Management Discussion and Analysis

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Management Discussion and Analysis For the Financial Results of The First Quarter of 2013 Ended March 31, 2013 Note: This Management Discussion and Analysis (MD&A) was made to disclose information

1 Management Discussion and Analysis For the Financial Results of The First Quarter of 2013 Ended March 31, 2013 Note: This Management Discussion and Analysis (MD&A) was made to disclose information and the vision of the management in order to assist investors to better understand the company's financial status and operation. It also supports the "Good Corporate Governance Project" of the Securities and Exchange Commission (SEC). An English version of the MD&A has been prepared from the Thai version. In the event of a conflict or a difference in interpretation between the two languages, the Thai version shall prevail. The objective of this MD&A is to present the information and the explanation of financial status and operating results as of the date hereof. However, the information provided in this MD&A may vary if any factors or situation are changed in the future; the investors are, therefore, required to have their own discretion regarding the usage of this information for any purpose. For further detail, please contact Investor Relations Section of the Electricity Generating Public Company Limited at Tel: or ir@egco.com

2 1. Executive Summary Management Discussion and Analysis 1.1 Significant events In the First Quarter of 2013 (Q1/2013) The completed projects - Bueng Sam Pan Solar Power Project in Petchaboon province is the forth project of G-Power Source Company Limited (GPS) (EGCO holds a 60% ownership interest). The commercial operations was on February 1, The progress in construction projects - Theppana Wind Farm Company Limited (Theppana) (EGCO holds a 90% ownership interest). Theppana is the very small wind power plant, located in Chaiyaphum province. The completion of the project was 68.2%. The commercial operation is scheduled in July GIDEC Company Limited (GIDEC) (EGCO holds a 50% ownership interest.) The power plant is located in Hat Yai Municipality s sanitary landfill, Khuan Lang District, Songkhla Province with the installed capacity of 6.7 MW to generate the electricity to the grid. The completion of the project was 65%. The commercial operation is scheduled in August Solarco Company Limited (Solarco) (EGCO holds a 49% ownership interest), a project developer of 6 solar power plants with the total capacity of 57 MW (AC). Solarco is located in Nakorn pathom province and Suphan buri province. The completion of the project was 19.91%. The commercial operation is scheduled in December Xayaburi Project, a project of the Xayaburi Power Company Limited (Xayaburi) (EGCO holds a 12.5% ownership interest.) It is a run-of-the-river dam in the Laos People s Democratic Republic (Laos PDR). The Xayaburi Project has been preparing area and starting in construction work. The completion of the project was 7.46%. The commercial operation is scheduled in January Significant events from April - Present The completed projects - NED 8 MW Project, a project of Natural Energy Development (NED) (EGCO holds a 33.33% ownership interest.) It is a solar power plant which is an expansion project from the existing project. The commercial operation was on May 2, Page 2

3 1.3 Business overview EGCO Group has invested in the Independent Power Producer (), Small Power Producer (), Very Small Power Producer (V), Biodiesel, Coal Mining, Operating and Maintenance (O&M), Management and Administrative Services (Management Services), Tap water and Rayong power plant as an operating company, details of each plant are as follows: (1) Subsidiaries which can be categorized into 2 businesses: Power Generation Khanom Electricity Generating Co., Ltd. (KEGCO) Quezon Power (Philippines) Limited Co. (Quezon) EGCO Cogeneration Co., Ltd. (EGCO Cogen) Roi-Et Green Co., Ltd. (Roi-Et Green) 2 Co., Ltd. (2) 3 Co., Ltd. (3) 4 Co., Ltd. (4) 5 Co., Ltd. (5) Yanhee EGCO Holding Co., Ltd. (Yanhee EGCO), which invested in Solarco Company Limited (Solarco) Theppana Wind Farm Co., Ltd. (Theppana) Others EGCO Engineering and Service Co., Ltd. (ESCO), which invested in Egcom Tara Co., Ltd. (Egcom Tara) Pearl Energy Philippines Operating Inc. (PEPOI) Quezon Management Services Inc. (QMS) (2) Joint Ventures which can be categorized into 2 businesses: Power Generation Gulf Electric Public Company Limited (GEC), which invested in Gulf Cogeneration Co., Ltd. (GCC) V V V V Holding Co. V V O&M Tap Water O&M Management Services Holding Co. Page 3

4 Nong Khae Cogeneration Co., Ltd. (NKCC) Samutprakarn Cogeneration Co., Ltd. (SCC) Gulf Yala Green Co., Ltd. (GYG) Gulf Power Generation Co., Ltd (GPG) BLCP Power Co., Ltd. (BLCP) Conal Holdings Corporation (Conal), which invested in Western Mindanao Power Corporation (WMPC) Southern Philippines Power Corporation (C) Alto Power Management Coporation (APMC) Nam Theun 2 Power Co., Ltd. (NTPC) Natural Energy Development Co., Ltd. (NED) G-Power Source Co., Ltd. (GPS) GIDEC Company Limited (GIDEC) Others Absolute Power P Co., Ltd. (APPC) Manambang Muara Enim coal mine Company (MME) Holding Co. O&M V V Biodiesel Coal Mining (3) Other investments Other investments, which are long-term investment in securities : - EGCO holds 18.72% of the outstanding shares in East Water Resources Development and Management Public Company Limited (East Water). - EGCO holds 12.50% of the outstanding shares in Xayaburi Power Company Limited (XPCL). As of March 31, 2013, EGCO Group s portfolio comprised 20 operating plants, with a total installed capacity of 4,714 MW equity. The total contracted capacity with Electricity Generating Authority of Thailand (EGAT) under long-term PPAs of 3,880 MW. This resulted in EGCO Group s market share in Thailand of 12% from a total installed capacity of 32,871 MW. Page 4

5 2. Report and Analysis of the Operating Results Commencing on 1 January 2013, EGCO Group has applied the new accounting standards that are effective for accounting periods beginning on or after 1 January These accounting standards affect the operating result which are TAS 12 Income taxes and TAS 21 (Revised 2009) - The Effects of Changes in Foreign Exchange Rates. The analysis of the financial statements of EGCO is as follows: Q1/2013, Ended March 31, 2013 Power Generation Others Total Change Increase/ (Decrease) Total Revenues 4,512 1, ,790 2,099 2, % Total Expenses (4,045) (1,743) (193) (190) (4,238) (1,933) 2, % Share of Profit (Loss) 1,576 1,574 (16) - 1,560 1,574 (14) (1%) NCI* before FX (11) (6) (11) (8) (22) (14) (8) (57%) Profit (Loss) before FX 2,032 1, ,090 1, % FX 130 (278) (12) (278) % Net Profit (loss) 2,162 1, ,208 1, % * NCI: Non-Controlling Interests Profit from operating of EGCO Group before FX for Q1/ 2013 ended March 31, 2013 was 2,090 million baht, increased 364 million baht compared to the same period of last year, which came from an increase in power generation business of 367 million baht and a decrease in other businesses of 3 million baht. See more details in 2.1 and 2.2 as below; 2.1 The Analysis of the Operating in Power Generation business Profit (loss) before FX for Q1/2013, the operating in power generation business increased 367 million baht. Mainly due to operating results of KEGCO, Quezon, EGCO Cogen GEC, and BLCP increased, while the operating results from GPG and NTPC decreased as follows: % Page 5

6 KEGCO: Electricity Revenue % Other income 2 3 (1) (33%) Total revenues % Cost of sale (330) (333) (3) (1%) Other expenses (80) (75) 5 7% Total expenses (410) (408) 2 - Profit (Loss) before FX % - KEGCO : Availability payment (AP) increased by 94 million baht according to the PPA, resulting in an increase in profit in the amount of 90 million baht. Quezon %: (Former Portion and PEPOI and QMS) Electricity Revenue 1,326 1, Other income (4) 14 (18) (129%) Total revenues 1,322 1,334 (12) - Cost of sale (822) (803) 19 3% Other expenses (232) (353) (121) (34%) Total expenses (1,054) (1,156) (102) (9%) Profit (Loss) before FX % - Former Portion of Quezon (52.125%) : Other expenses decreased by 121 million baht which was witholding tax from dividend decreased by 86 million baht. Moreover, administrative expenses decreased by 22 million baht. These led to the operating result increased of 90 million baht. Page 6

7 Quezon % (Additional Portion in the year 2012 and PEPOI and QMS) : 2013 (48.875%) 2012 (48.875%) Increase/(Decrease) % Electricity Revenue 1,166-1, % Other income (3) - (3) 100% Total revenues 1,163-1, % Cost of sale (723) % Other expenses (205) % Total expenses (928) % Profit (Loss) before FX % - Additional Portion of Quezon (45.875%) : The additional shares of % which EGCO acquired Quezon in May 2012 led to an increase in profit in the amount of 235 million baht. EGCO Cogen: Electricity Revenue % Other income % Total revenues % Cost of sale (559) (453) % Other expenses (26) (11) % Total expenses (585) (464) % Profit (Loss) before FX 34 (38) % - EGCO Cogen : Higher electricity generation compared to the same period of the previous year because of plant s interruption from a damage of plant s equipment from February 11 October 12, Additionally, maintenance costs decreased by 65 million baht which resulted in an increase in profit in the amount of 72 million baht. Page 7

8 GEC (GCC, NKCC, SCC, and GYG): Electricity Revenue 1, % Other income % Total revenues 1, % Cost of sale (1,036) (895) % Other expenses (69) (50) 19 39% Total expenses (1,105) (945) % Profit (Loss) before FX % - GEC : Electricity revenue increased by 225 million mainly came from the higher electricity generation of NKCC compared to the same period of the previous year. This was because the plant s equipment was damaged in Q1/2012. Moreover, other income increased by 120 million baht because NKCC received an insurance claim in February 2013 from those such damage leading to an increase in other incomes 105 million baht. These two reasons resulted in an increase in profit in the amount of 184 million baht. GPG: Electricity Revenue 3,551 3,628 (77) (2%) Other income (4) (25%) Total revenues 3,563 3,644 (82) (2%) Cost of sale (3,021) (3,039) (18) (1%) Other expenses (113) (121) (8) (7%) Total expenses (3,134) (3,160) (26) (1%) Profit (Loss) before FX (55) (11%) - GPG : The maintenance of the plants were more than the same period of the previous year leading to lower electricity generation. This resulted in a decrease in the operating result in the amount of 55 million baht. Page 8

9 BLCP: Electricity Revenue 2,198 2,310 (112) (5%) Other income % Total revenues 2,229 2,338 (109) (5%) Cost of sale (1,479) (1,639) (160) (10%) Other expenses (60) (122) (62) (51%) Total expenses (1,539) (1,761) (222) (13%) Profit (Loss) before FX % - BLCP : Lower electricity generation compared to the same period of the previous year leading to a decrease in Availability payment (AP) 50 million baht according to the PPA, Energy Payment (EP) decreased by 63 million baht, also, fuel costs decreased by 142 million baht. In addition, Other cost of sales decreased by 18 million baht. Moreover, deferred income tax was 42 milion baht according to the adoption of TAS 12 - Income taxes. These led to an increased in profit in the amount of 113 million baht. NTPC: Electricity Revenue (147) (20%) Other income 3 4 (1) (25%) Total revenues (148) (20%) Cost of sale (184) (184) - - Other expenses (272) (288) (16) (6%) Total expenses (456) (472) (16) (3%) Profit (Loss) before FX (132) (50%) NTPC : Secondary Energy (SE) decreased due to water used in electricity generation was lower than the same period of the previous year. This resulted in a decrease in electricity revenue in the amount of 147 million baht. However, other expenses decreased by 16 million baht from interest expenses, leading to the operating result decreased by 132 million baht. Page 9

10 EGCO and Other Subsidiaries in Power Generation business: EGCO Rayong Power Plant Roi-et Green 2* 3* Electricity Revenue Other income Total revenues Cost of sale - - (381) (367) (40) (38) (14) - (12) (4) Other expenses (488) (258) (50) (65) (22) (25) (14) - (15) (14) Total expenses (488) (258) (431) (432) (62) (63) (28) - (27) (18) Profit (Loss) before FX (470) (90) (4) * EGCO acquired ordinary shares of 2 on 23 May 2012 and 3 on 29 February * 5* Others** Total Change Increase/ (Decrease) % Electricity Revenue % Other income (147) (80%) Total revenues (1) - Cost of sale (9) (7) (13) (470) (416) 54 13% Other expenses (11) (17) (13) (609) (379) % Total expenses (20) (24) (26) (1,079) (795) % Profit (Loss) before FX 17 (1) (226) 60 (286) 477% * EGCO acquired ordinary shares in 4 on 23 January 2012 and 5 on 18 June **Yanhee EGCO and Theppana are under construction. Page 10

11 Other Joint Ventures in Power Generation business: Conal NED GPS* GIDEC* Total Change Increase/ (Decrease) % Electricity Revenue % Other income (3) (19%) Total revenues % Cost of sale (60) (65) (28) (16) (23) (111) (81) 30 37% Other expenses (82) (79) (27) (19) (11) - (2) - (122) (98) 24 24% Total expenses (142) (144) (55) (35) (34) - (2) - (233) (179) 54 30% Profit (Loss) before FX (2) % * EGCO acquired ordinary shares in GPS on 23 March 2012 and GIDEC on 28 September The Analysis of the Operating in Other businesses Profit (loss) before FX for Q1/2013 ended March 31, 2013 in other businesses decreased slightly from Q1/2012 by 3 million baht, The details were shown below: Other Subsidiaries and Joint Ventures in Other business: ESCO EGCOM APPC* MME* Total Change TARA Increase/ Decrease) % Revenue % Service income % Other income Total revenues % Cost of sale (140) (122) (20) (21) (38) - (43) - (241) (143) 98 69% Other expenses (21) (32) (23) (23) (4) - (6) - (54) (55) (1) (2%) Total expenses (161) (154) (43) (44) (42) - (49) - (295) (198) 97 49% Profit (Loss) before FX (7) - (9) (3) (5%) * EGCO acquired ordinary shares in APPC on 15 May 2012 and MME on 16 August Page 11

12 3. Report and Analysis of Cash Flow Position As at March 31, 2013, cash and cash equivalents were 5,370 million baht, increasing by 1,223 million, from the amount as at December 31, 2012, consisted of Net cash received from operating activities 1,396 Net cash received from investing activities 841 Net cash payment for financing activities )849( Loss from foreign exchange rate on cash and cash equivalents )165( Net increase in cash 1,223 - Net cash received from operating activities was 1,396 million baht. This was mainly due to cash received from operation of EGCO and its subsidiaries. - Net cash received from investing activities was 841 million. This was caused by cash received from joint ventures dividend was 1,807 million baht, whereas, cash payment for construction in Theppana and Solarco were 826 million baht. Moreover, cash paid for Solarco shares were 31 million baht and additional paid up shares in Xayaburi was 100 million baht. - Net cash payment for financing activities was 849 million baht. This was mainly due to interest payment of loans was 427 million baht and the principal repayment of loans were 9,437 million baht. Meanwhile, drawn down loans were 9,016 million baht. Page 12

13 4. Financial ratios Profitability Ratios Restated Gross Profit Ratio 29.25% 27.22% Operating Profit Ratio before FX 25.27% 23.23% Profit Ratio before FX 16.19% 13.95% Profit before FX per share (Baht) Remarks - used proportionate consolidation method Other Financial Ratios 2013 March 31, 2012 December 31, Restated Debt to equity ratio (Time) Book value per share (Baht) Current ratio (Time)* Quick ratio (Time) Page 13

Management Discussion and Analysis

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