RATCHABURI ELECTRICITY GENERATING HOLDING PUBLIC COMPANY LIMITED AND SUBSIDIARIES

Transcription

1 RATCHABURI ELECTRICITY GENERATING HOLDING PUBLIC COMPANY LIMITED Interim Financial Statements For the period ended September 30, 2003 and Review Report of Certified Public Accountant

2 BALANCE SHEETS AS AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 A S S E T S Consolidated The Company Only September 30, December 31, September 30, December 31, Unaudited Unaudited Notes Reviewed Audited Reviewed Audited CURRENT ASSETS Cash and cash equivalents 6 186,787 95,342 73,562 7,583 Short-term investments in fixed deposits 100, Short-term investments in promissory notes 68, ,000 48, ,000 Short-term investments in bills of exchange - net 300, ,290 - Short-term investments pledged as collateral - Promissory notes 6 1,188,935 1,503, Bills of exchange - net 6 3,286,821 1,706, Current portion of long-term investment in bills of exchange - net - 9,974-9,974 Current portion of long-term investments pledged as collateral - Bills of exchange - net 6 9,701 46, Held-to-maturity debentures - net 6 30,883 21, Trade receivable from related party 4 7,319,697 6,409, Advances to and other receivables from related parties 4 8,672 20, Other receivable - 90, Supplies 1,403,288 1,370, Dividend receivable - - 2,375,750 - Other current assets - Prepaid insurance premium 84, Prepaid income tax 17,787 43,650 17,562 43,603 - Value-added tax receivable 431 2,831-2,831 - Others 55,156 43,685 4,527 6,433 Total Current Assets 14,061,364 11,945,013 2,821, ,945 2

3 BALANCE SHEETS AS AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 A S S E T S (Continued) Consolidated The Company Only September 30, December 31, September 30, December 31, Unaudited Unaudited Notes Reviewed Audited Reviewed Audited NON-CURRENT ASSETS Advance to related party 4 400, , Long-term trade receivable from related party 4 39,607 41, Investments in shares of subsidiary companies - at equity method ,704,251 21,896,289 Long-term investments pledged as collateral - Promissory notes 6 608, , Bills of exchange - net 6 624, , Held-to-maturity debentures - net 6 315, , Property, plant and equipment - net 6 51,707,825 53,279,115 59,080 67,453 Deferred loan arrangement fees - net 595, , Other non-current assets 3,436 2,765 2,280 2,373 Total Non-Current Assets 54,295,381 55,839,025 20,765,611 21,966,115 TOTAL ASSETS 68,356,745 67,784,038 23,586,647 22,612,060 The accompanying notes are an integral part of these financial statements. 3

4 BALANCE SHEETS AS AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 LIABILITIES AND SHAREHOLDERS EQUITY Consolidated The Company Only September 30, December 31, September 30, December 31, Unaudited Unaudited Notes Reviewed Audited Reviewed Audited CURRENT LIABILITIES Trade payables - Related party 4 588, Others 4,083,015 3,981, Current portion of long-term loans 6, 7 - Related party 4-138, Other financial institutions 2,774,057 2,103, Other payables - Related party 4 28,661 45, Others 108,589 30, Value-added tax payable 253, , Income tax payable 9,918 61, Dividend payable 59,600 2,541 59,600 2,541 Other current liabilities 491,454 63,987 65,043 32,799 Total Current Liabilities 8,397,655 6,555, ,648 35,767 NON-CURRENT LIABILITIES Long-term loans - net of current portion 6, 7 - Related party 4-2,381, Other financial institutions 36,497,091 36,270, Liabilities under finance lease and hire-purchase contracts - net 37 2, ,144 Total Non-Current Liabilities 36,497,128 38,654, ,144 Total Liabilities 44,894,783 45,209, ,685 37,911 4

5 BALANCE SHEETS AS AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 LIABILITIES AND SHAREHOLDERS EQUITY (Continued) Consolidated The Company Only September 30, December 31, September 30, December 31, Unaudited Unaudited Reviewed Audited Reviewed Audited SHAREHOLDERS EQUITY Share capital - common shares, Baht 10 par value Authorized share capital - 1,450,000,000 shares Issued and paid-up share capital - 1,450,000,000 shares 14,500,000 14,500,000 14,500,000 14,500,000 Premium on share capital 1,531,778 1,531,778 1,531,778 1,531,778 Retained earnings - Appropriated for legal reserve 607, , , ,619 - Unappropriated 6,822,921 6,142,752 6,822,921 6,142,752 Total Shareholders Equity 23,461,962 22,574,149 23,461,962 22,574,149 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 68,356,745 67,784,038 23,586,647 22,612,060 The accompanying notes are an integral part of these financial statements. 5

6 UNAUDITED REVIEWED STATEMENTS OF INCOME FOR EACH OF THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Consolidated The Company Only Three Months Ended September 30 Nine Months Ended September 30 Three Months Ended September 30 Nine Months Ended September 30 Notes REVENUES 4 Net sales 10,206,233 7,326,257 27,263,888 18,858, Service income , ,845 Equity in net profit of subsidiary companies ,611,357 1,113,486 4,243,271 2,979,023 Interest income 37,406 43, , ,848 4,054 9,563 15,976 22,142 Compensation for late transfer of power plant 9-1, , Compensation for combustion system improvement - 22,868-22, Other income 8, ,278 26, Total Revenues 10,252,154 7,395,250 27,406,155 19,362,654 1,615,764 1,123,314 4,260,594 3,196,017 EXPENSES 4 Cost of sales 8,230,271 5,667,614 21,566,222 14,371, Selling and administrative expenses 82, , , ,874 28,417 31, ,032 87,060 Director s remuneration 2,442 2,296 6,876 6,782 1,468 1,367 4,078 4,020 Total Expenses 8,314,815 5,770,345 21,840,897 14,687,445 29,885 32, ,110 91,080 6

7 UNAUDITED REVIEWED STATEMENTS OF INCOME FOR EACH OF THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Consolidated The Company Only Three Months Ended September 30 Nine Months Ended September 30 Three Months Ended September 30 Nine Months Ended September 30 Notes Profit Before Interest Expense and Income Tax 1,937,339 1,624,905 5,565,258 4,675,209 1,585,879 1,090,617 4,150,484 3,104,937 Interest Expense 4 ( 341,593) ( 516,596) (1,380,902) (1,432,325) ( 51) ( 73) ( 171) ( 234) Income Tax 8 ( 9,918) ( 12,160) ( 34,043) ( 169,939) - 5,605 - ( 31,758) Net Profit 1,585,828 1,096,149 4,150,313 3,072,945 1,585,828 1,096,149 4,150,313 3,072,945 Basic Earnings per Share (Baht) The accompanying notes are an integral part of these financial statements. 7

8 UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY REVIEWED FOR EACH OF THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Consolidated () Issued and Paid-up Common Premium on Legal Retained Note Share Capital Share Capital Reserve Earnings Total Balance as at January 1, ,500,000 1,531, ,172 3,100,259 19,295,209 Legal reserve ,647 ( 153,647) - Net profit for the period ,072,945 3,072,945 Dividend payment ( 1,450,000) ( 1,450,000) Balance as at September 30, ,500,000 1,531, ,819 4,569,557 20,918,154 Balance as at January 1, ,500,000 1,531, ,619 6,142,752 22,574,149 Legal reserve ,644 ( 207,644) - Net profit for the period ,150,313 4,150,313 Devidend payment ( 3,262,500) ( 3,262,500) Balance as at September 30, ,500,000 1,531, ,263 6,822,921 23,461,962 The Company Only () Issued and Paid-up Common Premium on Legal Retained Note Share Capital Share Capital Reserve Earnings Total Balance as at January 1, ,500,000 1,531, ,172 3,100,259 19,295,209 Legal reserve ,647 ( 153,647) - Net profit for the period ,072,945 3,072,945 Dividend payment ( 1,450,000) ( 1,450,000) Balance as at September 30, ,500,000 1,531, ,819 4,569,557 20,918,154 Balance as at January 1, ,500,000 1,531, ,619 6,142,752 22,574,149 Legal reserve ,644 ( 207,644) - Net profit for the period ,150,313 4,150,313 Dividend payment ( 3,262,500) ( 3,262,500) Balance as at September 30, ,500,000 1,531, ,263 6,822,921 23,461,962 The accompanying notes are an integral part of these financial statements. 8

9 UNAUDITED STATEMENTS OF CASH FLOWS REVIEWED FOR EACH OF THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Consolidated The Company Only CASH FLOWS FROM OPERATING ACTIVITIES: Net profit 4,150,313 3,072,945 4,150,313 3,072,945 Adjustments to reconcile net profit to net cash provided by (used in) operating activities Equity in net profit of subsidiary companies - - (4,243,271) (2,979,023) Depreciation 1,865,497 1,249,644 15,311 14,615 Amortization of deferred loan arrangement fees 40,307 40, Amortization of service income ( 194,398) Amortization of premium (discount) on investments - net ( 9,112) ( 13,684) 550 ( 325) Loss on disposal of fixed assets Unrealized loss (gain) on foreign exchange rate - net 7,486 ( 20,585) - - Decrease (increase) in operating assets : Trade receivable from related party ( 907,704) (2,277,175) - - Advance to and other receivable from related party 11, , ( 165) Other receivable 90, Supplies ( 32,326) (2,416,332) - - Other current assets ( 66,886) ( 50,564) 30,652 ( 3,098) Other non-current assets ( 671) ( 129) 93 ( 140) Increase (decrease) in operating liabilities : Trade payable to related party 588, , Trade payables to other companies 101,276 1,225, Other payable to related party ( 17,303) ( 23,854) ( 427) ( 3) Other payables to other companies 70, , Value-added tax payable 125,497 ( 24,237) 5 - Income tax payable ( 51,305) ( 146,692) - ( 69,013) Other current liabilities 427,443 ( 105,765) 32,244 ( 7,439) Net Cash Provided by (Used in) Operating Activities 6,394,531 1,259,143 ( 14,476) ( 166,044) 9

10 UNAUDITED STATEMENTS OF CASH FLOWS (Continued) REVIEWED FOR EACH OF THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2002 Consolidated The Company Only CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in short-term investments in fixed deposits ( 100,002) 339,998 ( 2) 339,998 Decrease (increase) in short-term investments in promissory notes 824,830 ( 654,775) 526,250 ( 552,000) Decrease (increase) in short-term investments in bills of exchange ( 1,877,255) 107,092 ( 300,000) 188,258 Increase in long-term investments in promissory notes ( 77,150) Decrease (increase) in long-term investments in bills of exchange 56,037 ( 394,562) 9,134 9,865 Decrease (increase) in long-term investments in held-to-maturity debentures ( 4,300) ( 114,562) - - Increase in investment in subsidiary company - - ( 180,000) ( 2,275,000) Dividend received from subsidiary company - - 3,239,559 3,887,862 Purchases of fixed assets ( 294,923) (17,114,314) ( 6,938) ( 3,944) Net Cash Provided by (Used in) Investing Activities ( 1,472,763) (17,831,123) 3,288,003 1,595,039 CASH FLOWS FROM FINANCING ACTIVITIES: Payment of liabilities under finance lease and hire-purchase contracts ( 2,432) ( 1,557) ( 2,107) ( 1,231) Proceed from long-term loans - 18,715, Repayments of long-term loans ( 1,622,450) ( 911,436) - - Dividend payment ( 3,205,441) ( 1,446,831) ( 3,205,441) ( 1,446,831) Net Cash Provided by (Used in) Financing Activities ( 4,830,323) 16,356,141 ( 3,207,548) ( 1,448,062) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 91,445 ( 215,839) 65,979 ( 19,067) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 95, ,711 7,583 25,109 CASH AND CASH EQUIVALENTS, END OF PERIOD 186,787 38,872 73,562 6,042 ADDITIONAL CASH FLOW INFORMATION: Cash paid during the periods for : - Interest expense 1,380,902 1,432, Income tax 85, , ,535 The accompanying notes are an integral part of these financial statements. 10

11 REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT To the Board of Directors of Ratchaburi Electricity Generating Holding Public Company Limited I have reviewed the accompanying consolidated balance sheet of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries as at September 30, 2003, the consolidated statements of income for each of the three-month and nine-month periods ended September 30, 2003 and 2002, and the consolidated statements of changes in shareholders equity and cash flows for each of the nine-month periods ended September 30, 2003 and I have also reviewed the balance sheet of Ratchaburi Electricity Generating Holding Public Company Limited as at September 30, 2003, the statements of income for each of the three-month and nine-month periods ended September 30, 2003 and 2002, and the statements of changes in shareholders equity and cash flows for each of the nine-month periods ended September 30, 2003 and The management of Ratchaburi Electricity Generating Holding Public Company Limited is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to issue a report on these financial statements based on my reviews. I conducted my reviews in accordance with auditing standards applicable to review engagements. This Standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit in accordance with generally accepted auditing standards. Accordingly, I do not express an audit opinion on the reviewed financial statements. Based on my reviews, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. I have previously audited the consolidated financial statements of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries for the year ended December 31, 2002, and the financial statements of Ratchaburi Electricity Generating Holding Public Company Limited for the same period in accordance with generally accepted auditing standards and expressed an unqualified opinion on those statements in my report dated January 31, The consolidated balance sheet and the balance sheet of Ratchaburi Electricity Generating Holding Public Company Limited as at December 31, 2002, which have been presented herein for comparative purpose, are components of those financial statements which I have audited and reported thereon. I have not performed any audit procedures subsequent to the date of that report. (Winid Silamongkol) Certified Public Accountant Registration No KPMG Phoomchai Audit Ltd. Bangkok November 10, 2003

12 Notes to Interim Financial Statements September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) 1. BASIS OF INTERIM FINANCIAL STATEMENT PREPARATION AND PRINCIPLES OF CONSOLIDATION The accompanying interim financial statements have been prepared in Thai language, expressed in Thai Baht, and in conformity with generally accepted accounting principles in Thailand. The interim financial statements have been prepared for providing an update on the financial statements for the year ended December 31, They focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim financial statements should be read in conjunction with the financial statements for the year ended December 31, The accounting standards, being adopted by the Company, may not be in conformity with generally accepted accounting principles practiced in other countries due to the accompanying interim financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. Accordingly, these interim financial statements have not been designed for those who are not familiar with Thai accounting principles and practices. The interim financial statements are prepared under the historical cost basis. For the convenience of the readers, an English version of interim financial statements have been translated from the Thai version of interim financial statements. Such financial statements have been prepared for domestic reporting purpose. The accompanying consolidated interim financial statements include the financial statements of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries in which the Company has control or invested over 50% of their voting rights. These subsidiaries are detailed as follows: Percentage of Ownership Country of September 30, December 31, Business Type Registration Ratchaburi Electricity Generating Electricity Company Limited Generating Thailand Ratchaburi Energy Company Limited Investment Thailand Significant intercompany transactions between the Company and subsidiaries have been eliminated. 2. SIGNIFICANT ACCOUNTING POLICIES The accompanying interim financial statements have been prepared in accordance with generally accepted accounting principles. Accounting policies that have been applied to the preparation of the interim financial statements for each of the three-month and nine-month periods ended September 30, 2003 and 2002 are similar to those have been applied to the financial statements for the year ended December 31, 2002 except for the change in accounting for income tax in respect of recording income tax on the amount currently payable according to the Revenue Code without consideration of deferred income tax starting from January 1, The change in accounting for income tax does not affect to the beginning retained earnings and net profit for the period. 11

13 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) 3. BASIC EARNINGS PER SHARE Basic earnings per share is determined by dividing the net profit by the weighted average number of shares outstanding during the periods (1,450,000,000 shares in 2003 and 2002). 4. TRANSACTIONS WITH RELATED PARTIES The Company and the subsidiary companies have extensive transactions with their related parties. A significant portion of the Company s and the subsidiary companies assets, liabilities, revenues, and expenses arose from transactions with said related parties. These related parties are related through common shareholdings and/or directorships. The effects of these transactions, which are in the normal course of business on an arm s-length basis, are reflected in the accompanying interim financial statements. Significant transactions with its subsidiaries and related parties during the three-month and nine-month periods ended September 30, 2003 and 2002 were as follows: Consolidated The Company Only Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30 September 30 September 30 September 30 Policy of Pricing Revenues - Sales Negotiated agreement 10,206,233 7,326,257 27,263,888 18,858, Service income Negotiated agreement , ,845 - Compensation for late transfer of power plant Negotiated agreement - 1, , Compensation for combustion system improvement Negotiated agreement - 22,868-22, Other income Negotiated agreement ,208 4, Expenses - Cost of fuel oil Market price 720, , , , Operation and maintenance expenses Negotiated agreement 187, , , , Cost of electricity Market price 32,277 17,465 98,183 60, Interest expense Market interest rate 7,697 31,775 71,722 70, Environmental system management fee Negotiated agreement 360 2,308 4,448 2, Balances of receivables from and payables to subsidiaries and related parties as at September 30, 2003 and December 31, 2002 were as follows: Consolidated The Company Only September 30, December 31, September 30, December 31, Trade receivable from related party - Electricity Generating Authority of Thailand 7,319,697 6,409, Advances to and other receivables from related parties - Electricity Generating Authority of Thailand 8,672 20, Ratchaburi Electricity Generating Company Limited Ratchaburi Energy Company Limited Total 8,672 20,

14 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) Consolidated The Company Only September 30, December 31, September 30, December 31, Advance to related party - Electricity Generating Authority of Thailand 400, , Long-term trade receivable from related party - Electricity Generating Authority of Thailand 39,607 41, Trade payable to related party - Electricity Generating Authority of Thailand 588, Other payable to related party - Electricity Generating Authority of Thailand 28,661 45, Long-term loans from related party - Thai Military Bank Public Company Limited - 2,519, Less portion due within one year - ( 138,118) - - Net - 2,381, As at September 30, 2003 and December 31, 2002, trade receivable from related party is current. Advance to Electricity Generating Authority of Thailand (EGAT) represented advance payment for the ongoing construction project of fuel oil handling system amounting to Baht 400 million (a part of the assets totalling Baht 30,472 million that were transferred on October 31, 2000). Presently, EGAT has already acquired land, hired consultant for conducting a study of environment impact evaluation and started constructing the fuel oil handling system and expects to hand over to the subsidiary company in September INVESTMENTS IN SHARES OF SUBSIDIARY COMPANIES - At Equity Method As at September 30, 2003 and December 31, 2002, investments recorded by the equity method consisted of the investments in shares of subsidiaries in the Company s financial statements as follows: Investments recorded by the equity method in the Company s financial statements as at September 30, 2003 consisted of: Paid-up In Million Baht Type of Capital % Share At Cost At Equity Business Relationship (Million Baht) Holding Method Method Dividends Subsidiaries Ratchaburi Electricity Generating Company Electricity Limited Generating Shareholding 18, ,275 20,524 5,615 Ratchaburi Energy Company Limited Investment Shareholding Total 18,465 18,465 20,704 5,615 13

15 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) Investments recorded by the equity method in the Company s financial statements as at December 31, 2002 consisted of: Paid-up In Million Baht Type of Capital % Share At Cost At Equity Business Relationship (Million Baht) Holding Method Method Dividends Subsidiaries Ratchaburi Electricity Generating Company Electricity Limited Generating Shareholding 18, ,275 21,891 3,888 Ratchaburi Energy Company Limited Investment Shareholding Total 18,285 18,285 21,896 3, ASSETS PLEDGED/MORTGAGED AS COLLATERAL As at September 30, 2003, the following assets of Ratchaburi Electricity Generating Company Limited, a subsidiary company, are either pledged or mortgaged as collateral for long-term credit facilities. a) Deposits at financial institutions totalling Baht 58.0 million. b) Short-term investments in promissory notes totalling Baht 1,188.9 million. c) Short-term investments in bills of exchange totalling Baht 3,286.8 million. d) Long-term investments in promissory notes totalling Baht million. e) Long-term investments in bills of exchange totalling Baht million. f) Long-term investments in debentures totalling Baht million. g) All of the subsidiary company s land, power plant, buildings and structures, which have net book value as at September 30, 2003 totalling Baht 51,577.8 million. The subsidiary company can withdraw these deposits and investments when need as specified in the loan agreement. 7. LONG-TERM LOANS September 30, 2003 December 31, 2002 Other Other Financial Financial Related Party Institutions Related Party Institutions Long-term loans - 39,271,148 2,519,469 38,374,129 Less portion due within one year - ( 2,774,057) ( 138,118) ( 2,103,788) Net - 36,497,091 2,381,351 36,270,341 14

16 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into long-term loan agreement in Thai Baht with several banks and financial institutions to borrow credit facilities of Baht 44,000 million on October 9, The loans consist of: a) Long-term loan of Baht 42,500 million (Tranche A) is for the purchase of the Thermal Power Plant Units 1 and 2 and Combined Cycle Plant Blocks 1-3. It is subject to floating interest rate at the average Minimum Lending Rate (MLR) of 4 banks, consisting of Krung Thai Bank Public Company Limited, Siam Commercial Bank Public Company Limited, Bangkok Bank Public Company Limited and Bank of Ayudhya Public Company Limited. On October 31, 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary company, made the initial drawdown from Tranche A1 loan for the amount of Baht 18,475 million. The principal is repayable in 53 quarterly installments commencing from September 28, 2001 and interest is payable monthly. On April 18, 2002, the subsidiary company made the second drawdown from Tranche A2 loan for the amount of Baht 18,716 million. The principal is repayable in 52 quarterly installments commencing from June 28, 2002 and interest is payable monthly. And on November 1, 2002, the subsidiary company made the final drawdown from Tranche A3 loan for the amount of Baht 5,246.5 million. The principal is repayable in 49 quarterly installments commencing from December 30, 2002 and interest is payable monthly. The subsidiary company used its cash from operations of Baht 62.5 million compensating an undrawdown portion of Tranche A3 loan. On June 20, 2002 and June 27, 2003, the subsidiary company respectively entered into the First Amendment and the Second Amendment to loan agreement with several banks and financial institutions, who agreed to provide a long-term loan facility for acquiring the power plants of Baht 42,500 million, to reduce the applicable interest rate from the floating rate based on the average Minimum Lending Rate (MLR) announced by the 4 local commercial banks to the rate for the different ranges of period as follows: Period Interest Rate (%) July 1, June 30, 2003 MLR July 1, June 30, 2005 MLR July 1, June 30, 2008 MLR July 1, 2008 and thereafter MLR In addition, the banks and financial institutions agreed to reduce the Debt Service Reserve Requirement from the reserved amount sufficient to repay the principal and interest on the next sixmonth period to the reserved amount sufficient to repay the principal and interest on the next threemonth period, effective on July 1, 2003 onwards. b) Long-term loan of Baht 1,500 million (Tranche B) is for working capital. It is subject to floating interest rate at average Minimum Overdraft Rate (MOR) of 4 banks, consisting of Krung Thai Bank Public Company Limited, Siam Commercial Bank Public Company Limited, Bangkok Bank Public Company Limited, and Bank of Ayudhya Public Company Limited. The subsidiary company has the right to select terms of loan either 1, 2, or 3 months, which principal repayment would be in line with the loan terms with monthly interest payment. However, on July 22, 2002, the subsidiary company cancelled Tranche B credit facilities from lenders. Long-term loans are secured by assets pledged/mortgaged as collateral as discussed in Note 6. 15

17 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) 8. PROMOTIONAL PRIVILEGES By virtue of the provisions of the Industrial Investment Promotional Act B.E. 2520, Ratchaburi Electricity Generating Company Limited, a subsidiary company, was granted certain privileges which included among others, the exemption from payment of income tax for a period of 8 years from the start of commercial operations (October 31, 2000 for thermal Generating Power Plant and April 18, 2002 for the Combined Cycle Generating Power Plant). As a promoted company, the subsidiary company must comply with certain terms and conditions provided for in the promotional certificate. 9. AGREEMENTS a) On October 9, 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into sale and purchase of the Combined Cycle Generating Blocks 1, 2 and 3 of Ratchaburi Power Plant with EGAT at the market price appraised by the independent appraiser of Baht 26,300 million. The title of the Combined Cycle Generating Units of Ratchaburi Power Plant was transferred to the subsidiary company on April 18, 2002 (for Blocks 1 and 2) and November 1, 2002 (for Block 3). Since EGAT has not been able to transfer the Combined Cycle Generating Blocks 1, 2 and 3 to the subsidiary company by the originally agreed date on August 31, 2001 (for Blocks 1 and 2) and April 30, 2002, (for Block 3), the subsidiary company was therefore entitled to receive compensation for late transfer from EGAT for the months of January 2002 to September 2002 totalling approximately Baht million, which was recorded as income in the consolidated statement of income for the nine-month period ended September 30, b) On October 9, 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into 25-year Power Purchase Agreement with EGAT whereby the subsidiary company will supply the electric power from the Thermal Generating Units 1 and 2 and the Combined Cycle Generating Blocks 1, 2 and 3 to EGAT at the agreed quantity and price. c) On October 26, 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into the Operation and Maintenance Agreement with EGAT for a period of approximately 9 years whereby EGAT will operate and provide maintenance services including general maintenance and major overhaul for the subsidiary company at the agreed price. d) On October 27, 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into 25-year Gas Sales Agreement with PTT Public Company Limited (PTT) whereby PTT will supply natural gas to the subsidiary company at the agreed quantity and price. e) On February 1, 2001, the Company entered into a rental agreement with a local company to lease its new office premises and other facilities for a period of 3 years with annual rental and facility charges approximately totalling Baht 7.3 million. In this consideration, the Company paid deposit of Baht 2 million, which was presented under other non-current assets in the balance sheets as at September 30, 2003 and December 31, f) On September 26, 2001, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into supply and/or repair of parts agreement for the Combined Cycle Generating of Ratchaburi Power Plant with the Consortium of General Electric International Operations Co., Inc. and GE Energy Parts, Inc. for a period of 12 years at the agreed price. 16

18 Notes to Interim Financial Statements (Continued) September 30, 2003 and 2002 (Reviewed) and December 31, 2002 (Audited) g) On August 1, 2002, Ratchaburi Electricity Generating Company Limited, a subsidiary company, entered into Parts Management Agreement for Gas Turbine Model MS9001FA with EGAT for a period of 12 years at the agreed price. 10. SEGMENTATION OF BUSINESS The Company s operations are to invest in other companies, whose objectives equivalent or similar to the Company s objectives (Power Plant) and the operations of Ratchaburi Electricity Generating Company Limited, a subsidiary company, are to develop and operate the Ratchaburi Power Plant comprising the Thermal Generating Units and the Combined Cycle Generating Units. Management considers this as an integrated and complementary line of business and determines that the Company and the subsidiary company have only one major industry segment. Moreover, in terms of operating locations and market areas, the Company and the subsidiary company have only one geographical segment since they operate solely in Thailand. 11. APPROPRIATION OF RETAINED EARNINGS At the annual general shareholders meeting held on April 11, 2003, the shareholders approved the payment of cash dividends totalling Baht 2,175 million (Baht 1.5 per share, 1,450,000,000 shares) out of 2002 earnings. Such dividends were paid on May 7, The general shareholders meeting also approved appropriation for legal reserve amounting to Baht million. At the Board of Directors meeting held on August 23, 2003, the Board of Directors approved the payment of first interim cash dividends totalling Baht 1,087.5 million (Baht 0.75 per share, 1,450,000,000 shares) out of earnings for the period ended June 30, Such dividends were paid on September 22, The Board of Directors meeting also approved appropriation for legal reserve amounting to Baht million. At the annual general shareholders meeting held on April 22, 2002, the shareholders approved the payment of cash dividends totalling Baht 1,450 million (Baht 1 per share, 1,450,000,000 shares) out of 2001 earnings. Such dividends were paid on May 10, The general shareholders meeting also approved appropriation for legal reserve amounting to Baht million. 12. SUBSEQUENT EVENT At the extraordinary shareholders meeting held on November 6, 2003, the shareholders approved the transactions of investment in Tri Energy Co., Ltd. through the purchasing of shares of Banpu Gas Power Ltd. totalling Baht 2,100 million on November 14, RECLASSIFICATION OF ACCOUNTS Certain accounts in the 2002 financial statements have been reclassified to conform with the 2003 interim financial statement presentation. 17