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FINANCIAL HIGHLIGHT FINANCIAL POSITION (CONSOLIDATED)

Total Revenue Operating Revenue

2008 33,854 33,724

2007 33,011 32,266

(Unit : Million Baht) 2006 33,992 32,593

- IPP Business - Cogen Business

10,859 22,864

10,162 22,104

10,705 21,888

EBITDA EBIT Normalized Net Profit Total Assets Total Liabilities Shareholders’ Equity Dividend Per Share (Baht)

7,294 4,850 3,784 70,083 39,885 30,198 1.654(1)

8,605 5,654 4,314 54,024 25,053 28,971 1.575(2)

9,052 5,933 4,602 54,609 28,169 26,440 2.850(3)

Note :

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(1) 1.054 Baht / share paid from 2007 results, 0.60 Baht / share paid from 2008 results (interim) (2) 0.975 Baht / share paid from 2006 results, 0.60 Baht / share paid from 2007 results (interim) (3) 2.250 Baht / share paid from 2005 results, 0.60 Baht / share paid from 2006 results (interim)

Annual Report 2008


(Unit ; Million Baht)

35,000

33,724

(Unit ; Million Baht)

32,266 32,593

(Unit ; Million Baht)

80,000

5,000

4,602 4,314 4,000

70,083 70,000

30,000

3,784 60,000

25,000 Cogen Business IPP Business

15,000

54,609

2007

2006

50,000

3,000

20,000

54,024

40,000 2,000

30,000

10,000

20,000 1,000

5,000

10,000 0

0

0

2008

2007

2006

OPERATING REVENUE

2008

2007

2006

NORMALIZED NET PROFIT

2008

TOTAL ASSETS

Key P&L performance indicator for Glow is Normalized Net Profit (NNP) • IPP business has an outstanding loan in USD which will be repaid by USD linked operating cash flows. • Under Thai GAAP the outstanding USD loan is converted at year-end in THB at the current exchange rate. Any difference in THB outstanding loan amount due to using a difference exchange rate compared to last year leads to an unrealized FX gain (THB appreciation) or loss (THB depreciation). • Since the USD loans in IPP business are served by USD linked cash flows the Unrealized FX gains / losses should, in Glow’s view, be ignored from an economic point of view. • Glow’s management has always and consistently focused on NNP ignoring unrealized FX gains / losses (substance over form).

Glow Energy Public Company Limited

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GENERAL INFORMATION GLOW ENERGY PUBLIC COMPANY LIMITED Head Office address Plant Location

Homepage Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Glow Phase 2 - Central Utilities Cogeneration Plant 3, 5, I - 4 Road, Map Ta Phut Industrial Estate, Muang District, Rayong 21150 Tel. (038) 684 078 - 80 Fax (038) 684 – 789 and : Glow Phase 4 - Central Utilities Cogeneration Plant : 11, I - 5 Road, Map Ta Phut Industrial Estate, Muang District, Rayong 21150 Tel. (038) 698 400 - 10 Fax (038) 684 789 : www.glow.co.th : Supply utilities (electricity, steam, clarified and demineralized water)

SUBSIDIARY COMPANY THAT THE COMPANY HOLDS SHARES OF MORE THAN 50% 1. GLOW COMPANY LIMITED Head Office address Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Provide management services, consultant services and management advisory for related companies

2. GLOW IPP COMPANY LIMITED Head Office address Plant Location

Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Glow IPP Power Plant 42 Moo 8, CIE - 8 Road, Hemaraj Chonburi Industrial Estate, Sriracha District, Chonburi 20230 Tel. (038) 345 900 - 5 Fax (038) 345 906 : Generate and Supply Electricity

3. GLOW SPP 1 COMPANY LIMITED Head Office address Plant Location

Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Glow SPP 1 Plant - Central Utilities Cogeneration Plant 10, Soi G - 2, Pakornsongkrawhrat Road, Hemaraj Eastern Industrial Estate (Map Ta Phut), Huaypong, Muang District, Rayong 21150 Tel. (038) 685 589 Fax (038) 685 104 : Generate and Supply Utilities including electricity, steam and demineralized water for industrial use

4. GLOW SPP 2 COMPANY LIMITED Head Office address Plant Location

Type of Business

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Annual Report 2008

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Glow Phase 3 - Hybrid Cogeneration Plant 11, I - 5 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Muang District, Rayong 21150 Tel. (038) 698 400 – 10 Fax (038) 684 789 : Generate and Supply Utilities including electricity and steam for industrial use


5. GLOW SPP 3 COMPANY LIMITED Head Office address Plant Location

Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : Glow Phase 3 - Hybrid Cogeneration Plant 11, I - 5 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Muang District, Rayong 21150 Tel. (038) 698 400 – 10 Fax (038) 684 789 : Generate and Supply Utilities including electricity, steam clarified and demineralized water for industrial use

6. GLOW DEMIN WATER COMPANY LIMITED Head Office address Plant Location

Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 - 9 : 9, Soi G - 2, Pakornsongkrawhrat Road, Hemaraj Eastern Industrial Estate (Map Ta Phut), Huaypong, Muang District, Rayong 21150 Tel. (038) 685 589 Fax (038) 685 104 : Generate and supply demineralised water for industrial use

7. GLOW IPP 3 COMPANY LIMITED Head Office address Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 – 9 : Investment and Development of power generation projects

8. GLOW IPP 2 HOLDING COMPANY LIMITED Head Office address Type of Business

: 195 Empire Tower 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. (66 2) 670 1500 - 33 Fax (66 2) 670 1548 – 9 : Investment in power generation companies

9. GHECO-ONE COMPANY LIMITED Head Office / Plant Location Type of Business • Number of Employees as of 31 December 2008 • Registered Capital as of 31 December 2008 • Paid up Capital as of 31 December 2008

: 11, I-5 Road, Map ta Phut Industrial Estate, Map Ta Phut, Muang District, Rayong 21150 Tel. (038) 698 400 - 10 Fax (038) 684 789 : Generate and Supply Electricity : 490 persons 120 persons are located at Bangkok and 370 persons at Plant : 14,828,650,350 baht : 14,628,650,350 baht

OTHER REFERENCES Bondholder’s Representative

Auditor

: Siam Commercial Bank Public Company Limited Tower 2, 3rd Floor, 1060 New Petchaburi Road, Makkasan, Rajatevee Bangkok 10400 Tel. (66 2) 256 2323 - 27 : Deloitte Touche Tohmatsu Jaiyos Audit Company Limited 183 Rajanakarn Building 25, 26, 28th Floor, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120

Glow Energy Public Company Limited

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MESSAGE FROM THE CHAIRMAN

In 2008 Glow Group (‘the Company’) achieved significant commercial successes which will ensure future profitable growth for both its cogeneration and its IPP Business, an achievement we can be proud of. Despite a difficult environment which has negatively impacted our profitability, the Company managed to deliver satisfactory financial results. In 2008, Glow Group recorded consolidated total revenues of Baht 33,751 million, a 4.33 percent increase from 2007. Our normalized net profit (‘NNP’ – net profit before unrealized foreign exchange gains and losses) was Baht 3,784 million, a 12.27 percent decrease which was mainly due to an increase in fuel which was not accompanied by a corresponding increase in electricity tariff, as well as a reduction in demand of our industrial customers during the last quarter due to the economic downturn.

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Annual Report 2008


However, the outlook for our business is very promising. Our subsidiary, GHECO-One, was one of the winning bidders in the 2007 IPP solicitation. In 2008, GHECO-One, a 660 MW coal-fired project, obtained its EIA license and executed a Power Purchase Agreement with Electricity Generating Authority of Thailand (‘EGAT’). The construction of the plant began in mid 2008 and is currently progressing on schedule with a target commercial operation by the end of 2011. This plant will be the most efficient and environmentally friendly coal-fired power plant in Thailand and will support Thailand’s fuel diversification policy as well as contribute in providing stable and affordable electricity prices to consumers.

Our CFB3 cogeneration project is progressing, is on schedule and should reach commercial operation by the end of this year. Additionally, we started construction of Phase 5, a 382 MW gas-fired cogeneration plant, in second half of 2008, which should come into operation in the second half of 2011. These two plants will provide power and steam to several petrochemical customers expanding their production as part of third expansion phase of Map Ta Phut. In parallel to our focus on growth, the Company continues to focus on the need to develop social welfare within the surrounding communities and strong protection of environment. Maintaining sustainable relationships and contributing to the improvement of the quality of life within our communities is an integral part of our corporate culture. Our new plants utilize state of the art emission control technologies and we are also further improving the emission control systems of our existing plants which at this point already fulfill all Thai regulations and World Bank guidelines. On behalf of the Company’s Board of Directors, I would like to express my gratitude to all executives and employees of the Company for their dedication and hard work towards the success of our company as well as their contributions to society. I would also like to thank our shareholders, customers, investors, financial institutes, public and private sectors including the local communities for the trust and continued support of our business.

Mr. Guy Richelle Chairman of the Board

Glow Energy Public Company Limited

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MESSAGE FROM THE CEO

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Annual Report 2008


FINANCIAL RESULTS (Unit : Million Baht)

(Unit : Million Baht)

(Unit : Million Baht)

- Cogen Business - IPP Business

OPERATING REVENUE

EBITDA

NORMALIZED NET PROFIT

Due to mainly external circumstances 2008 was a challenging year to Glow, throughout the year, we were facing a situation where gross margin was reduced as a result of increasing fuel prices and limited increase in Ft. We implemented various cost saving measures and our financial results for the first three quarters of the year were still in line with the previous year. However, because of weakening demand from our industrial customers due to economic downturn combined with effects from unplanned outage of some of our plants in the last quarter of 2008, our NNP (Normalized Net Profit) for the year dropped to 3,784 MTHB, a decrease of 12.27% from 2007.

Glow Energy Public Company Limited

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THE STRATEGY OF GLOW Glow’s objectives remain balanced between achieving long-term and short-term financial targets, both accounting and cash, while prudently taken into consideration the boundary conditions for proper and sustainable business including corporate social responsibility.

Cash

Earnings

Shareholders Value Creation - Long Term, risk adjusted Free Cash Flow - Short Term, dividend policy

EBITDA and NNP (Thai GAAP) Reduce earning volatility

Actions • • • • •

Commercial Financial Operational Human Resources Social

Boundary Conditions

Managerial Fundamentals

Risk Management (Legal and Corporate) Compliance Commodity risk management (FX, interest, gas, coal)

Quality management (Reliability of decision-making and reporting based on standardized documented processes, automated tools / systems and highly qualified & motivated workforce who adheres to values & culture of Glow)

Social Responsibility Strengthen educational support, government relations, community relations, environmental care

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Annual Report 2008


KEY TARGET 2009 : IMPLEMENTATION OF EXPANSIONS

GHECO-One will sell all of its capacity to EGAT under 25-Year Power Purchase Agreement signed in September 2008. CFB 3 and Phase 5 projects will serve industrial customers in Map Ta Phut We have currently three major expansions projects under area and all of CFB 3 capacity is already contracted as well as most of the Phase 5 capacity. construction : • 115 MW coal-fired cogeneration project (CFB 3)

The construction of all of these projects is currently progressing in accordance with the planned time schedule and budget.

• 660 MW coal-fired IPP project (GHECO-One) We trust that with commitment of dedicated and professional employees, support from our long standing customers and suppliers and co-operation with authorities and local These three projects will increase our generation capacity by communities, we will manage to complete these expansions as approximately 60% after entering into commercial operation in planned and develop our business further in a sustainable manner. 2009 (CFB 3) and 2011 (GHECO-One and Phase 5). • 382 MW gas-fired cogeneration project (Phase 5)

Mr. Esa Heiskanen Chief Executive Officer

Glow Energy Public Company Limited

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VISION, MISSION, CORPORATE CULTURE

VISION Glow vision changes to include expansions outside Thailand.

OPERATIONAL EXCELLENCE • • • •

Focus on reliability and improvement of heat rates Reduce production costs and increase productivity Improve fuel management and efficiency Focus on completing expansions, meet the targeted schedule and performance • Reduce cost of capital • Improve reporting and management tools and processes • Improve customer intimacy and satisfaction

PROFITABLE GROWTH • Expand Cogen businesses in Thailand by selling steam and electricity to high-load industrial customers who value reliability • Expand IPP business in Thailand • Expand business in Laos and seek new business in Cambodia • Follow key customers when they pursue petrochemical projects in ASEAN countries, to the extent that a full operational integration in Glow’s activities makes sense and allows for synergies

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Annual Report 2008


MISSION Glow mission focuses on value creation for shareholder’s and customers and on environmental and social responsibility

CREATE VALUE FOR OUR SHAREHOLDERS AND CUSTOMERS IN A SUSTAINABLE MANNER THROUGH: a) b) c) d) e)

Reliable products and services Operational excellence Profitable growth Committed and knowledgeable employees A network of expertise

PERFORM THE BUSINESS IN A SUSTAINABLE RELATIONSHIP WITH THE ENVIRONMENT AND WITH THE SOCIETY: a) b) c) d)

Environmentally responsible projects Develop the quality of life of communities in areas where we do businesses A prime focus on environment health and safety for our employee, contractors and the surrounding communities Provide expertise and support to the development of the Thai energy sector if valued by the authorities

CORPORATE CULTURE : CACSS 1. Communication : Openly communicate with bosses / subordinates and internal / external customers 2. Adaptability : Adjust and thrive in an environment where tasks, assignments, priorities and surrounding do change 3. Commitment : Finish what you start and commit to tasks assigned and take accountability and responsibilities when problems arise 4. Social Partnership : Develop and maintain a sustainable relationship with the environment, community and society 5. Sustainable Business Relations : Develop and maintain a long-term relationship and commitment to all business partners (suppliers, customers, equity investors) through loyal, honest, and sincere conduct.

Glow Energy Public Company Limited

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GOOD CORPORATE GOVERNANCE The Company follows the prudent supervision control principles according to guidelines prescribed by the Stock Exchange of Thailand as follows:

RIGHTS OF SHAREHOLDERS The Board of Directors of the Company has established the corporate governance policies concerning the shareholders’s basic rights as follows: 1. Rights to buy, sell or transfer shares 2. Rights to share in the profit of the company 3. Rights to have access to the company’s information in a timely fashion and on a regular basis 4. Rights to participate and vote in the shareholders meeting including the rights to • Elect or remove members of the Board • Propose and approve the appointment of external auditor • Participate in the decision making of any transactions that affect the Company and/or the shareholders in a material manner The Company has facilitated the shareholders during each shareholder’s meeting by preparing the appropriated meeting venues which correspond to the number of shareholders participating in the meeting. The Company also sends each shareholder a letter of invitation to the meeting together with an agenda and clear, complete and adequate information to be used with each agendum 7 days in advance of the meeting date. Each agendum also has commendations of the Board of Directors of the Company. Moreover, the Company prepares the accurate and complete minutes of each meeting to be made available for inspection by the shareholders on the website of the Company. The Company has also developed a process allowing the shareholders to propose agenda or questions to the company or contact person for the shareholders’ meeting through Company website.

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Annual Report 2008


In 2008, the Company has arranged 1 Annual General Meeting of Shareholders and 1 Extraordinary General Meeting of Shareholders No.1/2008. During the shareholders’ meeting, the Chairman of the meeting allows every shareholder to equally examine business operations of the Company. Shareholders were welcome to voice any queries, express their opinions and make other suggestions.

stakeholders have been protected and treated well. The Company places importance on the rights of all stakeholders groups such as employees, customers, business partners, business competitors and the overall societies. The operating guidelines for the directors, executive officers and employees are clearly defined as the business practice in the Code of Conduct section of the Corporate Governance Policy.

EQUITABLE TREATMENT OF SHAREHOLDERS Under the Company’s Corporate Governance Policy, it is the duty of the Board of Directors to facilitate the minority shareholders to propose, in advance of the meeting date, any issues for consideration in the shareholders meeting. The Board of Directors has established a procedure to allow the shareholders to make proposals including a procedure to nominate candidates. The detailed procedures and criteria can be found on the Company website. The Board of Directors has approved the Insider Trading Policy to prevent the abusive use of inside information and has communicated this policy to everyone in the company via the Company website. Moreover, when directors and certain executives of the Company, who are considered as being in the position of an Informed Function, buy/sell shares of the Company, they are required to submit a report on ownership (Form 59-2) to the SEC within 3 days.

ROLE OF STAKEHOLDERS The Company acknowledges and is fully aware of the rights of the stakeholders. It is the Company’s policy to encourage the cooperation between the Company and the Stakeholder in enhancing the mutual interests as well as ensuring that the

The Board of Directors has also established The Audit Committee to examine the key operations of the company. The Audit Committee’s duties shall involve auditing/governing the Company’s operations, financial reports and internal control systems, the selection of auditors, and the consideration of conflicts of interest, including risk management. The Audit Committee scope and responsibilities are described in the Audit Committee Charter. The Board of Directors has approved the Environmental Policy to ensure continuous and sustainable development of its core business, without compromising the ability of the current and the future generation to enjoy the environment. In addition, The Board of Directors has also approved the Health and Safety Policy so that the Company pays full attention to the health and safety concerns that affect our employees, clients and the community.

DISCLOSURE AND TRANSPARENCY Information related to the Annual General Shareholder Meeting, Ethics Charter, Health, Safety & Environmental Charter, Code Of Conduct, Insider Trading, Ethic Officer contact details, Ethical and Social policies and other relevant information approved by the Board of Directors, have been provided through various channels such as the company’s annual reports and website.

Glow Energy Public Company Limited

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In addition to disclosing information, as specified in relevant regulations, through the channel of the SET, Form 56-1, and annual reports, the Board of Directors has designated the Finance & Investors Relation Department to disseminate information to shareholders and other stakeholders and to equitably and appropriately assist investors and securities analysts to understand the company and its business. Information posted in the company’s website is both in Thai and English. In addition, Communication Department has been assigned to widely publicize timely corporate information and performance data via various media. The Board of Directors is responsible for the consolidated financial position of the Company and its subsidiaries as well as the financial information as appears in the Company’s annual report. Such financial statements are prepared in accordance with the generally accepted accounting principles of Thailand by using the appropriate accounting policies, by adhering to them constantly and by carefully using the best judgment. The important information is adequately disclosed in the note to the financial statements. The Board of Directors has established an effective internal control system to ensure that the report and the accounting information are accurate, complete and adequate enough to maintain the assets and to prevent the loss, dishonest conduct or other ill-operations which might result in damage to the Company. The Company has disclosed the roles and responsibilities of the Board of Directors together with these of the committees in the Directors Charter of Corporate Governance Policy. In 2008, the Board of Directors has arranged 4 ordinary meetings and 7 extraordinary meetings. The participation of each director can be summarized as follows:

THE ATTENDANCE OF THE DIRECTORS IN 2008 NAME 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Note :

Mr. Guy Richelle Mr. Peter Valere Germain Termote1 Mr. Esa Heiskanen2 Mr. Kovit Poshyananda Mr. Vitthaya Vejjajiva Mrs. Supapun Ruttanaporn Mr. Dirk Achiel Marc Beeusaert Mr. Guido Geeraerts Mr. Johan De Saeger Mr. Rajit Nanda3 Mr. Michel J. G. Gantois4 Mr. Philip De Cnudde5 Mr. Pierre Jacques Weulersse6 Mr. Anut Chatikavanij Mr. Brendan G. H. Wauters

POSITION HOLDING 30 April 2008 30 April 2008 7 October 2008 25 April 2007 30 April 2008 25 April 2007 25 April 2007 25 April 2007 28 April 2006 28 April 2006 26 February 2009 28 April 2006 26 February 2009 30 April 2008 28 April 2006

PARTICIPATION / TOTAL MEETING ORDINARY MEETING EXTRA-MEETING TOTAL 4/4 2/4 1/4 4/4 4/4 4/4 2/4 2/4 3/4 2/4 0/0 1/4 0/0 3/4 3/4

6/7 5/7 0/7 6/7 7/7 6/7 1/7 0/7 5/7 4/7 0/0 0/7 0/0 7/7 5/7

10/11 7/11 1/11 10/11 11/11 10/11 3/11 2/11 8/11 6/11 0/0 1/11 0/0 10/11 8/11

1. Resigned from the company’s director and Chief Executive Officer on 7 October 2008. 2. Replaced Mr. Peter Valere Germain Termote in his position as Director and Chief Executive Officer on 7 October 2008. Was an Executive Vice President and Chief Projects Development and IPP Business from 3 March 2005. Was an Executive Vice President and Chief Projects Government Affairs from 1 September 2004. 3. Resigned from the company’s director on 26 February 2009. 4. Replaced Mr. Rajit Nanda as Director on 26 February 2009. 5. Resigned from the company’s director on 26 February 2009. 6. Replaced Mr. Philip De Cnudde as Director on 26 February 2009.

The process of setting and evaluating the objectives related to the determination of the remuneration of the Executive Vice Presidents and the CEO (not individual remuneration) will be disclosed to the Board of Directors in the annual report and the website. The disclosed remuneration figures of directors and management in the annual report will remain aggregated and will not be individualized. The individual

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Annual Report 2008


remuneration of the Executive Vice Presidents and CEO will be disclosed to the remuneration committee.

RESPONSIBILITIES OF THE BOARD 1. BOARD STRUCTURE • The Board of Directors has an adequate and appropriate number of directors according to the size and the operation of the Company by having a total of 12 directors, consisting of 1 director who is in a management position, and 11 non-management directors. Of all directors, 3 are independent. The number, definition, role and responsibilities of Board of Directors shall be complied the rule and regulations to be issuance.

as required by the Company. This is to enable the directors to work for the best interest of all shareholders on an equitable basis and to prevent conflicts of interest between the Company and management of major shareholder(s) or other companies having management/ major shareholders in common. In addition, directors must also be able to express their opinion independently.

• The term of service of directors has been clearly stated in Glow’s Corporate Governance policy as follows: - Board members will be elected for a period of three (3) years, after which the members need to resign. - Resigned member may be nominated again. - During any rotation period, no more than one third of the directors should be rotated to ensure continuity. - During the implementation phase, some members may serve an additional year to ensure that the rotation policy could be implemented effectively.

• According to The Direct Charter of the Glow Corporate Governance Policy, each Director shall dedicate the necessary time and attention to fulfill his duties. Should a Director propose to accept another Directorship in addition to that (or those) held at the time of his appointment (with the exception of such position with an unlisted group company), this fact has to be brought to the attention of the Chairman of the Board’s Committee in charge of appointments with whom they are to assess whether such new responsibilities would leave them the time necessary to be devoted to their Director responsibilities. In addition, each Director shall inform the Board of Directors completely and beforehand of any real or potential conflict of interest, direct or indirect, which they may have. Any Director with such a conflict must not participate in any discussion of any such topic and on voting on it.

• As specified by Glow’s Corporate Governance Policy, directors must be independent according to the SEC’s notification regarding the qualifications and scope of work of the Audit Committee, including other qualifications

• The roles and responsibilities of the Chairman are different from those of the CEO. As described by the Glow’s Corporate Governance Policy, the board should separate the roles and responsibilities of both positions

Glow Energy Public Company Limited

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so that the Board, under the guidance of the Chairman, has authority and is able to control the management’s operations effectively and efficiently. • The Company’s Board of Directors has assigned the Vice President - Finance & Investor Relations as the company secretary to serve the Board of Directors in areas of taking care of the Board’s activities and monitoring compliance to the Board’s resolutions.

2. COMMITTEES The Company’s Board of Directors has appointed the sub-committee to help with supervising the Company’s business operations as follows: AUDIT COMMITTEE The Audit Committee consists of 3 directors. A member of the Audit Committee may serve for a maximum of 6 consecutive years, counting for practical purposes as of 1 April 2005 listing. To ensure continuity, a maximum of one third may be replaced in any given 24 months period. All of the Audit Committee members are independent directors. The Audit Committee shall hold at least 4 meetings per year. In 2008, there were 7 audit meetings. The Audit Committee is comprised of 3 committee members as follows : NAME 1. Mr. Kovit Poshyananda 2. Mr. Vitthaya Vejjajiva 3. Mrs. Supapun Rattanaporn

POSITION Chairman of the Audit Committee Audit Committee Members Audit Committee Members

Scope of Authority and Responsibilities of the Audit Committee • To review the sufficiency, credibility and objectivity of the financial reporting by coordinating with the external auditors and management responsible for preparing the quarterly and yearly financial reports and to suggest issues or matters to be included for review or audit by the external auditors during its audit of the company. • To review the adequacy and effectiveness of internal control systems and internal audit functions by coordinating with the external auditors and internal auditors. • To review compliance with the Securities and Exchange Acts, Regulations of the SET, and any other relevant laws of Thailand.

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Annual Report 2008

• To consider and advise the appointment of the external auditors including the audit fee by considering the credibility, the adequacy of its resources, the volume of engagements, and the experience of its supervisory and professional staff. • The Audit Committee should also keep the nature the nonaudit services under review. The Audit Committee should set and apply a formal policy specifying the types of nonaudit services; - Not permissible; - Permissible after the review of the Audit Committee; and - Permissible without the referral to the Audit Committee. • To consider the appropriate disclosure of all connected transaction and any conflict-of-interests matters in conformity of relevant rules and regulations. • To take care of other matters assigned to it by the Board of Directors and agreed to by the Audit Committee. • To report the activities of the Audit Committee in the company’s annual report, which shall be signed by the Chairman of the Audit Committee. • To act as the Corporate Governance Committee to ensure that the Company has in place and effectively complies with a corporate governance framework to protect the reputation of the company and the interest of all stakeholders. THE NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee, comprises of 3 members of the Board, of which 1 is an independent director. The Nomination and Remuneration committee’s role is to select appropriate candidates to be proposed for the positions of director and CEO. The nomination process shall be set up in accordance with certain criteria and shall be transparent. The Nomination and Remuneration Committee shall also consider the guidelines for the remuneration of the Board, the CEO and the executives directly reporting to the CEO, to ensure that the basis is fair and reasonable for submission to the Board and the shareholders’ meeting for approval. The Nomination and Remuneration Committee’s scope and responsibilities are described in the Nomination and Remuneration Committee Charter.


The Nomination and Remuneration Committee is comprised of 3 committee members as follows : NAME 1. Mr. Guy Richelle 2. Mr. Dirk Achiel Marc Beeuwsaert 3. Mr. Vitthaya Vejjajiva

POSITION Chairman of the Nomination and Remuneration Committee Member Member

Overall Purpose / Objectives • The role of the Nomination and Remuneration Committee is to propose to the Board of Directors (“the Board”), in the first instance, any new appointments, whether of executive or of non-executive directors, and recommend a successor to the Chief Executive Officer when considered necessary. The Committee will review Board membership on a regular basis, considering inter alia the length of service of members, their contribution to the work of the Board and the breadth of expertise of the Board as a whole. • The Committee is also responsible for recommending to the Board the remuneration arrangement for non-executive and independent members of the Board. • In performing its duties, the Committee will maintain effective working relationships with the Board, and each Committee member will obtain an understanding of the detailed responsibilities of Committee membership as specified in this Charter under the Corporate Governance Policy.

• The Committee shall define on behalf of the Board of Directors (“the Board”) and the shareholders, Glow’s remuneration policy for the Chief Executive Officer and Executive Vice Presidents (“senior executives”), and to determine their specific remuneration, benefits and terms of employment including pension rights and any compensation payments and to monitor implementation of Glow’s human resources vision and strategy. Authority • The Board authorises the Nomination and Remuneration Committee, within the scope of its responsibilities, to propose candidates with proper qualifications to the Board, and make all decisions relevant to this Charter (other than where Board approval is specifically required). • The Board authorises the Nomination and Remuneration Committee, within the scope of its responsibilities, to make all decisions relevant to its Charter (other than where Board approval is specifically required) and have access to professional advice inside and outside Glow at Glow’s expense, subject to the prior approval of the Board. Roles and Responsibilities Nomination • Review and recommend the criteria for Board membership and required qualifications.

Glow Energy Public Company Limited

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• Review the composition, size and experience of the Board on a regular basis, including current and future requirements, having regard in part to regulatory constraints.

• Establish guidelines for remuneration on the initial appointment of the CEO and the Executive Vice Presidents of Glow.

• Make recommendations to the Board of candidates with proper qualifications for the Board to submit for appointment to the annual general shareholders meeting.

• Ensure that a proper system of long and short-term compensation is in place to provide performance-oriented incentives to management.

• Seek proposals of individuals for appointment as independent members of the Board.

• Monitor implementation of Glow’s human resources vision and strategy, including management development programs for senior executives.

• Ensure that new members to the Board participate in the orientation program for new directors. • Review and recommend to the Board the remuneration arrangements for non-executive and independent members of the Board, including their responsibilities for Committee activities, for subsequent approval by shareholders. • Make recommendations to the Board for the successor to the Chief Executive Officer when considered necessary. • Develop a succession plan for the Chief Executive Officer that considers both potential internal and external candidates. Remuneration • Review Glow’s annual remuneration strategy and recommend strategy to the Board for endorsement.

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Annual Report 2008

• Evaluate the Chief Executive Officer’s performance based on a personal development plan, which incorporates shortterm and long-term objectives together with performance targets linked to Glow’s strategy. Determine the salary and benefits annually at the end of each financial year. • Ensure that Glow’s remuneration packages are competitive in view of industry practices, and judge where to position Glow relative to other similar companies with respect to salaries and relevant performance of comparable banks. • Provide a remuneration policy and package designed to attract, retain and motivate staff of outstanding ability and of the quality required but, the Committee should avoid, where possible, paying more than is necessary for this purpose.


• With respect to early retirements for the Chief Executive Officer and senior executives, the Committee should avoid rewarding poor performance, while dealing fairly with cases where departure is not due to poor performance. • Ensure that succession plans for CEO and EVPs are reviewed periodically, through assessment of specific senior executive positions and qualified potential replacements. Salary and Benefits of CEO and EVPs. • Review the salary and benefits of the Chief Executive Officer (CEO) and on the recommendation of the CEO, review the salaries, and benefits of the Executive Vice Presidents (EVPs) individually, at the end of each financial year.

Pensions and Life Assurance of CEO and EVPs • Assess reasonableness of pensions and life assurance benefits for the Chief Executive Officer and EVPs. In general, pensionable salary should not include annual bonuses or the value of other contingent benefits. Aggregate Salary and bonuses of VP and SVP • Review the aggregate salary, benefit and bonus package of the Vice Presidents (VPs) and Senior Vice Presidents (SVPs) of the company with a review of individual package that exceed the maximum level under the applicable Glow grading system. Notice Period for Resignation of CEO and EVPs • Establish notice periods for the Chief Executive Officer and EVPs at initial appointment. Notice periods should not be less than 3 months.

Bonus of CEO and EVPs. • Operate an annual performance related bonus scheme for the Chief Executive Officer and Executive Vice Presidents. Approve the objectives and the compensation • Approve the terms and conditions of early retirements (which for Executive Vice Presidents is proposed by the for the Chief Executive Officer and EVPs. CEO). Annual performance bonus should be a percentage of base salary and depend upon the achievement of 3. ROLES AND RESPONSIBILITIES OF THE BOARD individual performance targets which reflect Glow’s • The Company’s Board of Directors has clearly specified the strategic objectives and the individual’s contribution to roles, duties and responsibilities of the directors and the such objectives. Bonuses should be aligned to give the management. The Board of Directors has appointed the Chief Executive Officer and Executive Vice Presidents President to be responsible for management of the daily incentives to perform at the highest levels. operations of the Company. The Board shall approve the vision, mission, strategy, goals, business plan and budget of Share Options issued by Glow the Company presented to it by the management. In • Make recommendations to the Board on executive share addition, the Board of Directors has the internal control options in Glow. mechanism for supervising, monitoring and evaluating the Glow Energy Public Company Limited

27


operational results of the management by using operating objectives bases in measuring the operations of the management and the employees. • The Board of Directors has set up policies to encourage the business undertaking for maximum benefits in parallel with the encouragement of business undertaking with ethics. In order to create an organization with standardized plans and operations and to ensure that all parties will be treated equally and fairly, the Board of Directors has established the Code of Conduct of the directors, the management and the employees for their acknowledgement, compliance and adherence in performing the Company’s business missions.

• The Company’s Board of Directors has the internal control systems in place that cover all aspects such as finance, operations and management so as to be in accordance with the related laws, rules and regulations. There are also the auditing and balance of power mechanisms which are effective enough to protect and oversee the shareholders’ capital and company’s assets. The delegation of authority and responsibilities of the management and the employees is prescribed in an orderly manner. • The Board of Directors has established a risk management policy to cover all activities of the Company. Business risks are assessed twice a year. Also, risks are discussed during Board of Directors’ meetings and monthly management meetings.

• In order to prevent the occurrence of conflicts of interest, the Board of Directors has established the policies and 4 BOARD MEETINGS operating guidelines to prevent directors and employees of • The Board of Directors has at least 4 fixed and confirmed the Company from exploiting for personal benefits by not meetings a year during the months of February, May, August allowing the directors and the employees to perform any and November to consider and approve the quarterly related transaction, which might cause conflicts of interest financial statements and extraordinary meetings may be of the Company. In cases where it is necessary to perform arranged if and when necessary. For each meeting, a clear the related transaction, the Board of Directors has specified agenda is specified with correct, complete and adequate that such operation must be in accordance with criteria supporting documents submitted to each director at least 7 specified by the SET by having the price and conditions as if days in advance of the meeting so that the director can it was making the transaction with third parties. have time to study the information before attending the Furthermore, the directors or the employees who will meeting. Each director can openly discuss and express his/ benefit from such transaction shall not be allowed to her opinion. The Chairman will collect all comments and participate in the approval process. summarize information gathered from the meeting.

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Annual Report 2008


• The Company’s secretariat shall record the minutes of the meeting in writing. Minutes of meeting of the previous meetings, which have been approved from the Board of Directors’ meeting, shall be kept and made available for the directors and concerned parties to inspect at any time.

its individual directors has been conducted. Evaluations will not be disclosed. The non-executive directors, led by the senior independent director, should be responsible for the performance evaluation of the Chairman of the Nomination and Remuneration Committee, taking into account the views of the executive directors.

5 BOARD SELF ASSESSMENT • Every year, the Board will undertake a formal and rigorous 6 REMUNERATION annual evaluation of its own performance and that of its • The Company has established the Nomination and committees and individual directors. Remuneration Committee whose main roles are to propose to the Board of Directors, in the first instance, any new • The Chairman of the Nomination and Remuneration appointments, whether of executive or of non-executive Committee ensures that every 2 years, the members of the directors, and recommend a successor to the Chief Board will assess the performance of the Board and its Executive Officer when considered necessary. The member committees as a whole or specifically to the Committee will review Board membership on a regular issues, not to any director. Over a period of time, the Board basis, considering inter alia the length of service of will develop a benchmark of its performance year-on-year. members, their contribution to the work of the Board and the breadth of expertise of the Board as a whole. • The Chairman of the Nomination and Remuneration • The Committee is also responsible for recommending to Committee ensures that every 2 years each individual Board member is evaluated in its capacity as a member of the the Board the remuneration arrangement for non-executive Board or member of one of its committees. Individual and independent members of the Board. The Committee evaluation is aimed to show whether each director shall define on behalf of the Board of Directors and the continues to contribute effectively and to demonstrate shareholders, Glow’s remuneration policy for the Chief commitment to the role (including commitment of time for Executive Officer and Executive Vice Presidents and to Board and committee meetings and any other duties). determine their specific remuneration, benefits and terms of employment including pension rights and any compensation payments and to monitor implementation of • The chairman (of the Board) will act on the results of the Glow’s human resources vision and strategy. performance evaluation by recognizing the strengths and addressing the weaknesses of the Board and, where appropriate, proposing new members to be appointed to 7 BOARD AND MANAGEMENT TRAINING the Board or seeking the resignation of directors. • New directors shall be provided with a Directors Package so that they may perform their duty effectively. They shall • In the annual report, the Board will disclose that the also attend a Directors training within 6 months of taking performance evaluation of the Board, its committees and their post.

Glow Energy Public Company Limited

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GLOW IS PROUD TO PLAY VITAL PART IN COMMUNITY AND SOCIAL DEVELOPMENT

Glow Group has been implementing social development programs in the communities nearby its plants since the start of operations over 15 years ago. Social partnership and conducting our business in sustainable manner are part of our culture. We care about the people, the communities and the natural environment where we conduct our business.

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Annual Report 2008


Some of the Corporate Social Responsibility activities we undertook in 2008 were :

1. COMMUNITY AND SOCIAL DEVELOPMENT ACTIVITIES • Glow Group together with Energy Assistance and the Office of Her Royal Highness Princess Sirindhorn’s Projects developed the mini hydropower to produce power in the Ban Kong Po Tai, Omkoi District, Chiang Mai. After successfully operating the power plant, there is a need to further develop an irrigation system which water come from mini hydropower plant. This project will make the villagers there having water for agricultural purpose all year round. In 2008, Glow continued to support rural development projects in collaboration with the Office of Her Royal Highness Princess Sirindhorn. In particular, the Company supported both technically and financially installation of mini hydropower plant for hill tribe village in Chiang Mai. This project is continued with study on immigration project downstream from the mini hydropower plant. The construction phase will be started in 2009. • The Company has contributed throughout the year to the Energy funds for the development of the local communities near to its power plants. • The Company has worked together with the Quality of Life and Environment Development Foundation to help to develop communities in Map Ta Phut and Ban Chang.

• The Company has supported together with ‘Strong Rayong Foundation’ projects developing agriculture, industry and tourism in Rayong. • The Company has supported recycling project in Map Ta Phut Muslim community.

2. EDUCATIONAL ACTIVITIES • Glow, in collaboration with Rayong Province and the Industrial Estate Authority of Thailand, jointly arranged ‘Rayong English Camp 2008’ for students in Map Ta Phut and Ban Chang. • Glow together with Rayong Province, Map Ta Phut Municipality and the Office of Rayong Education Service Zone 1 jointly arranged tutoring program for local high school students preparing for university entrance examination. The program included pre-entry test and review of O-Net and A-Net subjects. • Glow granted two scholarships for undergraduate students selected from participants to 2007 session of tutoring program for university entrance examination. • Glow launched new website “www.glowfamily.in.th” based communication channel between Glow and the youth who participate in various educational projects. It serves to update on educational information and other activities arranged by Glow Group.

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• Glow Group also continually contribute to the Children and Youth Development Fund in Remote Areas under the Office of Her Royal Highness Princess Sirindhorn’s Projects. In 2008, Glow Group contributed to the development of Mae Wah Luang School, Tak province in the amount of 780,000 Baht for educational development of the hill tribe youth who live in the remote areas. • Activities to disseminate information on new power plant project • The Company supported Wat Nong Fab temple’s Computer Learning Center which provides access to use of computers to people from local community, including students, monks and novices.

3. HEALTH CARE AND SPORT ACTIVITIES • Glow organized Mobile clinic providing doctors and nurses from leading hospital for medical check-up in local communities surrounding Map Ta Phut Industrial Estate.

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Annual Report 2008

• Glow sponsored young boxers from Rayong as well as other local sport events.

4. ENVIRONMENTAL ACTIVITIES • The Company arranged together with Takuan-Aow Pradoo fishermen a program supporting breeding of aquatic animals under the project of “Aquatic animal releasing sea lives program”. • The Company arranged sea pine planting and monthly beach cleaning to create the collaboration with the community to clean the beach by picking garbage and waste from seaside. • The Company donated proper garbage collection equipment to local communities the greate to enhance the recognition of the throwing garbage, accurately separating waste and to create the awareness of waste reduction to students and people.


ENVIRONMENT, HEALTH & SAFETY MANAGEMENT

Environment, health and safety have been focus of the Company throughout its 15 years of operation. The emissions from our plants as well as safety incidents have consistently been better than targeted and meeting the applicable regulations. We continuously strive to improve our EHS practices and some of the major EHS programs initiated in 2009 were : • The Company linked Continuous Emission Monitoring Systems (CEMS) plants in Rayong with the Information Center of Map Ta Phut Industrial Estate Office. The Information Center of Department of Industrial Works to provide on-line information of its emissions to authorities. • Glow SPP3 started testing co-firing of biomass together with coal targeting to reduced CO2 emissions. • Glow Energy renewed its ISO14001 certificate. • The Company included safety targets as criteria determining the variable bonus of its employees. The EHS management of the Company is carried out in compliance with Thai regulations, its Environmental Impact Assessment approvals and GDF SUEZ Environmental Charter.

Glow Energy Public Company Limited

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GHECO-ONE POWER PLANT PROJECT

GHECO-One Company Limited is a joint venture between Glow Energy Public Company Limited, Thailand’s largest private producer of electricity and industrial utilities and Hemaraj Land and Development Public Company Limited, Thailand’s leading developer of the industrial estates. The JV was formed with the objective of producing and supplying electricity to Electricity Generating Authority of Thailand (EGAT) under the Independent Power Producers (IPP) program. To obtain approval to develop the new power plant project, and in accordance with newly introduce Thai regulations in Map Ta Phut, Glow Group must reduce NOx and SO2 emission at Glow’s existing facilities, whereby the NOx and SO2 emission of the GHECO-One project may not exceed 80% of the amounts reduced. GHECO-One is utilizing highly efficient supercritical boiler technology and state-of-the-art emission reduction equipment. The plant will be one of the most efficient and cleanest coal-fired power plant when commissioned in 2011. Its emission level could comfortably meet existing Thai and World Bank standards, as well as EU standards which are among the most stringent in the world.

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Annual Report 2008


ENVIRONMENTALLY – FRIENDLY ELECTRICITY GENERATING PROCESS

Thailand), a high efficiency boiler system that can reduce consumption of fuel, thus reducing all emission. 8. There is continuous environmental monitoring program throughout the project lifetime. In addition, Glow Group is the first private power company in Thailand to install an Emission Display Board which is showing real time emissions compared to standards, testimony to Glow’s transparency and environment care preoccupation. 9. The Company can use some parts of its existing utilities and infrastructures; consequently this will reduce environmental impact.

BENEFITS FROM THE PROJECT – NATIONAL LEVEL 1. Imported high-quality Bituminous coal will be transferred from the project’s coal receiving harbor by the enclosed conveyor to coal stockyard. 2. Coal will be pulverized before injecting into high efficiency boiler to burn and generate heat energy by using burners designed for optimum combustion and low nitrogen oxide emissions (Low NOx Burner). 3. Heat energy will be passed into boiler to make high pressure steam which will then go to steam turbine to drive generator and generate electricity. 4. Steam that has passed through the steam turbine will be cooled using sea water for reuse. The temperature of cooling sea water will be controlled to legal limits before discharging into the sea. This avoids use of fresh water that can be used for agriculture and residential use. 5. Hot gas from combustion in boiler will be sent through emission reduction and control system, comprising Selective Catalytic Reduction (SCR) for NOx removal, Electrostatic Precipitator (ESP) for dust removal and Flue Gas Desulphurization (FGD) for SO2 removal before emitting the air into atmosphere through 150 meter high stack. These systems make this the cleanest coal fired power plant in Thailand and one of the cleanest in the world. 6. All coal ash residues from the combustion process will be collected in a silo before transporting to the cement industry/ ready mixed concrete industry where it will be recycled. 7. GHECO-One Power Plant will be operated at international standards, using high quality coals and state-of-the-art and environmentally friendly technology including the use of Supercritical Pulverized Coal Boiler Technology (a first for

• Cheap electricity tariff (award was based on competitive bidding). • Diversification of fuel risk. • Introduction of a “model” coal-fired plant, one of the cleanest in the world. • Increase competitiveness of Thailand.

BENEFITS FROM THE PROJECT – LOCAL AND COMMUNITY LEVEL • Cleaner air due to net NOx and So2 emission reduction as a result of the expansion. • Generate income to the local community via employment and taxes. • Contribution to the Surrounding Community Development Fund Project: - During construction period: approximately Baht 33 million a year. - During operation: approximately Baht 100 million a year

Community Fund Management is comprised of representatives from community, qualified experts, representatives from government sector and power plant operators. The community will control the use of the fund. The Fund is primarily for the benefit of the communities within 5 kilometers from the Map Ta Phut industrial estate boundary. The fund may be utilized for the following objectives: • Promote and develop career and life quality for the communities. • Support education, local folk and culture. • Support activities regarding health, hygiene and environment. • Support social activities.

Glow Energy Public Company Limited

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BOARD OF DIRECTORS*

Mr. Esa Heiskanen Director and Chief Executive Officer

Mr. Guy Richelle

Mr. Vitthaya Vejjajiva

Chairman of the Board

Independent Director and Audit Committee

Mr. Kovit Poshyananda Independent Director and Audit Committee

Remark :

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*As of March 23, 2009

Annual Report 2008


Mr. Dirk Achiel Marc Beeuwsaert Director

Mrs. Supapun Ruttanaporn

Mr. Johan De Saeger

Independent Director and Audit Committee

Director

Mr. Guido Geeraerts Director

Mr. Michel J. G. Gantois

Mr. Anut Chatikavanij

Director

Director

Mr. Pierre Jacques Weulersse

Mr. Brendan G. H. Wauters

Director

Director

Glow Energy Public Company Limited

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Management Team

Mr. Esa Heiskanen Chief Executive Officer

Mrs. Sriprapha Sumruatruamphol Executive Vice President and Chief Commercial Officer

Mr. Heikki Pudas

Mr. Suthiwong Kongsiri

Executive Vice President – Project Development and Business

Executive Vice President and Chief Financial Officer

Mr. Pajongwit Pongsivapai Executive Vice President and Chief Operating Officer

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Annual Report 2008


NAME

POSITION

1. Mr. Peter Termote

Chief Executive Officer (until 6 October 2008)

2. Mr. Esa Heiskanen

Chief Executive Officer (since 7 October 2008)

3. Mrs. Sriprapha Sumruatruamphol

Executive Vice President and Chief Commercial Officer

4. Mr. Heikki Pudas

Executive Vice President – Project Development and Business

5. Mr. Pajongwit Pongsivapai

Executive Vice President and Chief Operating Officer

6. Mr. Suthiwong Kongsiri

Executive Vice President and Chief Financial Officer

7. Mr. Svend Erik Jensen

Senior Vice President - Construction & EPC Management

8. Mr. Kanit Thangpetchr

Senior Vice President - Rayong Facilities Management

9. Mr. Louis Stephen Holub

Senior Vice President – Operations Support Services

10. Mr. Michael J. W. Reiff

Senior Vice President and Chief Financial Controller

11. Mr. Wisit Srinuntawong

Senior Vice President – Engineering

12. Mr. Narongchai Visutrachai

Senior Vice President - Government & Public Affairs

13. Mrs. Chamaiporn Soonthorntasanapong

Vice President - Legal & Insurance

14. Ms. Sirichan Chotchaisathit

Vice President - Industrial Sales

15. Mr. Prateep Phuthamrugsa

Vice President – Supply Chain Management

16. Mr. Chin Beng Tong

Vice President - Coal & Biomass Management

17. Mr. Somchai Klinsuwanmalee

Vice President – Public Relations

18. Mrs. Mantana Kunakorn

Vice President - Human Resources & Administration

19. Mr. Renaud Louis Albert Pilleul

Vice President - Industrial Customer Relations

20. Ms. Suttasinee Pengsupaya

Vice President - Accounting

21. Mr. Chaiwut Rattanapornsinchai

Vice President - Information Technology

22. Mr. Thomas J. M. Ranschaert

Vice President – Business Quality & Internal Audit

23. Mrs. Unchana Kittipiyakul

Vice President – Budgeting & Business Controlling

24. Dr. Somgiat Dekrajangpetch

Vice President – Asset Optimization

25. Mr. Nattaphatt Tanboon-ek

Vice President - Finance & Investor Relations

26. Mr. Akarin Prathuangsit

Vice President – Cogeneration Marketing Development

27. Mr. Anutarachai Natalang

Plant Manager – Glow Energy Site (Phase 1 & 2)

28. Mr. Apichart Jamjuntr

Plant Manager – Glow SPP2/ SPP3, Glow Energy Site (Phase 3 & 4)

29. Mr. Apidech Siriphornoppakhun

Plant Manager – Glow SPP1 and Glow Demin Water site

30. Mr. Suratchai Bangluang

Facility Manager – Glow IPP

Glow Energy Public Company Limited

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BUSINESS

OVERVIEW We are one of the largest private electricity generators and providers of industrial utilities in Thailand. We operate IPP and cogeneration facilities (most of which operate as SPPs under Thailand’s SPP program) and our core business is to produce and supply electricity to EGAT and electricity and steam to industrial customers in the MIE Area. We have operated in Thailand since 1993 and our five principal production facilities are located in Rayong and Chonburi provinces on the industrial eastern seaboard of Thailand. On December 31, 2008, we had a total generating capacity of 1,708 MW of electricity and 967 tons per hour of steam.

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Annual Report 2008


Electricity generation and sales is the most important component of our business, accounting for 86.1 percent of our total revenues in 2008. Generation and sales of steam is also a significant part of our business, accounting for 12.5 percent of our total revenues in 2008. We currently own and operate five principal production facilities, four of which generate electricity. Our production facilities and their operating characteristics as of December 31, 2008, are: • Glow IPP plant, which operates in the Chonburi Industrial Estate and can generate 713 MW of electricity; • Glow Energy plant, which operates in the MIE and can generate 358 MW of electricity, 687 tons per hour of steam and 3,320 cubic meters per hour of processed water; • Glow SPP 1 plant, which operates in the EIE and can generate 124 MW of electricity, 90 tons per hour of steam and 70 cubic meters per hour of processed water; • Glow SPP 2 / SPP 3 plant, which operates in the MIE and can generate 513 MW of electricity, 190 tons per hour of steam and 150 cubic meters per hour of processed water; • Glow Demin Water plant, which operates in the EIE and can generate 120 cubic meters per hour of processed water. In 2008, we had total revenues of Baht 33,854.0 million and a net profit of Baht 3,539.4 million. As of December 31, 2008 we had total assets of Baht 70,083.0 million.

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STRUCTURE OF REVENUES REVENUES We derive our revenues primarily from sales of electricity to EGAT and sales of electricity, steam and clarified and demineralized water to industrial users in the MIE Area. The following table breaks down our revenues by source for the periods indicated:

2006 (BAHT MILLIONS) (%)

REVENUES YEAR ENDED DECEMBER 31, 2007 (BAHT MILLIONS) (%)

2008 (BAHT MILLIONS)

(%)

Revenues from Sales of Goods and Rendering of Services Electricity Sales to EGAT by IPP Sales to EGAT by SPPs Sales to Industrial Customers Total

10,705.0 9,640.6 7,877.2 28,222.8

31.5 28.4 23.2 83.1

10,161.8 9,323.5 8,224.8 27,710.1

30.8 28.2 24.9 83.9

10,859.5 10,337.8 7,954.1 29,151.4

32.1 30.5 23.5 86.1

Steam Processed water Total Other Income Total Revenues

4,029.9 340.4 32,593.1 1,398.7 33,991.9

11.9 1.0 96.0 4.0 100.0

4,219.2 336.6 32,265.8 745.4 33,011.3

12.8 1.0 97.7 2.3 100.0

4,244.7 327.7 33,723.8 130.2 33,854.0

12.5 1.0 99.6 0.4 100.0

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Annual Report 2008


BUSINESS STRATEGIES 1. OVERVIEW Our vision is to optimize profitability through operational excellence and value-creating growth in Thailand and neighboring countries. We have crafted a business strategy that takes into account four perspectives: commercial, operational, financial and human resources. We have balanced our short- and long-term objectives to create a well - defined set of priorities and action plans for our company. For our existing operations, this involves enhancements in utilization, efficiency and reliability of the existing units, achieving overall cost reductions, timely completion of construction of new facilities within budget, optimizing our cost of capital and strengthening internal reporting systems and procedures. We believe that our business strategies will prepare us for growth opportunities with new and/or existing industrial customers as well as position ourselves favorably for a new round of IPP bidding if and when such opportunities arise. With the assistance of GDF SUEZ S.A., we plan to continue to develop a highly motivated and competent Thai management team and workforce to support these efforts.

2. COMMERCIAL PERSPECTIVE From a commercial perspective, our focus is on (a) growing our core business, (b) proactively managing our client relationships, (c) optimizing fuel costs and securing our fuel supply, and (d) maintaining and enhancing our local knowledge and relationships.

(a) Pursue growth of our core business We intend to grow our core business by both increasing our capacity to meet growing industrial demand for electricity and steam and by positioning ourselves to compete successfully for opportunities to install new generating capacity in Thailand. For example, in 2005, we have completed the first and second stage of Glow Energy’s capacity expansion in the MIE, allowing us to produce an additional 77 MW of electricity and 137 tons per hour of steam. We are now constructing i) a new CFB with a net capacity of 115 MW and scheduled to begin commercial operation by the end of 2009 and ii) a new gas-fired cogeneration unit of Glow Energy’s capacity expansion in the MIE (Phase 5) with a net capacity of 382 MWeq and scheduled to begin commercial operations by the end of 2011 for supply to industrial customers. In addition, we have been awarded by the Ministry Of Energy for new IPPs which EGAT already signed the purchase agreement with us and we are now constructing a 660 MW coal fired IPP plant with schedule commercial operations by the end of 2011. We will consider, in addition to these projects, further opportunities to expand and strengthen our ability to serve industrial customers (See Expansion and Potential section). We intend to continue to seek opportunities to acquire new high-value industrial customers and grow to follow the demand of our existing customers (both in Thailand and South East Asia). In addition, we will focus on maintaining

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and enhancing our operations, continuing to provide highquality, reliable service, performing our obligations under our EGAT power purchase agreements and strengthening our institutional relationships within Thailand (including with our regulators), all of which, we believe, has put us in a favourable position to bid for new electricity generation projects in Thailand that may arise in the future.

(b) Proactively manage our industrial customer relationships Our industrial customer base is a key component of our business. Our industrial customers are principally involved in the petrochemical production process, which relies upon stable supply of electricity and steam to avoid startup costs associated with interruption during production. As such, our focus is on strengthening our relationships with existing customers, not only by providing them with a reliable supply of electricity and industrial utilities, but by working closely with them to further understand their needs and to develop ways in which to further improve our levels of service. We focus on various action plans to improve customer satisfaction by improving supply reliability, communication, incident handling and problem solving and firmly believe that customer satisfaction is the key to customer retention and acquisition of new customers or new contracts from existing customers. We believe that our service reliability sets us apart from our competitors and positions us favourably as the electricity and industrial utility supplier of choice in our markets. We

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Annual Report 2008

target steam customers and high-load electricity customers who value reliability of supply.

(c) Optimize our fuel management by reducing fuel cost and ensuring supply availability Fuel is our major cost item and our business is exposed to fluctuations in price and availability of fuel (and in particular coal). We commit significant resources to fuel management and will continue to do so. We seek opportunities to enhance our coal procurement arrangements to reduce our coal and freight costs, which directly affect our profitability. We continue to examine our open positions on fuel costs and, in connection with our ongoing efforts to protect our company from fuel price fluctuations, we may in the future enter into hedging arrangements from time to time. Our primary fuel supply arrangements seek to maintain a sufficient supply of fuel that is critical to our ability to operate our business and we also seek to maintain prudent levels of back-up fuel supplies. (d) Maintain and enhance local knowledge and relationships We have a long-term commitment to Thailand and our core business is to generate and supply electricity and steam to customers in Thailand. We focus on identifying key individuals for us to train to lead our company in coming years as well as on strengthening our institutional relationships with EGAT, the government and government authorities and our regulators.


3. OPERATIONAL PERSPECTIVE From an operational perspective, our focus is on (a) to maintain and improve reliability and availability of our generating units, (b) improving our fuel efficiency, (c) reducing our operating costs and (d) effectively managing our projects under construction.

(a) Maintain and improving reliability and capacity utilization Our plant capacity utilization can be improved through capacity enhancement measures and reducing the amount of unplanned outage or reducing the days needed for scheduled maintenance. We continually seek to improve our performance in all areas through various measures, such as condition and performance monitoring, preventive and effective maintenance and reduction of forced outages through root cause analysis and enhanced operating procedures. (b) Improving fuel efficiency Fuel is a major cost item for us and our fuel efficiency is an important driver of our profitability. We seek to continually improve our operational efficiency by optimizing dispatch, critical equipment performance monitoring, work processes and energy loss monitoring and mitigation.

(c) Reduce operational costs We seek to minimize our operational and maintenance costs without compromising fulfilling contractual obligations to supply to customers or reliability of the plants by creating transparency in the manner and timing at which the costs are incurred and by exercising good judgment with respect to the need for those expenses. We have a focus on cost management through reliable systems and control procedures. In the future, we hope to be able to enter into a long term parts agreement with the original equipment manufacturer for supplying gas turbine parts to Glow IPP which would result in cost reductions. Our relationship with and technical support from GDF SUEZ S.A. and the increase in number of gas turbine units within the group enables us negotiate effectively with suppliers and to source equipment and parts on competitive terms. (d) Execute projects effectively We are, on an ongoing basis, either constructing new power plants to serve new customers’ demand, implementing projects to enhance performance and/or constructing distribution lines to our customers. These projects are handled by a dedicated team of employees in an organized and prudent manner in order to avoid delay, poor performance and the financial consequences thereof.

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4. FINANCIAL PERSPECTIVE

structure. In addition, we will actively monitor our cash balance, in conjunction with our capital expenditure plans, so that in the long run, shareholders value is maximized. For further details on the CODIS Program, see the “Internal Control” section.

Maintain and improve our financial position Our internal focus on excellence includes financial management. We actively evaluate opportunities to minimize the weighted average cost of capital by optimizing our capital structure while reducing our exposure to financial risks. We seek to mitigate foreign exchange risk by matching the currency of costs and debt service payments with the We believe that our principal competitive strengths are the currency of free cash flow. We have a prudent but flexible following: interest rate risk management system which is supported by the expertise of the GDF SUEZ S.A. finance departments who 1. CRITICAL SCALE AND RELIABILITY OF OPERATIONS assist us in determining the amount and timing of fixing of We believe that we have a critical scale of operations in interest rates. We seek to improve our management reporting Thailand. Glow IPP has two electrical generators and our systems and procedures by improving the reliability of the cogeneration facilities have an aggregate of 20 electrical systems and reviewing and documenting the processes. We generators. This size is critical to our competitiveness since continue to implement a sustainable program of Internal we have interconnected our cogeneration facilities to provide Control (also referred to as the CODIS or Control Disclosure a reliable supply of electricity and steam to our industrial Program), which applies to our company as a subsidiary customers. We have a steam network which substantially reduces the risk of supply interruption and pressure loss in of GDF SUEZ S.A. The appropriate implementation, within the event that any one unit fails. The interconnection of our the Group, of the methodology developed ensures the facilities provides us with a number of advantages: we are compliance of GDF SUEZ S. A. with the French “Loi de Sécurité able to dispatch our lowest-cost generating units and improve Financière” (“LSF”) and the related French regulatory the reliability of our electricity and steam supply to our authority (AMF) recommendations and, from 2008, with the customers, we have greater flexibility to coordinate and European Union regulation (7th and 8th European Directives). rotate maintenance schedules and we are able to provide The aforementioned laws and regulations seek to promote greater flexibility to our customers in scheduling maintenance corporate responsibility, increase public disclosure, and outages and in supplying peak start-up demand. Overall, improve the quality and transparency of financial reporting these factors have allowed our cogeneration facilities to and auditing. They also make the company executives maintain high reliability rates as well as to reduce operating explicitly responsible for establishing, evaluating, and monitoring costs. the effectiveness of their company’s internal control

COMPETITIVE STRENGTHS

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We do not believe that the scale of our cogeneration 2. STRATEGIC LOCATION AND ASSETS In addition to a critical scale of operations, we believe that operations can be replicated in the near term, which we the location and concentration of our assets also provides us believe limits our competitors’ opportunities to grow their with a key competitive advantage. We are the principal business. The scale of our operations allows us to capitalize private electricity supplier in the MIE, which is the largest and on synergies between our various businesses, including most important industrial estate for petrochemical companies system redundancies, economies of scale, spare parts in Thailand, and one of the largest industrial utilities suppliers management, operational expertise, automated systems, in the MIE Area. We operate a centralized utility park that has procedures, qualified and trained personnel and leverage allowed us to apply our strategic resources in a focused with regard to suppliers. Our size and long-term presence also manner to achieve operational strength (including in terms of allows us to attract a highly motivated and competent system redundancies and infrastructure connections) in an workforce and provides us with key market know-how and efficient and effective manner. Our presence in the MIE Area credibility as a long-term player in the Thai energy industry. provides us with an established presence and business We operate IPP and cogeneration facilities (most of which infrastructure in a key area of Thailand and has afforded us an operate as SPPs under Thailand’s SPP program), giving us a opportunity to develop important business relationships with major presence in two distinct sectors of the Thai electricity some of the largest companies in Thailand. Our facilities are supply market and a diverse business “footprint” in Thailand. located centrally within the MIE and are surrounded by In addition, we have full or near-full ownership and sole several key petrochemical producers. Additionally, we have operational control of our key assets, which allows us to invested in a supply infrastructure that connects our facilities control strategic business decisions and react quickly and in a to our clients via an underground electrical network and an coordinated manner to market developments. We believe above-ground steam pipe network. Industrial activity in the that these factors, in turn, position us to capture new MIE Area is expanding, which we believe will provide us with business in the future. attractive opportunities for growth. We are able to use our existing property and facilities to expand our operations.

Glow Energy Public Company Limited

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We operate IPP and cogeneration facilities (most of which operate as SPPs under Thailand’s SPP program), giving us a major presence in two distinct sectors of the Thai electricity supply market and a diverse business “footprint” in Thailand. Our assets are also diversified in the sense that we (i) operate both gas- and coal-fired generating units, (ii) sell to industrial customers as well as to EGAT, (iii) sell material amounts of both electricity and steam and (iv) operate IPP, SPP and nonSPP cogeneration facilities. This diversified portfolio of products, customers and plants gives us a major presence in the Thai energy supply market.

3. ESTABLISHED TRACK RECORD AS A RELIABLE SUPPLIER FOCUSING ON CUSTOMER SATISFACTION We have operated in Thailand since 1993 and believe that we have established a reputation as a reliable provider of electricity and steam offering a high level of service to our customers. Reliability of supply is particularly important to our industrial customers operating in the petrochemicals industry, and we have focused on developing our reliability of supply and quality of service in order to differentiate ourselves from our competitors. In the MIE Area, our generating park is centralized and interconnected and we have a dedicated transmission network. Reliability of supply to industrial customers is further enhanced through implementation of critical redundancies and through underground cabling for electricity customers. We focus on customer satisfaction as a

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key driver of customer retention and acquisition. We believe that our track record, particularly with our industrial customers in the MIE Area, has strengthened our reputation and positions us well to compete successfully going forward to capture future growth. Further, in contrast to certain of our competitors, generation and supply of electricity and steam is our core business. This allows us to focus our management resources on business development and operational excellence and to capitalize on support from GDF SUEZ S.A., which is also principally engaged in electricity and industrial utilities production and supply.


4. RELATIONSHIP WITH GDF SUEZ S.A. We are a subsidiary of GDF SUEZ S.A., a worldwide group whose expertise spans most major areas of the global electricity and gas industries. This provides us with access to critical experience and technical know-how and allows us to capitalize on and benefit from group-wide relationships. We have formalized certain aspects of this relationship in a sponsor support agreement that Glow Co., Ltd. has signed with a wholly-owned subsidiary of GDF SUEZ S.A. which, among other things, provides us with access to control, operational and project consulting support from GDF SUEZ S.A. We have signed a separate agreement with GDF SUEZ S.A. in which it has agreed not to directly compete with us in the electricity generation business in Thailand. As GDF SUEZ S.A.’s sole vehicle for investment in the electricity generation business in Thailand, we believe that we will continue to benefit from this relationship going forward, under the terms of these agreements and otherwise.

5. STABILITY OF REVENUES AND CASH FLOWS Most of our sales of electricity and steam are made under long-term sales contracts with durations of approximately 15 years for our industrial customers and between 21 and 25 years for sales to EGAT. Most of our current contracts with industrial customers expire between. 2012 and 2014, while the EGAT power purchase agreements expire between 2016 and 2025 for our SPPs and in 2028 for Glow IPP. This provides our business, as a whole, an element of stability and predictability and affords us some level of insulation from competition. In addition, most of our industrial customers are in the petrochemical industry and, due to the nature of petrochemical production processes, have relatively high load factors and relatively stable levels of demand.

HISTORY Glow Energy was incorporated as The Cogeneration Public Company Limited in October 1993. SUEZ Tractebel S.A. (currently “GDF SUEZ S.A.”) acquired its initial interest in Glow Co., Ltd in September 1997 and acquired its initial interest in Glow Energy in November 2000 (and subsequently de-listed it). Our company was formed through the combination of Glow Energy and Glow Co., Ltd. in December 2004. In the reorganization, Glow Energy acquired Glow Co., Ltd. from GDF SUEZ S.A. on a book value basis for a net purchase price of Baht 7,114.8 million, bringing Glow IPP, Glow SPP 1 and Glow Demin Water into our corporate group. In February 2005, we changed our name from “Glow SPP Public Company Limited” to “Glow Energy Public Company Limited”. In 2007, we also set up Glow IPP2 Holding, Glow IPP3 and GHECO-One. Glow IPP2 Holding and Glow IPP3 (formerly Glow Hemaraj Energy Co., Ltd.) are holding companies while GHECO-One is an operating company. These companies principle business is developing power generation projects in Thailand and certain neighbouring countries under the Thai Independent Power Producer Program and future similar programs for the purchase of power from independent power producers by the Electricity Generating Authority of Thailand (“EGAT”) or any successor of EGAT and cogeneration business to supply industrial customers in certain neighboring countries. In September 2008, GHECO-One signed a long term power purchase agreement with EGAT and started construction of a 660 MW coal fired project. Glow Group owns a 65% share in GHECO-One and Hemaraj Land and Development Plc owns 35%. Glow Energy Public Company Limited

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THE FOLLOWING DIAGRAM SETS OUT OUR CURRENT ORGANIZATIONAL AND OWNERSHIP STRUCTURE :

GDF SUEZ S.A.1

Minority Shareholders 30.89%

69.11%

Glow Energy 100%

Glow

100%

100%

100%

Glow SPP2

Glow SPP3

Glow IPP2 Holding

100%

95%

100%

Glow IPP3

Hemaraj 100%

Glow SPP1

Glow Demin Water

Glow IPP

65%

GHECO-One

35% 5%

Note :

(1) GDF SUEZ S.A. holds its interest in Glow Energy through its wholly-owned subsidiary, SUEZ-Tractebel Energy Holdings Cooperative U.A. and GDF SUEZ Energy (Thailand) Co., Ltd.

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THE FOLLOWING TIMELINE SETS OUT KEY STEPS IN GLOW ENERGY’S HISTORY AND DEVELOPMENT October 1993 February 1996 April 1996 March 1999 November 2000 February / March 2001

: : : : : :

August 2002 May 2003 December 2004 January 2005 February 2005 April 2005 December 2005 December 2007

: : : : : : : :

September 2008

:

Glow Energy was incorporated under the name “The Cogeneration Public Company Limited”. The Cogeneration Plc. listed its shares on the SET. The Cogeneration Plc.’s cogeneration plant began initial commercial operation. The Glow SPP 2 / Glow SPP 3 hybrid plant began commercial operation. GDF SUEZ S.A. acquired a 62 percent stake in The Cogeneration from Sithe Pacific Holdings Limited GDF SUEZ S.A. increased its shareholding in The Cogeneration to 99 percent by purchasing Banpu’s shares and conducting a tender offer for remaining outstanding shares. The Cogeneration’s shares were delisted from the SET. Change of company name from The Cogeneration Plc. to Glow SPP Plc. Glow SPP acquired 100 percent of Glow Co., Ltd from GDF SUEZ S.A. Phase 4 Stage 1 began full commercial operation. Change of company name from Glow SPP Plc. to Glow Energy Plc. Glow Energy listed its shares on the SET. Phase 4 Stage 2 became commercially operational. GHECO-One was selected as the preferred bidder for a 660 MW coal fired project in the new round of IPP bidding. Signed Power Purchase Agreement with EGAT and started Construction of GHECO-One project in October 2008.

The following timeline sets out key steps in the history of Glow Co., Ltd. beginning with GDF SUEZ S.A.’s initial investment in Glow Ltd: September 1997

February 1998 May 1999 June 2000 2000-2004 January 2003 December 2004

: GDF SUEZ S.A. formed a joint venture with Hemaraj Land and Development Plc. (“Hemaraj”), in which each party had a 50 percent interest with respect to Glow Co., Ltd. (formerly H-Power Company Limited). H-Power at the time owned 100 percent of Glow SPP 1 (formerly Industrial Power Company Limited) and 51 percent of Glow IPP (formerly Bowin Power Company Limited). : Glow SPP 1’s 124 MW cogeneration plant began commercial operation. : Glow Co., Ltd. acquired the remaining 49 percent interest in Glow IPP from International Generating Co., Ltd. bringing its interest to 100 percent. : GDF SUEZ S.A. increased its interest in Glow Co., Ltd. to 75 percent. : GDF SUEZ S.A. progressively increased its interest in Glow Co., Ltd. to 100 percent in a series of transactions that involved an indirect sale of a five percent interest in Glow IPP to Hemaraj. : Glow IPP’s 713 MW plant began commercial operation. : Glow SPP acquired 100 percent of Glow Co., Ltd’s shares from GDF SUEZ S.A.

Although our reorganization has changed our corporate structure, it has not resulted in any significant operational changes. Both Glow Energy and Glow Co., Ltd were previously owned by our major shareholder, GDF SUEZ S.A., and they and their respective subsidiaries were managed and operated as a single group of companies. This remains the case after our reorganization. Although our key operating assets are owned by separate companies within our corporate group, we maintain a single, coordinated management structure for all of our group companies and assets, which allows us to monitor and coordinate the operations of our production facilities. SUEZ Tractebel Energy, the Selling Shareholder, is itself a subsidiary of GDF SUEZ S.A., an international industrial and services group which provides electricity, gas, water and waste services solutions worldwide. SUEZ Tractebel Energy, which is headquartered in Brussels, Belgium, is a major global energy company, with energy-related businesses throughout North America, South America, Europe, the Middle East and Asia. Our company is part of GDF SUEZ’s Electricity & Gas International (“EGI”) division, one of GDF SUEZ’s four business lines. EGI develops, builds and operates electricity and gas-related energy facilities throughout North America, Latin America, Southeast Asia and the Middle East, including transportation and distribution of liquefied natural gas.

Glow Energy Public Company Limited

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PRODUCTS AND PRODUCTION FACILITIES Our core business is the generation and supply of electricity to EGAT and the generation and supply of electricity and steam, with clarified and demineralized water as secondary products, to industrial customers within the MIE and nearby industrial estates..

PRODUCTS (A) ELECTRICITY We produce electricity for sale both to EGAT and to industrial customers. Electricity sold to EGAT, the single wholesale buyer of electricity in Thailand, is routed into EGAT’s national transmission system. EGAT sells this electricity to PEA and MEA, which distribute it through their respective distribution networks to end users throughout Thailand. We own and operate an interconnected system of supply sources and transmission lines and the various companies within our legal group have entered into contracts to sell electricity to industrial customers in the MIE Area. While the contracts of Glow Energy, Glow SPP 2 and Glow SPP 3 are principally with industrial customers in the MIE, they also have other industrial customers elsewhere in the MIE Area. Glow SPP 1 sells to industrial customers in the EIE. We supply the electricity that we sell to our customers through dedicated transmission lines. This electricity is used by our industrial customers for a variety of industrial purposes, primarily relating to petrochemical and petrochemical-related manufacturing and production processes.

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(B) STEAM We supply steam to industrial users in the MIE Area. Glow Energy, Glow SPP 2 and Glow SPP 3 principally sell to industrial customers in the MIE and AIE, while Glow SPP 1 sells to industrial customers in the EIE. The steam that we sell to our customers, at varying levels of pressure, is used for a variety of industrial purposes. Because of inherent limitations on the ability to transport steam over long distances, most of our steam customers are located within four kilometers of our steam generating facilities.

(C) PROCESSED WATER We also sell clarified and demineralized water to industrial users in the MIE Area, which is not a core business line in itself (although the production and sale of demineralized water is Glow Demin’s core business). However, it is complementary to our electricity and steam generation businesses, and we entered into the business in order to be able to internally generate the water that we need for our own production purposes. We sell excess processed water that we produce to industrial customers.

Glow Energy Public Company Limited

53


PRODUCTION FACILITIES The following table sets out certain information, including key capacity statistics, relating to our production facilities as of December 31, 2008: PLANT NAME

PRODUCTION FACILITIES Glow IPP Glow Energy Phase 1 Glow Energy Phase 2 Glow Energy Phase 4 Glow SPP 1 Glow SPP 2/ SPP 3 Glow Demin Water Total

LOCATION

CIE MIE MIE MIE EIE MIE EIE

PRODUCTION CAPACITY ELECTRICITY STEAM PROCESSED WATER (MW) (TONS/HR) (CU.M/HR) CLARIFIED DEMIN 713 281 77 124 513 1,708

250 300 137 90 190 967

1,110 900 600 2,610

230 280 200 70 150 120 1,050

COMMERCIAL OPERATION DATE

Jan. 2003 Jul. 1994 Apr. 1996 Jan. 2005 Feb. 1998 Mar. 1999 Nov. 1999

Source : Glow Energy.

Although ownership of our plants rests with separate legal entities within our corporate group, we manage all of them centrally through a single, coordinated management structure. This allows us to monitor the operations of our facilities, coordinate their operation and implement policy on a group-wide basis.

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(A) GLOW IPP PLANT The Glow IPP plant is a natural gas-fired combined cycle plant that began commercial operation in January 2003. The plant operates as an independent power producing facility under Thailand’s IPP program, generating and selling electricity to EGAT. The Glow IPP plant, as of December 31, 2008, had an electricity generating capacity of 713 MW.

(B) GLOW ENERGY PHASE 1 PLANT The Glow Energy Phase 1 plant, consisting of a natural gas-fired “D” type boiler for steam generation and a water production plant, began commercial operation in July 1994. It is located in the MIE and is capable of generating 250 tons per hour of steam, 1,110 cubic meters per hour of clarified water and 230 cubic meters per hour of demineralized water. Because this facility uses relatively inefficient boilers for steam generation, we do not enter into long-term steam supply contracts with respect to this facility, but rather use it to satisfy short - term demand, start - up demand and excess capacity and to strengthen our overall system reliability. We principally sell the processed water generated by this facility to industrial customers in the MIE.

(C) GLOW ENERGY PHASE 2 PLANT The Glow Energy Phase 2 plant is a combined cycle natural gas - fired cogeneration plant that began commercial operation in April 1996. As of December 31, 2008, the plant, located in the MIE, had an electricity generating capacity of 281 MW and a steam generating capacity of 300 tons per hour. Electricity generated by the Glow Energy plant is sold both to EGAT and to industrial customers in the MIE and steam is sold to industrial customers in the MIE. In addition, the Glow Energy Phase 2 plant also has water treatment facilities that can produce 900 cubic meters per hour of clarified water and 280 cubic meters per hour of demineralized water for consumption within the Glow Energy Phase 2 plant and for sale to industrial customers in the MIE and nearby industrial estates.

(D) GLOW ENERGY PHASE 4 PLANT The Glow Energy Phase 4 plant is a natural gas - fired cogeneration plant that began commercial operation in January 2005. As of December 31, 2008, the plant, located in the MIE, had an electricity generating capacity of 77 MW, a steam generating capacity of 137 tons per hour, clarified water generating capacity of 600 cubic meters per hour and demineralized water generating capacity of 200 cubic meters per hour. We sell electricity, steam and processed water from the plant to industrial customers in the MIE and nearby industrial estates.

Glow Energy Public Company Limited

55


(E) GLOW SPP 1 PLANT The Glow SPP 1 plant is a natural gas-fired combined cycle cogeneration facility that began commercial operation in February 1998. The plant is located in the EIE and as of December 31, 2008 had an electricity generating capacity of 124 MW, a steam generating capacity of 90 tons per hour and a demineralized water production capacity of 70 cubic meters per hour. We sell electricity generated by the Glow SPP 1 plant to EGAT and to industrial customers in the EIE. We sell steam and processed water from the plant to industrial customers in the EIE and also use this processed water internally for steam production and for sale to Glow Demin Water.

(F) GLOW SPP 2/ SPP 3 PLANT The Glow SPP 2/ SPP 3 plant is a hybrid natural gas- and coal-fired cogeneration facility located in the MIE that began commercial operation in March 1999. Technically, although we consider the plant to be a single generation facility, the gas-fired generation portion of the facility is owned by Glow SPP 2 and the coal-fired portion is owned by Glow SPP 3. The plant is divided in two parts:

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(i) two 35 MW gas-fired gas turbine units and two heat recovery units and (ii) two 222 MW hybrid cogeneration units, each comprising a steam turbine and coal-fired circulating fluidized bed boiler. The Glow SPP 2/ Glow SPP 3 plant had, as of December 31 2008, an electricity generating capacity of 513 MW, a steam generating capacity of 190 tons per hour and a demineralized water production capacity of 150 cubic meters per hour. We sell electricity generated by the Glow SPP 2/ Glow SPP 3 plant to EGAT and to industrial customers in the MIE Area. We also sell steam and processed water from the plant to industrial customers in the MIE and nearby industrial estates.

(G) GLOW DEMIN WATER PLANT The Glow demineralized water plant, located in the EIE, began commercial operation in November 1999. The expansion of 40 cubic meters per hour of demineralised water was completed in 2007. It is capable of producing a total of 120 cubic meters per hour of demineralized water. We sell processed water produced by the Glow Demin plant to industrial users in the EIE.


THE FOLLOWING MAP SHOWS THE LOCATIONS OF OUR HEAD OFFICE AND OUR PRODUCTION FACILITIES.

Laos Myanmer

THAILAND Bangkok Chonburi Rayong

Cambodia

Gulf of Thailand

Vietnam

Head office Glow IPP Glow Energy Glow SPP1 Glow SPP2/SPP3 Glow Demin Water Glow Energy Expansion GHECO-One

Malaysia

Glow Energy Public Company Limited

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RISK FACTORS

RISKS RELATING TO US AND OUR BUSINESS WE ARE EXPOSED TO FLUCTUATIONS IN FUEL PRICES Fuel is our most significant operating cost, accounting for 81.7 percent of our total expenses in 2008. Whether and to what extent we can pass fuel price fluctuations through to our electricity and steam customers depends on the specific terms of our sales agreements. • Under the terms of Glow IPP’s power purchase agreement with EGAT, which accounted for 32.1 percent of our total revenues in 2008, our fuel costs are fully passed through to EGAT at contracted heat rates. • Under the terms of our SPP power purchase agreements with EGAT relating to our gas-fired facilities, which together accounted for 23.0 percent of our total revenues in 2008, our fuel costs are passed through to EGAT at contracted heat rates. • Under the terms of our SPP power purchase agreements with EGAT relating to our coal-fired facilities (of which there are two, in respect of 90 MW contracted capacity each), which together accounted for 7.5 percent of our total revenues in 2008, our fuel costs are only partially passed through to EGAT as the freight charges relating to our purchase of coal, which are an important component of fuel costs, are not passed through to EGAT. Overall coal costs, including freight costs, have increased significantly over the past two to three years, which has had an adverse effect on our profit margins.

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• Under the terms of our power supply agreements with industrial customers, which together accounted for 23.5 percent of our total revenues in 2008, we generally sell electricity at prices that are based on the retail electricity tariff charged by the Provincial Electricity Authority of Thailand (the “PEA”), the electricity distribution utility for the areas of Thailand in which we operate. Although the PEA tariff is designed to reflect fluctuations in fuel prices through a fuel transfer charge (the “Ft”), it does so by reference to a fuel index maintained by EGAT which is not designed to reflect our actual fuel costs and only factors in coal costs (which we also use to generate up to 120 MW of electricity that we supply to our industrial customers) to a very limited extent. We are also constructing a 115 MW coal fired plant to supply power and steam to industrial customers with scheduled COD at the end of 2009. This will increase fuel diversification but also coal commodity risk. In addition, the Ft does not always function as designed. See “—We price a portion of our electricity sales by reference to the PEA tariff, which does not reflect our actual costs and may not be adjusted as designed to reflect fluctuations in, among other things, fuel costs and inflation”.

Because we cannot pass through all of the changes in our fuel costs to our customers, we are exposed to increases in the prices of fuel (and in particular coal). If there are material increases in our cost of fuel and we are unable to pass these increases through to our customers, this will directly reduce our profit margins and could have a material adverse effect on our business, results of operations, financial condition and prospects.

WE PRICE A PORTION OF OUR ELECTRICITY SALES BY REFERENCE TO THE PEA TARIFF, WHICH DOES NOT REFLECT OUR ACTUAL COSTS AND MAY NOT BE ADJUSTED AS DESIGNED TO REFLECT FLUCTUATIONS IN, AMONG OTHER THINGS, FUEL COSTS AND INFLATION

Under the terms of our power supply agreements with our industrial customers, which together accounted for 23.5 percent of our total revenues in 2008, we generally sell electricity at prices that are based on the retail tariff charged by the PEA (such prices are typically expressed as a percentage discount to the PEA tariff). The PEA’s tariffs are determined by the Thai government and take into account the electricity generation, purchase, transmission and distribution costs of the PEA, the Metropolitan Electricity Authority of Thailand (the “MEA”) and EGAT, the major electricity utilities in Thailand. Therefore, the PEA tariff rates, and consequently the prices at which we sell electricity to our • Under the terms of our steam supply agreements with industrial customers, do not necessarily reflect our actual costs of industrial customers, which together accounted for 12.5 producing and supplying this electricity. percent of our total revenues in 2008, we sell steam based on prices that are indexed to fluctuations in the price of The PEA tariff is designed to reflect fluctuations in fuel prices, natural gas, but not coal (which we also use to produce inflation, foreign exchange rates and other factors by application the steam that we sell). In addition, the natural gas of the Ft. However, the most significant component of the Ft, the indexation in our steam tariffs does not fully reflect our fuel cost component, refers to a general fuel index that does not actual natural gas costs. Glow Energy Public Company Limited

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necessarily reflect our actual fuel costs and only factors in coal costs, which we use to partially generate up to 120 MW of electricity that we supply to our industrial customers, to a very limited extent. In addition, the Ft does not always function as designed. When the Ft adjustment is not applied or not fully applied to the PEA tariff in a rising fuel cost environment, it means that the prices at which we sell electricity to our customers are not increased to reflect higher prevailing fuel prices, and consequently, our profit margins are reduced. For the foregoing reasons, our reliance on the PEA tariff could have a material adverse effect on our business, results of operations, financial condition and prospects.

WE ARE HIGHLY DEPENDENT ON A SMALL NUMBER OF INDUSTRIAL CUSTOMERS CONCENTRATED IN THE PETROCHEMICALS SECTOR

In addition to EGAT, we are also highly dependent on a small number of industrial customers. Our ten largest industrial customers (which, for the avoidance of doubt, excludes EGAT) accounted for 28.5 percent of our total revenues in 2008. A disruption of our relationship with one or more of our industrial customers could have a material adverse effect on our business, results of operations, financial condition and prospects. In addition, many of our contracts with industrial customers have terms that are unfavorable to us, which could result in large contractual claims against us or early termination of these WE ARE HIGHLY DEPENDENT ON EGAT contracts. Further, our industrial customers are highly concentrated EGAT is our largest and most important customer and is both geographically and in terms of industrial classification. Most committed to purchasing electricity from us under our EGAT of our industrial customers are located in the MIE or elsewhere power purchase agreements, which are long-term contracts with within the MIE Area. This exposes us to increased risk of an durations from 21 to 25 years. The EGAT power purchase accident, natural disaster, infrastructure or other failure or agreements are material to our business, accounting for 62.6 breakdown disrupting the facilities of the MIE, the other industrial percent of our revenues in 2008. EGAT is the dominant participant estates in which our industrial customers are located or the MIE in the Thai electricity market. In addition to being the single Area generally. wholesale buyer and controlling all of the wholesale transmission of electricity in Thailand, EGAT is also Thailand’s largest electricity In addition to their geographic concentration, many of our generator. A number of our important contracts contain unclear industrial customers are companies operating in petrochemical or terms which have led to disagreements with EGAT regarding the petrochemical-related industries. This exposes them, and indirectly operation of our business, as discussed below in “—We have had us, to the performance of the petrochemical sector. Many a number of significant disputes with EGAT in the past” and which petrochemical products are commodities and the petrochemical could result in further disputes in the future. Any material industry is highly competitive. In addition, significant price fluctuations disputes or disagreements that we have with EGAT could have a and business cyclicality are common in many petrochemicalmaterial adverse effect on our business, results of operations, related industries. These factors may affect our ability to financial condition and prospects. conclude new agreements with these customers or negatively

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affect our demand and load factor, customer creditworthiness, the timing of our customers’ expansions and thereby the terms on which we are able to reach any such new agreements and may, for these reasons or otherwise, have a material adverse effect on our business, results of operations, financial position and prospects.

Utility”), which are both affiliates of PTT. PTT Utility is a joint venture of PTT with its affiliates PTT Chemical and PTT Aromatics and Refining that is located in the vicinity of the MIE and generates electricity and steam. PTT Chemical utility business unit, PTT Utility and PEA have certain competitive advantages over us. PTT Chemical and PTT Utility are affiliated with PTT, the principal natural gas supplier in Thailand and, through this relationship, with a number of companies in the MIE Area (including many of our important customers). PTT also has an equity interest in a number of our industrial customers (most significantly PTT Chemical (previously known as “Thai Olefins Plc”) and PTT Aromatics and Refining (previously known as “Aromatics (Thailand) Plc”), sales to which accounted for 11.2 percent of our total revenue from electricity sold to industrial customers, 27.3 percent of our total revenue from sales of steam and 6.5 percent of our total revenues in 2008. PEA, on the other hand, does not require its customers to enter into long-term contracts.

Despite that, we have successfully extended long term contracts with industrial customers that were due to expire in coming 2 to 3 years, we can not assure you that we will be able to retain those customers whose contract are expiring in medium term or find new customers to replace them on commercially reasonable terms when our sales agreements with them expire. In addition, it is important to our business to maintain minimum levels of steam sales in order to meet applicable generating efficiency requirements (and failure to do so could result in termination of certain of our EGAT power purchase agreements). If we are unable to retain our customers or to find new customers to replace them on commercially reasonable terms and along the product lines that we require, this could have a material adverse effect on our According to market information as of December 2008, PTT Utility is aimed at supporting the future growth of the petrochemical business, results of operations, financial position and prospects. business of the PTT group of companies, but may also serve the utilities needs of nearby factories in the MIE Area. We believe that WE FACE SIGNIFICANT COMPETITION We face significant competition, particularly in respect to our this project will maintain or increase the level of competition that supply of electricity and steam from our cogeneration facilities to we face for industrial customers, particularly in the following industrial customers in the MIE Area. Although our customers are respects: (i) certain of our important customers are PTT affiliates party to long-term agreements with us, we compete with PEA and and (ii) certain of our existing customers already do business with the utility business units of both PTT Chemical Public Co., Ltd., a PTT and its affiliates. See “Business-Competition” for more merged company between Thai Olefins Plc (our existing industrial discussion of the competitive risks that we believe PTT Utility customers) and National Petrochemical Plc (which is the owner of poses to our business. this utility business) and PTT Utility Company Limited (“PTT Glow Energy Public Company Limited

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WE ARE SUBJECT TO SIGNIFICANT CONTRACTUAL RISKS UNDER OUR SPP POWER PURCHASE AGREEMENTS EGAT is our largest and most important customer, and sales to EGAT from our SPPs accounted for 30.5 percent of our total revenues in 2008 (see “—We are highly dependent on EGAT”). EGAT is the sole purchaser of wholesale electricity in Thailand. Due in part to the foregoing, our SPP power purchase agreements with EGAT are standard form contracts that we were not given an opportunity to negotiate. This means that these contracts are not tailored to our specific operating circumstances and contain a number of ambiguous provisions. Certain of the terms of our existing SPP power purchase agreements that we believe present risks to our business are as follows: • In contrast to our IPP power purchase agreement, our SPP power purchase agreements only provide for very limited instances in which penalties or liquidated damages are EGAT’s principal remedy for our failure to perform our contractual obligations. This means that any such failures by us are more likely to constitute events of default under our SPP power purchase agreements and, upon expiration of relevant cure periods, give EGAT the right to terminate these agreements;

not considered to be a governmental force majeure event for these purposes, so in the event of a PTT supply failure EGAT will only pay us for capacity actually made available and energy actually delivered; and • Our SPP power purchase agreements with EGAT contain only a general commitment for both parties to negotiate in good faith to amend to our contractual arrangement in response to any adverse change in law, including changes in environmental standards, which provides us with only limited change-in-law protection. This is particularly relevant if new laws were to impose more stringent environmental conditions on our existing facilities, which could require significant opex and capex. These contractual risks could have a material adverse effect on our business, results of operations, financial condition and prospects.

WE OPERATE IN A HIGHLY REGULATED INDUSTRY THAT IS SUBJECT TO CHANGE

The regulatory framework applicable to electricity generating companies in Thailand has undergone significant structural changes in the past and may undergo significant changes in the future. In addition, there have been a variety of proposals for • A power purchase agreement may be terminated before reform of the Thai electricity industry in the past which, once the end of its term due to the default of either party and made, have subsequently been delayed, cancelled, or significantly our only remedy may be to bring a claim in arbitration and modified prior to their implementation. prove damages; Thailand has been considering deregulation of the electricity • Although the power purchase agreements do not include industry for a number of years, including privatization of EGAT, liquidated damages provisions, penalties are imposed in MEA and PEA. EGAT began the process of privatization, but this the form of reduced capacity or energy payments from privatization process was cancelled. However, the EGAT power EGAT or refunds by us where (i) we supply less than the purchase agreements for our SPPs do not contain any provisions contracted capacity, (ii) we provide electricity for less than dealing with the potential future privatization of EGAT or the 7,008 hours in a year, (iii) the cogeneration efficiency is less restructuring of the electricity sector. We are unable to predict than 45 percent or (iv) thermal energy accounts for less what impact deregulation or privatization would have on our contractual arrangements and on the electricity sector in Thailand than 10 percent of our total energy sold; in general. If such deregulation were to have the impact of • If a force majeure event affecting EGAT or a governmental abolishing the PEA price, for example, which is the reference price force majeure event (as defined in the power purchase that we use to price our electricity sales to industrial customers, agreement) prevents us from supplying electricity to EGAT, we would likely have to attempt to renegotiate the pricing EGAT will continue to make its capacity payment (the structure with our industrial customers, which we may not be payment that is designed to allow us to recover our fixed able to do on reasonable commercial terms or at all. costs for constructing and operating the power generating facility over the life of the contract) to us for only up to six Because we operate a number of SPPs (and our companies months. In addition, failure by PTT to deliver gas to us is account for a material portion of all SPP electricity sold to EGAT),

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which are higher-cost wholesale electricity generators compared to IPPs and many of EGAT’s generating facilities, we are exposed to regulatory changes that seek to increase generating efficiency or to penalize high-cost generating facilities. This could take the form of changes in law and many of our key sales contracts do not contain specific mechanisms for compensating us in the event of adverse changes in law. To facilitate continued reform, the Energy Industry Act was published on the 10th of December 2007. Under such act, a new independent regulatory body, the Energy Regulatory Commission (“ERC”), has already been established on February 1, 2008 in order to regulate both the electricity and natural gas supply industries and to ensure fair competition. This agency’s key responsibilities will include: • Primarily regulating the electricity supply industry and the gas supply industry (GSI); • Regulating tariffs, standards and service quality; • Ensuring competition and preventing abuse of monopoly power; • Protecting consumers and dealing with consumer complaints; • Promote economical and efficient use of energy; • Provide comment on the power development plan, the investment plans of the electricity industry, the natural gas procurement plan and the energy network system expansion plan for submisson to the minister.

These or other regulatory or structural changes affecting the Thai electricity industry could require us to significantly change the way that we operate our business and could have a material adverse effect on our business, results of operations, financial condition and prospects. Presently, the ERC announced the new regulation for the power industry, which is resulting that the existing power generators have to apply the generation distribution and sales licenses.

WE HAVE HAD SIGNIFICANT DISPUTES WITH EGAT IN THE PAST EGAT is our largest and most important customer. We have been involved in a number of significant disputes with EGAT in the past, including disputes relating to important components of our business operations. Most significantly, in 2004, EGAT challenged the interconnection of our various cogeneration facilities, which we believe is central to the reliability and quality of our service, as a violation of our power purchase agreements and challenged the compliance of our Glow SPP 2 / SPP 3 hybrid plant with applicable operating efficiency criteria established under Thailand’s SPP regulations. Although we have resolved these disputes in a satisfactory manner and amended our relevant EGAT power purchase agreements to reflect our agreements with EGAT, we agreed as part of the settlement to make financial concessions to EGAT (although we do not consider the amounts of these concessions to be material). We can not assure you that we will not become involved in further disputes with EGAT, or that if we do, we will be able to resolve any such disputes on satisfactory terms.

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In the past, we have been involved in discussions with EGAT regarding important aspects of our business, including the reference index for coal prices that we are permitted to pass through to EGAT under our power purchase agreements and the synchronization of our non-SPP generating units to the EGAT grid. Although we do not characterize these as disputes, we believe that, because of the structure of the Thai electricity supply industry and the nature of our power purchase agreements, we will likely continue to maintain an ongoing dialogue with EGAT to resolve these and similar types of issues in order to continue to clarify certain aspects of our contractual relationship. There is the potential for disputes to arise in connection with any such issues or points of discussion. Because EGAT is our most important customer and disputes with EGAT may involve some of our most important contracts, any disputes that we may have with EGAT in the future may require us to materially change the way in which we operate our business and could have a material adverse effect on our business, results of operations, financial condition and prospects.

We have entered into long-term natural gas supply agreements with PTT. Because of the structure of the Thai fuel supply industry, PTT currently operates as an effective monopoly and is the only entity that is able to supply us with natural gas to allow us to operate our business. In the event that PTT fails to supply us with adequate quantities of natural gas under our gas supply agreements, we could face significant disruptions to our business. Although there is a compensation provision in the gas supply agreements between our SPPs and PTT which require PTT to compensate us for its inability to deliver contracted quantities of natural gas to us, this compensation only extends to natural gas that we use to produce electricity to sell to EGAT and not to our industrial customers. Most of our gas-fired facilities are designed to be able to run on diesel fuel as an alternative fuel source, but we could incur significant costs and operating inefficiencies in switching to and operating by using diesel fuel. Moreover, our cogeneration facilities may not be able to operate on diesel fuel for sustained periods of time, as, when operating on diesel fuel, we consume diesel fuel faster than we are able to re-fill our diesel fuel storage tanks.

OUR BUSINESS OPERATIONS ARE DEPENDENT ON THE There is a risk of natural gas supply disruption resulting from AVAILABILITY OF FUEL Our business operation are dependent on the availability of fuel, in particular natural gas and coal. In 2008, purchases of natural gas accounted for 76.9 percent of our cost of sales and purchases of coal accounted for 7.0 percent of our total cost of sales. Shortages in natural gas or coal, or an inability of our suppliers to provide these fuels to us, could prevent some or all of our facilities from being able to generate electricity and steam, which could prevent us from fulfilling our contractual obligations.

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defects in or the requirement for maintenance of the pipeline, over which we have no control. The current limitations on the supply of natural gas to the areas in which we operate, or any disruption in the supply of natural gas, could have a material adverse effect on our business, results of operations, financial condition and prospects. We have entered into a long-term coal supply agreement with Banpu International Limited (“Banpu�) for supply of coal to our


Glow SPP 3 plant, which is our only coal-fired facility. Our current policy states that we will source approximately 50 - 52 percent of our coal requirements from Banpu, and approximately 38 - 40 percent under medium term contracts with other international supplier(s) and the remainder through spot purchase. Therefore, there is a risk of coal supply disruption resulting from various circumstances, including a situation where our long-term coal supplier could not fulfill its obligations and we could not arrange substitute supply from our medium-term coal suppliers and/or spot market. In such situation, we also can not assure that the cost of substitute supply would be commercially competitive.

WE ARE HIGHLY DEPENDENT ON PTT As discussed under “—Our business operations are dependent on the availability of fuel”, we rely heavily on PTT for the supply of natural gas to our operating facilities. Purchases of natural gas, which were almost all purchased from PTT, accounted for approximately 76.9 percent of our total cost of sales in 2008. In addition to being a key supplier, PTT has an equity interest in PTT Chem and PTT Utility, two of our principal competitors (as discussed above under “—We face significant competition”). PTT also has an equity interest in a number of our industrial customers (most significantly PTT Chemical, previously known as Thai Olefins Plc and PTT Aromatics and Refining, previously known as Aromatics (Thailand) Plc). Sales to these two customers accounted for 11.2 percent of our total revenue from electricity sold to industrial customers (in MWh), 27.3 percent of our total revenue from sales of steam and 6.5 percent of our total revenues in 2008. See “—We face significant competition”.

If our competitive position with PTT adversely affects its willingness to, or the terms on which it will, enter into new agreements to supply natural gas to us, or if our relationship with PTT deteriorates for any other reason, this could have a material adverse effect on our business, results of operations, financial condition and prospects.

WE ARE SUBJECT TO SIGNIFICANT CONTRACTUAL RISKS UNDER OUR SPP GAS SUPPLY AGREEMENTS WITH PTT PTT is our largest and most important fuel supplier (see “-We are highly dependent on PTT”). PTT is majority-owned by the government and currently has an effective monopoly with respect to supply of natural gas in Thailand. Due in part to the foregoing, our gas supply agreements with PTT are standard form contracts that we were not given an opportunity to negotiate. This means that, among other things, our gas supply agreements with PTT are not tailored to our specific operating circumstances and contain a number of ambiguous provisions. Although the terms of our PTT gas supply agreements vary from each other, certain of the terms contained in at least some of our PTT gas supply agreements that we believe present risks to our business are as follows: • A gas supply agreement may be terminated before the end of its term due to the default of either party and our only remedy may be to bring a claim in arbitration and prove damages (rather than allowing us to require PTT to continue to supply gas to us during resolution of the dispute); • PTT only undertakes to use its “best efforts” to deliver the specified daily quantity and is not under an absolute obligation to deliver gas to us; Glow Energy Public Company Limited

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• The terms relating to PTT’s requirement to compensate us if PTT fails to deliver gas meeting contractually-designated specifications are unclear and in any case the amount of any compensation that it would pay to us is capped; and • Non-compliance with any term in a gas supply agreement by either party that is not remedied within 60 days of a notice of default thereof constitutes an event of default and enables the non-defaulting party to terminate the gas supply agreement.

fired cogeneration facility will be sold before scheduled COD. This could have a material adverse effect on the business, results of operation, financial conditions and prospects.,

All the projects mentioned are under construction. We can not ensure that we would ultimately be able to complete the construction of above-mentioned projects within the schedule and/or within the budget. Also, we can not ensure that we would ultimately be able to source funding as required for completion of construction of the projects, and that the cost of such funding These contractual risks could have a material adverse effect on would be on competitive basis. Substantial delay in completion our business, results of operations, financial condition and of these projects could have a material adverse effect on the business, results of operation, financial conditions and prospects. prospects.

WE ARE ENGAGING IN NUMBERS OF EXPANSION ENVIRONMENTAL OPPOSITION TO EXPANDING MAP TA PROJECTS, THEREFORE, ARE EXPOSED TO RISKS PHUT Some NGO’s, local communities and politicians claim that the ASSOCIATED WITH COMPLETION OF SUCH PROJECTS. We are currently engaging in 3 major expansion projects; 115 MW coal-fired cogeneration plant, 660 MW coal-fired IPP plant, and 382 MW gas-fired cogeneration plant. The 115 MW coal-fired cogeneration plant is scheduled to start commercial operation by the end of 2009, and we have contracted to sell all of its capacity to industrial customers. The 660 MW coal-fired plant has scheduled commercial operation date at November 9, 2011, and we have entered into Power Purchase Agreement with EGAT under IPP program. The 382 MW gas fired cogeneration plant is scheduled to start commercial operation in 3rd quarter of 2011, and we have contracted to sell majority, but not all, of its capacity. We can not ensure that all capacity of the 382 MW gas

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industrial expansion of the petrochemical complex in Map Ta Phut is not sustainable from a health and environmental point of view. Several measures restricting environmental permits have been made, including: no new environmental impact assessment approvals unless NOx, SO2 and TSP emissions from existing plants are reduced by 125% of the emissions of any planned new plant. Our EIA for the 2 new projects – GHECO-One and new cogeneration project – were approved based on the abovementioned principal. We need to invest and improve our existing facilities to reduce the emission by 125 percent of the amount emitted by the new plants in order to do the expansion project. There could also be


new more stringent emissions standards applicable in Map Ta Phut or Thailand on existing power plants or new power plants. There could also be a decision to develop the petrochemical business further in a new Southern Seaboard. This could have a material adverse effect on the business, results of operation, financial conditions and prospects for future expansions.

WE ARE EXPOSED TO FOREIGN EXCHANGE RISK We are exposed to foreign exchange risk in a number of respects. Many of our operating costs are denominated in US dollars and other currencies. Most of our US dollar-denominated operating costs can be serviced by US dollar-linked income. However, we also purchase parts and equipment for our plants in US dollars, and Glow IPP incurs a significant amount of Swiss francdenominated costs relating to maintenance. Moreover, our coal and coal freight costs, although largely denominated in Baht, are US dollar-based and we can not fully pass the fluctuations in these costs (including as a result of currency fluctuations) through to our customers. Further, while our revenues are partially linked to the US dollar, a significant amount of our indebtedness is Bahtdenominated. We have in the past targeted a substantial degree of US dollar content or linkage in cash flows (and thus normalized net earnings) available to distribute to shareholders and, if we continue to do so, any appreciation of the Baht compared to the

US dollar would reduce the Baht amount of dividend payments to our shareholders. For these reasons, significant fluctuations in exchange rates could have a material adverse effect on our business, results of operations, financial condition and prospects.

OUR INSURANCE COVERAGE MAY NOT ADEQUATELY PROTECT US AGAINST POSSIBLE RISK OF LOSS Our operations are subject to operating and other risks typically associated with electricity generation. Insurance markets are cyclical. As a result, we may at times be unable to obtain appropriate insurance on commercially reasonable terms or at all, which may subject us to potentially significant financial loss upon the occurrence of a large uninsurable event. We have all-risk and business interruption, third party liability, terrorism and other insurance coverage. Our principal insurance covers loss arising out of physical loss or damage to our plants and generating machinery as well as financial loss resulting therefrom, but contains certain customary exclusions and deductibles. If we suffer a large uninsured or excluded loss or any insured loss suffered by us significantly exceeds our insurance coverage, our business, financial condition and results of operations may be materially adversely affected.

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SHAREHOLDING AND MANAGEMENT STRUCTURE

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SHAREHOLDERS The following table sets out our major shareholders as at December 31, 2008. MAJOR SHAREHOLDERS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Note :

GDF Suez-Energy (Thailand) Co., Ltd.(1) Suez-Tractebel Energy Holdings Cooperatieve U.A.(2) State Street Bank and Trust company for London Nortrust Nominees LTD. Social Security Office (2 KorRaNee) Littledown Nominees Limited 7 Chase Nominees Limited 1 Chase Nominees Limited 32 Government of Singpore Investment Corporation C American International Assurance company, Limited-APEX State Street Bank and Trust Company Littledown Nominees Limited 9 HSBC (Singapore) Nominees Pte Ltd. Chase Nominees Limited Boon Rawd Brewery Co., Ltd. Chase Nomimees Limited 42 Others

# SHARES 645,259,773 365,716,260 59,496,749 53,430,800 22,468,500 20,223,254 19,662,600 17,200,100 12,914,000 11,787,500 11,096,428 10,128,900 9,841,400 9,058,100 8,000,000 7,350,400 179,230,271 1,462,865,035

% 44.11 25.00 4.07 3.65 1.54 1.38 1.34 1.18 0.88 0.81 0.76 0.69 0.67 0.62 0.55 0.50 12.25 100.00

(1) Suez-Energy (Thailand) Co., Ltd. has been changed the name of the Company to be “GDF SUEZ Energy (Thailand) Company Limited since 31 January 2009 (2) Suez-Tractebel Energy Holdings Cooperatieve U.A. and GDF Suez-Energy (Thailand) Co., Ltd. are the wholly owned subsidiary of GDF SUEZ S.A.

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Glow Energy Public Company Limited Board of Directors Audit Committee Chief Executive Officer

Executive Vice President and Chief Financial Officer

Executive Vice President and Chief Commercial Officer

Senior Vice President and Chief Financial Controller Vice President - Accounting

Vice President - Cogeneration Marketing & Development

Vice President Information Technology

Vice President Industrial Sales

Vice President - Budgeting and Business Controlling

Vice President Industrial Customer Relations

Vice President Business Quality & Internal Audit

Vice President Coal & Biomass Management

Vice President Finance & Investor Relations Vice President Legal and Insurance

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Vice President Human Resources and Administration


Executive Vice President Project Development and Business

Executive Vice President and Chief Operating Officer

Senior Vice President Construction & EPC Management

Senior Vice President Operations Support Services

Senior Vice President Engineering

Senior Vice President Rayong Facilities Management

Senior Vice President Government & Public Affairs Vice President - Public Relations

Plant Manager - Glow SPP1 & Glow Demin Water Site Plant Manager - Glow SPP2, Glow SPP3 & Glow Energy Site (Phase 3 & 4) Plant Manager Glow Energy Site (Phase 1 & 2)

Facility Manager - Glow IPP Vice President Suppy Chain Management Vice President Asset Optimization

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The company’s management structure is comprised of the Board of Directors, the Audit Committee, and the Management Team

1. BOARD OF DIRECTORS NAME 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Mr. Guy Richelle Mr. Peter Valere Germain Termote1 Mr. Esa Heiskanen2 Mr. Kovit Poshyananda Mr. Vitthaya Vejjajiva Mrs. Supapun Ruttanaporn Mr. Dirk Achiel Marc Beeuwsaert Mr. Guido Geeraerts Mr. Johan De Saeger Mr. Rajit Nanda3 Mr. Michel J. G. Gantois4 Mr. Philip De Cnudde5 Mr. Pierre Jacques Weulersse6 Mr. Anut Chatikavanij Mr. Brendan G. H. Wauters

POSITION Chairman of the Board Director and Chief Executive Officer Director and Chief Executive Officer Independent Director and Audit Committee Independent Director and Audit Committee Independent Director and Audit Committee Director Director Director Director Director Director Director Director Director

Mr. Sirote Vichayabhai7 is the Company secretary. Mr. Natthapatt Tanboon-ek8 is the Company secretary. Note :

1. Resigned from the company’s director and Chief Executive Officer on 7 October 2008. 2. Replaced Mr. Peter Valere Germain Termote in his position as Director and Chief Executive Officer on 7 October 2008. Was an Executive Vice President and Chief Projects Development and IPP Business from 3 March 2005. Was an Executive Vice President Projects Government Affairs from 1 September 2004. 3. Resigned from the company’s director on 26 February 2009. 4. Replaced Mr. Rajit Nanda as Director on 26 February 2009. 5. Resigned from the company’s director on 26 February 2009. 6. Replaced Mr. Philip De Cnudde as Director on 26 February 2009. 7. Resigned from VP Finance and Investor Relations on 15 July 2008. 8. Has been VP Finance and Investor Relations since 20 October 2008. The Board of Directors’ Meeting on 26 February 2009 approved the resignation of Mr. Rajit Nanda and Mr. Philip De Cnudde from the position of Director of the Company and the appointment of Mr. Michel J. G. Gantois and Mr. Pierre Jacques Weulersse to replace the resigned directors for their remaining term.

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Authorized Directors Mr. Anut Chatikavanij or Mr. Dirk Achiel Marc Beeuwsaert or Mr. Guido Geeraerts or Mr. Esa Heiskanen or Mr. Pierre Jacques Weulersse or Mr. Brendan G. H. Wauters or Mr. Johan De Saeger or Mr. Guy Richelle or Mr. Michel J. G. Gantois, 2 of these 9 directors to sign jointly and affixed Company’s seal. Note :

The authorized directors of the Company as referred above with signing authority only after obtaining approval from the Annual General Meeting of Shareholders of the Company and completion of the filing process with the Ministry of Commerce.

Scope of Authority and Responsibilities of the Board of Directors • The Company’s board of directors must perform its duties in accordance with laws, objectives and articles of association of the Company as well as in accordance with the resolutions of shareholders’ meetings. The board of directors may empower one or more directors or any person to act on its behalf. • The board of directors has the power to make decisions and oversee the operations of the Company, except in the following cases which require approval from the shareholders’ meeting first. • any activity that laws and / or articles of association of the Company has specified that require approval from the shareholders’ meeting first. • any undertaking of any related transaction according to the regulations of the Stock Exchange of Thailand. • any acquisition and disposal of the assets according to the regulations of the Stock Exchange of Thailand. • The board of directors has the power to declare payment of interim dividends from time to time if it deems that the Company has enough profit to do so.

2. MANAGEMENT TEAM The Management Team is comprised of 30 persons as follows : NAME 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Mr. Peter Valere Germain Termote Mr. Esa Heiskanen Mrs. Sriprapha Sumruatruamphol Mr. Heikki Pudas Mr. Pajongwit Pongsivapai Mr. Suthiwong Kongsiri Mr. Svend Erik Jensen Mr. Kanit Thangpetchr Mr. Louis Stephen Holub Mr. Michael W. Reiff Mr. Wisit Srinuntawong Mr. Narongchai Visutrachai Mrs. Chamaiporn Soonthorntasanapong Ms. Sirichan Chotchaisathit Mr. Prateep Phuthamrugsa Mr. Chin Beng Tong Mr. Somchai Klinsuwanmalee Mrs. Mantana Kunakorn Mr. Renaud Louis Albert Pilleul Ms. Suttasinee Pengsupaya

POSITION Chief Executive Officer (until 6 October 2008) Chief Executive Officer (since 7 October 2008) Executive Vice President and Chief Commercial Officer Executive Vice President - Project Development and Business Executive Vice President and Chief Operating Officer Executive Vice President and Chief Financial Officer Senior Vice President - Construction & EPC Management Senior Vice President - Rayong Facilities Management Senior Vice President - Operations Support Services Senior Vice President and Chief Financial Controller Senior Vice President - Engineering Senior Vice President - Government & Public Affairs Vice President - Legal & Insurance Vice President - Industrial Sales Vice President - Supply Chain Management Vice President - Coal & Biomass Management Vice President - Public Relations Vice President - Human Resources & Administration Vice President - Industrial Customer Relations Vice President - Accounting

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NAME 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Mr. Chaiwut Rattanapornsinchai Mr. Thomas J.M. Ranschaert Mrs. Unchana Kittipiyakul Dr. Somgiat Dekrajangpetch Mr. Nattaphatt Tanboon-ek Mr. Akarin Prathuangsit Mr. Anutarachai Natalang Mr. Apichart Jamjuntr Mr. Apidech Siriphornoppakhun Mr. Suratchai Bangluang

POSITION Vice President - Information Technology Vice President - Business Quality & Internal Audit Vice President - Budgeting & Business Controlling Vice President - Asset Optimization Vice President - Finance & Investor Relations Vice President - Cogeneration Marketing and Development Plant Manager - Glow Energy Site (Phase 1 & 2) Plant Manager - Glow SPP2 / SPP3, Glow Energy Site (Phase 3 & 4) Plant Manager - Glow SPP1 & Glow Demin Water Site Facility Manager - Glow IPP

Scope of Authority and Responsibilities of the CEO The CEO shall have the authority to perform the normal business operations of the Company except the following matters which shall be considered and approved by the Board of Directors or recommended to the Shareholders’ Meeting for its approval, as the case may be : • Authorization of internal power of attorneys; • Amendment of the Company’s Articles of Association; • Merger, split up or any modification of the form of the Company; • Dissolution of the Company; • Increase, decrease or transfer of the registered capital of the Company; • Taking of a lien or any other security on the assets of the Company; • Any material change to the main agreements, i.e. Power Purchase Agreement with EGAT, Gas Supply Agreement with PTT, Coal Supply Agreement with Banpu Minerals Co., Ltd. and EPC Contracts; • Negotiation and execution of documents in relation to the opening of credit facilities with banks, for an amount exceeding the amount mentioned in the daily management powers granted by the Board of Directors to the CEO; • Commencement or discontinuance of any business; • Removal and appointment of CEO; • Approval of long-term strategic plan; and • Approval of annual budget.

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DETAILS OF THE BOARD OF DIRECTORS 1. Mr. Guy Richelle (54) Education Sharholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Nuclear Engineering, University Liege in Belgium Master Degree in Business Administration, University of Louvain-la-Neuve in Belgium None None Present • Chairman of the Board and Director / Glow Energy Public Co., Ltd. • Chairman of the Board and Director / Glow Group (Except GHECO-One Co.,Ltd) • Director / GHECO-One Co., Ltd. • Chairman of the Board and Director, Regional Manager/ President & CEO / GDF SUEZ Energy Asia • Chairman of the Board and Director / GDF SUEZ Energy (Thailand) • Director / PTT Natural Gas Distribution Co., Ltd. (PTT NGD) • Director / Huay Ho Power Company (Laos) • Director / Emerald Energy Corporation (Phillippines) • Director / Senoko Power Limited (Singapore) • Director / Senoko Service Pte. Ltd. (Singapore) • Director / Senoko Gas Supply Pte. Ltd. (Singapore) • Director / Senoko Energy Supply Pte. Ltd. (Singapore) • Director / Lion Power Holding Pte. Ltd. (Singapore) • Director / Tractebel Pacific Limited (Hongkong) • Director / SUEZ Energy India Pvt Ltd. (India) • Director / Baymin Enerig AS (Turkey) • Director / Suez-Tractebel S.A. (Dubai) • Director / United Power Company (Oman) • Director / Power Development Company (Oman) • Director / Sohar Power Company (Oman) • Director / Suez-Tractebel Dubai Branch Supervisory Board (Oman) • Director / RLC Power Holding Company Ltd. (United Arab Emirates) • Director / SGA Marafiq Holding WLL (Bahrain) • Director / Ras Girtas Power Company (Qatar) • Director / Jubail Water & Power Company (Saudi Arabia) • Director / Tractebel EGI Middle East (Dubai)

2. Mr. Peter Valere Germain Termote (44) Education Sharholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : : :

Master Degree from Harvard University with full Scholarship (Tuition & COL) Master Degree from University of Paris 1 – Sorbonne with full Scholarship (Tuition & COL) Bachelor Degree in Law (Highest Honors) 1st of class Award, University of Brussels 223,200 Shares (0.02%) None 2004 - 2008 (Resigned from the Company on October 2008) • Director and Chief Executive Officer / Glow Energy Public Co., Ltd. • Director and Chief Executive Office / Glow Group

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3. Mr. Kovit Poshyananda (73) Education

Sharholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : : : :

Honorary Doctorate (Economics), Chulalongkorn University National Defense College M.A., Ph.D. from Cornell University B.A. (Honors) from Cambridge University None None Present • Independent Director & Audit Committee / Glow Energy Public Co., Ltd. • Independent Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Chairman of the Board of Director and the Audit Committee / Sansiri Public Co., Ltd. • Director and Chairman of the Audit Committee / Furukawa Metal (Thailand) Co., Ltd. • Director and Chairman of the Audit Committee / Shangri-La Hotel Public Co., Ltd. • Director / Bangkok Bank Public Co., Ltd. • Director / Office of the Council of State • Chairman of the Appellate Committee / Thai Securities and Exchange Commission (SEC)

: : : : : :

Master Degree of Laws, Harvard University, USA Bachelor Degree of Laws, Gray’s – Inn, England Role of Chairman Program Class 2/2001, Thai Institute of Directors Association (IOD) None None Present • Independent Director & Audit Committee / Glow Energy Public Co., Ltd. • Independent Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • President / National Committee United World Colleges • President / K-Line (Thailand) Co., Ltd. • President / Kawasaki-Dowa Co., Ltd.

4. Mr. Vitthaya Vejjajiva (72) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

5. Mrs. Supapan Ruttanaporn (67) Education

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

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: MBA (Accounting), Michigan State University, USA : Bachelor of Accounting (Second Honor), Chulalongkorn University : Certificate in Director Certification Program (DCP) , Class 15/2002, Thai Institute of Directors Association (IOD) : None : None : Present • Independent Director & Audit Committee / Glow Energy Public Co., Ltd. • Independent Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Independent Director & Audit Committee / Delta Electronics (Thailand) Public Co., Ltd. • Member of the Ethic Committee / Federation of Accounting Profession : Past • Chairperson / Thai Accounting Association • Independent Director & Audit Committee / Chiang Mai Frozen Food Public Co.,Ltd. • Member of Department of Accountancy Committee / Faculty of Commerce and Accountancy, Chulalongkorn University


• Member of the subcommittee on the Automatic Adjustment Mechanism Monitoring / National Energy Policy Office of Thailand • Member of the Accounting and Finance Specialist Committee / Office of Civil Service Commission

6. Mr. Dirk Achiel Marc Beeuwsaert (61) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

General Management Programme Cedep, Fontainebleau Bachelor Degree in Electrical and Mechanical Engineering, University of Ghent None None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Chief Executive Officer / Tractebel Electricity and Gas International • Director / Tractebel Energia (Brazil) • Director / Tractebel Inc. (USA)

: : : :

Master Degree in Organizational Sociology, Gent University None None Present • Director / Glow Energy Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Senior Vice President - Trading and Sales / Electricity and Gas International • Department of Organizational Studies / Electrabel N.V. (Belgium) • Department of Organization and Development / Electrabel N.V. (Belgium) • Director / Tractebel Energy Marketing Inc. • Director / Tractebel Energy Services Inc. • Director / Electrabel Nordic AS

7. Mr. Guido Geeraerts (55) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

8. Mr. Johan De Saeger (42) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Commercial Engineering, Catholic University of Leuvein, Belgium Master Degree in Business Administration, Cornell University, USA 57,300 shares (0.00%) None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group • Director / GDF SUEZ Energy Asia Co.,Ltd • Director / GDF SUEZ Energy (Thailand) Co.,Ltd • Director / Senoko Power Limited • Director / Senoko Service Pte. Ltd • Director / Senoko Gas Supply Pte. Ltd • Director / Senoko Energy Supply Pte. Ltd • Director / Lion Power Holding Pte. Ltd • Director / Houay Ho Power Co.,Ltd • Executive Vice President- Head of Business Development Southeast and East Asia, Australia and Southern Africa / GDF SUEZ Energy Southern Africa (PTY) Ltd. : 2002 - 2006 • Executive Vice President - Country Manager/ SUEZ Energy International

Glow Energy Public Company Limited

77


9. Mr. Rajit Nanda (38) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree of Business Administration, Utkal University, India Bachelor Degree of Commerce, Utkal University, India None None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd) • Chief Executive Officer / SUEZ Energy International Asia, Middle East & Africa • Director / Tractebel Parts & Repairs FZE : 2000-2006 • Director / SUEZ Group

10. Mr. Philip De Cnudde (48) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : : :

Master Degree in Electrical Engineering from Ghent University Operational Management in further Degree from Ghent University General Management Programme CEDEP at INSEAD, Fontainebleau None None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Chief Business Controller / SUEZ Energy International

11. Mr. Anut Chatikavanij (42) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Bachelor Degree from Lehigh University, Pennsylvania, USA : Certificate in Director Accreditation Program (DAP), Class 38 / 2005, Thai Institute of Directors Association (IOD) : 415,200 shares (0.03%) : Relative of Mrs. Sriprapha Sumruatruamphol (Management) : Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Gheco-One Co.,Ltd.) • Director / Leading Edge Golf Co., Ltd. • Director / Hunter Mutual Fund Co., Ltd. • Director / Operation Power Services Co., Ltd.

12. Mr. Brendan G.H. Wauters (38) Education

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

78

Annual Report 2008

: Master Degree in Business Administration, University of Brussels : Commercial Engineering Degree of University of Brussels (VUB) : Certificate in Director Accreditation Program (DAP), Class 57/ 2006, Thai Institute of Directors Association (IOD) : 45,000 shares (0.00%) : None : Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd & Gheco-One Co., Ltd.) • Chief Financial Officer / Tractebel Asia • Executive Vice President - Strategy / GDF SUEZ Energy MEAA • Executive Director & Vice President - Commercial / Senoko Power Ltd.


13. Mr. Esa Heiskanen (41) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master Degree in Science (Mechanical Engineering), Helsinki University of Technology, Finland : None : None : Present • Director and Chief Executive Officer / Glow Energy Public Co., Ltd. • Director and Chief Executive Officer / Glow Group : 2004 - 2008 • Executive Vice President and Chief Project Development & IPP Business / Glow Energy Public Co.,Ltd. • Executive Vice President and Chief Project Development & IPP Business / Glow Group : 2001 - 2004 • Senior Business Developer / Tractabel Asia, Bangkok Office

14. Mr. Pierre Jacques Weulersse (57) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Diploma of Engineering from Ecole Polytechnique, France None None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd. & GHECO-One Co., Ltd.) • Director / GDF SUEZ Energy (Thailand) Co., Ltd. • Executive Vice President and Head of Strategy & Sustainable Development / GDF SUEZ – GDF SUEZ Energy International : Past • Vice President International Business Development / Gaz de France International Division • Executive Consultancy / Sofregaz

15. Mr. Michel J.G. Gantois (42) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

BSc in Finance and MBA, Katholieke Universiteit Leuven None None Present • Director / Glow Energy Public Co., Ltd. • Director / Glow Group (Except Glow IPP 3 Co., Ltd) • Director / GDF SUEZ Energy (Thailand) Co., Ltd. • Regional CFO / GDF Suez Middle East, Asia, Africa : 2004 • Vice President – Finance / Kelson Energy / Electricity Production • Director / Deloitte Chaina / Consulting

Remark : Glow Group as per mention in this attachment is 1) Glow SPP 2 Co., Ltd. 4) Glow SPP 1 Co., Ltd. 2) Glow SPP 3 Co., Ltd. 5) Glow IPP Co., Ltd. 3) Glow Co., Ltd. 6) Glow Demin Water Co., Ltd.

7) Glow IPP 2 Holding Co., Ltd. 8) Glow IPP3 Co., Ltd. 9) GHECO-One Co., Ltd

Glow Energy Public Company Limited

79


DETAILS OF MANAGEMENT TEAM 1. Mr. Peter Valere Germain Termote (See description at the Board of director profile no. 2)

2. Mr. Esa Heiskanen (See description at the Board of director profile no. 13)

3. Mr. Heikki Pudas (46) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

:

: : :

M.Sc. Engineering (Energy Economic), Technical University of Lappeenranta, Finland None None Present • Executive Vice President - Project Development & Business / Glow Energy Public Co., Ltd. • Executive Vice President - Project Development & Business / Glow Group 2008 • Vice President – Project Development / Glow Energy Public Co., Ltd. • Vice President – Project Development / Glow Group 2005-2006 • Director, Innovations and City Marketing / City of Oulu, Finland 2002-2005 • Chairman of Board / Oulu Innovation Ltd., Finland 1998-2005 • General Manager, International O&M, Regional Director South East Asia, Managing Director / Fortum Power & Heat Oy, Finland • General Manager, International O&M, Regional Director South East Asia, Managing Director / Fortum Service Oy, Finland (based in Bangkok) • General Manager, International O&M, Regional Director South East Asia, Managing Director / Fortum Energy Solutions (Thailand) Co., Ltd.

4. Mrs. Sriprapha Sumruatruamphol (45) Education

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master of Business Administration, Syracuse University, New York, USA : Bachelor Degree in Science (Chemical Engineering), Michigan Technological University, Michigan, USA : 30,000 Shares (0.00%) : Relative of Mr. Anut Chatikavanij (Director) : Present • Executive Vice President and Chief Commercial Officer / Glow Energy Public Co., Ltd. • Executive Vice President and Chief Commercial Officer / Glow Group • Director / Eastern Fluid Transport Co., Ltd • Vice Chairman and Director / Association of Private Power Producers

5. Mr. Pajongwit Pongsivapai (40) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

80

Annual Report 2008

: : : : :

Master Degree of Science in Chemical Engineering, Oregon State University, USA Bachelor Degree in Chemical Engineering, Chulalongkorn University 35,500 Shares (0.00%) None Present • Executive Vice President and Chief Operating Officer / Glow Energy Public Co., Ltd. • Executive Vice President and Chief Operating Officer / Glow Group


: 2006-2007 • Deputy Chief Operating Officer and Senior Vice President – Operations / Glow Energy Public Co., Ltd • Deputy Chief Operating Officer and Senior Vice President – Operations / Glow Group : 2003-2004 • Operation Director / S.T.P. & I. Public Co., Ltd.

6. Mr. Suthiwong Kongsiri (38) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Business Administration, University of North Carolina, Chapel Hill Bachelor Degree in Finance & Banking, Assumption University, Bangkok 50,000 Shares (0.00%) None Present • Chief Financial Officer and Executive Vice President / Glow Energy Public Co., Ltd. • Chief Financial Officer and Executive Vice President / Glow Group : 2003-2004 • Senior Vice President and Deputy Chief Financial Officer / Glow Energy Public Co., Ltd. • Senior Vice President and Deputy Chief Financial Officer / Glow Group

7. Mr. Svend Erik Jensen (51) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master Degree in Business Administration (MBA), Macquarie Graduate School of Management Sydney, Australia : Bachelor Degree in Mechanical Engineering, Technical University of Denmark : None : None : Present • Senior Vice President - Construction & EPC Management / Glow Energy Public Co., Ltd. • Senior Vice President - Construction & EPC Management / Glow Group : 2001-2003 • Project Manager / Glow Energy Public Co., Ltd. • Project Manager / Glow SPP 3 Co., Ltd.

8. Mr. Kanit Thangpetchr (51) Education

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master Degree in Business Administration, Pathumthani University : Senior Electrical Professional Engineer. : Bachelor Degree in Engineering (Electrical), King Mongkut Institute of Technology (Ladkrabang) : None : None : Present • Senior Vice President - Rayong Facilities Management / Glow Energy Public Co., Ltd. • Senior Vice President - Rayong Facilities Management / Glow Group (Except Glow IPP Co., Ltd.) : 2002 - 2006 • General Manager of Operations of Rayong Facilities / Glow Group (Except Glow IPP Co., Ltd.)

Glow Energy Public Company Limited

81


9. Mr. Louis Stephen Holub (47) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: United States Navy Education Programs, City College of Chicago, Dundalk Community College : American University (Tulane & Arizona State) Degree Accreditation Pending : None : None : Present • Senior Vice President - Operations Support Services / Glow Energy Public Co., Ltd. • Senior Vice President - Operations Support Services / Glow Group : 2006-2007 • Senior Vice President - Strategic Initiatives / Glow Energy Public Co., Ltd. • Senior Vice President - Strategic Initiatives / Glow Group • Vice President - GIPP Facilities Management / Glow IPP Co.,Ltd. : 2002-2006 • Senior Vice President - Rayong Facilities Management / Glow Energy Public Co., Ltd. • Senior Vice President - Rayong Facilities Management / Glow Group (Except Glow IPP Co., Ltd.)

10. Mr. Michael W. Reiff (46) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Diploma of Industrial Management, (Master Degree), Industrial Academy Stuttgart, Germany None None Present • Senior Vice President and Chief Financial Controller / Glow Energy Public Co., Ltd. • Senior Vice President and Chief Financial Controller / Glow Group : 2004-2006 • Corporate Controller / Johnson Electric, Hong Kong : 2000-2003 • Operations Development Manager / The Coca-Cola Co., Ltd.

11. Mr. Wisit Srinuntawong (46) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master Degree in Business Administration, Bangkok University : Bachelor Degree in Engineering (Electrical Power), King Mongkut Institute of Technology (North Bangkok) : None : None : Present • Senior Vice President – Engineering / Glow Energy Public Co., Ltd. • Senior Vive President – Engineering / Glow Group : 1999-2004 • Vice President – Engineering / Glow Energy Public Co., Ltd. • Vice President – Engineering / Glow Group

12. Mr. Narongchai Visutrachai (42) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

82

Annual Report 2008

: : : : : :

Master Degree in Science (Economics), University of North Texas, USA Master Degree in Business Administration, Kasetsart University Bachelor Degree in Political Science (Public Administration), Chulalongkorn University None None Present • Senior Vice President – Government & Public Affairs / Glow Energy Public Co., Ltd. • Senior Vice President – Government & Public Affairs / Glow Group


13. Mrs. Chamaiporn Soothorntasanapong (48) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Liberal Art (Thai – English Translation), Ramkamhang University Bachelor Degree in Liberal Arts (English), Thammasart University None None Present • Vice President – Legal and Insurance / Glow Energy Public Co., Ltd. • Vice President – Legal and Insurance / Glow Group

14. Mr. Anutarachai Nathalang (46) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master of Engineering (Electrical), King Mongkut Institute of Technology (Ladkrabang) Bachelor of Science (Physics), Chiangmai University None None Present • Plant Manager / Glow Energy site (Phase 1 & 2) : 1994-2006 • Operation Planning Manager / Glow Group

15. Ms. Sirichan Chotchaisathit (44) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Business Administration, Chulalongkorn University Bachelor Degree in Liberal Arts, Thammasart University None None Present • Vice President – Industrial Sales / Glow Energy Public Co., Ltd. • Vice President – Industrial Sales / Glow Group (Except Glow IPP Co., Ltd.)

16. Mr. Prateep Puthamrugsa (44) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Public Administration, Pathumthani University Bachelor Degree in Industrial Technology, Srinakarinwirot University None None Present • Vice President – Supply Chain Management / Glow Energy Public Co., Ltd. • Vice President – Supply Chain Management / Glow Group : 2000-2006 • Rayong Administration and Supply Chain Manager / Glow Group (Except Glow IPP Co., Ltd)

17. Mr. Chin Beng Tong (43) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Bachelor Degree in Science (Electrical Engineering), Kansas State University, USA None None Present • Vice President – Coal & Biomass Management / Glow Energy Public Co., ltd. • Vice President – Coal & Biomass Management / Glow Group : Past • Lead, Global Market Intelligence & Sourcing Analyst / Shell Eastern Petroleum (Singapore) Pte. Ltd. • Regional Procurement Manager / Holcim Group Support (S) Pte. Ltd.

Glow Energy Public Company Limited

83


18. Mr. Somchai Klinsuwanmalee (43) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Bachelor Degree in Accounting, Chulalongkorn University None None Present • Vice President – Public Relations / Glow Energy Public Co., ltd. • Vice President – Public Relations / Glow Group : 2003-2008 • Vice President – Government & Public Affairs / Glow Energy Public Co., ltd. • Vice President – Government & Public Affairs / Glow Group

19. Mrs. Mantana Kunakorn (43) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Bachelor Degree in Liberal Arts (Industrial Psychology), Thammasart University None None Present • Vice President – Human Resources and Administration / Glow Energy Public Co., Ltd. • Vice President – Human Resources and Administration / Glow Group : 2002-2007 • Assistant Vice President – Human Resources and Administration / Glow Energy Public Co., Ltd. • Assistant Vice President – Human Resources and Administration / Glow Group

20. Mr. Apichart Jamjuntr (43) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Bechelor Degree in Engineering (Electronics Engineering), Rajamangala None None Present • Plant Manager / Glow SPP2, Glow SPP3, and Glow Energy Site (Phase 3 & 4) : 1995-2006 • Operation Manager / Glow SPP2, Glow SPP3 & Glow Energy

21. Mr. Renaud Louis Albert Pilleul (42) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Bachelor Degree in Process Engineering, Institut National Polytechnique de Grenoble, France : None : None : Present • Vice President – Industrial Customer Relations / Glow Energy Public Co., Ltd. • Vice President – Industrial Customer Relations / Glow Group : 2003-2004 • Project Manager – Phase 4 Stage 1 & 2 / Glow Energy Public Co., Ltd.

22. Ms. Suttasinee Pengsupaya (41) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

84

Annual Report 2008

: : : : :

Master Degree in Science (Accounting), Thammasat University, Bangkok Bachelor Degree in Accounting, Thammasat University, Bangkok None None Present • Vice President – Accounting / Glow Energy Public Co., Ltd. • Vice President – Accounting / Glow Group


23. Mr. Chaiwut Rattanapornsinchai (41) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Computer Science, Rangsit University Bachelor Degree in Computer Science, Chandrakasem Teacher College None None Present • Vice President – Information of Technology / Glow Energy Public Co., Ltd. • Vice President – Information of Technology / Glow Group

24. Mr. Suratchai Bangluang (40) Education

: MBA General Management, Ramkhamhaeng University.

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : :

Bachelor Degree in Electrical Engineering, Mahanakorn University of Technology None None Present • Facility Manager / Glow IPP Co., Ltd. : 2006-2007 • Plant Manager / Glow SPP 1 Co.,Ltd : 2003-2006 • Maintenance Manager / Glow Energy Public Co., Ltd., Glow SPP 2 Co.,Ltd., Glow SPP 3 Co.,Ltd.

25. Mr. Thomas J. M. Ranschaert (39) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Business Administration, Vlerick Leuven Gent Management School, Belgium Master Degree Economics, E.T.E.W. Catholic University of Leuven, Belgium None None Present • Vice President – Business Quality and Internal Audit / Glow Energy Public Co., Ltd. • Vice President – Business Quality and Internal Audit / Glow Group : 2005-2008 • Consultant Business Quality Management / Glow Energy Public Co., Ltd. • Consultant Business Quality Management / Glow Group : 2000-2005 • Management Consultant / Iter Consult BVBA

26. Mr. Apidech Siriphornoppakhun (38) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Of Business Administration, Ramkhamhaeng University Bachelor Degree in Science (Industrial Technology), Rahaphat Institute Chachoengsao None None Present • Plant Manager / Glow SPP1 Co., Ltd. : 1997-2007 • Operation Manager / Glow SPP1 Co., Ltd.

27. Mrs. Unchana Kittipiyakul (37) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Business Administration, Kasetsart University Bachelor Degree in Accounting, Thammasart University. None None Present • Vice President – Budgeting and Business Controlling / Glow Energy Public Co., Ltd. • Vice President – Budgeting and Business Controlling / Glow Group

Glow Energy Public Company Limited

85


: 2003-2006 • Assistant Vice President – Budgeting and Business Controlling / Glow Energy Public Co., Ltd • Assistant Vice President – Budgeting and Business Controlling / Glow Group

28. Dr. Somgiat Dekrajangpetch (35) Education

Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : : : :

Doctorate Degree in Electrical Engineering (Electrical Power), Iowa State University, USA Master Degree in Economics, Iowa State University, USA Master Degree in Electrical Engineering, Iowa State University, USA Bachelor Degree in Science - Electrical Engineering, Chulalongkorn University None None Present • Vice President – Asset Optimization / Glow Energy Public Co., Ltd. • Vice President – Asset Optimization / Glow Group : 2003-2006 • Systems Optimization Manager / Glow Group

29. Mr. Nattaphatt Tanboon-ek (34) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: : : : :

Master Degree in Finance (Business Administration), University of Baltimore, USA Bachelor Degree in Engineering, Chulalongkorn University None None Present • Vice President – Finance & Investor Relations / Glow Energy Public Co., Ltd. • Vice President – Finance & Investor Relations / Glow Group : Past • General Manager – Business Development / Somboon Advanced Technology PLC • Vice President – Investment Banking / Trinity Securities Co., Ltd. • Vice President / Trinity Advisory 2001 Co., Ltd.

30. Mr. Akarin Prathuangsit (33) Education Shareholding Proportion (Percent) Family Relation with Management 5 years past experience

: Master Degree in Business Administration, Assumption University : Bachelor Degree in Engineering (Industrial Engineering), Sirindhorn International Institute of Technology, Thammasat University : None : None : Present • Vice President – Cogeneration Marketing and Development / Glow Energy Public Co., Ltd. • Vice President – Cogeneration Marketing and Development / Glow Group : 2004-2007 • Vice President – Marketing and Business Planning / Glow Energy Public Co., Ltd. • Vice President – Marketing and Business Planning / Glow Group : 2003-2004 • Assistant Vice President – Marketing and Business Planning / Glow Energy Public Co., Ltd. • Assistant Vice President – Marketing and Business Planning / Glow Group

Remark : Glow Group as per mention in this attachment is 1) Glow SPP 2 Co., Ltd. 2) Glow SPP 3 Co., Ltd. 3) Glow Co., Ltd.

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Annual Report 2008

4) Glow SPP 1 Co., Ltd. 5) Glow IPP Co., Ltd. 6) Glow Demin Water Co., Ltd.

7) Glow IPP 2 Holding Co., Ltd. 8) Glow IPP 3 Co., Ltd. 9) GHECO-One Co., Ltd


INFORMATION OF MANAGEMENT POSITION OF COMPANY, ITS SUBSIDIARY AND ASSOCIATE COMPANY AS OF 31 MARCH 2009 Company name Company Management

1. Mr. Guy Richelle 2. Mr. PeterTermote1 3. Mr. Esa Heiskanen 2 4. Mr. Kovit Poshyananda 5. Mr. Vitthaya Vejjajiva 6. Mrs. Supapun Ruttanaporn 7. Mr. Dirk Achiel Marc Beeuwsaert 8. Mr. Guido Geeraerts 9. Mr. Johan De Saeger 10 . Mr. Rajit Nanda3 11. Mr. Michel J. G. Gantois4 12. Mr. Philip De Cnudde5 13. Mr. Pierre Jacques Weulersse6 14. Mr. Anut Chatikavanij 15. Mr. Brendan G. H. Wauters 16. Mr. Heikki Pudas7 17. Mrs. Sriprapha Sumruatruamphol 18. Mr. Pajongwit Pongsivapai 19. Mr. Suthiwong Kongsiri 20. Mr. Svend Erik Jensen 21. Mr. Kanit Thangpetchr 22. Mr. Louis Stephen Holub 23. Mr. Michael W. Reiff 24. Mr. Wisit Srinuntawong 25. Mr. Narongchai Visutrachai 26. Mrs. Chamaiporn Soonthorntasanapong 27. Mr. Anutarachai Natalang 28. Ms. Sirichan Chotchaisathit 29. Mr. Prateep Puthamarugsa 30. Mr. Chin Beng Tong8 31. Mr. Somchai Klinsuwanmalee 32. Mrs. Mantana Kunakorn 33. Mr. Apichart Jamjuntr 34. Mr. Renaud Louis Albert Pilleul 35. Ms. Suttasinee Pengsupaya 36. Mr. Chaiwut Rattanapornsinchai 37. Mr. Suratchai Bangluang 38. Mr. Thomas J. M. Ranschaert9 39. Mr. Apidech Siriphornoppakhun 40. Mrs. Unchana Kittipiyakul

Glow Energy PCL

Subsidiaries Glow Glow Glow Glow Glow Glow SPP 2 SPP 3 Co., Ltd. SPP 1 IPP Demin Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Water Co., Ltd.

Glow IPP 2 Holding Co.,Ltd.

Glow IPP 3 Co., Ltd

GHECOOne Co., Ltd

X

X

X

X

X

X

X

X

X

/

// / / / / / /

// / / / / / /

// / / / / / /

// / / / / / /

// / / / / / /

// / / / / / /

// / / / / / /

// / / / / / /

//

//

/

/

/

/

/

/

/

/

/

/

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

/

/

Glow Energy Public Company Limited

87


Company name Company Management

41. 42. 43. 44. 45. 46. 47. 48.

Glow Energy PCL

Subsidiaries Glow Glow Glow Glow Glow Glow SPP 2 SPP 3 Co., Ltd. SPP 1 IPP Demin Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Water Co., Ltd.

Glow IPP 2 Holding Co.,Ltd.

Glow IPP 3 Co., Ltd

Dr. Somgiat Dekrajangpetch Mr. Sirote Vichayabhai10 Mr. Natthapatt Tanboon-Ek11 Mr. Akarin Prathuangsit Mr. David Richard Nardone Mr. Vivat Jiratikarnsakul Ms. Pattama Horrungruang Mr. Miklos Almasy

GHECOOne Co., Ltd

/ / / /

Remark / = Director X = Chairman of the Board // = Chief Executive Officer 1. Resigned from the company’s director and Chief Executive Officer on 7 October 2008. 2. Replaced Mr. Peter Valere Germain Termote in his position as Director and Chief Executive Officer on 7 October 2008. Was an Executive Vice President and Chief Projects Development and IPP Business from 3 March 2005. Was an Executive Vice President and Chief Projects Government Affairs from 1 September 2004. 3. Resigned from the company’s director on 26 February 2009. 4. Replaced Mr. Rajit Nanda as Director on 26 February 2009. 5. Resigned from the company’s director on 26 February 2009. 6. Replaced Mr. Philip De Cnudde as Director on 26 February 2009. 7. Has been EVP Project Development and Business since 16 January 2009. 8. Has been VP Coal and Biomass Management since 8 July 2008. 9. Has been VP Business Quality and Internal Audit since 1 July 2008. 10. Resigned from VP Finance and Investor Relations on 15 July 2008. 11. Has been VP Finance and Investor Relations since 20 October 2008. The Board of Directors’ Meeting on 26 February 2009 approved the resignation of Mr. Rajit Nanda and Mr. Philip De Cnudde from the position of Director of the Company and the appointment of Mr. Michel J. G. Gantois and Mr. Pierre Jacques Weulersse to replace the resigned directors for their remaining term. The authorized directors of the Company with signing authority only after obtaining approval from the Annual General Meeting of Shareholders of the Company and completion of the filing process with the Ministry of Commerce.

SELECTION OF DIRECTORS AND MANAGEMENT TEAM SELECTION OF DIRECTORS The Company has set up the Nomination and Remuneration Committee whose roles include, amongst others: • the recommendations to the Board of candidates with proper qualifications for the Board to submit for appointment to the annual general shareholders meeting. • Seek proposals of individuals for appointment as independent members of the Board. At the meeting of the Shareholders, the following rules and procedures with regards to the voting of directors shall apply:

88

Annual Report 2008


• each shareholder shall have one vote for each share he or she (or it) holds; • each shareholder shall exercise all the votes he or she (or it) holds to elect one or several person(s) to be directors (if any shareholder wishes to vote for several candidates, the votes held by such shareholders shall be equally allotted between all such candidates); and • the candidates receiving the most votes, in descending order, shall be elected directors of the Company until all of the directors’ positions are filled. In the event of a vacancy of a director’s position for reasons other than by retirement in due course, the Board of Directors shall, by a majority vote of not less than three-fourths of the remaining directors, elect a suitably qualified person, who does not possess characteristics that are prohibited under Section 68 of the Public Company Limited Act B.E. 2535.

SELECTION OF MANAGEMENT TEAM The Nomination and Remuneration Committee shall also make recommendations to the Board for the successor to the Chief Executive Officer when considered necessary as well as to develop a succession plan for the Chief Executive Officer that considers both potential internal and external candidates. The Board of Directors of the Company shall select the management teams by taking into consideration experiences, knowledge and skills for management according to the related position selected. For more details on the scope and responsibilities of the Nomination and Remuneration Committee, please refer to Good Corporate Governance, Topic “Nomination and Remuneration Committee.”

REMUNERATIONS REMUNERATIONS OF THE BOARD OF DIRECTORS In the Annual General Meeting of Shareholders held on 30 April 2008, a resolution passed concerning the remuneration for chairman and other Non-Executive members of the Board of Directors base on remuneration for directors and senior management for listed companies in the year 2006 as follows: (Baht) FIXED REMUNERATION MEETING ALLOWANCE (PER YEAR) (PER MEETING) Chairman 350,000 80,000 Non-Executive members 350,000 80,000 During the 2008 fiscal year, the total remuneration paid to 11 directors was 3,850,000 Baht and total Meeting allowance was 6,005,000 Baht.

Glow Energy Public Company Limited

89


REMUNERATIONS FOR THE COMMITTEES • In the Annual General Meeting of Shareholders held on 30 April 2008, a resolution passed concerning the remuneration for Audit Committee Membersbase on remuneration for director and senior management for listed comprises in the year 2006 • The Board of Directors passed a resolution to remunerate members of the Nomination and Remuneration Committee on the basis of annual fixed fee and Meeting allowance as follows: (Baht)

The Audit Committee Chairman Members The Nomination and Remuneration Committee Chairman Members

ANNUAL FIXED FEE (PER YEAR)

MEETING ALLOWANCE (PER MEETING)

-

36,100 30,600

40,000 29,000

25,000 18,000

REMUNERATION OF THE MANAGEMENT TEAM The total remuneration received from the Company by the 30 person management team during the 2007 fiscal year comprised salary and other remuneration such as bonuses and provident fund, totaling 138,892,100 Baht.

HUMAN RESOURCE MANAGEMENT As of 31 December 2008, total number of employees was 490 persons. COMPANY Glow Energy Plc. Glow Co., Ltd. Glow IPP Co., Ltd. Glow SPP 1 Co., Ltd. Glow SPP 2 Co., Ltd. Glow SPP 3 Co., Ltd. Glow Demin Water Co., Ltd (1) Total

HEAD OFFICE

EMPLOYEE PLANTS

TOTAL

120 120

78 143 39 33 54 23 370

78 263 39 33 54 23 490

Remark : (1) Company indicated no employee, receives supports from Glow Co., Ltd.

EMPLOYEES REMUNERATION As of 31 December 2008, the total remuneration paid to employees amounted to 403,282,905.01 Baht including salaries, bonuses and provident funds.

THE COMPANY AND ITS SUBSIDIARIES’ POLICY FOR EMPLOYEES Glow believes that our people are the foundation of our success. We employ 490 people in Thailand, at Head Office in Bangkok and Power plants in Rayong and Chonburi.

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Annual Report 2008


Our employees enjoy a working environment that encourages commitment, teamwork and innovation. This philosophy is supported by the strength of our leadership, our high technical standards and our passion for safety. We work in a safe and satisfying environment. We commit ourselves to being a world class operator of power generation and cogeneration facilities and to conducting this core business with full attention to Environmental, Health and Safety concerns that affect our employees, clients and the community. We create value for our shareholders and customers through the commitment and knowledge of our employees. We seek to implement best practices through human resource information systems and HR policies, and standardized procedures. We focus on employee training and development and strengthening our employees’ ability to enhance organization capability. Our major shareholder provides support and guidance in developing best practices for our company. We seek to attract and retain qualified professionals who can adhere to the Glow culture, which is based on communication, commitment, adaptability, social partnership and sustainable business relations. We support our people to realize their full potential by offering challenging work, project assignment, on-the-job development, formal training and education. We also offer our employees highly competitive remuneration packages, including an attractive range of benefits. Our success comes from our people. We work in a safe and satisfying environment. We choose to treat each other with trust and respect and maintain a healthy balance between work and family life. Our operational excellence, teamwork and ability to deliver product reliability and availability of our generating units are our most valued and rewarding strengths.

DIVIDEND POLICY Dividends may be declared by Glow Energy’s board of directors subject to, in the case of annual dividends, the approval of our shareholders at any annual general meeting. Our declaration of interim dividends does not require shareholder approval. The current policy of our board of directors is to recommend to our shareholders to distribute annual dividends in the amount of not less than 50 percent of our net income for each year, normalized by excluding unrealized foreign exchange gains and losses and after deduction of all specified reserves, subject to our investment plans and other considerations that our board of directors deems appropriate. Under the Public Company Limited Act (PLCA), we may not make any distribution of dividends other than out of our net income. In addition, no dividends can be paid if our retained earnings are not positive, even if we record net income for the current year. Under the PLCA, we are required to set aside as a legal reserve an amount equal to 5 percent of our annual net income until our total legal reserve is not less than 10 percent of our registered capital, which may reduce the amount of net income available for our payment of dividends. As at December 31, 2008, our registered capital was Baht 14,828.7 million and our legal reserve was Baht 1,253.9 million, or 8.4 percent of our registered capital as at that date. Our total consolidated retained earnings (company only) as at December 31, 2008 were Baht 4,079.8 million. At present, the Subsidiary of the Company has no specific policy for distribution of dividend. The Board of Directors of each Subsidiary may consider and recommend to the Shareholders’ Meeting of each subsidiary for consideration and approval of the distribution of the dividends.

Glow Energy Public Company Limited

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INTERNAL CONTROL The Glow Audit Committee consists of 3 members who are also member of the Company’s Board of Directors. The Company’s Internal Audit function, reporting to the Audit Committee and the Glow management, performs internal audits in cooperation with GDF SUEZ Energy International internal audit (“GSEI IA”). In 2008, the Audit Committee assessed the adequacy of the internal control systems of the Company in order to ensure the effectiveness of all operational and financial controls. The Audit Committee concluded that the Company has adequate and appropriate internal control systems in place, taking into account the current business environment and characteristics. In addition, the Company’s auditors also commented that there were no material deficiencies in the internal control of the Company in accordance with the generally accepted accounting principles.

THE ORGANIZATION AND THE ENVIRONMENT • The organizational structure in place allows the Company’s management team to operate objectively and efficiently by clearly specifying the roles and duties of each person. • During the past years, the Company has done big efforts to further improve the internal control framework. • Comprehensive policies and procedures have been established for all the significant business processes. Every employee has to comply with these policies and procedures within his/her responsibility. • A Glow Code of Conduct has been implemented and the GDF SUEZ Ethics Charter has been communicated to all employees of the Company. • Glow Internal Audit formally reports its activities and the internal audit findings to the Company management and to the Audit Committee, at least four times a year. • The Company is also subject to GDF SUEZ Energy International Group internal audit (“GSEI IA”). GSEI IA and the Company’s Internal Audit function work closely together and the latter is responsible to coordinate and follow-up the implementation of all audit recommendations. • The Company’s CEO commits, by signing an annual attestation letter, to set up an internal control system within his scope of responsibility. This is based on the monitoring program and the evaluations of conditions under which internal control is performed. These evaluations are carried out using self-assessment questionnaires on the general control environment (COSO).

RISK MANAGEMENT MEASUREMENT • Business risks which might have an impact on the business to achieve its objectives are formally assessed twice a year, taking into consideration the present and future risks and covering strategic, financial, operational and compliance risks. • The impact and likelihood of each risk and its risk factors are identified and assessed. • Risk responses and measurements are developed to reduce risks, and these risks are continuously monitored. • Risks are discussed during Board of Directors’ meetings and monthly management meetings.

OPERATION CONTROLS OF THE MANAGEMENT • An Internal and External Power Of Attorney (“POA”) have been established and communicated to all employees of the Company. Both documents are updated when required and are approved by the Board of Directors. The POA clearly specifies the authorization limits for capital and operational spending per function. • For other transactions with major shareholders, directors, management, staff or others persons related to those parties, the Company has established a strict guideline to prevent any conflict of interest, by taking into consideration the optimization of the Company’s value to its shareholders and other stakeholders. In addition, all related party transactions should be done on an arms-length basis, the same basis applicable to third parties transactions.

INFORMATION AND COMMUNICATION SYSTEMS • Important and reliable business and financial information is available for the Company’s directors to assist them in decision

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• •

making. The Company does continuous efforts to improve the information and communication systems, such as the implementation of the company’s reporting tool. The Company’s directors receive an invitation and agenda together with all the relevant supporting documentation to the agenda. The proposed agenda, together with information on possible impact towards the Company as well as all other information that is required for consideration purposes, is distributed before the meeting within the minimum period of time prescribed by law. Moreover, the minutes of meeting of the Board of Directors contain all necessary details so that the shareholders can inspect the appropriateness of the operations of the Company’s Board. The Company maintains and retains all documentation that is used in recording of accounting transactions as well as all other relevant supporting documentation in an organized manner and in compliance with laws regulating the documentation retention period. The Company applies accounting policies in accordance with Thai Accounting Standards (“TAS”) and other international Generally Accepted Accounting Principles, where appropriate, and which are applicable and aligned with the characteristics of the Company’s business.

MONITORING SYSTEM • Glow Internal Audit reports all material internal control deficiencies to Glow management and to the Audit Committee. The Audit Committee evaluates the deficiencies and assesses the adequacy of the remediation plans in place and reports on such findings to the Company’s Board of Directors for their notification within a reasonable period of time. • The Company’s directors monitored and compared the operational performance of the Company, as well as those of management against agreed objectives, key performance indicators and budgets. • The Company’s internal control systems are audited on a continuous basis. • Each year, the Company agrees on an Internal Audit Plan based on identified high risk areas to be included in the internal audit’s planning.

LSF – FRENCH LAW ON INTERNAL CONTROLS • Since several years, principles of corporate governance and the internal control requirements have been undergoing a deep reform. In September 2003, the SUEZ Group launched the Control Disclosure Program (“CODIS”) in response to the increasing regulatory pressure for internal control and disclosure requirements, such as the French Law on Internal Controls (LSF). Beyond mere compliance, the Program was seen as an opportunity to add value by reinforcing the financial reporting processes as well as the system of internal control within the Group. • For Glow Group, Glow Energy, Glow SPP3 and Glow IPP were identified in the scope of the CODIS program. • The CODIS program required a significant effort from Glow Group, especially during the last four years. All processes and related internal controls with a potential relevant impact on the financial statements have been documented and the internal controls have been assessed by the Business Process Owners both on design effectiveness (completeness of documentation of the controls) and operating effectiveness (effective execution of the internal control). This self-assessment reinforces ownership and responsibility. It guarantees the ongoing operational effectiveness of the internal control system and its adaptation to changes requiring so. Among the documented processes are accounting management, asset management, sales management, procurement management, operations management, corporate governance and IT management. • The Business Process Owners are assisted by an Internal Control Coordinator (ICC). The ICC ensures the implementation of the Codis program within the company, and prepares the information supporting the signing of the internal control attestation by the CEO and CFO of the company. • A selection of the most critical internal controls (Key Controls) has been extensively tested by Glow Internal Audit as well as by the External Auditor. These tests included assessment of design effectiveness and operating effectiveness. The assessment contributes to the improvement of the internal control system by suggesting action plans linked to deficiencies identified. • For all deficiencies identified during these tests, Glow management has developed the necessary remediation plans. The implementation of the remediation actions has been closely monitored and has been subjected to ongoing testing to ensure effective implementation. • On January 31st 2009, the Chief Executive Office (“CEO”) and Chief Financial Officer (“CFO”) of the Company have signed-off the Glow CODIS Attestation for the Accounting Year 2008 to GSEI management. Glow Energy Public Company Limited

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RELATED PARTY TRANSACTIONS

DETAIL OF RELATED PARTY TRANSACTIONS The Company has business transactions with its subsidiaries, associated companies and related companies as details disclosed in the note to the financial statements No. 22. In addition, the Company and its six subsidiaries, comprising of Glow Co., Ltd., Glow SPP 1 Co., Ltd., Glow SPP 2 Co., Ltd., Glow SPP 3 Co., Ltd., Glow IPP Co., Ltd., and Glow Demin Water Co., Ltd. (“Glow Group”) jointly entered into Support Services Agreement and Engineering Services Agreement on May 3, 2005 with SUEZ-Tractebel S.A. (“SUEZ”), whereby, SUEZ shall provide consulting services in respect of engineering, operational, financial and auditing system, investment, project finance, insurance, etc. The service fee is based on reference market rate and shall be in Euro currency. The service agreements will be determined in the hourly rate depend on the type of services. The term of the agreements is 5 years from the execution date, automatically renewed for successive one-year term unless termination is notified by either party. Nevertheless, the agreements shall be terminated on the date that SUEZ holds directly or indirectly less than 25% of the shares of Glow Group.

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NECESSITY AND REASONABLENESS OF THE RELATED TRANSACTIONS

POLICY AND TREND OF THE RELATED TRANSACTION IN THE FUTURE

The related transactions of the Company and the person who might have conflict of interest for the past year have been done by taking into consideration the maximum benefit of the Company, and the Audit Committee has considered and agreed that such transactions were normal course of the business and there was no benefit transfer between the Company and the person who might have the conflict of interest. In addition, price fixing, fee rate and interest rate of the transactions all were in accordance with general trade conditions. Price fixing was comparable to market price and competitive mechanism or was the reasonable price and did not have condition that differed from making transactions with other third parties.

The Company anticipates that there will be related transactions incurred in the future because the related transactions of the Company have been done in accordance with the normal business of the Company and the Company has the policy to operate such related transactions for the maximize benefit of the Company. For the related transactions in the future, the Company shall comply with the laws concerning securities and stock exchange and the regulations, announcements, orders or requirements of the Stock Exchange of Thailand as well as to comply with the requirements concerning the disclosure of the related transactions and the acquisition and disposal of the material assets of the Company including compliance with the accounting standard specified by the Accountants and the Certified Public Auditors Association of Thailand and Federation of Accounting Professional.

APPROVAL PROCEDURES OF THE RELATED TRANSACTIONS Since the related transactions of the Company were in accordance with the normal course of business operations, just like the purchase, sales and/or services provided to the other unrelated business, the approval procedures are in accordance with the regulations of the Company, the subsidiaries, the associated companies and the related companies. In addition, for the consideration of the related transactions between the Company and the persons who might have conict of interest and are a shareholder or the management of such company, such shareholder or such management shall not take part in the approval process.

However, if there is a related transaction of the Company with a person who might have conflict of interest or the stakeholders or who might have conflict of interest in the future, the Company shall appoint the Audit Committee to give opinion on necessity and reasonableness of such transaction and the appropriateness of price fixing of other items so as to be in accordance with the general market price and with the conditions that is not different from other third parties or at prime cost. In addition, the Company shall disclose the related transactions in the note to the financial statements, which has been audited by the auditors of the Company.

Auditor’s remuneration for the period of January 1, 2008 - December 31, 2008 consists of :-

Audit fee Non-audit fee - Review of Financial ratio - Review of Package - Professional fee for the additional scope of work - Other

THE COMPANY

(Unit : Baht) SUBSIDIARIES

1,899,270.00

5,248,938.50

249,422.00 1,098,061.00 201,100.00 -

453,372.00 100,000.00 -

Glow Energy Public Company Limited

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MANAGEMENT‘S DISCUSSION AND ANALYSIS

OVERVIEW Glow Energy Public Company Limited and its subsidiaries are one of the largest private electricity generators and providers of industrial utilities in Thailand. We operate IPP and cogeneration facilities (most of which operate as SPPs under Thailand’s SPP program) and our core business is to produce and supply electricity to EGAT and electricity and steam to industrial customers in the MIE Area . As of December 31, 2008, we had a total generating capacity of 1,708 MW of electricity and 967 tons per hour of steam. We recorded total revenues of Baht 33,854.0 million in 2008, a 2.6 percent increase from Baht 33,011.3 million in 2007. Our normalized net profit (net profit excluding unrealized exchange gains/losses), which is the basis used to determine our dividend distribution, was Baht 3,784.4 million in 2008, a 12.3 percent decrease from Baht 4,313.7 million in 2007. As of December 31, 2008, we had total assets of Baht 70,083.0 million and total liabilities of Baht 39,884.9 million.

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REVENUES We derive our revenues primarily from sales of electricity to EGAT and sales of electricity, steam and clarified and demineralized water to industrial users in the MIE Area. The following table breaks down our revenues by source for the periods indicated:

2008 (BAHT MILLIONS) Revenues from Sales of Goods and Rendering of Services Electricity Sales to EGAT by IPP Sales to EGAT by SPPs Sales to Industrial Customers Total

YEAR TO DATE ENDED DECEMBER 31, 2007 DIFFERENCE (%) (BAHT MILLIONS) (%) (BAHT MILLIONS) (%)

10,859.5 10,337.8 7,954.1 29,151.4

32.1 30.5 23.5 86.1

10,161.8 9,323.5 8,224.8 27,710.1

30.8 28.2 24.9 83.9

697.7 1,014.3 (270.7) 1,441.3

6.9 10.9 (3.3) 5.2

Steam Processed water Total

4,244.7 327.7 33,723.8

12.5 1.0 99.6

4,219.2 336.6 32,265.8

12.8 1.0 97.7

25.5 (8.9) 1,457.9

0.6 (2.7) 4.5

Other Income Total Revenues

130.2 33,854.0

0.4 100.0

745.4 33,011.3

2.3 100.0

(615.2) 842.7

(82.5) 2.6

Our revenues are in part driven by the volumes of electricity and industrial utilities that we produce and sell to our industrial customers in MIE Area. The following table sets out our volumes of electricity and industrial utilities sold for the periods indicated:

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VOLUMES SOLD 2008

YEAR TO DATE ENDED DECEMBER 31, 2007 DIFFERENCE (%)

Electricity dispatch (GWh) To EGAT by IPP To EGAT by SPPs To Industrial Customers Total

5,054 3,879 3,193 12,126

5,175 3,950 3,323 12,448

(121.6) (70.7) (129.9) (322.2)

(2.4) (1.8) (3.9) (2.6)

Steam (thousands of tons)

5,372

5,697

(324.5)

(5.7)

10,798

11,262

(464.3)

(4.1)

Processed water (thousands of cubic meters)

REVENUES FROM SALES OF GOODS ELECTRICITY SALES TO EGAT

STEAM SALES

We sell electricity to EGAT under our EGAT power purchase agreements. We are currently party to one IPP power purchase agreement, in respect of 713 MW of electricity and a total of 8 SPP power purchase agreements, in respect of an aggregate of 590 MW of electricity.

We sell steam to our industrial customers under our steam supply agreements. As of December 31, 2008, we were party to a total of 23 steam supply agreements with 17 industrial customers in respect of an aggregate of 738 tons per hour of steam.

PROCESSED WATER SALES ELECTRICITY SALES TO INDUSTRIAL CUSTOMERS We sell electricity to our industrial customers under our power supply agreements. As of December 31, 2008, we were party to a total of 35 power supply agreements with 27 industrial customers in respect of an aggregate of 448 MW of electricity.

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We sell clarified water and demineralized water to our industrial customers under our water supply agreements. As of December 31, 2008, we were party to a total of 13 water supply agreements with 9 customers in respect of an aggregate of 1,549 cubic meters per hour of water.


EXPENSES Our expenses consist of cost of sales of goods and selling and administrative expenses. The following table sets out the different components of our expenses by their amount and as a percentage of our total expenses for the periods indicated:

2008 (BAHT MILLIONS) Cost of Sales of Goods Fuel Natural Gas Coal Diesel Maintenance Depreciation/Amortization Other Total Cost of Sales of Goods Selling and Adminstrative Expenses Depreciation/Amortization Financial Expenses General Expenses Total Selling and Administrative Expenses Exchange Loss Total Expenses

YEAR TO DATE ENDED DECEMBER 31, 2007 DIFFERENCE (%) (BAHT MILLIONS) (%) (BAHT MILLIONS) (%)

21,816.8 1,988.0 63.9 841.1 2,418.6 1,233.3 28,361.8

74.7 6.8 0.2 2.9 8.3 4.2 97.1

19,967.9 1,396.7 27.0 786.1 2,925.3 1,161.7 26,264.7

74.6 5.2 0.1 2.9 10.9 4.3 98.1

1,849.0 591.2 36.9 55.0 (506.7) 71.7 2,097.1

9.3 42.3 136.7 7.0 (17.3) 6.2 8.0

25.7 58.4 515.2 599.3

0.1 0.2 1.8 2.1

25.5 81.4 410.8 517.7

0.1 0.3 1.5 1.9

0.2 (23.0) 104.4 81.6

0.9 (28.3) 25.4 15.8

247.5 29,208.6

0.9 100.0

0 26,782.4

0 100.0

247.5 2,426.2

0 9.1

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The following table shows a breakdown of our costs for Glow IPP, on one hand, and for our cogeneration facilities, on the other:

IPP AND COGENERATION FACILITIES COST OF SALES OF GOODS BREAKDOWN(1) 2008 (BAHT MILLIONS)

YEAR TO DATE ENDED DECEMBER 31, 2007 DIFFERENCE (%) (BAHT MILLIONS) (%) (BAHT MILLIONS) (%)

Glow IPP Natural Gas Coal Diesel Maintenance Depreciation/Amortization Others Total Cost of Sales

7,878.9 60.4 79.4 749.3 176.0 8,944.0

88.1 0.7 0.9 8.4 2.0 100.0

7,213.6 17.4 84.3 1,109.1 180.6 8,604.9

83.8 0.2 1.0 12.9 2.1 100.0

665.3 43.0 (4.9) (359.8) (4.6) 339.1

9.2 247.7 (5.8) (32.4) (2.6) 3.9

Cogeneration Facilities Natural Gas Coal Diesel Maintenance Depreciation/Amortization Others Total Cost of Sales

13,938.0 1,988.0 3.5 761.7 1,669.3 1,057.3 19,417.8

71.8 10.2 0.0 3.9 8.6 5.5 100.0

12,754.3 1,396.7 9.6 701.8 1,816.3 981.0 17,659.8

72.2 7.9 0.1 4.0 10.3 5.6 100.0

1,183.6 591.2 (6.1) 59.9 (147.0) 76.3 1,758.0

9.3 42.3 (63.2) 8.5 (8.1) 7.8 10.0

Note : (1) The data presented herein as the cost of sales of our cogeneration facilities is our consolidated financial results less the results of Glow IPP. In fact, certain of these amounts are attributable to portions of our business, which are not technically our cogeneration facilities, although these amounts represent only a small portion thereof.

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COST OF SALES OF GOODS FUEL The principal fuels that we use to generate electricity and steam are natural gas and coal. Purchases of natural gas constitute our single largest operating expense, accounting for 74.7 percent of our total expenses in 2008. The following table sets out our average gas(1) costs for the periods indicated:

2008 (Bt/mmBTU) Average cost To Glow IPP To Cogeneration facilities(2)

YEAR TO DATE ENDED DECEMBER 31, 2007 Difference (Bt/mmBTU) (Bt/mmBTU)

225.89 233.49

202.00 208.13

23.9 25.4

(%) 11.8 12.2

Note: (1) These are not our actual gas prices, but are derived by taking our total natural gas expenses and dividing by total fuel consumption of the facilities for the periods presented. (2) This is a “blended� rate, reflecting principally prices paid to PTT (i) by our cogeneration facilities for gas used to supply electricity to EGAT and industrial customers, (ii) for gas used to fire boilers to generate steam for industrial customers. Each of the prices set out in (i) and (ii) are different. We also purchase small amounts of tail gas from another Thai supplier, which prices are separate and are also factored into the foregoing rates.

Purchases of coal accounted for 6.8 percent of our total expenses in 2008. The following table sets out average coal costs for the periods indicated:

YEAR TO DATE ENDED DECEMBER 31,

Reference coal price @ 6,700 kcal/kg(1) Freight costs(2)

2008 ($/TON)

2007 ($/TON)

DIFFERENCE ($/TON)

(%)

82.15 11.97

48.21 11.28

33.94 0.69

70.4 6.1

Note : (1) These are not our actual coal prices, which are subject to various adjustments under the terms of our coal supply contracts, but a benchmark provided to illustrate the general movements in coal prices over the periods presented. (2) These reflect our actual freight and insurance costs.

The key determinants of our fuel expenses are the amounts of electricity and steam produced by our facilities and the efficiency with which we are able to generate such products.

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The following table sets out the energy production levels and heat rates(1) of our facilities for the periods indicated:

YEAR TO DATE ENDED DECEMBER 31, 2008 2007 Glow IPP Equivalent energy production (GWh) Fuel consumption (mmBTU, HHV) Heat rate (BTU/kWhe, HHV) Cogeneration facilities Allocated energy production (GWh equivalent)(2) Gas-fired cogeneration facilities Coal-fired cogeneration facility Fuel consumption (mmBTU, HHV) Gas-fired cogeneration facilities Coal-fired cogeneration Facility Allocated heat rates (BTU/kWhe, HHV) Gas-fired cogeneration facilities Coal-fired cogeneration Facility(3)

5,054 34,988,891 6,923

5,175 35,742,561 6,906

6,743 1,599

6,950 1,693

59,678,372 16,482,388

61,201,856 17,185,749

8,850 10,355

8,806 10,202

Notes: (1) We present an “allocated” heat rate, which is a deemed heat rate for our cogeneration facilities that we derive by dividing the total fuel energy consumption of such facilities over a specified period of time by the energy produced during such period. This is not a straightforward exercise, particularly with respect of our Glow SPP 2 / SPP 3 hybrid facility, where, for purposes of such calculation, we are required to “allocate” the amount of energy produced using steam and the amount of energy used producing gas. We make this allocation on the basis of the contribution of each energy source to total energy input, which involves subjective judgments and the use of simplifying assumptions. (2) Includes production of electricity and steam. For these purposes, steam has been converted into MW at a deemed equivalent electrical energy value. (3) CFB start-up gas is charged to the coal heat rates for purposes of the figures presented in this table.

MAINTENANCE EXPENSES The following table sets forth a breakdown of our maintenance costs for the periods indicated:

YEAR TO DATE ENDED DECEMBER 31, 2008 2007 DIFFERENCE (BAHT MILLIONS) (BAHT MILLIONS) (BAHT MILLIONS) (%) Glow IPP Cogeneration facilities

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79.4 761.7

84.3 701.8

(4.9) 59.9

(5.8) 8.5


RESULTS OF OPERATIONS YEAR 2008 COMPARED TO YEAR 2007 REVENUES Revenues from sales of goods and the rendering of services was Baht 33,854.0 million in 2008, a 2.6 per cent increase from Baht 33,011.3 million in 2007. The increase is attributable to the following factors: • Sales of electricity to EGAT by Glow IPP, under IPP scheme, amounted to Baht 10,859.5 million in 2008, a 6.9 per cent increase from Baht 10,161.8 million in 2007. This increase was principally caused by higher energy payment as a result of the higher fuel costs in 2008 despite a lower capacity payment from EGAT as a result of a lower availability due to inspection and maintenance outage in 2008. • Sales of electricity to EGAT by our cogeneration facilities, under SPP scheme, amounted to Baht 10,337.8 million in 2008, a 10.9 per cent increase from Baht 9,323.5 million in 2007. This increase was principally caused by higher energy payment, as a result of the higher fuel costs in 2008, despite a lower capacity payment from EGAT, as a result of a lower availability due to forced outage of our coal-fired unit in the 4th quarter of 2008.

industrial customers in the 4th quarter of 2008. The electricity sales volume decreased by 3.9% in 2008. • Sales of steam to industrial customers by our cogeneration facilities amounted to Baht 4,244.7 million in 2008, a 0.6 percent increase from Baht 4,219.2 million in 2007. This increase was principally caused by higher unit price sold which is primarily reflected the higher fuel costs, despite the decrease in steam sales volume by 5.7% in 2008, due to weakening demand of industrial customers in the 4th quarter of 2008. • Sales of other products and services by our cogeneration facilities amounted to Baht 327.7 million in 2008, a 2.7 percent decrease from Baht 336.6 million in 2007. This decrease was due to a lower selling volume of processed water. Our other income consists mostly of revenue from net exchange gains, interest income and others. In 2008, there was no net exchange gain, whereas there was a net exchange gain of Baht 533.2 million in the same period of 2007. This exchange gain and loss is derived mainly from the US dollar denominated debt in Glow IPP, which is being served by the US dollar linked revenue from sales of electricity to EGAT.

• Sales of electricity to industrial customers by our cogeneration We recognized interest income of Baht 101.7 million in 2008, a facilities amounted to Baht 7,954.1 million in 2008, a 3.3 decrease of Baht 21.0 million from Baht 122.7 million in 2007. The percent decrease from Baht 8,224.8 million in 2007. The interest income was principally attributable to interest earned on decrease was principally caused by weakening demand of cash held in the form of deposits, instruments and in reserve accounts under our project financing agreements.

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Others income in 2008 amounted to Baht 28.5 million, and consisted principally of revaluation of spare parts. Others in the year 2007 amounted to Baht 89.5 million, and consisted principally of proceeds from sales of unused spare parts remaining from the previous Long Term Service Agreement. As a result of the foregoing, total revenues in 2008 amounted to Baht 33,854.0 million, a 2.6 percent increase from Baht 33,011.3 million in 2007.

EXPENSES Cost of sales of goods was Baht 28,361.8 million in 2008, a 8.0 per cent increase from Baht 26,264.7 million in 2007, which increase is attributable to the following factors:

GLOW IPP • Glow IPP’s cost of natural gas was Baht 7,878.9 million in 2008, a 9.2 percent increase from Baht 7,213.6 million in the year 2007. This increase was principally because of average effective cost of natural gas, which increase for approximately 11.8% comparing to that of year 2007. • Glow IPP’s cost of diesel was Baht 60.4 million in 2008, compared to Baht 17.4 million in 2007. This increase was primarily due to higher diesel dispatch by EGAT compared to the previous year.

because of average effective cost of natural gas, which increase for approximately 12.2% comparing to that of year 2007. • Our cogeneration facilities’ cost of coal was Baht 1,988.0 million in 2008, a 42.3 percent increase from Baht 1,396.7 million in 2007. The increase was principally because of the increase in average coal cost, despite the decrease in consumed volume, stronger Thai Baht, and usage of biomass. The reference coal price is increase by 70.4%, from 48.2 USD / ton to 82.2 USD / ton, while freight cost increase only 6.1%. The coal consumption, included biomass mix, is decrease by 4.1%, due to forced outage of our coalfired unit in the 4th quarter of 2008. • Our cogeneration facilities’ maintenance costs were Baht 761.7 million in 2008, a 8.5 percent increase from Baht 701.8 million in 2007, mainly due to the A and B inspections at Cogeneration facilities. • Our cogeneration facilities’ depreciation and amortization costs were Baht 1,669.3 million in 2008, a 8.1 percent decrease from Baht 1,816.3 million in 2007. • Our cogeneration facilities’ other costs of sales of goods were Baht 1,057.3 million in 2008, a 7.8 percent increase from Baht 981.0 million in 2007.

• Glow IPP’s maintenance costs were Baht 79.4 million in 2008, compared to Baht 84.3 million in 2007 Selling and administrative expenses in 2008 amounted to Baht 599.3 million, a 15.8 percent increase from Baht 517.7 million in • Glow IPP’s depreciation and amortization costs were Baht 2007. This was attributable to the following factors: 749.3 million in 2008, a 32.4 percent decrease from Baht 1,109.1 million in 2007. The decrease was primarily due to • Depreciation and amortization amounted to Baht 25.7 the shift of maintenance schedule from the third quarter to million in 2008, a 1.0 percent increase from Baht 25.5 the fourth quarter million in 2007. • Glow IPP’s other costs of sales of goods were Baht 176.0 million in 2008, a 2.6 percent decrease from Baht 180.6 million in 2007. Glow IPP’s other costs of sales of goods consist mainly of water, chemicals, and general overhead costs, where overhead costs decreased slightly year on year.

COGENERATION FACILITIES • Our cogeneration facilities’ cost of natural gas was Baht 13,938.0 million in 2008, a 9.3 percent increase from Baht 12,754.3 million in 2007. This increase was principally

104

Annual Report 2008

• Financial expenses amounted to Baht 58.4 million in 2008, a 28.3 percent decrease from Baht 81.4 million in 2007. This decrease can be mainly attributed to lower guarantee fee under the Glow IPP loan and lower financial fee under cogeneration business. • General selling and administrative expenses amounted to Baht 515.2 million in 2008, a 25.4 percent increase from Baht 410.8 million in 2007 mainly due to loss from sales of fixed assets under Glow SPP3 (write-off of water reservoirs facility and warehouse).


There was a net exchange loss in 2008 amounting to Baht 247.5 PROFIT AFTER TAX million, whereas there was no net exchange loss in the same As a result of the foregoing, our profit after tax in 2008 amounted period 2007. This exchange loss is derived mainly from the US to Baht 3,613.5 million, a 25.3 per cent decrease from Baht dollar denominated debt in Glow IPP, which is being served by 4,839.7 million in 2007. the US dollar linked revenue from sales of electricity to EGAT.

NET PROFIT OF MINORITY INTEREST As a result of the foregoing, our total expenses in the 2008 were Baht 29,208.6 million, a 9.1 percent increase from Baht 26,782.4 million in 2007.

PROFIT BEFORE INTEREST EXPENSES AND INCOME TAX

Net profit of minority interest in 2008 was Baht 74.1 million from Baht 57.0 million in 2007. This increase was principally due to the higher net income of Glow IPP compared to 2007 (which is the company representing most of the minority interest in our group companies).

As a result of the foregoing, our profit before interest expenses and income tax in 2008 was Baht 4,645.4 million, a 25.4 percent NET PROFIT decrease from Baht 6,228.9 million in 2007. As a result of the foregoing, our net profit in 2008 was Baht 3,539.4 million, a 26.0 per cent decrease from Baht 4,782.8 million INTEREST EXPENSES in 2007. Our interest expenses in 2008 were Baht 796.1 million, a decrease of 28.5 per cent from Baht 1,112.6 million in 2007. This decrease NORMALIZED NET PROFIT was principally attributable to the reduction of average interest In 2008, our normalized net profit, which is net income excluding cost and lower net outstanding debt at Glow IPP and interest rate Baht 245.0 unrealized foreign exchange loss, was Baht 3,784.4 restructuring in Glow Energy. Despite the higher net outstanding million, a 12.3 per cent decrease from Baht 4,313.7 million in debt at Glow cogeneration business, the decrease was principally 2007. This normalized net profit is the basis used to determine due to interest capitalization to the asset. our dividend distribution.

INCOME TAX EXPENSES Our income tax expenses in 2008 were Baht 235.8 million, a decrease of Baht 40.8 million from Baht 276.5 million in 2007. This decrease was principally due to lower taxable income as a result of the foregoing lower EBITDA.

Glow Energy Public Company Limited

105


AUDIT COMMITTEE’S REPORT TO: THE SHAREHOLDERS GLOW ENERGY PUBLIC COMPANY LIMITED (“THE COMPANY”) The Audit Committee is composed of three independent directors: • Mr. Kovit Poshyananda Chairman • Mr. Vitthaya Vejjajiva Member; and • Ms. Supapun Ruttanaporn Member The Glow internal audit function acts as the audit committee secretary. During the period ended 31 December 2008, the Audit Committee held seven meetings and performed their duties and responsibilities in accordance with the Audit Committee Charter. The principal responsibilities during this period were as follows: 1. Independently reviewed the interim and annual financial statements by coordinating with the external auditors and related management and proposed for the Board’s approval. 2. Reviewed the adequacy and effectiveness of the internal control systems and the internal audit function by coordinating with the external auditors and internal auditors. 3. Reviewed compliance with the Securities and Exchange Act, Stock Exchange of Thailand regulations, and any other relevant laws of Thailand. 4. Considered and advised on the appointment of the external auditors including the audit fee. 5. Reviewed and approved the internal audit plan and assessed the performance of internal audit. 6. Reviewed company risks as identified by the internal auditor and management, and also reviewed that appropriate risk management is applied by top management. 7. Considered the accuracy and completeness of the company’s disclosure of information on connected transactions or potential conflicts of interest.

106

Annual Report 2008


The Audit Committee is of the view that the company recognises the importance of conducting its business in accordance with the Stock Exchange of Thailand’s Principles of Good Governance, as evidenced by a process to review all the Corporate Governance Policies to ensure they are compliant with all the SET Principles and include relevant best practices. In addition, the Audit Committee has been given the responsibility associated with good Corporate Governance. With the support of its management, who recognizes the importance of strong internal control, the company has established and maintains an efficient and effective internal control system. In addition, as a subsidiary of GDF SUEZ S.A. a company listed overseas, the company is required to comply with the internal control requirements of the French Law (Loi de Sécurité Financière – “LSF”) and with the European Union regulation (European Directive). The LSF French Law requires that the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of SUEZ, the major shareholder of Glow, attest on the quality of internal control over financial reporting for the year-end 2008 Financial Statements. In order to support their signature, SUEZ is requesting a back-up attestation from the CEO and CFO of the Company. Furthermore, the company’s senior management has an ongoing commitment to add value to the company for the benefit of all stakeholders. The Audit Committee proposed the appointment of Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. as the external auditor of the company for the period ending 31 December 2009 and proposed that the Board of Directors request that the meeting of the company’s shareholders for the year 2008 consider appointing Ms. Thanawan Anuratbodee, CPA registration no. 3440 or Mr. Niti Jungnitnirundr, CPA registration no. 3809 or Ms. Somporn Dulyavit, CPA registration no. 3709 of Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. as the external auditors of the company as well as the determination of the audit fee.

Mr. Kovit Poshyananda Chairman of the Audit Committee Glow Energy Public Company Limited

Glow Energy Public Company Limited

107


FINANCIAL STATEMENTS GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES

108

Annual Report 2008


REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS GLOW ENERGY PUBLIC COMPANY LIMITED We have audited the consolidated balance sheet of Glow Energy Public Company Limited and its subsidiaries and the separate balance sheet of Glow Energy Public Company Limited as at December 31, 2008, and the related consolidated and separate statements of income, changes in shareholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements of Glow Energy Public Company Limited and its subsidiaries and the separate financial statements of Glow Energy Public Company Limited for the year ended December 31, 2007, presented herein for comparison, were audited by another auditor of the same firm, whose report thereon dated January 28, 2008 expressed an unqualified opinion with an emphasis of matter paragraph that the Company changed its accounting policy for investments in subsidiaries from the equity method to the cost method for the separate financial statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned consolidated and separate financial statements present fairly, in all material respects, the financial position of Glow Energy Public Company Limited and its subsidiaries and of Glow Energy Public Company Limited, as at December 31, 2008, and the results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles.

Thanawan Anuratbodee Certified Public Accountant (Thailand) Registration No. 3440 DELOITTE TOUCHE TOHMATSU JAIYOS AUDIT CO., LTD.

BANGKOK January 30, 2009

Glow Energy Public Company Limited

109


BALANCE SHEETS

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2008 AND 2007

Unit : Baht CONSOLIDATED NOTE ASSETS CURRENT ASSETS Cash and cash equivalents Current investments Trade accounts receivable, net Advances to related parties Interest receivable from related parties Inventories, net Other current assets Prepaid expenses Advance payment Others Total Current Assets NON-CURRENT ASSETS Investments in subsidiaries using the cost method Long-term investments in other company Long-term loans to related parties Property, plant and equipment, net Other non-current assets, net Total Non-Current Assets TOTAL ASSETS

5 6 7, 22 22 22 8

2008

Annual Report 2008

2007

2008

2007

5,680,499,950 1,763,369,316 4,384,765,389 7,617,911 2,047,782,584

4,042,573,667 1,710,093,615 4,569,233,694 2,767,890 1,660,961,042

322,984,717 581,372,342 1,264,815,219 6,485,542 26,599,591 280,252,289

187,428,600 653,598,524 1,206,856,476 172,531,930 30,733,644 245,045,789

118,165,581 12,227,751 717,612,582 14,732,041,064

139,049,485 197,218,410 131,739,257 12,453,637,060

28,922,838 484,045 272,898,497 2,784,815,080

37,436,932 19,057,847 43,131,911 2,595,821,653

9

-

-

19,889,308,743

19,774,948,743

10, 22 11 12

1,500,000 54,324,602,874 1,024,886,670 55,350,989,544

1,500,000 40,861,674,350 706,840,983 41,570,015,333

1,500,000 5,419,684,060 18,808,925,102 116,715,875 44,236,133,780

1,500,000 6,015,000,000 10,244,087,368 50,720,647 36,086,256,758

70,083,030,608

54,023,652,393

47,020,948,860

38,682,078,411

Notes to the financial statements form an integral part of these statements

110

THE SEPARATE FINANCIAL STATEMENTS


BALANCE SHEETS

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2008 AND 2007

(Continued) Unit : Baht CONSOLIDATED NOTE LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Trade accounts payable Current portion of finance lease payables Current portion of long-term loans Current portion of debentures Advances from related parties Other current liabilities Other payables Accounts payable - acquisition of assets Accrued interest expense Accrued expenses Value added tax payable Corporate income tax payable Others Total Current Liabilities NON-CURRENT LIABILITIES Finance lease payables Long-term loans Debentures Other non-current liabilities Total Non-Current Liabilities TOTAL LIABILITIES

22 13 14 15 22

13 14 15 22

2008

THE SEPARATE FINANCIAL STATEMENTS

2007

2008

2007

2,934,154,673 32,911,845 743,132,975 2,310,000,000 23,348,362

2,793,699,618 38,537,672 717,675,588 2,600,000,000 20,398,027

801,650,850 4,393,413 2,310,000,000 31,604,325

825,555,320 5,080,985 2,600,000,000 45,112,783

36,280,635 2,605,285,876 201,670,349 303,479,054 154,350,144 81,122,259 276,634,087 9,702,370,259

55,217,120 131,356,097 128,646,595 314,731,734 132,104,242 71,044,281 722,045,371 7,725,456,345

9,369,514 1,731,902,650 147,022,419 92,360,709 11,667,480 51,952,093 53,465,119 5,245,388,572

11,498,721 65,874,149 110,589,662 111,125,822 32,607,723 38,842,041 585,584,911 4,431,872,117

41,368,594 20,509,464,333 9,463,210,129 168,437,827 30,182,480,883

39,471,693 9,290,374,213 7,773,376,069 224,123,835 17,327,345,810

13,806,976 7,157,444,796 9,463,210,129 391,722,802 17,026,184,703

6,438,810 2,427,699,600 7,773,376,069 196,350,294 10,403,864,773

39,884,851,142

25,052,802,155

22,271,573,275

14,835,736,890

Notes to the financial statements form an integral part of these statements Glow Energy Public Company Limited

111


BALANCE SHEETS

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2008 AND 2007

(Continued) Unit : Baht CONSOLIDATED NOTE

THE SEPARATE FINANCIAL STATEMENTS

2008

2007

2008

2007

14,828,650,350

14,828,650,350

14,828,650,350

14,828,650,350

LIABILITIES AND SHAREHOLDERS’ EQUITY (Continued) SHAREHOLDERS’ EQUITY SHARE CAPITAL Authorized share capital 1,482,865,035 ordinary shares of Baht 10 each Issued and paid-up share capital 1,462,865,035 ordinary shares of Baht 10 each PREMIUM ON ORDINARY SHARES RETAINED EARNINGS Appropriated Legal reserve 17 Unappropriated TOTAL MAJOR SHAREHOLDERS’ EQUITY MINORITY INTEREST TOTAL SHAREHOLDERS’ EQUITY

14,628,650,350 2,935,427,353

14,628,650,350 2,935,427,353

14,628,650,350 4,786,986,727

14,628,650,350 4,786,986,727

1,253,913,105 10,903,799,061 29,721,789,869 476,389,597 30,198,179,466

1,087,782,469 9,950,083,268 28,601,943,440 368,906,798 28,970,850,238

1,253,913,105 4,079,825,403 24,749,375,585 24,749,375,585

1,087,782,469 3,342,921,975 23,846,341,521 23,846,341,521

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

70,083,030,608

54,023,652,393

47,020,948,860

38,682,078,411

Notes to the financial statements form an integral part of these statements

112

Annual Report 2008


STATEMENTS OF INCOME

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Unit : Baht CONSOLIDATED

Revenues from the sales of goods Costs of the sales of goods Gross profit Other income Exchange gain Interest income Dividend income Others Selling and administrative expenses Exchange loss Interest expense Profit before income tax expense Income tax expense NET PROFIT PROFIT ATTRIBUTABLE TO Equity holders of the parent Minority interest

BASIC EARNINGS OF MAJOR SHAREHOLDER PER SHARE WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

BAHT

SHARES

THE SEPARATE FINANCIAL STATEMENTS

2008

2007

2008

2007

33,723,795,611 (28,361,836,841) 5,361,958,770

32,265,849,729 (26,264,725,355) 6,001,124,374

10,825,576,478 (9,169,205,677) 1,656,370,801

10,597,905,928 (8,512,327,364) 2,085,578,564

101,747,190 1,050,000 27,400,693 (599,278,750) (247,466,367) (796,118,029) 3,849,293,507 (235,755,592) 3,613,537,915

533,192,178 122,715,830 89,537,563 (517,678,154) (1,112,619,140) 5,116,272,651 (276,537,617) 4,839,735,034

264,738,225 2,231,725,251 19,270,675 (267,434,573) (10,849,218) (420,682,698) 3,473,138,463 (150,525,737) 3,322,612,726

241,649,132 3,654,366,571 27,893,907 (228,173,391) (1,728,662) (552,349,917) 5,227,236,204 (162,294,204) 5,064,942,000

3,539,425,091 74,112,824 3,613,537,915

4,782,756,371 56,978,663 4,839,735,034

2.42

3.27

2.27

3.46

1,462,865,035

1,462,865,035

1,462,865,035

1,462,865,035

-

-

Notes to the financial statements form an integral part of these statements Glow Energy Public Company Limited

113


STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Unit : Baht CONSOLIDATED ISSUED AND PREMIUM ON APPROPRIATED UNAPPROPRIATED MINORITY PAID-UP SHARE ORDINARY RETAINED RETAI NED INTEREST CAPITAL SHARES EARNINGS EARNINGS -LEGAL RESERVE BEGINNING BALANCE, JANUARY 1, 2007 14,628,650,350 2,935,427,353 Share subscription received from minority of subsidiaries Minority interest of a subsidiary acquired by the Company Dividend paid (Note 18) Net profit Appropriation of net profit for legal reserve ENDING BALANCE, DECEMBER 31, 2007 14,628,650,350 2,935,427,353 BEGINNING BALANCE, JANUARY 1, 2008 14,628,650,350 2,935,427,353 Share subscription received from minority of a subsidiary Dividend paid to minority of a subsidiary Dividend paid (Note 18) Net profit Appropriation of net profit for legal reserve ENDING BALANCE, DECEMBER 31, 2008 14,628,650,350 2,935,427,353

834,535,369 -

Annual Report 2008

-

317,172,698 26,440,372,197 87,056,000

87,056,000

(2,304,012,430) 4,782,756,371 253,247,100 (253,247,100) 1,087,782,469 9,950,083,268

(92,300,563) (92,300,563) (2,304,012,430) 56,978,663 4,839,735,034 368,906,798 28,970,850,238

1,087,782,469

9,950,083,268

368,906,798 28,970,850,238

(2,419,578,662) 3,539,425,091 166,130,636 (166,130,636) 1,253,913,105 10,903,799,061

78,400,000 78,400,000 (45,030,025) (45,030,025) (2,419,578,662) 74,112,824 3,613,537,915 476,389,597 30,198,179,466

Notes to the financial statements form an integral part of these statements

114

7,724,586,427

TOTAL SHAREHOLDERS’ EQUITY


STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Continued) Unit : Baht

BEGINNING BALANCE, JANUARY 1, 2007 Dividend paid (Note 18) Net profit Appropriation of net profit for legal reserve ENDING BALANCE, DECEMBER 31, 2007

14,628,650,350 14,628,650,350

THE SEPARATE FINANCIAL STATEMENTS PREMIUM ON APPROPRIATED UNAPPROPRIATED TOTAL ORDINARY RETAINED RETAINED SHAREHOLDERS’ SHARES EARNINGS EARNINGS EQUITY -LEGAL RESERVE 4,786,986,727 834,535,369 835,239,505 21,085,411,951 (2,304,012,430) (2,304,012,430) 5,064,942,000 5,064,942,000 253,247,100 (253,247,100) 4,786,986,727 1,087,782,469 3,342,921,975 23,846,341,521

BEGINNING BALANCE, JANUARY 1, 2008 Dividend paid (Note 18) Net profit Appropriation of net profit for legal reserve ENDING BALANCE, DECEMBER 31, 2008

14,628,650,350 14,628,650,350

4,786,986,727 4,786,986,727

ISSUED AND PAID-UP SHARE CAPITAL

1,087,782,469 166,130,636 1,253,913,105

3,342,921,975 (2,419,578,662) 3,322,612,726 (166,130,636) 4,079,825,403

23,846,341,521 (2,419,578,662) 3,322,612,726 24,749,375,585

Notes to the financial statements form an integral part of these statements Glow Energy Public Company Limited

115


GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

STATEMENTS OF CASH FLOWS

Unit : Baht CONSOLIDATED

2008 CASH FLOWS FROM OPERATING ACTIVITIES Net profit before tax Adjustments for : Dividend received from subsidiaries / other company Depreciation Amortization of other non-current assets Amortization of deferred bond issue expenses Write-off of fixed assets and other non-current assets Impairment loss of fixed assets (reversal) Loss on disposals of fixed assets Amortization of other non-current liabilities Exchange loss (gain) Reversal of provision for repurchase of convertible debentures Adjustment of finance lease payable Excess of minority interest paid to acquire a subsidiary Amortization of discount on forward foreign exchange contracts Interest expense Profit from operations before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Advances to related parties Interest receivable from related parties Inventories Prepaid expenses Advance payment Other current assets Other non-current assets

Annual Report 2008

2008

2007

3,849,293,507

5,116,272,651

3,473,138,463

5,227,236,204

(1,050,000) 2,416,466,760 32,063,207 12,945,002 99,566 26,460,000 43,363,594 (79,341,494) 226,969,452

2,924,878,620 47,054,343 13,058,714 26,900 (66,520,000) 63,466,411 (62,538,956) (526,442,373)

(2,231,725,251) 587,815,313 5,826,123 12,945,002 4,723,650 (72,358,968) 4,239,602

(3,654,366,571) 554,274,525 20,589,842 13,058,714 14,350 75,915 (57,538,004) 2,834,998

-

(410,750) (19,073,960) 3,330,499

-

(410,750) -

796,118,029

(1,776,043) 1,112,619,140

420,682,698

552,349,917

7,323,387,623

8,603,945,196

2,205,286,632

2,658,119,140

198,058,400 (4,850,021) (374,555,484) 12,042,802 57,440,659 (299,397,006) (7,609,985)

195,525,777 (2,767,890) (23,451,034) 18,618,003 86,801,248 12,672,265 (68,522,777)

(52,911,765) 166,046,388 4,134,053 (31,813,161) 8,514,094 2,323,802 (36,921,786) (100,894)

5,609,777 (146,128,235) (6,759,244) 6,742,869 (1,253,787) (14,986,651) (4,078,005)

Notes to the financial statements form an integral part of these statements

116

2007

THE SEPARATE FINANCIAL STATEMENTS


GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

STATEMENTS OF CASH FLOWS (Continued)

Unit : Baht CONSOLIDATED

CASH FLOWS FROM OPERATING ACTIVITIES (Continued) Operating liabilities increase (decrease) Trade accounts payable Advances from related parties Other payables Accrued expenses Value added tax payable Other current liabilities Cash received from operations Cash paid for interest Cash paid for income tax Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Withdrawal from (deposit in) Debt Service / Maintenance Accrual Accounts Cash paid for short-term loan granted to a subsidiary Cash received from a subsidiary for short-term loan repayment Cash received from subsidiaries for long-term loans repayment Cash paid for investments in subsidiaries Dividends received from subsidiaries / other company Cash paid for purchase of property, plant and equipment Interest paid capitalised as fixed assets Cash paid for purchase of assets from a subsidiary Proceeds from sale of fixed assets Advance payment for purchase of land Payment of assignment fee for land leasehold right Proceeds from long-term right to use of assets Net cash provided by (used in) investing activities

THE SEPARATE FINANCIAL STATEMENTS

2008

2007

2008

142,391,845 2,950,335 (19,075,108) (655,321) 21,356,830 94,562,207 7,146,047,776 (723,094,275) (335,026,406) 6,087,927,095

(1,029,167,879) 1,311,810 5,642,037 (26,443,434) (77,630,891) 33,576,018 7,730,108,449 (1,158,686,506) (281,147,422) 6,290,274,521

(23,904,470) (13,508,458) (2,253,025) (18,852,990) (21,270,419) 15,837,920 2,200,605,921 (384,249,941) (153,189,799) 1,663,166,181

(556,344,954) 38,271,921 7,411,698 19,808,159 (9,091,627) 25,230,619 2,022,551,680 (590,835,075) (177,612,052) 1,254,104,553

(42,655,517) -

31,618,815 -

72,226,182 (2,000,000,000)

(2,722,670) -

-

-

2,000,000,000

1,050,000 (13,021,890,340) (307,284,745) 9,326,939 23,655,486 (13,337,798,177)

(95,631,062) (2,632,829,835) 22,788,751 (84,500,000) (150,911,992) (2,909,465,323)

595,315,940 (114,360,000) 2,231,725,251 (7,276,444,839) (196,917,221) 2,292,948 267,731,476 (4,418,430,263)

2007

(284,215,062) 3,654,366,571 (1,731,503,187) (513,003,535) 1,622,010 (37,473,225) 1,087,070,902

Notes to the financial statements form an integral part of these statements Glow Energy Public Company Limited

117


GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

STATEMENTS OF CASH FLOWS (Continued)

Unit : Baht CONSOLIDATED

CASH FLOWS FROM FINANCING ACTIVITIES Receipts of short-term loans from financial institutions Repayment of short-term loans from financial institutions Receipts of short-term loans from related party Repayment of short-term loans from related party Repayment of finance lease payables Cash received from the issue of new debentures Payment of debentures issue expenses Receipts of long-term loans from financial institutions Payment of fees related to loans arrangement Long-term loans repayment Repayment of debentures Repayment of convertible debentures Dividend paid Share subscription received from minority of subsidiaries Dividend paid to minority of a subsidiary Net cash provided by (used in) financing activities Unrealized exchange gain (loss) of cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as at January 1, Cash and cash equivalents as at December 31, (Note 5)

2008

2007

2008

2007

3,423,000,000 (3,423,000,000) 1,258,000,000 (1,258,000,000) (42,438,977) 4,000,000,000 (13,110,942) 11,061,004,496 (421,152,234) (711,423,185) (2,600,000,000) (2,419,578,662) 78,400,000 (45,030,025) 8,886,670,471 1,126,894 1,637,926,283 4,042,573,667 5,680,499,950

(41,428,382) 2,000,000,000 (8,009,741) (4,054,874) (830,885,050) (2,600,000,000) (1,076,700) (2,304,012,430) 87,056,000 (3,702,411,177) (3,793,409) (325,395,388) 4,367,969,055 4,042,573,667

3,423,000,000 (3,423,000,000) (6,405,726) 4,000,000,000 (13,110,942) 3,999,999,996 (71,720,457) (2,600,000,000) (2,419,578,662) 2,889,184,209 1,635,990 135,556,117 187,428,600 322,984,717

(4,455,130) 2,000,000,000 (8,009,741) (4,054,874) (2,600,000,000) (1,076,700) (2,304,012,430) (2,921,608,875) (3,262,205) (583,695,625) 771,124,225 187,428,600

Notes to the financial statements form an integral part of these statements

118

Annual Report 2008

THE SEPARATE FINANCIAL STATEMENTS


NOTES TO THE FINANCIAL STATEMENTS

GLOW ENERGY PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

1. OPERATIONS OF THE COMPANY AND SUBSIDIARIES 1.1

THE COMPANY’S GENERAL INFORMATION Glow Energy Public Company Limited (“the Company”) registered as a public limited company under Thai laws on September 1, 1995, and was listed on the Stock Exchange of Thailand (SET) in February 1996 until August 2002 and listed again on April 21, 2005. The Company operates in Thailand and principally engages in the generation and distribution of electricity, steam and water for industrial use. The Company’s office is located at 195 Empire Tower, 38th Floor - Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok. As at December 31, 2008 and 2007, the Company’s major shareholder is Suez Energy (Thailand) Company Limited, holding 44.1 percent of the Company’s share capital. Suez Energy (Thailand) Company Limited is a wholly owned subsidiary of SuezTractebel Energy Holdings Cooperatieve U.A., holding 25 percent of the Company’s share capital. As at December 31, 2008 and 2007, the Company’s ultimate shareholder is GDF Suez S.A. and Suez Tractebel S.A., respectively.

1.2

CHANGE IN ACCOUNTING POLICY 1.2.1 For the year ended December 31, 2007, the Company changed its accounting policy for investments in subsidiaries from the equity method to the cost method to comply with the Notification of Federation of Accounting Professions No. 26/2549 (Amendment No. 1) regarding Thai Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investment in Subsidiaries” and the Notification of Federation of Accounting Professions No. 32/2549 regarding the explanation for Thai Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investment in Subsidiaries” (paragraph 27) and Thai Accounting Standard No. 45 “Accounting for Investment in Associates” (paragraph 11). This change in accounting policy has been accounted for retroactively in the separate financial statements as if the Company had recorded such investments by the cost method according to the new accounting policy continuously. The effect of the change up to December 31, 2006 was included in retained earnings as at January 1, 2007. 1.2.2 In 2008, Glow SPP 3 Company Limited, a subsidiary, has changed the estimated useful life of its power plant from 30 years to 40 years in order to more appropriately reflect the current usage condition and consumption of the economic benefit. As a result, in the consolidated financial statements for the year ended December 31, 2008, depreciation expense decreased and net profit increased in the same amount of Baht 159.5 million, and basic earnings per share increased by Baht 0.11.

Glow Energy Public Company Limited

119


1.3

SUBSIDIARIES All subsidiaries of the Company are companies registered in Thailand and their office is located at 195 Empire Tower, 38th Floor – Park Wing, South Sathorn Road, Yannawa, Sathorn, Bangkok excepted for the registered office of GHECO-One Company Limited is located at 11 I – 5 Road, Tambon Maptaphut, Amphur Muang Rayong, Rayong Province. The information of the subsidiaries is as follows : COMPANY’S NAME REGISTERED DATE MAIN BUSINESS OBJECTIVE 1) Glow Company Limited

March 12, 1997

2) Glow SPP 1 Company Limited

December 6, 1994

3) Glow SPP 2 Company Limited 4) Glow SPP 3 Company Limited

September 19,1994 August 9, 1991

5) Glow IPP Company Limited 6) Glow Demin Water Company Limited

March 12, 1997 January 13, 1999

7) Glow IPP 3 Company Limited 8) GHECO-One Company Limited

June 14, 2005 April 27, 2007

9) Glow IPP 2 Holding Company Limited

October 16, 2007

Provide management services, consultant services and management advisory for related companies Generate and distribute electricity, steam and water for industrial use Generate and distribute electricity and steam for industrial use Generate and distribute electricity, steam and water for industrial use Generate and distribute electricity to EGAT Generate and distribute demineralised water and high quality water for the general industry and for the petrochemical industry. Develop power generation projects. Generate and distribute electricity to EGAT (in process of power plant construction) Invest in other companies

2. BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS 2.1

The consolidated and the separate financial statements have been prepared in Thai Baht currency and in compliance with the Notification of the Department of Commercial Registration (currently the Department of Business Development) regarding “The Brief Particulars in the Financial Statements B.E. 2544” dated September 14, 2001 which is in accordance with the Regulation of The Stock Exchange of Thailand dated January 22, 2001, regarding the preparation and submission of financial statements and reports for the financial position and result of operations of the listed companies, and in accordance with accounting standards and practices generally accepted in Thailand. However, the consolidated and the separate financial statements for the years ended December 31, 2008, and 2007 are different from Thai Accounting Standard No.35 (revised 2007) “Presentation of Financial Statements”. The revision of Thai Accounting Standard has no material impact on the consolidated and the separate financial statements. The Company changes the format of presentation of the Statements of Cash Flows for the years ended December 31, 2008 and 2007 to comply with the Thai Accounting Standards No. 25 (revised 2007) “Cash Flow Statements”, which is effective for financial periods beginning on or after January 1, 2008 onwards.

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2.2

The consolidated financial statements included the accounts of the Company and its subsidiaries, after elimination of intercompany transactions, of which the percentage of shareholding is as follows : % OF SHAREHOLDING 2008 2007 OWNED BY THE COMPANY Glow Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP 3 Company Limited Glow IPP 2 Holding Company Limited

100 100 100 100 100

100 100 100 100 100

OWNED BY GLOW COMPANY LIMITED Glow SPP 1 Company Limited Glow IPP Company Limited Glow Demin Water Company Limited

100 95 100

100 95 100

OWNED BY GLOW IPP 2 HOLDING COMPANY LIMITED GHECO-One Company Limited

65

65

3. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared on an accrual basis under the measurement basis of historical cost except as disclosed in the accounting policies below: Significant accounting policies of the Company and subsidiaries are summarized below:

3.1

CASH AND CASH EQUIVALENTS Cash and cash equivalents are cash on hand, deposits at banks’ savings accounts and current accounts, and short-term highly liquid investments with maturities within three months.

3.2

RECOGNITION OF REVENUES Revenues from the sales of goods are recognized on an accrual basis, which represent the invoiced value, excluding value added tax, of products supplied after deducting discounts, which is calculated based on annual purchase volumes of each customer by the percentage of net sales as specified in the agreement. Revenues from rendering of services are recognized on an accrual basis.

3.3

ALLOWANCE FOR DOUBTFUL ACCOUNTS Allowance for doubtful accounts are based on estimated uncollectible debts.

3.4

INVENTORIES Inventories consisting of raw materials, spare parts, and supplies for machines are valued at the lower of cost and net realizable value. Cost is determined by weighted average method. Provision is made for obsolete and slow moving inventories based on the items that expected not to be used.

3.5

PROPERTY, PLANT AND EQUIPMENT Property is stated at cost. Plant and equipment are stated at cost less accumulated depreciation.

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121


Depreciation is calculated by reference to cost of assets on a straight-line basis over the following estimated useful lives : YEARS Plant and parts of construction in progress which are already in operation Leasehold improvements Machinery, tools and plant equipment Furniture, fixtures and office equipment Motor vehicles

2.2 - 40 5 - 20 5 - 20 3, 5, 10 5

3.6

CONSTRUCTION IN PROGRESS Construction in progress includes construction, borrowing costs that are directly attributable to loans for construction and other related costs directly to constructing the asset or bringing it to working condition.

3.7

BORROWING COSTS Interest incurred during the construction or installation and related to loans obtained for construction of the power plant and acquisition of machinery are capitalized as part of the cost of assets.

3.8

AMORTIZATION OF OTHER NON-CURRENT ASSETS Deferred right to use grid system and transmission line are amortized on a straight-line basis over the period of power purchase agreements. Deferred land lease fee is amortized on a straight-line basis over the period of the lease agreement from the date of commencing commercial operations. Deferred land leasehold right is amortized on a straight-line basis over the period of the lease agreement of 30 years. Deferred financial service fees are amortized on a straight-line basis over the period of related agreements. Deferred right of pipe rack usage is amortized on a straight-line basis over the period of the lease agreement of 15 years.

3.9

INVESTMENTS Long-term investments in other company, which are non-marketable equity securities and held as other investments are valued at cost. The Company recognizes loss on impairment of securities in the statement of income in the period in which it incurs.

3.10 LONG-TERM LEASE - Operating lease Leases in which substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Rentals applicable to such operating leases are charged to the statement of income over the lease term. - Finance lease Leases in which substantially all the risks and rewards of ownership, other than legal title, are transferred to the Company and its subsidiaries are accounted for as finance leases. At inception, the fair value of the leased assets is recorded together with the obligation. The leased assets are depreciated using the straight-line method over their estimated useful lives. Interest or financial charge and depreciation are recognized as expenses in the statement of income.

3.11 FOREIGN CURRENCIES Transactions denominated in foreign currencies are converted into Baht at rates of exchange prevailing at the transaction dates. All balances of monetary assets and liabilities in foreign currencies and forward foreign exchange contracts at the end of the year are converted at the reference exchange rates established by the Bank of Thailand at the end of the year. Both realized and unrealized foreign exchange gains or losses are recognized as revenues or expenses in the statements of income.

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3.12 FINANCIAL INSTRUMENTS The Company and its subsidiaries entered into Interest Rate Swap Agreements, Forward Foreign Exchange Contracts and Currency Swap Agreements in asset and liability management activities to control exposure to fluctuations in interest and foreign exchange rates. Further details of financial instruments are disclosed in Note 21. Income and expense from interest rate swap agreements used to manage interest rate exposures are recognized as adjustments to interest income and expense in statements of income. Such adjustments that are attributable to construction are capitalized as part of construction in progress. Gains and losses on forward foreign exchange contracts and currency swap agreements designated as hedges of existing assets and liabilities are recognized as income or expense in the statements of income. Gains and losses on forward foreign exchange contracts designated as hedges that are attributable to construction are capitalized as part of construction in progress. Amounts to be paid and received are offset in the balance sheet. Premiums or discounts on forward foreign exchange contracts are amortized to revenues or expenses over the contract period. The Company and its subsidiaries have no policy to speculate in or engage in the trading of any derivative financial instruments.

3.13 PROVIDENT FUND The Company, the subsidiaries and their employees jointly registered a provident fund scheme under Provident Fund Act B.E. 2530. The funds are contributed by the employees, the Company and its subsidiaries. COMPANY’S NAME MANAGED BY Glow Energy Public Company Limited Glow Company Limited Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP Company Limited

Bank of Ayudhaya Public Company Limited. TISCO Assets Management Co., Ltd., and Bank of Ayudhaya Public Company Limited. TISCO Assets Management Co., Ltd. Bank of Ayudhaya Public Company Limited. Bank of Ayudhaya Public Company Limited. TISCO Assets Management Co., Ltd.

The above funds will be paid to the employees upon termination in accordance with the rules of the provident fund. Contributions for employees by the Company, under the provident fund scheme, are recorded as expenses when incurred.

3.14 INCOME TAX EXPENSE Income tax expense is based on tax paid and accrued for the year. 3.15 EARNINGS PER SHARE Basic earnings per share are calculated by dividing net profit for the year by the weighted average number of ordinary shares issued during the year. 3.16 USE OF ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles also requires the Company’s management to exercise judgments in order to determine the accounting policies, 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 reported amounts of revenue and expense during the reporting period. Although, these estimates are based on management’s reasonable consideration of current events, actual results may differ from these estimates. Glow Energy Public Company Limited

123


4. SUPPLEMENTAL CASH FLOWS INFORMATION 4.1

Accounts payable – acquisition of assets for the years ended December 31, 2008 and 2007 are as follows : CONSOLIDATED 2008

Accounts payable - acquisition of assets brought forward Add Purchase of fixed assets Unrealized exchange loss (gain) Less Cash payment Reversal of accounts payable Assets under finance lease Accounts payable - acquisition of assets carried forward 4.2

2007

131,356,097 106,660,955 15,469,057,040 2,672,724,517 75,014,471 (1,600,676) (13,021,890,340) (2,632,829,835) (9,541,341) (38,710,051) (13,598,864) 2,605,285,876

131,356,097

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007 65,874,149 8,949,895,763 5,663,897 (7,276,444,839) (13,086,320)

19,524,759 1,780,798,494 (353,917) (1,731,503,187) (2,592,000)

1,731,902,650

65,874,149

In October 2007, the Company entered into a new Facility Agreement to obtain a Yen 8,100 million loan and fully prepaid the previous Yen loan in the same amount. These transactions had no impact on cash inflows and outflows (see Note 14).

5. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2008 and 2007 consist of : CONSOLIDATED

Cash Bank deposits in current accounts Bank deposits in savings accounts Bills of exchange

2008

2007

765,165 4,027,156 5,675,707,629 5,680,499,950

762,735 772,811 2,691,455,549 1,349,582,572 4,042,573,667

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007 46,082 2,096,879 320,841,756 322,984,717

46,016 512,811 186,869,773 187,428,600

As at December 31, 2008 and 2007, cash and cash equivalents of Glow IPP Company Limited of Baht 1,650.3 million and Baht 2,127.5 million, respectively, are pledged as collateral to secure credit facilities obtained from financial institutions. However, the pledged accounts can be withdrawn for use as working capital required in the normal course of its business (see Note 14). As at December 31, 2008 and 2007, bank deposits in savings accounts and bills of exchange carry interest between 0.125-2 percent per annum and 0.125-4.25 percent per annum, respectively.

6. CURRENT INVESTMENTS Current investments as at December 31, 2008 and 2007 consist of : CONSOLIDATED

Bank deposits in savings accounts Bills of exchange Global Liquidity Fund

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Annual Report 2008

2008

2007

1,763,369,316 1,763,369,316

660,826,005 650,000,000 399,267,610 1,710,093,615

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007 581,372,342 581,372,342

653,598,524 653,598,524


Current investments of the Company represent bank deposits in Debt Service Accrual Account, which is for the purpose of repayment of the Company’s debentures. As at December 31, 2008 and 2007, current investments of Glow IPP Company Limited of Baht 1,182.0 million and Baht 1,056.5 million, respectively, are pledged as collateral to secure credit facilities obtained from financial institutions and are restricted for repayment of long-terms loans and payment of major maintenance (see Note 14). Current investments of Baht 1,056.5 million as at December 31, 2007 included investment in overseas Global Liquidity Fund of USD 11.9 million, with the floating interest rate which was withdrawn during the year 2008.

7. TRADE ACCOUNTS RECEIVABLE, NET Trade accounts receivable, net as at December 31, 2008 and 2007 are classified by aging as follows : CONSOLIDATED

Trade accounts receivable, other companies Current Past due Less than 3 months 6 - 12 months More than 12 months Less Provision for contract discounts Trade accounts receivable from related parties Current Total trade accounts receivable, net

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007

2008

2007

4,397,591,875

4,599,979,273

2,218,558 3,858,659 36,906,218 4,440,575,310 (57,448,953) 4,383,126,357

2,800,407 1,163,496 33,113,900 4,637,057,076 (69,045,872) 4,568,011,204

44,647 1,154,686,876 (53,365,831) 1,101,321,045

44,647 1,238,282,324 (64,853,222) 1,173,429,102

1,639,032 4,384,765,389

1,222,490 4,569,233,694

163,494,174 1,264,815,219

33,427,374 1,206,856,476

1,154,642,229 -

1,238,237,677 -

8. INVENTORIES, NET Inventories, net as at December 31, 2008 and 2007 consist of : CONSOLIDATED

Raw material - coal Raw material - oil Raw material - woodchips Spare parts and supplies for machines Less Allowance for obsolete inventories Total inventories, net

2008 517,494,935 242,085,041 5,028,932 1,283,173,676 2,047,782,584 2,047,782,584

2007 302,982,392 220,386,699 1,161,885,665 1,685,254,756 (24,293,714) 1,660,961,042

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007 280,252,289 245,045,789 280,252,289 245,045,789 280,252,289 245,045,789

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125


9. INVESTMENTS IN SUBSIDIARIES USING THE COST METHOD Investments in subsidiaries using the cost method in the separate financial statements as at December 31, 2008 and 2007 are as follows : Unit : Baht COMPANY’S NAME PAID-UP PORTION OF CAPITAL INVESTMENT (%) 2008 2007 Glow Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP 3 Company Limited Glow IPP 2 Holding Company Limited Total

4,401,668,111 4,941,534,880 7,373,389,550 245,000,000 220,000,000

100 100 100 100 100

7,114,824,403 4,941,534,760 7,379,374,488 233,575,092 220,000,000 19,889,308,743

7,114,824,403 4,941,534,760 7,379,374,488 228,715,092 110,500,000 19,774,948,743

On August 14, 2008, the Board of Directors’ meetings of the subsidiaries passed a resolution to distribute an interim dividend from retained earnings as at June 30, 2008 detailed as follows : COMPANY’S NAME BAHT AMOUNT DIVIDEND PER SHARE (MILLION BAHT) PAYMENT DATE Glow Company Limited 0.68 299.3 August 28, 2008 Glow SPP 2 Company Limited 0.20 98.8 August 28, 2008 Glow SPP 3 Company Limited 1.28 943.8 August 28, 2008 On April 29, 2008, the annual general shareholders’ meetings of the subsidiaries passed a resolution to distribute annual dividends for the year 2007. The dividends were paid as interim dividends following the resolutions of the Board of Directors’ meetings of the subsidiaries detailed as follows : COMPANY’S NAME BOD’S BAHT AMOUNT DIVIDEND MEETING DATE PER SHARE (MILLION BAHT) PAYMENT DATE Glow SPP 1 Company Limited May 10, 2007 0.70 150.5 May 29, 2007 Glow SPP 1 Company Limited August 9, 2007 0.93 200.0 August 29, 2007 Glow SPP 1 Company Limited February 28, 2008 0.84 180.6 March 6, 2008 Glow SPP 2 Company Limited November 12, 2007 0.45 222.4 November 27, 2007 Glow SPP 3 Company Limited May 10, 2007 0.55 405.5 May 29, 2007 Glow SPP 3 Company Limited August 9, 2007 1.93 1,423.1 August 29, 2007 Glow SPP 3 Company Limited February 28, 2008 0.68 501.4 March 6, 2008 Glow IPP Company Limited February 28, 2008 3.16 900.6 March 6, 2008 Glow Company Limited May 10, 2007 0.68 299.3 May 29, 2007 Glow Company Limited August 9, 2007 0.45 198.1 August 29, 2007 Glow Company Limited February 28, 2008 0.88 387.3 March 6, 2008

GLOW IPP 3 COMPANY LIMITED On April 11, 2007, the extraordinary general shareholders’ meeting of Glow IPP 3 Company Limited passed a special resolution to increase the registered capital from Baht 110 million to Baht 380 million by the issuance of 27 million new ordinary shares with the par value of Baht 10 each. 60 percent of the newly issued shares (16.2 million shares) were subscribed by the Company. Glow IPP 3 Company Limited registered the capital increase with the Department of Business Development on August 30, 2007. The Company paid for the capital increase in the amount of Baht 78.1 million on June 29, 2007.

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On August 15, 2007, the Company purchased 1.1 million shares of Glow IPP 3 Company Limited from Hemaraj Land and Development Public Company Limited at par value of Baht 10 each, resulting in a change of the shareholding proportion of the Company from 50 percent to 60 percent. The Company has already paid in advance for the shares purchase totaling Baht 11 million on June 29, 2007. On October 15, 2007, the Company entered into a sale and purchase agreement to purchase 15,199,997 shares of Glow IPP 3 Company Limited from Hemaraj Land and Development Public Company Limited at the price of Baht 96.0 million, resulting in a change of the shareholding proportion of the Company from 60 percent to 100 percent. Baht 64.5 million was paid on October 15, 2007, whereby the remaining Baht 31.5 million is to paid depending on certain conditions of the agreement. However, the purchase price was adjusted and the final remaining amount of Baht 20.1 million was paid in December 2007. On October 31, 2007, the extraordinary general shareholders’ meeting of Glow IPP 3 Company Limited passed a resolution to change its name from “Glow Hemaraj Energy Company Limited” to “Glow IPP 3 Company Limited”. Glow IPP 3 Company Limited registered the name change with the Department of Business Development on December 14, 2007. On September 12, 2008, the Board of Directors’ meeting of Glow IPP 3 Company Limited passed a resolution to call for paid up capital of Baht 0.18 per share of the 27 million issued shares. The Company paid the called amount totaling Baht 4.86 million on September 30, 2008.

GHECO-ONE COMPANY LIMITED GHECO-One Company Limited was also established under the Joint Development and Venture Agreement dated March 18, 2005 made by the Company and Hemaraj Land and Development Public Company Limited. GHECO-One Company Limited registered as a limited company in Thailand on April 27, 2007 with Baht 10 million registered capital, 65 percent of which was held by the Company. On May 21, 2007, the extraordinary general shareholders’ meeting of GHECO-One Company Limited passed a special resolution to increase the registered capital from Baht 10 million to Baht 100 million by issuing 9 million new ordinary shares with the par value of Baht 10 each. GHECO-One Company Limited registered the capital increase with the Department of Business Development on June 4, 2007. The Company has paid for the called increase shares of Baht 26 million on July 6, 2007. On October 13, 2007, the Company and Hemaraj Land and Development Public Company Limited entered into a shareholders’ agreement, which superseded the Joint Development and Venture agreement dated March 18, 2005, in order to regulate their responsibilities with respect to the ownership and management of GHECO-One Company Limited. On October 16, 2007, the Company entered into a share purchase agreement to sell 6,499,996 shares of GHECO-One Company Limited to Glow IPP 2 Holding Company Limited at Baht 32.5 million. On January 25, 2008, the extraordinary general shareholders’ meeting of GHECO-One Company Limited passed a special resolution to increase the registered capital from Baht 100 million to Baht 324 million by issuing 22.4 million new ordinary shares at par value of Baht 10 each. GHECO-One Company Limited registered the capital increase with the Department of Business Development on March 4, 2008.

GLOW IPP 2 HOLDING COMPANY LIMITED Glow IPP 2 Holding Company Limited registered as a limited company in Thailand on October 16, 2007 with Baht 1 million registered capital. On December 6, 2007, the annual general shareholders’ meeting of Glow IPP 2 Holding Company Limited passed a resolution to increase the registered capital from Baht 1 million to Baht 220 million by issuing 2.19 million new ordinary shares with the par value of Baht 100 each. Glow IPP 2 Holding Company Limited registered the capital increase with the Department of Business Development on December 25, 2007 and called for payment of the increase shares at Baht 50 per share. The remaining Baht 109.5 million was called and paid on March 10, 2008.

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127


10. LONG-TERM LOANS TO RELATED PARTIES This represents long-term loans granted to Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited under the Phase III Project Shareholder Loan Agreement dated September 29, 2003 and Novation Agreement dated December 25, 2006. The loans carry interest at a fixed percentage per annum and are repayable before each date on which a principal payment must be made in respect of the debentures of the Company.

11. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of : Unit : Baht

LAND

CONSOLIDATED FURNITURE, CONSTRUCTION MACHINERY, FIXTURES AND IN PROGRESS/ POWER/ WATER LEASEHOLD TOOLS AND OFFICE MOTOR EQUIPMENT UNDER PLANT IMPROVEMENT EQUIPMENT EQUIPMENT VEHICLES INSTALLATION

TOTAL

Cost December 31, 2007 Purchases Capitalized interest Transferred to spare parts Transferred from advance payment Transferred from other non-current assets Adjustments Transfer Disposals December 31, 2008

291,865,672 59,394,987,788 155,251,877 317,645,580 252,487,880 86,347,214 2,155,773,131 62,654,359,142 161,993,000 71,172,764 3,469,223 10,044,726 44,370,373 40,757,801 15,137,249,153 15,469,057,040 307,231,456 307,231,456 (12,266,058) (12,266,058) 127,550,000

-

-

-

-

-

-

127,550,000

87,494,427 87,494,427 (17,320,327) (3,101,155) (20,421,482) 165,104,464 3,943,022 2,183,695 (3,096,493) (168,134,688) (57,609,765) (567,495) (6,993,612) (5,110,283) (24,838,807) (84,700) (95,204,662) 581,408,672 59,544,068,866 162,096,627 319,779,234 288,651,477 102,266,208 17,519,528,779 78,517,799,863

Accumulated depreciation December 31, 2007 Depreciation for the year Depreciation – disposals Depreciation – transfer December 31, 2008

-

21,291,588,162 45,501,031 225,530,340 174,876,796 55,188,463 2,341,812,793 9,214,772 27,399,873 23,419,077 14,620,245 (8,553,882) (567,495) (3,496,373) (4,958,028) (24,838,785) 1,212,732 (1,342,585) 129,853 23,626,059,805 52,805,723 249,563,693 193,337,845 44,969,923

-

21,792,684,792 2,416,466,760 (42,414,563) 24,166,736,989

-

26,460,000 26,460,000

Provision for impairment December 31, 2007 Addition December 31, 2008

-

26,460,000 26,460,000

-

-

-

-

Net book value December 31, 2007 December 31, 2008

291,865,672 38,103,399,626 109,750,846 581,408,672 35,891,549,061 109,290,904

92,115,240 70,215,541

77,611,084 31,158,751 2,155,773,131 40,861,674,350 95,313,632 57,296,285 17,519,528,779 54,324,602,874

Depreciation for the years ended December 31, 2008 2007

128

2,416,466,760 2,924,878,620

Annual Report 2008


Unit : Baht

LAND

THE SEPARATE FINANCIAL STATEMENTS FURNITURE, MACHINERY, FIXTURES AND POWER/ WATER LEASEHOLD TOOLS AND OFFICE MOTOR CONSTRUCTION PLANT IMPROVEMENT EQUIPMENT EQUIPMENT VEHICLES IN PROGRESS

TOTAL

Cost December 31, 2007 Purchases 65,000,000 Capitalized interest Transferred to spare parts Transferred from advance payment 16,250,000 Transfer Disposals December 31, 2008 81,250,000

13,194,433,313 74,872,145 203,156,527 58,259,431 24,416,286 51,398,807 1,693,259 5,392,941 7,326,568 15,111,820 (3,393,339) -

1,685,104,368 15,240,242,070 8,803,972,368 8,949,895,763 196,917,221 196,917,221 (3,393,339)

16,250,000 73,829,692 1,232,112 (75,061,804) (7,944,771) (567,495) (1,465) (1,553,572) (4,326,412) (14,393,715) 13,308,323,702 77,230,021 208,548,003 64,032,427 35,201,694 10,610,932,153 24,385,518,000

Accumulated depreciation December 31, 2007 Depreciation for the year Depreciation – disposals December 31, 2008

-

4,783,187,301 8,023,616 142,905,507 46,798,378 15,239,900 555,585,487 3,914,400 17,757,566 5,703,307 4,854,553 (938,616) (567,495) (1,464) (1,543,135) (4,326,407) 5,337,834,172 11,370,521 160,661,609 50,958,550 15,768,046

-

4,996,154,702 587,815,313 (7,377,117) 5,576,592,898

Net book value December 31, 2007 December 31, 2008

81,250,000

8,411,246,012 66,848,529 7,970,489,530 65,859,500

60,251,020 11,461,053 9,176,386 1,685,104,368 10,244,087,368 47,886,394 13,073,877 19,433,648 10,610,932,153 18,808,925,102

Depreciation for the years ended December 31, 2008 2007

587,815,313 554,274,525

As at December 31, 2008 and 2007, cost of property, plant and equipment in the consolidated financial statements that was fully depreciated but still in use was Baht 6,794.8 million and Baht 4,535.1 million, respectively.

THE COMPANY On June 6, 2006, the Company entered into a Memorandum of Understanding (MOU) with a local company, being an industrial estate owner, whereby, by December 31, 2006, both parties shall enter into an agreement for the sale and purchase of land of approximately 31 rais in the amount totaling Baht 81.25 million for the development of a new cogeneration power plant. Advance payment of Baht 8.1 million was paid on the signing date of the MOU and another Baht 8.1 million was paid on September 30, 2006. Under certain conditions of the MOU, the Company shall be granted two options; 1) to terminate the MOU by January 31, 2007, and all payments made shall be returned to the Company, or 2) to extend signing the Land Sale and Purchase Agreement until December 31, 2007, in the event that the Company fails to sign the agreement within that date, all payments made by the Company shall be confiscated. On January 3, 2007, the Company sent a notice to exercise the option to extend signing the Land Sale and Purchase Agreement until December 31, 2007. Subsequently, on December 11, 2007, the Company sent the letter requesting to extend the term of the MOU to be until April 30, 2008. Accordingly, the signing of the Land Sale and Purchase Agreement was postponed to be by April 30, 2008.

Glow Energy Public Company Limited

129


On April 30, 2008, the Company entered into the Land Sale and Purchase Agreement and paid the amount of Baht 56.9 million. The remaining Baht 8.1 million was paid on land title transfer date on May 29, 2008.

GLOW IPP COMPANY LIMITED All of the land, construction, machinery and equipment of the power plant of Glow IPP Company Limited have been mortgaged and pledged to secure credit facilities obtained from financial institutions (see Note 14). GLOW IPP 3 COMPANY LIMITED On December 23, 2005, Glow IPP 3 Company Limited entered into a Land Deposit Agreement with a local company, being an industrial estate owner, to reserve land of approximately 134 rais at the price as specified in the agreement totaling Baht 268 million to be used for the development of a new IPP Project and paid a down payment of Baht 26.8 million. The term of the agreement is 18 months and can be extended for another 6 months with an additional down payment of Baht 8.9 million. In the event that Glow IPP 3 Company Limited decides not to purchase the land within the term of the agreement, 50 percent of the down payment shall be returned. On June 29, 2007, Glow IPP 3 Company Limited entered into the Land Purchase and Sale Agreement to purchase 111.3 rais of the above reserved land at the amount totaling Baht 222.6 million. Baht 44.5 million and Baht 40.0 million were paid on the signing date and on December 15, 2007, respectively. The remaining amount of Baht 111.3 million is to be paid on March 31, 2008 upon certain conditions. On May 22, 2008, Glow IPP 3 Company Limited entered into an amendment No. 1 to the above Land Purchase and Sale Agreement to amend the land area from 111.3 rais to 104 rais and the purchase price was reduced to Baht 208 million. On June 27, 2008, the remaining amount of Baht 96.7 million was paid and the land title deed was transferred to Glow IPP 3 Company Limited.

12. OTHER NON-CURRENT ASSETS, NET Other non-current assets, net as at December 31, 2008 and 2007 consist of : CONSOLIDATED

Deferred right to use grid system Deferred right to use transmission line Deferred land lease Deferred land leasehold right Deferred financial service fee Project development costs Refundable deposits Others Total other non-current assets, net Amortization for the years ended December 31,

130

Annual Report 2008

2008

2007

152,829,731 133,791,660 92,501,975 178,804,659 423,900,899 23,333,792 19,723,954 1,024,886,670 32,063,207

163,767,498 140,818,170 93,530,889 177,772,227 8,309,436 81,598,954 21,176,196 19,867,613 706,840,983 47,054,343

Unit : Baht THE SEPARATE FINANCIAL STATEMENTS 2008 2007 35,971,691 71,718,705 5,038,718 3,986,761 116,715,875 5,826,123

37,428,736 3,949,200 4,769,641 4,573,070 50,720,647 20,589,842


12.1 Deferred right to use grid system represents right to use grid system of Glow SPP 2 Company Limited and Glow SPP 3 Company Limited, whereby on September 27, 2000, both subsidiaries handed over and transferred the ownership of certain parts of the grid system to Electricity Generating Authority of Thailand (EGAT) to comply with the power purchase agreement, under the regulation of purchasing electricity from small power producers. The net book value of the transferred parts of the grid system at the transfer date was Baht 242.8 million. 12.2 Deferred right to use transmission line represents the costs paid by Glow IPP Company Limited for construction of transmission line in order to comply with the power purchase agreement, under the regulation of purchasing electricity from independent power producers. The ownership of the transmission line belongs to EGAT and Glow IPP Company Limited has the right to use the transmission line over the period of the power purchase agreement of 25 years. 12.3 Deferred land lease represents fees paid by Glow SPP 2 Company Limited and Glow SPP 3 Company Limited under the coleasehold contract for the land at industrial habour in Map Ta Phut Industrial Estate for a period of 28 years, from December 1, 1996 to November 30, 2024 in order to construct power plant project - Phase III. The proprietary rights on construction still belong to the subsidiaries after the expiration of the contract. In 2008, part of the land leasehold right of 35 rais was assigned to GHECO-One Company Limited (see Note 22). 12.4 Deferred land leasehold right represents the fees which were paid in relation to the assignment of the leasehold right for 57 rais of land to the Company, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and GHECO-One Company Limited. On August 30, 2006, Glow IPP 3 Company Limited entered into a Deposit and Lease Option Agreement with a local company, as a leasehold right owner, to transfer the leasehold right for land of approximately 62 rais to Glow IPP 3 Company Limited at the price totaling Baht 181 million to be used for the development of a new IPP project and a deposit of Baht 18.1 million was paid. On January 29, 2007 and March 19, 2007, the transferor issued two letters to reduce the area of the land and the leasehold transfer fee to be 57 rais and Baht 169 million, respectively. On August 9, 2007, Glow IPP 3 Company Limited entered into an Assignment Agreement to assign all rights and obligations under the above Deposit and Lease Option Agreement to the Company. The Company is to pay the consideration, consisting of Assignment Fee of Baht 23.1 million and reimbursement of actual rental and utility fee already paid by Glow IPP 3 Company Limited to Industrial Estate Authority of Thailand (IEAT) from August 2006 to August 2007. The Company paid the consideration totaling Baht 27.1 million on August 30, 2007. On August 21, 2007, the Company sent a notice to exercise the lease option and paid the remaining assignment fee to the leasehold right owner of Baht 150.9 million on December 18, 2007. The Company, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited jointly entered into a land lease agreement for the above land with IEAT on December 19, 2007 (see Note 23.1.9.1). On February 27, 2008, the Company entered into an assignment agreement to assign its rights and obligations under the above Deposit and Lease Option Agreement to Glow SPP 2 Company Limited and Glow SPP 3 Company Limited which is retroactively effective on December 19, 2007. The rights and obligations of the Company, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited are on a pro rata basis according to amount of land area of 12 rais, 0.259 rais and 44.736 rais, respectively. Subsequently, 44.736 rais of the land was assigned to GHECO-One Company Limited (see Note 22). 12.5 Deferred financial service fee of Baht 348.1 million represents the financial fees paid in connection with the project financing of GHECO-One Company Limited. 12.6 Project development costs represent costs incurred by Glow IPP 3 Company Limited that were transferred to GHECO-One Company Limited in December 2007 in accordance with the Joint Development and Venture Agreement dated March 18, 2005. Such costs were capitalized as cost of power plant which is under construction in 2008.

Glow Energy Public Company Limited

131


13. FINANCE LEASE PAYABLES The Company and its subsidiaries entered into finance lease agreements for vehicles and office equipment, under which the balance of minimum lease payments as at December 31, 2008 and 2007 are as follows : Unit : Baht CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007 Less than 1 year More than 1 year Total minimum lease payment Less : Interest expense Total minimum lease payment, net Less : Current portion of finance lease payables

132

Annual Report 2008

53,947,728 118,569,512 172,517,240 (98,236,801) 74,280,439 (32,911,845) 41,368,594

50,581,193 132,624,013 183,205,206 (105,195,841) 78,009,365 (38,537,672) 39,471,693

5,510,134 15,024,477 20,534,611 (2,334,222) 18,200,389 (4,393,413) 13,806,976

5,662,533 7,049,709 12,712,242 (1,192,447) 11,519,795 (5,080,985) 6,438,810


Glow Energy Public Company Limited

133

33 semi-annual installments 33 semi-annual installments 25 semi-annual installments 23 semi-annual installments

* * Jun. 15, 2018 Jun. 15, 2014

* Jun. 15, 2006 Jun. 15, 2003

Dec. 30, 2011

-

*

Jul. 15, 2015

-

REPAYABLE MATURITY COMMENCEMENT DATE DATE

* See the attached details below.

Total in the consolidated financial statements Less Current portion of long-term loans in the consolidated financial statements

Subsidiaries 3) Loan under Facility Agreement dated October 9, 2008 4) Loan under Facility Agreement dated October 9, 2008 5) Loan from overseas commercial banks 6) Loan from overseas financial institutions (Tranche EIB)

The Company 1) Loan under Facility Agreement dated July 15, 2008 2) Loan under Facility Agreement dated October 2, 2007 Total in the separate financial statements

TERMS

USD

USD

USD

Baht

YEN

Baht

CURRENCY

FACILITY

61,500,000

217,666,655

460,000,000

9,960,000,000

8,100,000,000

3,999,999,996

Long-term loans of the Company and its subsidiaries as at December 31, 2008 and 2007 consist of :

14. LONG-TERM LOANS

36,992,903

165,535,491

121,000,000

-

8,100,000,000

-

USD/YEN

BAHT

14,095,152,512 21,252,597,308 (743,132,975) 20,509,464,333

1,297,799,807

5,807,382,305

4,244,970,400

2,745,000,000

7,157,444,796

3,157,444,800

3,999,999,996

2008

41,847,646

181,860,490

-

-

8,100,000,000

-

USD/YEN -

BAHT

7,580,350,201 10,008,049,801 (717,675,588) 9,290,374,213

1,418,007,499

6,162,342,702

-

-

2,427,699,600

2,427,699,600

2007


THE COMPANY’S LOAN Facility Agreement dated July 15, 2008 On July 15, 2008, the Company entered into a Facility Agreement with a group of financial institutions for a 7-year term loan of Baht 4,000 million, carrying interest at THBFIX plus a certain percentage per annum. The loan is guaranteed by Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited. The Facility Agreement stipulates certain covenants such as the maintenance of tangible net worth, net debt to equity ratio and debt service coverage ratio. The Company entered into interest rate swap agreements for the loan (see Note 21.3.4). As the financial market disruption, the lenders agreed to temporary apply the interest at BIBOR plus a certain percentage per annum for the period starting from October 13, 2008. Facility Agreement dated October 2, 2007 On October 2, 2007, the Company entered into a Facility Agreement with local branch of a foreign bank to obtain a Yen 8,100 million loan, carrying interest at JPY LIBOR plus a certain percentage per annum. The loan was drawn down on October 22, 2007 and used for prepayment of the Yen loan under the Facility Agreement dated February 16, 2005 (see Note 4.2). The loan is guaranteed by Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited. The Yen loan was swapped into Baht loan in the amount of Baht 2,964.6 million under the Cross Currency Rate Swap Agreement (see Notes 21.2.1 and 21.3.1). The Facility Agreement contains normal covenants related to various matters such as the maintenance of tangible net worth and a certain net debt to equity ratio.

THE SUBSIDIARIES’ LOANS GHECO-One Company Limited The loans in No. 3) and 4) represent loans of GHECO-One Company Limited. On October 9, 2008, GHECO-One Company Limited entered into a Facility Agreement with a group of financial institutions for project financing of its new 660 MW Coal Fired Power Plant. The loan facilities consist of: - US$ Term Loan Facility of USD 460 million carries interest at LIBOR plus a certain percentage per annum and is repayable in 33 semi-annual instalments of a portion specified in the agreement commencing on the date falling 12 months after the Project Commercial Operation Date. - Thai Baht Term Loan Facility of Baht 9,960 million carries interest at THBFIX plus a certain percentage per annum and is repayable in 33 semi-annual instalments of a portion specified in the agreement commencing on the date falling 12 months after the Project Commercial Operation Date. In the event the Market Disruption Event occurs, the interest rate of the loans shall be the cost of funding plus a certain percentage per annum. On December 29, 2008, GHECO-One Company Limited entered into a VAT Facility Agreement with a local financial institution which is one of the above financial institutions for a Baht 350 million facility of VAT Advances and VAT Guarantee. The VAT Advances carry interest at MLR minus a certain percentage per annum and are repayable whenever the VAT is refunded from the Revenue Department and within two years after the Project Commercial Operation Date, which is not later than February 9, 2014. As at December 31, 2008, the VAT Advances have not been drawn down. The loans are secured by the mortgage of plant and pledge of machinery, bank accounts for the project, all shares of GHECO-One Company Limited and the assignment of all rights and obligations under various agreements relating to the project.

134

Annual Report 2008


The Facility Agreement contains normal covenants related to various matters, such as the maintenance of debt service coverage ratio, the Project Commercial Operation Date, the maintenance of coal stockpile. In addition, no later than one month after the Project Commercial Operation Date, GHECO-One Company Limited shall enter into the Working Capital Facility Agreement for a Baht 1,600 million loan. GHECO-One Company Limited entered into interest rate swap agreements for the loans in No. 3) and 4) (see Notes 21.3.7 and 21.3.8). Glow IPP Company Limited The loans in No. 5) and 6) represent loans of Glow IPP Company Limited. For the loan in No. 5), Glow IPP Company Limited entered into the Loan Transfer Coordination Agreement dated December 12, 2005, Comprehensive Amendment Agreement, Amended and Restated Common Terms Agreement and Commercial Bank Loan Facility Agreement dated December 15, 2005 with the overseas commercial banks as the Replacement Finance Parties. In respect to the Commercial Bank Loan Facility Agreement under the Comprehensive Amendment Agreement, the previous ERG Facility Agreement and the OND Facility Agreement were consolidated and the outstanding principal amounts were fully prepaid. As a consequence, as of the Amendment Date, total loan under the Commercial Bank Loan Facility Agreement was USD 151.2 million, including new granted loan of USD 8 million, and a further loan commitment of USD 66.5 million was still available. The loan carries interest at LIBOR plus a certain percentage per annum and payable semi-annually. On March 6, 2006 and May 15, 2006, the subsidiary drew down an additional amount of loans of USD 21 million and USD 45.5 million, respectively. On March 1, 2006, the Company entered into a Dollar Debt Service Reserve Guarantee agreement with an Offshore Collateral Agent, as agent for the lenders, of Glow IPP Company Limited to guarantee and undertake to the agent for the payments of Accrual Scheduled Debt Service when due, of which the guarantee facility amount shall not exceed 50 percent of the amount required for the Relevant Debt Service Reserve Account on that Repayment Date. For the loan in No. 6), on July 14, 2000, Glow IPP Company Limited entered into loan agreements with a foreign financial institution, under the Common Term Agreement, Tranche EIB of USD 70.9 million which carries interest at cost of fund plus a fixed percentage per annum or fixed interest rate per annum depending on the type of interest rate chosen at the drawdown date. Such type of interest rate is fixed throughout the period of each drawdown, and payable semi-annually. The loan is repayable in 24 semi-annual installments in the amounts specified in the agreement from December 2002 to June 2014. On February 5, 2003, Glow IPP Company Limited and the foreign financial institution agreed to reduce the loan facility from USD 70.9 million to USD 61.5 million and to change the repayment schedule to be 23 semi-annual installments from June 2003 to June 2014. On December 12, 2005, under the Loan Transfer Scheme, the Tranche EIB was amended only the EIB Guarantors. Glow IPP Company Limited entered into an EIB Guarantee Facility Agreement with various offshore banks to support its obligations under the EIB Finance Contract for an amount equal to 115 percent of the outstanding principal amount of the EIB Loans from time to time. All loans of Glow IPP Company Limited are secured by the mortgage of all of the land and construction and pledge of machinery and equipment (see Note 11), the pledge of deposits at financial institutions and current investments (see Notes 5 and 6), and the assignment of all rights and obligations under various agreements relating to the project. In addition, the loans are secured by the pledge of all shares of Glow IPP Company Limited, of which 95 percent are owned by Glow Company Limited and 5 percent by other shareholders. The loan agreements contain normal covenants related to various matters, such as the maintenance of certain debt to equity ratio, the maintenance of certain debt service coverage ratio, and the project completion period. Glow IPP Company Limited entered into interest rate swap agreements for the USD loan in No. 5) (see Notes 21.3.5 and 21.3.6).

Glow Energy Public Company Limited

135


On May 8, 2007, Glow IPP Company Limited entered into a Working Capital Facility Agreement with an overseas commercial bank. The facility of Baht Equivalent 600 million carries interest at THBFIX and JPY LIBOR plus a fixed percentage per annum for the loan denominated in Baht and Yen, respectively. The loan is repayable at the end of each Interest Period as specified by Glow IPP Company Limited but not exceeding six months. As at December 31, 2008, the loan has not been drawn down.

15. DEBENTURES Debentures as at December 31, 2008 and 2007 consist of : Unit : Baht CONSOLIDATED AND THE SEPARATE FINANCIAL STATEMENTS 2008 2007 Debentures No. 1/2551 Less Deferred debentures issue expenses Debentures No. 1/2550 Less Deferred debentures issue expenses Debentures No. 1/2546 and No. 2/2546 Less Deferred debentures issue expenses Current portion of debentures

4,000,000,000 (12,235,963) 2,000,000,000 (6,714,241) 5,800,000,000 (7,839,667) (2,310,000,000) 9,463,210,129

2,000,000,000 (7,516,530) 8,400,000,000 (19,107,401) (2,600,000,000) 7,773,376,069

Debentures No. 1/2551 On June 5, 2008, the Company issued 4,000,000 units of unsubordinated and guaranteed debentures with a debentureholders’ representative in the named-registered certificate at the face value of Baht 1,000 each, totaling Baht 4,000 million. These were offered exclusively to institutional and high net-worth investors. The debentures consist of : - 1,500,000 units of Tranche 1, with 7 year term, due for redemption on June 5, 2015 and bearing coupon rate at a certain percentage per annum, payable semi-annually commencing December 5, 2008. - 2,500,000 units of Tranche 2, with 10-year term, due for redemption on June 5, 2018 and bearing coupon rate at a certain percentage per annum, payable semi-annually commencing December 5, 2008. The debentures are guaranteed by Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited according to the letter of guarantee issued by them in respect of a joint obligation to guarantee and undertake to pay to the debentureholders’ representative in respect of the debentures. The above debentures stipulate certain covenants such as the maintenance of tangible net worth, the maintenance of a net debt to equity ratio and the maintenance of a debt service coverage ratio. Debentures No. 1/2550 On May 21, 2007, the Company issued 2,000,000 units of unsubordinated and guaranteed debentures with a debentureholders’ representative in the named-registered certificate at the face value of Baht 1,000 each, totaling Baht 2,000 million. These were offered exclusively to institutional or large investors. The debentures have a 10-year term and will be due for redemption on May 21, 2017. The debentures have a coupon rate at a certain percentage per annum, payable semi-annually commencing November 21, 2007. The debentures are guaranteed by Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited according to the letter of guarantee issued by them in respect of a joint obligation to guarantee and undertake to pay to the debentureholders’ representative in respect of the debentures.

136

Annual Report 2008


The above debentures stipulate certain covenants such as the maintenance of tangible net worth, the maintenance of a certain net debt to equity ratio and the maintenance of a certain debt service coverage ratio. Debentures No. 1/2546 and No. 2/2546 The Company entered into a Placement Agreement dated June 30, 2003 and amendments to the Placement Agreement dated September 19, 2003, September 26, 2003, and November 17, 2003, respectively, with two local financial institutions to offer guaranteed amortising debentures of Baht 12,300 million, at a price of Baht 1,000 each and to issue the short-term Bills of Exchange in amount of Baht 700 million which was mature on April 1, 2004. On September 30, 2003, the Company issued 6,500,000 units of the debentures at a price of Baht 1,000 each, totaling Baht 6,500 million (Debentures No. 1/2546). These were offered by way of private placement to institutional or specific investors. The debentures have a maturity of 5 years and the principal is repayable in eight semi-annual instalments commencing April 1, 2005 and have a coupon rate at a certain percentage per annum, payable semi-annually commencing April 1, 2004. On December 11, 2003, the Company issued 5,800,000 units of the debentures at a price of Baht 1,000 each, totaling Baht 5,800 million (Debentures No. 2/2546). These were offered by way of public offering and private placement to institutional investors. The debentures consist of : - 2,310,000 units of Tranche 1 at a price of Baht 1,000 each, totaling Baht 2,310 million, with a term of 5 years 9 months and 20 days. The Debentures are repayable on April 1 and October 1, 2009, and have coupon rate at a certain percentage per annum, payable semi-annually commencing April 1, 2004. - 3,490,000 units of Tranche 2 at a price of Baht 1,000 each, totaling Baht 3,490 million, with a term of 7 years. The Debentures are repayable on December 11, 2010 and have coupon rate at a certain percentage per annum, payable semi-annually commencing June 11, 2004. The debentures No. 1/2546 and No. 2/2546 were issued for financial support to Glow SPP 2 Company Limited and Glow SPP 3 Company Limited. On September 29, 2003, both subsidiaries issued a letter of guarantee in respect of a joint obligation to guarantee and undertake to pay to the debentureholders representative in respect of the debentures. The above debentures stipulate certain covenants such as the maintenance of tangible net worth, the maintenance of a certain gearing ratio, the maintenance of a certain debt service coverage ratio and keeping of trade-related secured indebtedness within a specified amount. Under the above Placement Agreement and Amendment Agreements, an amount of Baht 369 million was received by the Company from both financial institutions for the difference between pricing of debentures and bills of exchange, and Benchmark Pricing. The amount was included in other non-current liabilities in the balance sheets and is being accreted against interest expense over the term of debentures.

16. CORPORATE INCOME TAX Corporate income tax is calculated from net taxable profit after adjusting entries under the Revenue Code and less tax losses carried forward of each company (if any).

17. LEGAL RESERVE 17.1 Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a legal reserve of at least 5 percent of net earnings after deducting accumulated deficit brought forward (if any) until the reserve reaches 10 percent of the registered share capital and the reserve is not available for distribution as dividends.

Glow Energy Public Company Limited

137


17.2 According to the Civil and Commercial Code, subsidiary companies are required to set aside a legal reserve of at least 5 percent of net earnings at each dividend payment until the reserve reaches 10 percent of the registered share capital. Such reserve is not available for distribution as dividends.

18. DIVIDEND PAYMENT On September 12, 2008, the Board of Directors’ meeting of the Company passed a resolution to distribute an interim dividend from profit for the six-month period ended June 30, 2008 at Baht 0.6 per share totaling Baht 877.7 million. The dividend was paid on October 9, 2008. The annual general shareholders’ meeting of the Company passed a resolution to distribute dividends as follows : SHAREHOLDERS’ BAHT AMOUNT DIVIDEND MEETING DATE PER SHARE (MILLION BAHT) PAYMENT DATE April 30, 2008

1.654

2,419.6

April 25, 2007

1.575

2,304.0

May 29, 2008 for Baht 1.054 per share and September 7, 2007 for Baht 0.60 per share May 25, 2007 for Baht 0.975 per share and September 8, 2006 for Baht 0.60 per share

19. PROVIDENT FUND EXPENSE Provident fund contributions made by the Company and its subsidiaries for their employees and recorded as expense in the income statements for the years ended December 31, 2008 and 2007 are as follows : Unit : Million Baht COMPANY’S NAME CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007 Glow Energy Public Company Limited 2.3 1.7 2.3 1.7 Glow SPP 1 Company Limited 0.9 0.9 Glow SPP 2 Company Limited 1.3 1.2 Glow SPP 3 Company Limited 0.4 0.5 Glow IPP Company Limited 0.9 0.7 Glow Company Limited 8.8 7.7 -

138

Annual Report 2008


20. PROMOTIONAL PRIVILEGES The Company and all of subsidiaries have been granted various promotional privileges under the Investment Promotional Act, B.E. 2520 by the Board of Investment under the promotion certificates as follows : PRIVILEGES COMPANY’S NAME CERTIFICATES 1st INCOME DATE NO. DATED Glow Energy Public Company Limited

Glow Company Limited Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP Company Limited Glow Demin Water Company Limited GHECO-One Company Limited

1413 / 2537 1392 / 2538 1206 (2) / 2547 1635 (2) / 2547 1609 (2) / 2550 2155 / อ. / 2550 1479 / 2546 1032 / 2539 1532 / 2539 1744 / 2539 1222 / 2536 1552 / 2540 1526 / 2542 1213 / 2542 1235 (2) / 2549 1969 (2) / 2551

July 11, 1994 June 23, 1995 March 9, 2004 August 9, 2004 June 18, 2007 November 16, 2007 September 4, 2003 January 22, 1996 July 24, 1996 November 6, 1996 November 5, 1993 August 22, 1997 November 30, 1999 May 21, 1999 March 2, 2006 July 25, 2008

May 1995 January 1996 July 2004 December 2005 September 1997 July 1998 August 1997 July 1994 August 1999 January 2003 May 1999 July 2006 -

a) to g) a) to g) a) to g) a) to g) a) to g) a) to b) a) a) to g) a) to g) a) to g) a) to g) a) to g) a) to d) a) to g) a) to g) a) to g)

Subject to certain imposed conditions, the privileges include the following : a) Permission to own land in order to carry on the promoted activities as the Board may deem appropriate. b) Exemption of import duty on machinery, materials and supplies imported for production for domestic sales as approved by the Board. c) Exemption of corporate income tax on net profit for a period of eight years commencing from the date of earning operating income. In cases where the business incurs a loss during that period of exemption, the loss incurred in such period can be taken as a deduction from net profit of the years after the period of exemption, not exceeding 5 years. d) Exemption of income tax on dividends paid from the profit of the promoted operation for a period of eight years. e) An allowance of fifty percent of the normal rate of corporate income tax on net profit for a period of five years after the expiry date of the corporate income tax exemption period as described in c) above. f) Permission to deduct double the cost of transportation, electricity and water supply for corporate income tax purpose for a period of ten years commencing from the date of earning operating income. g) Permission to deduct the cost of installation or construction of public utilities at the rate of twenty-five percent in addition to normal depreciation charges. As Glow SPP 3 Company Limited sold its Phase 1 water plant to the Company in June 2007, therefore, on November 16, 2007, Glow SPP 3 Company Limited transferred the remaining privileges under the promotion certificate No. 1222/2536 dated November 5, 1993 to the Company.

Glow Energy Public Company Limited

139


All the Company’s sales are domestic sales, which are allocated to promoted and non-promoted activities as follows : Unit : Baht THE SEPARATE FINANCIAL STATEMENTS

Revenues from the sales of goods

PROMOTED ACTIVITIES

2008 NON-PROMOTED ACTIVITIES

TOTAL

7,159,117,468

3,666,459,010

10,825,576,478

PROMOTED ACTIVITIES

2007 NON-PROMOTED ACTIVITIES

TOTAL

9,287,273,470

1,310,632,458

10,597,905,928

21. DISCLOSURE OF FINANCIAL INSTRUMENTS 21.1 CREDIT RISK Credit risk is the risk arising from the inability of a counterparty of the Company and its subsidiaries to meet the terms of a financial instrument, causing the Company and subsidiaries to incur a financial loss. It is the policy of the Company and its subsidiaries to enter into financial instrument contracts only with creditworthy counterparties. Although the Company and its subsidiaries are subject to significant concentrations of credit risk, as almost all sales are made to Electricity Generating Authority of Thailand (EGAT) and companies in the petrochemical industry, the Company and its subsidiaries do not expect to incur material credit losses on their risk management or other financial instruments. As at December 31, 2008 and 2007, the maximum exposure to credit risk in the event the counterparties fail to perform their obligations is the carrying amount of the financial assets as stated in the balance sheets.

21.2 FOREIGN CURRENCY RISK The exposure to foreign currency risk relates primarily to purchases of equipment, repairs and maintenance of power plants and loans denominated in foreign currencies. In order to hedge the foreign currency risk, the Company and its subsidiaries entered into currency swap agreements and forward foreign exchange contracts, of which the details are as follows: 21.2.1 On February 16, 2005, the Company entered into a cross currency interest rate swap agreement with a financial institution to swap the Company’s long-term loan of Yen 8,100 million for a Baht 2,964.6 million loan. The term of the agreement is from February 18, 2005 to December 30, 2011. On September 4, 2007 and April 2, 2008, the Company and the financial institution agreed to amend the swap agreement (see Note 21.3.1). 21.2.2 On January 23, 2007, the Company entered into forward foreign exchange contracts with three financial institutions for the USD amount of the Offshore Supply Contract for construction of new 115 MW CFB Power Plant. The outstanding balance of the forward contracts as at December 31, 2008 is as follows : Unit : Million VALUE DATE CONTRACT AMOUNT USD BAHT May 4, 2009 - March 1, 2010

140

Annual Report 2008

20.2

720.5


As the payment term of the construction has been extended, therefore in December 2008, the Company entered into forward foreign exchange contracts with one of the above financial institutions for the extended payment term as follows : Unit : Million VALUE DATE CONTRACT AMOUNT USD BAHT January 5, 2009 10.5 373.5 21.2.3 In June 2008, the Company entered into forward foreign exchange contracts with three financial institutions for part of the USD and EUR amount of the Offshore Supply Contract for construction of new combined cycle cogeneration Power Plant. The outstanding balance of the forward contracts as at December 31, 2008 are as follows : Unit : Million VALUE DATE CONTRACT AMOUNT EUR USD BAHT April 1, 2009 - October 1, 2009 May 4, 2010 - November 1, 2010 May 10, 2010 April 16, 2009 - November 10, 2011

30.0 35.1

26.5 20.0 -

885.3 679.9 1,570.1 1,864.1

In addition, on August 5, 2008, the Company entered into forward foreign exchange contracts with another financial institution for part of the USD amount of the Onshore Construction Contract for construction of the above new Power Plant, which are as follows : Unit : Million VALUE DATE CONTRACT AMOUNT USD BAHT February 2, 2009 - December 1, 2009 18.3 617.9 21.2.4 In July 2008, GHECO-One Company Limited entered into forward foreign exchange contracts with three financial institutions for the USD amount of the Procurement Contract for construction of its new 660 MW Coal Fired Power Plant, which are as follows : Unit : Million VALUE DATE CONTRACT AMOUNT USD BAHT July 30, 2010 100 3,451.7 October 29, 2010 - March 31, 2011 30 1,032.8 May 31, 2011 - September 30, 2011 40 1,394.8 November 30, 2011 64 2,262.1 All the above forward foreign exchange contracts are guaranteed by the Company.

Glow Energy Public Company Limited

141


21.2.5 On November 11, 2008, Glow Company Limited entered into a forward foreign exchange contract with a financial institution amounting to USD 37.8 million at an strike price of Baht 35.06 / USD 1, for the payment of an acquisition of a foreign subsidiary in March 2009. 21.2.6 As at December 31, 2008, Glow IPP Company Limited has outstanding forward foreign exchange contracts with a financial institution amounting to CHF 11.4 million at an average strike price of Baht 30.51/CHF 1, for payment of the spare parts used for major maintenance which will be due in January 2009. As at December 31, 2008 and 2007, the Company and its subsidiaries have net current liabilities in foreign currencies which are not hedged against foreign exchange rate risk as follows : Unit : Million FOREIGN CURRENCIES 2008 2007 USD EUR CHF

13.7 2.9 8.6

3.1 0.4 0.5

21.3 INTEREST RATE RISK Interest rate risk is the risk whereby future movements in market interest rates will have an effect on the operating results and cash flows of the Company and its subsidiaries. Financial instruments of the Company and its subsidiaries with floating interest rates comprise deposits at financial institutions, and long-term loans. In order to hedge interest rate risks of long-term loans, the Company and its subsidiaries entered into interest rate swap agreements, of which the details are as follows : 21.3.1 On February 16, 2005, the Company entered into a cross currency interest rate swap agreement with a financial institution (same agreement in Note 21.2.1) to swap interest at JPY LIBOR plus a certain percentage per annum for THB-THBFIX plus a certain percentage per annum. The term of the agreement is from February 18, 2005 to December 30, 2011. On September 4, 2007, the Company and the financial institution agreed to amend the swap agreement by swapping interest at JPY LIBOR plus a certain percentage per annum for a certain percentage per annum. The amended swap agreement is effective on February 18, 2008 until December 30, 2011. Subsequently, on April 2, 2008, the swapped percentage per annum was amended to two different percentages per annum (i.e. a certain percentage per annum for February 18, 2008 to August 18, 2009 and another percentage per annum for August 18, 2009 to December 30, 2011). 21.3.2 On April 9, 2008, the Company entered into an interest rate swap agreement with a financial institution to swap coupon rate at a certain percentage per annum of the Company’s debenture No. 2/2546 Tranche 2 of Baht 3,490 million for two different percentages per annum (i.e. a certain percentage per annum for June 11, 2008 to June 10, 2009 and another percentage per annum for June 11, 2009 to December 11, 2010). 21.3.3 On May 16, 2008, the Company entered into an interest rate swap agreement with a financial institution to swap coupon rate at a certain percentage per annum of the Company’s debenture No. 1/2550 of Baht 800 million for two different percentages per annum (i.e. a certain percentage per annum for May 21, 2008 to May 21, 2010 and another percentage per annum for May 21, 2010 to May 21, 2017).

142

Annual Report 2008


21.3.4 On August 21, 2008 and September 11, 2008, the Company entered into interest rate swap agreements with five financial institutions to swap interest at THBFIX of the Company’s long-term loan of Baht 4,000 million for fixed percentages per annum for the period from October 15, 2008 to July 15, 2015. 21.3.5 On December 9, 2005, Glow IPP Company Limited entered into three interest rate swap agreements with three foreign banks for the USD loan at the notional amount totaling USD 64.27 million, swapping interest at LIBOR for a certain percentage per annum. The interest rate swap agreements are effective on December 15, 2008 and mature on June 15, 2018. 21.3.6 On November 3, 2008, Glow IPP Company Limited entered into an interest rate swap agreement with a financial institution for the USD loan at the notional amount of USD 174.1 million, swapping interest at LIBOR for a certain percentage per annum. The interest rate swap agreement is effective on June 16, 2008 and mature on December 16, 2013. As at December 31, 2008, the outstanding balance of the notional amount is USD 101.3 million. 21.3.7 In November 2008, GHECO-One Company Limited entered into ten interest rate swap agreements with six financial institutions for its USD facility at the notional amount totaling USD 453.6 million, swapping interest at LIBOR for a certain percentage per annum. The interest rate swap agreement is effective in November 2008 and mature in October 2028. As at December 31, 2008, the outstanding balance of the notional amount is USD 120.9 million. 21.3.8 In November 2008, GHECO-One Company Limited entered into six interest rate swap agreements with two local financial institutions for its Baht facility at the notional totaling Baht 9,825 million, swapping interest at THBFIX for a certain percentage per annum. The interest rate swap agreement is effective in November 2008 and mature in October 2021. As at December 31, 2008, the outstanding balance of the notional amount is Baht 2,880.4 million. In addition, other financial instruments of the Company and its subsidiaries, which have fixed interest rates, are deposits at financial institutions, current investments, debentures and long-term loan.

21.4 FAIR VALUE OF FINANCIAL INSTRUMENTS Thai Accounting Standard No. 48, “Financial Instruments Disclosure and Presentation�, requires certain fair value disclosures. Considerable judgement is necessarily required in estimation of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amount that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The following methods and assumptions were used by the Company and its subsidiaries in estimating fair value of financial instruments. Cash and cash equivalents, current investments, trade accounts receivable, advance to related parties, interest receivable from related parties, other current assets, trade accounts payable, finance lease payables, advance from related parties, other current liabilities and long-term loans with floating interest rate; the carrying values approximate their fair values. Long-term loans bearing fixed interest rates; the fair values are calculated based on the discounted cash flow method using current average interest rate over the remaining period of the loan agreement. As at December 31, 2008, fair value of the Tranche EIB loan of Glow IPP Company Limited is Baht 1,465.4 million which its carrying value is Baht 1,297.8 milion. As at December 31, 2007, the carrying value of the loan approximates its fair value as such interest rate approximates the current market rate.

Glow Energy Public Company Limited

143


As at December 31, 2008 and 2007, the carrying values of currency swap agreements, interest rate swap agreements, forward foreign exchange contracts and debentures compared to their fair values, are as follows : Unit : Million DECEMBER 31, 2008 CONSOLIDATED CONTRACT AMOUNT FAIR VALUE ASSET (LIABILITY) YEN CHF EUR USD BAHT USD EUR BAHT Cross currency interest rate swap agreement 8,100.0 2,964.6 (177.0) Forward foreign exchange contracts - CHF / Baht 11.4 347.6 0.9 - USD / Baht 367.3 12,744.3 1.8 - EUR / Baht 65.1 3,434.3 (5.5) Interest rate swap agreements - Note 21.3.2 3,490.0 (47.2) - Note 21.3.3 800.0 (18.7) - Note 21.3.4 4,000.0 (706.1) - Note 21.3.5 64.3 (19.6) - Note 21.3.6 101.3 (6.3) - Note 21.3.7 120.9 (42.1) - Note 21.3.8 2,880.4 (1,041.1) Unit : Million DECEMBER 31, 2008 THE SEPARATE FINANCIAL STATEMENTS CONTRACT AMOUNT

Cross currency interest rate swap agreement Forward foreign exchange contracts - USD / Baht - EUR / Baht Interest rate swap agreements - Note 21.3.2 - Note 21.3.3 - Note 21.3.4

144

Annual Report 2008

FAIR VALUE ASSET (LIABILITY) USD EUR BAHT

YEN

EUR

USD

BAHT

8,100.0

-

-

2,964.6

-

-

65.1

95.5 -

3,277.1 3,434.3

1.9 -

-

-

-

3,490.0 800.0 4,000.0

-

-

(177.0)

(5.5)

-

-

(47.2) (18.7) (706.1)


Unit : Million DECEMBER 31, 2007 CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS CONTRACT AMOUNT FAIR VALUE CONTRACT AMOUNT FAIR VALUE ASSET (LIABILITY) ASSET (LIABILITY) YEN CHF USD BAHT USD BAHT YEN USD BAHT USD BAHT Cross currency interest rate swap agreement 8,100.0 Forward foreign exchange contracts - CHF / USD - USD / Baht Interest rate swap agreements - Note 21.3.5 -

-

37.7 -

-

2,964.6

-

(624.8) 8,100.0

32.9 122.4 4,375.0

0.4 (7.2)

-

-

64.3

(10.4)

-

-

-

DECEMBER 31, 2008 CONSOLIDATED AND THE SEPARATE FINANCIAL STATEMENTS CARRYING VALUE FAIR VALUE BAHT BAHT Debentures 1/2551 Tranche 1 Debentures 1/2551 Tranche 2 Debentures 1/2550 Debentures 1/2546 Debentures 2/2546 Tranche 1 Debentures 2/2546 Tranche 2

1,500.0 2,500.0 2,000.0 2,310.0 3,490.0

1,500.0 2,500.0 1,928.3 2,315.2 3,505.0

-

2,964.6

94.9 3,393.2 -

-

-

(624.8)

(5.5)

-

-

-

Unit : Million DECEMBER 31, 2007 CONSOLIDATED AND THE SEPARATE FINANCIAL STATEMENTS CARRYING VALUE FAIR VALUE BAHT BAHT 2,000.0 2,600.0 2,310.0 3,490.0

1,813.4 2,585.1 2,322.2 3,510.6

The fair value of debentures is determined by the last bid price on the Thai Bond Dealing Center on the last business day of the year.

Glow Energy Public Company Limited

145


22. TRANSACTIONS WITH RELATED PARTIES A portion of the company’s business is represented by transactions with its related parties which have the same group of shareholders and directors. The financial statements reflect the effects of those transactions occur in the normal course of business based on the basis determined by the Company and its related parties. Significant balances and transactions between the Company and its related parties are as follows :

ACCOUNT NAME/ COMPANY’S NAME

RELATIONSHIP

Trade accounts receivable from related parties Glow SPP 1 Company Limited Subsidiary Glow SPP 2 Company Limited Subsidiary Glow SPP 3 Company Limited Subsidiary Suez Energy Asia Company Limited Related company Emerald Energy Corporation Related company Advances to related parties Glow SPP 2 Company Limited Subsidiary Glow SPP 3 Company Limited Subsidiary Glow IPP Company Limited Subsidiary GHECO-One Company Limited Subsidiary Suez-Tractebel S.A. Related company Suez Energy Asia Company Limited Related company Interest receivable from related parties Glow SPP 1 Company Limited Subsidiary Glow SPP 2 Company Limited Subsidiary Glow SPP 3 Company Limited Subsidiary Long-term loans to related parties Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited

Subsidiary Subsidiary Subsidiary

Trade accounts payable to related parties Glow SPP 2 Company Limited Subsidiary Glow SPP 3 Company Limited Subsidiary

146

Annual Report 2008

Unit : Baht AS AT DECEMBER 31, CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007 1,076,332 562,700 1,639,032

1,222,490 1,222,490

23,926,129 23,278,707 116,289,338 163,494,174

21,858,255 11,569,119 33,427,374

2,297,209 5,320,702 7,617,911

2,767,890 2,767,890

443,370 5,381 3,580 1,146,344 4,886,867 6,485,542

951,712 168,812,262 66 2,767,890 172,531,930

-

-

1,497,205 5,855,839 19,246,547 26,599,591

1,844,384 7,099,657 21,789,603 30,733,644

-

-

690,000,000 1,359,951,197 3,369,732,863 5,419,684,060

850,000,000 1,499,951,198 3,665,048,802 6,015,000,000

-

-

34,931,508 23,594,673 58,526,181

30,747,578 58,810,723 89,558,301


ACCOUNT NAME/ COMPANY’S NAME

RELATIONSHIP

Advances from related parties Glow SPP 1 Company Limited Subsidiary Glow SPP 2 Company Limited Subsidiary Glow SPP 3 Company Limited Subsidiary Glow Company Limited Subsidiary Glow IPP 2 Holding Company Limited Subsidiary Suez-Tractebel S.A. Related company Suez Energy Asia Company Limited Related company Suez University Related company Advance received from a related party GHECO-One Company Limited Subsidiary

ACCOUNT NAME/ COMPANY’S NAME

RELATIONSHIP

Unit : Baht AS AT DECEMBER 31, CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007 20,348,362 3,000,000 23,348,362 -

12,773,152 7,277,233 347,642 20,398,027 -

21,336 80,580 45,229 20,379,220 11,077,960 31,604,325

1,178,177 50,104 33,709,280 1,000,000 5,057,744 4,117,478 45,112,783

251,238,795 251,238,795

-

Unit : Baht FOR THE YEARS ENDED DECEMBER 31, CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007

Sales Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited

Subsidiary Subsidiary Subsidiary

-

-

48,801,231 82,012,035 132,644,660

65,726,165 99,644,013

Interest income Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited GHECO-One Company Limited

Subsidiary Subsidiary Subsidiary Subsidiary

-

-

25,334,137 49,465,197 124,732,422 43,633,973

30,600,000 53,998,243 131,941,757 -

Service income Suez Energy Asia Company Limited Related company Emerald Energy Corporation Related company Sale of spare parts Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP Company Limited Glow Demin Water Company Limited

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

6,060,569 562,700 -

5,730,842 -

1,404,290 4,834,691 510,333 3,346 11,657

123,387 1,794,028 2,323,509 17,646 8,370

Glow Energy Public Company Limited

147


ACCOUNT NAME/ COMPANY’S NAME

RELATIONSHIP

Unit : Baht FOR THE YEARS ENDED DECEMBER 31, CONSOLIDATED THE SEPARATE FINANCIAL STATEMENTS 2008 2007 2008 2007

Assignment of land leasehold right GHECO-One Company Limited

Subsidiary

-

-

1,894,630

Purchases Glow SPP 2 Company Limited Glow SPP 3 Company Limited

Subsidiary Subsidiary

-

-

166,844,294 117,886,102

182,336,920 391,889,994

12,524,556 (562,878) -

4,308,107 4,117,478 -

Service expenses Suez-Tractebel S.A. Suez Energy Asia Company Limited Suez University South Sathorn Company Limited

Related company Related company Related company Related company

14,913,227 (614,040) 340,000

8,463,567 4,168,640 347,642 -

Capitalized service expense South Sathorn Company Limited

Related company

60,834,697

9,179,545

Management fees Glow Company Limited Suez-Tractebel S.A.

Subsidiary Related company

Purchase of spare parts Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP Company Limited Glow Demin Water Company Limited

-

(444,056)

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

-

-

Purchase of water plant and related assets Glow SPP 3 Company Limited Subsidiary

-

-

Dividend income Glow Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited

-

-

Capitalized interest expense Hemaraj Land and Development Public Company Limited

148

Annual Report 2008

Subsidiary Subsidiary Subsidiary Related company

29,410,701

-

-

-

-

139,570,093 -

113,206,229 -

116,594 4,993,958 2,090,901 172,034 4,539

156,979 1,274,940 9,400,095 288,568 -

686,660,216 98,830,695 1,445,184,340 -

505,920,153 497,388,490 222,369,064 2,934,609,017 -


No interest is charged on advances with related parties. The Company and the related companies have determined prices of sales and purchases of electricity, steam and water to and from related companies based on average selling price charged to industrial customers of the Company and related companies. Service expenses are determined based on the amounts stipulated in the agreements. Management fees are determined based on the cost related to rendering services to the Company and its subsidiaries plus a certain margin. Sale of spare parts is determined based on cost plus a certain margin. On June 25, 2007, the Company purchased phase 1 water plant together with assets used for its operations, i.e. furniture, office equipment, tools and equipment, and spare parts, from Glow SPP 3 Company Limited. The assets were priced at Baht 513 million, determined based on an agreed price for water plant, net book value for furniture, office equipments, and tools and equipment, and cost for spare parts. In December 2007, a reduction of Baht 7.1 million was adjusted to the price as a result of actual cost subsequently incurred. GHECO-One Company Limited entered into four loan agreements to obtain short-term loans from Glow Company Limited, Hemaraj Land and Development Public Company Limited and the Company. The loans carry interest at MLR minus a certain percentage per annum and are repayable within 365 days from the first drawdown date or on the effective of Financial Closing Date, whichever is earlier for loans from Glow Company Limited and Hemaraj Land and Development Public Company Limited, and within 365 days from the first drawdown date for loan from the Company. The loan agreements are detailed as follows: Unit : Million Baht AGREEMENT DATE LENDER LOAN FACILITY LOAN AMOUNT March 28, 2008 April 4, 2008 June 5, 2008 June 5, 2008

Glow Company Limited Hemaraj Land and Development Public Company Limited Hemaraj Land and Development Public Company Limited Glow Energy Public Company Limited

500 238 1,020 2,000

442 238 1,020 2,000

The loans were repaid in full on December 4, 2008 which is the Financial Closing Date of GHECO-One Company Limited. Assignment of land leasehold right under land option agreement On October 17, 2007, the Company, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited entered into a land option agreement with GHECO-One Company Limited to grant an option to GHECO-One Company Limited to acquire the leasehold right of approximately 32 rais of land at the price of Baht 96 million for construction and operation of 660 MW coal fired power plant under the Thai Independent Power Producer Program. The exercise of the option shall be within December 31, 2008. On February 8, 2008, GHECO-One Company Limited sent a notice to exercise the option. GHECO-One Company Limited agreed to acquire the leasehold right of 35 rais of the land and paid the assignment fee totaling Baht 114.5 million to Glow SPP 2 Company Limited and Glow SPP 3 Company Limited upon Financial Closing Date, which is on December 4, 2008. GHECO-One Company Limited was added as co-lessee of the lease agreement dated December 6, 1996 on April 11, 2008 (see Note 23.1.9.1). Assignment of land leasehold right under coal storage land lease option agreement On October 17, 2007, the Company and GHECO-One Company Limited entered into a coal storage land lease option agreement to grant an option to GHECO-One Company Limited to acquire the leasehold right of 44.7 rais of land at the price totaling approximately Baht 136.9 million. The exercise of the option shall be within March 31, 2009. On February 8, 2008, GHECO-One Company Limited sent a notice to exercise the option.

Glow Energy Public Company Limited

149


On February 27, 2008, the Company entered into an assignment agreement to assign to Glow SPP 2 Company Limited and Glow SPP 3 Company Limited its rights and obligations under the above coal storage land lease option agreement and the Deposit and Lease Option Agreement as described in Note 12.4. The assignment agreement is retroactively effective on December 19, 2007. GHECO-One Company Limited agreed to pay the assignment fee of Baht 1.9 million and Baht 144.7 million to the Company and Glow SPP 3 Company Limited, respectively. GHECO-One Company Limited was added as co-lessee of the lease agreement dated December 19, 2007 on April 11, 2008 (see Note 23.1.9.1). Shared facilities agreements The Company, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited entered into Shared Facilities Agreements to provide and allow the use of their facilities to GHECO-One Company Limited in operating its new power plant for a period of 25 years commencing from the date that will be agreed later. On December, 4, 2008, shared facilities fees totaling Baht 1,253.8 million were paid by GHECO-One Company Limited detailed as follows : COMPANY’S NAME AGREEMENT DATE FEES (BAHT) Glow Energy Public Company Limited March 14, 2008 163,072,795 Glow SPP 2 Company Limited March 14, 2008 28,955,184 Glow SPP 3 Company Limited January 21, 2008 1,061,750,682 The fees are recorded as advance received in the balance sheet and will be recognized as income over the agreement period. In addition, GHECO-One Company Limited shall pay the annual fees to the Company, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited in the amount stipulated in the agreement. Emission credit assignment agreement On August 20, 2008, the Company and Glow SPP 3 Company Limited entered into an Emission Credit Assignment Agreement with GHECO-One Company Limited whereby GHECO-One Company Limited shall pay the fees for the emission reduction equipments to the Company and Glow SPP 3 Company Limited of USD 2.5 million and USD 7.5 million, respectively. The fees were paid on December 4, 2008 and recorded as advance received in the balance sheet and will be recognized as income over agreement period. In addition, GHECO-One Company Limited shall pay the annual fees to the Company and Glow SPP 3 Company Limited in the amount stipulated in the agreement.

150

Annual Report 2008


23. COMMITMENTS AND CONTINGENT LIABILITIES The Company and its subsidiaries have commitments and contingent liabilities as follows : 23.1 COMMITMENTS 23.1.1 Significant power purchase agreements The Company and its subsidiaries entered into Power Purchase Agreements (PPAs) with the Electricity Generating Authority of Thailand (EGAT). Each of the agreements is effective commencing from the month in which electricity was sold to EGAT. The Company and its subsidiaries have provided letters of guarantee issued by banks to guarantee their performance as specified in the PPAs as below : COMPANY’S NAME DATE OF NUMBER OF AGREEMENT BANK AGREEMENT AGREEMENTS TERM GUARANTEE YEARS MILLION BAHT Glow Energy Public Company Limited January 7, 1998 2 21 326.2 Glow SPP 1 Company Limited February 1, 1996 2 23 199.3 Glow SPP 2 Company Limited December 23, 1997 2 25 217.4 Glow SPP 3 Company Limited December 23, 1997 2 25 455.8 Glow IPP Company Limited November 19, 1997 1 25 Not required GHECO-One Company Limited September 10, 2008 1 25 330.0 23.1.2 Power, steam and water supply agreements among the group of companies On December 25, 2006, Glow SPP 1 Company Limited, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company jointly entered into Back-up Agreements for supply of electricity, steam, clarified water and demineralized water among them. Such agreements shall be effective for the period of 25 years starting from January 1, 2004. 23.1.3 Gas supply agreements 23.1.3.1 The Company and its subsidiaries entered into Gas Supply Agreements with PTT Public Company Limited (PTT) detailed as follows : COMPANY’S NAME DATE OF NUMBER OF TERM / RENEW AGREEMENT AGREEMENTS YEARS Glow Energy Public Company Limited November 22, 1999 1 21/ 4 Glow SPP 1 Company Limited October 1, 1998 1 21/ 4 Glow SPP 2 Company Limited September 28, 1999 1 21/ 4 Glow IPP Company Limited December 12, 1997 1 25 Under the agreements, the Company and its subsidiaries are committed to purchase gas at a specified quantity and price starting from the Gas Commercial Utilization Date. 23.1.3.2 On February 19, 2008, the Company entered into a Gas Supply Agreement and its Supplementary Agreement with PTT to purchase gas for its new cogeneration power plant (Phase 5) at a quantity and price as stipulated in the Agreement for a period of 10 years starting from the Gas Commercial Utilization Date. 23.1.3.3 On September 7, 2005, the Company entered into a Memorandum of Purchase of Natural Gas with PTT to purchase gas for power plant expansion project 1 and 2 of the Company at a quantity and price as stipulated in the Memorandum for a period of not less than 15 years starting from December 1, 2004 (Gas Commercial Utilization Date of Expansion Project 1).

Glow Energy Public Company Limited

151


On February 19, 2008, the Company entered into a Gas Supply Agreement with PTT to supersede the above Memorandum. The Agreement is for a period of 15 years starting from February 1, 2008, renewable for another 4 years. 23.1.3.4 On January 15, 2004, Glow SPP 3 Company Limited entered into a Gas Supply Agreement with PTT to purchase gas at the quantity and price as stipulated in the Agreement for a period of 5 years starting from January 1, 2004. On January 15, 2007, Glow SPP 3 Company Limited and PTT agreed to terminate the above Gas Supply Agreement and entered into a new Gas Supply Agreement to purchase gas at the quantity and price as stipulated in the Agreement for a period of 5 years starting from November 1, 2006. On July 27, 2007, Glow SPP 3 Company Limited, PTT and the Company entered into an assignment agreement to assign all rights and obligations under the Gas Supply Agreement to the Company, whereby the assignment was effective starting from June 25, 2007. 23.1.3.5 On October 31, 2008, the Company entered into a Gas Supply Agreement with PTT to purchase gas for its steam generation process at the quantity and price as stipulated in the agreement for a period of 5 years starting from the First Utilization Date which shall be during May 1, 2010 to July 31, 2010. 23.1.4 Coal supply agreements 23.1.4.1 Glow SPP 3 Company Limited is committed under Coal Supply Agreement dated December 17, 1997, Amendment No.1 dated April 8, 1999, Amendment No.2 dated September 6, 2002 and Amendment No. 3 dated December 15, 2006 to purchase coal from a local company at a specified quantity and price until December 31, 2014, renewable for another 10 years. 23.1.4.2 Glow SPP 3 Company Limited entered into a coal supply agreement dated November 22, 2007 with an overseas company to purchase coal at the quantity and price as stipulated in the agreement for the period of 3 years commencing from January 1, 2008 to December 31, 2010. 23.1.4.3 On September 22, 2008, Glow SPP 3 Company Limited entered into a coal supply agreement with an overseas company to purchase coal at the quantity and price as stipulated in the agreement for the period from January 1, 2009 to June 30, 2010. 23.1.4.4 On October 16, 2007, GHECO-One Company Limited entered into three of Head of Agreements for Coal Supply Agreements with overseas companies to agree that they will enter into Coal Supply Agreements in the case that the GHECO-One Company Limited is awarded a Power Purchase Agreement (PPA) with EGAT. These Head of Agreements were terminated on October 1, 2008. 23.1.4.5 GHECO-One Company Limited entered into two coal supply and transportation agreements dated August 15, 2008 and August 25, 2008 with two overseas companies to purchase coal at the quantity and price as stipulated in the agreements for the period of 4 years each commencing from the Commercial Operation Date. 23.1.5 Woodchips supply agreements Glow SPP 3 Company Limited entered into an agreement for purchase and sale of woodchips dated August 18, 2008 with a local company to purchase woodchips at the quantity and price as stipulated in the agreement for the period from January 1, 2009 to December 31, 2012.

152

Annual Report 2008


23.1.6 Back-up power purchase agreements Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company entered into Back-up Power Purchase Agreements with EGAT to purchase back-up power at the quantity and price as stipulated in the agreements. The agreements are for a period of 1 year, renewable every year and are detailed as follows : COMPANY’S NAME AGREEMENT DATE EFFECTIVE DATE NUMBER OF AGREEMENT Glow Energy Public Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited

February 2, 2004 March 22, 2002 February 2, 2004

October 1, 2003 January 1, 2001 October 1, 2003

2 2 2

On September 30, 2004, Glow SPP 1 Company Limited, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company jointly entered into an agreement with EGAT to settle the dispute regarding the interconnection of the power and steam systems of the Group. Under the agreement, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company agreed to purchase additional back-up power from EGAT at a quantity specified in the agreement. Subsequently, on February 2, 2005, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company made amendments to the Back-up Power Purchase Agreements with EGAT to revise the quantity of back-up power and to purchase the back-up power over the periods as follows : COMPANY’S NAME PROJECT PERIOD UP TO Glow Energy Public Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited

1 2 1 2 1 2

March 31, 2017 September 30, 2017 March 28, 2024 April 25, 2024 August 31, 2024 March 19, 2025

In the event the PPAs are terminated before the above date, the back-up power purchase agreements will be consequently terminated. 23.1.7 Pipe rack agreements 23.1.7.1 On August 30, 2007, the Company entered into an agreement with PTT Public Company Limited for right of use of structure for piping of PTT for its pipeline system for a period of 15 years commencing January 1, 2007 to December 31, 2021. The right of use fee, which is calculated following the calculation formula stipulated in the agreement, is to be paid semi-annually, of which the amount is approximately Baht 0.2 million, increase by 3 percent every year. 23.1.7.2 On September 1, 2004, the Company entered into a pipe rack agreement to lease the space in the piping support system from a local company for a period from June 1, 2005 to December 31, 2020, with an annual rental of Baht 4.5 million adjusted every year by 5 percent. 23.1.7.3 On September 29, 2005, Glow SPP 3 Company Limited entered into an agreement with PTT Public Company Limited for right of use of structure for piping of PTT for its pipeline system for a period of 15 years commencing September 1, 2005 to August 31, 2020. The right of use fee, which is calculated following the calculation formula stipulated in the agreement, is to be paid semi-annually, of which the amount is approximately Baht 0.3 million, increase by 3 percent every year. 23.1.7.4 Glow SPP 1 Company Limited entered into a pipe rack agreement dated May 28, 1999, superseded the pipe rack usage agreement dated September 25, 1998, to lease the space in the piping support system from a local company for a period of 15 years from October 1, 1998 to September 30, 2013. The right of Glow Energy Public Company Limited

153


use fee of Baht 8.6 million was paid and recorded as deferred right of pipe rack usage. In addition, Glow SPP 1 Company Limited is liable to pay a semi-annual rental fee of approximately Baht 3 million, increase by 5 percent every year. On September 1, 2002 and September 28, 2006, Glow SPP 1 Company Limited entered into amendments No.1 and No.2, respectively, to the pipe rack agreement to lease more space and extend the period for another 8 years. 23.1.8 Construction and development 23.1.8.1 As at December 31, 2008 and 2007, the Company and its subsidiaries have outstanding commitments in respect of construction and improvement as follows : Unit : Million Baht COMPANY’S NAME COMMITMENTS AMOUNT 2008 2007 Glow Energy Public Company Limited Construction of new warehouse 735.7 520.2 and transmission line, and Improvement of power plant system Glow SPP 2 Company Limited Improvement of power plant system 1.2 Glow SPP 3 Company Limited Improvement of power plant system 12.8 5.5 Glow IPP Company Limited Improvement of power plant system 5.0 19.0 GHECO-One Company Limited Engineering service for new 660 MW 86.8 Coal Fired Power Plant construction 23.1.8.2 On August 7, 2000, Glow SPP 3 Company Limited entered into a joint agreement with the Industrial Estate Authority of Thailand (IEAT) to develop an area to construct a shipping berth at Map Ta Phut Industrial Estate. The construction of the dedicated berth for use in handling of coal, other raw materials and necessary goods has been completed and it commenced the operation on December 7, 2001. Glow SPP 3 Company Limited has the right to utilize this area for a period of 30 years, with the following benefits paid to IEAT : - Right of way fee for coal conveyor construction at Baht 1.3 million per annum, adjusted every 10 years by 10 percent. - Water front fees of Baht 23.6 million payable within 1 year, and fees of Baht 9.9 million per annum payable from 2001 to 2030. - Fee payable at a rate stipulated in the agreement for actual shipments made through the berth, and, from 2002, a minimum of at least an amount equivalent to 500,000 tons per year being shipped through the berth is to be paid. In addition, the ownership of the dedicated berth will be transferred to IEAT in the fifteenth year from the date of commencing the operations, without any compensation. 23.1.8.3 On January 22, 2007, the Company entered into Offshore Supply Contract and Onshore Construction Contract with an overseas company for construction of a new 115 MW CFB Power Plant, of which the contract prices are USD 124.9 million and Baht 1,584.5 million, respectively. As at December 31, 2008, the Company had outstanding commitments of USD 13.0 million and Baht 392.2 million. 23.1.8.4 On April 18, 2008, the Company entered into Offshore Supply Contract and Onshore Construction Contract with a consortium of an overseas company and a local company for construction of a new combined cycle cogeneration Power Plant, of which total contract prices are USD 157.4 million, EUR 80.7 million and Baht 1,481.7 million. As at December 31, 2008, the Company had outstanding commitments of USD 69.0 million, EUR 66.2 million and Baht 1,018.6 million.

154

Annual Report 2008


23.1.8.5 On May 15, 2008, GHECO-One Company Limited entered into Procurement Contract and Engineering, Procurement and Construction Contract with an overseas company for construction of a new 660 MW Coal Fired Power Plant, of which the contract prices are USD 660.5 million and Baht 4,935.9 million, respectively. As at December 31, 2008, GHECO-One Company Limited had outstanding commitments of USD 564.7 million and Baht 4,072.1 million. 23.1.9 Lease agreements 23.1.9.1 The Company and its subsidiaries entered into land lease agreements with the Industrial Estate Authority of Thailand (IEAT) for the construction of power plants and power substation and to operate electricity and steam generation business as follows : COMPANY’S NAME DATE OF TERM/ LEASE/ GUARANTEE AGREEMENT RENEW YEAR CASH BANK GUARANTEE YEARS MILLION MILLION MILLION BAHT BAHT BAHT Glow Energy Public Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited Glow Energy Public Company Limited Glow Energy Public Company Limited Glow SPP 2 Company Limited Glow SPP 2 Company Limited and Glow SPP 3 Company Limited

December 19, 2007

June 5, 2007 April 4, 1994 August 13, 1998 (started September 30, 1996) December 6, 1996

30

7.6

7.6

7.6

13 26 / 20 28

1.0 0.5 0.5

1.0 0.5 0.5

1.0 0.5 0.5

28

30.9

-

46.4

Lease agreement dated December 19, 2007 On April 11, 2008, the Company, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and GHECOOne Company Limited entered into an addendum attached to the lease agreement to add GHECO-One Company Limited as a co-lessee of the lease agreement (see Notes 12.4 and 22). Lease agreement dated December 6, 1996 On July 11, 2003, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and the Company entered into an addendum attached to the lease agreement to add the Company as a co-lessee of the lease agreement. On April 11, 2008, the Company, Glow SPP 2 Company Limited, Glow SPP 3 Company Limited and GHECOOne Company Limited entered into an addendum attached to the lease agreement to add GHECO-One Company Limited as a co-lessee of the lease agreement (see Note 22). 23.1.9.2 On March 17, 2008, the Company entered into an agreement with IEAT for the right of use of the land for laying its underground power transmission line for a period from January 2, 2008 to November 30, 2024, with an annual fee of Baht 0.2 million, adjusted by 10 percent every 5 years. 23.1.9.3 On January 23, 2007, the Company and Glow SPP 3 Company Limited jointly entered into an agreement with IEAT for right of use of the land for laying their power transmission line for a period of 30 years commencing January 15, 1996 to November 30, 2024, renewable for another 20 years, with an annual fee of approximately Baht 2.2 million, adjusted by 10 percent every 10 years. The fee for the period from January 15, 1996 to January 14, 2008 of Baht 27.2 million was paid in January 2007. Glow Energy Public Company Limited

155


23.1.9.4 On February 15, 2005, Glow SPP 3 Company Limited entered into a land lease agreement with PTT Public Company Limited to lease the land where its network of power transmission line systems are erected for a period of 20 years starting from January 1, 2005 to December 31, 2024 with an annual rental fee of Baht 5.4 million, adjusted every year by 2 percent after the tenth year of the lease agreement. 23.1.9.5 On June 1, 2007, Glow Company Limited entered into two agreements with a company for lease and service of building space for a period of 2 years commencing June 1, 2007 to May 31, 2009 with a monthly fee of Baht 1.5 million. 23.1.9.6 As at December 31, 2008 and 2007, the Company and its subsidiaries had outstanding commitments in respect of software license, lease of vehicles, and other services agreements totaling approximately Baht 166.2 million and Baht 146.5 million, respectively. 23.1.10 Maintenance service agreements 23.1.10.1 On April 20, 2004, the Company and Glow SPP 2 Company Limited entered into the Long Term Parts and Long Term Service Agreements (LTSAs) with a local company in order for provision of parts and maintenance services of Gas Turbine Units and their associated equipment. The term of the LTSAs is determined by the number of hours that such Cover Unit is operated (Factored-Fired Hour) and number of Major Inspection as specified in the agreements. The provision of services commenced in January 2005. The contract prices consist of a fixed Thai Baht monthly fee and variable monthly fee in both USD and Baht currency as specified in the agreements. These prices are subject to escalation in accordance with the terms of the LTSAs. 23.1.11 Support service agreements 23.1.11.1 On May 3, 2005, the Company and six subsidiaries (“Glow Group”) jointly entered into Support Services Agreement and Engineering Services Agreement with Suez-Tractebel S.A. (“Suez”), whereby Suez shall provide consulting services in respect of engineering, operational, financial and auditing system, investment, project finance, insurance, etc. The service fee shall be in Euro currency. The service agreements will be determined in the hourly rate depend on the type of services. The term of the agreements is 5 years from the execution date, automatically renewed for successive one-year term unless termination is notified by either party. Nevertheless, the agreements shall be terminated on the date that Suez holds directly or indirectly less than 25 percent of the shares of Glow Group. 23.1.11.2 On July 11, 2000, Glow IPP Company Limited entered into a technical support agreement with SuezTractebel S.A. for the operation and maintenance of its facility. Glow IPP Company Limited has to pay an annual fixed service fee and monthly variable service fees based on actual costs incurred. The agreement will be terminated when each party has notified of the termination in written form. 23.1.12 Utilities agreements Glow IPP Company Limited entered into a utility agreement with a local company for the service on basic infrastructure, purchase of raw water, potable water, process waste water and other services for the period of 25 years commencing from the commercial operation date, which was January 31, 2003. Glow IPP Company Limited has to pay service fees as specified in the agreement. 23.1.13 Purchase of spare parts In 2007, Glow IPP Company Limited issued purchase orders to an overseas supplier to purchase spare parts to be used for major maintenance in 2008 and 2009 in the amount totaling CHF 54.7 million. An advance payment of CHF 12.9 million was paid in 2007. The remaining amount shall be paid when the parts are ready for delivery and after receipt of the parts. The outstanding commitment as at December 31, 2008 is CHF 0.5 million.

156

Annual Report 2008


23.1.14 Acquisition of a foreign subsidiary On October 29, 2008, the extraordinary general shareholders’ meeting No. 1/2008 of the Company passed a resolution for the Company to enter into the transaction in accordance with the Related Party Transaction under the Notification No.Tor.Chor. 21/2551 announced by Capital Market Supervisory Board which approved the execution and deliver all relevant transaction documents in connection with the Glow Company Limited’s acquisition of shares in and subsequent restructuring of Houay Ho Thai Company Limited and Houay Ho Power Company Limited and the financing of such acquisition. On December 19, 2008, Glow Company Limited entered into a Sale and Purchase Agreement to purchase the following shares : 1) 4,296,810 ordinary shares (49 percent of the issued shares) of Houay Ho Thai Company Limited (HHTC) from Suez Energy Asia Company Limited at the price of USD 1.3 million, being subject to adjustment under certain conditions in the agreement. 2) 300,000 ordinary shares (60 percent of the issued shares) of Houay Ho Power Company Limited (HHPC), a company operates a 150 MW hydro power plant in Laos, from Stopper Finance B.V., a company registered in Netherlands, at the price of USD 37.8 million. The transactions shall be completed upon all conditions as stipulated in the agreement have been fulfilled, provided that the completion date shall not be earlier than January 1, 2009. On the same date, Glow Company Limited entered into another Sale and Purchase Agreement to sell 25,000 ordinary shares of HHPC to HHTC at the price of USD 3.2 million. As a result, Glow Company Limited and HHTC shall own 55 percent and 25 percent, respectively, in HHPC. On January 15, 2009, Glow Company Limited entered into a Subscription Agreement to agree that it will subscribe for the increased shares in HHTC in an amount sufficient for HHTC to : -

repay loan in full to Suez Tractebel S.A. on the date which is not later than March 31, 2010. The loan price on March 31, 2009 is USD 10.0 million.

-

pay the purchase price of USD 3.2 million above to Glow Company Limited.

The allotment of the increased shares shall be on a pro rata basis in accordance with the intended ownership of HHTC shares, being 49 percent owned by Glow Company Limited. 23.1.15 Facility Agreement On December 18, 2008, the Company entered into a Facility Agreement with a local financial institution for a Baht 3,000 million loan, repayable on the date which is 7 years after the date of the first drawdown and carrying interest at THBFIX plus a certain percentage per annum. The loan is guaranteed by Glow SPP 1 Company Limited, Glow SPP 2 Company Limited and Glow SPP 3 Company Limited. The Facility Agreement stipulates certain covenants such as the maintenance of tangible net worth, net debt to equity ratio and debt service coverage ratio. As at December 31, 2008, the loan has not been drawn down.

Glow Energy Public Company Limited

157


23.2 CONTINGENT LIABILITIES 23.2.1 Letters of guarantee As at December 31, 2008 and 2007, there were outstanding letters of guarantee issued by banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business of the Company and its subsidiaries as follows : Unit : Million Baht COMPANY’S NAME AMOUNT 2008 2007 Glow Energy Public Company Limited Glow SPP 1 Company Limited Glow SPP 2 Company Limited Glow SPP 3 Company Limited Glow IPP Company Limited Glow Company Limited Glow IPP 2 Holding Company Limited and another shareholder GHECO-One Company Limited Glow Energy Public Company Limited and six subsidiaries

439.0 203.3 240.6 489.2 6.8 0.4 330.0 2.0

812.2 203.3 240.6 489.0 6.8 330.0 2.0

The above bank guarantee of Glow IPP 2 Holding Company Limited of Baht 330 million is guaranteed by the Company in the amount not exceeding Baht 214.5 million and was returned on October 9, 2008. The above bank guarantee of GHECO-One Company Limited of Baht 330 million is guaranteed by the Company in the amount not exceeding Baht 214.5 million. 23.2.2 Others 23.2.2.1 Glow IPP 3 Company Limited has an obligation under the Land Purchase and Sale Agreement dated June 29, 2007 and Amendment No. 1 dated May 22, 2008 (see Note 11), to purchase approximately 4 rais of the land at the price of Baht 2 million per rai in the event that the land will not be used for EGAT power line installation. In case EGAT still has not made decision until the end of 2012, Glow IPP 3 Company Limited shall enter into the Land Purchase and Sale Agreement within 90 days from the end of 2012. In addition, Glow IPP 3 Company Limited shall be responsible for the cost of engineering expenses and construction of raw water pipeline, and process waste water facility and waste water collection pipeline system in excess of the standard capacity. 23.2.2.2 Glow IPP Company Limited has performed an offline water wash at a 1-3 month interval and EGAT has duly paid for the Availability Payment during the period of such operations. The Availability Payment during the offline water wash operations, received from EGAT starting from the commercial operation date up to May 2005, was approximately Baht 30 million. However, EGAT has made a new interpretation of the PPA and has argued that EGAT is not entitled to pay the Availability Payment. Accordingly, EGAT has not paid for the Availability Payment since invoice of June 2005 up to December 2008 totaling Baht 40.6 million. Glow IPP Company Limited has sent a letter to EGAT requesting for payment of the over due balance with interest. EGAT has refused to pay. Glow IPP Company Limited believes that it is clearly stated in paragraph 22 of Schedule 2 of the PPA that a reduction in output or availability due to offline water washing during the allowed transient period shall not result in deductions from the Full Availability Payment.

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Annual Report 2008


Due to the difference interpretation as aforementioned, both parties agreed to bring the matter to arbitration in an amicable manner. If Glow IPP Company Limited loses the case in arbitration, it will lose availability payment on a recurrent basis of approximately Baht 30 million per year until the PPA is terminated.

24. FINANCIAL INFORMATION BY SEGMENT The Company’s and its subsidiaries’ operations involve a single industry segment, the production and distribution of electricity, steam and water for industrial use and being carried on in the single geographic area being Thailand. As a result, revenues, operating profits and identifiable assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area.

25. ACCOUNTING STANDARDS ANNOUNCED BUT NOT EFFECTIVE The Federation of Accounting Professions issued Notifications of Federation of Accounting Professions No. 86/2551 dated November 12, 2008 regarding the following accounting standards that were announced in the Royal Gazette, but were not in effect in 2008 : TAS 36 TAS 54

(Revised 2007) Impairment of Assets (Revised 2007) Non-current Assets Held for Sale and Discontinued Operations

The accounting standards will supersede previously issued accounting standards when they become effective. The management has assessed the impact of these accounting standards, when they are effective, for financial periods beginning on or after January 1, 2009 and does not expect them to have a material effect on the Company’s financial statements.

26. CAPITAL MANAGEMENT The Company and its subsidiaries’ (“Group Company”) objectives in respect of managing capital are as follows: - To safeguard the Group Company’s ability to continue as a going concern so that it can continue to provide returns to shareholders and benefits to other stakeholders and, - In order to provide adequate returns to shareholders, the projects invested by the Companies in the Group shall be prudently considered on the appropriate risk level. The Group Company undertakes the capital management by setting a target to maintain the credit rating of the Group Company by not less than A minus following the principle of Credit Rating performed by TRIS. The Group Company manages its capital in relation to the proportional risk and manages the capital structure by separate funding to each type of project. The funding of Independent Power Producer Project (IPP) is separately managed from other projects in term of Project Financing. For the Cogeneration project, Group Company’s source of fund shall pass through Glow Energy Public Company Limited by raising fund and grants the loan to the companies in the group for their projects. Monitoring the capital of the Cogeneration project is considered based on the financial ratio of Group Company’s performance excluding Independent Power Producer’s operating result. The financial ratios comprised Debt to Equity Ratio, Debt Service Coverage Ratio and Interest Coverage Ratio. Monitoring the capital of the Independent Power Producer is in accordance with the covenant on financial ratio stipulated in a loan agreement of each project.

Glow Energy Public Company Limited

159


27. EVENT AFTER BALANCE SHEET DATE On January 20, 2009, the Board of Directors’ meeting of the subsidiaries passed a resolution to distribute an interim dividend as follows : COMPANY’S NAME BAHT PER SHARE AMOUNT DIVIDEND (MILLION BAHT) PAYMENT DATE Glow SPP 1 Company Limited 1.16 249.4 January 22, 2009 Glow SPP 2 Company Limited

0.60

296.5

January 22, 2009

Glow SPP 3 Company Limited

1.62

1,194.5

January 22, 2009

28. APPROVAL OF THE FINANCIAL STATEMENTS These financial statements have been authorized for issue by Finance Executive Management on January 30, 2009.

160

Annual Report 2008


Glow 08  

GLOW_2008 GLOW ENERGY PCL Annual Report 2008

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