor or abusive hiring. In addition, the working system is designed to put priority on safety and occupational health. There has never been any report on the violation of human rights by EGCO. It should be noted that during the past year, there was no legal dispute between the employees and EGCO. In addition, there was no disabling injury in all subsidiaries. EGCO is proud to announce that the Rayong Electricity Generating Co., Ltd. (“REGCO”) and the Khanom Electricity Generating Co., Ltd. (“KEGCO”) have been certified the OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series) by RWTUV (Thailand) and KEGCO has been honored the National Distinguished Workplace in terms of Safety, Occupational Health and Environment for 10 years consecutively. Customers EGCO always commits to provide good quality and reliable services in accordance with the agreements with EGAT and all customers. To ensure consistent quality service, the ISO 9001:2000 has been implemented at REGCO, KEGCO, Roi-Et Green Co., Ltd. and Egcom Tara Co., Ltd. During the past year, EGCO and its subsidiaries could generate the contracted electricity with higher equivalent availability factors (“EAF”) than the value stipulated in the power purchase agreement. REGCO also made a superior record in being awarded the EAF bonus for 13 years consecutively. EGCO also prepared our power plant to meet any system emergency. It was notable that Rayong Power Plant’s ability could quickly execute the restoration plan in case of brown out using black start emergency diesel in order to power up the eastern region. As such, it is put in the restoration plan of the Electricity Generating Authority of Thailand, the Provincial Electricity Authority and the Metropolitan Electricity Authority. The testing of the restoration plan is carried in each region every year.


Electricity Generating Public Co., Ltd.

Creditors EGCO will endeavor to ensure that it complies with the loan provision and that the company financial status is correctly disclosed. The Company will endeavor to solve the problem in case of doubt about the likely impact on lenders such as when the company’s financial position is uncertain or insolvency may be pending. Suppliers and Contractors EGCO will treat suppliers and contractors fairly and would not seek undue benefit from them. EGCO will comply with the conditions in the agreements. In addition, EGCO aims at developing and securing sustainable relationship with suppliers and contractors on the bases of value for money, technical conformance and mutual trust. Competitors EGCO will conduct its business on a fair play basis. We will not use a disgraceful approach such as bribery in order to get competitors’ sensitive confidential information. EGCO will also refrain from attacking the competitors with false allegations. Community, Society and Environment EGCO has a policy to operate the business with commitment to social contribution and environment conservation. In this regard, EGCO will foster the corporate culture that employees at all levels will be fully responsible for any social and environment impact when discharging their duties. EGCO also sets guidelines in the Code of Conduct that employees must deliver their duties in a safe manner to avoid any impact on themselves as well as people living and working in communities near our facilities, and the environment. Our employees will strive to comply with relevant laws, prevent accident and pollution, and will use the natural resources in an efficient and environmentally responsible manner. In addition, EGCO has implemented the social projects which cover the followings: • Promotion and Development of Community’s “Quality of Life” : EGCO Group will put the prime focus on the quality of life of the surrounding communities both at the head office and at the power plants. In this regard, EGCO has initiated and provided supports to projects relating to education, villagers’ occupation and environment. • Conservation of “Watershed Forest: Source of Life” : Apart from taking care of the working environment and surrounding communities, EGCO Group plays a vital role in conserving the natural resources with the focus on watershed forests, which nourish the well being of all lives. • Promotion of Learning and fostering a Public Mindedness among “Youths” for Sustainable Social Development : We recognize that education is the key to national development. With the awareness that development starts from early childhood, EGCO has supported the projects to encourage youths from pre-elementary, elementary to high school level to learn from

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both inside and outside the classroom to children. We believe that such learning is the starting point for social and moral quotient, essential factors for long term national development. In 2009, there was no claim against EGCO from the stakeholders. Detailed information on Corporate Social Responsibility is presented in the Sustainability Report. 3.2 Channel to Direct Corporate Issues to the Board of Directors and Corporate Secretary To increase the corporate value, the stakeholders can direct their recommendations and concerns on corporate issues to EGCO at the following address. Electronic mail Board of Directors Audit Committee Corporate Secretary Corporate Communications Investor Relations

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

Telephone numbers 0 2998 5021-5 0 2998 5131-3 0 2998 5145-7

The mailing address is Electricity Generating Public Company Limited, EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210. The Corporate Secretary will be responsible for forwarding communications directed to the Board to the standing committee or relating directors. The Corporate Secretary will summarize all directors’ communications received during the most recent quarter to the Board, except for mails addressed to the Audit Committee which would be directly forwarded to the Audit Committee without screening. 3.3 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. The procedure to protect the whistleblower is also put in place. For example, information will be kept confidential and will be known only among responsible parties. The whistleblowers can identify themselves or can keep their identities anonymous. However, they must provide adequate information for the Company to investigate the claims. 3.4 Sustainable Development EGCO Group endeavors to optimize the usage of natural resources, taking into account the impacts on the environment. In this regard, EGCO has monitored the situation and set the measures to alleviate such impacts. In addition, REGCO and KEGCO have implemented the Occupational Health and Safety Management System TIS 18001:1999 & OHSAS 18001. EGCO Group also factors in the following activities to ensure that EGCO business has taken into account the social and environment issues for sustainable development. • Preparing the investment plan with fuel diversification as part of the agenda to reduce the risk of heavy dependence on only one type of fuel. At present, EGCO is the IPP with the most diversified fuel types in Thailand.


Electricity Generating Public Co., Ltd.

• Investing in renewable projects to alleviate global warming and decrease the fossil fuel import. • Operating business with environment concern and strict adherence to relevant laws and regulations including the regulations of local administrative agencies. • Supporting economic and social development while respecting the local tradition and culture. EGCO will support the government policy and take a good care of communities surrounding the power plants so that they will not only be protected from the negative impact of EGCO business, but will also have a better quality of life. EGCO set up a Corporate Social Responsibility (“CSR”) Committee to oversee the management of environment and society with a focus on impacts to shareholders and stakeholders. In 2009, EGCO set CSR plans and activities covering safety, health and working environment along with social responsibility plans to foster environment conservation, community learning, and quality of life. Details are presented in Sustainability Report. In 2009, EGCO was selected a candidate for CSR Award in the 2009 SET Awards for the second year. In addition, Group companies also won the following awards. • KEGCO won the EIA monitoring Awards for 7 consecutive years, National Safety Awards for 2009” for the 10 consecutive years and Outstanding Achievement on Labor Relations and Welfare” for 3 consecutive years. • Roi-Et Green Co., Ltd won the Provincial Safety Award” for 2 consecutive years • EGCO Engineering and Services Co., Ltd. (“ESCO”) was awarded the Gold Certificate for HIV/AIDS and TB Prevention and Management in the Workplace by Ministry of Labor and Ministry of Public Health. • EGCOM Tara Co., Ltd. was presented the Certificate for Quality of Drinking Water for 7 consecutive years, Certificate audit for Environment Management System: EMS Stage I and excellent healthy workplace for 3 consecutive years.

4. Disclosure and Transparency 4.1 Information Disclosure Being aware of the impact of EGCO’s information on the decision of investors and stakeholders, the Board set a policy to disclose the information via the SET’s Community Portal system and the Company’s web site at www.egco.com as well as the annual report and the annual registration statement. The disclosed information includes roles and responsibility of the Board and standing committees, directors’ meeting attendance, and remuneration policy for Directors and top management. Only the President or the assigned staff member is authorized to disclose the Company’s information. EGCO has established a Disclosure Committee comprising President, Senior Executive Vice President-Finance and Corporate Services, Senior Executive Vice President-Business Development and Management, Senior Vice President-Corporate Secretary, Senior Vice President- Corporate Communication and Vice-President-Investor Relations. The meetings are called on quarterly basis in order to set communication plan, review disclosure policy, and prepare significant disclosure to ensure that the information is correct and efficiently communicated. Investor Relations Investor Relations is responsible for communication with institutional and individual investors, and analysts on an equitable basis. In this regard, annual Investor relations plan is prepared.

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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 2009 included meeting investors in SET in the City in Bangkok, Nakorn Rachasima and Chiang Mai. Two trips were arranged for investors’ and shareholders’ visits to Kang Khoi 2 Power Plant and one trip for investors’ and analysts’ visit to Nam Theun 2 Power Plant. Besides, there were four analyst meetings in Thailand and three overseas road shows to the United States, Hong Kong and Singapore. On top of the above mentioned, there are also newsletters and electronic mails. For those that cannot join the investor relations activities, EGCO has posted the presentations, operating results, financial statements and notice to the SET on our web sites. Corporate Communications The Corporate Communications Division is responsible for communicating the movement of the Company to media for public disclosures. Major events in 2009 included 3 press conferences on corporate results and directions, 4 media trips, 20 executive Interview and 30 pieces of press releases. Corporate Secretary The Corporate Secretary discloses information as required by the SET and SEC on a correct and transparent basis. In 2009, 11 notifications were made to the SET. EGCO always updates the information on EGCO website. Quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for future improvement. In addition, EGCO also attached the feedback form for shareholders to provide feedback on the quality of the annual report, additional document required, and questions for the President to answer in the next AGM in the annual report and the notice to the AGM. Such feedback form was well received by shareholders. 4.2 Financial Statement Preparation EGCO aims at fostering the stakeholders’ confidence that EGCO’s financial reports are accurate, complete and transparent in line with the generally accepted accounting standards to protect EGCO assets against fraud or abnormalities. In this regard, the Board has entrusted the Audit Committee to assume key duties and responsibilities of reviewing the financial statements to ensure its correctness and adequacy and compliance with the accounting standards and relevant regulation. The Audit Committee sets the policy to have a non-management meeting with the auditor at least once a year to ask questions and discuss with them about various significant issues. Apart from disclosing the Auditor Report in the annual report, the Board also prepares the report on Board of Directors’ Responsibilities on Financial Statements which covers important topics as prescribed in the SET’s Best Practices for Directors of Listed Companies. In 2009, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited as the Company’s auditor given that they had professional knowledge and had no conflicts of interest to defect their independent judgment. This was aimed at fostering the Board’s and shareholders’ trust that EGCO’s financial statements truly reflected the actual financial status and operating result. EGCO also prepares the report on Management Discussion and Analysis to provide analytic information on the Company’s financial status, operating results and major changes to investors and analysts on a quarterly basis. Such report is submitted via SET’s portal along with the Company’s financial statements.


Electricity Generating Public Co., Ltd.

It should be noted that SEC has never informed EGCO to re-state the financial statements. In addition, the quarterly and annual financial statements are disclosed before the deadline. On top of that, EGCO is honored the Certificate of Excellence from IR Magazine, Singapore and also the Certificate on Distinguish Exhibition Booth on information provision from the 2009 SET in the City in November, 2009.

5. Responsibilities of the Board 5.1 Board’s structure Structure and Composition Currently, the Board comprises not less than 5 directors and not more than 15 directors as stipulated in the Articles of Associations. The number of the directors will be reviewed periodically. The change in number of directors requires the shareholders’ approval with the four-fifth majority votes of shareholders who attend the meeting and have the rights to vote. As at January 31, 2009, the Board comprised 15 directors, 14 of whom were outside directors which accounted for 93% of the Board. From these outside directors, 6 were qualified as independent directors which accounted for 40% of the total directors. The Nomination and Remuneration Committee is entrusted to select and recommend prospective nominees, whether they are to become the shareholders’ representatives or independent directors. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria as deemed necessary. The Board views that the existing structure and composition of the Board which comprises directors with the background in engineering, economics and finance, and laws and political science at the ratio of 46.67%, 26.67%, and 26.67% respectively, was appropriate with useful mix of skills and experience and an appropriate balance of power. Term and Age Limit One / third of the directors shall retire by rotation at the AGM as prescribed in the Public Limited Company Act. The Board views that there should not be limit on the number of terms a director may serve. Term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high functioning members able to keep the commitments to Board service, the Nomination and Remuneration Committee will evaluate the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term. On the other hand, the age limit policy is imposed that director candidates can not stand for election after age 72. Given such age limit on the election date, directors will be able to serve on the Board until the expiry of their terms. Chairman The Board elected Mr. Pornchai Rujiprapa, a representative director of EGAT, as the Chairman because of his knowledge in energy sector together with his leadership to lead EGCO to achieve the corporate vision and mission. Although the Chairman is not an independent director, the Board remains independent and objective due to the following mechanisms : 1. The Chairman is a non-executive director, is not the same person as the President and has no relations with the management. His authorities are separate from those of the President, and there is a clear distinction between supervisory policymaking and day-to-day business administrative roles. The Chairman takes the role of the leader and assures that the Board’s meetings are conducted efficiently by encouraging involvement by all directors and providing recommendations to Management via the President. The Board will not intervene with any routine activities under the President’s responsibilities;

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2. The Chairman is not an EGAT’s employee but is entrusted by the Energy Ministry to be on EGAT Board of Directors to protect the national benefits. The Board believes that the Chairman will act in the best interest of all shareholders and stakeholders; 3. The Board is mostly comprised of non-executive directors and the Board’s seats are allocated in accordance with the shareholding in the Company comprising 4 EGAT representative directors, 4 OneEnergy Thailand Ltd. (“OneEnergy”) representative directors, and 6 independent directors which indicates a proper balance of power; 4. The Board has appointed the Vice Chairman who is an independent director to work with the Chairman in setting and scrutinizing the meeting agenda and the time allocation for each agenda item, and 5. The Board has assigned Board committees to oversee tasks where there may be a potential for conflict of interest and to balance the need of each stakeholder. With respect to this, the Audit Committee is entrusted for oversight of the integrity of financial and non-financial reporting and review and management of related party transaction. The Nomination and Remuneration Committee is assigned to take care of selection of Board members and key executives and their remuneration. The result of the Board’s performance appraisal in 2009 indicates that the Chairman is effective 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. Independent directors set up the policy to call meetings as needed. In 2009, there were 2 independent director meetings to discuss and exchange their views regarding the corporate governance and interesting issues without the Management and the result was reported to the Board. (Please see the definition of independent director in the article “Shareholding and Management Structure”.) Segregation of Duties There is a segregation of duties between policy making, which is the responsibility of the Board and routine business, which is the responsibility of the Management. In this regard, the Table of Authority has been prepared and approved by the Board. The Board will not intervene with any routine activities under the President’s responsibilities. Policy and the Procedure for Other Positions of Directors and Management To ensure that the Board will be able to devote time for the efficient governance of EGCO, the Board agrees that a director should not serve more than 4 companies if being executive director and 6 companies if being non-executive director. Currently, there is one director who serves more than 6 companies. However, such positions do not have any impact on discharging his duty for EGCO as he regularly attends the meeting and provide useful information to the Company. The Board has already taken into account his meeting attendance as one of the criteria for his re-election. As regards the management, each of them should not hold directorship in more than 3 companies excluding the wholly owned subsidiaries to ensure sufficient time for their governance. Corporate Secretary The Board has appointed Ms. Busakorn Kakanumpornwong as the Corporate Secretary with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution. • To provide primary advice pertaining to EGCO’s regulations and Articles of Associations, and to monitor to ensure


Electricity Generating Public Co., Ltd.

regulatory compliance on a regular basis, and report any significant changes to the directors, • To arrange meetings of shareholders and the Board in accordance with the laws and regulations, including EGCO’s articles of associations and procedures, • To prepare meeting minutes of shareholders and the Board of Directors, and to monitor to ensure compliance with resolutions of shareholders’ and Board meetings, • To ensure that corporate information disclosure to regulatory agencies is in accordance with the laws and the SEC’s and SET’s regulations, • To inform general shareholders of their legitimate rights including EGCO’s news, • To facilitate the Board activities including director orientation, • To file and keep record of EGCO’s paper such as directors’ registration, notice to the meeting, minutes of meetings, annual reports, notice to shareholders’ meetings, shareholders’ minutes of meetings and reports on directors’ and management’ interest. 5.2 Board’s Standing Committees With the objective to enhance the governance efficiency, the Board assigns directors with knowledge and expertise to be the members of the Board committees namely Audit Committee, Executive Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee. Each Board committee has its own charter which prescribes functions, composition, term of office, responsibilities and meeting conduct. The committee’s charter, which is approved by the Board, will be reviewed as deemed appropriate. Each committee can retain outside counsels, experts and professional advisors, as deems appropriate at EGCO’s expense. The committees will report their meeting results to the Board. The Audit Committee comprises 3 independent directors. The Audit Committee’s mission covers the review of the financial statements, legal compliance, risk management policy, internal control and appointment of auditor. The Audit Committee also reviews the connected transaction or transaction with conflicts of interest to ensure that such transaction is in compliant with the SET’s requirement, well grounded and will be for the best interest of EGCO. The Nomination and Remuneration Committee comprises 4 non-executive directors, two of whom are independent. The Nomination and Remuneration Committee members appointed Mr. Mark Jobling, a representative director from OneEnergy as the Chairman of the Committee as he has a wealth of experience in policy implementation, human resources management and governance management. The Board trusts that regardless of whom the Committee Chairman is represented, the Nomination and Remuneration Committee has the appropriate process and mechanisms to mandate transparent procedure of (1) recruitment of directors and Management in line with the best practices taking into account the recommendations from all shareholders; and (2) transparent and clear guidelines for remunerating directors and Management at a rate comparable to those of the peer companies and aligned with the long term benefit of EGCO and the shareholders. The Executive Committee comprises 5 directors and has the responsibility to screen and endorse for the Board’s consideration the Management’s proposals especially on the investments, funding and relating activities. Exception is made for medium and small sized investment where the Executive Committee can approve business decision with subsequent acknowledgement by the Board. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board

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is appointed the Chairman of the Executive Committee. He has proven to be efficient chairman who conducts the meeting efficiently and be attentive to other members’ recommendations both at the Board’s and the committee’s meeting. The Board is considering the revision of the Executive Committee Charter to reflect the actual responsibilities. The Corporate Social Responsibility Committee comprises 5 members with the President as the Chairman of the Committee. Two of the CSR members shall be directors/nominees and the other two shall be Management. The Corporate Social Responsibility Committee has the responsibility to oversee EGCO’s positions and practices on issues of corporate social responsibilities, principally in relation to social and environmental matters that affect shareholders and other key stakeholders. The structure and duties and responsibilities of each Board committee as well as the number of meetings are reported in the other article on “Shareholding and Management Structure”. 5.3 Role and Responsibility of the Board of Directors Duty and Responsibilities The Board members well understand their role and responsibilities including the business of the Company. They well serve the Company with honesty and prudent judgments for the utmost benefit of the Company and the fairness to all shareholders. The Board has exercised independent judgment and devoted time in discharging their duties in accordance with the Corporate Governance Principle as follows. • To set the corporate vision, target and business strategy including risk management policy, annual budget and business plan as well as setting the corporate performance targets while monitoring the implementation, the result, significant investment cost, acquisition and disposal of the assets; • To recruit, set the remuneration rate, monitor the performance and if necessary to change the key management and plan for a smooth succession plan; • To review the remuneration of directors and key management and ensure that the director selection process is procedural and transparent; • To monitor and resolve the conflicts of interests which may incur by Management, directors and shareholders, and to ensure the independent audit and internal control with the focus on risk monitoring, financial control and legal compliance; • To monitor the effectiveness of the existing governance tools and instruments and implement change if necessary; • To monitor the information disclosure and communications; and • To direct self - appraisal annually and declare in the annual report how well they carry out their duties and oversee EGCO. Leadership and Vision The Board works with the Management in setting the vision, mission, strategies, goals and business plans both over a short and long term. The corporate KPIs are designated for each key area being growth, finance and organization excellence. The Board also endeavors to ensure that the significant working system such as the internal control and risk management are in place. Management performance is also monitored through the President’s report which is prepared on a monthly basis to ensure that EGCO business is carried out in an efficient manner.


Electricity Generating Public Co., Ltd.

Code of Conduct To maintain high ethical standards, EGCO has set up a Code of Conduct as a guideline so that directors, Management and employees perform their duties with regard to ethical values. Directors’ Code of Conduct focuses on business ethics, ethics for directors, directors’ commitment, duties and responsibilities, conflicts of interest and use of information. Employees’ Code of Conduct covers 1. Guiding principles, 2. Making the system work, 3. Compliance with laws and regulations, 4. Business ethics, 5. Human resources, 6. Safety, health and environment and 7. Accountability. EGCO continuously conducts the training on adherence to the Code of Conduct for the employees as well as provides clarification on their frequently asked questions. Directors, Management and employees must obey and respect the spirit of the Code of Conduct. Managers at all levels are required to promote the compliance with the Code of Conduct and act as role models. Employees at senior vice president level and upward shall review their compliance with the Code of Conduct before signing and submitting the Code of Conduct Compliance Statement to their immediate boss annually. Internal Control and Internal Audit Realizing the importance of having sufficient and suitable internal control at all levels, EGCO clearly determines responsibilities and authority of Management and employees in writing, taking into account segregation of duties, check and balance, and control of Company’s assets. EGCO also set a correct and timely financial report system. Apart from this, EGCO sets up an Internal Audit division which directly reports to the Audit Committee in order to make sure of its transparent auditing process. The Audit Committee has a responsibility to approve internal audit plan, and to consider and review the independence and the performance report of the Internal Audit Division. The Board sets the policy to annually review EGCO’s internal control system using the questionnaires that were developed in line with the guidelines of the SET and the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Employees from section managers and upward are assigned to evaluate the quality of the internal control of which the result will be proposed to each subsidiary’s Board of Directors, the Audit Committee and EGCO Board of Directors, respectively. The evaluation result in 2009 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system. The details are presented in Internal Control in this annual report. To ensure compliance with internal control systems, and rules and regulations, employees of EGCO and subsidiaries at senior vice president level and upward are required to thoroughly review their 2009 work practices before signing the General Representation Letter to their managers up to the President. The President also signed the General Representation Letter addressed to the Chairman of the Board. EGCO emphasizes on developing the capabilities of internal auditors by self development, experience sharing and attending inside and outside seminar. The Internal Auditor Division also provides consultation to relevant units to reduce the weaknesses in the system under the proactive audit plan. Risk Management The Board of Directors entrusts the Audit Committee to review with the Management the risk management policy, implementation and guidelines. The Audit Committee reports the update on risk management issues to the Board twice a year to consider the adequacy and effectiveness of risk management system with focus on early warning system and irregularities so that the strategies, plan and measures can be adjusted or put in place at an appropriate timing. In 2009, EGCO had engaged an advisor to review the Group’s risk management system and to provide recommendations to enhance the practices which include key risk indicators, risk appetite and enterprise risk management.

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To implement enterprise risk management, the following measures are implemented: • EGCO Risk Management Committee is shored up comprising top management of the Group companies and chaired by the President. The objectives are to closely monitor the risk management of the Group and to present the result to the Audit Committee and the Board. In addition, Risk Management Committee is also set up at each power plant to set up the policy and monitor the implementation to meet the overall policy and the business characteristic of each power plant. • Risk Management Section was also set up under Internal Audit Division to be fully responsible and coordinating for risk management. • Risk management process is embedded into the working process. Management and employees are encouraged to take part in the process and to efficiently use the resources to identify, appraise and manage risks. • Risk management is implanted into the corporate culture. EGCO has adopted the risk management policy and risk management manuals as guidelines since 2001. Risk Management implementation is also included as one of the elements for internal control assessment. The result of such assessment in 2009 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 taking such engagement; • Directors will promptly notify the Board when any of the conflict of interest occurs and must consider whether to refrain from participating in the debate and/or voting on the matter, whether to be absent from discussion of the matter, whether to arrange that the relevant board papers are not sent, or, in an extreme case, whether to resign from the Board; • The list of major shareholders is disclosed. Directors and designated Management will report the change in their security holding to the regulatory body. The Corporate Secretary is assigned to report the security holdings of directors and Management to the Board at every meeting; • Employees should not borrow money from the customers/suppliers or from individuals or firms having business dealings other than financial institutions as it may influence the way they handle EGCO business; and • Transaction that may induce the conflict of interest shall be reported to the Board for consideration. The details of such transaction such as transaction price, contractors, and rationale are to be disclosed in compliance with the requirements of the SEC and SET. The Corporate Secretary will identify the type of transaction and the approval body and will submit the reports on connected transactions and any conflict of interests to the Audit Committee for acknowledgement twice a year and disclose the information in the annual report and annual registration form (Form 56-1). To foster trust among all concerned parties that the connection transactions are aimed at optimizing the benefits of 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.


Electricity Generating Public Co., Ltd.

Fraud Risk Management With a view that fraud risk was significant, 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 system is established and appraised. The whistleblower program is in place. • Investigation : Eeach supervisor assumes responsibility to prevent and control fraud risks and errors in the system. In addition, there is an internal audit unit which is independent from senior management to review the compliance with the regulations and test the early warning signals. • Fairness : The fraud investigation will be made by a panel to ensure fairness to the defenders. In addition, whistleblowers will be appropriately protected. • Lesson Learn : Case study on fraud risks both in Thailand and overseas will be used to train supervisors on fraud prevention. In 2009, there is no claim or any fraud found in EGCO Group due to the above efficient preventive measures. 5.4 Board Meeting To ensure that the Board takes full responsibility to meet the expectations of the shareholders, the Board reviews significant business policy and corporate calendar. In this regard, it is determined that the Board meeting will be held at least once every two months. Extra Meeting can be called if there is any major unplanned event that needs the Board’s consideration. The Board can also authorize the committees to scrutinize or approve the management’s activities within the delegated authority during the meeting interval. The Board also instructed management to provide monthly performance report so that the Board can follow up the business progress despite not having the Board meeting. To facilitate the directors, EGCO plans the meeting dates and the agenda for the whole year in advance. The Chairman and President fix the agenda for the Board’s meeting. Each director can propose the agenda to the Chairman and can deliver their independent judgment. The Corporate Secretary delivers the notice, agenda, and meeting document to the directors for consideration at least one week in advance. Agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, Matter for Information to ensure that items that need the most careful deliberation are given adequate time. The Chairman allocates adequate time for Management to present their issues and to permit directors to conduct extensive discussion of agenda items and other topics of interest. The minutes of meeting are drafted for the Board’s review within 14 days after the meeting prior to the adoption at the next meeting. The Board had called 8 meetings in 2009 comprising 7 scheduled and 1 extra meeting. Each meeting took approximately 2 hours and a half. The average attendance rate is 92.49%. Since EGCO has a number of directors who do not reside in Thailand, EGCO has set the policy to allow those directors to attend the meeting by teleconference so that EGCO and the Board will benefit from their opinion and recommendation. Such attendance is not considered the meeting quorum and those who attend the meeting by teleconference do not have the right to vote. The Board encourages the President to invite top Management being the senior executive vice presidents to attend all the Board’s meeting. Other Managements are invited to join the meeting as deemed necessary to provide additional insights into

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the items being discussed because of personal involvement in those areas. Managers with future potential are given exposure to the Board to support the consideration of the succession planning. The Board can request for additional necessary information from the President or the Corporate Secretary or other assigned management within the extent of the established policy. The Board can also engaged independent advisor for the benefits of the business on EGCO’s expenses. Details of directors’ attendance in 2009 are illustrated in Table 1. The Board set up a policy for non-executive directors to call a meeting at least once a year. There are three meetings in 2009. The agenda items cover board of directors’ meetings, risk management, structure, roles and responsibilities of directors and management, good corporate governance, President’s performance appraisal and human resource management. 5.5 Board Self Assessment The Board regularly conducts self assessment for future improvement. In 2009, the Board agreed to use the 2008 self appraisal form based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. There are two parts, the collective appraisal form and the individual appraisal form. The grading code is “excellent” for the score of 85 and above, “very good” for the score of 75 and above, “good” for the score of 65 and above, “fair” for the score of 50, and above and “poor” for the score below 50. The result of the appraisal is concluded as follows. Collective Self appraisal The collective self appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the President, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The result can be concluded that the Board protected the benefits of shareholders, stakeholders and EGCO and that EGCO had good corporate governance. The average score was 85% which was in the excellent level. The highlights were as follows : • EGCO’s objectives reflect shareholders’ expectation and full and accurate reporting on EGCO affair had been made; • The Board understands who the key stakeholders are and have good relationship with them; • The strategic plan is carried out of sufficient quality and content and is well reflected at operational level with key performance indicators; • The Board communicates proper ethical and legal responsibilities to its members and ensures ethical behavior and proper compliance standards throughout the organization. The Board is sufficiently independent of the Management. The Board has leadership and effectively managed the conduct of Board business as a team. • New directors are provided with adequate information about the Company and the Board. Director receives proper training in corporate governance. • The job description of the President is clearly defined. The Board works well with the President and other managers to create an open culture that encourages frank discussion. The Board avoids excessive intrusion in the President and/or management’s responsibility. • The Board and committee meeting are productive. • The Chairman carries out the role satisfactory and encourages director participation in a debate;


Electricity Generating Public Co., Ltd.

• The Board regularly evaluates the performance of the President and creates an appropriately designed management compensation plan; • The Board has a company wide succession plan in place; and • The Board has a working knowledge of competitors in the sector and plays a role in public service. Despite an excellent score, the Board viewed that plan should be made to ensure that the succession planning is perfect. Individual Self Appraisal The individual appraisal form comprised 7 sections, namely strategic thought, good corporate governance, competence, independence, preparedness as a director, personal attributes and awareness of stakeholders. From the individual self appraisals, most of the scores were higher than 90% which could be concluded that the directors had appropriate deliberations and contributions in accordance with the recommended best practices. Audit Committee Self Appraisal Apart from the Board, the Audit Committee also appraises themselves annually. The result of the self appraisal in 2009 indicates that the composition, qualifications and roles and responsibilities of the Audit Committee are still in line with the Audit Committee’s Charter B.E. 2551 and the international best practices. 5.6 Performance Appraisal of President and Top Executives All the non-executive directors will appraise the President performance against the corporate and individual achievement. Indicators include the following: • Qualitative indicators being leadership, relationship with the Board, risk management and internal control, human resources management, good corporate governance and Code of Conduct. • Corporate achievements based on the committed Key Performance Indicators • Capabilities to enhance business development The Nomination and Remuneration Committee is responsible for endorsing the performance appraisal of the senior executive vice presidents and executive vice presidents based on the individual achievement of each executive. 5.7 Remuneration for Directors and Management EGCO set the directors’ remuneration at the appropriate rate which is comparable to that of the leading companies in the same sector. The remuneration comprises monthly retainer fee, meeting allowance and bonus which is paid once a year and is tied with EGCO’s achievement. The Nomination and Remuneration Committee shall recommend the remuneration framework to be endorsed by the Board before proposing to the shareholders. EGCO has a policy to disclose the remuneration of each director for transparency. Directors that also serve as committee members will be entitled to extra remuneration to match the increase in responsibilities. Management who serve as directors and committee members shall refrain from taking director remuneration. The non-executive directors shall set the remuneration of the President taking into account the performance appraisal and the peer payment. The Board also approves the pay structure of the Company. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to that of the peer companies and adequate to attract and motivate the qualified executives.

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Annual Report 2009

The remuneration of directors and management is disclosed under the topic of shareholding and management structure in this annual report. 5.8 Board and Management Training The Board pays attention to continuous development of directors and management. In 2009, The following development plan was implemented to ensure efficiency and effectiveness. Director Development Continued development is encouraged for all directors : New Directors : Directors’ orientation is arranged where directors will have a chance to meeting with Management. Directors’ manual is updated to equip incoming directors with knowledge about EGCO. Directors are also encouraged to attend training programs at the Institute of Thai Directors (“IOD”). Existing Directors : The Board encourages continued development covering in-house training and outside training at the IOD or other relating academic institutes. In 2009, EGCO’s in-house training programs for directors were risk management and fraud risk management, and new accounting principles and the Company’s governance. The seminar on an overview of industry, business characteristics of the Group companies, current and future plans were also provided to the Board. EGCO also arranged a Board visit to Rayong Power Plant, Khanom Power Plant, BLCP Power Plant, Nam Theun 2 Power Plant in Laos PDR and site visits to wind farm and gas fired power plant in Australia to educate our directors on power business and future trend. Management Development and Succession Plan EGCO supports the executive development program to enhance Management capacities and skills to be suitable to perform their duties and to assign the suitable and challenging job. The Board determines policies and principles for selection of the President and his successor in the event of an emergency or the retirement of the President taking into account educational background, experience, capabilities, ethics and leadership. The selection process is fair and transparent. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications endorsed by the Nomination and Remuneration Committee. The approval of the candidates shall be as stated in the Company’s Regulation on Human Resource Management B.E. 2550 and the resolution of the Board as follows. • The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice President, Executive Vice President, and nominate senior executives of subsidiary/joint venture companies that EGCO has the right to nominate for a position equivalent to EGCO’s EVP level and upward. • The President shall appoint the division and section managers. • The appointment of Corporate Secretary shall be by the Board while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee. The Nomination and Remuneration Committee has assigned the Management to prepare the succession plan for 17 key positions along with the executive development plan to ensure that qualified employees would be selected under the D-R-I-V-E people attributes as follows :


Electricity Generating Public Co., Ltd.

Dynamic

Full of energy and committed to take action proactively while striving for creating opportunities continuously to move EGCO Group forward.

Relationship

Committed to work cooperatively with diverse team across EGCO Group and other stakeholders and sustain integrity and clean environment with caring and harmonizing to achieve synergized superior goal.

Initiatives

Committed to challenge existing ways of doing things and thing outside the box in light of better business results

Vision Focus

Committed to strive for accomplishment of EGCO Group vision through decision making, planning and communication in accordance with business strategies, objectives and goals.

Excellence

Committed to dedicate ourselves to keep abreast of best practices in professionalism and apply our in-depth of expertise based on calculated cost - benefits optimization to provide reliable deliverables with fully met customers and stakeholders’ delight.

The Management development plan is prepared to focus on development of core, managerial/leadership competencies and functional competencies. Key courses and numbers of trainees for each course are as shown below : Courses Executive Leadership Program (ELP-NIDA Wharton) Director Certification Program Senior Management Training by Capital Market Academy Senior Management training for globalization

No. of participants 8 14 4 1

The Board is committed to safeguard the benefits of the Company and the shareholders. The Board of Directors consists of knowledgeable, capable, and experienced professionals from diverse related fields, thereby enabling EGCO to perform efficiently. This is evidenced as EGCO Board is honored as the Board of the Year for Distinctive Practices for year 2008-2009 and the Board of the Year for Consistent Practices.

6. Good Governance : Continuous Improvement The Good Corporate Governance report as detailed above reflects the commitment and devotion of the Board to create value to EGCO through management, good corporate governance and corporate social responsibility. EGCO has provided information to relevant parties for the benefit of enhancing the good corporate governance in Thailand such as the project to survey the director remuneration, the hearing on qualifications of independent directors and connected transactions. EGCO will continue to study and adopt the appropriate best practices to enhance EGCO’s and shareholders’ value and to maintain the reputation of Thai industrial sector.

099


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Annual Report 2009

Table 1 : Board and Committee Meeting Attendance Report No.

Name Board Meeting 8 times / year

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1

Mr.Pornchai Rujiprapa Chairman Mr.Aswin Kongsiri Vice Chairman Independent Director Mr.Chaipat Sahasakul Independent Director Mr.Thanapich Mulapruek Independent Director Mr.Somphot Kanchanaporn Independent Director Mrs.Wattanee Phanachet1 Independent Director Police Lieutenant General Pijarn Jittirat2 Independent Director Mr.Phaiboon Siripanoosatien Independent Director Mr.Somboon Arayaskul Director Mr.Wisudhi Srisuphan Director Mr.Apichart Dilogsopon Director Mr.Peter Albert Littlewood Director Mr.Hideaki Tomiko Director Mr.Mark Takahashi3 Director Mr.Hideo Kuramochi4 Director Mr.Shinji Tsuchiya5 Director Mr.Mark Jobling6 Director Mr.Vinit Tangnoi Director and President

Audit Committee 15 times / year

8/8

Nomination and Remuneration Committee 9 times/year

Corporate Social Responsibility Committee 2 time / year

11/12

6/8

8/9

7/8

15/15

6/8

14/15

8/8

15/15

2/2

6/6

5/6 8/8

9/9

7/8

9/9

8/8 8/8

12/12

7/8 8/8

12/12

3/4

5/6

5/5

4/4

6/6

4/4

8/8

12/12

4/4 4/4

Retired by rotation in Shareholders’ Annual General Meeting no. 1/2009 on April 24 Being appointed director in Shareholders’ Annual General Meeting no. 1/2009 on April 24 3 Resigned on June 22, 2009 4 Resigned on June 22, 2009 5 Being appointed director on June 22, 2009 6 Being appointed director on June 22, 2009 Note : 4 members in Audit Committee comprising no. 3, 4, 5, 6 6 members in Executive Committee comprising no. 1, 11, 13, 14, 17, 18 5 members in Nomination and Remuneration Committee comprising no. 2, 8, 9, 14, 17 1 members in Corporate Social Responsibility Committee comprising 1 members no.18 2

Meeting (time) Executive Committee 12 times / year

2/2


Electricity Generating Public Co., Ltd.

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

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

Chairman Directors’ The Role of Audit Raising the Accounting Finance for Director 2000 Certification Chairman Committee Awareness for non- Non-Finance Accreditation Program Program Program of Corporate accounting Directors Program Fraud in Audit (DAP) Thailand Committee

The Role of the Compensation Committee Program

IFRS

√ √

Risk it all

√ √

√ √

√ √

√ √

√ √ √ √ √

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Annual Report 2009

Internal Control The Board of Directors is responsible for ascertaining that EGCO and its subsidiaries have in place an efficient internal control system which is in line with the guidelines of The Stock Exchange of Thailand’s (SET) and the internal control framework of The Committee of Sponsoring Organizations of the Treadway Commission (COSO). In this respect, the Board has entrusted the Audit Committee the responsibility to review the appropriateness and effectiveness of the internal control system and the internal audit. 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. The administrative tasks of the Internal Audit Division are reported to the President. The internal audit scopes of EGCO and its subsidiaries are financial audit, operational audit, compliance audit, information system audit, and management audit. EGCO has had in place the internal controls which is consistent with the guidelines of SET and COSO. Our control framework and how we operate are described as follows : Control Environment • The Board carefully sets up clear and measurable business objectives and policies to be a guideline for the management and employees. The operation is periodically reviewed to ensure conformity with the business objectives taking into account the fair treatment to stakeholders for long - term benefit of EGCO. • The organization structure including approval authority has been adjusted to support operation efficiency. • The written Code of Conduct is reviewed periodically. The Management will give the written Code of Conduct to employees and advise them to understand their responsibilities to uphold the Code of Conduct which includes the measure to avoid the conflict of interest. Failure to observe the Code of Conduct may result in a range of disciplinary actions. • Regulations, instructions and Table of Authority for accounting, finance, budget, procurement, and human resource functions are established and clearly communicated to all employees for acknowledgment and compliance. Risk Management The details of Risk Management of EGCO and subsidiaries are disclosed under “Risk Factors”. Control Activities To ensure efficient control of operation including accounting and finance, the following activities are implemented. • Transactions and approval amount of management are set forth in the Table of Authority. • Duty to approve the transaction, operation or accounting record is segregated from the duty to, safeguard assets. • The Asset Management Division is responsible for regularly monitoring the operation results of EGCO’s subsidiaries and joint ventures.


Electricity Generating Public Co., Ltd.

• Process to approve and monitor connected transactions is set out clearly. Such transactions must be approved by those who have no conflict of interests and will be carried out in a way that will provide the utmost benefits to EGCO. • The Corporate Secretary is entrusted to ensure that EGCO and the Board’s practices are in compliance with the Securities and Exchange Acts, the notification and regulation of the SET, Securities and Exchange Commission (SEC), and other related laws and regulations. • The compliance database is developed for reference and tracking. The Legal division is responsible for updating the compliance database and providing recommendations to employees. • The Internal Audit Division is responsible for regularly reviewing adequacy and appropriateness of internal control system. Information and Communication EGCO has established information system and communication channels as follows : • For internal communication, all employees will receive information about the company’s policies, regulations and instructions via intranet and different level of meetings. Employees are encouraged to give comments on the improvement of operations efficiency in the meetings. • For external communication, EGCO’s information is disclosed via the SET’s Community Portal system and EGCO’s web site at www.egco.com as well as the quarterly analyst meeting, EGCO newsletters, and press conference. • The meetings among the Audit Committee, external auditors and concerned Management are held to review the financial accounting complying with the General Accepted Accounting Principles and International Accounting Standards. • Management information are recorded and maintained in a complete, correct, timely and adequate manner to support the decision making. Information such as power plant operation data along with information on accounting, budgeting and finance are recorded and maintained in the Management Reporting System. This reporting system is regularly updated and secured against unauthorized use. • Accounting records and supporting documents which will be used to support the financial statements preparation are kept completely and in orderly manner. There is no deficiency in those documents informed by the auditor. • The Board of Directors receives invitation letters, meeting agendas and supporting documents in advance of the meeting. Discussion, remarks and recommendations of the Board and standing committees including resolutions are recorded in the minutes of meetings for future reference or auditing. • Communication channel is provided for employees to report suspected violations of EGCO’s Code of Conduct to the Management or to the Board of Directors (whistleblower). The message providers are well protected by the company.

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Annual Report 2009

Monitoring To ensure that the established internal control system is sufficient and appropriate, the following activities are implemented. • The responsible unit is assigned to follow up, monitor and set appraisal criteria to benchmark the corporate performance against the plan. Gap analysis is carried out and scheduled reports are submitted to the Management and the Board. • The Internal Audit Division is entrusted to review the internal control system to ensure that the company’s practices are in compliance with the established internal control system, the Securities and Exchange Acts and other related laws and regulations. The Internal Audit Division prepares audit result reports to be submitted to the Audit Committee. Such report includes recommendations to improve the internal control efficiency together with the Management’s actions responding to such recommendations. • External auditors are independent. They regularly report their findings to the Audit Committee. • EGCO and its subsidiaries’ internal controls have been evaluated annually. The evaluation form has been designed following SEC’s and SET’s internal control guidelines as well as COSO’s internal control framework. The evaluation results have been reported to the Audit Committee and the Board of Directors by the Internal Audit Division. The 2009 evaluation results can be concluded that the internal control of EGCO and its subsidiaries are sufficient and appropriate. • To ensure the compliance with rules, regulations and Code of Conduct, employees from Senior Vice President and upwards of EGCO and its subsidiaries are required to thoroughly review their 2009 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to his/her managers up to the President. EGCO’s President and the Managing Directors of EGCO’s subsidiaries also signed the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board of each company. • In reviewing the financial statements, the auditor has also reviewed internal control on accounting and finance to define the audit approach, work duration and scope of work. In 2009, no significant finding, regarding the improvement on internal control systems, has been found. • EGCO recognizes the importance of risk management. The Board of Directors has focused on the likelihood of the irregularities, risk mitigation and early warning systems. The Board entrusts the Audit Committee to review with the Management the risk management policy and the practice compliance with such policy. The management set up the Risk Management Committee comprising EGCO’s top executives and the Managing Directors of EGCO’s subsidiaries as members and EGCO’s President as the chairman. The Audit Committee reviews the internal control system and risk management regularly and reports the result to the Board of Directors. As a consequence, the Board agrees with the Audit Committee that the internal control system of EGCO and its subsidiaries is appropriate and that it sufficiently safeguards EGCO’s assets from misuse or unauthorized use. The Audit Committee and the Board have not received significant deficiency report on the internal control system from external auditors and Internal Audit Division.


Electricity Generating Public Co., Ltd.

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, implementation and reporting. The Risk Management Committee has been set up at the Management level which comprises of 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 subsidiaries such as KEGCO, and ESCO also have their own risk management committees to help ensure that their particular risks will be managed adequately. The Board of Directors has included the risk management policy in a Risk Management manual which serves as a guideline for the EGCO Group. In 2009, EGCO Group reviewed its risk management system which include risk appetites and risk rating categories along with the review of the overall risk profile to be consistent with the approved EGCO Group’s strategic plan. The Board of Directors will together consider and provide recommendation on the Company’s risk management. The Audit Committee also considered fraud risk and requested a report from the Management on its policies to look for and address fraud risk management which included the likelihood, prevention and remedial actions. A summary of key risk factors and associated mitigation measures is as follows :

1. New Development Project Risk EGCO is a holding company. Its main source of its income is dividends from subsidiaries and joint ventures under long term Power Purchase Agreements (PPA) with EGAT. Failure to add new assets to its portfolio either through greenfield development or acquisition will affect EGCO’s long-term outlook. 1.1 Risks from New Project Development EGCO plans to expand its investment in order to maintain continuous growth, both in Thailand and in foreign countries. To achieve this objective, EGCO has analyzed and identified the key risks involved. These include the relative economic performance, financial market strengths and weaknesses, and key business risks including competition, graft in the industry, production costs, environmental and social/health impacts, changes in laws and relevant regulations as well as political risk.

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Annual Report 2009

In light of these risk factors, EGCO’s strategy to cope with these business conditions is to thoroughly analyze project data and conducting feasibility work and due diligence in accordance with relevant investment guidelines and in constant communication with the Company’s Executive Committee to ensure that each invested project is suitable for the EGCO Group. 1.2 Country Risk In light of the intense and growing domestic competition in the well served Thai market and the vast growth opportunities for the power sector in less well served neighboring country markets, EGCO is seeking to increase its investment primarily in Asean countries and also in Africa and the Middle East through ESCO. For investments in foreign countries, each target country macroeconomic, industrial status, political, economic, social policies along with relevant laws and regulations will be thoroughly analyzed to ensure that the project risk is acceptable in advance of any investment and during the investment holding period. Where possible and commercially feasible, political risks may be mitigated by securing political risk insurance and related coverage. 1.3 Risks from PPA expiration (Rayong Power Plant) On October 1, 2009, REGCO and its key contracts/business were consolidated into EGCO. REGCO’s PPA will expire on December 7, 2014. There is a provision in the PPA that offers a possibility for REGCO and EGAT to negotiate an extension of the PPA. Such negotiation may commence with EGAT and the relevant authorities not less than 2 years but not longer than 4 years before the PPA’s expiry date. To improve the chance of extending the PPA or rebuilding the facility, EGCO has conducted feasibility studies to gain supporting information to propose to relevant government authorities for consideration. To ensure that the staff at the Rayong Power Plant are well prepared, skills development for staff have been continuously carried out. Learning new technologies, and studying the conditions of other IPPs’ power purchase agreements have been undertaken as well. As the plant has been maintained properly and regularly, the plant can be operated effectively at least 10 years after current PPA’s expiration, however being of 1980s vintage, it may be necessary to upgrade the technology with the best 21st century technology to ensure the facility is clean and efficient enough to be accepted by the public and the relevant authorities. The strengths of the Rayong Power Plant have been confirmed as follows : • Having event free track record and good relation with the community • Environment Impact Assessment (“EIA”) in place and sufficient space for a new unit within the existing campus to allow for the building of new plant technology • The efficiency improvement of the Plant can reduce NOx emissions by 19%


Electricity Generating Public Co., Ltd.

compare with figure of EIA approval • Location of Rayong Power Plant close to industrial factories in the eastern seaboard which reduce power loss from source to destination • Automatic Fuel Transfer from natural gas to diesel during plant operation can be executed in case of emergency gas shortage • Ability to quickly execute EGAT’s restoration plan in case of brown out using black start emergency diesel.

2. Project Construction Risk Nam Theun 2 (“NT 2”) is currently undergoing commissioning. NT 2 has entered into the long-term Power Purchase Agreement (“PPA”) with EGAT and the Government of Laos. The scheduled commercial operation date is in March 2010. Major risks of project under construction/commissioning are project construction delay and cost overrun. The two risks can lead to negative impact on the return on investment and delay the revenue recognition of such project. During the commissioning period, the technical problems were found at some partial load settings. In order that the plant to be handed over to EGCO and other shareholders is in acceptable condition at all power settings, NTPC and its contractors are continuing to monitor the plant as it is brought to the Commercial Operation Date (“COD”) and seeking to make modifications where necessary. Due to such problems, the COD is delayed for about 3 months from the original schedule of December 2009 and NT 2 will be liable to penalties by EGAT under the PPA. However, there is also a liquidated damage provision in the agreement with the Head Contractor which covers the fine that NT2 has to pay to EGAT. Consequently, the negative impact on NT 2 Project’s return on investment is expected to be minimal.

3. Operational Risks 3.1 Risk of Failure to Get Target Return on Investment EGCO has the responsibility to properly monitor and manage plant operations in order to reach or exceed targeted return on investment. Typical measures imposed to mitigate relevant risks are as follows : • Establish asset management policies and, where possible, assign management and staffs to be EGCO Group representatives’ directors or management of its subsidiaries and investment projects. • Set up EGCO’s Asset Management Division to regularly monitor operating performances of each facility and analyze the actual return on investment against the planned target.

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Annual Report 2009

• Prepare regular progress reports to senior management and the Board of Directors so that a timely and appropriate action can be taken. The exceptional operating performance is to be reported as well. According to the 2008 operating performance report, the incomes from EGCO’s portfolio have been received in line with modeled results. 3.2 Reliance on the Main Customer Risks EGCO Group’s business is electricity generation and wholesale sales under PPAs with EGAT and other national utilities in its neighboring country investments. EGCO’s largest customer, EGAT, provided 85% of EGCO’s total revenue in 2009. Relying heavily on only one main customer may affect main revenue of the Company to the extent that such customer has any difficulty in its own business in the future. However, this type of risk is considered low as EGAT has the mission to establish the stability of the country’s electricity energy sector and is the state enterprise with good reputation and strong financial status. The reduction of electricity consumption due to economic slowdown does not impact on EGCO group’s revenue under its existing PPAs. The main part of revenue under the PPA, comprising Availability Payments and Energy Payments, is Availability Payments. Revenue from Energy Payments is nonmaterial. 3.3 Plant Performance Risks A commitment to generate and deliver electricity pursuant to a PPA with EGAT entails the following performance risks : (1) Plant Efficiency There are various efficiency benchmarks under a PPA with EGAT i.e., Equivalent Availability Factor (EAF) and Heat Rates. Failure to meet these performance requirements would result in penalties and potential termination in certain extreme cases. With consistent, professional maintenance being a policy in place for each of EGCO Group’s power plants, this risk is considered to be low. Despite that, the management


Electricity Generating Public Co., Ltd.

has established systematic procedures to ensure that all relevant performance targets are met. These procedures are as follows : - Include the key plant efficiency parameters in the Corporate Key Performance Indicators of power plants in the EGCO group in order to ensure that the production efficiency is closely monitored and all employees take part in the plant efficiency. - Set up Early Warning Systems for critical information regarding the plant operation processes. - Ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff. - Ensure that spare part inventory is adequate and well managed. - Implement the Quality Management System (ISO: 9001:2000) to ensure that those power plants operate in accordance with the terms of their PPAs - Continuously develop the competencies of the firms’ human resources. (2) Raw Water Shortage for Electricity Generating The risk of a raw water shortage can result in plant stoppages, revenue shortfall, or penalty payments. Although EGCO Group has never before experienced any water shortage in the past 3 - 4 years, the measures are set to prevent and mitigate such risks by increasing the raw water storage capacity, seeking additional sources of raw water supply and setting measures to maximize the benefit of water usage. (3) Fuel Shortage for Electricity Generating The risks of a fuel shortage for electricity generating can result in plant stoppages, revenue shortfall or penalty payments. From the past record, the fuel shortage is considered to be low and a responsible unit is assigned to continuously monitor the fuel supply status. EGCO Group’s gas fired power plants have long term Gas Supply Agreements with PTT, except for Rayong Power Plant and KEGCO which EGAT is the gas supplier under the terms of their PPAs. The quantity and quality of natural gas and other key parameters are all specified in the relevant agreements. With PTT and/or EGAT being the main suppliers, the risks of fuel gas shortage is considered low. With regard to BLCP which is a coal fired power plant, a long term Coal Supply & Transportation Agreement has been entered into with Australian Coal Holdings Pty Ltd. (“ACH”). ACH is obliged to supply coal with the quantity and quality as specified in the agreement. In case of ACH’s failure to supply coal, BLCP may purchase coal from other suppliers. The increased expenditure occurred will be responsible by ACH. However, BLCP continuously monitors and maintains a sufficient amount of reserve coal at site and through long-term arrangements with potential alternative suppliers to ensure the adequacy supply under the terms of the PPA.

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Biomass power plants which use rice husk and Para wood chip as fuel may face the fuel risk in terms of inadequate supply and volatile pricing. This is because those agricultural products may have alternative uses in the market. Since long term fuel supply agreements can not be established as there are few creditworthy suppliers of such feedstock, the primary risk prevention measures are to reserve more fuel and to seek alternative fuel sources in surrounding areas. This mitigation measures can help manage the fuel price at a certain level. However, the biomass fuel is still a seller’s market. It should be noted that the revenue from biomass power plants such as Roi-Et Green accounts for 2% of 2009 revenue from EGAT. As such, the impact of the inadequate of such fuel on EGCO’s revenue is very low. (4) Safety Health and Environment EGCO realizes that the electricity generating process which uses natural gas and coal as primary fuels will have certain impacts on the safety, environment and quality of life of surrounding communities. Consequently, EGCO has taken the following actions to mitigate any potential negative impacts and reduce the likelihood of such risks as follows : - Develop Safety, Health and Environment (“SHE”) Management Manual for all EGCO owned plant to follow. - Prepare the work manuals and emergency plan, implement training plan and testing of plan, equipment and warning system while ensuring strict compliance with the manual. - Develop a list of governing laws and regulations and designate responsible person to monitor the compliance with related laws. - Monitor and ensure the compliance with SHE Management Manual (5) Accident, Resistance, and Sabotage Accident may cause fire. In addition, EGCO business may subject to the community resistance if the generation process has negative impact on the community. Besides, power plant may also be the sabotage target. Management is well aware of the above risks and set the following measures to mitigate and reduce the likelihood of those risks. - Strongly encourage employees to prudently discharge their duties with the belief that carelessness may lead to significant damages. - Periodically maintain all equipment as scheduled to ensure that they can work efficiently. - Strengthen relationship with surrounding communities to foster the right perception about EGCO business. - Set the security plan with regular drills and provide equipment such as closed circuit TV.


Electricity Generating Public Co., Ltd.

- Secure the insurance policy that covers all risks, machinery breakdown, business interruption and third party liability to assure that assets and personnel will be properly and adequately protected and the damages will be recovered even in an unexpected case. The insurance policy on terrorist attack is also procured for some power plants in EGCO Group.

4. Financial Risks The investments of EGCO Group are capital-intensive. Since the primary funding sources are loans from domestic and international bank loan markets, foreign exchange rate fluctuation and interest rate fluctuation, are important risks to be monitored and mitigated. Failure to do so could possibly lead to a decline in the group’s operating performance. Therefore, the mitigation measures are established as follows : 4.1 Foreign Exchange Rate Fluctuation EGCO Group has a policy to mitigate currency mismatches for each of its investment projects to prudent levels. In general, this is achieved by matching currencies of project development and construction costs with funding source currencies and subsequently matching the currency of long-term funding profiles with those of each project’s revenue stream during the operation phase. However, if the portions of foreign currency (US Dollar) of revenue and expenses are not matched, it may have an unexpectedly negative or positive impact on EGCO in case of the depreciation or appreciation of Thai Baht against US Dollar occurred. For example, if the proportion of US Dollar indexed electricity revenue is higher than the US Dollar denominated debt, Thai baht appreciation will result in lower net cash. Therefore, EGCO Group in certain cases has used a “Revenue Swap” as an instrument to mitigate foreign exchange rate fluctuation risk. As a consequence, the Group’s revenues are stable and can be projected accurately. 4.2 Interest Rate Fluctuation EGCO Group has a policy to manage risk of interest rate fluctuation by using financial hedging instruments (namely interest rate swaps) to fix floating interest rate exposure to prudent levels in order to provide the most predictable cash flows over its long-term power purchase contracts. If interest rate fixtures are not available for the full project terms required, EGCO would seek to enter into or cause its project company’s to enter into financial instruments that can best mitigate the interest rate risks subject to market availability and cost. As of December 31, 2009, most of EGCO Group’s loan floating interest rate was already fixed.

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“...EGCO Group’s market share and strength in the energy sector, EGCO’s business strategy will place more emphasis on expanding investment opportunities in the ASEAN market, fuel-related projects, and prospective domestic projects using renewable energy...”


Electricity Generating Public Co., Ltd.

Management Discussion and Analysis 1. Executive Summary The Electricity Generating Public Company Limited (EGCO) is structured as a holding company which invests in subsidiaries and interests in joint ventures. In 2008, the sale of shares in Amata-EGCO Power Ltd. (AEP), Amata Power (Bangpakong) Ltd. (APBP) and Amata Power-ESCO Service Co., Ltd. (AMESCO) as well as the purchase of shares in Quezon Power (Philippines) Limited Co. (Quezon) were made. In 2009, EGCO’s significant events are summarized as follows : • The additional purchase of 2.60% stake in Quezon, which owns, operates and maintain a 502.50 MW (installed capacity) coal-fired power plant, was made in March 2009. • The investment in Natural Energy Development Co., Ltd. (NED), with the total stake of 33.33%, was made in July 2009. NED is the renewable energy developing company which is currently studying solar and wind power projects in Thailand. • The acquisition of entire business of Rayong Electricity Generating Co., Ltd. (REGCO) occurred in October 2009. This created two periods of operating results : 1) January - September 2009 operating results was included in REGCO’s financial statements. 2) October - December 2009 operating results was included in EGCO’s financial statements. Both periods of the operating results were included in the consolidated financial statements, which hereinafter referred to Rayong power plant. • The purchase of the ordinary shares of Power Generation Services Co., Ltd. (PGS), which provides operation and maintenance services to BLCP Power Limited (BLCP), with the total stake of 50% was made in December 2009. EGCO businesses can be categorized into four investment groups as follows : 1. Independent Power Producer (IPP) consists of Rayong power plant, Khanom Electricity Generating Co., Ltd. (KEGCO), BLCP Power Limited (BLCP) and Gulf Power Generation Co., Ltd. (GPG), which is a subsidiary of Gulf Electric Public Company Limited (GEC). 2. Small Power Producer (SPP) consists of EGCO Cogeneration Co., Ltd. (EGCO Cogen) and Roi-Et Green Co., Ltd. (Roi-Et Green) and four subsidiaries of GEC, which are

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Gulf Cogeneration Co., Ltd. (GCC), Nong Khae Cogeneration Co. Ltd., (NKCC), Samutprakarn Cogeneration Co., Ltd. (SCC) and Gulf Yala Green Co., Ltd. (GYG). 3. Overseas consists of Conal Holdings Corporation (Conal), Nam Theun 2 Power Co., Ltd. (NTPC) and Quezon. 4. Other Business consists of EGCO Engineering & Service Co., Ltd. (ESCO), Egcom Tara Co., Ltd. (ET) and NED. EGCO, Subsidiaries and Interests in Joint Ventures entities, hereinafter collectively referred to as EGCO Group1, owns 13 operating plants, totaling 3,980.70 equity MW at present, an increase of 13.10 MW compared to the total equity MW at the end of 2008. This was caused by the additional purchase of 2.60% stake in Quezon (leading to a total stake of 26%). EGCO Group’s consolidated net profit for 2009 ended December 31, 2009 was Baht 7,936 million, an increase of Baht 1,009 million or 15% compared to last year. Excluding the gain on foreign exchange rate, which was mostly a translation transaction to be shown in accordance with the Thai Accounting Standard, EGCO Group’s profit was Baht 7,505 million, an increase of Baht 14 million or 0.19%. This is mainly due to the higher share of profit from Quezon’s operating result and the increase of GPG’s electricity sales as well as the increase in other income of NTPC. Meanwhile, electricity sales of Rayong power plant, KEGCO and BLCP decreased.

2. Business Expansion Analysis EGCO Group is the first IPP in Thailand established on May 12, 1992, structured as a holding company with a number of subsidiaries and joint ventures. Our vision is “To be the leading Thai integrated electric power company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environment protection and social development support”. Our core business is to produce and supply electricity to Electricity Generating Authority of Thailand (EGAT) under long-term power purchase agreements (PPAs). EGCO focuses its investment on pursuing opportunities in power generation in Thailand and also seeks to expand its business in ASEAN countries with the aim to provide optimum returns to shareholders by improving the profitability of our existing assets and acquiring new projects with acceptable risk and reasonable return profile. As of December 31, 2009, Thailand’s total installed capacity was reported at 29,212 MW2. During the year 2009, the peak demand reached 22,045 MW2 on April 24, 2009, which was 2.32% lower than the peak demand in April 2008.

1

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


Electricity Generating Public Co., Ltd.

Due to the economic crisis during the year 2009, the demand for electricity dropped continuously, especially during the beginning of the year. The Energy Policy and Planning Office (EPPO) has to adjust the Power Development Plan (PDP) in order to reflect the current situation and it is expected to be completed by January 2010 and to implement in April 2010. The new PDP will be an improvement of PDP 2007 (2nd revision). After the new PDP is completed, EPPO will organize a public hearing before submitting to the National Energy Policy Council. Currently, the four new IPPs with the total capacity of 4,200 MW are having the problem of construction delay caused by the requirement of conducting the Health Impact Assessment (HIA) to comply with the constitution. Such delay would not impact the national power supply over a short term as the power consumption growth in the year 2010 is projected at 4% while the reserve margin is higher than 20%. To maintain EGCO Group’s market share and strength in the energy sector, EGCO’s business strategy will place more emphasis on expanding investment opportunities in the ASEAN market, fuel-related projects, and prospective domestic projects using renewable energy. As of December 31, 2009, EGCO Group has 13 operating plants with capacity totaling 3,980.70 equity MW, of which 3,599.60 equity MW is dispatched to EGAT under long-term PPAs representing 12.32% of Thailand’s total installed capacity, 29,212 MW. EGCO also invests in Nam Theun 2 project which is currently under construction and set to commence Commercial Operation in early 2010, postponed from the previous COD targeted in mid December 2009. This project represents an additional 271.70 equity MW in EGCO’s portfolio. The project is a 1,086.80 MW (installed capacity) hydroelectric power plant located in the Lao PDR. EGCO holds a 25% ownership in the project company; NTPC. EGAT is contracted to take off 995 MW and the remaining MW will be sold to the Lao PDR. At the end of December 2009, the overall project progress was 99.87% complete. The company has a policy to dividend 40% of the consolidated net profit after taxation, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to the company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the company. The dividend declaration shall not exceed the retained earnings of the company financial statements.

3. Report and Analysis of the Operating Results This report contains the analysis of the financial statements of EGCO, subsidiaries and interests in joint ventures as follows :

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3.1 Operational Results Unit : Million Baht

2009 Overseas 9% SPP 6%

Others 2%

IPP 83%

Profit before FX - 2009 Remarks : -

EGCO IPP SPP Overseas Other Business Total

2008

Before FX After FX Before FX After FX (550) (550) (598) (565) 6,680 7,169 7,195 6,707 516 634 599 452 693 523 21 57 166 160 274 275 1 1 7,936 7,491 6,927 7,505

Profits before FX separate out foreign exchange impact from EGCO, subsidiaries and joint ventures. IPP : Rayong power plant, KEGCO, BLCP, GPG SPP : EGCO Cogen, Roi-Et Green, GCC, NKCC, SCC, GYG, APBP, AEP Overseas : Conal, NTPC, Quezon Others : ESCO, ET, NED and AMESCO APBP, AEP and AMESCO were sold in May 2008; Quezon and NED was acquired in November 2008 and July 2009, respectively.

EGCO Group’s profit before the effect of foreign exchange rate for 2009 ended December 31, 2009 was Baht 7,505 million, representing an increase of Baht 14 million or 0.19% compared to last year. This is mainly due to the higher share of profit from Quezon’s operating result and the increase of GPG’s electricity sales due to the Kaeng Khoi 2 (KK2) unit 2 which achieved its Commercial Operating Date (COD) on February 27, 2008, as well as the increase in other income of NTPC from the liquidated damages charged to the head contractor due to the project delay. Meanwhile, electricity sales of Rayong power plant, KEGCO and BLCP decreased due to lower in the capacity rate. If including the gain on foreign exchange rate from Baht appreciation of Baht 430 million, EGCO Group’s profit for 2009 was Baht 7,936 million, an increase of Baht 1,009 million or 15%, while in 2008 it recorded a foreign exchange loss of Baht 564 million. This creates a difference caused by foreign exchange rate of Baht 994 million. The gain (loss) on foreign exchange rate is mostly a translation transaction to be shown in accordance with the Thai Accounting Standard. It incurs from the difference of the translation of the net debt denominated in foreign currency into the Thai Baht equivalent using the foreign exchange rate at the end of this accounting period (December 31, 2009) and the previous period (December 31, 2008). The gain on foreign exchange rate of 2009 in the amount of Baht 430 million can be explained as follows: • The gain on foreign exchange rate of EGCO and subsidiaries of Baht 33 million, an increase of Baht 58 million compared to the previous year which recorded the loss from foreign exchange rate of Baht 25 million. • The gain on foreign exchange rate of joint ventures of Baht 398 million, an increase of Baht 936 million compared to the previous year which showed the loss from foreign exchange rate of Baht 539 million.

1

Profit before Fx shown in the table is different from profit before FX calculated from the consolidated financial statements because the consolidated financial statements show currency exchange gains (losses) of EGCO and Subsidiaries, but not those of joint ventures. The share of profit (loss) from interests in joint ventures is a figure net of currency exchange gains (losses).


Electricity Generating Public Co., Ltd.

Gain (Loss) on FX from Joint Ventures : BLCP GPG GCC, NKCC, SCC and GYG APBP and AEP* Conal NTPC Quezon Total Gain (Loss) from FX

Unit : Million Baht

2009

2008

296 197 75 0.38 (180) 9 398

(231) (287) (61) 6 53 (8) (10) (539)

* APBP and AEP were sold in May 2008

The earnings before finance costs, tax, depreciation and amortization (EBITDA) for 2009 was Baht 15,864 million, representing an increase of Baht 432 million or 3% as compared to 2008, in which the EBITDA was Baht 15,432 million. The gross profit of EGCO and subsidiaries was reported at Baht 3,734 million, down by Baht 714 million or 16%, as a result of lower contracted electricity sales of KEGCO and Rayong power plant. The same reason caused the operating profit of EGCO and subsidiaries to fall to Baht 2,965 million, a decrease of Baht 770 million or 21%. Important Profitability Ratios for 2009 operating results were as follows : • Gross Profit Ratio was 40.83% • Operating Profit Ratio was 32.42% • Net Profit Ratio was 50.33% • Net Profit Ratio (excluding the effect of foreign exchange of EGCO and subsidiaries) was 50.12% • Earnings per share (EPS) was Baht 15.07 • Earnings (excluding the effect of foreign exchange of EGCO and subsidiaries) per share (EPS) was Baht 15.01 • Return on Equity (ROE) was 16.60% The gross profit margin (excluding the share of profit from joint ventures) of 40.83% was lower than the previous year’s margin of 43.10% due to lower electricity sales of KEGCO and Rayong power plant; whereas the net profit ratio (excluding the effect of foreign exchange of EGCO and subsidiaries) was reported at 50.12%, higher than 2008 ratio of 45.39% mainly due to an increase in the share of profit from GPG and the recognition of the share of profit from Quezon.

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3.2 Income, Expense and Share of Profits from Joint Ventures Analysis The 2009 operating results, excluding FX of EGCO Group and profit attributable to minorities (MI), are as follows : • Total revenues were Baht 9,495 million, a decrease of Baht 1,218 million or 11%. • Total expenses were Baht 7,751 million, a decrease of Baht 542 million or 7%. • The share of profits from joint ventures before FX was Baht 5,876 million, an increase of Baht 718 million or 14%. The details according to their groups of business are as follows : Total Revenues, Total Expenses and Share of Profits (Losses) from JVEs before FX : EGCO IPP SPP Overseas 2009 2008 2009 2008 2009 2008 2009 2008 Total Revenues Total Expenses Profits bf Share of Profits (Losses) from JVEs Share of Profits (Losses) from JVEs bf FX Net Profit bf FX and MI

242 792

249 6,124 7,195 2,237 2,234 847 4,312 4,767 1,972 1,961

Others 2009 2008

Unit : Million Baht Total 2009 2008

-

-

891 1,034 9,495 10,712 674 717 7,751 8,293

(550) (598) 1,812 2,428

265

273

-

-

217

317 1,744 2,419

- 4,869 4,767 (550) (598) 6,681 7,195

325 590

365 638

693 693

21 21

(11) 206

4 5,876 5,157 321 7,620 7,576

1) EGCO’s total revenues for 2009, amounting to Baht 242 million decreased by Baht 7 million or 3% mostly from a decrease of interest income by Baht 44 million due to lower interest rate. Meanwhile, dividend income from Eastern Water Resources Development and Management Public Company Limited (EASTW) increased by Baht 31 million. Total expenses of EGCO were Baht 792 million, a decrease of Baht 56 million or 7%. This resulted mainly from a decrease in administrative expenses amounting to Baht 128 million due to lower development expenses and advertising expenses, meanwhile, finance costs increased by Baht 52 million from the interest on the disbursement of revolving loan of Baht 3,500 million in November 2008 and of long-term loan totaling Baht 4,000 million in September 2009. 2) IPP’s total revenues were Baht 6,124 million, a decrease of Baht 1,071 million or 15%. The total expenses were Baht 4,312 million, down by Baht 455 million or 10%. The share of profits from joint ventures before FX was reported at Baht 4,869 million, an increase by Baht 101 million or 2%. The details are as follows : Total Revenues, Total Expenses and Share of Profits (Losses) from JVEs before FX of IPP : Rayong power KEGCO BLCP GPG plant 2009 2008 2009 2008 2009 2008 2009 2008 2009 Total revenues 3,787 3,952 2,337 3,243 - 6,124 Total expenses 2,406 2,448 1,906 2,319 - 4,312 Profits bf Share of Profits (Losses) from JVEs 1,380 1,504 431 924 - 1,812 Share of Profits (Losses) from JVEs bf FX - 2,930 3,200 1,939 1,567 4,869 Net Profit bf FX and MI 1,380 1,504 431 924 2,930 3,200 1,939 1,567 6,681

Unit : Million Baht Total 2008 7,195 4,767

%Chg (15%) (10%)

2,428

(25%)

4,767 7,195

2% (7%)


Electricity Generating Public Co., Ltd.

• Sales of electricity of IPP were Baht 6,040 million, representing a decrease of Baht 1,065 million or 15%. The decrease was a result of KEGCO’s lower electricity sales by Baht 893 million to register Baht 2,318 million, caused by a decrease in the Base Availability Credit for KEGCO. Moreover, Rayong power plant’s electricity sales decreased by Baht 172 million to register Baht 3,722 million from a decrease in the Capacity Rate. These changes were in accordance with the capacity payment formula calculated on a “Cost Plus Basis” under the PPAs and in line with the company’s projection. Sales of Electricity - IPP : Rayong power plant KEGCO Total Sales of Electricity - IPP

Unit : Million Baht

2009

2008

%Changes

3,722 2,318 6,040

3,894 3,211 7,105

(4%) (28%) (15%)

The PPAs cover the full amount of the projected fixed costs, debt financing charges and major maintenance charges, which are used in calculating the electricity tariff for each period. Moreover, the calculation of the capacity payment is adjusted to include compensation for the exchange rate effect from debt services and expenses of major maintenance parts denominated in US Dollar. Rayong power plant and KEGCO receive the compensation monthly for each billing period. They receive higher capacity charge than that stated in the original PPAs before the inclusion of foreign exchange indexation if the exchange rate is above Baht 28 per US Dollar and vice versa. For 2009, Rayong power plant and KEGCO received compensation for the exchange rate effect of Baht 214 million. • Interest income and others amounted to Baht 84 million, a decrease of Baht 6 million or 7%, mainly from a decrease of KEGCO’s interest income by Baht 21 million due to lower deposit amount and interest rate. Meanwhile, other income of Rayong power plant increased by Baht 13 million due to an environmental management fee. • Cost of sales totaled Baht 3,052 million, a decrease of Baht 382 million or 11% from a decrease of KEGCO’s cost of sales totaling Baht 238 million due to lower major maintenance expenses and heavy oil cost caused by EGAT’s dispatch order and Rayong power plant’s cost of sales totaling Baht 145 million due to lower major maintenance expenses. Cost of Sales - IPP : Rayong power plant KEGCO Total Cost of Sales - IPP

Unit : Million Baht

2009

2008

%Changes

1,690 1,361 3,052

1,835 1,599 3,434

(8%) (15%) (11%)

• Administrative expenses and income taxes were Baht 1,032 million, an increase of Baht 41 million or 4%, mainly from the increase of provision for devaluation inventory of Rayong power plant by Baht 133 million. Meanwhile, Rayong power plant’s tax payment decreased by Baht 50 million due to lower revenues. The corporate tax reduction BOI privilege for Rayong power plant ended on April 19, 2008. Moreover, tax payment at KEGCO decreased by Baht 67 million due to lower revenues. KEGCO’s 50% corporate tax reduction BOI privilege on profits from power generation already ended on September 25, 2009. • Finance costs were Baht 229 million, a decrease of Baht 114 million or 33%, resulting from KEGCO’s lower principal amounts of debentures and KEGCO’s completion of overseas loan repayment in June 2008.

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• Share of profits from joint ventures before FX, BLCP and GPG, was recognised in the amount of Baht 4,869 million, an increase by Baht 101 million or 2% that resulted from an increase of GPG’s electricity sales due to the Kaeng Khoi 2 (KK2) unit 2 achieved its Commercial Operating Date (COD) on February 27, 2008. Meanwhile, BLCP’s electricity sales decreased due to lower in the Base Availability Credit. 3) SPP’s total revenues were reported at Baht 2,237 million, an increase of Baht 3 million or 0.14%. The total expenses were Baht 1,972 million, an increase of Baht 11 million or 1%. The share of profits from joint ventures before FX was reported at Baht 325 million, down by Baht 40 million or 11%. The details are as follows : Total Revenues, Total Expenses and Share of Profits (Losses) from JVEs before FX of SPP : EGCO Cogen Roi-Et Green GCC, NKCC, APBP and SCC, GYG AEP* 2009 2008 2009 2008 2009 2008 2009 2008 Total revenues Total expenses Profits bf Share of Profits (Losses) from JVEs Share of Profits (Losses) from JVEs bf FX Net Profit bf FX and MI

1,933 1,947 1,814 1,804

Unit : Million Baht Total 2009

2008

% Chg 0.14% 1%

305 158

287 157

-

-

-

- 2,237 2,234 - 1,972 1,961

119

143

147

130

-

-

-

-

265

273

(3%)

119

143

147

130

325 325

324 324

-

41 41

325 590

365 638

(11%) (8%)

* APBP and AEP were sold in May 2008

• Sales of electricity of SPP were Baht 2,226 million, representing an increase of Baht 11 million or 0.49%, mainly from Roi-Et Green’s electricity sales that increased by Baht 18 million due to higher Energy Charge from higher fuel oil price, which was in accordance with the tariff formula. Meanwhile, EGCO Cogen’s electricity sales decreased by Baht 7 million due to lower steam sales. Sales of Electricity - SPP : EGCO Cogen Roi-Et Green Total Sales of Electricity - SPP

Unit : Million Baht

2009

2008

%Changes

1,927 299 2,226

1,935 281 2,216

(0.40%) 7% 0.49%

• Interest income and others amounted to Baht 11 million, a decrease of Baht 8 million or 42%, mainly from the lower interest income of EGCO Cogen. • Cost of Sales of SPP was reported at Baht 1,847 million, an increase of Baht 11 million or 1%. This was substantially driven by an increase in cost of sales of EGCO Cogen in the amount of Baht 7 million as a result of major maintenance expenses. Cost of Sales - SPP : EGCO Cogen Roi-Et Green Total Cost of Sales - SPP

Unit : Million Baht

2009

2008

%Changes

1,705 142 1,847

1,698 138 1,836

0.40% 3% 1%


Electricity Generating Public Co., Ltd.

• Administrative expenses and income taxes were Baht 39 million, up by Baht 1 million or 2%. • Finance costs were Baht 86 million, a decrease of Baht 1 million or 1%. • Share of profits from joint ventures before FX, GCC, NKCC, SCC and GYG, totaled Baht 325 million, a decrease of Baht 40 million or 11% from the disposal of APBP and AEP in May 2008. 4) Overseas’ share of profits from joint ventures before FX, Conal, NTPC and Quezon, was reported at Baht 693 million, an increase of Baht 672 million mainly from the recognition of Quezon’s share of profit from acquiring 23.40% in December 2008 and 2.60% in March 2009, and an increase of NTPC’s other income from the liquidated damages charged to the head contractor due to the project delay. 5) Other Business’ total revenues were Baht 891 million, a decrease of Baht 142 million or 14%; and total expenses were Baht 674 million, a decrease of Baht 43 million or 6%. Share of losses from the joint ventures before FX were Baht 11 million when compared to the previous year that created the share of profit totaling Baht 4 million. The details are as follows : Total Revenues, Total Expenses and Share of Profits (Losses) from JVEs before FX of Other Business : ESCO* ET NED 2009 2008 2009 2008 2009 2008 Total revenues Total expenses Profits bf Share of Profits (Losses) from JVEs Share of Profits (Losses) from JVEs bf FX Net Profit bf FX and MI

621 545 76 76

796 641 155 4 159

270 129 141 141

238 76 162 162

(11) (11)

2009 -

Unit : Million Baht Total 2008 % Chg

891 1,034 674 717 217 317 (11) 4 206 321

(14%) (6%) (32%) N.A. (36%)

* AMESCO was sold in May 2008

• Service income from ESCO amounted to Baht 611 million, down by Baht 158 million or 21%, resulting mostly from lower maintenance service income and spare parts sale to overseas power plants. • Sales of water from ET, were Baht 267 million, up by Baht 38 million, or 17%, thanks to the increase of the tariff and minimum take under the long-term Water Purchase Agreement with Provincial Waterworks Authority. • Interest income and others amounted to Baht 13 million, down by Baht 22 million or 64% due to a gain on the sale of AMESCO totaling Baht 15 million in 2008. • Cost of services was Baht 435 million, a decrease of Baht 96 million or 18% which was in accordance with the decrease in service income. • Cost of water sales of ET was Baht 77 million, an increase of Baht 6 million or 9%. • Administrative expenses and income taxes totaled Baht 162 million, an increase of Baht 47 million or 40% as a result of ESCO’s fine from defaulting on rice husk power plant construction amounted to Baht 37 million as well as from higher tax payment of ET in the amount of Baht 46 million due to the end of corporate tax reduction on February 2009. Meanwhile, ESCO’s corporate tax decreased by Baht 38 million from lower revenues. • Share of losses from joint ventures before FX totaled Baht 11 million from the acquisition of NED, natural energy developing in Thailand, in July 2009. Compared to the previous year, a share of profit of ESCO was Baht 4 million from AMESCO, which was sold in May 2008.

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4. Report and Analysis of Financial Position 4.1 Asset Analysis As at December 31, 2009, total assets of EGCO, its subsidiaries and interests in joint ventures amounted to Baht 62,920 million, an increase of Baht 4,590 million or 8% from December 31, 2008. The important details are as follows : 2009

Unit : Million Baht 2008

70,000 62,920 60,000

58,330

50,000 40,000 28,529

30,000

24,494 20,000

15,068 7,923

10,000

17,041 10,452 9,596

6,032 947 1,166

0

Total Assets ts

Cash, ST & LT LT nt Investment

ST & LT Investmentt al as Collateral

Inv. in Subs. s. ts & Interests in JVEs

Property,Plan ann ett) and Equip (net)

Others

1) Cash and deposits at financial institutions, and short-term and long-term marketable securities were Baht 7,923 million or 13% of the total assets, up Baht 1,891 million or 31%. This resulted mainly from EGCO’s drawn down of a long-term loan amounting to Baht 4,000 million, dividends from joint ventures totaling Baht 3,563 million, dividend of Baht 109 million received from EASTW, higher market price of EASTW by Baht 511 million and net cash receipts from operating activities of Baht 4,165 million. Meanwhile, dividend payment to shareholders amounted to Baht 2,708 million, an investment in joint ventures was Baht 2,549 million, a short-term investment in financial institutions was Baht 556 million and principal repayment and interest payment totaled Baht 5,088 million. 2) Short-term and long-term investments used as collateral were Baht 947 million or 2% of the total assets, down Baht 219 million or 19%. This increase mainly came from the principal repayment and interest payment of KEGCO. 3) Investment in subsidiaries and interests in joint ventures recorded under the equity method in the consolidated financial statements as at December 31, 2009 amounted to Baht 28,529 million or 45% of the total assets, up Baht 4,035 million or 16%. The major change can be defined as follows : 3.1) An increase in share of profit from investment according to the equity method amounting to Baht 6,323 million. 3.2) An increase in share capital of a joint venture, Quezon and PGS, totaling Baht 1,038 million. 3.3) The transfer of net liabilities to interests in joint ventures, NTPC, totaling Baht 1,361 million. 3.4) Dividends received from BLCP, GEC, Conal and Quezon by Baht 4,428 million. 3.5) Loss from the translation of foreign currencies to Thai Baht on the net investment in foreign joint ventures, Conal and Quezon, totaling Baht 259 million. For the company financial statements, the original cost was applied for recording the investment in subsidiaries and interests in joint ventures at the beginning; the book value as at December 31, 2009 was Baht 32,219 million, down Baht 2,105 million, mainly due to transferring REGCO to EGCO.


Electricity Generating Public Co., Ltd.

4) Property, plant and equipment (net) totaled Baht 15,068 million or 24% of the total assets. They were down Baht 1,973 million or 12% due to the decrease in property, plant and equipment from the depreciation of EGCO and subsidiaries’ assets totaling Baht 2,214 million and the reclassification of unutilised capital spare parts from property, plant and equipment to spare parts and supplies at Rayong power plant, EGCO Cogen and KEGCO totaling Baht 216 million. Meanwhile, there was a recording of capital spare parts as property, plant and equipment following the major maintenance at Rayong power plant, EGCO Cogen and KEGCO in the amount of Baht 273 million and net purchase of property, plant and equipment totaled Baht 184 million. 5) Other assets were Baht 10,452 million or 17% of the total assets, up Baht 856 million or 9% mainly from higher dividends receivable from joint ventures by Baht 865 million. 4.2 Liability Analysis As at December 31, 2009, the EGCO Group’s total liabilities were Baht 11,826 million, which was Baht 962 million or 8% lower than the amount as at December 31, 2008. The total liabilities consist of the following : 1) Short-term loans of Baht 3,500 million were repaid in October 2009. 2) Long-term loans and debentures totaled Baht 10,716 million, or 91% of total liabilities, up Baht 2,946 million or 38%. This mainly came from EGCO’s drawn down of a long-term loan amounting to Baht 4,000 million. Meanwhile, KEGCO, EGCO Cogen and Roi-Et Green repaid the principal of debentures and long-term loans. The details are as follows : THB Debenture 13%

• USD loans in the amount of USD 16 million THB 80%

USD 5%

• Yen loans in the amount of Yen 671 million

JPY 2%

• Baht loans in the amount of Baht 8,555 million • Baht debentures in the amount of Baht 1,410 million Maturity of long-term loans and debentures as of December 31, 2009 Within 1 Year 1 - 5 Years > 5 Years Total

Unit : Million Baht

EGCO

KEGCO

4,000 4,000 8,000

914 497 1,410

EGCO Cogen 168 894 1,062

Roi-Et Green 37 150 57 243

Long-term loans and debentures are secured liabilities over land, buildings, power plants and equipments of subsidiaries. The subsidiaries have to maintain cash reserves as at December 31, 2009 totaling Baht 223 million for the purpose of payment of principal and interest due within one year. 3) Other liabilities amounted to Baht 1,110 million or 9% of total liabilities, representing a decrease of Baht 408 million or 27% which mostly resulted from the decrease in Rayong power plant, KEGCO and ESCO’s income tax payable. 4.3 Shareholders’ Equity Analysis As at December 31, 2009, Shareholders’ Equity amounted to Baht 51,093 million, which was Baht 5,551 million or 12% higher than the amount as at December 31, 2008. This was mainly from 3 factors as follows: 1. The net profit in the consolidated financial statements amounted to Baht 7,936 million, while appropriated dividend totaled Baht 2,619 million made the increasing of retained earnings by Baht 5,317 million.

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2. The market price of available-for-sale investment in EASTW increased by Baht 511 million. 3. Loss from the translation of foreign currencies to Thai Baht on the net investment in foreign joint ventures, Conal, NTPC and Quezon, totaling Baht 322 million. The analysis of the company’s capital structure as at December 31, 2009 can be summarized as follows : Shareholders’ equity was Baht 51,093 million or 81.20%. Liabilities were Baht 11,826 million or 18.80%. Equity 81.20%

Debt 18.80%

Important financial ratios were as follows : • Debt to equity ratio was 0.23 times, lower than 0.28 times at the end of 2008. • Book value per share was Baht 96.06, higher than Baht 85.60 at the end of 2008.

5. Report and Analysis of Cash Flow Position Cash Flow Statement shows the change in cash flows from operating activities, investing activities, and financing activities at the end of the accounting period, and indicates the ending balance of the cash and the cash equivalents. As at December 31, 2009, the ending balance of the cash and the cash equivalent was Baht 5,855 million, which was Baht 876 million higher than the amount as at December 31, 2008. The details of the sources and uses of funds are as follows : • Net cash received from operating activities totaled Baht 4,165 million. This was cash received from operating activities of Baht 5,211 million. Whereas cash payment for corporate income tax was Baht 653 million and cash payment for working capital was Baht 393 million.. • Net cash received from investing activities was Baht 508 million mainly due to dividend received from joint ventures and EASTW amounting to Baht 3,563 million and Baht 109 million, respectively. Meanwhile, an investment in joint ventures was Baht 2,549 million and a short-term investment in financial institutions was Baht 556 million. • Net cash payment for financing activities was Baht 3,797 million mainly due to the dividend payment to shareholders amounting to Baht 2,708 million and principal repayment and interest payment of EGCO, KEGCO, EGCO Cogen and Roi-Et Green totaling Baht 5,088 million. Meanwhile, EGCO drew down a long-term loan amounting to Baht 4,000 million. In 2009, the analysis of the company’s liquidity ratios is as follows : • Current ratio was 8.30 times, compared to 2.58 times in 2008. • Quick ratio was 4.35 times, compared to 1.34 times in 2008. Both ratios were higher than the ratios in 2008 due to the repayment of short-term loan of EGCO amounting to Baht 3,500 million.


Electricity Generating Public Co., Ltd.

Related Transactions In conducting the normal business courses, there are related transactions between EGCO or its subsidiaries and persons who may have potential conflict of interest. EGCO endeavors to ensure that these transactions are justified and in compliance with the Stock Exchange of Thailand (“SET”) and the Capital Market Supervisory Board’s rules and regulations. Apart from designating the authorized persons to approve the transaction in accordance with the Table of Authority, the Audit Committee is entrusted to review the related transactions that need to be approved by the Board of Directors. The details of the related transactions are disclosed under item 30 of the Notes to 2009 Financial Statements for the period ended December 31, 2009.

Procedure to Approve the Related Transactions EGCO lives by the following policies and guidelines in treating and approving the related transactions. • In case of entering into any contracts or any related transactions between EGCO, subsidiaries, joint venture companies, associated companies and/or outside parties, EGCO will consider the necessity and justification of such transactions for the best interest of the Company. Transaction prices are charged at fair market price like the transactions with other outside parties (Arm’s Length Basis). If there is no such price, EGCO will apply the price of similar market transactions. EGCO may also compare the price with the one recommended by an independent appraiser to ensure that such price is reasonable to maximize the Company’s benefits. • Related transactions that are considered connected transactions in accordance with the SET’s regulation will be treated in accordance with the requirements of the SET’s and Securities & Exchange Commission (“SEC”) and must be reviewed by the Audit Committee in case such transaction must be approved by the Board of Directors. • Financial assistance or guarantee provided to Group companies or connected persons will be conducted prudently to ensure the utmost benefits of the Group companies. Fee will be charged using the market rate as at the transaction date. • The summary of transactions with commercial term that an ordinary person will agree to deal with the counterparty under similar circumstances, on the basis of commercial negotiation and without any dependent interest resulting from the status of the director, executive or related person, as the case may be, shall be reported to the Audit Committee on the quarterly basis. This is aimed to ensure that such transaction is well grounded and provide optimal benefit to the Company and in line with the approved process. • In a case that a shareholders’ approval is needed, the major shareholder who is the connected person can attend the meeting in order to constitute a quorum but will not have a voting right. Since the voting will be based on the number of shareholders who are eligible for voting, this criterion does not have the negative impact on the quorum or the voting. • Directors with potential conflict of interest will not be allowed to vote or attend the meeting.

Related Transactions in 2009 EGCO’s related transactions in 2009 were normal business transactions with no objective to siphon profits between EGCO or its subsidiaries and parties with potential conflict of interest. Each transaction was duly approved under the transparent process

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and the persons with potential conflict of interests were not involved in the decision making. Such transactions were well justified that they were carried out for the best interest of the Company like the transactions with the third parties. The system to follow up and review the transactions was also in place to ensure that they are carried out in line with the established process. Details of related transactions in 2009 are as summarized below. 1. Related Transactions with Electricity Generating Authority of Thailand In carrying out the EGCO Group’s business, there were related transactions relating to the power sale and maintenance services between the Group companies and the Electricity Generating Authority of Thailand (“EGAT”), a major shareholder which owns 25.41 stake in EGCO and has 4 representative directors on EGCO Board. However, all the transactions followed the established process and in line with the disclosure and other requirements of the SET and SEC. 1.1 Power Sold to EGAT EGCO and four subsidiaries being Rayong Electricity Generating Company Limited (“REGCO”), Khanom Electricity Generating Company Limited (“KEGCO”), EGCO Cogeneration Company Limited (“EGCO Cogen”) and Roi-Et Green Company Limited (“Roi-Et Green”) entered into the Power Purchase Agreement (“PPA”) with EGAT. The PPA terms for the first and second power plants are twenty years and fifteen years while the terms for the third and the fourth power plants are twenty one years each. (It should be noted that REGCO had transferred its entire business to EGCO on October 1, 2009) Such transactions are justified as power generation is EGCO Group’s core business and EGAT is the single wholesale buyer. In addition, the pricing and conditions of those transactions are in accordance with the standard contracts which have been endorsed by relevant government agencies. Companies EGCO REGCO KEGCO EGCO Cogen Roi-Et Green

Relationship

Subsidiaries

Transaction value for the period ended December 31, 2009 (million baht) Sale Revenue Traded Receivable 928.65 664.60 2,793.44 2,317.81 368.00 1,164.29 202.92 298.94 53.25

The value of the related transactions between joint venture companies and EGAT are as shown in the following table. Since EGCO has recorded the share of profit from joint venture companies using equity method, the value of such transactions is not shown on the consolidated financial statements. Companies GEC (including subsidiaries) BLCP

Relationship

Transaction value for the period ended December 31, 2009 (million baht) Sale Revenue Traded Receivables 14,225.65 2,188.38

Joint Venture 9,870.79

969.55

1.2 Maintenance Service to EGAT EGCO Engineering and Services Co., Ltd. (“ESCO”), EGCO’s subsidiary which is an O&M service provider, has entered into a Maintenance Agreements with EGAT to provide major maintenance work including other administrative and relating services to the power plants.


Electricity Generating Public Co., Ltd.

Such transaction is justified as the price is charged on a “cost plus basis” with the annual CPI escalation which is the same standard as the price charged to the third parties. The agreement is effective for a period of eight years commencing September 24, 2007. Companies ESCO

Relationship Subsidiary

Transaction value for the period ended December 31, 2009 (million baht) Maintenance Fee Traded Receivables 49.45 12.18

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

Relationship

Subsidiary

Transaction value for the period ended December 31, 2009 (million baht) O&M Fee Account Payables 25.91 22.09 71.04 21.27 7.60 9.14 0.80

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

Relationship Joint Venture

Transaction value for the period ended December 31, 2009 (million baht) Maintenance Advisory Fee Account Payables 15.53 0.78

2. Related Transactions with CLP Holdings Limited CLP Holdings Limited indirectly holds 12.74% in EGCO through its group of companies as follow : • CLP Holdings Limited holds 50% stake in ONEENERGY THAILAND LTD (“OneEnergy”) while OneEnergy holds 22.42% stake in EGCO. OneEnergy has four representative directors in EGCO Board of Directors. • CLP Holdings Limited holds 100% stake in CLP SEA Energy Limited while CLP SEA Energy Limited holds 1.53% stake in EGCO with no representative director.

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In 2009, EGCO purchased 50% of the ordinary shares of Power Generation Services Company Limited (“PGS”) from CLP Power (Southeast Asia) Operation Limited (“CLP-SEA”). PGS is the company providing operation and maintenance services to BLCP power plant according to Operations & Maintenance Agreement (“the O&M Agreement”). Based on the O&M Agreement, PGS is entitled to service revenues for the BLCP power plant operation for a period of 25 years under the PPA between BLCP and EGAT which ends 31 January 2032. BLCP is equally held by EGCO and Banpu Public Company Limited (“BANPU”). CLP-SEA, a connected party of EGCO, holds 60% stake in PGS while, on the other hand, it does not directly hold stake in BLCP. Such shareholding structure may lead to the potential conflict of interests. EGCO, therefore, entered into this connected transaction to prevent such potential conflict of interests. EGCO appointed KTB Advisory Co., Ltd. (“KTBA”), a company which is on the list of SEC’s qualified financial advisors, to be the Independent Financial Advisor for this transaction. The opinion of the Independent Financial Advisor could be summarized that the total value of transaction price of 554,843,750 baht was deemed appropriate. Considering such transaction, the Audit Committee and the Board of Directors shared the same view that this connected transaction was transparent, fair, and beneficial to the Company. Such connected transaction helped prevent the potential conflict of interests, and created value to BLCP administration. EGCO would also receive higher return on investment through BLCP after conducting an entire business transfer and dissolve PGS. The Board of Directors, therefore, resolved to approve this connected transaction. CLP Holdings Limited’s representative directors who had conflict of interests being Mr. Peter Littlewood, Mr. Mark Jobling, Mr. Hideaki Tomiku and Mr. Shinji Tsuchiya did not attend the Board of Directors’ meeting and had no voting rights. The connected transaction size of 1.14% of EGCO’s net tangible assets as of 30 September 2009 was considered significant. As such, the Company was required to seek approval from the Board of Directors and disclose information to the SET. EGCO then disclosed the information to the SET on December 17, 2009. 3. Related Transaction between EGCO and Subsidiaries EGCO has entered into three agreements with subsidiaries and joint venture companies, which EGCO is a major shareholder and EGCO executives sit on their boards. 1. Agreements to provide office space and building services for 6 companies being REGCO, KEGCO, ESCO, EGCO Cogen, Roi-Et Green and EGCOM Tara. The space and service scope was specified in the contract with a one-year term. Such transaction was considered justified as it helped maximize the building space usage and the fee was charged at the market rate which was the same rate charged to the third party. 2. Agreements to provide management services to the above companies of which the scope covers internal audit, legal counseling, Board’s secretarial work, technology, public and community relations and financial work (exclude ESCO and EGCOM Tara) and agreements to dispatch employees to NTPC and BLCP. Such transactions are well grounded because those Group companies do not have internal staff to take care of such work while EGCO has the capability to provide the services. The management service fee is charged in accordance with the actual operating hours based on the cost plus basis. Companies REGCO KEGCO ESCO EGCO Cogen

Relationship

Transaction value for the period ended December 31, 2009 (million baht) 19.65 24.64 10.26 7.93


Electricity Generating Public Co., Ltd.

Companies EGCO Green Roi-Et Green EGCOM Tara EGCO BVI Total for subsidiaries NTPC BLCP Total for joint ventures

Relationship Subsidiaries

Joint Ventures

Transaction value for the period ended December 31, 2009 (million baht) 0.83 7.30 2.50 0.54 73.65 9.19 12.00 21.19

4. Financial Support EGCO provides financial support to subsidiaries and joint ventures in accordance with its ownership in such respective companies. Such supports are normal business practices and are aimed at optimizing shareholders’ return. They are duly approved by the Board in accordance with the Table of Authority and disclosed in the notes to financial statements as at December 31, 2009. 4.1 Inter-company Loan ESCO On 22 November 2006, EGCO entered into an agreement to provide loan to ESCO in the amount of 780 million baht. Principal payment of 45,882,350 baht each is scheduled annually commencing December 2009 to December 2025. The interest rate is set in accordance with the market rate for long term loan at MLR minus a certain margin and payable on a semi-annual basis. The outstanding loan amount as at December 31, 2009 was 734.12 million baht. NED On 25 September 2009, EGCO entered into an agreement to provide loan to NED in the amount of 32 million baht with the bullet payment within 1 year after the loan drawdown. Such loan was provided in accordance with EGCO’s ownership in such companies and on the same conditions as the other two shareholders in those companies being CLP Thailand Renewables Limited (“CLP”) and Diamond Generating Asia, Limited (“DGA”). The interest rate is set in accordance with the market rate for short term loan which is a fixed rate. The outstanding loan amount as at December 31, 2009 was 32 million baht. 4.2 Guarantee EGCO provided the loan guarantee under the Sponsor Support Agreement to subsidiary, joint venture and associated companies. Significant information is as follows. 4.2.1 Contingent Liabilities EGCO Cogen As of December 31, 2009, EGCO Cogen’s sponsors has a commitment to provide the loan to EGCO Cogen if it has any financial liquidity problem and cannot service debt and expenditures in accordance with the conditions in the contract in the amount not exceeding 200 million baht. Since EGCO holds an 80% stake in EGCO Cogen, its guarantee portion was not exceeding 160 million baht. This agreement is justified as it is the condition in the loan agreement and the financial support is provided on a pro-rata basis in accordance with the ownership in the company.

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Roi-Et Green EGCO has a commitment to provide the loan guarantee in the amount not exceeding the total outstanding loan and interest payment. As at December 31, 2009, the total commitment amounted to 676.31 million yen equivalent to 247.27 million baht. This agreement is justified as it is the condition in the loan agreement and the project development condition. 4.2.2 Letter of Guarantee EGCO has the commitment to the banks under the Counter Guarantee and Standby Letter of Credit (“SBLC”) issued on behalf of EGCO for the subsidiaries and joint ventures. Details of the transaction are as shown below. KEGCO EGCO requested HSBC to issue the SBLC to guarantee the release of cash in the KEGCO’s US dollar and baht Debt Service Reserve Accounts. As at December 31, 2009, the value of the SBLC was 476.62 million baht. This transaction was justified as it enables EGCO to release the cash trapped in KEGCO reseve. NTPC The Nam Theun II project’s finance was structured in a way that would allow sponsors who invested in Lao PDR to inject equity on a back-end basis while lenders would allow loan drawn down during the first phase. As such, lenders requested the banks on behalf of the sponsors to issue the SBLC to guarantee future capital injection. The face value of the SBLC will reduce in accordance with each capital injection. With respect to the above, EGCO requested Mizuho Corporate Bank to issue SBLC under the Shareholders’ Support Agreement. As at December 31, 2009, the guarantee value was US 25 million dollar (equivalent to 837.92 million baht). Such transaction is well grounded as EGCO has to comply with loan conditions and the guarantee is made on a pro-rata basis in accordance with the ownership in NTPC. QPL EGCO requested HSBC to issue the SBLC for the purpose of providing a guarantee for the reserve for principle and interest payment of Quezon project. As at December 31, 2009, the guarantee value was US 9.48 million dollar (equivalent to 317.81 million baht). With respect to this, EGCO purchased a bill of exchange (“B/E”) with the face value of 450 million baht and pledged that B/E in favor of HSBC as SBLC security until its expiring date. Such transaction is justified as EGCO has to comply with loan conditions and the guarantee is made on a pro-rata basis in accordance with the ownership in QPL.

Guidelines for Treating Future Related Transactions Most of the existing related transactions will continue in the future. EGCO will seek to ensure that all of the related transactions are transparent, fair and beneficial to the Company. The Board will entrust the Audit Committee, the auditor or independent consultants to review and recommend the appropriate pricing and the justification of those transactions. In addition, material information about such transactions which includes types, value and the reasons for entering into those transactions will be disclosed to the shareholders in accordance with the regulations of the SET and SEC. EGCO will also provide the updated information, rules and regulation with regard to the related transaction to relevant parties to foster understanding which will lead to full compliance, transparency and the benefit of the shareholders.


Electricity Generating Public Co., Ltd.

Statement of Directors’ Responsibilities According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543, the Securities and Exchange Act B.E. 2535, and the NotiďŹ cation of Capital Market Supervisory Board re : “Disclosure of Financial Statements and Performance of Listed Companiesâ€?, the Board of Directors is responsible to prepare the true and fair ďŹ nancial statements of the Company. The Board of Directors has also issued the Company’s regulation on accounting, ďŹ nance 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 ďŹ nancial statements have been prepared in a justiďŹ ed 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 ďŹ nancial statements for the year ended 31 December 2009 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 ďŹ nancial statements were prepared in a prudent and justiďŹ ed manner with adequate disclosure of signiďŹ cant information in the notes of the ďŹ nancial statements. The Board of Directors is of the opinion that both the consolidated and company ďŹ nancial statements for the year 2009, present the company’s ďŹ nancial position, operating results, changes in shareholders’ equity and cash ows fairly, in all material respects, and reliable manner and that such statements are in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations.

-R0ORNCHAI2UJIPRAPA #HAIRMAN

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Audit Committee’s Report The Audit Committee of EGCO comprises 3 independent directors whose qualifications, experience, and expertise are in accounting, finance, economics, law, management and energy business as well. The Chairman of the Audit Committee is Mr. Chaipat Sahasakul, and the other 2 members are Mr. Thanapich Mulapruk and Mr. Somphot Kanchanaporn. The Audit Committee has performed its duties in conformity with the mission entrusted to it by the Board of Directors in the Audit Committee Charter which is in compliance with those specified by the Stock Exchange of Thailand (SET) : the Audit Committee’s Qualification and Scope of Duties and Responsibilities B.E. 2551. The Audit Committee regularly reports the Committee’s Minutes of Meetings to the Board of Directors. During 2009, the Committee held 15 meetings with 100% attendance in 14 meetings and 1 member could not attend 1 meeting. The Committee Meeting Attendance Report is shown in Corporate Governance section on page 100. Summary of major activities is as follows : • Review the 2009 quarterly financial statements and the annual financial statements with both the external auditor and the Management. This was accomplished by asking questions and providing comments and useful recommendations to ensure that the process to prepare the financial statements and major disclosures were complete, accurate, reliable, in compliance with related laws and regulations, and in accordance with the generally accepted accounting principles which were consistently applied. The Committee has supported the IFRS (International Financial Reporting Standards) adoption of EGCO’s financial statements in accordance with FAP’s (Federation of Accounting Profession) and SEC’s guidelines. • Consider the accuracy and adequacy of EGCO’s disclosure on related-party transactions or any transactions that may cause conflict of interest. The appropriateness, reasons, fairness, and conditions of transactions have been considered as well. • Review with the management the risk management policy, the practice compliance with such policy and EGCO’s risk management guidelines. The Committee supported EGCO’s Enterprise Risk Management Enhancement Program in 2009 to ensure the continuous and enterprise wide risk management of EGCO and its subsidiaries. The current and future major risks and fraud risk have been considered for mitigation and management as well. • Review the sufficiency and effectiveness of the internal control systems. The Committee considered the internal auditor’s and the external auditor’s reports, the results of the internal control evaluation of EGCO and its subsidiaries together with the internal control questionnaires which were prepared in compliance with the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) guidelines. • Review and acknowledge the Code of Conduct Compliance Statement and General Representation Letter submitted by the President to the Chairman. The process of preparing those statements as well as their contents provided the assurances to the Committee that EGCO’s operations were in compliance with the Code of Conduct and the internal control systems and that the financial information and disclosures were accurate, complete and reliable.


Electricity Generating Public Co., Ltd.

• Approve the audit plan which included “management auditâ€? requested by the Committee, the scope of work, the budget and the manpower of the Internal Audit Division. The Committee also conducted the performance appraisal of the internal audit manager who functionally reported to the Committee. • Review with Management EGCO’s compliance procedures to ensure that the Management and the operations complied with the securities and exchange laws and regulations of the SET and laws relating to the business of EGCO. • Consider other services performed by the audit ďŹ rm’s group companies for EGCO and its subsidiaries during 2009. It was determined that the scope of work and fees for other services were not signiďŹ cant and did not inuence the independence of the auditor. • Hold exclusive meeting with the external auditors to ensure their independence. • Review the Management Discussion and Analysis (MD&A) with Management to ensure its accuracy, adequacy and usefulness to shareholders and investors for making their investment decisions. • Review the Audit Committee Charter to ensure that the duties entrusted to them in 2009 were achieved and complied with international practices and those speciďŹ ed by the SET’s Audit Committee Best Practice Guidelines, while also being appropriate for EGCO’s business. • Assess the Audit Committee’s performance for the year 2009 by completing the Audit Committee’s Self-Assessment Form which complied with SET’s regulations and international good practice. The result of this self-assessment was reported to the Board of Directors. • Enhance other good corporate governance practices such as providing the channel for employees and shareholders to direct their complaints, suspected violation of laws and Code of Conduct and questions about the ďŹ nancial statements and internal control systems by email to auditcommittee@egco.com. Such email address could be accessed only by the Chairman of the Audit Committee. Based on the above practices, the Committee was of the opinion that EGCO’s 2009 ďŹ nancial statement was accurate, complete, and reliable. The internal control system was adequate and appropriate. Operations were in compliance with the Securities and Exchange Act, regulations of the Stock Exchange of Thailand and laws relating to the business of EGCO. In addition, information disclosure in case of related-party transaction or conict of interest was correct and complete. The Committee reviewed the auditors’ performance in 2009 and recommended to the Board of Directors that PricewaterhouseCoopers ABAS Ltd., Ms. Nangnoi Charoenthaveesub CertiďŹ ed Public Accountant (Thailand) No. 3044, Mr. Prasan Chuaphanich CertiďŹ ed Public Accountant (Thailand) No. 3051, and Mr. Vichien Khingmontri CertiďŹ ed Public Accountant (Thailand) No. 3977, be re-appointed by the shareholders as the Company’s auditors for 2010 due to their professional practices, appropriate experience and discharging their duties effectively.

-R#HAIPAT3AHASAKUL #HAIRMANOFTHE!UDIT#OMMITTEE

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Nomination and Remuneration Committee’s Report Based on EGCO’s Governance Principles, the Nomination and Remuneration Committee (“NRCâ€?) shall consist of 4 directors, two of whom shall be non-executive, independent directors. The NRC shall elect one member to be the Chairman. The term of ofďŹ ce of each NRC member is 3 years. In 2009, the NRC consisted of four non-executive directors, two of whom were independent under the Company’s deďŹ nition. The NRC duly performed its duties under the Nomination and Remuneration Committee’s Charter and held nine meetings in such regard. The major issues being discussed included director nominees, selection of EGCO senior executives under the new organization structure, performance appraisal of the Company, directors and management, the remuneration of directors and management and the succession plan for key positions. In scrutinizing the list of nominees for directors and executives, the NRC had taken into account the required skill sets and experience, integrity and ethics, good attitude towards the Company, and professionalism along with the time commitment. With regard to the remuneration structure of the directors and senior executives of the Company, the NRC had established a clear and transparent process to ensure that the remuneration structure of both directors and executives were comparable to those of peer companies, effective in retaining qualiďŹ ed personnel, fair and tied to the long term beneďŹ ts of the Company and the shareholders. The guidelines for selection of directors and executives along with their remuneration are disclosed in this annual report.

-R-ARK*OBLING #HAIRMANOFTHE.OMINATIONAND2EMUNERATION#OMMITTEE


Electricity Generating Public Co., Ltd.

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Annual Report 2009

Auditor’s Report To the Shareholders of Electricity Generating Public Company Limited I have audited the accompanying consolidated and company balance sheets as at 31 December 2009 and the related consolidated and company statements of income, changes in shareholders’ equity and cash ows for the year then ended of Electricity Generating Public Company Limited and its subsidiaries and of Electricity Generating Public Company Limited respectively. The Company’s management is responsible for the correctness and completeness of information in these ďŹ nancial statements. My responsibility is to express an opinion on these ďŹ nancial statements based on my audit. The consolidated and company ďŹ nancial statements for the year ended 31 December 2008 of Electricity Generating Public Company Limited and its subsidiaries and of Electricity Generating Public Company Limited respectively, presented herewith for comparative purposes, were audited by another auditor from the same ďŹ rm as myself, and the other auditor expressed an unqualiďŹ ed opinion on those ďŹ nancial statements on his report dated 16 February 2009. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance about whether the ďŹ nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ďŹ nancial statements. An audit also includes assessing the accounting principles used and signiďŹ cant estimates made by management, as well as evaluating the overall ďŹ nancial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated and company ďŹ nancial statements referred to above present fairly, in all material respects, the consolidated and company ďŹ nancial position as at 31 December 2009 and the consolidated and company results of operations and cash ows for the year then ended of Electricity Generating Public Company Limited and its subsidiaries and of Electricity Generating Public Company Limited respectively in accordance with generally accepted accounting principles.

.ANGNOI#HAROENTHAVEESUB #ERTIFIED0UBLIC!CCOUNTANT4HAILAND .O 0RICEWATERHOUSE#OOPERS!"!3,IMITED

Bangkok 15 February 2010


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Electricity Generating Public Co., Ltd.

Balance Sheets Electricity Generating Public Company Limited As at 31 December 2009 and 2008

Notes Assets Current assets Cash and cash equivalents 7 Short-term investments 8 - Deposits at financial institutions - Marketable securities 9 Short-term investments used as collateral Trade receivables, net 10 30(d) Trade receivable from a related party Dividend receivables from subsidiaries 13.2 and joint ventures 30(f) Short-term loan to a related party Current portion of long-term loans 30(f) to related parties 30(e), (f) Amounts due from related parties Spare parts and supplies, net 11 Other current assets Total current assets Non-current assets Long-term investments in marketable securities and others Deposits at financial institutions used as collateral Amounts due from a related party due over one year Long-term loans to related parties, net Investments in subsidiaries, net Interests in joint ventures Property, plant and equipment, net Right in long-term power and tap water purchase agreements, net Other non-current assets Total non-current assets

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

5,854,559,912

4,978,673,389

4,466,193,050

4,152,458,251

82,466,656 576,232,421 946,820,945 157,441,813 1,300,951,299

128,429,368 20,593,755 1,166,086,009 144,013,348 1,372,875,688

934,189 591,818,834 450,000,000 664,598,306

50,910,213 28,761,675 450,000,000 -

4,755,176,964 32,000,000

3,889,865,572 -

6,123,509,671 32,000,000

7,130,153,391 -

69,014,215 2,928,604,061 329,702,451 17,032,970,737

8,034,497 2,834,909,620 452,358,309 14,995,839,555

45,882,350 6,752,693 1,310,174,733 28,338,783 13,720,202,609

966,282,350 11,067,562 26,281,075 12,815,914,517

12

1,409,723,219

904,676,968

1,419,766,832

931,261,999

9

282,300

282,300

-

-

30(e) 30(f) 13.1 13.3 14

227,893,381 28,529,156,466 15,067,989,416

220,620,458 24,494,257,861 17,040,713,045

227,893,381 688,235,300 11,939,720,281 20,279,561,685 6,096,247,433

220,620,458 734,117,650 16,110,372,281 18,214,187,685 567,815,729

15 16

181,646,649 470,024,908 45,886,716,339

196,171,740 477,615,535 43,334,337,907

338,210,190 40,989,635,102

337,808,172 37,116,183,974

62,919,687,076

58,330,177,462

54,709,837,711

49,932,098,491

Total assets

For Director ………………………………………………………………. The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


138

Annual Report 2009

Balance Sheets (Continued) Electricity Generating Public Company Limited As at 31 December 2009 and 2008

Notes Liabilities and shareholders’ equity Current liabilities Trade payables Trade payable to a related party Amounts due to related parties Short-term loans from financial institutions Current portion of long-term loans from financial institutions, net Debentures due within one year Other current liabilities - Interest payable - Value added tax payable - Corporate income tax payable - Others Total current liabilities Non-current liabilities Long-term loans from financial institutions, net Debentures, net Retirement benefits obligation Net liabilities in a joint venture Other non-current liabilities Total non-current liabilities Total liabilities

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

30(d) 30(e) 17

264,342,314 30,482,192 9,632,996 -

285,275,330 71,931,882 7,441,426 3,500,000,000

25,802,310 22,085,537 6,064,474 -

23,398 3,500,000,000

18 19

204,339,427 913,608,200

196,460,746 816,479,640

-

-

24,101,710 98,441,619 25,176,338 481,270,524 2,051,395,320

31,012,724 107,940,673 280,766,261 525,248,888 5,822,557,570

2,733,699 58,903,136 220,921,889 336,511,045

2,162,112 184,651,700 3,686,837,210

9,101,323,874 496,670,303 165,202,205 2,909,914 8,870,052 9,774,976,348

5,346,349,348 1,410,357,043 158,487,484 39,667,033 10,603,699 6,965,464,607

8,000,000,000 75,265,316 28,324,479 8,103,589,795

4,000,000,000 45,171,386 4,746,358 4,049,917,744

11,826,371,668

12,788,022,177

8,440,100,840

7,736,754,954

18 19 20 13.4

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


Electricity Generating Public Co., Ltd.

Balance Sheets (Continued) Electricity Generating Public Company Limited As at 31 December 2009 and 2008

Notes Liabilities and shareholders’ equity (continued) Shareholders’ equity Share capital Authorised share capital Issued and paid-up share capital Premium on share capital Premium on treasury stock Retained earnings Appropriated - Legal reserve Unappropriated Unrealised gains on investments in marketable securities - available-for-sale Translation adjustments Total parent’s shareholders’ equity Minority interests Total shareholders’ equity Total liabilities and shareholders’ equity

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

21

21

22

23

5,300,000,000

5,300,000,000

5,300,000,000

5,300,000,000

5,264,650,000 8,601,300,000 47,373,035

5,264,650,000 8,601,300,000 47,373,035

5,264,650,000 8,601,300,000 47,373,035

5,264,650,000 8,601,300,000 47,373,035

530,000,000 35,914,439,291

530,000,000 30,597,546,886

530,000,000 31,270,451,013

530,000,000 27,700,350,806

545,189,294 (330,810,419) 50,572,141,201 521,174,207 51,093,315,408

33,471,644 (8,450,173) 45,065,891,392 476,263,893 45,542,155,285

555,962,823 46,269,736,871 46,269,736,871

51,669,696 42,195,343,537 42,195,343,537

62,919,687,076

58,330,177,462

54,709,837,711

49,932,098,491

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.

139


140

Annual Report 2009

Statements of Income Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Notes Revenues Sales and service income Cost of sales and services Gross profit Other income - Interest income - Dividend income from other companies - Dividend income from subsidiaries and joint ventures - Others Currency exchange gains (losses) Profit before expenses Administrative expenses Directors and management remuneration Operating profit Share of loss exceed interest in a joint venture Share of profit from interests in joint ventures Profit before finance costs and corporate income tax Finance costs Profit before corporate income tax Corporate income tax Net profit for the year Attributable to : Equity holders of the Company Minority interest Basic earnings per share for profit attributable to the equity holders of the Company during the year Basic earnings per share

30(a), (b) 30(c)

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

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

10,319,657,962 (5,872,289,636)

928,651,865 (426,421,316)

-

3,733,623,611

4,447,368,326

502,230,549

-

97,400,055 109,005,117

185,084,824 77,860,798

155,690,075 109,005,117

253,932,659 77,860,798

143,064,527 32,576,781

114,965,630 (25,368,443)

5,901,128,751 408,195,699 2,629,835

6,455,178,664 579,839,533 33,963,791

4,115,670,091 (1,052,269,597) (98,405,558)

4,799,911,135 (967,138,976) (97,761,644)

7,078,880,026 (560,019,962) (56,266,725)

7,400,775,445 (596,918,522) (51,579,127)

2,964,994,936

3,735,010,515

6,462,593,339

6,752,277,796

13.4

(49,736,931)

(93,533,146)

-

-

13.3

6,323,091,601

4,712,174,107

-

-

27 24

9,238,349,606 (567,509,560) 8,670,840,046 (621,066,090) 8,049,773,956

8,353,651,476 (630,117,177) 7,723,534,299 (711,218,492) 7,012,315,807

6,462,593,339 (252,852,096) 6,209,741,243 (20,937,591) 6,188,803,652

6,752,277,796 (201,220,278) 6,551,057,518 6,551,057,518

23

7,935,595,850 114,178,106

6,926,708,007 85,607,800

6,188,803,652 -

6,551,057,518 -

15.07

13.16

11.76

12.44

30(f)

30(h)

25

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


5,264,650,000 8,601,300,000

47,373,035

-

Retained earnings Baht

-

530,000,000 30,597,546,886

-

530,000,000 26,274,327,432 - 6,926,708,007 - (2,603,488,553)

530,000,000 35,914,439,291

-

530,000,000 30,597,546,886 - 7,935,595,850 - (2,618,703,445)

Legal reserve Baht

33,471,644

(580,792,409) -

614,264,053 -

545,189,294

511,717,650 -

33,471,644 -

(8,450,173)

(151,410,686) -

142,960,513 -

(330,810,419)

(322,360,246) -

(8,450,173) -

Total Baht

511,717,650 (322,360,246) 114,178,106

(580,792,409) (151,410,686) 85,607,800 476,263,893 45,542,155,285

85,607,800

520,823,371 41,995,698,404 - 6,926,708,007 (130,167,278) (2,733,655,831)

521,174,207 51,093,315,408

114,178,106

476,263,893 45,542,155,285 - 7,935,595,850 (69,267,792) (2,687,971,237)

Fair value Translation Minority reserve adjustments interests Baht Baht Baht

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.

Closing balance as at 31 December 2008

23

26 -

47,373,035 -

5,264,650,000 8,601,300,000 -

Opening balance as at 1 January 2008 Net profit for the year Dividends Unrealised losses on investments in marketable securities - available-for-sale Translation adjustments Minority interests -

47,373,035

5,264,650,000 8,601,300,000

Closing balance as at 31 December 2009

23

-

47,373,035 -

26

5,264,650,000 8,601,300,000 -

Opening balance as at 1 January 2009 Net profit for the year Dividends Unrealised gains on investments in marketable securities - available-for-sale Translation adjustments Minority interests

Note

Issued and Premium on paid-up Premium on treasury share capital share capital stock Baht Baht Baht

Consolidated

Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Statements of Changes in Shareholders’ Equity

Electricity Generating Public Co., Ltd.

141


8,601,300,000 8,601,300,000 8,601,300,000

5,264,650,000 5,264,650,000 5,264,650,000

Closing balance as at 31 December 2009

Opening balance as at 1 January 2008 Net profit for the year Dividends Unrealised losses on investments in marketable securities - available-for-sale 47,373,035

-

47,373,035 -

47,373,035

-

47,373,035 -

Premium on treasury stock Baht

530,000,000

-

530,000,000 -

530,000,000

-

530,000,000 -

Legal reserve Baht

Company

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.

Closing balance as at 31 December 2008

26

26

8,601,300,000 -

Opening balance as at 1 January 2009 Net profit for the year Dividends Unrealised gains on investments in marketable securities - available-for-sale

5,264,650,000 -

Note

Issued and paid- Premium on up share capital share capital Baht Baht

Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Statements of Changes in Shareholders’ Equity (Continued)

27,700,350,806

-

23,752,781,841 6,551,057,518 (2,603,488,553)

31,270,451,013

-

27,700,350,806 6,188,803,652 (2,618,703,445)

Retained earnings Baht

51,669,696

(588,018,962)

639,688,658 -

555,962,823

504,293,127

51,669,696 -

Fair value reserve Baht

42,195,343,537

(588,018,962)

38,835,793,534 6,551,057,518 (2,603,488,553)

46,269,736,871

504,293,127

42,195,343,537 6,188,803,652 (2,618,703,445)

Total Baht

142 Annual Report 2009


143

Electricity Generating Public Co., Ltd.

Statements of Cash Flows Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Notes Cash flows from operating activities Profit before corporate income tax for the year Adjustments to reconcile profit before corporate income tax to net cash provided by operations : - Depreciation and amortisation - Loss from write off fixed assets - Loss from impairment on investments - Allowance for obsolescence - Retirement benefit expenses - Interest income - Interest expenses - Unrealised currency exchange (gains) losses - Gains on disposals of equipment - Losses (gains) from disposals of investments - Gains on discontinued operation of subsidiaries - Dividends from other companies - Dividends received from subsidiaries and joint ventures - Share of loss exceed interest in a joint venture - Share of profit from interests in joint ventures Cash flows before changes in operating assets and liabilities Changes in operating assets and liabilities : (excluding the effects of acquisition and disposal of subsidiaries and joint ventures) - Short-term and long-term investments used as collateral

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

8,670,840,046

7,723,534,299

6,209,741,243

6,551,057,518

2,240,924,618 193,510 226,468,498 21,879,507 (96,983,757) 564,071,679

2,195,763,427 75,962 33,354,136 25,993,412 (185,084,824) 610,898,735

325,309,297 21,943 68,495,136 6,420,373 (155,690,075) 252,852,096

50,028,045 47,820,000 10,626,623 (253,932,659) 185,757,312

(30,698,685) (3,396,151)

85,451,744 (823,306)

(3,428,586)

(596,391)

-

20,340,316

-

(436,640,000)

(109,005,117)

(77,860,798)

(254,308,981) (109,005,117)

(77,860,798)

13.2

-

-

(5,901,128,751)

(6,455,178,664)

13.4

49,736,931

93,533,146

-

-

13

(6,323,091,601)

(4,712,174,107)

-

-

5,210,939,478

5,813,002,142

439,278,578

(378,919,014)

219,265,064

(251,180,363)

-

(450,000,000)

20

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


144

Annual Report 2009

Statements of Cash Flows (Continued) Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Notes - Trade receivables and trade receivable from a related party - Amounts due from related parties - Spare parts and supplies - Other current assets - Other non-current assets - Trade payables and trade payable to a related party - Amounts due to related parties - Retirement benefit paid - Other current liabilities - Other non-current liabilities Cash generated (paid) from operation - Tax paid Net cash received from (payments in) operating activities Cash flows from investing activities Investment in subsidiaries and interest in joint ventures 13 Cash receipt from disposal of a joint venture Net cash receipts (payments) from deposits at financial institutions Net cash (payments) receipts from short-term investments Cash receipts from long-term investments Net purchases of plant and equipment Payment on the business transfer of a subsidiary Cash receipts from discontinued operations of subsidiaries 13.1, 32 Cash received from interest income Cash payment on short-term loan to a related party 30 Cash receipts from long-term loans to 30 related parties

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

58,571,808 (31,285,398) (377,547,374) (136,294,065) (7,385,573)

255,993,528 44,379,005 (75,045,500) (123,148,788) (20,920,734)

(5,148,977) 3,065,342 (67,732,604) 32,596,314 (7,658,276)

(4,796,273) (3,854,334) (18,748,064)

(34,255,570) (24,728,429) (15,164,786) (7,185,467) (37,658,545)

(224,254,716) 11,925,290 (3,743,525) (202,076,711) 273,609

(4,256,716) 861,829 (15,164,786) (4,275,002) (344,308)

(15,554) 19,984,893 3,114,887

4,817,271,143 (652,679,522)

5,225,203,237 (344,679,195)

371,221,394 -

(833,233,459) -

4,164,591,621

4,880,524,042

371,221,394

(833,233,459)

(2,548,710,000) -

(5,235,326,850) 815,000,000

(2,607,922,000) -

(5,067,500,850) 785,000,000

49,976,024

97,585,502

49,976,024

(50,019,862)

(555,696,486) 2,720,581 (179,340,611)

10,177,708 (167,770,126)

(542,422,568) 1,700,416 (40,924,675)

17,437,580 (22,389,047)

-

-

(7,625,704,188)

-

99,771,286

178,658,596

4,967,508,981 159,690,683

251,674,345

(32,000,000)

-

(32,000,000)

-

-

-

966,282,350

866,840,000

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


145

Electricity Generating Public Co., Ltd.

Statements of Cash Flows (Continued) Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008

Notes Dividends received from subsidiaries and joint ventures Dividends received from other companies Others

13.2

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

2008 Baht

3,562,737,285 109,005,117 (495,000)

2,007,169,958 77,860,798 (164,000)

6,907,772,471 109,005,117 -

4,971,228,942 77,860,798 -

507,968,196

(2,216,808,414)

2,312,962,611

1,830,131,906

(1,389,370) (570,981,485)

(1,356,157) (618,294,145)

(252,280,510)

(185,548,480)

17

(3,500,000,000)

3,500,000,000

(3,500,000,000)

3,500,000,000

18

4,000,000,000

-

4,000,000,000

-

18, 19 26

(1,016,773,534) (2,707,528,905)

(1,562,651,288) (2,753,165,660)

(2,618,168,696)

(2,602,957,596)

(3,796,673,294)

(1,435,467,250)

(2,370,449,206)

711,493,924

Net increase in cash and cash equivalents Beginning balance

875,886,523 4,978,673,389

1,228,248,378 3,750,425,011

313,734,799 4,152,458,251

1,708,392,371 2,444,065,880

Ending balance

5,854,559,912

4,978,673,389

4,466,193,050

4,152,458,251

1,132,495,593

316,849,382

23,849,546

35,828,246

4,722,064,319

4,661,824,007

4,442,343,504

4,116,630,005

5,854,559,912

4,978,673,389

4,466,193,050

4,152,458,251

14

273,489,780

874,356,861

181,785,508

-

14

216,105,345

339,169,700

106,911,868

-

Net cash received from (payments in) investing activities Cash flows from financing activities Payments on finance lease Interest paid Cash (payments) receipts from short-term loans from financial institutions Proceeds from long-term loans from financial institutions Payments on long-term loans from financial institutions and debentures Dividends paid to shareholders Net cash (payments in) received from financing activities

Cash and cash equivalents are made up as follows : - Cash in hand and deposits at financial institutions - Short-term investments - maturities within three months Non-cash transactions - Reclassification of utilised capital spare parts to property, plant and equipment - Reclassification of unutilised capital spare parts from property, plant and equipment

The notes to the consolidated and company financial statements on pages 146 to 187 are an integral part of these financial statements.


146

Annual Report 2009

Notes to the Consolidated and Company Financial Statements Electricity Generating Public Company Limited For the years ended 31 December 2009 and 2008 1 General information Electricity Generating Public Company Limited (the Company) is a public limited company incorporated and resident in Thailand. The address of its registered office is EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries and joint ventures are referred to as “the Group”. The principal business operation of the Group is the generation of electricity and tap water for sale to the government sector and industrial users both in Thailand and overseas. On 1 October 2009, the Company acquired the entire business of Rayong Electricity Generating Co., Ltd. (REGCO), a wholly owned subsidiary of the Company (as described in Note 32). Consequently, the principal business operation of the Company is the generation of electricity for sale to the government sector and investment in energy business, particularly electricity and tap water business (2008 : the principal business operation of the Company was investment in energy businesses, particularly electricity and tap water business). These consolidated and company financial statements were authorised for issue by the president on 15 February 2010.

2 Accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below. 2.1 Basis of preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. Comparative figures have been adjusted to conform with changes in presentation in the current year. The balance sheet as at 31 December 2009 has presented directors and management remuneration and finance costs in accordance with the announcement published by the Department of Business Development, dated 30 January 2009, regarding the 2009 financial statements format, which is mandatory for accounting periods beginning on or after 1 January 2009. An English version of the consolidated and company financial statements has been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.


Electricity Generating Public Co., Ltd.

2 Accounting policies (continued) 2.2 New accounting standard, new financial reporting standards and amendments to accounting standards On 26 June 2009, the Federation of Accounting Professions (FAP) announced the revision of the numbering used in Thai Accounting Standards to correspond with the numbering used in International Financial Reporting Standards. The revised accounting and financial reporting standards published by the FAP that are effective for periods beginning on or after 1 January 2009 and the revised accounting framework are as follows : TAS 36 (revised 2007)

Impairment of Assets

TFRS 5 (revised 2007)

Non-current Assets Held for Sale and Discontinued Operations (formerly TAS 54)

Accounting Framework (revised 2007) (effective 26 June 2009) The Group’s management has assessed and determined that the two standards and accounting framework do not have a significant impact on the financial statements being presented. The revised and new accounting standards that are effective for periods beginning on or after 1 January 2011 and 1 January 2012 and that were not adopted early by the Group are as follows : Effective for periods beginning on or after 1 January 2011 TAS 24 (revised 2007)

Related Party Disclosure (formerly TAS 47)

TAS 40

Investment Property

Effective for periods beginning on or after 1 January 2012 TAS 20

Accounting for Government Grants and Disclosure of Government Assistance

The Group’s management has assessed and determined that the revised standard and new standards will not significantly impact the financial statements being presented, except for TAS 40 Investment Property. A part of the Group’s building is rented out to others. This building is currently recorded in Property, Plant and Equipment. In applying TAS 40, the part of the building that is rented out should be recorded as investment property. 2.3 Group accounting - investments in subsidiaries and interests in joint ventures 2.3.1 Investments in subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which their control is transferred to the Group. They are de-consolidated from the date on which the control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus other relevant costs directly attributable to the acquisition of the subsidiary. Identifiable assets and liabilities in the business combination are measured initially at their fair values at the acquisition date, regardless of minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets of the subsidiary acquired by the Group is recorded as goodwill (see Note 2.10.1 for the accounting policy on goodwill).

147


148

Annual Report 2009

2 Accounting policies (continued) 2.3 Group accounting - investments in subsidiaries and interests in joint ventures (continued) 2.3.1 Investments in subsidiaries (continued) Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are eliminated; unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the accounting policies adopted by the Group. In the company financial statements, investments in subsidiaries are accounted for using the cost method of accounting. Under the cost method, income from investments in subsidiaries will be recorded when dividends are declared. A list of the Group’s subsidiaries and the financial effects of the acquisitions and disposals of subsidiaries are shown in Note 13. 2.3.2 Interests in joint ventures The Group’s interests in jointly controlled entities are initially recorded at cost and accounted for using the equity method in the consolidated financial statements. The Group has recognised interests in joint ventures including goodwill (net of accumulated amortisation). The Group’s share of its joint ventures’ post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in fair value reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the interests in joint ventures. When the Group’s share of losses in joint ventures equals or exceeds its interests in joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. In the company financial statements, interests in joint ventures are accounted for using the cost method of accounting. Under the cost method, income from interests in joint ventures will be recorded when dividends are declared. A list of the Group’s joint ventures and the financial effects of the acquisitions and disposals of joint ventures are shown in Note 13. 2.4 Foreign currency translation Items included in the financial statements of each entity in the Group are measured using the reporting currency of that entity. The consolidated financial statements are presented in Thai Baht. Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated and company statements of income. Liabilities which are covered by foreign currency forward contracts or currency and interest swap contracts are translated into Thai Baht at the contract rate. Statements of income and cash flows of foreign entities are translated into the Group’s reporting currency at the weighted average exchange rates for the year and balance sheets are translated at the exchange rates prevailing on the balance sheet date. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholders’ equity. On disposal of a foreign entity, accumulated currency translation differences are recognised in the consolidated statement of income as part of the gain or loss on sale.


Electricity Generating Public Co., Ltd.

2 Accounting policies (continued) 2.4 Foreign currency translation (continued) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate. 2.5 Financial instruments Financial assets carried in the balance sheets include cash and cash equivalents, investments, trade receivables and trade receivables from a related party. Financial liabilities carried in the balance sheet include trade payables, trade payables to a related party, loans and debentures. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group is also a party to financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which comprise interest rate swap contracts and foreign currency forward contracts, are not recognised in the consolidated and company financial statements on inception. Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on the interest rate swap contracts is recognised as a component of interest expenses as incurred. Disclosures about financial instruments to which the Group is a party are provided in Note 28. 2.6 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at financial institutions and short-term highly liquid investments with maturities of three months or less from the date of acquisition. 2.7 Trade receivables Trade receivables are recognised initially at original invoice amount and subsequently measured at the remaining amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount and the amount expected to be collectible. Bad debts are recognised in the consolidated and company statements of income as part of administrative expenses. 2.8 Spare parts and supplies Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated on the moving average basis. The spare parts are categorised as “specific spare parts” and “common spare parts”. Specific spare parts are classified into 2 categories, which are capital spare parts used for specific plant equipment in power plants and specific spare parts used for general use. The allowance for specific spare parts is calculated by dividing the balance of specific spare parts on hand at the year end by the number of years remaining under the Power Purchase Agreements with the Electricity Generating Authority of Thailand (EGAT), except for capital spare parts that are used for specific plant equipment in power plants (Note 2.11). The allowance for common spare parts is generally provided based on an aging analysis. 2.9 Other investments Investments other than investments in subsidiaries and interests in joint ventures are classified into the following three categories : held-to-maturity, available-for-sale and general investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.

149


150

Annual Report 2009

2 Accounting policies (continued) 2.9 Other investments (continued) • Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except those with maturities within 12 months from the balance sheet date, which are classified as current assets. • Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale, and are included in non-current assets unless management has expressed the intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. • Investments in non-marketable equity securities are classified as general investments. Purchases and sales of investments are recognised on the trade date, which is the date on which the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Held-to-maturity investments are carried at amortised cost using the effective yield method. Available-for-sale investments are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in equity. The fair value of investments is based on the quoted bid price by reference to the Stock Exchange of Thailand and the Thai Bond Dealing Center. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the consolidated and company income statements as gains and losses from investment in securities. General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the consolidated and company statements of income. When disposing of part of the Group’s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment. 2.10 Intangible assets 2.10.1 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertaking or joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint ventures is reported as an intangible asset and included in interests in joint ventures respectively in the consolidated balance sheet. Recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash generating units or group of cash generating units that are expected to benefit from the business combination in which the goodwill arose.


Electricity Generating Public Co., Ltd.

2 Accounting policies (continued) 2.10 Intangible assets (continued) 2.10.2 Right in Power Purchase Agreement and Tap Water Purchase Agreement The right in Power Purchase and Tap Water Purchase Agreements arising on acquisitions of the Group is amortised over the periods of the Power Purchase Agreements with the Electricity Generating Authority of Thailand and of the Water Supply Agreement with the Provincial Waterworks Authority (PWA), which are between 16 and 25 years. 2.10.3 Development expenditure Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the power plants’ life. 2.11 Property, plant and equipment All property, plant and equipment are initially recorded at cost. All plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost of each asset to its residual value over its estimated useful life, except land which is considered to have an indefinite life, as follows :

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

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

Capital spare parts whose estimated useful life is more than one year are capitalised and depreciated using the straightline method over the estimated useful life of between 6 and 12 years when used in major repair and maintenance processes. The capital spare parts which are replaced by a major overhaul will be removed and recorded as spare parts and supplies at the net book value at the date of replacement. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Repair and maintenance expenses are charged to the consolidated and company statements of income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the consolidated and company statements of income.

151


152

Annual Report 2009

2 Accounting policies (continued) 2.11 Property, plant and equipment (continued) Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset, during the period of time required to complete and prepare the property for its intended use. The borrowing costs include : • Interest on long-term loans; • Amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and • Certain currency translation differences arising from foreign currency borrowings but limited to the amount which would have been incurred had the loan been in Thai Baht. 2.12 Impairment of assets Intangible assets with an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets and intangible assets with a definite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. Assets other than goodwill that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.13 Leases Leases of assets which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the consolidated and company statements of income over the lease period. The equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated and company statements of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place. 2.14 Borrowings Borrowings are recognised initially at the fair value of the proceeds received, net of the transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated and company statements of income over the period of the borrowings. 2.15 Corporate income taxes The Group calculates income taxes in accordance with the Revenue Code on an accrual basis. The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the consolidated or company financial statements.


Electricity Generating Public Co., Ltd.

2 Accounting policies (continued) 2.16 Employee benefits 2.16.1 The Group operates a provident fund that is a defined contribution plan. The assets are held in a separate fund which is managed by an external fund manager in accordance with the Provident Fund Act B.E. 2530. The provident fund is funded by payments from employees and by the Group. Contributions to the provident fund are charged to the consolidated and company statements of income in the year to which they relate. 2.16.2 The Group provides for post employment benefits, payable to employees under the labour laws applicable in Thailand and other countries in which the Group has its operations. The liability in respect of employee benefits is the present value of the defined benefit obligation which is calculated by an independent actuary in accordance with the actuarial technique. The present value of the defined benefit obligation is determined by discounting estimated future cash flows using yields on government bonds which have terms to maturity approximating the terms of the related liability. The estimated future cash flows shall reflect employee salaries, turnover rate, mortality, length of service and other factors. Actuarial gains or losses will be recognised in the consolidated and company statements of income in the period to which they relate. The costs associated with providing these benefits are charged to the consolidated and company statements of income so as to spread the cost over the employment period during which the entitlement to benefits is earned. 2.17 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. 2.18 Treasury stock Treasury stock presented in the consolidated and company financial statements is carried at cost and shown as a deduction from total shareholders’ equity. Gains on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock”. Losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock” and “Retained earnings” consecutively. 2.19 Revenue recognition Sales under the Power Purchase Agreements (PPA) comprise Availability Payments and Energy Payments. Availability Payments are recognised according to the terms set out in the Power Purchase Agreement. Energy Payments are calculated based on electricity delivered. Sales under the Electricity and Steam Sales/Purchase Agreements with industrial users are recognised on delivery of electricity and steam and customer acceptance. Sales are shown net of sales taxes and discounts and after eliminating sales within the Group. Revenue from construction services is recognised using the percentage of completion method. The stage of completion is measured by reference to the relationship that the contract costs incurred for work performed to date bear to the estimated total costs for the contract. Revenue from other services is recognised when the services have been rendered in accordance with the terms of the agreements or invoices have been issued. Interest income is recognised on an accrual basis unless collectability is in doubt. Dividend income is recognised when the shareholder’s right to receive payment is established.

153


154

Annual Report 2009

2 Accounting policies (continued) 2.20 Dividends Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the shareholders and the Board of Directors. 2.21 Segment reporting The segment reporting has been prepared based on the Company’s method of internal reporting, which desegregates its business by geographical area.

3 Critical accounting estimates, assumptions and judgements Accounting estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. During 2009, the significant accounting estimates of the Group are as follows : 3.1 Revenue recognition from construction services Revenue recognition under construction and services contracts is based on the stage of completion of a contract measured by applying the cost-to-cost basis to contractual revenues. Use of the stage of completion method requires estimates of future gross profit on a contract by contract basis. The future gross profit represents the profit remaining after deducting the costs attributable to the contract from the revenues provided for in the contract. The estimate of future gross profit is based on a complex estimation process that includes identification of risks and any assessment that it is necessary to estimate with sufficient precision the total future costs as well as the expected timetable. 3.2 Impairment of receivables The Group maintains an allowance for doubtful accounts to reflect impairment of trade receivables relating to estimated losses resulting from the inability of customers to make required payments. The allowance for doubtful accounts is significantly impacted by the Group’s assessment, which is based on a consideration of historical collection experience, as well as known and identified instances of default. 3.3 Useful life of power plants and water treatment plant The Group determines the estimated useful lives of power plants and the water treatment plant based on the periods of the Power Purchase Agreements and Water Purchase Agreement. 3.4 Impairment of investment in subsidiaries and interests in joint ventures Investment in subsidiaries and interests in joint ventures are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is calculated by discounting future cash flows expected to be generated from the investment in subsidiaries and interests in joint ventures using the rate of return anticipated by the investor. The specified rate must incorporate various risk aspects. The estimation of future cash flows and the assessment of the related risks are by nature complicated processes. Nevertheless, the intention is to obtain the most accurate future cash flows. The recoverable amount is compared with the carrying amount and, if lower, the investment in subsidiaries and interests in joint ventures would be impaired to the recoverable amount and included in the consolidated statement of income. 3.5 Impairment of assets Goodwill is reviewed for impairment losses every year. Assets and intangible assets with a definite useful life are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be


Electricity Generating Public Co., Ltd.

3 Critical accounting estimates, assumptions and judgements (continued) 3.5 Impairment of assets (continued) recoverable. Factors taken into consideration in reaching such a decision include the economic viability of the asset itself and, where it is a component of a larger economic unit, the viability of that unit itself. Future cash flows expected to be generated by the assets are projected, taking into account market conditions and the expected useful lives of the assets. The present value of these cash flows, determined using an appropriate discount rate, is compared to the current net asset value and, if lower, the assets are impaired to the present value and are included in the statement of income.

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

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

6 Segment information Financial information by geographical segment For the year ended 31 December 2009 Thailand Baht Revenue from sales and service income Cost of sales and services Segment results Other income Currency exchange gains Profit before expenses Administrative expenses Directors and management remuneration Operating profit Share of loss exceeding interests in joint ventures Share of profit from interests in joint ventures Profit (loss) before financial costs and corporate income tax

The Lao People’s Democratic Republic Baht

The Philippines Baht

Consolidated Baht

9,145,066,615 (5,411,443,004) 3,733,623,611 349,469,699 32,576,781 4,115,670,091 (1,052,269,597) (98,405,558) 2,964,994,936

-

-

9,145,066,615 (5,411,443,004) 3,733,623,611 349,469,699 32,576,781 4,115,670,091 (1,052,269,597) (98,405,558) 2,964,994,936

(10,909,914) 5,761,661,155

(38,827,017) -

561,430,446

(49,736,931) 6,323,091,601

8,715,746,177

(38,827,017)

561,430,446

9,238,349,606

155


156

Annual Report 2009

6 Segment information (continued) Financial information by geographical segment (continued) For the year ended 31 December 2009 (continued) The Lao People’s Democratic Republic Baht

Thailand Baht Finance costs Profit (loss) before corporate income tax Corporate income tax Net profit (loss) for the year Net profit attributable to minorities Net profit (loss) attributable to equity holders of the Company

The Philippines Baht

Consolidated Baht

(567,509,560) 8,148,236,617 (621,066,090) 7,527,170,527 114,178,106

(38,827,017) (38,827,017) -

561,430,446 561,430,446 -

(567,509,560) 8,670,840,046 (621,066,090) 8,049,773,956 114,178,106

7,412,992,421

(38,827,017)

561,430,446

7,935,595,850

For the year ended 31 December 2008 The Lao People’s Democratic Republic Baht

Thailand Baht Revenue from sales and service income Cost of sales and services Segment results Other income Currency exchange losses Profit before expenses Administrative expenses Directors and management remuneration Operating profit Share of loss exceeding interests in joints venture Share of profit from interests in joint ventures Profit (loss) before financial costs and corporate income tax Finance costs Profit (loss) before corporate income tax Corporate income tax Net profit (loss) for the year Net profit attributable to minorities Net profit (loss) attributable to equity holders of the Company

The Philippines Baht

Consolidated Baht

10,319,657,962 (5,872,289,636) 4,447,368,326 377,911,252 (25,368,443) 4,799,911,135 (967,138,976) (97,761,644) 3,735,010,515

-

-

10,319,657,962 (5,872,289,636) 4,447,368,326 377,911,252 (25,368,443) 4,799,911,135 (967,138,976) (97,761,644) 3,735,010,515

-

(93,533,146)

-

(93,533,146)

4,561,781,796

-

150,392,311

4,712,174,107

8,296,792,311 (630,117,177) 7,666,675,134 (711,218,492) 6,955,456,642 85,607,800

(93,533,146) (93,533,146) (93,533,146) -

150,392,311 150,392,311 150,392,311 -

8,353,651,476 (630,117,177) 7,723,534,299 (711,218,492) 7,012,315,807 85,607,800

6,869,848,842

(93,533,146)

150,392,311

6,926,708,007


Electricity Generating Public Co., Ltd.

7 Cash and cash equivalents As at 31 December 2009, cash and cash equivalents mainly comprised investments in promissory notes with maturities of three months or less. The interest rates were 0.13% to 4.00% per annum (2008 : 0.13% to 4.00% per annum).

8 Short-term investments Short-term investments comprised deposits at financial institutions and marketable securities. Deposits at financial institutions The deposits at financial institutions of the Group mainly comprise deposits at financial institutions and promissory notes issued by local financial institutions. As at 31 December 2009, deposits at financial institutions of Baht 82 million in the consolidated financial statements bore interest at rates from 0.63% to 1.50% per annum (2008 : Baht 128 million in the consolidated financial statements bore interest at rates from 1.75% to 4.25% per annum). Marketable securities

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

Consolidated 2009 2008 Baht Baht

2009 Baht

575,281,603 950,818 576,232,421

579,882,323 11,936,511 591,818,834

16,587,675 4,006,080 20,593,755

Company 2008 Baht 24,755,595 4,006,080 28,761,675

9 Short-term and long-term investments used as collateral The Company As at 31 December 2009, deposits at financial institutions used as collateral of the Company represented collaterised deposits under Standby Letters of Credit issued on behalf of the Company to a subsidiary for investment in the Quezon Project of Baht 450 million (2008 : Baht 450 million). Subsidiaries The majority of the deposits at financial institutions used as collateral are those of three subsidiaries : Khanom Electricity Generating Company Limited, EGCO Cogeneration Company Limited and Roi-Et Green Company Limited. They comprise cash reserves required to be maintained under their loan and debenture agreements for the purpose of repayment of principal and payment of interest due within one year and as a reserve to minimise exchange rate risk. These cash reserves are provided from the proceeds of sales of electricity. As at 31 December 2009, the cash reserve for the purpose of repayment of principal and payment of interest due within one year of these three subsidiaries amounted to Baht 223 million (2008 : Baht 223 million). The remaining balance of short-term and long-term investments used as collateral of Baht 274 million (2008: Baht 493 million) represented collateralised deposits maintained in accordance with the loan agreements but which could be used subject to certain lender approvals. As at 31 December 2009, the Group had Thai Baht deposits at financial institutions used as collateral of Baht 947 million bearing interest at the rates of 0.63% to 4.00% per annum (2008: 1,166 million bearing interest at the rates of 0.50% to 4.00%).

157


158

Annual Report 2009

10 Trade receivables, net Consolidated 2009 2008 Baht Baht Trade receivables Less Allowance for doubtful receivables Trade receivables, net

157,441,813 157,441,813

Company 2009 Baht

144,826,529 (813,181) 144,013,348

2008 Baht -

-

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

Consolidated 2009 2008 Baht Baht Not overdue Overdue below 3 months Overdue 3 - 6 months Overdue 6 - 12 months Overdue over 12 months Less Allowance for doubtful receivables Trade receivables, net

125,937,960 31,173,378 330,475 157,441,813 157,441,813

Company 2009 Baht

133,180,396 7,617,901 1,824,995 169,729 2,033,508 144,826,529 (813,181) 144,013,348

2008 Baht -

-

11 Spare parts and supplies, net

Fuel Specific spare parts - Capital spare parts used for specific equipment of the power plant - Other specific spare parts Common spare parts Spare parts in transit Less Allowance for obsolescence Spare parts and supplies, net

Consolidated 2009 2008 Baht Baht

Company 2009 Baht

400,353,555

402,176,460

191,653,101

-

965,586,924 2,033,487,250 44,669,840 106,300 3,444,203,869 (515,599,808) 2,928,604,061

704,778,259 1,972,612,141 44,474,070 3,124,040,930 (289,131,310) 2,834,909,620

316,524,214 1,112,218,695 9,557,551 106,300 1,630,059,861 (319,885,128) 1,310,174,733

-

2008 Baht


Electricity Generating Public Co., Ltd.

12 Long-term investments in marketable securities and others Consolidated 2009 2008 Baht Baht Available-for-sale Debt securities Equity securities Changes in fair value of investments Total long-term investments in marketable securities Other investments Other equity securities Total other investments Long-term investments in marketable securities and others

Company 2009 Baht

2008 Baht

867,490,823 540,232,396 1,407,723,219

5,720,581 867,490,823 29,465,564 902,676,968

6,249,697 867,490,823 544,026,312 1,417,766,832

14,107,560 867,490,823 47,663,616 929,261,999

2,000,000 2,000,000

2,000,000 2,000,000

2,000,000 2,000,000

2,000,000 2,000,000

1,409,723,219

904,676,968

1,419,766,832

931,261,999

13 Investments in subsidiaries and interests in joint ventures, net Consolidated 2009 2008 Baht Baht Investments in subsidiaries Less Impairment Investments in subsidiaries, net (Note 13.1) Interests in joint ventures (Note 13.3) Investments in subsidiaries and interests in joint ventures, net

Company 2009 Baht

2008 Baht

28,529,156,466

24,494,257,861

11,987,540,281 (47,820,000) 11,939,720,281 20,279,561,685

16,158,192,281 (47,820,000) 16,110,372,281 18,214,187,685

28,529,156,466

24,494,257,861

32,219,281,966

34,324,559,966

The movements in investments in subsidiaries and interests in joint ventures can be analysed as follows :

Consolidated 2009 2008 Baht Baht Opening net book value Share of profit from interests in joint ventures Increase in share capital of joint ventures Disposals of joint ventures Transfer of net liabilities to interests in a joint venture (Note 13.4) Dividends received from joint ventures Acquisition of a joint venture (Note 29) Transfer of interest in a joint venture to investment in a subsidiary Translation adjustments Closing net book value

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

20,233,045,415 4,712,174,107 10,000,000 (835,340,316) (3,822,535,496) 4,349,957,000 (10,000,000) (143,042,849) 24,494,257,861

159


160

Annual Report 2009

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

Company 2009 Baht Opening net book value Increase in share capital of joint ventures (Note 13.3) Increase in share capital of subsidiaries Return of share capital from a subsidiary (Note 13.1) Loss from discontinued operation of a subsidiary (Note 13.1) Disposal of a joint venture Acquisition of a joint venture (Note 29) Business transfer from a subsidiary Investment impairment Closing net book value

34,324,559,966 1,502,530,250 542,548,000 (7,508,981) (3,491,019) 562,843,750 (4,702,200,000) 32,219,281,966

2008 Baht 29,653,239,116 895,369,850 (348,360,000) 4,172,131,000 (47,820,000) 34,324,559,966

The percentage of holdings in subsidiaries and interests in joint ventures is unchanged from 2008 except for the business transfer, the discontinuation of operations and the business acquisition described below : Rayong Electricity Generating Co., Ltd. (REGCO) On 1 October 2009, REGCO transferred its entire business to the Company. All assets, liabilities and agreements with third parties were transferred to the Company at the book value of net assets as at 30 September 2009. At the extraordinary shareholders’ meetings of REGCO on 2 October 2009, approval was granted to dissolve REGCO, and REGCO registered its dissolution with the Ministry of Commerce on the same date (as described in Note 32). However, the business transfer is part of the restructuring of the Group’s operations and does not have any impact on the consolidated financial statements. Sustainable Energy and Environmental Development Co., Ltd. (SEED) Sustainable Energy and Environmental Development Co., Ltd. (SEED), a wholly-owned subsidiary of the Company registered and resident in Thailand registered its liquidation with the Ministry of Commerce on 19 June 2009. The Company received a return of share capital of Baht 7.51 million and a loss from the liquidation of a subsidiary of Baht 3.49 million was recognised as expense in the company statement of income for the year ended 31 December 2009. The dissolution process of SEED was completed on 30 November 2009. Quezon Power (Philippines) Limited Co. (QPL) On 30 March 2009, EGCO International (B.V.I) Ltd. (EGCO BVI) purchased 100% of the outstanding shares of GPI-I, Ltd. (GPI-I) from GPSF Cayman I LDC (GPSF), where GPI-I had 10% ownership in GPIQ and GPIQ had an indirect interest in QPL. This transaction increases EGCO BVI’s aggregated indirect shareholding in QPL from 23.40% to 26.00% (as described in Note 29).


Electricity Generating Public Co., Ltd.

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.1 Investments in subsidiaries, net The subsidiaries are as follows :

Company 2009 Business

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

Cost Method Baht’000

Dividend Baht’000

(Including indirect holding) Subsidiaries incorporated in Thailand Rayong Electricity Generating Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service Co., Ltd. and its subsidiaries - Agro Energy Co., Ltd. - Egcom Tara Co., Ltd. EGCO Green Energy Co., Ltd. and its subsidiary - Roi-Et Green Co., Ltd. EGCO Cogeneration Co., Ltd. Subsidiary incorporated in British Virgin Islands EGCO International B.V.I. and its joint venture - Conal Holdings Corporation (Conal) (incorporated in the Philippines) - Quezon Power (Philippines) Limited Co. (QPL) (incorporated in the Philippines) Less Impairment

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

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

4,850,000 400,000

99.99 99.99

4,850,000 400,000

1,304,697 424,827 40,074

99.99 70.00 175,000

74.00

129,500

74,000

1,060,000

95.00 80.00

891,894

-

-

99.99

5,716,146

-

729,320 7,340,472

40.00 26.00

(47,820) 11,939,720

1,843,598

161


162

Annual Report 2009

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.1 Investments in subsidiaries, net (continued) The subsidiaries are as follows : (continued)

Company 2008 Paid-up Portion of share capital Investment Baht’000 (%)

Business Subsidiaries incorporated in Thailand Rayong Electricity Generating Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service Co., Ltd. and its subsidiaries - Agro Energy Co., Ltd. - Egcom Tara Co., Ltd. EGCO Green Energy Co., Ltd. and its subsidiary - Roi-Et Green Co., Ltd. EGCO Cogeneration Co., Ltd. Sustainable Energy and Environmental Development Co., Ltd. (SEED) Subsidiary incorporated in British Virgin Islands EGCO International B.V.I. and its joint venture - Conal Holdings Corporation (Conal) (incorporated in the Philippines) - Quezon Power (Philippines) Limited Co. (QPL) (incorporated in the Philippines) Less Impairment

Cost Method Baht’000

Dividend Baht’000

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

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

4,702,200 4,850,000

99.99 99.99

4,702,200 4,850,000

1,272,804 1,052,057

400,000

99.99 99.99 70.00

400,000

214,893

175,000

74.00

129,500

41,576

1,060,000

95.00 80.00

891,894

-

11,000

90.91

10,000

-

-

99.99

5,174,598

132,858

729,320 7,340,472

40.00 23.40

(47,820) 16,110,372

2,714,188

13.2 Dividends receivable from subsidiaries and joint ventures The principal movements of dividends receivable are as follows :

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

Consolidated 2009 2008 Baht Baht 3,889,865,572 4,428,048,677 (3,562,737,285) 4,755,176,964

2,074,500,034 3,822,535,496 (2,007,169,958) 3,889,865,572

Company 2009 Baht 7,130,153,391 5,901,128,751 (6,907,772,471) 6,123,509,671

2008 Baht 5,646,203,669 6,455,178,664 (4,971,228,942) 7,130,153,391


Electricity Generating Public Co., Ltd.

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.3 Interests in joint ventures The joint ventures are as follows :

Consolidated 2009 Business

Portion of Investment Baht’000

Cost Method (%)

Equity Method Baht’000

Dividend Baht’000

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (Gulf) and its subsidiaries BLCP Power Ltd. (BLCP) Power Generation Services Company Limited (PGS) Joint venture incorporated in the Philippines Conal Holdings Corporation (Conal) and its subsidiaries Quezon Power (Philippines), Limited Co. (QPL) Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC) Total interests in joint ventures, net

Investment in power energy business Electricity generation Power plant operation and maintenance services

50.00 50.00

6,672,769 9,902,800

10,398,240 10,699,218

1,392,219 2,665,311

50.00

554,844

554,844

-

Investment in power energy business Electricity generation

40.00 26.00

954,647 4,833,293

681,408 4,834,532

87,678 282,840

Electricity Generation (construction phase)

25.00

3,141,149 26,067,502

1,360,914 28,529,156

4,428,048

As at 31 December 2009 and 2008, according to the conditions under the loan agreement of BLCP, the common shares of BLCP were pledged as collateral for its long-term loans.

Consolidated 2008 Business

Portion of Investment Baht’000

Cost Method (%)

Equity Method Baht’000

Dividend Baht’000

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (Gulf) and its subsidiaries BLCP Power Ltd. (BLCP) Joint venture incorporated in the Philippines Conal Holdings Corporation (Conal) and its subsidiaries Quezon Power (Philippines), Limited Co. (QPL) Total interests in joint ventures

Investment in power energy business Electricity generation Investment in power energy business Electricity generation

50.00 50.00

6,672,769 9,902,800

9,255,247 10,138,080

100,626 3,640,365

40.00

954,647

734,744

81,544

23.40

4,349,957 21,880,173

4,366,187 24,494,258

3,822,535

163


164

Annual Report 2009

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.3 Interests in joint ventures (continued) The joint ventures are as follows : (continued)

Company 2009 Business

Portion of Cost Method Investment (%) Baht’000

Dividend Baht’000

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

Investment in power energy business Electricity generation Development of renewable energy projects Power plant operation and maintenance services

Electricity generation (construction phase)

50.00 50.00

6,672,769 9,902,800

1,392,219 2,665,311

33.33

8,000

-

50.00

554,844

-

25.00

3,141,149 20,279,562

4,057,530

Total interests in joint ventures

Company 2008 Business

Portion of Cost Method Investment (%) Baht’000

Dividend Baht’000

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

Investment in power energy business Electricity generation

50.00 50.00

6,672,769 9,902,800

100,626 3,640,365

Electricity generation (construction phase)

25.00

1,638,619 18,214,188

3,740,991

Total interests in joint ventures

As at 31 December 2009 and 2008, according to the conditions under the loan agreement of BLCP, the common shares of BLCP were pledged as collateral for its long-term loans. The following changes in interests in joint ventures occurred during the year ended 31 December 2009 Nam Theun 2 Power Company Limited (NTPC) During 2009, NTPC called for additional paid-up share capital of US dollars 127.98 million. The Group paid US Dollars


Electricity Generating Public Co., Ltd.

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.3 Interests in joint ventures (continued) 42.67 million, which is equivalent to Baht 1,502.53 million, for the additional paid-up shares based on the proportion of its original investment. Natural Energy Development Co., Ltd. (NED) In July 2009, the Executive Committee approved the joint investment with CLP Thailand Renewables Limited and Diamond Generating Asia, Limited in NED, which will be dedicated to the development of renewable energy projects in Thailand. Each of the parties will hold equal 33.33% stakes in NED with a value of Baht 8 million. Power Generation Services Company Limited (PGS) On 14 December 2009, the Company’s Executive Committee approved the purchase of ordinary shares of PGS from CLP Power (Southeast Asia) Operation Limited representing 50% of the total outstanding shares for US Dollars 16.75 million, equivalent to Baht 554.84 million (see Note 29). 13.4 Net liabilities in a joint venture The Company entered into agreements to provide financial support to Nam Theun 2 Power Company Limited (NTPC), which is a joint venture of the Company, amounting to US Dollars 94 million. As at 31 December 2009, the outstanding balance of the financial support was US Dollars 25 million. The Company has accounted for interests in joint ventures under the equity method of accounting in the consolidated financial statements. During the year ended 31 December 2009, NTPC called for additional paid-up share capital of Baht 1,503 million. The Group paid for the additional paid-up shares based on the proportion of its original investment. Accordingly, the share of the loss from NTPC did not exceed the interest in the joint venture. Consequently, the net liability has been transferred to interest in a joint venture (note 13.3) (2008 : net liability in a joint venture Baht 40 million). In addition, the Company entered into a loan agreement with Natural Energy Development Co., Ltd. (NED) amounting to Baht 32 million (as mentioned in note 30(f)). For the year ended 31 December 2009, the Company recognised the accumulated excess of the loss over the interest in NED amounting to Baht 3 million in the consolidated financial statements (2008 : Nil). The movements in net liabilities arising from interests in joint ventures in the consolidated financial statements for the year ended 31 December are as follows :

Consolidated 2009 2008 Baht Baht Opening net book amount Acquisition of a joint venture Share of loss for the year Capital increase of a joint venture Translation adjustments Transfer of net liabilities to interests in a joint venture Closing net book amount

(39,667,033) 8,000,000 (49,736,931) 1,502,530,250 (63,121,780) (1,360,914,420) (2,909,914)

(823,135,900) (93,533,146) 885,369,850 (8,367,837) (39,667,033)

165


166

Annual Report 2009

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.4 Net liabilities in a joint venture (continued) The amount of net liabilities in the joint ventures is as follows :

Consolidated 2009 Business

Joint venture incorporated in Thai Natural Energy Development Co., Ltd. (NED) Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC)

Development of renewable energy projects

Electricity generation (construction phase)

Portion of Cost Method Investment (%) Baht’000 (Including indirect holding)

33.33

8,000

Equity Method Baht’000

Dividend Baht’000

(2,910)

-

25.00 3,141,149 (transfer of net liabilities to interest in a joint venture) 3,157,149 (2,910)

-

Consolidated 2008 Business

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

Electricity generation (construction phase)

Portion of Cost Method Investment (%) Baht’000 (Including indirect holding)

25.00

Equity Method Baht’000

Dividend Baht’000

1,638,619

(39,667)

-

1,638,619

(39,667)

-

13.5 The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follows : Interest in Gulf Electric Public Company Limited (Gulf) Gulf Electric Public Company Limited (Gulf) is a joint venture between the Company and Electric Power Development Company Limited (EPDC) in which the Group has a 50% interest. Interest in BLCP Power Ltd. (BLCP) BLCP Power Ltd. (BLCP) is a joint venture between the Company and Banpu Coal Power Limited. The joint venture is governed by the Joint Venture Agreement and the Group has a 50% interest. Interest in Conal Holdings Corporation (Conal) Conal Holdings Corporation (Conal) is a joint venture between EGCO International B.V.I., which is the Company’s subsidiary, and Alsons Consolidated Resources, Inc. The joint venture is governed by the Joint Venture Agreement and the Group has a 40% interest.


Electricity Generating Public Co., Ltd.

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.5 The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follows : (continued) Interest in Nam Theun 2 Power Company Limited (NTPC) Nam Theun 2 Power Company Limited (NTPC) is a joint venture between the government of the Lao PDR through Lao Holding State Enterprise (LHSE), EDF International (EDFI), Italian-Thai Development Public Company Limited (ITD) and the Company. The joint venture is governed by the Joint Venture Agreement and the Group has a 25% interest. Interest in Quezon Power (Philippines), Limited Co. (QPL) Quezon Power (Philippines), Limited Co. (QPL) is a joint venture of EGCO International B.V.I. (EGCO BVI), the Company’s subsidiary. EGCO BVI holds 100% of the total shares in GPI Quezon Ltd. (GPIQ) and GPIQ holds 26% of the total shares in QPL. Accordingly, EGCO BVI is an indirect shareholder of QPL with a 26% interest. Interest in Natural Energy Development Co., Ltd. (NED) Natural Energy Development Co., Ltd. (NED) is a joint venture between the Company and CLP Thailand Renewables Limited and Diamond Generating Asia, Limited. The joint venture is governed by the Joint Venture Agreement and the Group has a 33.33% interest. Interest in Power Generation Services Co., Ltd. (PGS) Power Generation Services Co., Ltd. (PGS) is a joint venture between the Company and Banpu Power Co., Ltd. The joint venture is governed by the Joint Venture Agreement and the Group has a 50% interest. The Group’s share of the results of its joint ventures and its share of the assets and liabilities are as follows :

For the year ended 31 December 2009 Country of incorporation

Asset Baht’000

Liabilities Baht’000

Revenue Baht’000

Profit (loss) Baht’000

% interest held

(Including in direct holding) Gulf and its subsidiaries BLCP NED PGS Conal and its subsidiaries QPL NTPC

Thailand Thailand Thailand Thailand The Philippines The Philippines The Lao People’s Democratic Republic

23,271,483 26,687,624 31,342 140,748 1,382,054 7,661,369

12,896,572 19,166,032 34,252 110,610 399,105 3,334,446

15,003,470 9,916,564 435 617,583 2,810,959

2,541,459 3,370,888 (10,910) 90,765 533,521

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

9,557,591

8,196,677

261,101

(38,827)

25%

For the year ended 31 December 2008 Country of incorporation

Asset Baht’000

Liabilities Baht’000

Revenue Baht’000

Profit (loss) Baht’000

% interest held

(Including in direct holding) Gulf and its subsidiaries BLCP Conal and its subsidiaries QPL NTPC

Thailand Thailand The Philippines The Philippines The Lao People’s Democratic Republic

23,631,431 27,734,931 1,434,753 6,067,563

14,405,761 20,918,915 218,842 3,583,668

14,195,466 10,243,961 637,708 271,051

1,548,504 3,113,324 127,893 50,196

50% 50% 40% 23.40%

7,831,104

7,870,771

1,572

(93,533)

25%

167


168

Annual Report 2009

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

Land Baht At 31 December 2007 Cost Less Accumulated depreciation Net book value Year ended 31 December 2008 Opening net book value Additions Capitalisation of capital spare parts Transfer of capital spare parts out Disposals, net Transfer Depreciation charge (Note 24) Closing net book value

Power plants, substation, transmission system and water plants Baht

Equipment and motor vehicles Baht

Construction in progress Baht

Total Baht

1,623,268,572 1,623,268,572

3,766,641,730 (1,985,708,964) 1,780,932,766

35,087,030,430 (20,024,316,917) 15,062,713,513

476,875,718 (350,110,975) 126,764,743

43,951,696 43,951,696

40,997,768,146 (22,360,136,856) 18,637,631,290

1,623,268,572 -

1,780,932,766 3,548,550

15,062,713,513 13,824,752

126,764,743 38,859,920

43,951,696 105,756,565

18,637,631,290 161,989,787

-

-

874,356,861

-

-

874,356,861

(95,387,263) 1,527,881,309

124,345,310 (192,952,404) 1,715,874,222

(339,169,700) (705,236) (18,981,337) (1,935,649,195) 13,656,389,658

(1,139,456) 3,081,000 (40,591,639) 126,974,568

(136,114,973) 13,593,288

(339,169,700) (1,844,692) (123,057,263) (2,169,193,238) 17,040,713,045

Consolidated Buildings and land improvements Baht

Land Baht At 31 December 2008 Cost Less Accumulated depreciation Net book value

Power plants, substation, transmission system and water plants Baht

Equipment and motor vehicles Baht

Construction in progress Baht

Total Baht

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

3,894,535,590 (2,178,661,368) 1,715,874,222

35,455,048,582 (21,798,658,924) 13,656,389,658

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

13,593,288 13,593,288

41,395,168,341 (24,354,455,296) 17,040,713,045

1,527,881,309 -

1,715,874,222 6,369,528

13,656,389,658 19,831,166

126,974,568 40,600,349

13,593,288 121,504,200

17,040,713,045 188,305,243

Year ended 31 December 2009 Opening net book value Additions Capitalisation of capital spare parts Transfer of capital spare parts out Disposals, net Write-off, net Transfer Depreciation charge (Note 24) Closing net book value

-

-

273,489,780

-

-

273,489,780

1,527,881,309

(53,200) 29,099,995 (199,521,347) 1,551,769,198

(216,105,345) (142,402) 66,354,781 (1,971,851,565) 11,827,966,073

(3,259,119) (21,943) 3,552,000 (43,073,731) 124,772,124

(490,000) (99,006,776) 35,600,712

(216,105,345) (3,944,721) (21,943) (2,214,446,643) 15,067,989,416

At 31 December 2009 Cost Less Accumulated depreciation Net book value

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

3,929,951,912 (2,378,182,714) 1,551,769,198

35,424,115,993 (23,596,149,920) 11,827,966,073

522,982,322 (398,210,198) 124,772,124

35,600,712 35,600,712

41,440,532,248 (26,372,542,832) 15,067,989,416


Electricity Generating Public Co., Ltd.

14 Property, plant and equipment, net (continued) Company Land Baht

Buildings and land improvements Baht

Equipment and motor vehicles Baht

Total Baht

At 31 December 2007 Cost Less Accumulated depreciation Net book value

284,429,029 284,429,029

619,473,510 (277,998,147) 341,475,363

245,127,784 (180,826,578) 64,301,206

1,149,030,323 (458,824,725) 690,205,598

Year ended 31 December 2008 Opening net book value Additions Disposals, net Transfer Depreciation charge (Note 24) Closing net book value

284,429,029 (95,387,263) 189,041,766

341,475,363 (29,918,028) 311,557,335

64,301,206 23,438,692 (453,254) (20,070,016) 67,216,628

690,205,598 23,438,692 (453,254) (95,387,263) (49,988,044) 567,815,729

Company

Land Baht At 31 December 2008 Cost Less Accumulated depreciation Net book value

Power plants, substation, Office transmission equipment, system, operating furniture, Buildings and and maintenance computers and equipment motor vehicles structures Baht Baht Baht

Construction in progress Baht

Total Baht

189,041,766 189,041,766

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

-

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

-

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

Year ended 31 December 2009 Opening net book value Business transfer from a subsidiary Additions Disposals, net Write-off, net Transfer Depreciation charge (Note 24) Closing net book value

189,041,766

311,557,335

-

67,216,628

-

567,815,729

126,531,679 315,573,445

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

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

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

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

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

At 31 December 2009 Cost Less Accumulated depreciation Net book value

315,573,445 315,573,445

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

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

274,596,493 (198,274,947) 76,321,545

11,547,494 11,547,494

6,905,108,186 (808,860,752) 6,096,247,433

169


170

Annual Report 2009

14 Property, plant and equipment, net (continued) As at 31 December 2009, property, plant and equipment amounting to Baht 8,540 million in the consolidated financial statements were mortgaged and pledged as collateral for long-term loans and debentures, as described in Notes 18 and 19 (2008 : Baht 9,567 million). As at 31 December 2009, the Group had no capital commitments in respect of construction of power plants and purchases of equipment but not yet recognised in the consolidated financial statements (2008: nil). As at 31 December 2009, the gross carrying amount of fully depreciated equipment that was still in use was Baht 589.46 million and Baht 287.27 million for the consolidated and company financial statements respectively (2008 : Baht 527.08 million and Baht 160.40 million for the consolidated and company financial statements respectively).

15 Right in long-term power and tap water purchase agreements, net For the years ended 31 December

Consolidated 2009 2008 Baht Baht

Opening net book value Amortisation (Note 24) Closing net book value

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

210,696,831 (14,525,091) 196,171,740

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

297,178,164 (101,006,424) 196,171,740

At 31 December Cost Less Cumulated amortisation Net book value

16 Other non-current assets, net

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

Consolidated 2009 2008 Baht Baht

2009 Baht

2008 Baht

13,995,382 3,661,229 322,071,012 86,870,818 43,466,467 470,024,908

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

11,511,931 3,661,229 322,635,012 337,808,172

14,228,085 3,661,229 322,635,012 93,040,707 44,050,502 477,615,535

Company

17 Short-term loans from financial institutions Short-term loans from financial institutions in the company financial statements On 30 April 2008, the Company entered into a long-term promissory note agreement with a local bank to obtain a credit facility of Baht 4,000 million. The interest rate for this facility is equal to the three-month THBFIX rate plus a certain margin per annum. Interest is payable on a monthly basis and the principal is to be paid upon the final maturity date, which is three years from the date of this agreement. During 2008, the Company drew down a six-month promissory note amounting to Baht 3,500 million, which was rolled over on 25 May 2009. Consequently, the Company has outstanding credit facility of Baht 500 million. On 5 October 2009, the Company redeemed the six-month promissory note amounting to Baht 3,500 million.


Electricity Generating Public Co., Ltd.

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

Consolidated 2009 2008 Baht Baht Current portion of long-term loans, net Thai Baht US Dollars Japanese Yen Less Deferred financing fee Long-term loans, net Thai Baht US Dollars Japanese Yen Less Deferred financing fee, net Total long-term loans, net

Company 2009 Baht

2008 Baht

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

81,005,000 79,917,707 39,292,647 (3,754,608) 196,460,746

-

-

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

4,555,122,500 547,671,347 261,689,025 (18,133,524) 5,346,349,348

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

4,000,000,000 4,000,000,000

9,305,663,301

5,542,810,094

8,000,000,000

4,000,000,000

Long-term loans at subsidiaries are secured liabilities. The long-term loans are secured over land, buildings, power plants and equipment of the subsidiaries. The subsidiaries are required to maintain cash reserves which are provided from the proceeds of sales of electricity for the purpose of repayment of principal and payment of interest due within one year and as a reserve for minimising the exchange risk (refer to Note 9). In addition, the Power Purchase Agreements, the Asset Purchase Agreements, the Major Maintenance Agreements and insurance policies have been assigned as collateral in accordance with the conditions under the Loan Agreements and debentures. The interest rate exposure on the long-term loans of the Group after taking account of interest rate swap contracts is as follows :

Consolidated 2009 2008 Baht Baht Long-term loans, net - at fixed rates - at floating rates Total long-term loans, net

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

4,542,810,094 1,000,000,000 5,542,810,094

Company 2009 Baht 8,000,000,000 8,000,000,000

2008 Baht 3,000,000,000 1,000,000,000 4,000,000,000

After taking account of interest rate swaps, the weighted average effective interest rates of the long-term loans of the Group were approximately 7.49% per annum for US Dollar loans, 2.78% per annum for Japanese Yen loans and 6.19% per annum for Thai Baht loans. After taking account of interest rate swaps, the weighted average effective interest rates of the long-term loans of the Company were approximately 6.32% per annum for Thai Baht loans.

171


172

Annual Report 2009

18 Long-term loans, net (continued) The movements in the long-term loans can be analysed as follows :

Consolidated 2009 2008 Baht Baht Opening net book amount Additions of long-term loans Repayments of long-term loans Unrealised exchange gains Amortisation of deferred financing fee Closing net book amount

5,542,810,094 4,000,000,000 (200,215,354) (40,686,047) 3,754,608 9,305,663,301

6,280,947,382 (832,875,608) 90,982,844 3,755,476 5,542,810,094

Company 2009 Baht

2008 Baht

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

4,000,000,000 4,000,000,000

Maturity of long-term loans is as follows :

Consolidated 2009 2008 Baht Baht Within 1 year Later than 1 year and not later than 5 years Later than 5 years

204,339,427 5,044,228,280 4,057,095,594 9,305,663,301

196,460,746 982,234,689 4,364,114,659 5,542,810,094

Company 2009 Baht

2008 Baht

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

4,000,000,000 4,000,000,000

Credit facilities As at 31 December 2009, the Group had the available credit facilities from ďŹ nancial institutions amounted to Baht 4,333 million of which Baht 4,000 million for the Company (2008: Baht 833 million for the Group of which Baht 500 million for the Company).

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

Consolidated 2009 2008 Baht Baht Current portion of debentures Debentures, net Total debentures

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

816,479,640 1,410,357,043 2,226,836,683

Company 2009 Baht

2008 Baht -

-

Debentures are secured liabilities. The subsidiary is required to maintain reserves for repayment of principal and payment of interest due within one year. These cash reserves are provided from the proceeds of sales of electricity as described in Note 9. The subsidiary also has to pledge the relevant assets and agreements as collateral as described in Note 18. The weighted average effective interest rate exposure of the debentures was approximately 12.64% per annum (2008 : 12.24% per annum).


Electricity Generating Public Co., Ltd.

19 Debentures (continued) The movements of debentures can be analysed as follows :

Consolidated 2009 2008 Baht Baht

For the years ended 31 December Opening amount Repayments of debentures Closing amount

2,226,836,683 (816,558,180) 1,410,278,503

2,956,612,363 (729,775,680) 2,226,836,683

Maturity of debentures is as follows :

Consolidated 2009 2008 Baht Baht Within 1 year Later than 1 year but not later than 5 years

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

816,479,640 1,410,357,043 2,226,836,683

20 Retirement benefits obligation

Opening balance Retirement benefit expenses Retirement benefit paid Retirement benefits obligation from business transfer Closing balance

Consolidated 2009 2008 Baht Baht

2009 Baht

158,487,484 21,879,507 (15,164,786) 165,202,205

45,171,386 6,420,373 (15,164,786) 38,838,343 75,265,316

136,237,597 25,993,412 (3,743,525) 158,487,484

Company 2008 Baht 34,544,763 10,626,623 45,171,386

The following table is a summary of the assumptions relating to the actuarial technique as at the balance sheet date :

2009 and 2008 Discount rate as at 31 December Salary increase rate Turnover rate Pre-retirement mortality rate

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

173


174

Annual Report 2009

21 Share capital and premium on share capital Number of shares At 1 January 2008 Issue of shares At 31 December 2008 Issue of shares At 31 December 2009

526,465,000 526,465,000 526,465,000

Ordinary shares Baht 5,264,650,000 5,264,650,000 5,264,650,000

Premium on share capital Baht

Total Baht

8,601,300,000 8,601,300,000 8,601,300,000

13,865,950,000 13,865,950,000 13,865,950,000

The total authorised number of ordinary shares is 530,000,000 shares with a par value of Baht 10 per share (2008 : 530,000,000 shares with a par value of Baht 10 per share). Ordinary share of 526,465,000 shares are issued and fully paid up.

22 Legal reserve

Opening balance Appropriation during the year Closing balance

Consolidated 2009 2008 Baht Baht

2009 Baht

2008 Baht

530,000,000 530,000,000

530,000,000 530,000,000

530,000,000 530,000,000

530,000,000 530,000,000

Company

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

23 Minority interests Consolidated 2009 2008 Baht Baht Opening balance Shares of net profit from subsidiaries and interests in joint ventures Dividend payment of subsidiaries Closing balance

Company 2009 Baht

2008 Baht

476,263,893

520,823,371

-

-

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

85,607,800 (130,167,278) 476,263,893

-

-


Electricity Generating Public Co., Ltd.

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

Consolidated 2009 2008 Baht Baht Depreciation on plant and equipment (Note 14) Amortisation of right in long-term power and tap water purchase agreements (Note 15) Major repair and maintenance expense of power plants Staff costs Loss on investment impairment

Company 2009 Baht

2008 Baht

2,214,446,643

2,169,193,238

325,325,964

49,988,044

14,525,091 256,516,680 965,614,970 -

14,525,091 297,557,113 970,614,962 -

52,648,758 277,076,690 -

239,454,135 47,820,000

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

Consolidated 2009 2008 Baht Baht Net profit attributable to shareholders (Baht) Weighted average number of ordinary share in issue (Share) Basic earnings per share (Baht)

Company 2009 Baht

2008 Baht

7,935,595,850

6,926,708,007

6,188,803,652

6,551,057,518

526,465,000 15.07

526,465,000 13.16

526,465,000 11.76

526,465,000 12.44

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

26 Dividends At the Annual General Shareholders’ meeting on 24 April 2009, it was unanimously resolved to pay dividends in respect of the operating results for the year ended 2008 as follows : (a) Interim dividends for 526,465,000 shares of Baht 2.50 per share, totalling Baht 1,316 million. These dividends were paid to shareholders in September 2008. (b) Dividends for 526,465,000 shares of Baht 2.50 per share, totalling Baht 1,316 million. These dividends were paid to shareholders in May 2009 (2008: Dividends for 526,465,000 shares of Baht 2.50 per share, totalling Baht 1,316 million). The Board of Directors’ meeting on 24 August 2009 approved the payment of interim dividends in respect of the operating results for the six-month period ended 30 June 2009 for 526,465,000 shares at Baht 2.50 per share, totalling Baht 1,316 million. These dividends were paid to shareholders in September 2009. In addition, the Company reversed dividend payable, payable to foreign investors who were unable to exercise rights to receive such dividends, amounting to approximately Baht 14 million during 2009 (2008 : Baht 29 million).

175


176

Annual Report 2009

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

7 June 1999 6 December 2000

The promotional privileges of Khanom Electricity Generating Company Limited and Egcom Tara Company Limited in relation to the eight-year corporate income tax exemption expired on 26 September 2004 and 14 February 2009 respectively. Khanom Electricity Generating Company Limited is eligible to apply the corporate income tax rate of 50% of the normal corporate income rate for a period of five years beyond the eight-year corporate income tax exemption period. On 25 September 2009, Khanom Electricity Generating Company Limited’s privileges in relation to the use of the corporate income tax rate of 50% of the normal corporate income rate expired. Egcom Tara Company Limited is not eligible for any further reduction in corporate income tax. Accordingly, the net profit of these subsidiaries is subject to the normal corporate income tax rate after the expiration date.

28 Financial instruments The principal financial risks faced by the Group are interest rate and exchange rate risks. The Group borrows to finance its operations, which involve payments in foreign currencies, at both fixed and floating rates of interest. The objectives of using derivative financial instruments are to reduce the uncertainty over future cash flows arising from movements in interest and exchange rates and to manage the liquidity of cash resources. Interest and exchange rate exposure is managed through interest rate swap contracts and foreign currency forward contracts as discussed in Note 28 (a). In respect of currency exchange risk, the formula for the calculation of revenues from the Availability Payments and Energy Payments charged to EGAT and National Power Corporation (NPC) allows for the minimisation of the impact of currency exchange. Trading for speculative purposes is not allowed. All derivative transactions are subject to prior approval by the respective board of each company in the Group. (a) Financial assets and liabilities As at 31 December 2009 and 2008, the Group had outstanding foreign currency assets and liabilities after taking account of foreign currency forward contracts as details below.

Consolidated 2009 Currency Million Liabilities US Dollars Japanese Yen

15.61 671.33

2008 Million Baht 523.23 245.44 768.67

Currency Million 17.89 772.13

Million Baht 627.59 300.98 928.57


Electricity Generating Public Co., Ltd.

28 Financial instruments (continued) (a) Financial assets and liabilities (continued) The Company did not have the outstanding foreign currency assets and liabilities as at 31 December 2009 and 2008. Foreign currency assets represent cash and cash equivalents, trade receivables and US Dollar deposits with financial institutions. Foreign currency liabilities represent trade payables, other payables, interest payables and long-term loans. As at 31 December 2009, the subsidiaries have not entered into any foreign currency forward contracts to cover their exchange risk relating to long-term loan repayments of US Dollars 16 million and Japanese Yen 671 million (2008 : US Dollars 18 million and Japanese Yen 772 million). However, the subsidiaries receive compensation from EGAT for exchange rate effects related to its US Dollar and Japanese Yen debt service (as described in Note 30 (a)). Objectives and significant terms and conditions In order to manage risks arising from fluctuations in interest rates and currency exchange rates, the Group uses the following derivative financial instruments. Interest rate swap contracts Interest rate swap contracts are entered into to manage exposure to fluctuations in interest rates on specific transactions. The Company entered into an interest rate swap contract with a local financial institution to cover its risk from interest rate fluctuation. The total amount of credit facilities is Baht 4,000 million. The contract shall be effective from 28 December 2008 to 7 December 2014. The fixed interest rates under the swaps for long-term loans and credit facilities at 31 December were :

Contract amounts (millions) Currency

2009

2008

US Dollars Thai Baht

15.61 4,555.12

17.89 3,000.00

Fixed Exchange Rates 2009

2008

7.49 2.48 - 5.65

7.42 2.48 - 4.20

The remaining notional principal amounts of the outstanding interest rate swap contracts at 31 December were :

Consolidated 2009 2008 Million Baht Million Baht Within 1 year Later than 1 year

171 4,907 5,078

80 3,548 3,628

Company 2009 Million Baht 4,000 4,000

2008 Million Baht 3,000 3,000

(b) Credit risk The Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high quality institutions. The Group’s policy is designed to limit exposure with any one institution and to invest its excess cash in low risk investment accounts. The Group has not experienced any losses on such accounts. For trade receivables, the Group’s sales are made to EGAT, National Power Corporation and industrial users under the terms

177


178

Annual Report 2009

28 Financial instruments (continued) (b) Credit risk (continued) and conditions of the long-term Power Purchase Agreements and the long-term Electricity and Steam Sales and Purchase Agreements. (c) Revenue swap contract As described in Note 30, the Power Purchase Agreements between subsidiaries and EGAT state that revenue from Availability Payments shall be calculated based on factors denominated in US Dollars. A subsidiary of the Company, Rayong Electricity Generating Company Limited (REGCO), therefore entered into a revenue swap contract with a financial institution to minimise exchange rate risk. On 1 October 2009, REGCO transferred its entire business including the revenue swap contract to the Company (as described in Note 32). As at 31 December 2009, the electricity revenues under the revenue swap contract amounting to US Dollars 1.86 million were fixed at Baht 33.80 per US Dollar. The agreement is effective from 8 November 2007 to 5 January 2010. (d) Fair value The carrying amounts of the following financial assets and financial liabilities approximate their fair values: cash and cash equivalents, investments, trade receivables and payables, amounts due from and due to related companies, other receivables and payables, and short-term loans due to the short maturities of these instruments. Long-term loans and debentures The fair values of long-term loans with fixed interest rates have been calculated from the net present value of future cash flows discounted by market interest rates using rates at the balance sheet date. The fair values of long-term loans with floating interest rates approximate their carrying amounts. The fair value of debentures is estimated by discounting the future contractual cash flows at the market interest rate available on the latest trading date in the Bond Dealing Center on the balance sheet date. The contract amounts and fair values of certain long-term loans with fixed interest rates and debentures at the balance sheet date are as follows :

2009 Consolidated Contract amounts Million Baht Long-term loans Debentures

Company

Fair values Million Baht

243 1,410

Contract amounts Million Baht

262 1,519

Fair values Million Baht

-

-

2008 Consolidated Contract amounts Million Baht Long-term loans Debentures

301 2,227

Company

Fair values Million Baht 324 2,471

Contract amounts Million Baht -

Fair values Million Baht -


Electricity Generating Public Co., Ltd.

28 Financial instruments (continued) (d) Fair value (continued) Derivative financial instruments The fair values of the derivative financial instruments at the balance sheet date are as follows :

Consolidated 2009 2008 Million Baht Million Baht Unfavourable interest rate swaps Favourable interest rate swap Favourable (unfavourable) revenue swap

(98) 52 1

Company 2009 Million Baht

(284) (27)

2008 Million Baht

(51) 52 1

(222) -

The fair values of interest rate swap contracts, currency and interest rate swap contracts have been calculated using rates quoted by the Group’s bankers to terminate the contracts at the balance sheet date.

29 Business acquisition Quezon Power (Philippines) Limited Co., (QPL) On 29 November 2008, EGCO International (B.V.I.) Ltd. (EGCO BVI), a 99.99% owned subsidiary of the Company, purchased 90% of the registered share capital of GPI Quezon Ltd (GPIQ) from Global Power Investment, L.P. for the amount of US Dollars 123.30 million. The holding of 90% of GPIQ’s share capital provides EGCO BVI with a 23.40% indirect share holding in Quezon Power (Philippines), Limited Co. (QPL), which is a coal-fired power plant with a net capacity of 460 Megawatt and related transmission line in the Philippines. On 30 March 2009, EGCO BVI purchased 100% of the outstanding shares of GPI-I, Ltd. (GPI-I) from GPSF Cayman I LDC (GPSF), where GPI-I had 10% ownership in GPIQ and GPIQ had an indirect interest in QPL. This transaction increases EGCO BVI’s aggregated indirect shareholding in QPL from 23.40% to 26.00%. The subsidiary calculated the fair value of the net identifiable assets at the date of acquisition at Baht 4,291 million. The difference between the total purchase consideration and the fair values of net assets represents the right in the long-term power purchase agreement, which amounts to Baht 542 million. The right in the long-term power purchase agreement will be amortised on a straight-line basis over the remaining life of the agreement. The right in the long-term power purchase agreement is included in interests in joint ventures. Details of the net acquired assets and the right in the long-term power purchase agreement are as follows :

29 November 2008 Baht’000 Property, plant and equipment Fair value adjustment of property, plant and equipment Loans from financial institution, net Other assets less other liabilities Fair value of net assets Right in long-term power purchase agreement Total purchase consideration

5,070,116 1,376,072 (3,387,243) 784,792 3,843,737 506,220 4,349,957

30 March 2009 Baht’000 555,398 152,416 (371,840) 110,814 446,788 36,548 483,336

Total Baht’000 5,625,514 1,528,488 (3,759,083) 895,606 4,290,525 542,768 4,833,293

179


180

Annual Report 2009

29 Business acquisition (continued) Power Generation Services Company Limited (PGS) On 14 December 2009, the Company’s Executive Committee approved the purchase of ordinary shares in Power Generation Services Co., Ltd. (PGS) from CLP Power (Southeast Asia) Operation Limited (CLP-SEA) representing 50% of the total outstanding shares for US Dollars 16.75 million, equivalent to Baht 554.84 million. PGS is engaged in the provision of operation and maintenance services to BLCP Power Ltd. (BLCP), a joint venture of the Company. On 19 January 2010, the entire business of PGS was transferred to BLCP, including assets, liabilities and agreements entered into with third parties. BLCP issued new ordinary shares as a consideration upon the business transfer. PGS registered its liquidation with the Ministry of Commerce and transferred the investment in BLCP to the Company in return on the same date. The objective of this investment in PGS was to provide future benefits to the Company, as a shareholder of BLCP, through a reduction in the future power plant’s operating costs. Details of the net acquired assets and goodwill are as follows :

Million Baht Fair value of net assets Net cash from PGS Goodwill Total purchase consideration

6.27 26.11 522.46 554.84

Fair value of net assets is calculated from net asset value of BLCP.

30 Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The major shareholders of the Company are the Electricity Generating Authority of Thailand (EGAT) and One Energy Thailand Limited (formerly named “CLP Power Projects (Thailand) Limited”), holding 25.41% and 22.42% of the Company’s shares, respectively. The remaining shares in the Company are widely held. The information on the Company’s subsidiaries and joint ventures is provided in Note 13. The following material transactions were carried out with related parties : (a) Sales of electricity

For the years ended 31 December Sales of electricity - Major shareholder

Consolidated 2009 2008 Million Baht Million Baht 7,503

8,550

Company 2009 Million Baht 929

2008 Million Baht -


Electricity Generating Public Co., Ltd.

30 Related party transactions (continued) The following material transactions were carried out with related parties : (continued) (a) Sales of electricity (continued) Subsidiaries of the Company Four subsidiaries of the Company, Rayong Electricity Generating Company Limited (REGCO), Khanom Electricity Generating Company Limited (KEGCO), EGCO Cogeneration Company Limited, and Roi-Et Green Company Limited, have entered into Power Purchase Agreements (PPAs) with EGAT. The agreements are effective for periods of 20, 15, 21 and 21 years respectively. According to the resolutions of the Cabinet meetings dated 15 February 1994, 23 January 1996, 28 January 2003, and 29 May 2003 respectively, the electricity revenues from such agreements must be calculated on a cost plus basis. There is a limitation on sales of electricity to third parties as specified in the agreements. These agreements were pledged as collateral with the subsidiaries’ lenders under the Master Agreements. REGCO and KEGCO repaid the whole amount of their outstanding loans in 2006 and 2008 respectively. As at 31 December 2008, REGCO’s agreement has not been pledged, while that of KEGCO has, as described in Note 19. In addition, REGCO and KEGCO are eligible to receive compensation for exchange rate effects, by adjusting the formula for calculation of electricity sold to EGAT each month pertaining to The First Amendment to the Power Purchase Agreements dated 30 January 1998 over the periods of the PPAs. Compensation for the years ended 31 December 2009 and 2008 amounted to Baht 214 million and Baht 320 million respectively. Under the PPAs with REGCO and KEGCO, EGAT has to bear the natural gas cost until the subsidiaries enter into natural gas purchase agreements with PTT Public Company Limited. To date, the subsidiaries have not entered into such purchase agreements. Therefore, the calculation of revenues from the portion of energy sales of electricity and the natural gas cost are not included in these financial statements. On 1 October 2009, REGCO transferred its entire business including Power Purchase Agreements (PPAs) with EGAT to the Company (as described in Note 32). (b) Service income

For the years ended 31 December Service income - Major shareholder

Consolidated 2009 2008 Million Baht Million Baht 50

51

Company 2009 Million Baht

2008 Million Baht -

-

EGCO Engineering and Service Company Limited has entered into the Subcontract for Major Maintenance Agreement with EGAT to provide major maintenance services, repair services, administrative services and additional services related to power plants. The compensation for such services is calculated on a cost plus basis. The agreement is effective for a period of eight years commencing from 24 September 2007.

181


182

Annual Report 2009

30 Related party transactions (continued) The following material transactions were carried out with related parties : (continued) (c) Major maintenance expenses

For the years ended 31 December Major maintenance expenses - Major shareholder

Consolidated 2009 2008 Million Baht Million Baht 127

287

Company 2009 Million Baht

2008 Million Baht

26

-

Two subsidiaries of the Company, REGCO and KEGCO, have entered into Major Maintenance Agreements with EGAT in order for the latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiaries’ power plants. The price for such services is calculated under the agreements on a cost plus basis and will be adjusted annually according to the Consumer Price Index. The agreements have been extended for a period of eight years, commencing from 7 December 2006 for REGCO and a period of four years, commencing from 1 August 2008 for KEGCO. These agreements were pledged as collateral with the lenders under the Master Agreements. The two subsidiaries repaid the whole amount of the outstanding loans in 2006 and 2008 respectively. As at 31 December 2008, REGCO’s agreement has not been pledged, while that of KEGCO has, as described in Note 19. On 1 October 2009, REGCO transferred its entire business including the Major Maintenance Agreement with EGAT to the Company (as described in Note 32). (d) Trade receivables from and trade payables to a related party

As at 31 December Trade receivables - Major shareholder Outstanding trade receivables as at 31 December can be analysed as follows : Not overdue Overdue below 3 months Overdue 3-6 months Overdue 6-12 months Overdue over 12 months Trade payables - Major shareholder

Consolidated 2009 2008 Million Baht Million Baht

Company 2009 Million Baht

2008 Million Baht

1,301

1,373

665

-

1,301 1,301

1,330 17 17 6 3 1,373

665 665

-

30

72

22

-


Electricity Generating Public Co., Ltd.

30 Related party transactions (continued) The following material transactions were carried out with related parties : (continued) (e) Amounts due from and amounts due to related parties

As at 31 December

Consolidated 2009 2008 Million Baht Million Baht

Amounts due from related parties - Major shareholder - Subsidiaries - Joint ventures Amounts due from related parties due over one year Amounts due to related parties - Other related party

Company 2009 Million Baht

2008 Million Baht

29 39 68

8 8

4 2 6

5 2 7

228

221

228

221

10

7

6

-

(f) Loans to related parties and related interests

As at 31 December Short-term loan to related parties - a join venture Long-term loan to related parties - subsidiaries - Due within 1 year - Due over 1 year Interest receivable - Subsidiary

Consolidated 2009 2008 Million Baht Million Baht

Company 2009 Million Baht

2008 Million Baht

32

-

32

-

-

-

46 688 734

966 734 1,700

-

-

-

4

-

-

84

139

For the year ended 31 December Interest income - Subsidiaries

As at 31 December Subsidiaries Beginning balance Loan repayments received during the year Ending balance

Consolidated 2009 2008 Million Baht Million Baht -

Company 2009 Million Baht -

1,700 (966) 734

2008 Million Baht 2,567 (867) 1,700

183


184

Annual Report 2009

30 Related party transactions (continued) The following material transactions were carried out with related parties : (continued) (f) Loans to related parties and related interests (continued)

As at 31 December

Consolidated 2009 2008 Million Baht Million Baht

Company 2009 Million Baht

2008 Million Baht

Joint ventures 32 32

Beginning balance Loans advanced during the year Ending balance

-

32 32

-

Loans to subsidiaries EGCO Engineering and Service Company Limited On 22 November 2005, the Company entered into a long-term loan agreement with EGCO Engineering and Service Company Limited to lend Baht 780 million. The principal is to be repaid annually at the amount of Baht 45,882,350 from December 2009 to December 2025. The interest rate is MLR minus a certain margin and interest is payable on a semiannual basis. Loans to a joint venture National Energy Development Co., Ltd. On 25 September 2009, the Company entered into a shareholder loan agreement with Natural Energy Development Co., Ltd., a joint venture of the Company, for the total amount of Baht 32 million. The loan has a ďŹ xed interest rate. The principal and interest are to be paid one year after the drawdown date. (g) Investments in debentures issued by a subsidiary and related interests

As at 31 December

Consolidated 2009 2008 Million Baht Million Baht

Investments in debentures - Subsidiary

Company 2009 Million Baht

2008 Million Baht

-

-

18

22

-

-

4

5

For the years ended 31 December Interest income on investments in debentures of - Subsidiary

(h) Office building rental and service income The Company has entered into OfďŹ ce Building Rental, Service Charges and Management Agreements with subsidiaries and a joint venture in order to provide rental space and certain services speciďŹ ed in the agreements. The agreements are renewed yearly. The price for management services is calculated under the agreements on a cost plus basis.


Electricity Generating Public Co., Ltd.

30 Related party transactions (continued) The following material transactions were carried out with related parties : (continued) (h) Office building rental and service income (continued)

Company For the year ended 31 December Office building rental and service income - Subsidiaries Management fee - Subsidiaries - Joint venture

2009 Million Baht

2008 Million Baht

11 11

12 12

63 23 86

70 1 71

31 Commitments and significant agreements 31.1 Commitments and significant agreements of the Company (a) As at 31 December 2009, the Company had commitments under Sponsor Support Agreements, which were made in respect of loans of subsidiaries, totalling Baht 407 million. (b) As at 31 December 2009, the Company had commitments under the Counter Guarantee and Standby Letters of Credit issued on behalf of the Company to a subsidiary and joint ventures of Baht 1,632 million. (c) According to the Power Purchase Agreements (PPAs) between the Company’s subsidiaries and the Electricity Generating Authority of Thailand (EGAT) whose period between 15 years and 21 years, the subsidiaries have to provide bank guarantees, totalling Baht 140 million. The collateral is to be returned to such subsidiaries upon the expiry of the agreements. (d) The Company commits to administering its obligations in compliance with good corporate governance. The contingent liabilities are classified, in terms of default risk, into two categories: low-risk and high-risk liabilities. The default risk is managed based on such information. In addition, the Company has reserved for deposits at financial institutions in respect of commitments under the Standby Letters of Credit issued on behalf of the Company to a subsidiary totalling Baht 450 million as described in Note 9. (e) As at 31 December 2008, the common shares of BLCP were pledged as collateral for the long-term loans of BLCP as described in Note 13.3. 31.2 Significant agreements In addition to the PPAs with EGAT which is one of the Company’s major shareholders (as discussed in note 30), the Group had the following significant agreements. Water Supply Agreement A subsidiary of the Company has entered into a water supply agreement with the Provincial Waterworks Authority (PWA) for a period of 30 years. Under the agreement, the subsidiary is required to produce water for sale to PWA in Ratchaburi and Samutsongkram provinces. The PWA has an obligation to purchase water at the minimum volume and price agreed.

185


186

Annual Report 2009

31 Commitments and significant agreements (continued) 31.2 Significant agreements (continued) Fuel Purchase Agreements Subsidiaries of the Company have entered into gas purchase agreements with PTT Public Company Limited (PTT). These agreements are effective for a period of 21 years and can be extended for another four years. A subsidiary of the Company has entered into a heavy fuel oil purchase agreement with PTT. The agreement shall be effective for a period of three years from 1 January 2005 to 31 December 2008. The agreement has been extended by one year and can be extended automatically for further one-year periods (in the event that there is no cancellation of the automatic extension). Operation and Maintenance Agreements A subsidiary of the Company has entered into power plant operation and maintenance, and power plant equipment maintenance agreements with two customers. The agreements, totalling Baht 517 million, are effective for a period of five years and six years respectively. In addition, the subsidiary has also entered into a subcontract for Supply of Spare Parts with a third party. This agreement is effective for a period of 2 to 3 years. The total contract price is USD 14.48 million.

32 Business Transfer At the Annual General Shareholders’ Meeting held on 21 April 2008, shareholders approved the acquisition of the entire business of Rayong Electricity Generating Co., Ltd. (REGCO), a wholly owned subsidiary of the Company, on 1 July 2008 or any other date that would be determined by the president. Under the new Energy Industry Act B.E. 2550, the Company was required to carry out certain processes and was then subject to a public hearing conducted by the Energy Regulatory Commission in order to obtain approval for the business transfer. This process was completed on 14 August 2009. The subsidiary of the Company was to transfer all assets, liabilities and agreements with third parties to the Company at the book value of net assets as at 30 September 2009. The Company acquired the entire business of REGCO on 2 October 2009. At the extraordinary shareholders’ meeting of REGCO on 2 October 2009, approval was granted to dissolve REGCO, and REGCO registered its dissolution with the Ministry of Commerce on the same date. The Company received a return of share capital of Baht 4,960 million, and a gain from the liquidation of a subsidiary of Baht 257.8 million was recognised as expense in the statement of income for the year ended 31 December 2009. Details of net acquired assets are as follows :

Baht’000 Property, plant and equipment Other assets less other liabilities Book value of net assetsิ

5,809,426 (344,271) 5,465,155


Electricity Generating Public Co., Ltd.

32 Business Transfer (continued) After the acquisition of REGCO, the commitments and agreements made by REGCO, Power Purchase Agreements (PPAs) (Note 30 (a)) and Major Maintenance Agreements with EGAT (Note 30 (c)), were transferred to the Company. In addition, as at 31 December 2009, the net cash balance of REGCO was Baht 335.45 million and this will be transferred to the Company after the completion of the dissolution process.

33 Post balance sheet event of the Company Additional investment in a subsidiary On 6 January 2010, EGCO Engineering and Service Company Limited, a subsidiary of the Company, purchased additional ordinary shares in Egcom Tara Company Limited (Egcom Tara) from a third party, totalling 1,420,860 shares, which is equivalent to 4.12% of the total equity of Egcom Tara. The total consideration paid was Baht 28.42 million. This additional share purchase has increased the investment portion of the Group in Egcom Tara from 70.07% to 74.19%. Business transfer of a joint venture On 19 January 2010, Power Generation Services Co., Ltd. (PGS), a joint venture of the Company (Note 29), transferred its entire business including all assets, liabilities, and agreements with third parties to BLCP Power Ltd. (BLCP), another joint venture of the Company. Newly issued shares were used as a consideration upon the business transfer. PGS registered its liquidation with the Ministry of Commerce and transferred the investment in BLCP to the Company in return on the same date.

187


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Annual Report 2009

Audit Fee Audit Fee In 2009, the Company and its subsidiaries paid the audit fee of Baht 3,470,000 to the Office of the Auditors, comprising the Company’s audit fee of Baht 1,280,000 and subsidiaries’ audit fee of Baht 2,190,000. No audit fee had been paid to the auditors or other related parties to the auditors and the Auditors’ office.

Non-Audit Fee The following non-audit fee was paid by the Company and its subsidiaries. 1. Payment to the Office of the Auditors : In 2009, its subsidiaries paid non-audit fee of Baht 46,000 to the Office of the Auditors for the special purpose review. In additional, the Company and its subsidiaries would also be responsible for the expenses of undelivered work of Baht 1,850,000 to the Office of the Auditors for advice service on IFRS. 2. Payment to Other Related Parties of the Auditors’ Office : In 2009, the Company and its subsidiaries paid non-audit fee of Baht 8,103,822 to other related parties of the Auditors’ office for the special purpose review and advice service on enterprise risk management and there is no outstanding amount for the undelivered work. The engagements of the office of the Auditors and other related parties of the Auditors’ office to provide the non-audit work were reported to the Audit Committee to be not involved the conflict of interest or the review of their own work which would contaminate the independence judgment of the auditors.


Electricity Generating Public Co., Ltd.

Report on the donation on behalf of all shareholders who elect to receive the Annual Report in the electronic form Starting from 2004, the Company had the policy to present the annual report in CD ROM format to save the cost and to reduce tree cutting over the long term. The Company committed to make a donation to the “Thai Forest Conservation Foundation� which had the objective to conserve the environment on behalf of all shareholders who opt for electronic form. In 2009, the Company donated the cost saving in this regard to the Thai Forest Conservation Foundation on behalf of all shareholders in the amount of 2,195,398 baht. The Company thanks all our shareholders and stakeholders who have made this donation and the Company looks forward to your support in the future.

189


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Annual Report 2009

General Information Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

5,300

10

5,264.65

-

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

Khanom Electricity Generating Company Limited (KEGCO) IPP Office 12th Floor, EGCO Tower Electricity Generating and supply Tel. 66 0 2998-5000 business 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

5,000

10

4,850

99.99

EGCO Engineering & Service Company Limited (ESCO) Engineering, operation and Office 13th Floor, EGCO Tower maintenance services for power Tel. 66 0 2998-5000 plants and manufacturers Fax 66 0 2955-0933 Site Office 35 Rayong Highway No. 3191

400

10

400

99.99

Company Electricity Generating Public Company Limited (EGCO) Registration Head Office

Business Holding Company focusing on

0107537000866 (No.BorMorJor.333) Power business and others related 14th, 15th Floor EGCO Tower, 222 Moo 5, to power business Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9

Rayong Power Plant Bangkok Office 12th Floor, EGCO Tower Tel. 66 0 2998-5999 Fax 66 0 2955-0931 Rayong Office

Independent Power Producer (IPP) Electricity Generating and supply business

35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-1012, 66 0 3868-1016, 66 0 3868-1020 Fax 66 0 3868-1784

Sector

Energy & Utilities

Industry

Resources

Foreign Limit

44.81%

Share of Minor Shareholder (% Free Float) 51.90% Website www.egco.com

Subsidiaries Company

Business


Electricity Generating Public Co., Ltd.

Subsidiaries (continued) Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

EGCO International (B.V.I.) Limited (EGCO B.V.I.) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Overseas office Romasco Place, Wickhams Cay 1, PO Box 3140, Road Town, Tortola, British Virgin Islands

Holding company focusing on 11.65 /1 investment in electricity generating companies in foreign countries (350,000 USD)

33.2867 /1

11.65 /1

100

(1 USD)

(350,000 USD)

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

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

1,060

10

1,060

80

EGCO Green Energy Company Limited (EGCO Green) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9

Holding company focusing on power business

175

10

175

74

180

10

180

70.30

2

10

2

99.99

Company

Business

Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-2611-4 Fax 66 0 3868-2823

Roi-Et Green Energy Company Limited (Roi-Et Green) SPP utilizing Biomass as primary fuel (EGCO Green is the company’s 95.00% shareholder) Office 13th Floor, EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Site Office 222 Moo 10, Nua-Muang District, Amphur Muang, Roiet 45000, Thailand Tel. 66 0 4351-9825-6 Fax 66 0 4351-9827 Agro Energy Company Limited (AE) (ESCO is the company’s 99.99% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9

Trading/delivery service of fuel from natural scrap

191


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Annual Report 2009

Subsidiaries (continued) Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

345

10

345

70.076

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

14,000

10

13,784.35

50

Gulf Power Generation Company Limited (GPG) Independent Power Producer (IPP) (GEC is the company’s 100% shareholder) Electricity Generating and supply Site office 64 Moo 2 Ban Pa District, business Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. 66 0 3624-8305 Fax. 66 0 3624-8314, 66 0 3625-1344

9,607

10

9,607

50

Gulf Cogeneration Company Limited (GCC) (GEC is the company’s 100% shareholder) Site office 79 Moo 3 Tandeow District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. 66 0 3624-6531 Fax 66 0 3624-8020

850

10

850

50

Company Egcom Tara Company Limited (ET) (ESCO is the company’s 70.076% shareholder) Office 13th Floor, EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0945 Site office - Plant 1 332 Moo 2, Pongsawai District, Amphur Muang, Ratchburi 70000, Thailand - Plant 2 250 Moo 1, Pangpuay District, Amphur Damneansaduak Ratchburi 70130, Thailand

Business Piped water generating and supply business

Joint Ventures Company Gulf Electric Public Company Limited (GEC) Office 11th FL., M. Thai Tower I,

Business Holding company focusing on IPP and SPP

All Seasons Place, 87 Wireless Road, Lumpini, Phathumwan, Bangkok 10330, Thailand Tel. 66 0 2654-0155 Website

Fax 66 0 2654-0156-7 http://www.gulfelectric.co.th

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


Electricity Generating Public Co., Ltd.

Joint Ventures (continued) Company

Business

Nong Khae Cogeneration Company Limited (NKCC)

Small Power Producer (SPP)

(GEC is the company’s 100% shareholder) Site office 111/11 Moo 7 Nongplamor District,

Electricity and steam generating and supply business

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

1,241.72

74

1,241.72

50

981.54

76

981.54

50

460

10

460

50

569.28 /2

71.16 /2

569.28 /2

40

Amphur Nong Khae, Saraburi 18140, Thailand Tel. 66 0 3637-3676 Fax 66 0 3637-3691 Samutprakarn Cogeneration Company Limited (SCC)

Small Power Producer (SPP)

(GEC is the company’s 100% shareholder) Electricity and steam generating Site office 745 Moo 2 Bang Pu Mai District, and supply business Amphur Muang, Samutprakarn 10280, Thailand Tel. 66 0 2709-0751 Fax 66 0 2709-1842 Gulf Yala Green Company Limited (GYG) (GEC is the company’s 100% shareholder) Site office

SPP utilizing Biomass as primary fuel

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

Conal Holding Corporation (Conal)

Holding company focusing on

(EGCO B.V.I. is the company’s 40% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Overseas office 2286 Alsons Building, Pasong Tamo Extension, Makati City, Philippines Tel. 816-6740, 892-4632 Fax 814-0625

power business in the Philippines

Alto Power Management Corporation (APMC)

Operation and maintenance

(Conal is the company’s 60% shareholder) Overseas office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. 812-0294 Fax 812-1005

services for power plants and consulting

(800,000,000 (100 PESO) (800,000,000 PESO) PESO)

14.23 /2

71.16 /2

7.11 /2

(20,000,000 PESO)

(100 PESO)

(10,000,000 PESO)

24

193


194

Annual Report 2009

Joint Ventures (continued)

Western Mindanao Power Corporation (WMPC)

IPP

Registered Share Capital (Million Baht) 355.80 /2

(Conal is the company’s 44% indirect shareholder) Overseas office 2285 Solid House Building,

Electricity Generating and supply business

(500,000,000 (100 PESO) (451,600,000

Company

Business

Pasong Tamo Extension,

Par Value (Baht) 71.16 /2

PESO)

Paid-up Share Capital (Million Baht) 321.36 /2

Ownership Interest (Direct+Indirect) (%) 17.6

PESO)

Makati City, Philippines Tel. 812-0294 Site office

Fax 812-1005 Sitio Malasugat, Sangali, Zamboanga City, Philippines

Southern Philippines Power Corporation (SPPC)

IPP

(Conal is the company’s 44% indirect shareholder)

Electricity Generating and supply

Overseas office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. 812-0294

business

Site office

213.48 /2

71.16 /2

196.76 /2

17.6

(300,000,000 (100 PESO) (276,500,000 PESO) PESO)

Fax 812-1005 Bo. Baluntay, Alubel, Sarangani, Philippines

Quezon Power (Philippines), Limited Co. (QPL)

IPP

147.76 /2

147.76 /2

(207,641,268 PESO)

(207,641,268 PESO)

26

(EGCO B.V.I. is the company’s 26% indirect shareholder) Electricity Generating and supply Overseas office 62 H. dela Costa, Mauban, Quezon Province, Republic of Philippines Site Office Cagsiay 1, Mauban Quezon Province, Philippines

business

BLCP Power Limited (BLCP) IPP (Since January 30, 2007) Electricity Generating and supply Office No. 9, I-8 Road, business Map Ta Phut Industrial Estate, Amphur Map Ta Phut, Rayong 21150, Thailand Tel. 66 0 3892-5100 Fax. 66 0 3892-5199 Power Generation Services Company Limited (PGS) Operation and Maintenance of BLCP Office No. 9, I-8 Road, Map Ta Phut Industrial Estate, Amphur Map Ta Phut, Rayong 21150, Thailand

12,000

100

12,000

50

10

100

10

50


Electricity Generating Public Co., Ltd.

Joint Ventures (continued) Business

Company Nam Theun 2 Power Company Limited (NTPC)

IPP

Office

Unit 9, Tat Luang Road

Electricity Generating and supply

Nongbone Village, P.O. Box 5862

business

Vientiane, Lao PDR

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

14,979.01 /1

3,328.67 /1

11,748.31 /1

25

450,000,000

100

352,942,975

USD Million

USD

USD Million

24

10

24

33.33

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (%)

1,665

10

1,299.69

18.72

Tel. (856-21) 263 900 Fax (856-21) 263 901 Natural Energy Development Co., Ltd (NED) Office 45/F The Offices at Central World

Feasibility study on Renewable Energy project in Thailand

999/9 Rama 1 Road, Patumwan Bangkok 10330, Thailand

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

East Water Building 23rd - 26th Floors, 1 Vibhavadi Rangsit Road, Jompol, Chatuchak, Bangkok 10900, Thailand Tel. 66 0 2272-1600 Fax 66 0 2272-1601-3

Website

www.eastwater.com

Note : The Exchange rate as at December 30, 2009 /1, /3 1 USD = Baht 33.2867 /2 1 PESO = Baht 0.7116

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

195


196

Annual Report 2009

Referenced Persons Regulator

The Securities and Exchange Commission, Thailand GPF Witthayu Towers, 93/1 Wireless Road, Lumpini, Patumwan, Bangkok 10330, Thailand Tel 66 0 2695 9999, 66 0 2263 6499 Fax. 66 0 2256 7711 Corporate Affairs Department ext. 9535, 9509 E-mail : info@sec.or.th Website : www.sec.or.th

Regulator

The Stock Exchange of Thailand The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel 66 0 2229 2000 Fax. 66 0 2654 5649 S-E-T Call Center 66 0 2229 2222 E-mail : SETCallCenter@set.or.th 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 : contact.tsd@set.or.th 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.Somchai Jinnovart Certified Public Accountant (Thailand) No. 3271 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


Electricity Generating Public Co., Ltd.

Index of articles required for the 56-2 form (This is prepared in accordance with the notice of the Securities and Exchange Commission no. Kor Jor 40/2540 re : Criteria and Conditions of Information Disclosure on ďŹ nancial status and operation performance of Listed Company) Topics

Page No.

1. General Information

190

2. Financial Summary

018

3. Business Characteristics Business Operation

047

Revenue Structure

053

Industrial trend and Competition

054

4. Risk Factors

105

5. Risk Factors Shareholder

057

Management Structure

058

Director and Management Selection

069

Remuneration

071

Good Corporate Governance Report

077

Inside Information

082

Internal Control

102

6. Related Transaction

125

7. Management Discussion and Analysis

113

8. Financial Statements Financial Statement

137

Audit Fee

188

197


198

Annual Report 2009

Glossary 1. Companies EGCO

Electricity Generating Public Company Limited

Group companies, EGCO Group

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

AE

Agro Energy Company Limited

APMC

Alto Power Management Corporation

BLCP

BLCP Power Limited

CHC, Conal

Conal Holdings Corporation

DGA

Diamond Generating Asia, Limited

East Water

Eastern Water Resources Development and Management Public Company Limited

EGAT

Electricity Generating Authority of Thailand

EGCO BVI

EGCO International (BVI) Limited

EGCO Cogen

EGCO Cogeneration Company Limited

EGCO Green

EGCO Green Energy Company Limited

Egcom Tara

Egcom Tara Company Limited

ESCO

EGCO Engineering and Service Company Limited

GCC

Gulf Cogeneration Company Limited

GEC, Gulf

Gulf Electric Public Company Limited

GECC

General Electric Capital Corporation

GEN

Gulf Energy Company Limited

GIPP

Gulf IPP Company Limited

GPG

Gulf Power Generation Company Limited

GPIQ

GPI Quezon Company Limited

GYG

Gulf Yala Green Company Limited

KEGCO

Khanom Electricity Generating Company Limited

NED

Natural Energy Development Company Limited

NKCC

Nong Khae Cogeneration Company Limited

NMPC

Northern Mindanao Power Corporation

NTPC

Nam Theun 2 Power Company Limited

OneEnergy

OneEnergy Thailand Limited

QPL

Quezon Power (Philippines) Limited Company


Electricity Generating Public Co., Ltd.

REGCO

Rayong Electricity Generating Company Limited

Roi-Et Green

Roi-Et Green Company Limited

SCC

Samutprakarn Cogeneration Company Limited

SPPC

Southern Philippines Power Corporation

WMPC

Western Mindanao Power Corporation

2. Government Organizations EPPO

Energy Policy and Planning Office

ERC

Energy Regulatory Commission

NEPC

National Energy Policy Council

PWA

Provincial Waterworks Authority

SEC

Securities and Exchange Commission, Thailand

SET

Stock Exchange of Thailand

3. Other Institutions IOD

Thai Institute of Directors

JBIC

Japan Bank for International Corporation

4. Technical Terms Associated Company

A firm is an associated company if : A) listed company or its subsidiaries hold 20.00% (twenty percent) or more, but not more than 50.00% (fifty percent) of its overall voting stock. B) A listed company or its subsidiary has influence, but not controlling power, over its monetary and operational policies. (The company is not deemed to be a subsidiary or joint venture.)

Controlling Person

This is a shareholder or a person who, through their behavior, can significantly influence the policy, management and operations of a listed firm. This is irrespective of the source of their authority : through their rights, contracts, or any others. Specially, a “controlling person” includes, but is not limited to, one who : A) Has direct or indirect voted exceeding 25.00% (twenty-five percent) of the total company votes. B) Through their behavior, has control over the appointment or removal of company directors. C) Through their behavior, has de facto control or undue influence over policy, controlling those company members authorized to determine management and operational policies. D) Through their behavior, acts or has the power to act in the same manner as the company management. This includes those who hold other positions in the company, but are able to act in the same manner as the company management.

199


200

Annual Report 2009

COSO

The Committee of Sponsoring Organization of the Treadway Organization

IPP

Independent Power Producer

Major Shareholder

Such person is a one whose holding in a listed firm exceeds 10.00% (ten) of the listed company’s overall voting stock.

PDP

Power Development Plant

SPP

Small Power Producer

Subsidiary Company

Is : A) A company that a listed company holds over 50.00% (fifty percent) of its total voting stock. B) A company that the company referred to in (A) holds over 50.00% (fifty percent) of its total voting stock. C) A company that is held by another company in a chain of ownership, no matter how many number in the chain, ending with the company referred to in (B) and D) A company that the company referred to in (A), (B), or (C) hold over 50.00% (fifty percent) of its overall voting stock, either directly or indirectly. E) A company that the company referred to in (A), (B), (C), or (D) have controlling power over its monetary and operational policies, and are able to direct and gain interest on its activities. The holding of (A), (B), (C), or (D) is included those held by related persons.


ELECTRICITY GENERATING PLC. 222 EGCO Tower, Moo 5, Vibhavadi Rangsit Rd., Tungsonghong, Laksi, Bangkok 10210, Thailand Tel : 66 (0) 2998 5000, (0) 2998 5999 Fax : 66 (0) 2955 0956-9

www.egco.com


Egco 09