Annual registration statement

-Translation-

Annual registration statement

As of December 31, 2011

Electricity Generating Public Company Limited

Content

Page

Part 1 Executive Summary 1

Part 2 Listed company 2 Section 1 Risk Factors 10 Section 2 Business Characteristic 15 Section 3 Operation of Business Line 28 Section 4 Research and Development 56 Section 5 Operational assets 57 Section 6 Future projects 60 Section 7 Dispute 61 Section 8 Capital Structure 62 Section 9 Management 65 Section 10 Internal Control 122 Section 11 Connected Transaction 130 Section 12 Financial Status and Operational Results 131 Section 13 Others 154

Part 3 The Certification of Information

Attachment 1 CV of the Management and the Control Persons Attachment 2 The positions of the Management and the Control Persons Attachment 3 Audit Committee’s Report

Glossary 1. Companies EGCO Electricity Generating Public Company Limited Group companies, EGCO Group

Electricity Generating Public Company Limited and its subsidiaries and joint venture companies.

AE Agro Energy Company Limited APMC Alto Power Management Corporation BLCP BLCP Power Limited BV New Growth B.V. Conal Conal Holdings Corporation Coop New Growth Cooperatief U.A. CPOI Covanta Philippines Operating Inc. Chaiyaphum Chaiyaphum Wind Farm Company Limited DGA Diamond Generating Asia, Limited East Water Eastern Water Resources Development and Management Public

Company Limited EGAT Electricity Generating Authority of Thailand EGCO BVI EGCO International (BVI) Limited EGCO Cogen EGCO Cogeneration Company Limited EGCO Green EGCO Green Energy Company Limited Egcom Tara Egcom Tara Company Limited ESCO EGCO Engineering and Service Company Limited GCC Gulf Cogeneration Company Limited GEC Gulf Electric Public Company Limited GECC General Electric Capital Corporation GEN Gulf Energy Company Limited GIPP Gulf IPP Company Limited GPG Gulf Power Generation Company Limited GPIQ GPI Quezon Company Limited GYG Gulf Yala Green Company Limited KEGCO Khanom Electricity Generating Company Limited NED Natural Energy Development Company Limited NED Wind NED Wind Company Limited NKCC Nong Khae Cogeneration Company Limited NMPC Northern Mindanao Power Corporation NTPC Nam Theun 2 Power Company Limited North Pole North Pole Investment Company Limited OneEnergy OneEnergy Thailand Limited OPDCI Ogden Power Development Cayman Inc. PEPOI Pearl Energy Philippines Operating Inc. PGS Power Generation Services Company Limited Quezon Quezon Power (Philippines) Limited Company REGCO Rayong Electricity Generating Company Limited Roi-Et Green Roi-Et Green Company Limited SCC Samutprakarn Cogeneration Company Limited SPPC Southern Philippines Power Corporation TEPDIA TEPDIA Generating B.V.

Theppana Theppana Wind Farm Company Limited WMPC Western Mindanao Power Corporation XPCL Xayaburi Power Company Limited 2. Government Organizations EPPO Energy Policy and Planning Office ERC Energy Regulatory Commission IEAT Industrial Estate Authority of Thailand NEPC National Energy Policy Council PWA Provincial Waterworks Authority SEC Securities and Exchange Commission, Thailand SET Stock Exchange of Thailand 3. Other Institutions IOD Thai Institute of Directors JBIC Japan Bank for International Corporation COSO The Committee of Sponsoring Organizations of the Treadway

Commission 4. Technical Terms Associated Company A firm is an associated company if :

A) listed company or its subsidiaries hold 20.00% (twenty percent) or more, but not more than 50.00% (fifty percent) of its overall voting stock. B) A listed company or its subsidiary has influence, but not controlling power, over its monetary and operational policies. (The company is not deemed to be a subsidiary or joint venture.) Shareholdings referred to above include those held by related persons.

Controlling Person This is a shareholder or a person who, through their behavior, can significantly influence the policy, management and operations of a listed firm. This is irrespective of the source of their authority: through their rights, contracts, or any others. Specially, a “controlling person” includes, but is not limited to, one who:

A) Has direct or indirect voted exceeding 25.00% (twenty-five percent) of the total company votes.

B) Through their behavior, has control over the appointment or removal of company directors.

C) Through their behavior, has de facto control or undue influence over policy, controlling those company members authorized to determine management and operational policies.

D) Through their behavior, acts or has the power to act in the same manner as the company management. This includes those who hold other positions in the company, but are able to act in the same manner as the company management.

IPP Independent Power Producer Major Shareholder Such person is a one whose holding in a listed firm exceeds

10.00% (ten percent) of the listed company’s overall voting stock. PDP Power Development Plan SPP Small Power Producer

Subsidiary Company Is : A) A company that a listed company holds over 50.00% (fifty

percent) of its total voting stock. B) A company that the company referred to in (A) holds over

50.00% (fifty percent) of its total voting stock. C) A company that is held by another company in a chain of

ownership, no matter how many number in the chain, ending with the company referred to in (B) and

D) A company that the company referred to in (A), (B), or (C) hold over 50.00% (fifty percent) of its overall voting stock, either directly or indirectly.

E) A company that the company referred to in (A), (B), (C), or (D) have controlling power over its monetary and operational policies, and are able to direct and gain interest on its activities.

The holding of (A), (B), (C), or (D) is included those held by related persons.

Part 1 Executive Summary

Page 1

Part 1 Executive Summary

The Notification of the Capital Market Supervisory Board No. Tor Jor 11/2009 Re: Criteria, Conditions and Procedures of Reporting Disclosure of Financial Status and Results of Business Operations of Issuance Companies dated March 13, 2009 revoked this part.

Part 2 Listed Company

Page 2

Part 2

Listed Company

1. EGCO Information

Name : Electricity Generating Public Company Limited (EGCO)

Business : Holding Company focusing on power business and other related business

Registration : 0107537008666 (Previously Number Listed Co. 333)

Sector : Energy and Utilities

Industry : Resources

Registered Capital : 5,300 million baht

Paid up Capital : 5,246.65 million baht

Par Value : 10 baht

Foreign Limit : 44.82%

% of Free Float : 50.65% as of March 16, 2012

Head Office : EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Rd., Tungsonghong, Laksi, Bangkok 10210, Thailand.

Home Page : http://www.egco.com

Tel. : 66 0 2998-5000

Fax : 66 0 2955-0956-7

Board of Directors : Email address : [email protected]

Audit Committee : Email address : [email protected]

Corporate Secretary : 0 2998-5020-6

Email address : [email protected]

IR Contact : 0 29985145-7

Email address: [email protected]


Page 3

2. Referenced Persons

Regulator The Securities and Exchange Commission, Thailand GPF Witthayu Building, 93/1 Wireless Road, Lumpini, Patumwan, Bangkok 10330, Thailand Tel +66 (0) 2695 9999, +66 (0) 2263 6499 Fax. +66 (0) 2256-7711 Corporate Affairs Department ext. 9535, 9509 E-mail: [email protected] Website: www.sec.or.th

Regulator The Stock Exchange of Thailand The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel +66 (0) 2229 2000, +66 (0) 2654 5656 Fax. +66 (0) 2229 2030, +66 (0) 2654 5649 S-E-T Call Center +66 (0) 2229 2222 E-mail: [email protected] Website: www.set.or.th

Share and Debenture registrar Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel +66 (0) 2229 2800 Fax. +66 (0) 2359 1259 Call Center +66 (0) 2229 2888 E-mail: [email protected] Website: www.tsd.co.th

Auditor 1. Ms. Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044 2. Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051 3. Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120, Thailand Tel +66 (0) 2286 9999, +66 (0) 2344 1000 Fax. +66 (0) 2286 5050


Page 4

3. General Information

Company Business Registered

Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect)

(%) Electricity Generating Public Company Limited (EGCO) Registration 0107537000866 (No.BorMorJor.333) Head Office 14th, 15th Floor EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Rayong Power Plant Bangkok Office 12th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0931 Rayong Office 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. +66 (0) 3868 1012, +66 (0) 3868 1016, +66 (0) 3868 1020 Sector Energy & Utilities Industry Resources Foreign Limit 44.81% Share of Minor Shareholder (% Free Float) 51.90% Website www.egco.com

Holding Company focusing on Power business and others related to power business Independent Power Producer (IPP) Electricity Generating and supply business

5,300 10 5,264.65 -


Page 5

Subsidiaries

Company Business

Registered Share Capital (Million Baht)

Par Value (Baht)



(%) Khanom Electricity Generating Company Limited (KEGCO) Office 12th Floor, EGCO Tower Tel. +66 (0)2998 5000 Fax +66 (0) 2955 0932 Site Office 112 Moo 8, Tongnean District, Amphur Khanom Nakhon Sri Thammarat 80210, Thailand Tel. +66 (0) 7552 9173, +66 (0) 7552 9179 Fax +66 (0) 7552 8358

IPP Electricity Generating and supply business

5,000 10 4,850 99.99

EGCO Engineering & Service Company Limited (ESCO) Office 13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0933 Site Office 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. +66 (0) 3868 2611-4 Fax +66 (0) 3868 2823

Engineering, operation and maintenance services for power plants and manufacturers

400 10 400 99.99

North Pole Investment Company Limited (North Pole) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office 6th Floor, Tower A, 1 CyberCity, Ebene, Republic of Mauritius

Holding company focusing on investment in electricity generating companies in foreign countries

5,724.76/1

(181,096,921 USD)

31.6116/1

(1 USD)

5,724.76/1

(181,096,921 USD)

100

EGCO International (B.V.I.) Limited (EGCO B.V.I.) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office Akara Bldg., 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands, P.O. Box 3136


11.06/1

(350,000 USD)

31.6116/1

(1 USD)

11.06/1

(350,000 USD)

100

New Growth Cooperatief U.A. (Coop) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands


2.23/2

(54,500 EUR)

4,088.28/2

(100 EUR)

2.23/2

(54,500 EUR)

100

New Growth B.V. (BV)

Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands


1.12/2

(27,500 EUR)

4,088.28/2

(100 EUR)

1.12/2

(27,500 EUR)

100

Pearl Energy Philippines Operating, Inc. (PEPOI) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office: Barangay, Cagsiay I, Mauban, Quezon, Philippines 4330

Operation and Maintenance of QPL 6.32/1

(200,000 USD)

6.32/1

(200,000 USD)

100

EGCO Cogeneration Company Limited (EGCO Cogen) Office 13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Site Office 222 Moo 8, Mabkha District,Amphur Nikhom Phattana Rayong 21180, Thailand Tel. +66 (0) 3863 7051-8 Fax +66 (0) 3863 7063

Small Power Producer (SPP) Electricity and steam generating and supply business

1,060 10 1,060 80


Page 6



Par Value (Baht)



(%)

EGCO Green Energy Company Limited (EGCO Green) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Holding company focusing on power business

175 10 175 74

Roi-Et Green Energy Company Limited (Roi-Et Green) (EGCO Green is the company’s 95.00% shareholder) Office 13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Site Office 222 Moo 10, Nua-Muang District, Amphur Muang Roiet 45000, Thailand Tel. +66 (0) 4351 9825-6 Fax +66 (0) 4351 9827

SPP utilizing Biomass as primary fuel 180 10 180 70.30

Agro Energy Company Limited (AE) (ESCO is the company’s 99.99% shareholder) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9

Trading/delivery service of fuel from natural scrap

2 10 2 99.99

Egcom Tara Company Limited (ET) (ESCO is the company’s 74.19% shareholder) Office 13th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0945 Site office - Plant 1 332 Moo 2, Pongsawai District, Amphur Muang Ratchburi 70000, Thailand - Plant 2 250 Moo 1, Pangpuay District, Amphur Damneansaduak Ratchburi 70130, Thailand

Piped water generating and supply business

345 10 345 74.19


Page 7

Joint Ventures:



Par Value (Baht)



(%) Gulf Electric Public Company Limited (GEC) Office 11th FL., M. Thai Tower I, All Seasons Place, 87 Wireless Road, Lumpini, Phathumwan, Bangkok 10330, Thailand Tel. +66 (0) 2654 0155 Fax +66 (0) 2654 0156-7 Website http://www.gulfelectric.co.th

Holding company focusing on IPP and SPP 14,000 10 13,784.35 50

Gulf Power Generation Company Limited (GPG) (GEC is the company’s 100% shareholder) Site office 64 Moo 2 Ban Pa District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. +66 (0) 3624 8305 Fax. +66 (0) 3624 8314, +66 (0) 3625 1344

Independent Power Producer (IPP) Electricity Generating and supply business

9,607 10 9,607 50

Gulf Cogeneration Company Limited (GCC) (GEC is the company’s 100% shareholder) Site office 79 Moo 3 Tandeow District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. +66 (0) 3624 6531 Fax +66 (0) 3624 8020


850 10 850 50

Nong Khae Cogeneration Company Limited (NKCC) (GEC is the company’s 100% shareholder) Site office 111/11 Moo 7 Nongplamor District, Amphur Nong Khae, Saraburi 18140, Thailand Tel. +66 (0) 3637 3676 Fax +66 (0) 3637 3691


1,241.72 74 1,241.72 50

Samutprakarn Cogeneration Company Limited (SCC) (GEC is the company’s 100% shareholder) Site office 745 Moo 2 Bang Pu Mai District, Amphur Muang, Samutprakarn 10280, Thailand Tel. +66 (0) 2709 0751 Fax +66 (0) 2709 1842


981.54 76 981.54 50

Gulf Yala Green Company Limited (GYG) (GEC is the company’s 100% shareholder) Site office 80 Moo 1, Pron District, Amphur Muang, Yala 95160, Thailand Tel. +66 (0) 7325 2721 Fax +66 (0) 7325 2722

SPP utilizing Biomass as primary fuel 460 10 460 50


Page 8



Par Value (Baht)



(%) Conal Holding Corporation (Conal) (EGCO B.V.I. is the company’s 40% shareholder) Office EGCO Tower Tel. +66 (0) 2998-5000 Fax +66 (0) 2955-0956-9 Oversea office 4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue Corner EDSA Makati City, Philippines Tel. (632) 836 4940, (632) 836 4403 Fax (632) 801 0593

Holding company focusing on power business in the Philippines

827.63 /1

(26,181,409 USD)

103.37 /1

(3.27 USD)

827.63 /1

(26,181,409 USD)

40

Alto Power Management Corporation (APMC) (Conal is the company’s 60% shareholder) Oversea 4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue Corner EDSA Makati City, Philippines Tel. (632) 836 4940, (632) 836 4403 Fax (632) 801 0593

Operation and maintenance services for power plants and consulting

15.69 /1

(496,278 USD)

78.40 /1

(2.48 USD)

7.84 /1

(248,139 USD)

24

Western Mindanao Power Corporation (WMPC) (Conal is the company’s 44% indirect shareholder) Oversea 4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue Corner EDSA Makati City, Philippines Tel. (632) 836 4940, (632) 836 4403 Fax (632) 801 0593 Site office Sitio Malasugat, Sangali, Zamboanga City, Philippines


410.18 /1

(12,975,535 USD)

82.19 /1

(2.60 USD)

307.47 /1

(11,719,503 USD)

17.6

Southern Philippines Power Corporation (SPPC) (Conal is the company’s 44% indirect shareholder) Oversea 4th Floor, Alphaland Southgate Tower, 2258 Chino Roces Avenue Corner EDSA Makati City, Philippines Tel. (632) 836 4940, (632) 836 4403 Fax (632) 801 0593 Site office Bo. Baluntay, Alubel, Sarangani, Philippines


257.74 /1

(8,153,289 USD)

85.98 /1

(2.72 USD)

237.55 /1

(7,514,615 USD)

17.6


Page 9

Quezon Power (Philippines), Limited Co. (QPL) (North Pole is the company’s 52.125% indirect shareholder) Oversea office 62 H. Dela Costa, Mauban, Quezon Province, Republic of Philippines Site Office Barangay, Cagsiay I, Mauban Quezon, Philippines 4330


6,563.87 /1

(207,641,268 USD)

6,563.87 /1

(207,641,268 USD)

52.125

BLCP Power Limited (BLCP) (Since January 30, 2007) Office No. 9, I-8 Road, Map Ta Phut Industrial Estate, Amphur Map Ta Phut, Rayong 21150, Thailand Tel. +66 (0) 3892 5100, Fax. +66 (0) 3892 5199


12,010 100 12,010 50

Nam Theun 2 Power Company Limited (NTPC) Office Unit 9, Tat Luang Road Nongbone Village, P.O. Box 5862 Vientiane, Lao PDR Tel. (856-21) 263 900 Fax (856-21) 263 901


14,225.22/1

450,000,000 USD

3,161.16/1 100 USD

11,806.93/1

373,500,000 USD

35

Natural Energy Development Company Limited (NED) Office 45/F The Offices at Central World 999/9 Rama 1 Road, Patumwan Bangkok 10330, Thailand

Website www.ned.co.th

Feasibility study on Renewable Energy project in Thailand

2,304 10 594 33.33

Other:



Par Value (Baht)


Ownership Interest (%)

Eastern Water Resources Development and Management Public Company Limited (EASTW) Office 23-26/F Eastwater Building, 1 Vibhavadi Rangsit Road, Jomphol, Chatuchak, Bangkok 10900, Thailand Tel. +66 (0) 2272-1600 Fax +66 (0) 2272-1601-3 Website www.eastwater.com

Water resources development and management for supplying raw water to the customers

1,663.73 1 1,663.73 18.72

Xayaburi Power Company Limited (Xayaburi) Office 215 Lanexang Avenue, Ban Siang Yuen Chantaburi District, Vientiane, Lao PDR

Feasibility study on Hydroelectric project in Lao PDR

1,000 10 1,000 12.50

Note : The Exchange rate as at December 30, 2011 /1 1 USD = Baht 31.6116

/2 1 EUR = Baht 40.8828

Part 2 Section 1 Rick Factors

10

1. Risk Factors

To create long term value for shareholders, EGCO recognizes the importance of properly analyzing and managing its business risks. The Board of Directors entrusted the Audit Committee to review the Company’s risk management policies while the Management has the responsibility to implement such policies and report the progress to the Audit Committee and the Board. In this regard, the Risk Management Committee has been set up at the Management level which comprises EGCO’s top executives and the Managing Directors of EGCO subsidiaries. EGCO’s President serves as the chairman of the Committee. Rayong Power Plant and EGCO subsidiaries such as KEGCO, and ESCO also have their own risk management committees to help ensure that their particular risks will be managed adequately.

EGCO Group has setup the risk management policy in a Risk Management Manual which serves as a guideline for the EGCO Group.

About the flood situation in central Thailand and Bangkok areas, EGCO group’s electricity generation and operation have not been affected by the floods. The details are presented in this article.

A summary of key risk factors and associated mitigation measures is as follows:

1. Investment Risk

EGCO invests in electricity generating business. Its main sources of income are dividends from subsidiaries and joint ventures which sell and distribute power under long term Power Purchase Agreements (PPA).

EGCO plans to continuously invest in new projects in accordance with EGCO’s strategy. Such project development may entail risks that will affect EGCO’s investment target. The investment risks are as follow:

1.1 Risks from Project Development

EGCO plans to expand its investment in order to maintain continuous growth, both in Thailand and foreign countries. Key projects are listed in the investment plan so that EGCO can appropriately allocate resources to those projects. Failure to add new assets to the portfolio either through Greenfield development or Acquisition will affect EGCO’s long-term outlook. Also, according to the decrease of revenue in electricity tariff structure, the earnings from new projects may not timely substitute for the declining of revenue from existing power plants.

However, the environment of the project and the project itself are the risk factors of project development caused by uncertainty and business competition which can occur regularly.

To ensure the success of project development, EGCO Business Development Team has analyzed and identified the key risks involved. These include economic, political, and social policies of target countries, economic situation, financial costs, as well as machine, equipment, and construction costs. Moreover, compliance with laws and regulations to prevent environmental, social, and health impacts are concerned as well.

EGCO has prepared risk mitigation measures. For instance, fundamental analysis of target countries was conducted by gathering necessary information such as Power Development Plan (PDP), electricity and tax structure. Project information such as factors of electricity


11

generating will be studied to appraise whether the projects are feasible with acceptable cost and competitive prices.

Besides the project feasibility, EGCO also set up the mechanisms and process to review and scrutinize new investment. Such mechanisms include the review by EGCO Management Committee which comprise EGCO’s top management, and the Investment Committee which is the Board’s committee to ensure that all material risks are identified and managed. The committees will also review the major conditions of the Shareholders’ Agreement such as dividend policy, rights to audit before submitting those agreements for the Board’s consideration.

2. Operational Risks

2.1 Risk of Failure to Get Target Return on Investment

EGCO has the responsibility to properly monitor and manage its investment in order to reach or exceed targeted return on investment. Without efficient mechanism to manage investment assets, EGCO may not get return on investment at target. Typical measures imposed to mitigate relevant risks are as follows:

- Establish asset management policies and, where possible, assign management and staffs to be EGCO Group representatives’ directors or management of its subsidiaries and investment projects.

- Monitor operating performances of each facility and analyze the actual return on investment against the planned target.

- Prepare regular progress reports to senior management and the Board of Directors so that a timely and appropriate action can be taken. The exceptional operating performance is to be reported as well.

- Coordinate with partners for joint-audit in investment companies to ensure the adequacy and effective of internal control system.

With these actions, EGCO will achieve target return on investment. According to the 2010 operating performance report, the incomes from EGCO’s portfolio have been received in line with modeled results.

2.2 Plant Performance Risks

A commitment to generate and deliver electricity pursuant to a PPA with EGAT entails the performance risks which may caused by staff, equipment and management approach. The significant performance risks are as summarized below:

(1) Plant Efficiency

There are various efficiency benchmarks under a PPA with EGAT i.e., Equivalent Availability Factor (EAF) and Heat Rates. Failure to meet these performance requirements would result in penalties and potential termination in certain extreme cases.

The cause of such risk may be power plant aging. With consistent, professional maintenance being a policy in place for each of EGCO Group’s power plants, this risk is


12

considered to be low. Despite that, the management has established systematic procedures to ensure that all relevant performance targets are met. These procedures are as follows:

- To include the key plant efficiency parameters in the Corporate Key Performance Indicators of power plants in the EGCO group in order to ensure that the production efficiency is closely monitored and all employees take part in the plant efficiency.

- To set up Early Warning Systems for critical information regarding the plant operation processes.

- To ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff.

- To ensure that spare part inventory is adequate and well managed.

- To implement the Quality Management System (ISO: 9001:2008) to ensure that those power plants operate in accordance with the terms of their PPAs

- To continuously develop the competencies of the firms’ human resources.

With consistent operation along with these mitigation actions, the chance of this risk is low.

(2) Raw Water Shortage for Electricity Generating

The electricity generating process requires pretreatment and demineralization of raw water for cooling system and steam boiler system.

The risk of a raw water shortage can result in plant stoppages, revenue shortfall, or penalty payments. The risk could be caused by climate change, overall increasing of water usage. Not enough amount of rainfall or the delay of rainy season in some years may affect to sufficient reserve of raw water.

Although EGCO Group has never before experienced any water shortage, the measures are set to prevent and mitigate such risks by increasing the raw water storage capacity, seeking additional sources of raw water supply and setting measures to maximize the benefit of water usage. The risk of raw water shortage is quite low.

(3) Fuel Shortage for Electricity Generation

The risks of a fuel shortage for electricity generation can result in plant stoppages, revenue shortfall or penalty payments. The shortage of “coal and biomass” fuel type could be caused by increasing demand or price fluctuation. Furthermore, natural disaster such as floods may affect the quality and quantity of fuel.

From the past record, EGCO Group has never before experienced any fuel shortage. However, the measures are set to closely monitor and to prevent and mitigate such risk for continuous power generation as follows:

- EGCO Group’s gas fired power plants, which contributed 54 % of 2010 total electricity sales revenues, have enjoyed long term Gas Supply Agreements with PTT, except for Rayong Power Plant and KEGCO which EGAT is the gas supplier under the terms of their PPAs. The quantity and quality of natural gas and other key parameters are all specified in the relevant agreements. With PTT and/or EGAT being the main suppliers, the risks of fuel gas shortage is considered low.


13

- EGCO Group’s coal fire power plants “BLCP and Quezon”, which contributed 36 % of 2010 total electricity sales revenues, have long term Coal Supply & Transportation Agreement. The suppliers must supply coal with the quantity and quality as specified in the agreement. Efficient coal reserve management is a significant measure which can reduce this type of risk as well.

Moreover, coal procurement from potential alternative suppliers when necessary is another measure to ensure the adequacy supply under the terms of the PPA.

- EGCO Group’s biomass power plants using rice husks and Para wood chips as fuel, which contributed 2 % of 2010 total electricity sales revenues, may face the fuel risk in terms of inadequate supply and volatile pricing. This is because those agricultural products may have alternative uses in the market. Since long term fuel supply agreements can not be established as there are few creditworthy suppliers of such feedstock, the primary risk prevention measures are to reserve more fuel and to seek alternative fuel sources in surrounding areas. This mitigation measures can help manage the fuel price at a certain level. However, the biomass fuel is still a seller’s market. As such, the impact of the inadequate of such fuel on EGCO’s revenues is low.

(4) Safety Health Environment and Social

EGCO realizes that the electricity generating process which uses natural gas and coal as primary fuels will have certain impacts on the safety, environment and quality of life of employees and surrounding communities. The cause of risk can arise from the inefficiency of power plant or the inadequate measurement. Consequently, EGCO has taken the following actions to mitigate any potential negative impacts and reduce the likelihood of such risks as follows:

- Develop and live by EGCO group’s Corporate Social Responsibility policy

- Develop Safety, Health and Environment (“SHE”) Management Manual for all EGCO owned plant as guidelines for implementation and audit.

- Prepare the work manuals and emergency plan, implement training plan and testing of plan, equipment and warning system while ensuring strict compliance with the manual.

- Develop a list of governing laws and regulations and designate responsible person to monitor the compliance with related laws.

- Monitor and ensure the compliance with SHE Management Manual

By complying with the above measures regularly, we can be ensured that this risk likelihood is quite low.

(5) Accident, Resistance, and Sabotage

EGCO business may face risk from accident that may cause fire. Besides, the operation may subject to the community resistance if the electricity generating process has negative impacts on the community. Such risks may be caused by the power plant aging condition, personnel operation, or sabotage event.


14

With existing mitigation actions and situation monitoring, this risk likelihood is quite low.

Management is well aware of the above risks and has set the following measures to mitigate and reduce the likelihood of those risks.

- To strongly encourage employees to prudently discharge their duties with the belief that carelessness may lead to significant damages.

- To periodically maintain all equipment as scheduled to ensure that they can work efficiently.

- To strengthen relationship with surrounding communities to foster the right perception about EGCO business.

- To strengthen relationship with local government authorities.

- To set the security plan with regular drills and provide equipment such as closed circuit TV.

- To secure the insurance policy that covers all risks, machinery breakdown, business interruption and third party liability to assure that assets and personnel will be properly and adequately protected and the damages will be recovered even in an unexpected case

- In 2011, the management has considered to procure the political violence insurance policy which covers the effects of political violation and terrorist attack. Effective from 2012, the insurance will cover EGCO’s power plants and subsidiaries including EGCO tower and Egcom tara. However, the insurance policy on terrorist attack have already been procured for most of EGCO’s joint venture power plants.

3. Financial Risks

The investments of EGCO Group are capital-intensive. Since the primary funding sources are loans from domestic and international bank loan markets, foreign exchange rate fluctuation and interest rate fluctuation, are important risks to be monitored and mitigated. This risk may be caused by mismatch of revenue and loan structure including the change of foreign currency and interest rate. In case that the change of foreign currency and interest rate are negative to EGCO structure, it will lead to decline in the Group’s operating performance. Therefore, the mitigation measures are established as follows:

3.1 Foreign Exchange Rate Fluctuation

EGCO Group has a policy to mitigate currency mismatches for each of its investment projects to prudent levels. In general, this is achieved by matching currencies of project development and construction costs with funding source currencies and subsequently matching the currency of long-term funding profiles with those of each project’s revenue stream during the operation phase.

3.2 Interest Rate Fluctuation

EGCO Group has a policy to manage risk of interest rate fluctuation by using financial hedging instruments (namely interest rate swaps) to fix floating interest rate exposure to prudent levels in order to provide the most predictable cash flows over its long-term power purchase contracts. If interest rate fixtures are not available for the full project terms required, EGCO will seek to enter into or cause its project company’s to enter into financial instruments that can best mitigate the interest rate risks subject to market availability and cost.


15

With these measures, the impacts to EGCO group are not much.

4. Other Risks

4.1 Business Interruption due to flood situation

EGCO group’s electricity generation and operation have not been affected by the floods occurred in 2011. However, flood situation and impact tend to occur more often in many areas of Thailand. Thus, the flood situation will be monitored further.. EGCO’s risk mitigation measures are as follows;

For EGCO Office:

- Prepare procedure for flood protection plan at EGCO tower. The job descriptions, responsible persons, and telephone numbers for contact are described.

- Define procedure to turn off the electricity system in order to protect the loss of life and the failure of office systems and computer systems.

- Seek a reliable service provider to arrange a backup site at a safety zone to ensure that EGCO can communicate with related parties and employees so that the management’s policy and the situation of flood around EGCO tower will be acknowledged.

- Coordinate with business partners to arrange temporary office during flood situation.

For Power Plants: EGCO’s power plants are designed to be situated in highland and the drainage systems are well-designed. However, the Management set the protection measurement as follows;

- Provide appropriate numbers of electric water pump.

- Establish crisis management plan including procedures, job descriptions to mitigate natural disaster such as floods.

- Procure the “All Risks” insurance policy which cover flood insurance.

- Monitor weather forecast and communicate with government authorities to take actions as planned.

Part 2 Business Characteristics

Page 15

2. Business Characteristics

2.1 Background and Major Development

The Electricity Generating Public Company Limited or EGCO is the first independent power producer in Thailand incorporated on May 12, 1992 by the Electricity Generating Authority of Thailand (“EGAT”). Such incorporation marked the commencement of the Thai government’s privatization initiatives to allow broader private sector investment in the electricity generating sector. On March 23, 1994, EGCO was transformed into a public company and then listed on the Stock Exchange of Thailand (“SET”) on January 16, 1995.

Since EGCO is a holding company, its main source of revenue is from the dividend income from subsidiaries and share of profits from joint ventures which are located in both Thailand and the Asian region. EGCO Group companies either operate in the power sector with long term Power Purchase Agreement (“PPA”) or conduct other related business.

Business Lines EGCO businesses can be categorized into 4 groups as follows: 1. Independent Power Producer (“IPP”) Group: This Group comprises 4 power plants being

Rayong Power Plant, Khanom Electricity Generating Co., Ltd., BLCP Power Ltd., and Gulf Power Generation Co., Ltd. The combined megawatt equity is 3,453 megawatt which accounts for 78.12% of EGCO’s total asset capacity. The combined megawatt equity is less than last year by 75 megawatt due to the expiration of PPA of Khanom power plant Unit 1 on June 19, 2011.

2. Small Power Producer (“SPP”) Group: This Group comprises 7 power plants being EGCO Cogeneration Co., Ltd., Roi-Et Green Co., Ltd., Gulf Cogeneration Co., Ltd., Nong Khae Cogeneration Co., Ltd., Samutprakarn Cogeneration Co., Ltd., Gulf Yala Green Co., Ltd. and Natural Energy Development Co., Ltd. The combined capacity is 295.73 megawatt equity, representing 6.69% of EGCO’s total asset capacity. The combined megawatt equity is more than the last year by 2.67 megawatt due to Commercial Operation Date (“COD”) of the first stage of Lopburi Solar power plant on December 22, 2011.

3. Overseas Power Producer Group: This Group comprises 4 power plants being Western Mindanao Power Corporation, Southern Philippines Power Corporation, Quezon Power (Philippines) Ltd., Co., in Philippines and Nam Theun 2 Power Co., Ltd., in Lao PDR. The combined megawatt equity is 671.24 megawatt, representing 15.19% of EGCO’s total asset capacity. The combined megawatt equity is higher than last year by 131.28 megawatt due to the additional acquisition of 26.125% interest in Quezon Power (Philippines) Ltd., Co., on March 25, 2011.

4. Other Business Group: This Group comprises 2 operation and maintenance companies being EGCO Engineering & Service Co., Ltd., and Pearl Energy Philippines Operating, Inc. In


Page 16

addition, there are 2 water supply companies being Egcom Tara Co., Ltd., and the Eastern Water Resources Development and Management Public Co., Ltd.

Details of each project are shown in the table at the end of this part. 2.4 Revenue Profile The major source of income is from IPP group. The revenue structure of EGCO Group of each business line as is shown below.


Page 17

Revenue Structure( Million Baht )

Product Transaction % 2011 2010 (Restated) 2009Service Shareholding Revenue % Revenue % Revenue %

Electricity IPP 33.27% 35.25% 38.31%

Rayong power plant/A(formerly REGCO)Capacity Charge 2,201.28 16.54% 2,454.12 16.25% 3,674.60 23.30%

Energy Charge 57.05 0.43% 81.16 0.54% 47.49 0.30%

KEGCO 99.99%

Capacity Charge 2,098.32 15.77% 2,772.83 18.36% 2,304.26 14.61%

Energy Charge 72.08 0.54% 15.61 0.10% 13.55 0.09%

SPP 17.95% 15.26% 14.12%

EGCO Cogen 80.00%

Energy Charge 2,064.46 15.51% 2,002.04 13.25% 1,927.49 12.22%

Roi-Et Green 70.30%

Energy Charge 324.60 2.44% 302.85 2.01% 298.94 1.90%

Service ESCO 99.99% 375.93 2.82% 721.54 4.78% 611.41 3.88%

PEPOI/B 100.00% 198.75 1.49%

Water Egcom Tara/C 74.19% 268.56 2.02% 258.83 1.71% 267.33 1.70%

Interest EGCO 141.21 1.06% 67.05 0.44% 66.50 0.42%

income Rayong power plant 4.38 0.03% 5.37 0.04% 9.03 0.06%

KEGCO 9.71 0.07% 6.56 0.04% 10.15 0.06%

EGCO cogen, EGCO Green, ESCO,

Egcom Tara, PEPOI, North Pole/D 21.10 0.16% 9.90 0.07% 11.71 0.07%

Others EGCO 208.91 1.57% 236.16 1.56% 175.46 1.11%

Rayong power plant 49.20 0.37% 47.99 0.32% 55.38 0.35%

KEGCO 1.12 0.01% 3.08 0.02% 9.34 0.06%

EGCO cogen, EGCO Green,

ESCO, Egcom Tara 13.48 0.10% 10.08 0.07% 11.88 0.08%

Share of BLCP 50.00% 1,849.03 13.89% 2,851.98 18.88% 3,226.45 20.46%

profit (loss) GEC 50.00% 1,836.18 13.80% 2,450.32 16.22% 2,535.21 16.08%

NED 33.33% (28.21) (0.21%) (22.69) (0.15%) (10.91) (0.07%)

NTPC/E 35.00% 1,045.62 7.86% 107.27 0.71% (38.83) (0.25%)

Conal 40.00% 19.66 0.15% 139.58 0.92% 63.07 0.40%

Quezon/F 52.125% 477.41 3.59% 582.76 3.86% 498.36 3.16%

Total revenues (revenues item in consolidated) 13,309.84 100% 15,104.40 100% 15,767.89 100%


Page 18

Notes /A The acquisition of entire business of REGCO to EGCO occurred in October 2009, which hereinafter referred to Rayong power plant

/B EGCO purchased ordinary shares in PEPOI on March 25, 2011, increasing its ownership 100%

/C ESCO purchased additional ordinary shares in Egcom Tara on January 6, 2010, increasing its ownership interest from 70.07% to 74.19%

/D EGCO purchased ordinary shares in North Pole on July 16, 2010, increasing its ownership 100%

/E EGCO purchased additional ordinary shares in NTPC on September 29, 2010, increasing its ownership interest from 25% to 35%

/F EGCO purchased additional ordinary shares in Quezon on March 25, 2011, increasing its ownership interest from 26% to 52.125%


Page 19

2.5 Business Target

EGCO focus to continue building upon its portfolio of power generation assets within both the domestic and ASEAN markets by develop or buy the power plant projects upon the company investment plan which concern in shareholders’ return maximization under the acceptable level of risk. In essence, the Company’s corporate vision is:

“To be the leading Thai integrated electric power Company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environment protection and social development support”

In this regard, EGCO has identified its key long term objectives as follows:

Seek to grow at a rate higher than the average growth of electricity demand in our target markets,

Achieve returns on equity (ROE) above the average of industry in Thailand,

Create a healthy organization which excels in terms of good corporate governance and acceptance from the communities.


Page 20

Table 1. EGCO’s Business Line: 1. IPP Group 1.1 Rayong Power Plant

Rayong power plant is the first IPP in Thailand located in Rayong province. It is a 1,232-megawatt power plant comprising four identical 308-megawatt combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 20-year Power Purchase Agreement (“PPA”).

In 2011, Rayong power plant generated and sold 2,126.70 million kilowatt-hour electricity output to EGAT. Its annual average Equivalent Availability Factor (“EAF”) was 93.09%.

1.2 Khanom Electricity Generating Company Limited (“KEGCO”)

EGCO directly holds a 100% stake in KEGCO which owns and operates Khanom power plant which is known as the largest independent power plant in the southern area of Thailand located in Nakhon Sri Thammarat province. It is a 824-megawatt power plant combining of two 75-megawatt barge-mouthed power units and one 674-megawatt combined cycle power block using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 15-year PPA for barge-mouthed power unit 1 and the 20-year PPA for barge-mouthed power unit 2 and combined cycle power block. On June 19, 2011, barge-mouthed power unit 1 was permanently shut down due to the expiration of the PPA.

In 2011, Khanom power plant generated and sold 5,816 million kilowatt-hour electricity output to EGAT. Its annual average EAF was 95.28%.

1.3 BLCP Power Limited (“BLCP”)

EGCO directly holds a 50% stake in BLCP which owns and operates an IPP coal-fired power plant located in Rayong province. It is a 1,434-megawatt power plant comprising two identical 717-megawatt pulverized coal-fired power units using high quality bituminous imported from Australia as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA.

In 2011, BLCP power plant generated and sold 10,616.59 million kilowatt-hour electricity output to EGAT, while its annual average EAF for unit 1 and unit 2 were 93.79% and 92.74%, respectively.

1.4 Gulf Power Generation Company Limited (“GPG”)

EGCO indirectly holds a 50% stake in GPG via its 50% ownership in Gulf Electric Public


Page 21

Company Limited (“GEC”). GPG owns and operates an IPP gas-fired power plant, called Kaeng Khoi 2 (“KK2”), located in Saraburi province. It is a 1,510-megawatt power plant composed of two 755-megawatt combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA. In 2011, KK2 power plant generated and sold 8,813.30 million kilowatt-hour electricity output to EGAT. The annual average EAF for block 1 and block 2 were 93.60% and 85.62%, respectively.

2. SPP Group 2.1 EGCO Cogeneration Company Limited (“EGCO Cogen”)

EGCO directly holds an 80% stake in EGCO Cogen which owns and operates a SPP cogeneration power plant located in Rayong province. It is a 117-megawatt cogeneration power plant with steam supply of 30 tons per hour using natural gas as a primary fuel. EGCO Cogen can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed a 60-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users in Rayong Industrial Park under the long-term PPAs.

In 2011, EGCO Cogen power plant generated and sold 709.92 million kilowatt-hour electricity output to its customers. Its annual average EAF was 98.12% and the steam output to the industrial user was 52,218 tons.

2.2 Roi-Et Green Company Limited (Roi-Et Green)

EGCO indirectly holds a 70.30% stake in Roi-Et Green via EGCO Green Company Limited. Roi-Et Green owns and operates a SPP renewable power plant located in Roi-Et province. It is a 9.9-megawatt biomass-fired power plant using rice husk as a primary fuel. Under the SPP firm renewable program, it signed an 8.8-megawatt contracted capacity with EGAT under the 21-year PPA. In 2011, Roi-Et Green power plant generated and sold 60.35 million kilowatt-hour electricity output to EGAT, while its annual average EAF was 86%.

2.3 Gulf Cogeneration Company Limited (“GCC”)

EGCO indirectly holds a 50% stake in GCC via GEC. GCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 110-megawatt cogeneration power plant with steam supply of 16 tons per hour using natural gas as a primary fuel. GCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2011, GCC power plant generated and sold 744.31 million kilowatt-hour electricity output to


Page 22

the customers, while its annual average EAF was 98.16% and the steam output to the industrial users was 126,528 tons.

2.4 Nong Khae Cogeneration Company Limited (“NKCC”)

EGCO indirectly holds a 50% stake in NKCC via GEC. NKCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour using natural gas as a primary fuel. NKCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2011, NKCC power plant generated and sold 842.34 million kilowatt-hour electricity output to the customers, while its annual average EAF was 98.45% and the steam output to the industrial users was 151,630 tons.

2.5 Samutprakarn Cogeneration Company Limited (“SCC”)

EGCO indirectly holds a 50% stake in SCC via GEC. SCC owns and operates a SPP cogeneration power plant located in Samutprakarn province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour using natural gas as a primary fuel. SCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs.

In 2011, SCC power plant generated and sold 817.53 million kilowatt-hour electricity output to the customers, while its annual average EAF was 98.63% and the steam output to the industrial users was 140,586 tons.

2.6 Gulf Yala Green Company Limited (“GYG”)

EGCO indirectly holds a 50% stake in GYG via GEC. GYG owns and operates a SPP renewable power plant located in Yala province. It is a 23-megawatt biomass-fired power plant using parawood residue as a primary fuel. Under the SPP firm renewable program, it signed 20.2-megawatt contracted capacity with EGAT under the 25-year PPA. In 2011, GYG power plant generated and sold 157.99 million kilowatt-hour electricity output to EGAT, while its plant annual average EAF was 94.33%.

2.7 Natural Energy Development Company Limited (“NED”)

EGCO directly holds a 33.33% stake in NED which owns and operates a 73 DC / 55 AC megawatt thin film solar power plant (“Lopburi Solar”) located in Lopburi province. NED signed a PPA with EGAT for the sale of all net electricity output generated. The term of the PPA is 5


Page 23

years from the Commercial Operation Date (“COD”) and will be renewed for 5-year contract each time. NED is subsidized with adder of 8 baht per kilowatt-hour on top for 10 years of its wholesale tariff. At December 31, 2011, the overall progress of construction project was 95% a slightly ahead target. The first stage of 11 DC / 8 AC megawatt achieved the official COD on December 22, 2011 that was slightly delayed from the scheduled COD in November 2011. The full scale generation of all seven phases are planned achieve within May 2012.

3. Overseas Group

3.1 Conal Holdings Corporation (CHC)

EGCO indirectly holds a 40% stake in CHC via EGCO International (B.V.I.) Limited (“EGCO BVI”). CHC is the largest IPP in the Mindanao Island, Philippines. CHC holds the shares in 2 electricity generating companies and 1 operation and maintenance service company. Western Mindanao Power Corporation (“WMPC”) EGCO indirectly holds a 17.6% stake in WMPC via CHC. WMPC owns and operates an IPP power plant located in Zamboanga city, Philippines. It is a 109.6-megawatt diesel power plant using a bunker-c fuel oil as a primary fuel. Under the Build-Operate-Own (“B-O-O”) scheme, it generates and sells all net electricity output to National Power Corporation (“NPC”) under the 18-year Energy Conservation Agreement (“ECA”). In 2011, WMPC power plant generated and sold 442.88 million kilowatt-hour electricity output to NPC, while its annual average EAF was 91.41%.

Southern Philippines Power Corporation (“SPPC”) EGCO indirectly holds a 17.6% stake in SPPC via CHC. SPPC operates and owns an IPP power plant called Gen Santos located in Sarangani province, Philippines. It is a 54.8-megawatt diesel power plant using bunker-c fuel oil as a primary fuel. Under the B-O-O scheme, it generates and sells all net electricity output to NPC under the 18-year ECA. In 2011, SPPC power plant generated and sold 268.43 million kilowatt-hour electricity output to NPC, while its annual average EAF was 90.26%.

Alto Power Management Corporation (“APMC”) APMC provides operation and maintenance services including plant management and consulting to the two above-mentioned power plants and also third-party power plants.

3.2 Quezon Power (Philippines), Limited Company (“QPL”)

EGCO indirectly holds 52.13% stake in QPL via North Pole Investment Company Limited


Page 24

(“North Pole”) and EGCO BVI. QPL owns and operates a 502.50-megawatt pulverized coal-fired power plant using the high quality coal imported from Indonesia as a primary fuel. Under the 25-year PPA, it generates and sells net electricity output to Manila Electric Company (“MERALCO”), the country's largest power distribution company, and also provides additional load stability of Luzon power grid. In 2011, Quezon power plant generated and sold 3,269.31 million kilowatt-hour electricity output to MERALCO, while its annual average EAF was 86.52%.

3.3 Nam Theun 2 Power Company Limited (“NTPC”)

EGCO directly holds 35% stake in NTPC, which owns and operates a 1,086.80-megawatt hydroelectric power plant located in Lao PDR. It generates and sells 948-megawatt contracted capacity to EGAT and 75-megawatt contracted capacity to Electricite du Laos (EDL) under the 25-year PPAs. In 2011, NT2 power plant generated and sold 5,956.68 million kilowatt-hour electricity output to EGAT and 404.16 million kilowatt-hours electricity output to EDL.

4. Other Businesses 4.1 EGCO Engineering & Service Company Limited (“ESCO”)

ESCO is EGCO’s wholly owned subsidiary which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries including the Group companies.

4.2 Egcom Tara Company Limited (“Egcom Tara”)

As at December 31, 2011, EGCO holds 74.19% stake in Egcom Tara via ESCO. Under a 30-year agreement, Egcom Tara produces tap water according to Thai Industrial Standard (“TIS”) and supplies to the 3 water stations of the Provincial Waterworks Authority of Thailand (PWA), namely, Lak Muang Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station.

4.3 Eastern Water Resources Development and Management Public Company Limited (“East Water”)

As at December 31, 2011, EGCO holds 18.72% of shares in East Water which is responsible for developing and operating the main raw water pipe network in the Thailand Eastern Seaboard area covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad.


Page 25

Part 2 Risk Factors

26 | P a g e

Business Paid-up Share Capital

(Million Baht)

Ownership

Interest (%)

Cost Method(Million Baht)

Other Shareholders

(%)

Subsidiaries Khanom Electricity Generating Company Limited

IPP- Generating and Supplying electricity 4,850.00 99.99 4,850.00

EGCO Engineering & Service Company Limited

Engineering, Operation and Maintenance Services for Power Plants and Manufacturers

400.00 99.99 400.00

EGCO Cogeneration Company Limited

SPP- Generating and Supplying electricity 1,060.00 80.00 891.89 J-Power Holdings (Thailand) Company Limited

20.00

EGCO Green Energy Company Limited

Holding Company focusing on SPP using biomass as fuel

175.00 74.00 129.50 J-Power Holdings (Thailand) Company Limited

26.00

North Pole Investment Company Limited

Holding Company focusing on SPP using biomass as fuel in overseas

81.10 Million USD 100.00 11,678.21

Joint Ventures Gulf Electric Public Company

Limited

Holding Company focusing on IPP and SPP 13,784.35 50.00 6,672.77 J-Power Holdings (Thailand) Company Limited

50.00

BLCP Power Company Limited

IPP-Generating and Supplying electricity 12,010.00 50.00 10,433.60 Banpu Coal Power Limited 50.00

Conal Holdings Corporation Holding company focusing on power business in the Philippines

800 Million PESO

40.00 954.65 Alsons Consolidated Resources, Inc.

60.00

Nam Theun 2 Power Company Limited

IPP-Generating and Supplying electricity from hydro power plant in Laos

373.50 Million USD

35.00 5,569.94 1. EDF International 2. Lao Holding State Enterprise

40.00 25.00

Natural Energy Development Co., Ltd.

Development for the renewable energy projects 594.00 33.33 198.00 1. CLP Thailand Renewables Limited 2. Diamond Generating Asia, Limited

33.33 33.33

Quezon Power (Philippines) Limited Co.

IPP-Generating and Supplying electricity 207.64 Million PESO

26.00 4,833.29 1. Covanta Energy Corp. 2. InterGen N.V.

45.87 26.13

Others Eastern Water Resources Development and Management Public Company Limited

Development and Management for supplying raw water to the customers

1,663.73 18.72 2,071.10 Provincial Waterworks Authority 40.20

Part 2 Risk Factors

27 | P a g e

Business Paid-up Share Capital

(Million Baht)

Ownership

Interest (%)

Cost Method(Million Baht)

Other Shareholders

(%)

Xayaburi Power Company Limited Investment in generating electricity from a run-of-river dam in Laos

1,000.00 12.50 125.00 1. CH. Karnchang Public

Company Limited 2. Natee Synergy Company Limited 3. PT Construction & Irrigation Co., Ltd.

57.50 25.00 5.00

Part 2 Section 3 Operation of Business Line

Page 28

3.Operation of Business Line

Since EGCO is a holding company, it has no product. It recognizes revenue from profit sharing of investment in subsidiaries and joint ventures, as well as dividend income from other businesses. EGCO’s business lines comprise the electricity business, service business and water business.

1. Significant Events

As at December 31, 2011, EGCO Group operated 15 power plants with 4,419.99 MW equity.

The power sold to EGAT under a long term PPA was 3,864.19 MW which accounted for

12.29% of the national installed capacity of 31,446.71 MW. EGCO’s MW equity in 2011

increased from 2008 by 13.07 MW. Highlights of the events in 2009 were as follows:

1 January 4, 2011 and February 11, 2011, EGCO was awarded licenses for 2010 SPP

Cogeneration projects from EGAT in accordance with the resolution of the Energy

Regulatory Commission. The projects are TJ Cogen, TP Cogen and SK Cogen, which are

contracted with EGAT of 90 megawatt each.

2 March 1, 2011, EGCO acquired a 12.50% interest in Xayaburi Power Co., Ltd.

(“Xayaburi”) from CH.Karnchang PCL. Xayaburi plans to develop a 1,285 megawatt run-

of-river hydroelectric power plant on the Mekong River in Laos PDR. The COD is

currently scheduled for January 2019.

3 March 25, 2011, EGCO completed the acquisition of an additional 26.125% effective

interest in Quezon Power (Philippines) Ltd., Co., (“QPL”) bringing EGCO’s total

ownership interest in QPL to 52.125%. In addition, EGCO completed the acquisition of

100% of the outstanding shares of Covanta Philippines Operating Inc. (“CPOI”), the

entity which provides operation and maintenance services to Quezon power plant through

a long-term operation and maintenance agreement. Later on May 3, 2011, CPOI changed

its name to Pearl Energy Philippines Operating, Inc. (“PEPOI”).

4 March 29, 2011, EGCO Engineering and Service Co., Ltd., a subsidiary of EGCO signed

the operation and maintenance services agreement for a 110 megawatt SPP Cogeneration

power plant which is owned by Navanakorn Electric Co., Ltd. and Toyo-Thai Corporation

PCL.

5 April 1, 2011, OneEnergy Thailand Ltd. transferred all of its shares in EGCO to TEPDIA

Generating B.V., a joint venture vehicle owned by Tokyo Electric Power Co., and

Diamond Generating Asia, Ltd., a Mitsubishi Corporation’s subsidiary, on a 50:50 basis.

6 June 19, 2011, Khanom power plant Unit 1, a 75 megawatt barge-mounted power unit,

was permanently shut down due to the expiration of PPA.


Page 29

7 November 25, 2011, three SPP Cogeneration projects entered into the PPA with EGAT.

Details are as below:

7.1 TJ Cogen, a 125 megawatt SPP Cogeneration project located in Pathumthani

province, entered into the PPA to sell 90 megawatt to EGAT for a 25-year term

with the Scheduled Commercial Operation Date (“SCOD”) on June 1, 2017.

7.2 TP Cogen, a 125 megawatt SPP Cogeneration project located in Ratchaburi


with the SCOD on June 1, 2018.

7.3 SK Cogen, a 125 megawatt SPP Cogeneration project located in Ratchaburi


with the SCOD on June 1, 2019.

8 December 22, 2011, the Lopburi Solar power plant, a 73 DC / 55 AC megawatt thin film

photovoltaic solar farm in Lopburi province, owned by Natural Energy Development Co.,

Ltd., started supplying electricity under the first stage (the 11 DC / 8 AC megawatt) to

EGAT.

2. Electricity Business EGCO businesses can be divided into 4 groups namely Independent Power Producer (“IPP”) Group, Small Power Producer (“SPP”) Group, Oversea Power Producer Group and Other Business Group: This Group comprises 2 types of business that is maintenance and operation business and tap water business as the following details. 2.1 Power Energy 2.1.1 Nature of Product/Service

Electrical power is a clean processing power that is easy to use and to transform into other

types of energy. Electrical power is vital to business operations, whether it be industry,

agriculture, communication or tourism. To generate sufficient electrical energy to satisfy

demand is therefore important. The manufacturing of electricity in Thailand at present can

be divided into two categories:

1. Non-fuel electricity such as hydro power plants, and natural energy power plants

using inexhaustible sources of natural energy like solar power, wind power and geothermal

power.

2. Fuel-based electricity such as steam power plants, gas turbine power plants and

combined cycle power plants.


Page 30

A. Types of Power Plant

The types of power plant operated by the EGCO Group are:

1. A hydro power plant generates electricity by the use of force and water

compression to rotate water turbines.

A power plant under this category is the Nam Theun 2 Power Plant.

2. A thermal power plant produces electricity using heat derived from combustion.

The fuels used in this type of plant can be natural gas, coal, or fuel oil which generate heat

to water until it becomes high-pressure steam. This steam will force the electricity

generator to rotate, creating electricity. It takes several hours each time to operate such a

process from boiling the water in a kiln to starting up the power generator. Therefore, it is

suitable for use as a base load plant.

Power plants under this category are Khanom Power Plants 1 and 2, BLCP Power Plants 1

and 2, and Quezon.

3. A gas turbine power plant operates by combustion in a compression chamber

creating force to rotate the gas turbine machine to generate electricity. The fuels used are

those such as natural gas or diesel. This type of power plant operates in a rapid manner

suitable for use as a standby power plant to generate electricity when it is most needed

during the process.

The EGCO Group does not have this type of power plant.

4. A combined cycle power plant combines the use of a gas turbine machine and a

steam turbine machine by transporting heat from exhaust gases coming out from a hot gas

turbine machine to the boiler, then transferring the heat to water, boiling it, and turning it

into steam. This steam will later rotate the steam turbine attached to the shafts of the power

generator where electricity is produced.


Page 31

Power plants under this category are Rayong Power Plants 1-4, Khanom Combined Cycle

Power Plant 3, GPG Power Plants 1 and 2.

5. A diesel power plant is a thermal power plant using oil as fuel. This type of power

plant operates in the same manner as a car engine adopting the combustion principles of

diesel injected in the engine cylinder in which air is compressed to obtain high temperature.

This is called a compression stroke. In the meantime, injected diesel combusts with heat

and then explodes, forcing the pistons to move the crankshaft which is connected to the

engine shaft making it move the power generator where electricity is produced.

Power plants under this category are WMPC Power Plant and SPPC Power Plant in the

Republic of the Philippines.

6. A cogeneration power plant is a medium-size power plant producing both electrical

power and thermal energy at the same time. At the plant, primary energy is converted to

electrical power and the thermal energy which will become useful heat energy following

the same process according to thermodynamics.

Power plants of this type are EGCO Cogen Power Plant, GCC Power Plant, KNCC Power

Plant and SCC Power Plant.

7. A renewable energy power plant uses non-conventional energy such as wind

energy, solar power and mini hydro. It can also be agricultural waste or waste materials,

waste from agricultural or industrial product manufacturing, products made from

agricultural waste or waste materials, garbage, woods from reforestation for fuel. It can

also be waste fuel, for example, steam left from the manufacturing process of industrial,

agricultural products such as heat exhaust gases, or by-product energy such as dynamic

power which is a by product from reducing the pressure of natural gas.

Power plants under this type are Roi-et Green Power Plant where chaff is used as fuel, and

GYG Power Plant where lumber from rubber trees is used as fuel.


Page 32

IPP Group Electricity business which is considered the core business of the Company comprises the investment in IPP, SPP and the overseas investment. Tariff Rate Both companies used the same tariff formula which consists of the following:

a. Capacity payment (in case of REGCO) or availability payment (in case of KEGCO) is a payment, which EGAT pays REGCO and KEGCO on a monthly basis for maintaining the availability of the power plants, regardless of whether the electric power will be supplied to EGAT or not. The capacity payment or the availability payment (as the case may be) will cover financial cost of investment in the power plants, principal repayments and interest, fixed operating and maintenance expenses, administrative expenses, major maintenance cost and internal rate of return on EGCO’s equity.

b. Energy payment is the payment for the actual net electrical output. It covers the variable operating and maintenance expenses.

SPP Group

EGAT also encourages investors to invest in small power plants of which a portion of the generation will be sold to EGAT under the SPP programs. EGCO’s investment in this area comprises the following companies.

Tariff Rate EGAT applies the power tariff formula to the SPPs as follows:

o Capacity payment is based on the monthly contracted capacity and charged on each customer regardless of whether such customer actually buys electricity or not. However, the capacity payment applicable to EGAT is different from that applicable to customers in general. The capacity payment in case of EGAT is based on its long run avoided capacity cost due to its purchase of power from SPPs while that applicable to customers in general is calculated from contracted capacity that will vary to the tariff structure of Provincial Electricity Generating Authority (PEA).

o Energy payment is the actual measured quantity of electricity delivered. Energy

payment charged on EGAT will cover variable operating and maintenance cost while that applicable to customers in general will change according to the tariff structure of PEA.

Overseas Investment Group

Tariff Rate Power tariff to be charged from NPC is divided into four main components as below: - Capital recovery fee is the remuneration payable by NPC to SPPC on a monthly basis.

It covers financial cost of investment in the power plant.


Page 33

- Fixed operation and management fee is the remuneration payable by NPC to SPPC on a monthly basis. It covers fixed operating and maintenance expenses of the power plant.

- Infrastructure fee is the remuneration payable by NPC to SPPC on a monthly basis. It covers expenses on the transmission system owned by SPPC.

- Energy fee is the remuneration paid for the electricity actually delivered. It covers variable operating and maintenance expenses.

The tariff charged under the specified formula is calculated based on both the USD and the Peso. Unit 1 quotes the tariff in both the US Dollar and the Peso, while unit 2 in the German Mark and the Peso.

In addition to the PPA with EGAT, the Board of Investment also granted the tax privileges to all IPPs and SPP in the Group with significant information as follows:

Salient Privileges 1. Exemption of corporate income tax for net profit from promoted business for eight years

from the first date of income earnings. 2. Exemption of calculating dividend from the promoted business as taxable income

throughout the period of corporate income tax holiday. 3. Reduction of corporate income tax for net profit from investment by 50% of the normal

rate for five years from the date following the end of the corporate income tax holiday.

Conditions: Having shareholders who are Thai nationals holding shares in an aggregate amount of at

least 51% of the registered capital. Having registered capital of at least as indicated. Power plant locating in Rayong province for 15 years from the first date of operation.

Relocation to other areas shall not be made unless with the BoI’s prior approval. Tax privileges to all IPPs are details as follows.

Power Plant Date of Promotion

Granted

Promotion Certificate

Salient Privileges

Registered Capital of at

Least

Location

REGCO April 20, 1995 No. 1440/1995 dated June 15, 1995

December 7, 1994-December 6, 2002

Baht 4,700 million

Rayong Province

KEGCO September 26, 1996

No. 1742/1996 dated November 6, 1996

September 26, 1996-September 25, 2004

Baht 4,710 million

Nakorn Sri Thammarat Province

BLCP October 10, 1997

No. 1499/2000 dated August 21, 2000

October 1, 2006-September 30, 2014

Baht 12,000 million

Rayong Province

GPG June 28, 2005 No. 1660(2)/2005 dated July 25, 2005

November 3 2006-November 2, 2014

Baht 1,850 million and shall increase the registered capital of at least Baht 9,030 million

Saraburi Province


Page 34

Tax privileges to all SPPs are details as follows.


Granted


Salient Privileges


Least

Location

EGCO Gogen January 10, 2003

No. 1230/1999 dated June 7, 1999 and the revised version No. 5106/2000 (3-1230/1999 and 6753/2002) (4-1230/1999) dated May 31, 2000, October 3, 2002 and November 2002, respectively

January 10, 2003-January 9, 2011

Baht 1 million Rayong Province

Roi-Et Green April 25, 2003 No. 1660(1) 2001 dated October 19, 2001 and revised version No. 6871/2003 (2-1660 (1) 2001) dated November 7, 2003

April 25, 2003-April 24, 2011

Baht 180 million Roi-Et Province

GCC July 21, 1998 No. 1279/2540 dated May 2, 1997 and 3 revised versions - No. 4553/1999 (2-1279/1997) - No 6013/2542 (3-1279/1997) Dated December 2, 1999 - No. 5279/2000 (4-1279/1997) dated June 20, 2000

July 21, 1998-July 20, 2004

- Saraburi Province

NKCC June 1, 2000 No. 1594/1998 dated December 28, 1998 and a revised version, No. 4735/2001 (2-1594/1998) dated March 7, 2001

June 1, 2001-May 31, 2008

- Saraburi Province

SCC April 1, 1999 No. 1761/1998 dated December 15, 1998 and a revised version, No. 4100/2001 (2-1761/1998) dated January 17,

April 1, 1999-March 31, 2007

- Samutprakarn Province


Page 35


Granted


Salient Privileges


Least

Location

2001 GYG November 7,

2007 No. 1549(2)/2004 dated July 9, 2004

November 7, 2004-November 6, 2014

Baht 1 million Yala Province

NED March 10, 2010 No. 1443(1) 2553 dated April 12, 2010

The Project is during the construction.

Baht 1,990 million

Lopburi Province

2.1.2 Marketing and competition 1.1 Electricity generation and transmission system

EGAT is responsible for electricity generation and transmission to respond to demand countrywide. It has its own power plants for power generation and also purchases power supply from private producers, Laos and Malaysia. It then sells electricity to Metropolitan Electricity Authority (MEA), Provincial Electricity Authority (PEA), and other direct customers (some industrial plants designated by the Royal Decree). EGAT dispatchs electricity through high-voltage power stations. MEA and PEA will undertake the distribution and retailing to the general public. Electricity is purchased from EGAT at the interconnection point and then transmitted to substations for further distribution to consumers.

At present, EGAT has altogether 39 power plants scattering in many regions across the country. Most of EGAT’s plants are hydroelectric power plants and the second and the third are combined cycle power plants and thermal power plants, respectively. The combined installed capacity of the thermal power plants is the largest installed capacity.

Since 1992, the government has encouraged private sector to take part in electricity generating. The National Energy Policy Council approved the establishment of Electricity Generating Co., Ltd. (EGCO) and the regulations for the purchase of power from Small Power Producers (SPP) as well as policy regarding the purchase of power from Independent Power Producers (IPP). Power purchase from SPPs and IPPs helps provide the reduction of EGAT ’s investment burden in power generating facility.

1.2 Power purchase from SPPs

Electricity generated by SPPs is partially for its own use or for sale to nearby factories, and the remaining is sold to EGAT under the regulations for the purchase of power from SPPs. There is currently also purchase of power from projects using other forms of energy, i.e. residue or waste. The purchase agreements are of non-firm type, under which no volume and time of purchase is specified. The purchase of electricity depends on the consideration of EGAT’s threshold capability of power transmission and distribution systems.


Page 36

EGAT has regulation to purchase electricity from SPPs each at 60 MW, but that may be extended to as high as 90 MW. From the beginning of the regulation to purchase power from SPPs in 1992 fiscal year until December 2010, there were 87 producers approved by EGAT with a total contracted capacity of 4,712.92 MW. Of the total, 61 producers with 3,786.30 MW capacity have been contracted on a firm type basis (with power purchase agreement term of 5 years up and defined capacity), and the other 26 producers with 926.62 MW capacity on a non-firm type basis (no defined capacity). Of these 87 producers, 59 producers have already dispatched 2,479.92 MW electricity to the system (43 producers, with 2,182.30 MW, have firm contracts and 16 producers, with 297.62 MW, have non-firm contracts).

Firm Non - Firm Total

Power Plant MW Power Plant MW Power Plant MW

Already dispatched 43 2,182.30 16 297.62 59 2,479.92

Non dispatch 18 1,604.00 10 629.00 28 2,233.00

Total 61 3,786.30 26 926.62 87 4,712.92

1.3 Power purchase from IPPs

The seventh National Economic and Social Development Plan has allowed for the private sector’s investment in power generation under the IPP scheme. The IPPs can submit their own proposals thereby competition is encouraged in respect of technology, location, generation source, type of fuel used, and power tariff.

Currently, there are IPPs that has begun commercially dispatching electricity to the system :-

IPP Installed

capacity (MW)Fuel

1. Electricity Generating PCL. - Rayong Power Plant 1,174.99 natural gas - Khanom Electricity Generating Co.,Ltd. 818.10 heavy oil, natural gas

2. Ratchaburi Electricity Generating Co., Ltd. 3,481.00 heavy oil, natural gas

3. Independent Electricity Generating (Thailand) Co., Ltd.

700.00 natural gas

4. Tri Energy Co., Ltd 700.00 natural gas 5. Glow IPP Co., Ltd 713.00 natural gas


Page 37

IPP Installed capacity (MW)

Fuel

6. , Eastern Power Co., Ltd 350.00 natural gas 7. BLCP Power Co., Ltd. (EGCO investment 50%)

1,346.50 Coal

8. Gulf Power Generation Co., Ltd.(EGCO investment 50%) 1,468.00

natural gas

9. Ratchaburi Power Co., Ltd 1,400.00 natural gas Total 12,151.59

IPPs that has not commercially dispatch electricity to the system :- No. Company Fuel Type Capacity

( MW) Commercial Operating

Date (COD)

1 Gheco-One coal 660.00 Nov. 2011 2 Siam Energy natural gas 1,600.00 Mar. / Sept. 2013 3 National Power Supply coal 540.00 Nov. 2013/ Mar. 20144 Power Generation Supply natural gas 1,600.00 June / Dec. 2014

Total 4,400.00

1.4 Thailand’s total capacity

As of December 31, 2010, the total installed capacity of the Thailand’s power system accounted for 30,920.01 MW, coming from:

Power plant Installed

capacity (MW)Fuel

1. Total installed capacity of EGAT Plc. 14,998.12 heavy oil, natural gas, diesel, lignite

2. IPP 12,151.59 heavy oil, natural gas, coal

3. Small Power producers – Firm type 2,182.30 heavy oil, natural gas, coal

4. Foreign Country - Nam Theun – Hin Bun hydroelectric power plant

214.00/1 -

- Huay Hoh hydroelectric power plant 126.00/1 - - Thailand-Malaysia transmission lines 300.00 - - Nam Theun 2 Power Co., Ltd 948.00/1 -

Total installed capacity 30,920.01 Source: EGAT

Note /1 Capacity at the interconnection point 1.5 Total power demand

(1) Statistics of power demand


Page 38

Peak load demand is the maximum power required in the system during the day in each year, and electricity generation refers to total units of electricity generated in a certain period. Both values depend on weather condition, period of power consumption, number of consumers, economic condition, etc. The historical data of Peak load power demand and electricity generation are as follows:

Peak load demand Electricity generation

Fiscal year MW Increase Million

Increase

MW % units Million units

%

1988 5,444.00 710.10 15.00% 31,996.94 3,803.78 13.49%1989 6,232.70 788.70 14.49% 36,457.09 4,460.15 13.94%1990 7,093.70 861.00 13.81% 43,188.79 6,731.70 18.46%1991 8,045.00 951.30 13.41% 49,225.03 6,036.24 13.98%1992 8,876.90 831.90 10.34% 56,006.44 6,781.41 13.78%1993 9,730.00 853.10 9.61% 62,179.73 6,173.29 11.02%1994 10,708.80 978.80 10.06% 69,651.14 7,471.41 12.02%1995 12,267.90 1,559.10 14.56% 78,880.37 9,229.23 13.25%1996 13,310.90 1,043.00 8.50% 85,924.14 7,043.77 8.93%1997 14,506.30 1,195.40 8.98% 92,724.66 6,800.52 7.91%1998 14,179.90 -326.40 -2.25% 92,134.44 -590.22 -0.64%1999 13,712.40 -467.50 -3.30% 90,413.99 -1,720.45 -1.87%2000 14,918.30 1,205.90 8.79% 96,780.72 6,366.73 7.04%2001 16,126.40 1,208.10 8.10% 103,165.20 6,384.48 6.60%2002 16,681.10 554.70 3.44% 108,382.46 5,217.26 5.06%2003 18,121.40 1440.30 8.63% 116,669.98 8,280.70 7.64%2004 19,325.80 1,204.40 6.64% 127,756.41 11,086.43 10.22%2005 20,537.50 1,211.70 6.26% 134,893.25 9,097.85 5.58%2006 21,064.00 526.50 2.57% 142,112.18 7,218.93 5.35%2007 22,586.10 1,522.10 7.22% 146,884.92 4,722.74 3.35%2008 22,568.20 -17.90 -0.08% 148,435.98 1,551.60 1.05%2009 22,044.90 -523.30 -2.32% 145,214.62 -3,221.36 -2.17%2010 24,009.90 1,965.00 8.91% 160,138.47 14,924.91 10.28%

Source: EGAT

(2) Power demand forecast


Page 39

Power demand can be forecasted based on possession and power consumption of electrical appliances (end use). This requires a large amount of information, on macro-level, e.g., economic growth, population size, number of households, government’s principle in power, etc. and micro-level, e.g. power consumption to value added of small business and industries, type of residence, income level, consumption and efficiency of electrical appliances, applications for power consumption and investment promotional privileges, power consumption to facility service areas, temperature, etc.

Power demand is identified in two terms, i.e. energy demand and peak load demand. Forecast of energy demand takes into account the above information with mathematical models applied. Meanwhile, peak load demand forecast is figured out by considering the derived energy demand forecast together with nature of consumption by each user.

1.6 Dependable capacity

Dependable capacity refers to the maximum generating capacity sustained by the system in a period of time under circumscribed environment. Dependable capacity of hydroelectric power plants is the electricity generating capacity with reservoir water availability and past water supply statistics taken into account. Dependable capacity of thermal power plants is the electricity generating capacity when taking into account various circumstances and their constraints, which can hinder thermal plants’ achievement of their full electricity generating capacity.

1.7 Reserve margin

Reserve margins come from the event when dependable capacity is higher than peak load demand. In calculation term, it is the difference between dependable capacity and peak load demand divided by peak load demand, expressed in percentage. In general, EGAT will maintain the reserve margin at 15% to ensure adequate generating capacity.

The following table presents EGAT’s reserve margin during fiscal years of 1991-2010. During 1991-1997, the country’s power demand expanded rapidly thereby the reserve margin in the system falling below the level to be maintained by EGAT. In 1998, due to the economic meltdown and baht volatility, several businesses had to close down or suspend their production and expansion indefinitely. As such, domestic power demand consumption dropped sharply resulting in increase in reserve margins. To contain the excessive reserve margins, EGAT negotiated with SPPs and IPPs for their postponement of power plant construction for 1-4 years and revised the power generating capacity development plan by postponing the projects, which have not yet begun their construction and temporarily shut down some power plants (cold standby)

Fiscal year Reserve margins (%)

1992 14.00 1993 17.42 1994 15.08 1995 12.69 1996 17.54 1997 14.77


Page 40

1998 22.44 1999 34.46 2000 33.44 2001 35.64 2002 28.0 2003 35.1 2004 26.8 2005 19.9 2006 13.7 2007 21.9 2008 23.8 2009 22.4 2010 25.0

Source: EGAT

1.8 Thailand Power Development Plan (PDP)

Since December 2008, the electricity demand has decreased significantly due to depressed economic conditions. To portray a clear picture of power sector development, the Ministry of Energy has developed the new Power Development Plan (PDP 2010) and designated as a “Green PDP” which highlights on greenhouse gas emission reduction, promotions of efficient energy utilization and electricity generation through cogeneration system. Not only did it corporate power purchase projects from domestic producers and neighboring countries that were approved by the Cabinet but also power generation from renewable energy as indicated in the Alternative Energy Development Plan (AEDP) 2008–2022. Besides, opinions and comments obtained from the public hearing of PDP 2007 Revision 2 were taken into account. Therefore, the new PDP will be a complete guideline for power system development that encourages generation from renewable energy and lessens greenhouse gas emission, and thus a balance of generation resources. Thailand Power Development Plan 2010–2030 (PDP 2010) has been developed within the following frameworks:

1. Extend the planning horizon from 15 years to 20 years (2010-2030)

2. Revise Thailand’s Load Forecast based on NESDB’s long term economic growth

3. Analyze and integrate the effects of DSM projects in both the load forecast and

the generation expansion planning

4. Combine the re-estimated amount of power purchase from renewable energy

regarding AEDP 2008–2022 into the plan

5. Review the amount of power purchase from SPPs in 2009-2015 and further

regarding the NEPC’s resolution on 24 August 2009 to promote power

production by cogeneration system

6. Reconsider power import from neighboring countries and identify only

promising projects

7. Lower greenhouse gas emission


Page 41

PDP 2010 was approved by NEPC and endorsed by the Cabinet on 12 March 2010

and 23 March 2010, respectively.

2. Power Industry in Central Region

The central region of EGAT system, covering 22 provinces in four main areas: 1) Bangkok outskirts and nearby provinces 2) Eastern area 3) Western area 4) Lower central area

At present, the generating capacity of the central region derives from EGAT’s power plants and other large private producers that EGAT has purchased electricity from. Besides, there is supplementary capacity from North Bangkok power plant and transmission facilities from the northern region. As of December 31, 2010, the generating capacity of the Central region is 22,143.12 MW, consisting of:

Total generating capacity of EGAT 8,788.13 MW Rayong Electricity Company Limited (REGCO) 1,174.99 MW Ratchaburi Electricity Generating Plc. 3,481.00 MW Tri Energy Co., Ltd. 700.00 MW Independent Electricity Generating (Thailand) Co., Ltd 700.00 MW Glow IPP Co., Ltd. (Bowin) 713.00 MW Eastern Power Co., Ltd. 350.00 MW BLCP Power Co., Ltd 1,346.50 MW Gulf Power Generation Co.,Ltd 1,468.00 MW Ratchaburi Power Co., Ltd 1,400.00 MW Small Power producers 2,021.50 MW Total power generating capacity 22,143.12 MW

3. Power Industry in Southern Region

Power generating capacity in the southern region comes principally from EGAT’s power plants, KEGCO and transmission network connecting to the central region. There is also supplementary capacity during peak period from Bang Lang and Ratchaprapa hydroelectric plants. In addition, the southern power network also links with that of Malaysia to allow for their power exchange in case of emergency or necessity.

Power generating capacity in the south as of December 31, 2010 was 2,485.58 MW:


Page 42

Total generating capacity of EGAT 1,338.48 MW Thai-Malaysian transmission networks 300.00 MW KEGCO 818.10 MW Small Power producers 29.00 MW Total power generating capacity 2,485.58 MW

4. Competition

4.1 EGCO’s market share compared with competitors’

As of December, 31 2010, EGCO has 14 operating plants with capacity totaling 4,361.08 equity MW, of which 3,931.43 equity MW is dispatched to EGAT under long-term PPAs. This 3,931.43 equity MW represents 12.71% of Thailand’s total installed capacity.

Power Plant Portion of investment

Install Capacity

Capacity dispatched to

EGAT (MW)

% of Capacity

dispatched to EGAT

(MW)

IPP

1. Rayong Power Plant 100% 1,232.00 1,174.99 29.89%

2. Khanom Electricity Generating Co., Ltd.

100% 824.00 818.10 20.81%

3. BLCP Power Co., Ltd.

50.0% 717.00 673.25 17.12%

4. Gulf Power Generation Co., Ltd. 50.0% 755.00 734.00 18.67%

3,528.00 3,400.34 86.50%

SPP

5. EGCO Cogeneration Co., Ltd. 80.0% 93.60 48.00 1.22%

6. Roi-Et Green Co., Ltd. 70.0% 7.00 6.19 0.16%

7. Gulf Cogeneration Co., Ltd. 50.0% 55.00 45.00 1.14%

8. Samutprakarn Cogeneration Co., Ltd.

50.0% 63.00 45.00 1.14%

9. Nong Khae Cogeneration Co., Ltd.

50.0% 63.00 45.00 1.14%

10. Gulf Yala Green Co., Ltd. 50.0% 11.50 10.10 0.26%

293.10 199.29 5.07%

Foreign Country

11. Nam Theun 2 Power Co., Ltd. 35.0% 380.40 331.80 8.43 %


Page 43

12. Quezon Power (Philippines) Limited Co.

26.0% 130.65 - -

13. Western Mindanao Corporation 17.6% 19.29 - -

14. Southern Philippines Power Corporation

17.6% 9.64 - -

539.98 331.80 8.43 %

Total 4,361.08 3,931.43 100.00%

4.2 Competition situation

As a prototype privatization, EGCO has enjoyed several privileges initiated to encourage the private sector’s participation which makes EGCO to be at advantage in view of the following

1. EGCO is creditable among the financial source and investors. 2. EGCO’s personnel are transferred from EGAT , which is the country’s sole source

of personnel in power industry, thus contributing to efficient operations. Its rivals, which are just set up, on the contrary, need to recruit personnel that may have no enough expertise or be costly or take time for training.

4.3 Opportunity of new entrants At present, there may be new entrepreneurs, especially the international power company, entering this industry. However, there are several obstacles due to the following:

1. Investment capital restriction: Since power plant construction is capital

intensive, the New entrants must have a very strong financial position. 2. Human resource restriction: Personnel with expertise in this area are scarce, so

recruitment is difficult and costly.

It is noted that some strong international power companies has entered the Thailand’s power industry. EGCO has prepared the plan to enhance its competitiveness by sharpening the skills and knowledge of its personnel, studying the domestic and overseas market analysis, and conducting the strengths, weaknesses, opportunities and threats of EGCO in order to set up the appropriate strategic plan to maintain its leadership and investment opportunities in the market which will add value to shareholders and other stakeholders.

2.1.3 Process

The Company has the policy to supply electricity or to provide related services with high quality. The Company will honor its promise to the customers and will continue to operate its business safely with environmental friendliness. In this regard, the description of the service of REGCO and KEGCO, the major power plants in EGCO Group, is provided as an example.


Page 44

Capacity, Net Generation and capacity Factor

The capacity, net generation and capacity factor of REGCO and KEGCO during 2006-2008 is as shown below:

units 2010 2009 2008

REGCO

Available capacity/1 million KW/hour

9,460 9,743 9,304

Dispatching net generation/3

million KW/hour

4,783 2,952 2,248

Capacity Factor(%) % 49.36 30.30 24.17

Increasing rate of capacity factor (%)

% +19.06 +31.32 -42.26

KEGCO


6,880 6,880 6,486


million KW/hour

5,655 5,643 5,577

Capacity Factor (%) % 90.97 89.13 86.98


% +1.84 +2.15 -1.44

BLCP


10,288.61 10,308.80 10,776.04


million KW/hour

10,035.79 10,018.13 10,174.59

Capacity Factor (%) % 97.54 97.18 94.42


% 0.18 -1.53 4.65

GPG


11,275.71 11,541.42 11,152.40


million KW/hour

9,857.32 9,329.09 8,960.32

Capacity Factor (%) % 87.42 80.83 80.34


% 5.66 4.11 155.86


Page 45

Notes /1 Available capacity of each plant in each year is calculated from the total number of hours deducted by the

number of hours of planned maintenance outage. 2. Dispatching net generation in each year depends on the generating availability of the plant and the order from the control center of EGAT based on the electricity requirement at each period of time. In this regard, REGCO operate the power plant for 24 hours a day with 4 shifts of 16 operators each for 4 blocks of combined cycle plant. KEGCO run the power plants throughout 24 hours a day with 5 shifts of operators. Three operators are required for each shift of the thermal power plant while 4 are required for combined cycle plants.

3. In 2006-2007, it was the testing period for operating GPG power plant, unit 1, and GPG received the commission fuel payment, which was the compensation for the fuel used during the testing period. The commercial operation date for unit 1 and unit 2 was on May 5, 2007 and March 1, 2008 respectively.

Raw Material Major raw material for power generation is fuel. Besides natural gas and heavy oil which are primary fuels and diesel oil which is secondary fuel, other raw materials required for the generating process are water and chemicals, e.g. water treatment agent, fuel additive, etc., as can be summarized as follows: (1) Natural gas

Natural gas is a primary fuel used for both thermal and combined cycle plants. Under the PPAs, EGAT will initially procure natural gas for REGCO and KEGCO, the payment for which shall be made by EGAT directly to Petroleum Authority of Thailand (“PTT”). The heat rate in the power generation must not exceed that specified under the PPAs. In case the actual heat rate is higher, both companies have to bear the increase in the natural gas cost. Once they directly enter into fuel supply agreements with PTT, they would be responsible for the payment for the natural gas and pass it on to EGAT through the calculation formula of energy payment.

(2) Heavy oil

The Khanom power plant uses heavy oil as primary fuel like natural gas for its Barges 1 and 2 power plants. However, it will be used only when natural gas supply is insufficient. The plant reserves heavy oil for serving 7 days of full generation.

(3) Diesel oil

Diesel oil is reserved to cope with primary oil shortage and for use in case of machinery test-run and for operation after repair & maintenance. According to the PPAs, REGCO and KEGCO have to make available diesel oil reserve to serve 3 days of full generation. Both companies will operate the facility with the use of diesel oil only upon the instruction of EGAT.

(4) Water


Page 46

Apart from the water purchase from East Water Resources Development and Management Plc., Dok Krai reservoir in Amphur Pluak Daeng of Rayong, a reservoir covering an area of around 50 rai with a 0.2 million m3 capacity was constructed in the company’s premises for emergency use and can sustain a water reserve for about seven days. Moreover, REGCO has a tap water unit that can produce tap water of up to 43,200 cu.m3 a day. The water supply is required by the boilers and the cooling system of the power generation process.

For KEGCO, the water used in the thermal plant comes from Ban Klang canal as the primary source and Tha Tok canal as the secondary source. A reservoir has also been built to accommodate water reserve of 0.4 million m3 on an area of 85 rai 56 sq.wah. along the Ban Klang canal, 9-10 km. far from the power plant, which can well cope with water shortage during the dry season. KEGCO is constructing another reservoir with the capacity of 0.4 million m3 which is about 6 kilometer far from the plant. BLCP purchases the water from the Industrial Estate Authority of Thailand (“IEAT”) with the water reserve for using in the power plant compound for 3 days. Moreover, BLCP has the desalination plant as the back up source to use in case that IEAT cannot deliver the water to the power plant. For PGP, the water used in the power plant comes from Pasak River as the primary source. A reservoir has also been built to accommodate water reserve of 1.3 million m3 on an area of 120 rai 56 and can sustain a water reserve for about 30 days. Moreover, REGCO has a tap water unit that can produce tap water of up to 54,413 cu.m3 a day.

(5) Chemicals Most chemicals used in power plants are for improving water quality, such as, hydrazene for boilers, and hydrochloric acid (HCL), sulfuric acid (H2SO4) and sodium hydroxide (NaOH) for use in regenerating resin and treating waste water, as well as kaolin and ferric chloride for tap water system. All these chemicals can be procured locally. 3.2 Service Business EGCO Engineering & Service Company Limited (“ESCO”) ESCO is EGCO’s wholly owned subsidiary which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries including the Group companies. 3.2.1 Service Power Plant Operation and Maintenance Services (O&M) ESCO aims to provide comprehensive operation and maintenance services with high efficiency, i.e., high equivalent availability factor and low heat rate with reasonable O&M cost. ESCO has extensive experiences to provide a full scope services to both thermal and combined cycle plants Maintenance Services


Page 47

With the strong and competent workforce, ESCO can provide a variety of professional maintenance services for power, petrochemical and oil & gas industries which covers the following areas:

Planned Outage maintenance Contract maintenance services Individual equipment maintenance Field service and emergency troubleshooting

ESCO has extensive expertise in mechanical maintenance, electrical maintenance, and control and instruments maintenance services and can be on called on 24-hour basis. Engineering & Construction Services ESCO has a qualified team of engineer to provide services on civil, mechanical, electrical and control and the testing and installation. The particular strength lies in erection and commissioning of power plant main system such as gas turbine, steam turbine, generator, HRSG, boiler and balance of plant. ESCO services also cover turn key of small to medium projects such as pumping stations and power distribution substations. In addition, ESCO also provides service on demand side management, technical and field testing and technical training. 3.2.2 Market and Competition ESCO has the highest market shares of around 90% for the SPP maintenance segment. This was because the power plant maintenance work requires high expertise as the equipment is of high price. The players in this market then are EGAT, OEM and ESCO. With the customers’ trust in ESCO services, ESCO could attract and retain both existing and new customers who tend to be more interested in entering into a long term contract. For other maintenance work such as that of the industrial and petrochemical plants, ESCO still has to compete with other service providers. However, the market share is increasing. With regard to the O&M service, the market is still limited as most private power producers still prefer to use their own workforce. For the engineering and construction, ESCO is competitive in term of financing apart from the qualified workforce.

3.3 Water Business Egcom Tara Company Limited (“ET”) EGCO holds an indirect 74.19% stake in ET via ESCO. Under a 30-year agreement, ET produces tap water according to Thai Industrial Standard (“TIS”) and supplies it to the three water stations of the Provincial Waterworks Authority of Thailand (PWA), namely, Pak Tor Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station. 3.3.1 Product and Service


Page 48

ET supplies tap water that meets the industrial standard to the PWA to replace the usage of well water which may result in the mud slide. ET has supplied tap water to the waterworks office in Ratchaburi and Samut Songkhram provinces under the 30-year water purchase agreement with the combined capacity of 36,000 cubic metres per day starting from April 7, 2001. ET enjoys the BOI privileges with significant conditions as follows 1. Permission to use the foreign labor with expertise in the business as agreed by the BOI, 2. Exemption of import duty on machinery as approved by the BOI, 3. Exemption of corporate income tax for net profit from promoted business for eight years

from the first date of income earnings, 4. Exemption of calculating dividend from the promoted business as taxable income

throughout the period of corporate income tax holiday. 5. Permission to transfer the money in foreign currency out of the country. 3.3.2 Market and Competition Since ET supplies tap water to the PWA under the 30-year contract, there is no competition. ET focuses on maintaining the quality of water that meets the standard which was certified by TIS and the Health Department, Ministry of Health as drinkable tap water. In addition, ET commits to ensure that its production is environmental friendly without any pollution. Due to its contribution to maintain a good working environment, it also wins the award on “Distinguished Workplace” from the Health Department. 3.3.3 Process Raw material used to produce tap water is the water from Mae Klong Rivier which incurs no cost. The production process is summarized below. Raw water pumpting from Mae Klong River, Chemical addition, Sedimentation, Filtration, Chorination, Storage in clear water tank, Transport to PWA, ready for distribution.

Apart from ET, EGCO also holds shares in Eastern Water Resources Development and Management Public Company Limited (“East Water”). At the end of February 8 2010, EGCO holds 18.72% of shares in East Water which is responsible for supplying raw water in the Eastern Seaboard of Thailand covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad. 3.4 Environment Impact EGCO has the policy to conduct our business with commitment in compliance with relevant environmental laws and regulations including the rules and regulations of the local government such as a municipal authority, a tambon administration authority, etc. In case that no enforceable law exists, EGCO will apply appropriate standards with responsibilities by; Encouraging employees to have strong concern and be responsible for the clean

environment,


Page 49

Communicating with the public on environmental matters, share its experience with other agencies to facilitate environmental improvements in industry performance, knowledge and operating practices,

Managing our business with the goal to alleviate the adverse effects on the environment, undertake appropriate reviews and evaluations of its performance to measure and to ensure compliance with this environmental policy.

Safety, Occupational Health and Environment To align our efforts and to extend our scope of responsibility to cover future power plants, EGCO has included the projects on safety, health and environment in the strategic plan and budget. With respect to this, the Safety, Health and Environment (SHE) Committee, has been shored up comprising representatives from Group companies. The responsibilities of the SHE Committee are to prepare the action plan on SHE implementation in alignment with the corporate policy and goals as well as the strategic plan and to monitor and appraise the quality of SHE program. At present, the Executive Vice President- Project Management from Asset Management and Planning Group is the Chairman of the Committee EGCO group considers SHE management as an essential part of our business to deliver our commitment of “constantly adopting the best practices to continuously increase the competitiveness and being sensitive to community and environment concerns”. In this regard, the SHE Committee has set the EGCO Group’s SHE guidelines. In 2008, the SHE Committee had cascaded the practice to EGCOM Tara, a subsidiary that supplies tap water that meets the industrial standard to the Provincial Waterworks Authority. SHE Committee’s Working Process The SHE Committee has established the EGCO Group’s SHE guidelines and cascaded the practices down to EGCOM Tara, a subsidiary supplying tap water that meets the industrial standard to the Provincial Waterworks Authority. The crucial principle of safety, occupational health and environmental management is developed on the ‘knowledge and expertise sharing’ basis in order to pass on experience, knowledge and skills to ensure standard practice across the board. The SHE Committee monitors and assesses the working practices using EGCO’s assessment criteria with Khanom and Rayong power plant being admired as the role models.

In addition, the SHE Committee has developed the SHE Management System Database which is used for knowledge sharing on SHE policies and practices among Group companies. Participations and feed backs from the Group companies are welcome of which the information will be used for continuous improvement. With a commitment to ensure that our SHE management system meet the international standard, EGCO continues to study the best practices and relevant laws and standards in order to update our SHE guidelines. Safety and Occupational Health Management As mention above, EGCO Group, which operates in the energy sector, put our priority on the SHE management to ensure the compliance with the international standards. Our SHE management covers not only our employees but also our partners and all relevant parties. With


Page 50

this in mind, we set a policy that contractors must attend the SHE training and testing under OHSAS 18001/TIS 18001 before discharging their duties.

EGCO Group realizes that preparation is the key success factor for safety management. Consequently, risk management principles are applied to prepare all relevant units for any unexpected incidents. Annual fire drills, regular check-up of workplace safety, safety equipment trainings are carried out regularly. In addition, work place safety exhibitions are organized to promote understanding on SHE management system to employees and contractors alike. Highlights of activities to promote the SHE consciousness in the year 2009 are as follows.

Safety Projects in 2010

- Suggestion system for workplace improvement campaign at Khanom power plant - ZERO Accident Campaign at Khanom power plant - Safety exhibition in collaboration with governments units to provide knowledge to

students, private and government organizations, and the general public at Khanom power plant.

- Project to reduce accidents at work at Roi-Et Green power plant. - Project to encourage employees to wear full safety gear while working at Roi-Et Green

power plant

Occupational Health Projects in 2010 EGCO Group believes that the healthiness of the employees reflect the healthiness of the organization. In this regard, EGCO takes care that all of our employees are in good shape. Apart from such campaign, EGCO Group also ran the following occupational health projects in 2010.

- Annual physical check-up for employees - First-aid training for the employees - Employees’ physical exercise for weight loss to promote physical fitness by providing

facilities for daily exercise, supporting the budget to the Sport Club to run sport programs for employees and regularly host sport events for employees.

- Sport campaign with private and government units including local communities. - Health and life insurance for employees and their families.

Safety Records With the commitment to high standard of SHE management, there is no labor dispute between EGCO and the employees. In addition, there is no event that leads to loss time injury in 2010. The accumulated safety hours of each company is shown below.

Power plants Working hours

Period

Rayong power plant 3,790,607.16 11 September 1999 to 31 December 2009Khanom power plant 5,000,520 17 May 1998 to 31 December 2009

EGCO COGEN power plant 521,632 28 January 2003 to 31 December 2009Roi-Et Green power plant 954,160 29 May 2003 to 31 December 2009

Energy Management EGCO Group puts high priority on efficient energy usage by running energy saving campaign which includes introducing energy efficient facilities, maintaining all equipment in a ready to


Page 51

use stage and studying and developing the energy management system to meet the international standard. Moreover, we promote the culture of sustainable energy use. In this regard, Khanom power plant converted one of the existing buildings to be the demonstration center for energy conservation powered by solar energy. This building is open as a learning center for renewable energy usage for employees, students, and the general public. Roi-Et Green has set the measure to clean the boiler heating surface during the planned outage 4 times a year. Since Roi-Et Green is a biomass power plant using rice husk as fuel, there is slag in the boiler tubes. As such, the oxygen level in the exhausted gas and the boiler blow down rate is adjusted down to maintain the boiler efficiency which results in a better heat rate. Environmental Management With the awareness that natural resources are major source for power generation, EGCO Group put the prime focus on efficient use of natural resources and see to that the impacts on the environment are well managed to reduce the impact from our operation. Such environment management includes water resource management, water treatment from production process, air pollution management, noise pollution management, waste management, green house gas management, and biodiversity management. Water resource management and Water treatment from production process EGCO Group supports the efficient use of water resource. Apart from reducing the water usage, we also adopt new technology in water treatment using sediment forming catalyst to treat waste water from office building and implement a neutralization system to treat chemical contaminated water from the operation process. In parallel, EGCO Group adheres to the water management plan.

Construction of reservoirs to reserve water for power generation process - Khanom power plant has constructed two water reservoirs with the capacity of

400,000 cubic meters and internal reservoir with the capacity of 35,000 cubic meters. KEGCO has set the water level above the check dam so that it can pump in water without disturbing the water consumption of communities around the reservoir and above the check dam.

Using treated water for fish farming or plant watering - Khanom power plant has run the Zero Discharge Program to re-use waste water

from office buildings, power plant and employees’ residences to water the plants. - Rayong, EGCO COGEN and Roi-Et power plants used the waste water from

office buildings for watering plants. This helps cut 30% of the water consumption.

The monthly monitoring of water quality was carried out to ensure that the waste water is treated to the level that meets the standard before being discharged to reduce the impact on the water resources. In addition, regular monitoring of the ecological system is conducted.

Quarterly monitoring of the water treatment system to ensure efficient treatment - Khanom power plant implements the grease and chemical trap in the water

drainage system to increase the efficiency of separating oil from discharged water.


Page 52

The tables below demonstrate water consumption of raw water and waste water during the last three years.

A. Water consumption Raw water consumption (M3/GWh)

2010 2009 2008 Remarks

Rayong power plant 1260.04 1,268.28 1,248.16

Khanom power plant 82.40 88.33 88.112

ECGO COGEN power plant 1,775.73 1,426.45 1,500.05

Roi-Et Green power plant 4,766.33 4,675.74 4,885.75 B. Temperature of cooling water of the discharge

Temperature of cooling water of the discharge

2010 2009 2008 Remarks

Rayong power plant 29.8 29.5 33.4

Legal requirement <= 40.00 C


ECGO COGEN power plant 36.0 34.1 34.1

Roi-ET Green power plant 28.63 28.38 25.04 Air Pollution Management With the efficient monitoring of the power generation process, the quality of air emission of all power plants in EGCO Group is better than the legal requirements. EGCO Group has also implemented continuous air quality control measures as follows:

Bi-annual cross-checking of stack emission measuring. Checking of efficiency of air pollution control treatment equipment on a quarterly

basis. Enhancing of air quality management as follows:

- Rayong power plant reduced Nitrogen Oxide emission by spraying water into the combustion chamber.

- Khanom power plant constructed a sandblasting room using Uncentrator and cartridge to control the dust from the sandblasting process in order to maintain a good working environment and control the air pollution in the nearby area.

- Roi-Et Green power plant, a biomass power plant using rice husk as fuel, installed an electrostatic precipitator to trap flying ash in the fuel to be kept in the ash silo before being transported by a truck with full cover and water spray to prevent dusting. Ash is transported via conveyor belt to the storage for future distribution to farmers in nearby areas to be used as fertilizers.

The table below demonstrates air emission from EGCO Group during the last 3

years.


Page 53

Air emission from power plants Oxide Nitrogen Emission

2010 2009 2008 หมายเหตุ Remarks

Rayong power plant 131.11 147.37 149.79

Legal requirements <= 200.00 ppm


EGCO COGEN power plant 71.8 92.3 58.9

Roi-Et Green power plant 4.2 26.71 117.41 Sulfur dioxide (ppm) <1.0 12.46 45.63 Legal requirements

<= 60.00 ppm Remarks: The measurement of SO2 is not required for REGCO, KEGCO and EGCO COGEN power plants due to the use of natural gas as fuel. * Roi-Et Green applied the old measurement criteria, of which the results cannot be comparable to the new measurement criteria in 2008.

Noise Management Noise measurement is made at all power plants in EGCO Group on a quarterly basis. The measurement is made at three areas being the original source in the power plants, the control room and the boundary. It is found that the noise level at the control room and the boundary areas are within the limit while the noise at the source will be controlled to be within the limit. For example, employees who have to work in the operation area are required by internal regulation to strictly follow the regulations and wear safety gadgets in order to reduce the noise level. Warning signs are also displayed at the area.

In addition, KEGCO has increased the noise measurement at the residential area in the power plant campus to ensure the safety and occupational health of the employees. The result indicated that the noise level is within the limit.

The table below demonstrates noise emission during the last 3 years.

Noise emission from power plants

2010 2009 2008Remarks

Noise level at the production site Legal requirement <= 90 dB(A)

Rayong power plant 69.5 79.1 81.3Khanom power plant 102.3 101.4 130.7EGCO COGEN power plant 83.7 89.9 88.2Roi-Et Green limited power plant 90.5 90.1 89.6

(dB(A)) Noise level at the control room Legal requirement <= 80 dB(A)

Rayong power plant 62.1 62.6 62.8 Khanom power plant 69.8 69.7 68.8

EGCO COGEN power plant 59.2 60.8 65.5 Roi-Et Green limited power plant 67.6 66.4 NA* * In 2006 and 2007, noise level which was below 80 DB(A) was not calculated for cumulative noise levels at


Page 54

work. Noise level at the boundary area (dB(A))

2010 2009 2008Legal requirement <= 70 dB(A)

REGCO power plant

48.7 53.2 50.9 Checked at a Security Kiosk

KEGCO 57.8 57.3 56.3EGCO COGEN power plant 69.3 63.4 64.3Roi-Et Green limited power plant 60.1 60.5 NA Unchecked

Waste Management With the commitment to make the best use of natural resources, EGCO Group set the procedure for waste management under the following principles.

Employees must bear in mind to produce as minimum waste as possible and to recycle waste.

o Khanom power plant organized project to produce organic instead of chemical fertilizers.

o Roi-Et Green power plant has used ash from rice husk which is the by product from the combustion process as fertilizers. Such knowledge is introduced to local villagers to replace the usage of chemical fertilizers with the environmental friendly one.

Appropriate waste management procedures are set up starting from separation, transportation and disposal.

Advisors will be engaged to manage contaminated and hazardous waste which may affect the environment to comply with the environmental laws.

Greenhouse gases and biodiversity management With the awareness that climate change will significantly affect ecological and natural systems, we at EGCO are determined to alleviate this problem by establishing a long term plan for greenhouse gas and biodiversity management together with the following projects.

Rayong Power Plant’s Green Belt 2006-2010

Rayong Power Plant has started the project to increase the greenbelt around the power plant to absorb as much as possible the carbon dioxide emitted from the electricity generation process. The project started in 2006 with the objective to expand the green zone to cover 120 rai within 2010. In the year 2009, Rayong power plant in collaboration with locals planted trees for 45 rai. Until now, there have been 90 rai of green zone.

Assessing species diversity and abundance of plankton and Benthic animals Project KEGCO has bi-annually assessed the species diversity and abundance of Plankton and Benthic animals at Khanom Gulf and Khanom River. It is found that the diversity and abundance were not directly impacted by the water discharged from the power plant but were up to the environment of the Khanom canal such as the chemical and physical conditions, light, nutrients, water discharge from households and development for community use.

Sustainable forest Project at Khaonom Power Plant


Page 55

In collaboration with local units at Khanom district, Khanom power plant has managed to grow mangrove trees in the area of 20 rai. This also encourages the local to set up conservation group to take care of natural pond, and local natural water sources including landscape improvement by increasing green area for community.

Bring life to the water project, KEGCO Khanom Power Plant raised 5,000 sea basses in baskets at its cooling water discharge twice a year until they are large enough to be released to the sea. This project is intended to be a showcase of good environment management in the power plant. At the same time, the project helps increase the population of sea basses in the Khanom area.

Improvement of the mountainous landscape by KEGCO Recognizing the duty to contribute to the society as well as seeing the importance of local plants, Khanom power plant has initiated the project to improve the landscape of the mountains by planting trees that represent 14 provinces in the south in the park at the foot of the mountain. Apart from being the resting and recreational area for employees and the general public, this park also provides knowledge about local plants to the community.

Banana Conservation Project at KEGCO In order to conserve the different kinds of banana and increase soil humidity in the foot of the mountain and the grass field, KEGCO has arranged a project to conserve different kinds of bananas. More than 200 banana trees were planted. The project sign to show the project name and the banana tree names are provided to provide knowledge for employees and local community.

Compliance with Environment Laws and Regulations EGCO Group has the policy to conduct our business with commitment to strictly complying with relevant environmental laws and regulations. We will also try to go beyond the legal requirement. For new project, we will adopt the EGCO’s SHE standard which will be in line with the local requirement of such project.

Safety, Occupational Health and Environmental Operation Efficiency With continuous effort in ensuring efficient SHE implementation, EGCO Group power plants are well recognized by various institutions as shown below:

Khanom Power Plant - 11 consecutive years of winning the award on outstanding organization for

national safety, occupational health and environment at work place award. Rayong power plant

- Participating in the project of Corporate Social Responsibility – Department of Industrial Work. (CSR-DIW)

Roi-Et Green - “National Safety Awards for the first year, at the 24th National Work Safety

Week by Ministry of Labor.

4. Undelivered work There is one project namely the Solar Power Plant Project, the Natural Energy Development Co., Ltd. (“NED”)’s project, located in Lopburi province, which is currently under development with the project’s COD target for November 2011.

Part 2 Section 4 Research and Development

Page 56

4. Research and Development


Part 2 Section 5 Operational Assets

Page 57

5. Operational Assets

5.1 Fixed Assets

The fixed assets of the company and subsidiaries as at December 31, 2011 comprise the following items.

Items Value/1

(Million Baht)

1. Land and Building

Less Accumulated Depreciation

Total

5,539.28 (2,770.09)

2,769.19

2. Power Plant and Transmission System


Total

36,103.55 (26,000.28)

10,103.27

3. Office Equipment and Cars


Total

583.53 (444.41)

139.12

4. Work under construction 11.00

Remark : /1 The number was shown in EGCO Group’s consolidated financial statement . EGCO Group has recorded interest from joint ventures in the financial statement. Therefore, the values of land, buildings and pledged of joint ventures were not shown in the financial statement.

Subsidiaries EGCO Cogeneration Co., Ltd. has mortgaged land and buildings to secure its long-term loan worth USD 27 million and Baht 1,182 million. Roi-Et Green Co., Ltd. has mortgaged land and buildings and pledged power plant equipment to secure its long-term loan worth JPY 1,260 million.

Joint Ventures

BLCP Power Co., Ltd. (“BLCP”) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 558 million and Baht 25,063 million.

Gulf Power Generation Co., Ltd. (“GPG”) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 323 million and Baht 16,388 million.

GCC, Nong Khae Cogeneration Co. Ltd. (“NKCC”) and SCC have mortgaged their land and buildings and pledged all power plant machinery and equipment including parts of their ordinary shares to secure its loan worth baht 5,800 million.


Page 58

Gulf Yala Green Co., Ltd (GYG) has mortgaged land and buildings and pledged all power plant machinery and equipment to secure its long-term loans worth USD 23 million and USD 645 million.

Southern Philippines Power Corporation (SPPC) has mortgaged land and buildings and pledged equipment to secure its long-term loan worth USD 12 million.

Western Mindanao Power Corporation (WMPC) has mortgaged land and building and pledged equipment to secure its long-term loans worth USD 20 million.

Nam Theun 2 Power Co., Ltd. (NTPC) has mortgaged company’s assets to secure its long-term loans worth USD 500 million and Baht 20,000 million.

Quezon Power (Philippines), Limited Co. (QPL) has mortgaged company’s assets to secure its long-term loans worth USD 758.7 million.

Natural Energy Development Co., Ltd. (NED) has mortgaged company’s assets to secure its long-term loans worth Baht 5,216 million.

5.2 Intangible Assets

- Concessions (Power Purchase Agreement and Water Supply Agreement)

Right in long-term power and tap water purchase represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertaking or joint ventures at the date of acquisition. The EGCO Group expected to receive benefits and bonus from the subsidiaries in return. Hence, right in long-term power and tap water purchase is amortized using the straight-line method over its estimated useful life. Management determines the estimated useful life of long-term power and tap water purchase within 16-25 years, based on the evaluations of EGAT and PWA , respectively.

One of EGCO’s intangible assets is a good will which occurred from businesses acquisition. On December 31, 2011, the net good will was worth Baht 686 million.

EGCO’s Group will estimate an impairment of good will on the statement date. The estimation is based on the value in exchange of each good will. So that, EGCO’s Group will adjust the book values not greater than the value in exchange.

5.3 Investment and Management Policy in Subsidiaries and Joint Ventures

EGCO sets its corporate vision “to be the leading Thai integrated electric power Company with comprehensive energy services in Thailand and in the ASEAN region, with full


Page 59

commitment to environment protection and social development support. In this regard, EGCO has identified its key long term objectives as follows.

1. Invest in the business in which EGCO Group has expertise to maximize profit and create growth to the Group with the acceptable risks,

2. Allocate the appropriate shareholding proportion in its investment to possess the governing right over joint venture companies,

3. Uphold the investment basis of Non-recourse or Limited Recourse Project Finance with clear sponsor support and contingent liability,

4. Support Corporate Social Responsibility projects and comply to all governing laws.

The Company expects all of its subsidiaries and joint ventures to operate their business in compliance with its corporate vision and mission, the code of conduct, the corporate governance principles and acceptable risk profiles. In addition, we expect all of the Group companies to carry out their business in accordance with the following values:

- To conduct business with honesty, integrity and ethics.

- To carry out business in compliance with all applicable business and commercial laws.

- To show respect and take into account the local traditions and cultures.

- To use natural resources in an efficient and environmentally responsible manner.

- To carry out their responsibilities in a professional manner and with team spirit.

The Board of Directors oversees the subsidiaries and joint ventures via the support of the Group Business Committee in accordance with the following guidelines.

- Implementing core policies via EGCO Group employees who are assigned to be directors, management or shareholders of those companies. These representatives must seek advance concurrence from the Board of Directors upon the substantial matter of events,

- Incentivizing Group companies to achieve corporate goal using a performance linked based KPI.

- Monitoring the progress and the operation of the subsidiaries and joint ventures via the Asset Management and Planning with monthly reports to the Board and the Group Business Committee. Should there be any urgent matters for which the immediate action is required; such matters will be duly reported to the Board on the first occasion.

Part 2 Section 6 Future Projects

Page 60

6. Future Projects


Part 2 Section 7 Dispute

Page 61

7. Dispute

EGCO is not involved in any legal dispute based on the following definition.

Legal case that has negative impact on EGCO and its subsidiaries with the size larger than 5% of the shareholders’ equity as at the end of the accounting year.

Legal case that has significant impact on EGCO business.

Legal case which is not related to EGCO’s normal business.

Part 2 Section 8 Capital Structure

Page 62

8. Capital Structure The Company’s securities (1). EGCO’s registered capital and paid up capitals as of December 31, 2011 is shown below. Registered Capital

: 5,300 million baht comprising 530,000,000 ordinary shares with the par value at 10 baht per share.

Paid Up Capital

: 5,264.65million baht comprising 526,465,000 ordinary shares with the par value at 10 baht per share.

As at December 31, 2011, the numbers of NVDR (Non-Voting Depository Receipt) amounted to 41,216,942 units or 7.83% of the registered shares. The NVDR holders have no voting right at the shareholders’ meeting. Any shareholders who need additional information on the NVDR can look for the information at www.set.or.th/nvdr/ Comparing to 2010, EGCO’s shares had a lot movement in 2011 with the highest trading price at 112.00 baht on January 19, 2011 and the lowest trading price at 80 baht on October 26, 2011. The average price/earning ( P/E ratio) was 10.15 in 2011.

(2) Other Securities

KEGCO’s Amortizing Secured Debenture No. 1 due in 2011. The details is shown below.

Type : Secured debentures in a registered form with collateral agent

Tenure : 15 years starting from the issuance Total Value of All Debentures Offered

: 7,500,000,000 baht

Total Debentures Issued : 750,000 units Par Value : 10,000 baht Offering Price/Share : 10,000 baht Issuance Date : June 14, 1996 Redemption Date : June 14, 2011 Interest Rate : 11.56% per annum Interest Repayment Date : Every 6 months on December 14, and

June 14 every year Principal Repayment Date : in installment every 6 months on

December 14, and June 14 every year with the first payment on December 14, 1996

The Outstanding Debentures as of December 31, 2011

: - units

The Outstanding Principal as of December 31, 2011

: - baht


Page 63

(2) Any commitment among major shareholders and the Company, which will affect the issuing and offering securities or the management of the Company

-None-

8.2 Shareholders

The top ten shareholders as of September 6, 2011, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 16, 2011, are as follows.

No. Shareholders /1 Shares % of Total

1. Electricity Generating Authority of Thailand 133,773,662 25.41 2. TEPDIA Generating B.V. 126,054,178 23.94 3. Littledown Nominees Limited 28,943,528 5.49 4. Bangkok Life Assurance Public Company Limited 10,019,300 1.90 5. State Street Bank and Trust Company, for London 7,449,805 1.41 6. Social Security Office (Two-types) 6,387,300 1.21 7. Chase Nominees Limited 1 7,120,247 1.35 8. The Bank of New York (Nominees) Limited 4,632,091 0.88 9. Chase Nominees Limited 15 4,330,760 0.82

10. State Street Bank Europe Limited 4,165,941 0.79 Remarks /1 1. Excluding 63,052,929 shares under Thai NVDR which account for 11.977% of the total

outstanding shares. 2. Excluding 3,298,645 shares under Thailand Securities Depository Co., Ltd. For

Depositors which account for 0.627% of the total of outstanding shares. The ultimate shareholders of EGCO’s major controlling shareholders are as follows. 1. Electricity Generating Authority of Thailand (EGAT): EGAT is a state utility with the objectives to generate, purchase, transmit and distribute electricity. EGAT also provides the operation and maintenance services and invests in electricity related business. EGAT holds 25.41% of EGCO’s outstanding shares. EGAT has four representative directors of all 15 directors in EGCO. 2. TEPDIA Generating B.V. (“TEPDIA”): TEPDIA is a joint venture of Diamond Generating Asia, Limited (“DGA”) and Tokyo Electric Power Company (“TEPCO”). TEPDIA, is jointly owned 50% by each DGA and TEPCO, is a company that invests in energy business in South east Asia and Taiwan. TEPDIA has four representative directors of all EGCO’s 15 directors. The details of TEPDIA’s shareholders are as follows: 2.1 Diamond Generating Asia, Limited (“DGA”), a Mitsubishi Corporation (“MC”)’s subsidiary, MC is a technology development and trading company in industrial and energy sector. MC indirectly holds 11.972% of EGCO’s outstanding shares via TEPDIA Generating B.V.


Page 64

2.2 Tokyo Electric Power Company (“TEPCO”): TEPCO is the largest electric power company in Japan and the largest privately owned electric utility in the world. TEPCO indirectly holds 11.972% of EGCO’s outstanding via TEPDIA Generating B.V.

8.3 Company’s dividend payment policy

In the absence of unforeseen circumstances, the Company has a policy to dividend approximately 40% of the net profit after taxation, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to the Company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the Company”.

The details of the dividend payment for the past 6 years.

Approval

Date XD Date Payment Date

Dividend

(Baht/

Share)

Operation Period

August 22, 2011 September 6, 2011 September 16, 2011 2.50 January 1, 2011-June 30, 2011

February 28, 2011 March 16, 2011 May 4, 2011 2.75 July 1, 2010-December 31, 2010






February 25, 2008 April 1, 2008 May 7, 2008 2.50 July 1, 2007-December 31, 2007




March 20, 2006 March 29, 2006 May 10, 2006 1.75 July 1, 2005-December 31, 2005



September 23, 2004 September 1, 2004 September 22, 2004 1.50 January 1, 2004-June 30, 2004


The controlling subsidiaries have the policy to pay their dividend four times a year to their shareholders at 100% of the net profits after tax, legal reserve and other reserve accounts applied to terms and conditions of their credit facility documents.

In addition, EGCO Cogen has to maintain its Debt Service Coverage Ratio for the previous six-month period not less than 1.1.

Part 2 Section 9 Management

65

9. Management

9.1 Organization Structure At the top of EGCO’s organization structure is the Board of directors, the standing committees, the President and the top management. 1. Structure of the Board of Directors The Board of Directors has main responsibility to conduct business in a way that will benefit EGCO, shareholders and stakeholders including the employees and communities where EGCO operates its business. In this regard, the Board works with the Management in formulating EGCO’s vision and policy and to approve the corporate budget. Currently, the Board comprises 15 members:

14 non-executive directors (including six independent directors), and President, the only one executive member.

The Board of Directors and their share ownership in EGCO as of December 31, 2011 are as listed below:

No. Name Position Appointment

Date

No. of shares December 31,

2011 December 31,

2010 Increase

(Decrease) 1 Mr. Pornchai Rujiprapa Chairman January 1, 2009 - - - 2 Mr. Aswin Kongsiri Independent

Director / Vice Chairman

April 24, 2009 - - -

3 Mr. Chaipat Sahasakul

Independent Director

April 21, 2010 - - -

4 Mr. Thanapich Mulapruk Independent Director

April 24, 2009 - - -

5 Police Lieutenant General Pijarn Jittirat


April 24, 2009 - - -

6 Mr. Somphot Kanchanaporn Independent Director

April 22, 2010 - - -

7 Mr. Phaiboon Siripanoosathien


April 21, 2010 - - -


66

No. Name Position Appointment

Date


2011 December 31,

2010 Increase

(Decrease) 8 Mr. Surasak Supavitipatana Director November 16,

2011 - - -

9 Mr. Kulit Sombatsiri Director December 13, 2011

- - -

10 Mr. Hideaki Tomiku Director April 23, 2007 - - - 11 Mr. Toshiro Kudama Director February 23,

2011 - - -

12 Mr. Akio Matsuzaki Director February 23, 2011

- - -

13 Mr. Ryota Sakakibara Director February 23, 2011

- - -

14 Mr. Vinit Tangnoi1 President/Director

October 1, 2008 - - -

15 Mr. Sahust Pratuknukul2 President April 22, 2010 1,890 1,890 -

Remark 1 Mr. Vinit Tangnoi’s contract as President expired on September 30, 2011. However, he continued his directorship until his resignation on January 1, 2012.

2 Mr. Sahust Pratuknukul was appointed as a director and the President on April 22, 2010 and October 1, 2011, respectively. The lists of directors who retired or resigned in 2011 together with their share ownership in EGCO are as shown below.

No. Name Position Retiring/

Resigning Date


2011 December 31,

2010 Increase

(Decrease) 1. Mr. Peter Albert Littlewood Director February 23, 2011 - - - 2. Mr. Mark Jobling Director February 23, 2011 - - - 3. Mr. Shinji Tsuchiya Director February 23, 2011 - - - 4. Mr. Wisudhi Srisuphan Director February 28, 2011 - - - 5. Mr. Somboon Arayaskul Director October 1, 2011 - - - 6. Mr. Kurujit Nakornthap Director December 1, 2011 - - -


67

Independent Directors The Board in the meeting no. 7/2008 on September 8, 2008 had early adopted the definition of independent directors to comply with the qualifications of independent directors stated in the notification of the Capital Market Supervisory Board no. 14/2008 re: “Filling for and Approval of Newly Issued Shares” before the effective date and the Board in the meeting no. 2/2011 on February 28, 2011 had resolved to reduce the shareholding under this item from not more than 1% to 0.5%. Under such definition, EGCO independent director shall have the following qualifications.

1. Holding shares not more than 0.5% of the paid-up capital with the voting right of EGCO, parent company, subsidiary company, associated company or any legal entity that may have the conflict of interest (including the connected persons as stipulated in section 258 of securities laws),

2. Not being a director that takes part in the management (executive director, director who has the same responsibility as management except for the signature in transactions approved by the Board and the joint signing with other directors), employees, advisors who receive regular salary, and controlling person of EGCO, parent company, subsidiary company, associate company and fellow subsidiary (subsidiary of the same holding company) or any entity that may have a conflict of interest during the period of two years before his/her appointment,

3. Not being a person who is related by maternity and by registration as parents, spouse, brother, sister, and son and daughter including their spouses of the management, or major shareholders, controlling persons or persons who will be nominated to be the Management or controlling persons of EGCO or its subsidiaries,

4. Not having business relationship with and not being a major shareholder, non-independent director or management of EGCO, parent company, subsidiary company, associate company or any entity that may have a conflict of interest in a way that would affect the giving of independent opinions during the period of two years before the filing date,

5. Not being an auditor or a major shareholder, director, management or partner of the audit firm that provides auditing services to EGCO, parent company, subsidiary company, associate company or any entity that may have a conflict of interest during the period of two years before the filing date,

6. Not providing any professional service or being a major shareholder, non- independent director, management or partner of the company that provide professional service which include financial and legal advices with the fee higher than 2 million baht per year during the period of two years before the filing date,


68

7. Not being appointed as a representative to safeguard interests of EGCO director, majority shareholders or shareholders who are related to EGCO’s majority shareholders, and

8. Not having any constraint that would affect the performance of giving independent judgment on EGCO. The terms of independent directors The term of independent directors is limited at 3 terms, of which the counting of the term would start from the 2011 Annual General Shareholders’ Meeting on wards. The Nomination and Remuneration Committee shall review the appropriateness of the independent director definition. Currently, there are 6 independent directors of all 15 directors who meet the above qualifications which accounts for more than one-third of all directors. Authorized Directors EGCO determines that the authorized directors comprise the President to sign and affix the company’s seal independently, or any two directors to sign jointly and affix the company’s seal. Such authorized directors shall exclude (1) independent directors to maintain their independence under the good corporate governance principle, (2) Chairman who is a senior government officer, and (3) directors who are also directors of the financial institutions to avoid the limitation that such financial institutions cannot provide future financial service to EGCO. Appointment, Resignation, and Dismissal of Directors The Board of Directors, which comprises not less than five and not more than 15 directors, shall be elected by shareholders, provided that not less than half of them must reside in Thailand. If a directorship becomes vacant for any reason other than by rotation, the Board in the subsequent meeting shall elect a person who is qualified to fill in the vacancy by the votes of not less than three-forth (3/4) of the remaining directors. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom s/he replaces. At every annual ordinary meeting, one-third of the directors shall retire from office. If the number of directors is not a multiple of three, the number nearest to one-third must retire from office. Additionally, any director who wishes to resign from office may do so by submitting a resignation letter to the company. Such resignation shall be effective from the date the resignation letter reaches EGCO. In voting for the dismissal of any directors from office before the expiration of his or her term of directorship, a four-fifth (4/5) vote of eligible shareholders present at the meeting shall be required.


69

Board of Directors’ Duties and Responsibilities The duties and responsibilities of the Board of Directors are as prescribed below.

1. Duties to EGCO To devote time to EGCO and conduct the business in compliance with the governance principles

and EGCO’s Code of Conduct. To demonstrate independent judgment in overseeing EGCO business.

To have full ethical and legal responsibility towards shareholders while taking into account the interests of other stakeholders.

To endeavor to recruit competent key management who will fully devote themselves for the benefit of EGCO.

To monitor EGCO’s business and the compliance with the laws, rules, regulations and contract provisions and will require the Management to submit report on EGCO’s significant matters to ensure effective corporate performance.

2. Duties to the Shareholders To endeavor to ensure that EGCO is financially viable, properly managed and constantly

improved so as to protect and enhance the interests of the shareholders. To endeavor to ensure that the information disclosure is materially correct, complete, transparent

and timely. To endeavor to ensure that shareholders are treated on equitable basis.

Not to submit fault information and to ensure that true and accurate information regarding the operating results and financial position is reported in accordance with the disclosure requirements.

3. Duties to Creditors To endeavor to ensure that EGCO complies with the loan provision and that EGCO’s financial

status is correctly disclosed. To seek professional advice in case of doubt about the likely impact on lenders such as when

EGCO’s financial position is uncertain or insolvency may be pending. 4. Duties to other Stakeholders To endeavor to ensure that EGCO complies with the governing laws and regulations while taking

into account the impact on employees, other stakeholders, community, society and environment.

5. Due Diligence To attend all Board meetings but where meeting attendance is not possible; directors will take


70

appropriate step to obtain leave of absence. To acquire knowledge about EGCO, the statutory and regulatory requirements affecting

directors in the discharge of their duties as EGCO director, and to be aware of the environment that has the impact on EGCO.

To endeavor to ensure that necessary data are provided in advance to allow adequate time to analyze, make thorough judgment and so discharge the duties of care and diligence.

To endeavor to ensure independent judgment and in case of dissent to any Board’s resolution, to request the record of objection in the Minutes of Meeting.

To endeavor to ensure that the system is established within EGCO to provide the Board, on a regular and timely basis, with necessary data to enable directors to make a reasoned and careful judgment.

To endeavor to make sure that relations between the Board and the auditors are open and that the auditor can work independently and efficiently with the full co-operation from management and the internal auditors.

To strive to ensure that EGCO complies with the governing laws, rules, regulations and business standard and ethics.

In any case of doubt in the capacity of directors and committee members, to seek advice from EGCO’s advisors who are experts in each areas and to engage independent advisors for the governance benefits such as legal advisors, financial advisors, HR advisors, other professional advisors on EGCO’s expenses.

Board of Directors’ Performance Appraisal The Board shall approve the self-appraisal form which will be reviewed and endorsed by the Nomination and Remuneration Committee. In 2011 the Board adopted the same self-appraisal form as 2010. Such form is based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. The self-appraisal form comprises two parts: collective appraisal form and individual appraisal form. The collective appraisal form comprises 15 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the CEO, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership, succession Planning and (15) other issues


71

The individual appraisal form comprises 7 sections, namely (1) strategic thought, (2) good corporate governance, (3) competence, (4) independence, (5) preparedness as a director, (6) personal attributes and (7) awareness of stakeholders. Result of the appraisals as well as directors’ recommendations will be used to enhance the Board’s performance each year. 2. Standing Committees’ Structure The Board of Directors has appointed 4 standing committees to help scrutinize significant matters. The details of the standing committees are as follows. Audit Committee The Audit Committee comprises at least 3 independent directors for a 3-year term of service, with one year for this purpose meaning the period between the Annual General Meeting (“AGM”) of shareholders when s/he is appointed and the next succeeding AGM. One of the members shall have finance and accounting background. (At present, Mr. Chaipat Sahasakul is the Audit Committee member that has such qualification.) The Audit Committee undertakes its responsibilities as described in the Audit Committee Charter, which is reviewed annually to be consistent with the changing internal and external environment. The responsibilities of the Audit Committee are detailed below. 1. To review the accuracy and adequacy of EGCO’s financial reporting. 2. To review the appropriateness and effectiveness of internal control systems, and internal audit functions and

determine the Internal Audit Division’s independence, as well as approving the appointment, rotation and removal, and performance development and appraisal of the Chief Internal Audit. The Chief Internal Audit shall present the appointment, rotation, promotion, removal, and performance development as well as appraisal of internal audit staff to the Audit Committee to consider whether the motion of dissent would be raised.

3. To monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET, and any other laws relevant to EGCO’s business.

4. To recommend the Board of Directors an independent person to be EGCO’s auditor as well as the audit fees for appointment by the shareholders to audit EGCO’s financial statements.

5. To attend a non-management meeting with an auditor at least once a year. 6. To consider the connected transactions or any transactions that may cause conflict of interest complying well

as the audit fees for appointment by the shareholders to audit EGCO’s financial statements. 7. To review the Internal Audit Charter prior to submission to the Board of Directors for approval.


72

8. To approve the internal audit plan as well as budget and personnel. 9. To review the internal audit functions, including: independence of internal audit division and reporting

obligation. 10. To review with the Management the preparation of the Management’s Discussion and Analysis or MD&A and

its disclosure in the Annual Report. 11. To review with the Management the risk management policy, the practice compliance with such policy, as well

as EGCO’s risk management guidelines. 12. To prepare a report that describes the Audit Committee’s activities and responsibilities. This report shall be

signed by the Chairman of the Audit Committee and published in the annual report to the shareholders. The Audit Committee’s Report shall consist of at least the following information:

(a) an opinion on the accuracy, completeness and creditability of EGCO’s financial report, (b) an opinion on the adequacy of EGCO’s internal control system,

(c) an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or the laws relating to EGCO’s business,

(d) an opinion on the suitability of an auditor, (e) an opinion on the transactions that may lead to conflicts of interests, (f) the number of the Audit Committee meetings, and the attendance of such meetings by each committee

member, (g) an opinion or overview comment received by the Audit Committee from its performance of duties in

accordance with the charter, and (h) other transactions which, according to the Audit Committee’s opinion, should be known to the

shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Board of Directors.

13. To inspect any suspiciousness reported by EGCO’s auditor, that the President, the Management or any person responsible for EGCO’s operation commits an offence under the Securities and Exchange Act (No. 4) B.E. 2551 and report the result of preliminary inspection to the Office of the Securities and Exchange Commission and the auditor within thirty days after being informed by the auditor.

14. To review the Audit Committee Charter at least annually. 15. To perform any other act as assigned by the Board of Directors with approval of the Audit Committee.

With regard to the above responsibilities, the Committee is accountable to EGCO Board of Directors whereas the Board of Directors remains responsible for EGCO’s actions against the third parties.

The Audit Committee conducts the self-appraisal annually and reports the result to the Board. For 2011, the Audit Committee used the questionnaire which was adapted from the Booklet: “Audit Committee – Good practices for


73

meeting market expectations – 2nd edition” which was studied by PricewaterhouseCoopers’ Global Corporate Reporting. There were 17 meetings in 2011 of which the attendance rate was 100%. Investment Committee The Investment Committee comprises 5 directors. The office term is the same as their directorship. The Investment Committee has the responsibilities to scrutinize and endorse for the Board’s consideration the Management’s proposals especially on investment and funding along with other related activities except for the small and medium size transaction which it has the authority to approve with subsequent acknowledgement by the Board. The Investment Committee’s responsibilities are described below.

1. To consider EGCO’s strategic plan, business plan and annual budget for presentation to the Board,

2. To formulate the overall investment strategy and investment policies in line with the EGCO’s policy, 3. To review major acquisition, investment, divestment and funding requests, 4. To review the financial operations of EGCO, including Group-wide financial and treasury management

policies and major financing transaction, 5. To approve activities in accordance with EGCO’s regulations, 6. To consider issues which are assigned by the Board, and 7. To review risks associated with investment and finance and other related issues.

There were 11 meetings in 2011 of which the attendance rate was 89%.

Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises 5 directors for a 3-year term of service with one year for this purpose meaning the period between the AGM of shareholders when s/he is appointed and the next succeeding AGM. In order to maintain continuity, members may be re-elected. The mission of the Nomination and Remuneration Committee is detailed below. 1. To recommend the structure and composition of the Board and committees together with the qualification of

its members,


74

2. To recommend the list of nominees for the Board of Directors to be proposed to the shareholders’ annual general meeting in case of vacancies by rotation and to the board in case of casual vacancies,

3. To scrutinize the list of nominees for EGCO President in case of vacancy including the establishment of the succession plan for executives,

4. To approve the appointment, promotion, rotation and removal of the senior executives of EGCO (Executive Vice Presidents and Senior Executive Vice Presidents) and to nominate senior executives of subsidiary/joint venture companies that EGCO had the right to nominate for a position equivalent to EGCO’s EVP level and upward,

5. To approve EGCO representatives to be directors of the subsidiary or associated companies according to equity proportion or shareholders’ agreement,

6. To endorse the performance evaluation of EGCO President,

7. To endorse the performance evaluation of EGCO Management (Senior Executive Vice President and Executive Vice President),

8. To recommend the remuneration structure of the directors and senior executives of EGCO and subsidiary and associated companies including meeting allowances, bonus, welfare and other benefits both in monetary and non-monetary terms,

9. To recommend policies and guidelines in determining the remuneration package of the senior executives on an annual basis,

10. To evaluate and approve the corporate performance of EGCO and the Group companies to determine the bonus and annual salary increase across the whole Group,

11. To recommend EGCO’s salary structure and other benefits, and

12. To review risks associated with people management. There were 10 meetings in 2011 of which the attendance rate was 98%.

Corporate Governance and Corporate Social Responsibility Committee The Corporate Governance and Corporate Social Responsibility Committee (“CC Committee”) comprises 5 directors being 3 independent directors, 1 non-executive director and President. The term of office of each CC director member is three years and can be re-elected. In order to maintain continuity, members may be re-elected.


75

The mission of the CC Committee is detailed as follows. 1. To endorse corporate governance policy for consideration and adoption by the Board, to monitor compliance

with that policy, and to review and adopt such policy on continual basis as appropriate, and 2. To endorse policy and framework for activities for EGCO Group’s CSR and to consider resources and

budgets for CSR projects and activities.

There was 2 meeting in 2011 of which the attendance rate was 90%. 3. Management Structure The President acts as the head of the Management team which comprises 3 groups as shown below:

Business Development -International Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there is one Executive Vice Presidents (EVP) who supervises the business development (international).

Business Development – Domestic Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there are two Executive Vice Presidents (EVP) who supervise the business development (domestic) and asset management.

Finance and Corporate Services Group: This group is headed by SEVP with two EVPs to supervise finance and corporate services performance.

President’s Direct Report Group: This group comprises the strategy and corporate management group headed by an EVP. There are also three divisions which are under the President’s supervision namely Controller, Internal Audit and Corporate Secretary. The last two divisions report administratively to the President, but functionally to the Audit Committee and the Board of Directors, respectively.

President

The President is responsible for managing EGCO’s business in consistent with the objectives, articles of associations, regulations and the resolution of the Board. The President is also in charge of supervising employees and completing activities assigned by the Board including the following activities.

To manage EGCO’s day-to day business,

To hire, appoint, remove, transfer, promote, demote, assign, and take disciplinary action against employees and workers from division managers downward (excluding the internal audit manager and corporate secretary), and

To ensure the implementation of the policies, plans, and budgets approved by the Board.


76

In this respect, the President is allowed to delegate his authority to other employees but is still accountable for the decision of his delegates. Management Team

The list of the Management team and their share ownership in EGCO as at December 31, 2010 is as follows.

No. Name Title No. of Shares

December 31, 2011

December 31, 2010

Increase (Decrease)

1 Mr. Sahust Pratuknukul President 1,890 1,890 - 2 Mr. Piya Jetasanon Senior Executive Vice

President-Finance & Corporate Services

- - -

3 Mr. John Palumbo Senior Executive Vice President-Business Development - International

- - -

4 Mr. Voravit Potisuk Senior Executive Vice President-Business Development - Domestic

5 Mr. Chumsak Desudjit

Director – Rayong Power Plant - - -

6 Mr. Chankij Jearaphunt Managing Director of KEGCO - - - 7 Mr. Wajarapong

Palakawong Na Ayudhaya

Managing Director of ESCO - - -

8 Mr. Suvapan Chomchalerm Executive Vice President -Finance

- - -

9 Ms. Somsiri Yoosuk First Senior Vice President –Finance Division

- - -

10 Mr. Nattanont Meesuksabai

Senior Vice President –Accounting and Budget Division

- - -

Corporate Secretary The Board in the meeting no. 6/2008 appointed Ms. Busakorn Kakanumpornwong the Corporate Secretary effective August 18, 2008 with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to


77

coordinate subsequent actions under the Board’s resolution. The Corporate Secretary directly report to the Board. The Board also delegates the Nomination and Remuneration Committee to appraise the performance of the Corporate Secretary. Management Committees EGCO has set up the following committees to ensure the appropriateness and efficiency of business management.

Group Business Committee:

The Board of Directors appoints the Group Business Committee which comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. The term of office for the executives is the same as their executive terms. The Group Business Committee is accountable for the following responsibilities

1. To act as the Board of Directors of the 100% equity subsidiaries namely KEGCO and ESCO,

2. To oversee that the operating assets comply with laws, regulations, governing documents and company’s regulations,

3. To consider and endorse the business plan, annual budget and KPIs for the operating assets to the Investment Committee for its consideration,

4. To direct asset management function to comply with the corporate plan and budget and meet both the short-term and medium-term corporate targets,

5. To oversee EGCO’s operating assets to ensure that the operating results and return on investment are in line with the plan and projection under the support of the Asset Management and Planning Group,

6. To propose/endorse the organizational structure, restructuring and governance of Group Companies (Division level up), and

7. To recommend the appointment, rotation and removal of the Managing Directors and Deputy Managing Directors of the wholly owned subsidiaries for the Nomination and Remuneration Committee’s approval.

The Group Business Committee’ meetings are called as necessary. In 2010, there were 5 meetings.


78

EGCO Management Committee: EGCO Management Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. EGCO Management Committee is responsible for formulating business policy of EGCO Group, scrutinizing all proposals to be presented to the Board and standing committees and monitoring the operation of the Group. The EGCO Management Committee meetings are called as necessary. In 2011, there were 12 meetings.

Good Governance Committee: The Good Corporate Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. The Good Corporate Committee is in charge of the following responsibilities. 1. To consider international criteria and practices of Good Corporate Governance and those of the SET and

SEC, 2. To formulate the policy, guidelines and practices of the Group in compliance with the Good Corporate

Governance, and 3. To revise the Code of Conduct to suit the business environment and to educate employees about the Codes

as well as providing cooperation to promote the practice in the Group. The Good Corporate Governance Committee meets when necessary. In 2011, there were two meetings.

Risk Management Committee:

The Risk Management Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by the President. The Risk Management Committee meets when necessary and directly reports to the Audit Committee. Its responsibilities are as follows.

1. To determine the risk management criteria for EGCO and subsidiaries,

2. To determine the risk management evaluation and mitigation,

3. To monitor compliance with risk management framework,

4. To revise EGCO’s risk factors to comply with the regulations of the governing authorities, and

5. To report its performance to the Audit Committee and the Board of Director. In 2011, the Risk Management Committee held six meetings.


79

Safety Health and Environment Committee: The Safety Health and Environment Committee comprises executives of EGCO Group in appropriate number. The Committee is chaired by EVP-Asset Management. The Safety Health and Environment Committee is in charge of the following responsibilities.

1. To determine the policy and plan regarding safety, health and environment (“SHE”) of EGCO Group to be in compliance with the strategic plan,

2. To implement the SHE action plan for EGCO Group,

3. To monitor and evaluate the SHE performance of EGCO Group, and

4. To improve and develop the SHE implementation of EGCO Group. The Safety Health and Environment Committee meets when necessary. In 2011, there was no meeting. 4. Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, EGCO sets up the following framework. Director Election and Appointment EGCO endeavors to select capable directors to govern the company, designate the corporate policies and sanction its business plans for the benefit of EGCO and shareholders. With respect to this, EGCO puts an emphasis on the director nomination and selection process taking into account the following qualifications and experiences in considering each individual candidates. 1. Legal requirement and regulations and notifications of SET and SEC regarding the directors’ qualifications, 2. Directors’ qualifications prescribed in Directors’ Code of Conduct namely honesty, virtue, initiative and

achievement, excellence, accountability, justice, independence, equality of shareholder opportunity, 3. Knowledge and experiences beneficial to EGCO’s business, 4. Trainings and experience at the policy making level in corporate governance, 5. Willingness to represent the best interests of all shareholders, and 6. Willingness to devote time and effort to contribute to EGCO’s development. The Board has delegated to the Nomination and Remuneration Committee the duty of selecting and recommending prospective nominees, whether they are to become the shareholders’ representatives or independent directors, for the Board’s approval. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria


80

as deemed necessary. The nomination of directors to succeed those who retire by rotation must be individually approved at the shareholders’ meeting based on the voting guidelines in the Articles of Association as follows. 1. Each shareholder shall be entitled to the number of votes equivalent to the number of shares held by

him/her; one share shall have one vote. 2. Each shareholder shall elect one or more directors, provided that they shall not exercise their votes in

excess of the number of directors required at such time. 3. In a case that a shareholder elects more than one director, s/he may exercise all the votes s/he has,

provided that s/he may not split his votes among any such persons. 4. The persons receiving the highest number of votes in respective order shall be appointed directors

depending on the requirements of directors set at such time. In the event that a number of persons receive an equal number of votes for the last directorship, the Chairman of the meeting shall have a casting vote.

5. Directors must be appointed by the vote not less than four-fifth of the shareholders present and having the right to vote.

To ensure that shareholders have adequate information to make their selection, EGCO shall present details of a given nominee such as education background, occupation, directorship in other companies, relevant experiences, and illegal acts committed (if any) in the notice of shareholders’ meeting. In case of the re-election, the attendance records and performance during the past year shall also be presented. In the case of casual vacancies, the Nomination and Remuneration Committee will nominate a qualified candidate who does not possess any forbidden characteristics as stipulated under the Public Company Act for approval at the subsequent Board of Directors' meeting. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom s/he replaces. The resolution of the Board of Directors in this respect shall consist of not less than three-fourth the votes of the remaining directors. Right of Minority Shareholders To ensure that EGCO treats shareholders equitably, the Board encourages minority shareholders to make recommendation on the director candidates with clear and transparent procedures as posted on EGCO website. Director Orientation and Training All new directors must participate in EGCO’s orientation program. This orientation will include presentations by senior management to familiarize new directors with EGCO’s significant issues, Directors’ Manual and EGCO’s Code of Conduct for Directors and Employees. Any sitting directors and other top management may attend the orientation program.


81

The information of the directors’ manual comprises role, duty and responsibility, Securities’ Dealing by Directors, Notification of Personal Interest of Director, Meeting Management, Disclosure Policy, Contact with management, Board’s and Committees’ Remuneration and Fringe Benefits, Table of Authority and EGCO general information. EGCO encourages directors to attend both in-house and external courses to enhance their knowledge and understanding on good corporate governance. Directors can apply for the training courses at the Thai Institute of Directors or relevant organizations on EGCO’s expenses. Management Selection and Appointment The Board determines policies and principles for selection of the President and policies regarding succession in the event of an emergency or the retirement of the President taking into account educational background, experiences, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications and selection process stated in EGCO Regulation on Human Resource Management B.E. 2554 and the resolution of the Board as follows. 1. The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice

President, Executive Vice President, the subsidiaries’ Managing Director and Deputy Managing Director. 2. The President shall appoint the division and section managers. The appointment of Secretary to the Board

and the Assistant Secretary to the Board shall be approved by the Board of Directors while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee.

5. Director and Management Remuneration EGCO sets the policy to reward directors and management with appropriate remuneration. In this respect, the Nomination and Remuneration Committee is entrusted to review the appropriate rate that takes into account the responsibility and the company’s financial status while being in line with the peer practices. Director Remuneration Director remuneration is appropriately set at a rate comparable to that of peer companies. The remuneration comprises (1) monthly retainer fee to reflect directors’ responsibilities, (2) meeting allowance to reflect time devotion and meeting attendance, and (3) bonus which is paid in accordance with the shareholder value creation. The Nomination and Remuneration Committee will endorse the director remuneration for the Board’s endorsement before seeking the shareholders’ approval on an annual basis. The guidelines are as follows:


82

Retainer fee and meeting allowance will be set in accordance with peer practices, EGCO operating performance, business size, and responsibility, knowledge, competencies and experience of the directors as required by the company.

Bonus will be considered from the Company’s net profit or dividend paid to shareholders. In 2011, the Shareholders’ Meeting resolved the directors’ remuneration as shown below: 1. Monthly retainer fee of 30,000 baht and meeting allowance of 10,000 baht each. Members who do not

attend the meeting will not receive the allowance. Chairman and Vice Chairman of the Board received 25% and 10% additional remuneration for both the retainer fee and the meeting allowance, respectively.

2. 2011 Bonus of 20 million baht, equal to 2010’s approved amount, taking into account the Company’s growth, the recognition in terms of good corporate governance, the increasing of share price, peers’ director bonus, and dividend payout ratio. Such bonus payment accounted for 0.29% of the net profit and 0.70% of 2010 annual dividend payment.

3. Remuneration for Board’s Committees being Investment Committee, Audit Committee, Nomination and Remuneration Committee, and Corporate Governance and Social Responsibility Committee as follows.

Committee Retainer Fee (baht) Meeting Allowance(baht) Chairman Member Chairman Member

Investment Committee 25,000 20,000 25,000 20,000 Audit Committee 25,000 20,000 25,000 20,000 Nomination and Remuneration Committee

25,000 20,000 25,000 20,000

Corporate Governance and Social Responsibility Committee

- - 30,000 24,000


83

The overall directors’ remuneration for 2011 is summarized below.

No. Name Appointment Date

No. of months in

service Meeting

Attendance (7 Times/Year)

Total Remuneration in 2011

Total Remuneration (Monthly Retainer,

Meeting Allowance) Bonus /2

2011 2010 Director Standing

Committee /1 1. Mr. Pornchai Rujiprapa January 1, 2009 12 12 7/7 550,000.00 575,000.00 1,742,140.00 2,867,140.00 2 Mr. Aswin Kongsiri April 24, 2009 12 12 7/7 484,000.00 526,000.00 1,533,100.00 2,543,100.00 3 Mr. Chaipat Sahasakul April 21, 2010 12 12 7/7 440,000.00 700,000.00 1,393,730.00 2,533,730.00 4 Mr. Thanapich Mulapruk April 24, 2009 12 12 6/7 430,000.00 560,000.00 1,393,730.00 2,383,730.00 5 Mr. Somphot

Kanchanaporn April 22, 2010 12 12 7/7

440,000.00 560,000.00 1,393,730.00 2,393,730.00 6 Police Lieutenant General

Pijarn Jittirat April 24, 2009 12 12 7/7

440,000.00 488,000.00 1,393,730.00 2,321,730.00 7. Mr. Phaiboon

Siripanoosatien April 21, 2010 12 12 7/7

440,000.00 488,000.00 1,393,730.00 2,321,730.00 8 Mr. Surasak Supavitipatana November 16,

2011 2 - 2/2

65,000.00 50,000.00 0 115,000.00 9 Mr. Kulit Sombatsiri December 13,

2011 1 - 1/1

29,000.00 0 0 29,000.00 10 Mr. Hideaki Tomiku April 22, 2010 12 12 6/7 420,000.00 889,333.34 1,393,762.49 2,703,095.83 11 Mr. Toshiro Kudama February 28,

2010 10 - 6/6

371,000.00 0 0 371,000.00 12 Mr. Akio Matsuzaki February 28,

2010 10 - 4/6

351,000.00 0 0 351,000.00 13 Mr. Ryota Sakakibara February 28,

2010 10 - 6/6

371,000.00 380,666.67 0 751,666.67 14 Mr. Vinit Tangnoi/3 April 21, 2008 12 12 7/7 110,000.00 100,000.00 0 210,000.00 15 Mr. Sahust Pratuknukul/4 April 22, 2010 12 8 7/7 330,000.00 360,000.00 964,000.00 1,654,000.00

The summary of remuneration of Retired and resigned directors during 2010-2011 is as shown below 1 Mr. Apichart Dilogsopol April 22, 2010 - 4 - 0 0 429,730.00 429,730.00 2 Mr. Wisudhi Srisuphan February 28, 2011 2 6 1/1 67,000.00 0 1,393,730.00 1,460,730.00 3. Mr. Peter Albert Littlewood February 23, 2011 2 6 0/1 52,000.00 0 1,742,195.00 1,794,195.00 4. Mr. Mark Jobling February 23, 2011 2 12 1/1 62,000.00 154,666.67 1,576,675.01 1,793,341.68 5. Mr. Shinji Tsuchiya February 23, 2011 2 12 1/1 62,000.00 0 1,576,675.01 1,638,675.01 6. Mr. Somboon Arayaskul October 1, 2011 8 12 5/5 320,000.00 344,000.00 1,393,730.00 2,057,730.00 7. Mr. Kurujit Nakornthap December 1,

2011 9 - 5/5 333,000.00 0 0 333,000.00

Total 6,167,000.00 6,175,666.68 20,714,387.51 33,057,054.19

/1 Standing Committees are 1. Investment Committee 2. Audit Committee, 3. Nomination and Remuneration Committee, 5. Corporate Governance and Social Responsibility Committee. /2 Bonus for Board of Directors in 2010 was paid in May 2011, as resolved by the Shareholders in the Annual General Meeting No.1/20101on April 21, 2011


84

/3 The retainer fee and meeting allowance be paid to Mr. Vinit Tangnoi during October 1, 2011- December 31, 2011 as the director. /4 The retainer fee and meeting allowance be paid to Mr. Sahust Pratuknukul during April 22, 2010 – September 30, 2011 as the director.

Management’s Remuneration The Management’s remuneration which comprises both salary and bonus are designed in a way that will reflect the corporate and individual achievement based on the remuneration structure approved by the Board. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to their work and those of the peer companies. The summary of the Management’s remuneration for 2011 as shown below.

(Unit: Baht)

2011 Remuneration Executive Director

(1 Person) /1 Management (6 Persons) /2

Total Remuneration

Total Salary - 25,858,680.00 25,858,680.00 Bonus/3 - 10,691,339.24 10,691,339.24 Meeting Allowance - - - Total - 36,550,019.24 36,550,019.24

/1 Executive Director is defined as director who is also management of EGCO. In this regard, the President is the executive director. He is not entitled to the retainer fee or meeting allowance as member of the standing committees.

/2 These included 7 management namely the President, Senior Executive Vice President –Business Development -International, Senior Executive Vice President –Business Development –Domestic, Senior Executive Vice President –Finance & Corporate Services, Director-Rayong Power Plant, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of KEGCO and ESCO. Since the salaries of MDs of KEGCO and ESCO are paid by those companies. EGCO is responsible for the remuneration of only four managements.

/3 The 2010 Bonus was paid in January 2011. Total Remuneration of Core Subsidiaries’ Management

The remuneration of the Management of core subsidiaries (subsidiaries of which the revenue account for more than 10% of the consolidated revenue (KEGCO and EGCO Cogen) in 2011 is detailed below.


85

(Unit: Baht) Year 2011 KEGCO EGCO Cogen

Remuneration Directors (7 Persons)

Management (7 Persons)

Total Remuneration

Directors (5 Persons)

Management (1 Person) /3

Total Remuneration

Salary - 15,870,960.00 15,870,960.00 - 1,616,400.00 1,616,400.00

Bonus /1 - 6,048,848.09 6,048,848.09 - 690,845.40 690,845.40

Meeting Allowance /2 - - - - - -

Total - 21,919,808.09 21,919,808.09 - 2,307,245.40 2,307,245.40

/1 The 2010 bonus was paid in January 2011. /2 EGCO was responsible for the meeting allowance of KEGCO Board. /3 EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO COGEN.

Other Remuneration

In 2011, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Managements as follows.

(Unit : Baht)

Company Year 2011

Members Provident fund

EGCO 6 1,846,368 KEGCO 7 1,587,096 EGCO Cogen 1 161,640

6. Employees EGCO As of December 31, 2011, EGCO has 268 headcounts which include the President, six Senior Executive Vice Presidents, six executives who are seconded to be management of Group companies and 256 staffs. The number of staffs in each reporting line is as show below:

Key Areas Members (Persons) 1. President 26 2. Business Development - International 8 3. Business Development -Domestic 29


86

Key Areas Members (Persons) 4. Finance and Corporate Services 53 5. Strategic and Corporate Management 15 6. Rayong Power Plant - Operation 59 - Maintenance 40 - Others 38 Total 268

Core Subsidiaries A. KEGCO

Employees Total (person)

KEGCO 1. Operation 67 2. Maintenance 53 3. Others 31 Total 151

B. EGCO Cogen There are three permanent staff members who serve EGCO Cogen. The general manager is assigned from EGCO under the service agreement between EGCO and EGCO Cogen. The Operation and Maintenance staffs of 31 headcounts are ESCO employees who work under the O&M service agreement between ESCO and EGCO Cogen. There has been no significant turnover and no illegal labor dispute during the past three years. 7. Employee Remuneration EGCO has the policy that the employees in the Group have fair remuneration which is comparable to the peer companies. Remuneration of employees of EGCO and core subsidiaries in 2010 is as shown below:


87

(Unit: Baht)

Remuneration Amount

EGCO/1 KEGCO EGCO Cogen/2 Total Salary 246,130,390.06 138,080,699.94 2,973,890.00 Bonus /3 104,766,953.28 62,557,519.73 1,303,337.21 Provident Fund 23,028,613.99 23,947,524.39 262,409.00

Total 373,925,957.33 224,585,744.06 4,539,636.21

/1 Include the salary and bonus of the executives on one year contract. /2 Include the salary and bonus of the General Manager who is seconded by EGCO and three permanent employees. /3 The 2010 bonus was paid in January 2011.

8. Human Resource Development Policy

EGCO Group believes in the value of our human resources and will strive to be the employer of choice by promoting the participative management with equal opportunity for career advancement. Employees are encouraged to enter the development program to enhance their capabilities to bring out their highest working potentials to undertake tasks in competent manner and maintain our leadership in the business. EGCO Group puts high priority on continuous development of the employee's ability and proficiencies which includes core, functional, and managerial/leadership competencies. In this regard, various projects and training courses have been developed covering individual studies, training with experts or resource persons, and sharing of experiences among peers. As a result, we can develop our employees in all dimensions including intelligence quotient (“IQ”), emotional quotient (“EQ”), moral quotient (“MQ”), and adversity quotient (“AQ”).

To ensure that the implementation of human resource development plan is a successful one, EGCO will prepare a list of required skill sets for each position as a part of the career path development plan.

9. Other information related to the Board of Directors and Management

In 2011, there were no director and management who were recorded to be prosecuted by the following cases.

Criminal prosecution, except the violation of traffic rules, minor offence or in respect of the same offence

Bankruptcy or receivership.


88

Corporate Governance Report for 2011 The Board of Directors (“Board”) believes that the good corporate governance is a significant tool to ensure efficient and transparent management to foster shareholders’ and investors’ trust. The Board then controls and oversees the company to conduct the business under the Good Corporate Governance Principles issued by the Stock Exchange of Thailand (“SET”) and the rules and regulations of Listed Company issued by the Securities and Exchange Commission (“SEC”) and the Capital Market Supervisory Board (“CMSB”) to continuously raise the governance of EGCO to international level for efficient management and sustainable business growth. Corporate Governance Policies For clarity and transparency, the Board has established the written corporate governance policies as guidelines for directors, management and employees. The Policies include the statutory rights of shareholders as well as the Best Practices issued by the SET. The Board annually reviews the good corporate governance policies to ensure adherence with the following core issues: Encouraging more understanding of the expectations of stakeholders; Improving the risk management practices; Enhancing the reputation of the organization and fostering greater public trust; Enhancing employee loyalty and morale and improving the safety and health of employees; Increasing productivity and resource efficiency and reducing waste; and Contributing to the long term viability of the organization. Communication of Corporate Governance Policies The Board discloses the Corporate Governance Policies on EGCO website. Shareholders who want to receive a hard copy can submit the form attached in the annual report to the Corporate Secretary. During the past year, the Company communicates the Corporate Governance Policies to its employees via various channels as follows: Good corporate governance E-newsletter was issued every Monday, Wednesday and Friday to communicate

news on good corporate governance, director information and best practices of other companies. Three trainings on good corporate governance were provided to the employees. The topics included Dhamma

Seminar on "Corporate Governance” and overall risk management. Good corporate governance was also included in the orientation presentation kit for new employees.


89

Monitoring of the Compliance with Corporate Governance Policies The Board requires the compliance with the Corporate Governance Policies as one of the key performance indicators of EGCO Group of which the progress was monitored on a quarterly basis. In 2011, the Board endeavored to ensure that directors, Management and employees adopted the above policies as the guiding principles in discharging their duties. There is no report of any breach to the Corporate Governance Policies. Based on the above commitment, EGCO is well recognized as an excellent showcase of good corporate governance companies by various institutions. 10th best listed companies in Thailand and 4th best public companies in energy and utility sector in a poll

conducted by Finance and Banking Magazine; 5th best public company on net margin in a poll conducted by Money and Banking Magazine;

An excellent showcase for shareholder meeting with the full score of 100 in the quality assessment of 2011

Annual General Shareholders’ Meeting organized by the Thai Investors Association; Top Corporate Governance Report Award and Corporate Social Responsibility Award for listed company with

the market capitalization over 10,000 million baht from the SET Awards hosted by the Stock Exchange of Thailand (“SET”) and the Finance and Banking Magazine;

Excellent Corporate Governance Performance in 2010 by IOD with the score of 96 out of 100 and full score in three categories being the rights of shareholders and role of stakeholders; and disclosure and transparency;

“Board of Directors for Exemplary Practices” for 2010-2011, “Board with Consistent Best Practice” and “Audit Committee of the Year” in a contest organized by the Thai Institute of Directors, SET, the Thai Chamber of Commerce, the Federation of Thai Industries, the Thai Bankers’ Association, the Listed Companies Association and the Federation of Thai Capital Market Organizations

The SET asks listed companies to adopt the SET’s Good Corporate Governance Principles for year 2006 as deemed appropriate and to notify with reasons and substitute measures/ actions to the SET for items which cannot be complied. The Board then prepares this report accordingly. 1. Rights of Shareholders EGCO realizes the importance of Good Corporate Governance and respects the shareholders’ rights as an investor and an owner of the Company based on acceptable and reliable standard. In this respect, EGCO encourages the


90

shareholders to exercise their rights including legal basic rights. Examples are the right to share in the profit, the right to receive adequate information, and the right to attend and vote for significant matters at the shareholders’ meeting such as appointment or removal of directors, remuneration of directors, appointment of auditor, auditors’ remuneration and other significant issues which impact EGCO. Beyond such basic rights, EGCO endeavors to provide significant information to shareholders via the website, newsletters and shareholders’ site visit. 1.1 Shareholders’ Meeting The Board ensures that the processes and procedures of the Shareholders’ Annual General Meeting (“AGM”) accommodate the shareholders to take part in EGCO’s governance. The AGM should be held within 4 months after the end of fiscal year. In 2011, EGCO held an AGM on April 21, 2011. With respect to this, the AGM Checklist issued by the Thai Investors Association, Listed Companies Association and SEC is used as the guidelines. Details are as follows. Before the Shareholders’ Meeting EGCO prepares and delivers the notice of the meeting as well as supporting documents in advance so that shareholders will have adequate information to support their judgments. The Board also encourages shareholders to attend the meeting either in persons or by proxy. The practices in 2009 were as follows. EGCO disclosed the schedule and the agenda of the AGM via the SET’s Community Portal system and

EGCO website on February 28, 2011, which was 52 days in advance of the AGM date. EGCO delivered the notices of the meeting as well as the agenda document on March 18, 2011, which was

33 days before the AGM date. The notices included the objectives, Board’s opinions, and conditions to attend the meeting. Similarly, at least three days ahead of each meeting, the invitation was announced through one Thai and one English newspaper, each for three days, to allow the shareholders enough time to prepare themselves for the meeting. All relevant information was posted on EGCO’s website to facilitate shareholders to study the information in advance before receiving the hard copies. Contact phone number was also provided for any relating inquiries.

EGCO joined hands with the Thailand Securities Depository Co., Ltd (“TSD”) to invite shareholders to notify the intention to attend the shareholder’s AGM in advance via IVR system so that EGCO would provide adequate facilities to accommodate shareholders.

EGCO encouraged shareholders to forward their questions with regard to the meeting agenda in advance to [email protected] or facsimile number 0-2955-0956-7 in order that the shareholders could gain the utmost benefits from the meeting and that their rights would be fully observed.


91

On Shareholders’ Meeting Date EGCO ensures that the meeting is conducted in a way that is convenient and transparent as well as encouraging shareholders for open discussion on EGCO business. The practices in 2011 were as follows: Directors, Management and the external auditor were encouraged to attend the AGM and answer

shareholders’ questions. All the fifteen directors including the Chairman attended the meeting which accounted for 100% of the Board members. The chairman and members of each standing committee also presented information to shareholders and answer shareholders’ questions.

Services to facilitate shareholders who attended the meeting were provided. Map for meeting venue was attached in the notice to the AGM. There was the shuttle service at the parking area at MRT station and the entrance of the meeting venue for shareholders.

Management, Investor Relation and Accounting Officers welcomed shareholders to the meeting and answered their inquiries about EGCO business at the mini-exhibition and shareholder corner in front of the meeting hall.

An officer from TSD, the company registrar, provided the shareholder services and answered questions regarding dividend cheque and share registration and certificates in front of the meeting room.

The barcode system was implemented to facilitate shareholders’ registration process. The shareholders who came late were allowed to vote for the ongoing agenda item and the remaining

agenda items. The Chairman convened the meeting in accordance with the priority notified in the agenda document.

Presentation for each agenda item included the background, supporting rationale and proposal. The meeting was broadcasted via closed circuit television so that shareholders who were outside the meeting

room could follow up the meeting proceedings. Shareholders were equitably treated and were allowed adequate time to address their concerns at the

meeting. The Chairman paid attention to clarify all shareholders’ inquiries of which the questions and the clarifications were recorded in the minutes of meeting.

PricewaterhouseCoopers Legal & Tax Consultants Ltd., (“PwCLT”) were engaged as the inspectors to look over registration documents, meeting quorum, compliance of the voting procedure with EGCO Articles of Association and the Chairman’s notification, voting card collection and vote counting. In this regard, PwCLT reported that the meeting and the voting procedure of 2009 AGM was transparent and in compliance with the governing laws and the Articles of Association.

The form to assess the quality of the AGM was disseminated to gather feedbacks for future improvement. The result of the survey in 2009 indicated that shareholders were satisfied with the quality of the notice to the meeting, meeting arrangement and meeting conduct.

There were 411 and 544 shareholders attending the 2011 AGM in person and by proxy, respectively, representing 395,885,697 shares which accounted for 75.577% of the total units of shares. The attendance rate was


92

approximately the same as that of 2010 AGM in which 485 and 576 shareholders attended the meeting in person and by proxy, respectively, representing 410,811,147 shares which accounted for 78.032% of the total units of shares. After the Shareholders’ Meeting EGCO posted the draft minutes of the meeting for shareholders’ review on EGCO website “www.egco.com”

on May 6, 2011 which was within 14 days after the meeting date (April 21, 2011) as required by the SET. The minutes of meeting had included the significant matter of each agenda items, shareholders’ inquiries and answers by the Board including the resolution and the voting for each proposal. The minutes of meeting was duly filed for future reference.

EGCO broadcasted on its web site that shareholders who could not attend the meeting could request for CD of the meeting for free of charge.

EGCO notified the meeting resolution on dividend payment via SET’s portal. EGCO also coordinated with the registrar to ensure that all the shareholders would receive the dividend.

EGCO took all the recommendations of the shareholders for consideration and improvement of the AGM. As a result of the above efforts, EGCO was honored as an excellent showcase for AGM of listed companies with the full score of 100 for three consecutive years. 1.2 Shareholders’ Visit The Board sets the principle to invite shareholders to visit the Company and meet the management to better understand EGCO business and monitor EGCO’s performance. In 2011, there are seven shareholders’ visits as follows: Shareholders’ visit to Kaeng Khoi Power Plant in Saraburi province (2 times), Analysts’ and investors’ visit to Solar Power Plant in Lopburi (2 times), and Investors’ and analysts’ visit to One Watershed Forest, One Energy Source project (3 times). 2. Equitable Treatment of Shareholders 2.1 Fair Treatment The Board regularly reviews the governance structure and framework to ensure that the shareholders, including minority and foreign shareholders, are treated equitably and that EGCO procedures do not make it unduly difficult or expensive to observe shareholders’ rights. The Board encourages shareholders to take part in EGCO’s


93

governance and ensures that they are well informed about the significant decisions of EGCO as prescribed by laws and the Articles of Association. EGCO strictly follows its policy not to raise any agenda items which had not been submitted to the

shareholders in advance, to make sure that other shareholders would have a great deal of time to study relevant information before making their decision. Every shareholder has a right to cast vote according to their numbers of shares on “a one share one vote” basis. EGCO has never granted a privilege for some specific shares which limits the rights of other shareholders.

To adhere to the best practice as recommended by the SET regarding the right of minority shareholders, EGCO announced via EGCO’s website and the SET’s portal the clear and transparent procedures for shareholders to recommend AGM agenda and to nominate director candidates to the Board during the period of November 2, 2010-January 17, 2011 (about 60 days before the AGM date). The shareholders who would like to propose the agenda or director candidates should hold not less than 100,000 shares which are lower than the SET’s recommended practice of holding not less than 0.5% of the total voting rights of the company. In 2011, no minor shareholders recommended AGM agenda nor nominate director candidates in advance. (Remarks: The Board of Directors in the meeting on August 22, 2011 resolved to offer minority shareholders the right to recommend agenda and questions for 2012 AGM along with the director nominees to EGCO during the period of September 1- December 31, 2011 in accordance with the criteria that the minority shareholders who were entitled to such right should hold the minimum shares of 0.05% of the total outstanding shares (equivalent to 263,230 shares as at September 1, 2011)).

Voting cards were provided for all agenda items for transparency and audit trail. Director election also allowed shareholders to vote on individual nominees.

Shareholders who could not attend in person could vote by proxy. The three proxy forms as introduced by Department of Business Development, Ministry of Commerce were provided which included the form that allowed the shareholders to direct the voting. Three independent directors who did not have the conflict of interests with the AGM agenda were offered as volunteer proxies. In a bid to facilitate the shareholders, the proxy forms could be downloaded from EGCO’s website.

Since most of the shareholders attending the meeting were Thai, the meeting was conducted in Thai. However, to facilitate foreign shareholders, EGCO prepared the notice of meeting in both Thai and English. English interpreting service was also provided at the meeting room.

With the awareness that some shareholders might not be able to read the minutes of meeting on the SET’s and EGCO’s website, a hard copy of the minutes of meeting no. 1/2011 were delivered to each shareholder for review.

2.2 Prohibition of Abusive Conduct by Insiders


94

EGCO has set up the written guidelines in the Code of Conduct for Directors and employees to prohibit improper insider trading and abusive conduct by insiders to ensure fairness to all shareholders. Directors Directors must not make improper use of information acquired by virtue of the directors’ position. Directors must not disclose matters such as trade secrets, or sensitive business information to outsiders. Directors must not buy or sell shares as a director of EGCO while in possession of information, which, if

disclosed publicly, would be likely to materially affect EGCO share price. Directors must not provide to anyone any information which is not publicly available and which would have a

material effect on the price or value of EGCO’s securities. Employees Employees shall at all times observe the rules and regulations issued by the SET, the SEC and other

governing laws which include the equitable disclosure to shareholders and the public. Any information disclosure to the public that will affect the business and EGCO’s stock must be approved by

the President. Only the President or the assigned staff member is authorized to disclose such information. The Corporate Communications Division, the Corporate Secretary Division and the Investor Relations Section

are responsible for disclosing EGCO information to the public while it is the responsibility of the information owner to provide the fact sheets.

EGCO also sets the policy that Management and employees who have the inside information relating to financial statements should refrain from their own security trading within 45 days before and 24 hours after a disclosure date. For other significant inside information, Management and employees should refrain from security trading from the day of acknowledgement until 24 hours after disclosure to public. In addition, EGCO has put in place the internal control system to prevent the leakage of any information before the public disclosure. Such measure was a part of significant risk management. Supervisors also have the responsibility to ensure that the measure to safeguard inside information is effective. Using inside information for own or other benefits of security trading when that information has not made public is considered violating the Code of Conduct. 2.3 Disclosure of Directors and Management’s Interest in EGCO’s Business The Board sets the guidelines that directors and Management discloses to the Board whether they have a material interest in any transaction or matter affecting EGCO to ensure transparency and to prevent conflicts of interest. Directors will promptly notify EGCO when they or their family member is a partner or shareholder of any entity

which may incur benefits or conflicts of interest with EGCO, acquire a direct or indirect interest in any contract


95

made with EGCO or hold shares or debentures of EGCO or any affiliate. Directors or management with potential conflict of interest shall refrain from discussing and voting on such agenda item.

Directors and Management should disclose to the Board their securities holdings at every Board meeting. There is also a statement informing directors at every meeting that directors, management including their spouses, minor children and related persons under Section 258 of the Securities and Exchange Act have a responsibility to prepare and disclose any change in shareholding of the Company to the SEC within three days.

In 2011, the Board also sets the policy for directors and management including related persons to report their interest in the Company to comply with the Notification of the CMSB no. Tor Jor 2/2009 as follows: 1. Directors and executives should submit the form to report their interest to the Corporate Secretary on a

quarterly basis. 2. In case of any change during the quarter, the updated form should be submitted to the Corporate Secretary

as soon as possible. 3. The Corporate Secretary shall submit the form to the Chairman and the Chairman of the Audit Committee

within 7 days after getting such report. In 2011, the Board did not get any complaints for not respecting shareholders’ rights or any accusation regarding director’ and Management’s insider trading. This shows the efficient control of the Board on such matter. 3. Role of Stakeholders 3.1 Rights of Stakeholders Apart from observing the rights of the shareholders, the Board takes due regard of and deal fairly with various stakeholders and encourages active cooperation with them which include both business and corporate social responsibility matters. The Board has set up the guidelines to respond to the requirements of each stakeholder in the Corporate Governance Principle and “EGCO Group’s Code of Conduct” with the expectations that directors, Management and employees shall be guided by those principles in discharging their duties. Employees EGCO believes in the value of its human resources and will strive to be the employer of choice. This is achieved by promoting the participative management, supporting the employees’ professional development and providing fair remuneration and suitable benefit scheme. EGCO strives to prevent accident, injury and occupational illnesses. Physical check up was provided in accordance with the occupational health risks.


96

It should be noted that during the past year, there was no legal dispute between the employees and EGCO. In addition, there was no disabling injury in all subsidiaries. EGCO is proud to announce that the Rayong Electricity Generating Co., Ltd. (“Rayong”) and the Khanom Electricity Generating Co., Ltd. (“KEGCO”) have been certified the OHSAS 18001 : 1999 (Occupational Health and Safety Assessment Series) by RWTUV (Thailand) and KEGCO has been honored the National Distinguished Workplace in terms of Safety, Occupational Health and Environment for 12 years consecutively. Customers EGCO always commits to provide good quality and reliable services in accordance with the agreements with EGAT and all customers. To ensure consistent quality service, the ISO 9001:2008 has been implemented at Rayong, KEGCO, Roi-Et Green Co., Ltd. and Egcom Tara Co., Ltd. During the past year, EGCO and its subsidiaries could generate the contracted electricity with higher equivalent availability factors (“EAF”) than the value stipulated in the power purchase agreement. Rayong also made a superior record in being awarded the EAF bonus for 15 years consecutively. EGCO also prepared our power plant to meet any system emergency. It was notable that Rayong Power Plant could quickly execute the restoration plan in case of brown out using black start emergency diesel in order to power up the eastern region. Creditors EGCO will endeavor to ensure that it complies with the loan provision and that the Company financial status is correctly disclosed. During the past year, EGCO and all the subsidiaries well observed the conditions in the loan agreement and there was no event of default. Suppliers and Contractors EGCO will treat suppliers and contractors fairly and would not seek undue benefit from them. EGCO will comply with the conditions in the agreements. In addition, EGCO aims at developing and securing sustainable relationship with suppliers and contractors on the bases of value for money, technical conformance and mutual trust. Competitors


97

EGCO will conduct its business on a fair play basis. We will not use a disgraceful approach such as bribery in order to get competitors’ sensitive confidential information. EGCO will also refrain from attacking the competitors with false allegations. Community, Society and Environment EGCO operates the business with commitment to social contribution and environment conservation. In this regard, EGCO will foster the corporate culture that employees at all levels will be fully responsible for any social and environment impact when discharging their duties. EGCO also sets guidelines in the Code of Conduct that employees must deliver their duties in a safe manner to avoid any impact on themselves as well as people living and working in communities near our facilities, and the environment. Our employees will strive to comply with relevant laws, prevent accident and pollution, and will use the natural resources in an efficient and environmentally responsible manner. In addition, EGCO has implemented the social projects which cover the following area: Promotion and Development of Community's “Quality of Life”: EGCO Group will put the prime focus on the

quality of life of the surrounding communities both at the head office and at the power plants. In this regard, EGCO has initiated and provided supports to projects relating to education, villagers’ occupation and environment.

Conservation of “Watershed Forest: Source of Life”: Apart from taking care of the working environment and surrounding communities, EGCO Group plays a vital role in conserving the natural resources with the focus on watershed forests, which nourish the well-being of all lives.

Promotion of Learning and fostering a Public Mindedness among “Youths” for Sustainable Social Development: We recognize that education is the key to national development. With the awareness that development starts from early childhood, EGCO has supported the projects to encourage youths from pre-elementary, elementary to high school level to learn from both inside and outside the classroom to children. We believe that such learning is the starting point for social and moral quotient, essential factors for long term national development.

In 2011, EGCO set up the Corporate Governance and Social Responsibility Committee with the responsibility to endorse the governance policy along with CSR policy and framework with the prime focus on the impact to the shareholders and stakeholders. EGCO also prepare the CSR action plan comprising the plan on safety, occupational health, and working environment, and community projects. Details were presented in the Sustainability Development report.


98

It should be noted that in 2010 there was no claim against EGCO from the stakeholders. Detailed information on Corporate Social Responsibility is presented in the Stakeholders’ report. 3.2 Observation of Human Rights EGCO requires that its directors, management and employees fully observe the following human rights. EGCO will treat our employees with respect and honor. EGCO will provide a communication channel for employees to submit questions and complaints relating to

work which we will seriously consider and remedy the problem to benefit and to promote good relations among all concerned parties.

EGCO encourages all employees to exercise their rights of citizenship in accordance with the constitution and relevant laws.

Employees’ personal information shall be kept with utmost discretion and confidentiality. Disclosure of personal information such as employee’ biodata, health record, working experience or any other personal information to non-related party without the permission of such employee is considered a violation of the Code of Conduct and may result in a range of disciplinary action except when it is done in accordance with the Company’s regulations or legal requirements.

EGCO did not support the violation of human rights and frauds. Employees must refrain from any deliberate discrimination or harassment in word or action against others

based on the basis of race, gender, religion, age, and physical or mental disability. EGCO also set clear guidelines for labor engagement of the Company and its business partners to strictly comply with the Labor Act such as no engagement of child labor or abusive hiring. In addition, the working system is designed to put priority on safety and occupational health. There has never been any report on the violation of human rights by EGCO. 3.3 Intellectual Property EGCO will comply with the legal requirements on intellectual property and copy rights. Employees must check beforehand that the work or information that belongs to third parties can be used within EGCO Group without violating the intellectual property of others. 3.4 Measures against Corruption and Bribery EGCO set the policy to work against corruption and bribery. In this regard, EGCO Code of Conduct prescribes that employees are prohibited from soliciting or accepting any advantage from third parties that may impair their


99

objectivity or weaken their ability to promote the best interests of EGCO Group. Employees shall refrain from offering the advantage to outside persons as a motive for him to do or refrain from doing any illegal and wrongful act. On November 9, 2010, EGCO joined the project on Collective Action Coalition to fight against corruption in the private sector. Such coalition was initiated by the IOD, the Thai Chamber of Commerce, international chambers of commerce and Thai Listed Companies Association. Such project was national project being supported by the government and the Office of the National Anti-Corruption Commission. 3.5 Responsibility towards Environment and Resources EGCO Group endeavors to optimize the usage of natural resources, taking into account the impacts on the environment. In this regard, EGCO has monitored the situation and set the measures to alleviate such impacts. In addition, Rayong and Khanom power plants have implemented ISO 14001 : 2004 environment management system and the TIS 18001:1999 & OHSAS 18001 : 2007 Occupational Health and Safety Management System. EGCO Group also factors in the following activities to ensure that EGCO business has taken into account the social and environment issues for sustainable development. Preparing the investment plan with fuel diversification as part of the agenda to reduce the risk of heavy

dependence on only one type of fuel. At present, EGCO is the IPP with the most diversified fuel types in Thailand.

Investing in renewable projects to alleviate global warming and decrease the fossil fuel import. Operating business with environment concern and strict adherence to relevant laws and regulations including

the regulations of local administrative agencies. Supporting economic and social development while respecting the local tradition and culture. EGCO will

support the government policy and take a good care of communities surrounding the power plants so that they will not only be protected from the negative impact of EGCO business, but will also have a better quality of life.

3.6 Channel to Direct Corporate Issues to the Board of Directors and Corporate Secretary To increase the corporate value, the stakeholders can direct their recommendations and concerns on corporate issues to EGCO at the following address.

Electronic mail Telephone numbers Board of Directors [email protected] - Audit Committee [email protected] - Corporate Secretary [email protected] 0 2998 5021-5


100

Corporate Communications

[email protected] 0 2998 5131-3

Investor Relations [email protected] 0 2998 5145-8 The mailing address is Electricity Generating Public Company Limited, EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210. The Corporate Secretary will be responsible for forwarding communications directed to the Board to the standing committee or relating directors. The Corporate Secretary will summarize all directors’ communications received during the most recent quarter to the Board, except for mails addressed to the Audit Committee which would be directly forwarded to the Audit Committee without screening. Also, for the electronic mails addressed to the [email protected], Chairman of the Audit Committee would open them by himself. 3.7 Whistleblower System and Whistleblower Protection The Board has set the channels for whistle blower programs at both management and director levels. For management channel, the report on any suspected violation or crime shall be made to the supervisor and the Good Corporate Governance Committee. For the Board’s channel, such report can be directed to either the Board or the Audit Committee. It is the responsibility of the management to coach employees to meet their responsibilities under the requirements of relevant laws and regulations. Failure to observe the Code of Conduct will result in a range of disciplinary actions. The procedure to protect the whistleblower is also put in place. For example, information will be kept confidential and will be known only among responsible parties. The whistleblowers can identify themselves or can keep their identities anonymous. However, they must provide adequate information for the Company to investigate the claims. In 2011, EGCO was honored the CSR Award for listed company with the market capitalization over 10,000 million baht from the 2011 SET Awards. In addition, Group companies also won the following awards. KEGCO won the National Safety Awards for 2009” for 12 consecutive years and Outstanding Achievement on

Labor Relations and Welfare” for 5 consecutive years. Roi Et Green Co., Ltd won the national Safety Award” for the second year. EGCOM Tara Co., Ltd. was presented the Certificate for Quality of Drinking Water for 9 consecutive years,

Certificate audit for Environment Management System: EMS Stage II by Ministry of Industry, and excellent healthy workplace for 5 consecutive years.

4. Disclosure and Transparency


101

4.1 Information Disclosure Being aware of the impact of EGCO’s information on the decision of investors and stakeholders, the Board set a policy to disclose material information in a timely and transparent manner in accordance with the requirements of the SEC and SET via the following channels: 1. SET’s Community Portal system and SEC; 2. Public channels such as newspapers, magazines, television, and corporate news; 3. Company’s web site at www.egco.com both in Thai and English; 4. Company’s visits; 5. Road shows for both domestic and overseas investors; 6. Analyst meetings; and 7. EGCO news via post EGCO has established a Disclosure Committee comprising President, Senior Executive Vice President-Finance and Corporate Services, Senior Executive Vice President-Business Development- Domestic, Senior Executive Vice President-Business Development- International, Senior Vice President-Corporate Secretary, Senior Vice President- Corporate Communication and Vice-President-Investor Relations. The meetings are called on quarterly basis in order to set communication plan, review disclosure policy, and prepare significant disclosure to ensure that the information is correct and efficiently communicated. Investor Relations Investor Relations is responsible for communication with institutional and individual investors, and analysts on an equitable basis. In this regard, annual Investor relations plan is prepared. EGCO puts priority on sharing information via investor relations activities. Senior management always takes parts in providing information to investors and analysts to create understanding on the Company, promote the relationship, and encourage them to provide the feedback to the Company. Significant activities in 2011 included meeting investors in 2011 Thailand Focus. Two trips were arranged for investors’ and shareholders’ visits to Kaeng Khoi 2 Power Plant in Saraburi Province. EGCO also hosted three trips for analysts and institutional investors to visit the “one watershed forest, one source of energy” project and two briefings and site visits the Solar Power Plant in Lopburi. Besides, there were four analyst meetings in Thailand, three overseas road shows to Hong Kong and Singapore. On top of that, there are newsletters and electronic mails. For those that cannot join the investor relations activities, EGCO has posted the presentations, operating results, financial statements and notice to the SET on our web sites.


102

Corporate Communications The Corporate Communications Division is responsible for communicating the movement of the Company to media for public disclosures. Major events in 2011 included 3 press conferences on corporate results and directions, 6 media trips, 12 executive Interview and 26 pieces of press releases. Corporate Secretary The Corporate Secretary discloses information as required by the SET and SEC on a correct and transparent basis. In 2011, 20 notifications were submitted to the SET. EGCO always updates the information on EGCO website. Quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for future improvement. In addition, EGCO also attached the feedback form for shareholders to provide feedback on the quality of the annual report, additional document required, and questions for the President to answer in the next AGM in the annual report and the notice to the AGM. Such feedback form was well received by shareholders. 4.2 Financial Statement Preparation EGCO aims at fostering the stakeholders’ confidence that EGCO’s financial reports are accurate, complete and transparent in line with the generally accepted accounting standards to protect EGCO assets against fraud or abnormalities. In this regard, the Board has entrusted the Audit Committee to assume key duties and responsibilities of reviewing the financial statements to ensure its correctness and adequacy and compliance with the accounting standards and relevant regulation. The Audit Committee sets the policy to have a non-management meeting with the auditor at least once a year to ask questions and discuss with them about various significant issues. Apart from disclosing the Auditor Report in the annual report, the Board also prepares the report on Board of Directors’ Responsibilities on Financial Statements which covers important topics as prescribed in the SET’s Best Practices for Directors of Listed Companies. In 2011, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited as the Company’s auditor given that they had professional knowledge and had no conflicts of interest to defect their independent judgment. This was aimed at fostering the Board’s and shareholders’ trust that EGCO’s financial statements truly reflected the actual financial status and operating result. EGCO also prepares the report on Management Discussion and Analysis to provide analytic information on the Company’s financial status, operating results and major changes to investors and analysts on a quarterly basis. Such report is submitted via SET’s portal along with the Company’s financial statements. 4.3 Information Disclosure on EGCO Website


103

In order that shareholders and investors can quickly search and retrieve EGCO’s public information, EGCO presented the following information on the website. 1. Corporate profile comprising history, vision and mission, organization structure; 2. Corporate governance comprising corporate governance principle, board of directors, board committees,

senior management; 3. Investor Relations comprising financial information, shareholder information, analyst information, investor

calendar; 4. Corporate information comprising brand information and press center; and 5. Corporate social responsibility comprising information about EGCO social contribution activities. Investors can visit EGCO website at www.egco.com It should be noted that SEC has never demanded EGCO to re-state the financial statements. In addition, the quarterly and annual financial statements are disclosed before the deadline. 5. Responsibilities of the Board 5.1 Board’s structure Structure and Composition Currently, the Board comprises not less than 5 directors and not more than 15 directors as stipulated in the Articles of Associations. The number of the directors will be reviewed periodically. The change in number of directors requires the shareholders’ approval with the four-fifth majority votes of shareholders who attend the meeting and have the rights to vote. As at January 31, 2011, the Board comprised 15 directors, 14 of whom were outside directors which accounted for 93% of the Board. From these outside directors, 6 were qualified as independent directors which accounted for 40% of the total directors. The Nomination and Remuneration Committee is entrusted to select and recommend prospective nominees, whether they are to become the shareholders’ representatives or independent directors. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria as deemed necessary. The Board views that the existing structure and composition of the Board which comprises directors with 100% in male and the background in engineering, economics and


104

finance, and laws and political science at the ratio of 40%, 33.33%, and 26.67% respectively, was appropriate with useful mix of skills and experience and an appropriate balance of power.

Term and Age Limit One third of the directors shall retire by rotation at the AGM as prescribed in the Public Limited Company Act B.E. 2535 The Board views that there should not be limit on the number of terms a director may serve. Term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high functioning members able to keep the commitments to Board service, the Nomination and Remuneration Committee will evaluate the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term. On the other hand, the age limit policy is imposed that director candidates cannot stand for election after age 72. Given such age limit on the election date, directors will be able to serve on the Board until the expiry of their terms. Chairman The Board elected Mr. Pornchai Rujiprapa, a representative director of EGAT, as the Chairman because of his knowledge in energy sector together with his leadership to lead EGCO to achieve the corporate vision and mission. Although the Chairman is not an independent director, the Board remains independent and objective due to the following mechanisms:

1. The Chairman is a non-executive director, is not the same person as the President and has no relations with the management. His authorities are separate from those of the President, and there is a clear distinction between supervisory policy-making and day-to-day business administrative roles. The Chairman takes the role of the leader and assures that the Board’s meetings are efficiently conducted by


105

encouraging involvement by all directors and providing recommendations to Management via the President. The Board will not intervene with any routine activities under the President’s responsibilities;

2. The Chairman is not an EGAT’s employee but is entrusted by the State to be on EGAT Board of Directors to protect the national benefits. The Board believes that the Chairman will act in the best interest of all shareholders and stakeholders;

3. The Board is mostly comprised of non-executive directors and the Board’s seats are allocated in accordance with the shareholding in the Company comprising 4 EGAT representative directors, 4 TEPDIA Generating B.V. (“TEPDIA”) representative directors, and 6 independent directors which indicates a proper balance of power;

4. The Board has appointed the Vice Chairman who is an independent director to work with the Chairman in setting and scrutinizing the meeting agenda and the time allocation for each agenda item; and

5. The Board has assigned Board committees to oversee tasks where there may be a potential for conflict of interest and to balance the need of each stakeholder. With respect to this, the Audit Committee is entrusted for oversight of the integrity of financial and non-financial reporting and review and management of related party transaction. The Nomination and Remuneration Committee is assigned to take care of selection of Board members and key executives and their remuneration.

The result of the Board’s performance appraisal in 2011 indicates that the Chairman is effective in leading the meeting and encouraging directors to participate in the debate around the Board table. Independent Director There are six independent directors on Board which is larger than one/third of the whole Board. Independent directors set up the policy to call meetings as needed. In 2011, there was an independent director meeting to discuss and exchange their views regarding the corporate governance and interesting issues and the result was reported to the Board. Segregation of Duties There is a segregation of duties between policy making, which is the responsibility of the Board and routine business, which is the responsibility of the Management. In this regard, the Table of Authority has been prepared and approved by the Board. The Board will not intervene with any routine activities under the President’s responsibilities. Policy and the Procedure for Other Positions of Directors and Management To ensure that the Board will be able to devote time for the efficient governance of EGCO, the Board agrees that a director should not serve more than 4 companies if being executive director and 6 companies if being non-


106

executive director. Currently, there is not any director who serves more than 6 companies. The Board has already taken into account his meeting attendance as one of the criteria for his re-election. Corporate Secretary The Board has appointed Ms. Busakorn Kakanumpornwong as the Corporate Secretary with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution. To provide primary advice pertaining to EGCO’s regulations and Articles of Associations, and to monitor to

ensure regulatory compliance on a regular basis, and report any significant changes to the directors; To arrange meetings of shareholders and the Board in accordance with the laws and regulations, including

EGCO’s articles of associations and procedures; To prepare meeting minutes of shareholders and the Board of Directors, and to monitor to ensure compliance

with resolutions of shareholders’ and Board meetings; To ensure that corporate information disclosure to regulatory agencies is in accordance with the laws and the

SEC’s and SET’s regulations; To inform general shareholders of their legitimate rights including EGCO’s news; To facilitate the Board activities including director orientation; and To file and keep record of EGCO’s paper such as directors’ registration, notice to the meeting, minutes of

meetings, annual reports, notice to shareholders’ meetings, shareholders’ minutes of meetings and reports on directors’ and management’ interest.

In 2011, the Corporate Secretary attended seminars and provided opinion on the hearings hosted by the list company regulators so that information should be used to enhance the efficiency of corporate governance. 5.2 Board’s Standing Committees With the objective to enhance the governance efficiency, the Board assigns directors with knowledge and expertise to be the members of the Board committees namely Audit Committee, Investment Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee. Each Board committee has its own charter which prescribes functions, composition, term of office, responsibilities and meeting conduct. The committee’s charter, which is approved by the Board, will be reviewed as deemed


107

appropriate. Each committee can retain outside counsels, experts and professional advisors, as deems appropriate at EGCO’s expense. The committees will report their meeting results to the Board. The Audit Committee comprises 3 independent directors. The Audit Committee’s mission covers the review of the financial statements, legal compliance, risk management policy, internal control and appointment of auditor. The Audit Committee also reviews the connected transaction or transaction with conflicts of interest to ensure that such transaction is in compliant with the SET’s requirement, well-grounded and will be for the best interest of EGCO. The Nomination and Remuneration Committee comprises 5 non-executive directors, three of whom are independent. The Nomination and Remuneration Committee members appointed Mr. Hideaki Tomiku, a representative director from TEPDIA as the Chairman of the Committee as he has a wealth of experience in policy implementation, human resources management and governance management. The Board trusts that regardless of whom the Committee Chairman is represented, the Nomination and Remuneration Committee has the appropriate process and mechanisms to mandate transparent procedure of (1) recruitment of directors and Management in line with the best practices taking into account the recommendations from all shareholders; and (2) transparent and clear guidelines for remunerating directors and Management at a rate comparable to those of the peer companies and aligned with the long term benefit of EGCO and the shareholders. The Investment Committee comprises 5 directors and has the responsibility to screen and endorse for the Board’s consideration the Management’s proposals especially on the investments, funding and relating activities. Exception is made for medium and small sized investment where the Investment Committee can approve business decision with subsequent acknowledgement by the Board. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board is appointed the Chairman of the Investment Committee. He has proven to be efficient chairman who conducts the meeting efficiently and be attentive to other members’ recommendations both at the Board’s and the committee’s meeting. It should be noted that the Investment Committee was established in 2010. The Corporate Governance and Social Responsibility Committee comprises 3 members being one non-executive director and the President. The Chairman of the Committee shall be independent director. The Corporate Governance and Social Responsibility Committee has the responsibility to endorse the corporate governance principle and the positions and practices on issues of corporate social responsibilities, principally in relation to social and environmental matters that affect shareholders and other key stakeholders. The structure and duties and responsibilities of each Board committee as well as the number of meetings are reported in the other article on “Shareholding and Management Structure”.


108

5.3 Role and Responsibility of the Board of Directors Duty and Responsibilities The Board members well understand their role and responsibilities including the business of the Company. They well serve the Company with honesty and prudent judgments for the utmost benefit of the Company and the fairness to all shareholders. The Board has exercised independent judgment and devoted time in discharging their duties in accordance with the Corporate Governance Principle as follows. To set the corporate vision, target and business strategy including risk management policy, annual budget

and business plan as well as setting the corporate performance targets while monitoring the implementation, the result, significant investment cost, acquisition and disposal of the assets;

To recruit, set the remuneration rate, monitor the performance and if necessary to change the key management and plan for a smooth succession plan;

To review the remuneration of directors and key management and ensure that the director selection process is procedural and transparent;

To monitor and resolve the conflicts of interests which may incur by Management, directors and shareholders, and to ensure the independent audit and internal control with the focus on risk monitoring, financial control and legal compliance;

To monitor the effectiveness of the existing governance tools and instruments and implement change if necessary;

To monitor the information disclosure and communications; and To direct self - appraisal annually and declare in the annual report how well they carry out their duties and

oversee EGCO. Leadership and Vision The Board works with the Management in setting the vision, mission, strategies, goals and business plans both over a short and long term. The corporate KPIs are designated for each key area being growth, finance and organization excellence. The Board also endeavors to ensure that the significant working system such as the internal control and risk management are in place. Management performance is also monitored through the President’s report which is prepared on a monthly basis to ensure that EGCO business is carried out in an efficient manner. Code of Conduct To maintain high ethical standards, EGCO has set up a Code of Conduct as a guideline so that directors, Management and employees perform their duties with regard to ethical values. Directors’ Code of Conduct


109

focuses on business ethics, ethics for directors, directors’ commitment, duties and responsibilities, conflicts of interest and use of information. Employees’ Code of Conduct would be annually reviewed. Employees’ Code of Conduct covers 1. Guiding principles, 2. Making the system work, 3. Compliance with laws and regulations, 4. Business ethics, 5. Human resources, 6. Safety, health and environment and 7. Accountability. EGCO continuously conducts the training on adherence to the Code of Conduct for the employees as well as provides clarification on their frequently asked questions. Directors, Management and employees must obey and respect the spirit of the Code of Conduct. Managers at all levels are required to promote the compliance with the Code of Conduct and act as role models. Employees at senior vice president level and upward shall review their compliance with the Code of Conduct before signing and submitting the Code of Conduct Compliance Statement to their immediate boss annually. Internal Control and Internal Audit

Realizing the importance of having sufficient and suitable internal control at all levels, EGCO clearly determines responsibilities and authority of Management and employees in writing, taking into account segregation of duties, check and balance, and control of Company’s assets. EGCO also set a correct and timely financial report system. Apart from this, EGCO sets up an Internal Audit Division to audit EGCO and subsidiaries and to provide consultation to relevant units to reduce the weaknesses in the system under the proactive audit plan. The Audit Committee directly reports to the Audit Committee in order to make sure of its transparent auditing process. The Audit Committee has a responsibility to approve internal audit plan, and to consider and review the independence and the performance report of the Internal Audit Division.

EGCO emphasizes on developing the capabilities of internal auditors by self-development, experience sharing and attending inside and outside seminar. In 2011, Vice President- Internal Audit was received the Certificate Internal Auditor (“CIA”) and an Assistant Vice President-Internal Audit was waiting for taking the examination to receive CIA.

The Board sets the policy to annually review EGCO’s internal control system using the questionnaires that were developed in line with the guidelines of the SET and the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Employees from section managers and upward are assigned to evaluate the quality of the internal control of which the result will be proposed to each subsidiary’s Board of Directors, the Audit Committee and EGCO Board of Directors, respectively. The evaluation result in 2011 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system. Details are presented in Internal Control in this annual report under article Internal Control. To ensure compliance with internal control systems, and rules and regulations, employees of EGCO and subsidiaries at senior vice president level and upward are


110

required to thoroughly review their 2010 work practices before signing the General Representation Letter to their managers up to the President. The President also signed the General Representation Letter addressed to the Chairman of the Board.

Risk Management The Board of Directors entrusts the Audit Committee to review with the Management the risk management policy, implementation and guidelines. The Audit Committee reports the update on risk management issues to the Board twice a year to consider the adequacy and effectiveness of risk management system so that the strategies, plan and measures can be adjusted or put in place at an appropriate timing. To implement enterprise risk management, the following measures are implemented: EGCO Risk Management Committee is shored up comprising top management of the Group companies with

the President as the Chairman of the Committee. The objectives are to closely monitor the risk management of the Group and to present the result to the Audit Committee and the Board. In addition, Risk Management Committee is also set up at each power plant to set up the policy and monitor the implementation to meet the overall policy and the business characteristic of each power plant.

Risk Management Section was also set up under Internal Audit Division to be fully responsible and coordinating for risk management.

Risk management process is embedded into the working process. Management and employees are encouraged to take part in the process and to efficiently use the resources to identify, appraise and manage risks.

Risk management is implanted into the corporate culture. EGCO has adopted the risk management policy and risk management manuals as guidelines since 2001. Risk Management implementation is also included as one of the elements for internal control assessment. The result of such assessment in 2011 indicated that EGCO Group has appropriately implemented risk management system. Conflicts of Interest EGCO has set the policy in the Code of Conduct for directors and employees to avoid the conflicts between the personal interest and the corporate interest as follows. Directors and employees shall not be engaged as directors or advisors of other companies, organizations,

and associations that may conflict with the interest and the business of EGCO. Acknowledgment of such engagement by the Board must be sought;


111

Directors will promptly notify the Board when any of the conflict of interest occurs and must consider whether to refrain from participating in the debate and/or voting on the matter, whether to be absent from discussion of the matter, whether to arrange that the relevant board papers are not sent, or, in an extreme case, whether to resign from the Board;

The list of major shareholders is disclosed. Directors and designated Management will report the change in their security holding to the regulatory body. The Corporate Secretary is assigned to report the security holdings of directors and Management to the Board at every meeting;

Employees should not borrow money from the customers/suppliers or from individuals or firms having business dealings other than financial institutions as it may influence the way they handle EGCO business; and

The step for implementing connected transaction along with the approval authority and the disclosure of such transaction shall be as required by the SET and SEC. The Corporate Secretary will identify the type of transaction and the approval body and will submit the reports on connected transactions and any conflict of interests to the Audit Committee for acknowledgement and disclose the information in the annual report and annual registration form (Form 56-1).

Directors and management are required to prepare the report on the interest of their own and related parties to the Company to enable the Corporate Secretary to ensure transparent practices. The Corporate Secretary will submit a copy of such report to the Chairman and the Chairman of the Audit Committee. To foster trust among all concerned parties that the connection transactions are aimed at optimizing the benefits of EGCO and the shareholders, the Audit Committee is assigned to review the information and provide comment with regard to the connected transaction that needs to be approved by the Board and the shareholders and to ensure that the disclosure is adequate. Fraud Risk Management With a view that fraud risk was significant, the Board set a measure to manage fraud risk as follows. Preventive Measures: The organization is well designed for the purpose of governing and managing business.

The Code of Conduct is prepared in writing and the compliance with the Code is promoted. The internal control system is established and appraised. The whistleblower program is in place.

Investigation: Each supervisor assumes responsibility to prevent and control fraud risks and errors in the system. In addition, there is an internal audit unit which is independent from senior management to review the compliance with the regulations and test the early warning signals.


112

Fairness: The fraud investigation will be made by a panel to ensure fairness to the defenders. In addition, whistleblowers will be appropriately protected.

Lesson Learn: Case study on fraud risks both in Thailand and overseas will be used to train supervisors on fraud prevention.

In 2011, there is no claim or any fraud found in EGCO Group due to the above efficient preventive measures. 5.4 Board Meeting To ensure that the Board takes full responsibility to meet the expectations of the shareholders, the Board reviews significant business policy and corporate calendar. In this regard, it is determined that the Board meeting will be held at least once every two months. Extra Meeting can be called if there is any major unplanned event that needs the Board’s consideration. The Board can also authorize the committees to scrutinize or approve the management’s activities within the delegated authority during the meeting interval. The Board also instructed management to provide monthly performance report so that the Board can follow up the business progress despite not having the Board meeting. To facilitate the directors, EGCO plans the meeting dates and the agenda for the whole year in advance. The Chairman and President fix the agenda for the Board’s meeting. Each director can propose the agenda to the Chairman and can deliver their independent judgment. The Corporate Secretary shall serve written notice calling for the Board meeting at least one week in advance except for necessary or urgent case to preserve the rights or benefits of the Company where the meeting may be called by other methods and an earlier meeting date may be chosen. Meeting document are sent to the directors in advance to allow adequate time for digesting such information. Agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, Matter for Information to ensure that items that need the most careful deliberation are given adequate time. The Chairman allocates adequate time for Management to present their issues and to permit directors to conduct extensive discussion of agenda items and other topics of interest. The minutes of meeting are drafted for the Board’s review within 14 days after the meeting prior to the adoption at the next meeting. The Board had called 7 meetings in 2011. Each meeting took approximately 2 hours and a half. The average attendance rate is 94.28%. Since EGCO has a number of directors who do not reside in Thailand, EGCO has set the policy to allow those directors to attend the meeting by teleconference so that EGCO and the Board will benefit from their opinion and recommendation. Such attendance is not considered the meeting quorum and those who attend the meeting by teleconference do not have the right to vote.


113

The Board encourages the President to invite top Management being the senior executive vice presidents to attend all the Board’s meeting. Other Managements are invited to join the meeting as deemed necessary to provide additional insights into the items being discussed because of personal involvement in those areas. Managers with future potential are given exposure to the Board to support the consideration of the succession planning. The Board can request for additional necessary information from the President or the Corporate Secretary or other assigned management within the extent of the established policy. The Board can also engaged independent advisor for the benefits of the business on EGCO’s expenses. Details of directors’ attendance in 2011 are illustrated in Table 1. The Board set up a policy for non-executive directors to call a meeting at least once a year. There are two meetings in 2011. The agenda items cover board of directors’ meetings, risk management, structure, roles and responsibilities of directors and management, good corporate governance, President’s performance appraisal and human resource management. 5.5 Board Self-Assessment The Board regularly conducts self-assessment for future improvement. In 2011, the Board agreed to use the 2009 self-appraisal form based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. There are two parts, the collective appraisal form and the individual appraisal form. The grading code is “excellent” for the score of 85 and above, “very good” for the score of 75 and above, good for the score of 65 and above, “fair” for the score of 50 and above and “poor” for the score below 50. The result of the appraisal is concluded as follows. Collective Self-appraisal The collective self-appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the President, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The result can be concluded that the Board protected the benefits of shareholders, stakeholders and EGCO and that EGCO had good corporate governance. The average score was 88% which was in the excellent level. The highlights were as follows: EGCO’s objectives reflect shareholders’ expectation and full and accurate reporting on EGCO affair had been

made. The Board understands who the key stakeholders are and have good relationship with them.


114

The strategic plan is carried out of sufficient quality and content and is well reflected at operational level with key performance indicators.

The Board communicates proper ethical and legal responsibilities to its members and ensures ethical behavior and proper compliance standards throughout the organization. The Board is sufficiently independent of the Management. The Board has leadership and effectively managed the conduct of Board business as a team.

New directors are provided with adequate information about the Company and the Board. Director receives proper training in corporate governance.

The Board works well with the President and other managers to create an open culture that encourages frank discussion. The Board avoids excessive intrusion in the President and/or management’s responsibility.

The Board and committee meeting are productive. The Chairman carries out the role satisfactory and encourages director participation in a debate. The Board regularly evaluates the performance of the President and creates an appropriately designed

management compensation plan. The Board has a company wide succession plan in place. The Board has a working knowledge of competitors in the sector and plays a role in public service. Despite an excellent score, the Board viewed that plan should be made to ensure that the director development, succession planning, and director and management remuneration is perfect. Individual Self-Appraisal The individual appraisal form comprised 7 sections, namely strategic thought, good corporate governance, competence, independence, preparedness as a director, personal attributes and awareness of stakeholders. From the individual self-appraisals, most of the scores were higher than 92% which could be concluded that the directors had appropriate deliberations and contributions in accordance with the recommended best practices. Audit Committee Self-Appraisal Apart from the Board, the Audit Committee also appraises themselves annually. The result of the self-appraisal in 2011 indicates that the composition, qualifications and roles and responsibilities of the Audit Committee are still in line with the Audit Committee’s Charter B.E. 2551 and the international best practices.


115

5.6 Performance Appraisal of President and Top Executives All the non-executive directors will appraise the President performance against the corporate and individual achievement. Indicators include the following: Qualitative indicators being leadership, relationship with the Board, risk management and internal control,

human resources management, good corporate governance and Code of Conduct. Corporate achievements based on the committed Key Performance Indicators. Capabilities to enhance business development. The Nomination and Remuneration Committee is responsible for endorsing the performance appraisal of the senior executive vice presidents and executive vice presidents based on the individual achievement of each executive. 5.7 Remuneration for Directors and Management EGCO set the directors’ remuneration at the appropriate rate which is comparable to that of the leading companies in the same sector. The remuneration comprises monthly retainer fee, meeting allowance and bonus which is paid once a year and is tied with EGCO’s achievement. The Nomination and Remuneration Committee shall recommend the remuneration framework to be endorsed by the Board before proposing to the shareholders. EGCO has a policy to disclose the remuneration of each director for transparency. Directors that also serve as committee members will be entitled to extra remuneration to match the increase in responsibilities. Management who serve as directors and committee members shall refrain from taking director remuneration. The non-executive directors shall set the remuneration of the President taking into account the performance appraisal and the peer payment. The Board also approves the pay structure of the Company. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to that of the peer companies and adequate to attract and motivate the qualified executives. The remuneration of directors and management is disclosed under the topic of shareholding and management structure in this annual report. 5.8 Board and Management Training The Board pays attention to continuous development of directors and management. In 2011, The following development plan was implemented to ensure efficiency and effectiveness. Director Development


116

Continued development is encouraged for all directors: New Directors: Directors’ orientation is arranged where directors will have a chance to meeting with Management. Directors’ manual is updated to equip incoming directors with knowledge about EGCO. Directors are also encouraged to attend training programs at the Institute of Thai Directors (“IOD”). Existing Directors: The Board encourages continued development covering in-house training and outside training at the IOD or other relating academic institutes. In 2011, EGCO’s in-house training programs for directors were risk management and fraud risk management, and new accounting principles and the Company’s governance. The seminar on an overview of industry, business characteristics of the Group companies, current and future plans were also provided to the Board. EGCO also arranged a Board visit to Solar Power Plant Project in Lopburi, and site visits to overseas power plants to educate our directors on power business and future trend. Company directors are well educated about the Company’s business and their responsibilities as a director. The list of directors who attended the courses at IOD and outside institutes as of December 2011 is shown in Table 2. Management Development and Succession Plan EGCO supports the executive development program to enhance Management capacities and skills to be suitable to perform their duties and to assign the suitable and challenging job. The Board determines policies and principles for selection of the President and his successor in the event of an emergency or the retirement of the President taking into account educational background, experience, capabilities, ethics and leadership. The selection process is fair and transparent. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications endorsed by the Nomination and Remuneration Committee. The approval of the candidates shall be as stated in the Company’s Regulation on Human Resource Management B.E. 2553 and the resolution of the Board as follows. The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice

President, Executive Vice President, and nominate senior executives of subsidiary/joint venture companies that EGCO has the right to nominate for a position equivalent to EGCO’s EVP level and upward.

The President shall appoint the division and section managers.


117

The appointment of Corporate Secretary shall be by the Board while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee.

The Nomination and Remuneration Committee has assigned the Management to prepare the succession plan for 17 key positions along with the executive development plan to ensure that qualified employees would be selected under the D-R-I-V-E people attributes as follows: Dedication to Excellence Result Orientation

Initiatives and Dynamic

Value Differences and Work as a Team

Environment, Social and Safety Concern The Management development plan is prepared to focus on development of core, managerial/leadership competencies and functional competencies. Key courses and numbers of trainees for each course are as shown below:

Courses No. of participants Director Certification Program 2 Executive Development by Thai Listed Companies Association

2

Management of Public Economic for Executives at King Prajadhipok’s Institute

1


118

Table 1: Meeting Attendance No. Name Meeting (time)

Board Meeting 8 times/year

Audit Committee

17 times/year

Investment Committee

11 times/year

Nomination and Remuneration

Committee 10 times/year

Good Corporate Governance and Corporate Social

Responsibility Committee 2 time/year

1 Mr. Pornchai Rujiprapa Chairman

7/7 11/11

2 Mr. Aswin Kongsiri Vice Chairman Independent Director

7/7 10/10 2/2

3 Mr. Chaipat Sahasakul Independent Director

7/7 17/17

4 Mr. Thanapich Mulapruek Independent Director

6/7 17/17

5 Mr. Somphot Kanchanaporn Independent Director

7/7 17/17

6 Police Lieutenant General Pijarn Jittirat

7/7 10/10 2/2

7 Mr. Phaiboon Siripanoosatien Independent Director

7/7 9/10 2/2

8 Mr. Somboon Arayaskul1 Director

5/5 7/8 1/2

9 Mr. Wisudhi Srisuphan2 Director

1/1

10 Mr. Kurujit Nakornthap3 Director

5/5

11 Mr. Surasak Supavititpatana4 Director

2/2 1/1

12 Mr. Kulit Sombatsiri5 1/1 0/0 13 Mr. Peter Albert Littlewood 6

Director 0/1

14 Mr. Hideaki Tomiko Director

6/7 10/11 7/7

15 Mr. Shinji Tsuchiya6 Director

1/1

16 Mr. Mark Jobling6 Director

1/1 1/2 3/3

17 Mr. Toshiro Kugama7 6/6 18 Mr. Akio Matsusaki8 4/6 19 Mr. Ryota Sakakibara7 6/6 8/9 20 Mr. Vinit Tangnoi9

Director and President 7/7 8/8 2/2 2/2


119

No. Name Meeting (time) Board Meeting

8 times/year Audit

Committee 17

times/year


11 times/year


Committee 10 times/year

Good Corporate Governance and Corporate Social

Responsibility Committee 2 time/year

21 Mr. Sahust Pratuknukul13 7/7 3/3 8/8 0/0

1 Resigned on October 1, 2011 2 Resigned on February 28, 2011 3 Being appointed director on February 28, 2011 and resigned on December 1, 2011 4 Being appointed director on October 25, 2011 5 Being appointed director on December 13, 2011 6 Resigned on February 23, 2011 7 Being appointed director in Shareholders’ Annual General Meeting no. 1/2011 on April 21 8 Being appointed director in Shareholders’ Annual General Meeting no. 1/2011 on April 21 and resigned on January 29, 2012 9 Resigned due to the end of contract on September 30, 2011 Note: 3 members in Audit Committee comprising no. 3, 4, 5 8 members in Executive Committee comprising no. 1,8,11,14,16,19,20,21

8 members in Nomination and Remuneration Committee comprising no. 2,6,7,8,14,16,20,21

7 members in Corporate Social Responsibility Committee comprising no. 2,6,7,8,12,20,21


120

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

Directors

Courses Chairman 2000/The Role of

Chairman

Directors’ Certification

Program

Successful Formulation

and Execution of

Strategy

Audit Committee Program

Financial Instrument

for Directors

Accounting for non-

accounting Audit

Committee

Director Accreditation Program (DAP)

The Role of the Compensation Committee Program

IFRS Audit Committee

and Continuing

Development program

Monitoring the System of

Internal Control and

Risk Management

Monitoring Fraud Risk

Management

Monitoring the Quality of

Financial Reporting

The Board’s Role on Fraud

Presentation and

Detection

Monitoring the Internal

Audit Function

Risk It all

1. Mr. Pornchai Rujiprapa Chairman

√ √

2. Mr. Aswin Kongsiri Vice Chairman Independent Director

√

√

√ √

3. Mr. Chaipat Sahasakul Independent Director

√ √ √ √ √ √ √ √ √ √ 4. Mr. Thanapich Mulapruek Independent Director

√ √ √ √ √ √ √

5. Mr. Somphot Kanchanaporn Independent Director

√ √ √ √ √ √ √ √ √ √ √

6. Police Lieutenant General Pijarn Jittirat Independent Director

√ √ √ √ √

7. Mr. Phaiboon Siripanoosatien Independent Director

√ √ √

8.Mr. Surasak Supavititpatana Director

√

9.Mr. Kulit Sombatsiri Director

√

10.Mr. Vinit Tangnoi Director

√ √ √


121

Directors

Courses Chairman 2000/The Role of

Chairman

Directors’ Certification

Program

Successful Formulation

and Execution of

Strategy

Audit Committee Program

Financial Instrument

for Directors

Accounting for non-

accounting Audit

Committee

Director Accreditation Program (DAP)

The Role of the Compensation Committee Program

IFRS Audit Committee

and Continuing

Development program

Monitoring the System of

Internal Control and

Risk Management

Monitoring Fraud Risk

Management

Monitoring the Quality of

Financial Reporting

The Board’s Role on Fraud

Presentation and

Detection

Monitoring the Internal

Audit Function

Risk It all

11. Mr. Hideaki Tomiko Director

√ 12. Mr. Toshiro Kudama Director

13. Mr. Akio Matsuzaki Director

√

14. Mr. Ryota Sakakibara Director

√

15. Mr. Sahust Pratuknukul Director and President

√ √ √

Part 2 Section 10 Internal Control

Page 122

10 Controlling System and Internal Audit The Board of Directors has entrusted the Audit Committee the responsibility to review the appropriateness and effectiveness of the internal control system provided by the management. This is to ensure that EGCO’s internal control system is adequate, appropriate and in line with the guidelines of The Stock Exchange of Thailand’s (SET) and the internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). EGCO’s internal control covers management control, operational control, financial control, and compliance control.

The Board set out the duties and responsibilities of the Internal Audit Division in the Internal Audit Charter which was reviewed by the Audit Committee and approved by the Board. The Internal Audit Division independently discharges its duties and functionally reports to the Audit Committee. Meanwhile, the administrative tasks of the Internal Audit Division are reported to the President. The internal audit scopes of EGCO and its subsidiaries are financial audit, operational audit, compliance audit, information system audit, and management audit.

EGCO control framework and operation are described as follows: Control Environment - The Board set up the clear vision, mission, and objectives to be guidelines for the management

and employees. The operation is periodically reviewed to ensure conformity with the business objectives while the fair treatment to stakeholders is also considered for long-term benefit of EGCO.

- To support business growth, the organization structure has been properly set and adjusted by the Board when the environment changes.

- Code of Conduct including good corporate governance guidelines are written and reviewed periodically. All employees are advised to understand their responsibilities to uphold the Code of Conduct which includes the measure to avoid the conflict of interest. Failure to observe the Code of Conduct may result in a range of disciplinary actions.

- Regulations, instructions and Table of Authority for accounting, finance, budget, procurement, and human resource functions are established and clearly announced to all employees for acknowledgment and practices.

Risk Management The Risk Management Committee (RMC) has been set up at the Management level which comprises of EGCO’s top executives. EGCO’s President serves as the chairman of the committee. RMC reviews risk management evaluation and mitigation of EGCO and subsidiaries and regularly reports to the Audit Committee and the Board. The Board of Directors has focused on the likelihood of the irregularities, risk mitigation and early warning systems. The Board entrusts the Audit Committee to review with the management the risk management policy and the compliance with such policy. The details of Risk Management of EGCO and subsidiaries are disclosed under “Risk Factors”. Control Activities To ensure that guidelines and policies set by the Board and the management are complied with, efficient control of accounting, finance, operation, and governance are implemented as follows: - Transactions and amount for approval authority of management are set forth in the Table of

Authority. - Approval authority, operation or accounting record, and safeguard of asset functions are

segregated.


Page 123

- The Asset Management Division is responsible for regularly monitor the operation results of EGCO’s subsidiaries and joint ventures.

- Approval process of connected transactions is clearly set out. The connected transactions are to be approved by directors or management who has no conflicts of interest, taken into account the best benefit to EGCO.

- The Corporate Secretary is entrusted to ensure that EGCO and the Board’s practices together with EGCO’s information disclosure are in compliance with the Securities and Exchange Acts, the notification and regulation of the SET, Securities and Exchange Commission (SEC), and other related laws and regulations. The Legal Division also provides consultation based on case by case basis.

- The Internal Audit Division is responsible for regularly reviewing adequacy and appropriateness of internal control system. Internal Audit Plan is set to cover all major functions.

- To ensure the compliance with Computer Related Crime Act, the Computer Related Crime Act has been clearly communicated to all employees for acknowledgment and compliance. All employees are required to sign IT Compliance Statement to confirm the non-violation of the law.

Information and Communication EGCO has established information system to maintain adequate important information for committees’ and management’s decision making via communication channels as follows: - For internal communication, all employees will receive information about the company’s policies,

regulations, instructions and good corporate governance via intranet and different level of meetings. Employees are encouraged to provide feedback on the improvement of operations efficiency in the meetings.

- For external communication, EGCO’s information has been disclosed via the SET’s Community Portal system and EGCO’s web site at www.egco.com as well as the quarterly analyst meeting, EGCO newsletter, and press conference.

- The meetings among the Audit Committee, external auditors and concerned Management are held to review the compliance of financial accounting with the General Accepted Accounting Principles and International Accounting Standards.

- Information are recorded and maintained completely, correctly, timely and adequately to support the decision making. Information such as power plant operation data along with information on accounting, budgeting and finance are recorded and maintained.

- Accounting records and supporting documents which will be used to support the financial statements preparation are completely kept in orderly manner. There is no deficiency in those documents informed by the auditor.

- The compliance database is developed for reference and tracking. The Legal Division is responsible for updating the compliance database and providing recommendation to employees.

- The Board of Directors receives invitation letters, meeting agendas and supporting documents far enough in advance of the meeting. Discussion, remarks and recommendations of the Board and standing committees including resolutions are recorded in the minutes of meetings for future reference or audit trail.

- Communication channel is provided for employees to report suspected violations of EGCO’s Code of Conduct to the Management or to the Board of Directors (whistleblower). The message providers are well protected by the company.

Monitoring To ensure that the established internal control system is sufficient and appropriate, the following activities are implemented. - The responsible unit is assigned to follow up, monitor and set appraisal criteria to benchmark

EGCO’s and its subsidiaries’ performance against the plan. Gap analysis is carried out and scheduled reports are submitted to the Management and the Board.


Page 124

- External auditors are independent and regularly report to the Audit Committee. - EGCO and its subsidiaries’ internal controls have been evaluated annually. The evaluation form

has been designed following SEC’s and SET’s internal control guidelines as well as COSO’s internal control framework. The evaluation results have been reported to the Audit Committee and the Board of Directors by the Internal Audit Division. The 2011 evaluation results can be concluded that the internal control of EGCO and its subsidiaries are sufficient and appropriate.

- To ensure the compliance with rules, regulations and Code of Conduct, employees from Senior Vice President and upwards of EGCO and its subsidiaries are required to thoroughly review their 2011 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to his/her managers up to the President. EGCO’s President and the Managing Directors of EGCO’s subsidiaries also sign the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board of each company.

- With regard to the auditor’s review of the financial statements, the auditor has also reviewed internal control on accounting and finance to define the audit approach, duration and scope of work. In 2011, no significant finding, regarding the improvement on internal control systems, has been found.

The Audit Committee reviews the internal control system and risk management throughout the year and regularly reports the result to the Board of Directors. As a consequence, the Board agrees with the Audit Committee that the internal control system of EGCO and its subsidiaries is appropriate and that it sufficiently safeguards EGCO’s assets from misuse or unauthorized use. The Audit Committee and the Board have not received significant deficiency report on the internal control system from external auditors and Internal Audit Division.

In addition, the 2011 Audit Committee’s Report is attached to this Report.

Part 2 Section 11 Connected Transactions

Page 125

11. Related Transactions In conducting the normal business courses, there are related transactions between EGCO or its subsidiaries and persons who may have potential conflict of interest. EGCO endeavors to ensure that these transactions are justified and in compliance with the Stock Exchange of Thailand (“SET”) and the Capital Market Supervisory Board’s rules and regulations. Apart from designating the authorized persons to approve the transaction in accordance with the Table of Authority, the Audit Committee is entrusted to review the related transactions that need to be approved by the Board of Directors. The details of the related transactions are disclosed under item 31 of the Notes to 2011 Financial Statements for the period ended December 31, 2011.

Procedure to Approve the Related Transactions EGCO lives by the following policies and guidelines in treating and approving the related transactions.

o In case of entering into any contracts or any related transactions between EGCO,

subsidiaries, joint venture companies, associated companies and/or outside parties, EGCO will consider the necessity and justification of such transactions for the best interest of the Company. Transaction prices are charged at fair market price like the transactions with other outside parties (Arm’s Length Basis). If there is no such price, EGCO will apply the price of similar market transactions. EGCO may also compare the price with the one recommended by independent appraiser to ensure that such price is reasonable to maximize the Company’s benefits.

o Related transactions that are considered connected transactions in accordance with the SET’s regulation will be treated in accordance with the requirements of the SET’s and Securities & Exchange Commission (“SEC”) and must be reviewed by the Audit Committee in case such transaction must be approved by the Board of Directors.

o Financial assistance or guarantee provided to Group companies or connected persons will be conducted prudently to ensure the utmost benefits of the Group companies. Fee will be charged using the market rate as at the transaction date.

o The summary of transactions with commercial term that an ordinary person will agree to deal with the counterparty under similar circumstances, on the basis of commercial negotiation and without any dependent interest resulted from the status of the director, executive or related person, as the case may be, shall be reported to the Audit Committee annually. This is aimed to ensure that such transaction is well grounded and provide optimal benefit to the Company and in line with the approved process. It should be noted that the Management had already reported the transactions in 2011 to the Audit Committee and the Board.

o In a case that a shareholders’ approval is needed, the major shareholder who is the connected person can attend the meeting in order to constitute a quorum but will not have a voting right. Since the voting will be based on the number of shareholders who are eligible for voting, this criterion does not have the negative impact on the quorum or the voting.

o Directors and management with potential conflict of interest will not be allowed to vote or attend the meeting

Related Transactions in 2011 EGCO’s related transactions in 2011 were normal business transactions with no objective to siphon profits between EGCO or its subsidiaries and parties with potential conflict of interest.


Page 126

Each transaction was duly approved under the transparent process and the persons with potential conflict of interests were not involved in the decision making. Such transactions were well justified that they were carried out for the best interest of the Company like the transactions with the third parties. The system to follow up and review the transactions was also in place to ensure that they are carried out in line with the established process.

Details of related transactions in 2011 are as summarized below. 1. Related Transactions with EGAT In carrying out the EGCO Group’s business, there were related transactions relating to the power sale and maintenance services between the Group companies and EGAT, a major shareholder which owns 25.41 stakes in EGCO and has 4 representative directors on EGCO Board. However, all the transactions followed the established process and in line with the disclosure and other requirements of the SET and SEC.

1.1 Power Sold to EGAT EGCO (Rayong Power Plant) and three subsidiaries being KEGCO, EGCO Cogen and Roi Et Green entered into the Power Purchase Agreement (“PPA”) with EGAT. The PPA terms for EGCO (Rayong Power Plant) and KEGCO are twenty years while the terms for EGCO Cogen and Roi Et Green are twenty one years each. Such transactions are justified as power generation is EGCO Group’s core business and EGAT is the single wholesale buyer. In addition, the pricing and conditions of those transactions are in accordance with the standard contracts which have been endorsed by relevant government agencies.

Companies Relationship Transaction value for the period

ended December 31, 2011 (million baht) Sale Revenue Trade Receivables

EGCO (Rayong Power Plant)

2,258 202

KEGCO Subsidiaries

2,171 94EGCO Cogen 1,263 189Roi Et Green 325 61

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

Transaction value for the period ended December

31, 2011 (million baht) Companies Relationship Sale Revenue Traded Receivables


Page 127

GEC Joint Venture 14,499 2,878BLCP 8,895 540NTPC 2,685 448

1.2 Maintenance Service to EGAT

ESCO, EGCO’s subsidiary which is an O&M service provider, has entered into a Maintenance Agreements with EGAT to provide major maintenance work including other administrative and relating services to the power plants.

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

Companies Relationship Transaction value for the period ended December 31, 2011

(million baht) Maintenance Fee Trade Receivables

ESCO Subsidiary 51 3

1.3 Maintenance Service by EGAT

EGCO Group has entered into the operation and maintenance agreements with EGAT which are defined as the transactions to support normal business of which the general trading terms and conditions are applied and the agreed price can be calculated from the assets or the referenced price in accordance with SET’s guidelines.

EGCO (Rayong Power Plant) and KEGCO has entered into the Major Maintenance Agreement (“MMA”) with EGAT for the latter to provide major maintenance services, repair services, administrative services, and additional services to their power plants. The service fees are charged on a “cost plus basis” with the annual CPI escalation. The contracts have been extended for another 8 years for EGCO (Rayong Power Plant) with the execution date on December 7, 2006 and 4 years for KEGCO with the execution date on August 1, 2008.

ESCO enters into the long term agreement with EGAT with the term starting from January 2005-December 2017. However, EGAT started providing the service under the agreement on May 23, 2007. The service fees are charged on a “cost plus basis” with the annual escalation of 3%.


(million baht) O&M Fee Trade Payables

EGCO (Rayong Power Plant)

131 56

KEGCO Subsidiaries 82 9 ESCO 2 -


Page 128

GEC has engaged EGAT as advisor for maintenance work. The fee is charged in accordance with the agreed price. Companies Relationship Transaction value for the period ended December

31, 2011 (million baht) Maintenance Advisory

Fee Account Payables

GEC Joint Venture 0.58 1

2. Related Transaction between EGCO and Subsidiaries

EGCO has entered into three agreements with subsidiaries and joint venture companies, which EGCO is a major shareholder and EGCO executives sit on their boards.

1. Agreements to provide office space and building services for 5 companies being KEGCO, ESCO, EGCO Cogen, Roi Et Green and EGCOM Tara. The space and service scope is specified in the contract with a one-year term.

Such transaction is considered justified as it helps maximize the building space usage and the fee is charged at the market rate which is the same rate charged to the third party.

2. Agreements to provide management services to the above companies and PEPOI of which the scope covers internal audit, legal counseling, Board’s secretarial work, technology, public and community relations and financial work (exclude ESCO and Egcom Tara) and agreements to dispatch employees to NTPC BLCP and NED.

Such transactions are well grounded because those Group companies do not have internal staff to take care of such work while EGCO has the capability to provide the services. The management service fee is charged in accordance with the actual operating hours based on the cost plus basis.


(million baht) Financial Statements

KEGCO

Subsidiaries

16ESCO 9EGCO Cogen 8EGCO Green 1

Roi Et Green 7Egcom Tara 2EGCO BVI 1PEPOI 16Total for

subsidiaries 60

NTPC Joint

Ventures

20BLCP 24 NED 6 Total for joint ventures

50


Page 129

3. Financial Support

EGCO provides financial support to subsidiaries and joint ventures in accordance with its ownership in such respective companies. Such supports are normal business practices and are aimed at optimizing shareholders’ return. They are duly approved by the Board in accordance with the Table of Authority and disclosed in the notes to financial statements as at December 31, 2011.

3.1 Inter-company Loan

ESCO On November 22, 2005, EGCO entered into an agreement to provide loan to ESCO in the amount of 780 million baht. Principal payment of 46 million baht each is scheduled annually commencing December 2009 to December 2025. The interest rate is set in accordance with the market rate for long term loan at MLR minus a certain margin and payable on a semi-annual basis. The outstanding loan amount as at December 31, 2011 was 642 million baht

3.2 Liabilities

EGCO provided the loan guarantee under the Sponsor Support Agreement to subsidiary, joint venture and associated companies. Significant information is as follows.

3.2.1 Contingent Liabilities

EGCO Cogen As of December 31, 2011, EGCO Cogen’s sponsors had a commitment to provide the loan to EGCO Cogen if it has any financial liquidity problem and cannot service debt and expenditures in accordance with the conditions in the contract in the amount not exceeding 200 million baht. Since EGCO holds an 80% stake in EGCO Cogen, its guarantee portion is not exceeding 160 million baht. This agreement is justified as it is the condition in the loan agreement and the financial support is provided on a pro-rata basis in accordance with the ownership in the company.

Roi-Et Green EGCO had a commitment to provide the loan guarantee in the amount not exceeding the total outstanding loan and interest payment. As at December 31, 2011, the total commitment amounted to 470 million yen equivalent to 194 million baht.

This agreement is justified as it is the condition in the loan agreement and the project development condition.

3.2.2 Letter of Guarantee

EGCO has the commitment to the banks under Standby Letter of Credit (“SBLC”) and the Counter Guarantee and issued on behalf of EGCO for the subsidiaries and joint ventures. Details of the transaction are as shown below.


Page 130

NTPC The Nam Theun II project’s finance is structured in a way that will allow sponsors who invest in Lao PDR to inject equity on a back-end basis while lenders will allow loan drawn down during the first phase. As such, lenders request the banks on behalf of the sponsors to issue the SBLC to guarantee future capital injection. The face value of the SBLC will reduce in accordance with each capital injection. As at December 31, 2011, EGCO requested Mizuho Corporate Bank to issue the SBLC for the purpose of providing a guarantee debt obligation in reserve accounts for The Nam Theun II project’s amounting to US 5 million dollars (equivalent to 151 million baht) and amounting to 607 million baht. Theppana EGCO requested KASIKORNBANK to issue the SBLC for the purpose of providing a guarantee for the PPA between Theppana and Provincial Electricity Authority. As at December 31, 2011, the guarantee value was 4 million baht.

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

Part 2 Section 12 Financial Satatus and Operational Results

131

12. Financial Position and Operational Performance

Financial statements

1. Auditor’s report The Management prepares the consolidated and company’s financial statements for the year ended December 31, 2011 in compliance with the Generally Accepted Accounting Principles under the Accounting Profession Act B.E. 2547, appropriate accounting policies and consistencies with adequate disclosure of significant information in the notes of the financial statements.

The Board of Directors has also issued the Company’s regulation on accounting, finance and budgeting B.E. 2550 to which the Management must adhere. In addition, the Audit Committee has been entrusted to ensure that the Company’s financial statements have been prepared in a justified and prudent manner in compliance with such rules and regulations. The appropriate accounting policies were consistently applied. Also, the Audit Committee has reviewed the Company’s internal control systems to ensure its adequacy and effectiveness as a means to safeguard the company’s assets from unauthorized persons and reveal the weakness to prevent unlawful conduct and abnormalities.

The Management has prepared both consolidated and Company financial statements for the year ended 31 December 2011 in compliance with the Thai Generally Accepted Accounting Principles under the Accounting Profession Act B.E. 2547. The appropriate accounting policies were consistently applied and the financial statements were prepared in a prudent and justified manner with adequate disclosure of significant information in the notes of the financial statements.

The Board of Directors is of the opinion that both the consolidated and company financial statements for the year 2011, present the company’s financial position, operating results, changes in shareholders’ equity and cash flows in a correct and reliable manner and that such statements are in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations.

132

2. Summary of Financial Statements

133


Statements of Financial Position

As at 31 December 2011 and 2010

Consolidated Company

2011 2010 2011 2010

Restated Restated

Notes Baht Baht Baht Baht

Assets

Current assets

Cash and cash equivalents 7 8,401,866,377 7,748,266,006 5,674,226,709 6,641,233,520

Short-term investments 8

- Deposits at financial institutions 1,717,680,697 108,217,105 1,576,075,477 943,871

- Marketable securities 222,000,000 505,981,000 222,000,000 515,715,500

Short-term investments used as collateral 9 343,952,162 964,776,625 - -

Trade receivables 10 245,141,606 245,779,344 - -

Trade receivable from a related party 31(d) 549,230,689 544,949,244 202,016,743 219,944,810

Dividend receivables from subsidiaries and

joint ventures 13.4 6,089,418,454 5,756,143,305 7,018,039,732 7,109,556,304

Current portion of long-term loans

to related parties 31(f) - - 45,882,350 45,882,350

Amounts due from related parties 31(e) 51,081,780 59,997,506 22,779,474 19,576,599

Fuel and spare parts and supplies, net 11 2,043,819,652 2,126,889,696 833,986,690 993,274,921

Other current assets 455,163,627 516,010,592 112,637,703 20,386,911

Total current assets 20,119,355,044 18,577,010,423 15,707,644,878 15,566,514,786

Non-current assets

Long-term investments in marketable securities 12 1,937,293,740 2,074,097,214 1,930,947,778 2,071,097,214

Amounts due from a related party due

over one year 31(e) 168,134,509 246,646,589 168,134,509 246,646,589

Long-term loans to related parties, net 31(f) - - 596,470,600 642,352,950

Deposits at financial institutions used

as collateral 282,300 282,300 - -

Investments in subsidiaries, net 13.2 - - 17,901,783,196 11,940,361,196

Interests in joint ventures 13.3 36,444,572,866 30,711,750,853 23,150,309,238 22,874,309,238

Other long-term investments 12 127,000,000 2,000,000 127,000,000 2,000,000

Investment property 14 322,071,012 322,071,012 322,071,012 322,071,012

Property, plant and equipment, net 15 13,022,582,385 14,796,459,845 4,977,213,590 5,987,845,784

Right in long-term power and

tap water purchase agreements and operation

and maintenance agreement, net 16 685,946,459 175,339,183 - -

Other non-current assets 17 128,834,166 134,757,515 11,779,387 11,527,548

Total non-current assets 52,836,717,437 48,463,404,511 49,185,709,310 44,098,211,531

Total assets 72,956,072,481 67,040,414,934 64,893,354,188 59,664,726,317

134





2011 2010 2011 2010

Restated Restated


Liabilities and shareholders' equity

Current liabilities

Trade payables 253,078,447 232,804,758 27,636,013 20,798,381

Trade payable to a related party 31(d) 64,551,410 92,712,524 55,751,959 34,298,660

Amounts due to related parties 31(e) 9,701,695 11,845,750 4,458,738 6,311,636

Current portion of long-term loans from

financial institutions, net 18 535,728,282 223,697,707 289,380,906 -

Debentures due within one year 19 - 496,621,203 - -

Other current liabilities

- Interest payable 18,222,832 15,899,297 9,659,749 2,733,699

- Value added tax payable 78,063,073 84,008,213 35,525,577 40,192,146

- Corporate income tax payable 35,810,629 113,015,320 - 11,105,901

- Others 720,905,424 540,140,230 286,883,840 270,834,863

Total current liabilities 1,716,061,792 1,810,745,002 709,296,782 386,275,286

Non-current liabilities

Long-term loans from

financial institutions, net 18 11,521,387,363 8,840,246,236 10,893,809,094 8,000,000,000

Retirement benefit obligations 20 199,408,660 180,533,136 91,767,927 82,159,491

Provision for decommissioning costs 21 972,895,496 874,279,974 386,414,269 370,839,030

Other non-current liabilities 13,267,003 6,091,897 30,590,721 26,111,871

Total non-current liabilities 12,706,958,522 9,901,151,243 11,402,582,011 8,479,110,392

Total liabilities 14,423,020,314 11,711,896,245 12,111,878,793 8,865,385,678

135





2011 2010 2011 2010

Restated Restated


Liabilities and shareholders' equity (continued)

Shareholders' equity

Share capital

Authorised share capital

- 530,000,000 ordinary shares of Baht 10 per share 5,300,000,000 5,300,000,000 5,300,000,000 5,300,000,000

Issued and paid-up share capital

- 526,465,000 ordinary shares of Baht 10 per share 5,264,650,000 5,264,650,000 5,264,650,000 5,264,650,000

Premium on share capital 8,601,300,000 8,601,300,000 8,601,300,000 8,601,300,000

Premium on treasury stock 47,373,035 47,373,035 47,373,035 47,373,035

Retained earnings

Appropriated

- Legal reserve 22 530,000,000 530,000,000 530,000,000 530,000,000

Unappropriated 42,681,867,762 40,455,123,354 37,274,695,405 35,142,994,510

Other components of equity 852,834,463 (79,022,179) 1,063,456,955 1,213,023,094

Total equity attributable to the parent company 57,978,025,260 54,819,424,210 52,781,475,395 50,799,340,639

Non-controlling interests 23 555,026,907 509,094,479 - -

Total shareholders’ equity 58,533,052,167 55,328,518,689 52,781,475,395 50,799,340,639

Total liabilities and shareholders’ equity 72,956,072,481 67,040,414,934 64,893,354,188 59,664,726,317

136


Income Statements

For the years ended 31 December 2011 and 2010


2011 2010 2011 2010

Restated Restated


Sales and service income 31(a),(b) 7,661,035,192 8,608,979,776 2,258,324,928 2,535,275,542

Cost of sales and services 31(c) (5,588,768,660) (5,678,455,725) (1,806,013,523) (1,531,846,798)

Gross profit 2,072,266,532 2,930,524,051 452,311,405 1,003,428,744

Other income 24 449,118,661 386,196,878 5,892,735,667 6,697,157,118

Currency exchange gains (losses) 21,978,720 (55,762,049) 7,412,030 (24,030,414)

Administrative expenses 31(h),(i) (1,678,317,514) (1,433,135,581) (921,361,651) (983,884,749)

Finance costs 26 (694,204,857) (563,981,872) (536,606,508) (380,741,909)

Share of profit from interests in

joint ventures, net 13 5,199,684,409 6,109,227,948 - -

Profit before corporate income tax 5,370,525,951 7,373,069,375 4,894,490,943 6,311,928,790

Corporate income tax (254,702,346) (455,179,284) - (142,951,141)

Net profit for the year 5,115,823,605 6,917,890,091 4,894,490,943 6,168,977,649

Attributable to:

Owners of the parent 4,989,534,456 6,802,559,659 4,894,490,943 6,168,977,649

Non-controlling interests 126,289,149 115,330,432 - -


Earnings per share for the year 27

Basic earnings per share 9.48 12.92 9.30 11.72

Diluted earnings per share 9.48 12.92 9.30 11.72

137


Statements of Comprehensive Income



2011 2010 2011 2010

Restated Restated

Baht Baht Baht Baht


Other comprehensive income

Unrealised gains (losses) on investments in marketable

securities - available-for-sale (146,130,436) 664,398,097 (149,566,139) 657,060,271

Translation adjustments 1,077,987,078 (957,799,151) - -

Other comprehensive income (expenses)

for the year 931,856,642 (293,401,054) (149,566,139) 657,060,271

Total comprehensive income for the year 6,047,680,247 6,624,489,037 4,744,924,804 6,826,037,920

Total comprehensive income attributable to:

Owners of the parent 5,921,391,098 6,509,158,605 4,744,924,804 6,826,037,920

Non-controlling interests 126,289,149 115,330,432 - -

6,047,680,247 6,624,489,037 4,744,924,804 6,826,037,920

138


Statements of Cash Flows



2011 2010 2011 2010

Restated Restated


Cash flows from operating activities

Profit before corporate income tax for the year 5,370,525,951 7,373,069,375 4,894,490,943 6,311,928,790

Adjustments to reconcile profit before corporate

income tax to net cash provided by operations:

- Depreciation and amortisation 1,972,553,321 2,175,204,520 1,053,132,812 1,076,811,397

- Allowance for obsolescence 217,216,514 247,138,340 121,740,689 135,970,288

- Retirement benefit expenses 20 25,988,046 22,299,447 10,310,096 10,889,865

- Interest income (176,396,514) (87,946,201) (189,063,659) (111,140,429)

- Interest expenses 466,647,642 569,080,001 380,541,269 365,794,461

- Provision for decommissioning costs 50,892,632 35,239,692 15,575,239 14,947,448

- Unrealised currency exchange (gains) losses 163,988,568 (17,655,469) 140,490,000 -

- Losses from write-off and disposal of spare parts

and supplies 68,627 106,583,177 68,627 106,583,177

- Losses from disposals of equipment 1,481,885 49,741 101,091 49,741

- Gain on disposals of equipment (1,476,528) (3,450,742) (170,865) (4,697,184)

- Gains from dissolution of a subsidiary - - (6,982,607) (330,000,000)

- Gain on disposals of marketable securities - (4,812,935) - (4,812,935)

- Dividends received from other company (115,233,980) (118,348,412) (115,233,980) (118,348,412)

- Dividends received from subsidiaries and

joint ventures 13.4 - - (5,364,452,040) (5,906,465,803)

- Share of profit from interests

in joint ventures, net 13 (5,199,684,409) (6,109,227,948) - -

Cash flows before changes in operating assets

and liabilities 2,776,571,755 4,187,222,586 940,547,615 1,547,510,404

Changes in operating assets and liabilities:

(excluding the effects of acquisition of subsidiaries)

- Other current assets (56,747,588) (380,946,787) (69,231,794) (128,243,728)

- Other non-current assets 77,353,857 (13,780,021) 78,512,080 (14,141,579)

- Short-term and long-term investments

used as collateral 620,824,463 (467,955,680) - -

- Trade receivables and trade receivable

from a related party (3,360,613) 667,664,575 17,928,067 444,653,496

- Amounts due from related parties 8,946,332 838,569 (3,225,854) 8,229,493

- Spare parts and supplies (117,590,329) (7,526,810) 28,693,005 (43,277,518)

- Trade payables and trade payable to

a related party (7,911,130) 32,697,764 28,290,932 7,209,194

- Amounts due to related parties (4,062,337) (19,181,726) (1,852,898) (21,200,903)

- Retirement benefit paid (7,112,522) (6,968,516) (701,660) (3,995,690)

- Other current liabilities (68,134,980) 10,743,722 231,501 29,466,466

- Other non-current liabilities 1,162,381 (5,197,140) 1,153,981 (2,212,609)

Cash generated from operations 3,219,939,289 3,997,610,536 1,020,344,975 1,823,997,026

- Interest received 152,419,869 95,589,690 166,871,516 117,129,117

- Tax paid (171,659,875) (71,942,173) (9,657,280) -

Net cash receipts from operating activities 3,200,699,283 4,021,258,053 1,177,559,211 1,941,126,143

139


Statements of Cash Flows



2011 2010 2011 2010

Restated Restated


Cash flows from investing activities

Investments in subsidiaries and interests

in joint ventures, net of cash and cash equivalents

transferred as part of acquisition 13 (6,570,001,495) (2,650,733,492) (6,237,422,000) (2,622,957,206)

Cash received from a joint venture for return of capital 13 - 3,521,667 - 3,521,667

Cash received from dissolution of a subsidiriary and

a joint venture 13 - 24,047,071 6,982,607 354,047,071

Net cash receipts from (payments in) short-term investments (1,489,463,592) 47,338,009 (1,448,832,809) 84,636,476

Net cash receipts from short-term investments used as collateral - 450,000,000 - 450,000,000

Net cash payments from long-term investments 156,075,075 - 158,000,000 -

Acquisition of other long-term investments (125,000,000) - (125,000,000) -

Net cash payments in purchases of equipment (76,474,101) (90,212,402) (21,302,557) (23,590,046)

Proceed from loans to related parties 31(f) - 32,000,000 45,882,350 77,882,350

Dividends received from subsidiaries

and joint ventures 13.4 6,403,252,203 4,536,948,586 5,455,968,612 4,920,419,170

Dividends received from other company 115,233,980 118,348,412 115,233,980 118,348,412

Net cash receipts from (payment in) investing activities (1,586,377,930) 2,471,257,851 (2,050,489,817) 3,362,307,894

Cash flows from financing activities

Payments on finance leases (3,257,977) (2,303,178) (1,062,724) -

Interests paid (460,923,941) (576,525,347) (373,477,533) (365,794,461)

Proceeds from long-term loans from

financial institutions 3,042,700,000 - 3,042,700,000 -

Payments on long-term loans from

financial institutions and debentures (724,073,518) (1,121,751,334) - -

Dividends paid to shareholders 28 (2,844,842,618) (2,855,935,925) (2,762,235,948) (2,762,599,106)

Net cash payment in financing activities (990,398,054) (4,556,515,784) (94,076,205) (3,128,393,567)

Net increase (decrease) in cash and cash equivalents 623,923,299 1,936,000,120 (967,006,811) 2,175,040,470

Beginning balance 7,748,266,006 5,854,559,912 6,641,233,520 4,466,193,050

Effect of exchange rate changes 29,677,072 (42,294,026) - -

Ending balance 8,401,866,377 7,748,266,006 5,674,226,709 6,641,233,520

Cash and cash equivalents are made up as follows:

- Cash in hand and deposits at financial institutions -

maturities within three months 2,539,090,823 2,669,712,841 339,646,491 1,740,221,779

- Short-term investments in promissory notes -

maturities within three months 5,862,775,554 5,078,553,165 5,334,580,218 4,901,011,741

8,401,866,377 7,748,266,006 5,674,226,709 6,641,233,520

Non-cash transactions

- Purchases of fixed assets by finance lease liabilities 27,512,619 - 3,998,070 -

- Reclassification of utilised capital spare parts to

property, plant and equipment 15 242,058,511 718,446,962 141,847,753 219,764,097

- Reclassification of unutilised capital spare parts from

property, plant and equipment 15 (258,683,278) (262,927,304) (133,061,844) (102,140,231)

- Increase in property, plant and equipment by other payables 10,877,070 - 8,344,308 -

Part 2 Section 12 Financial Satatus and Operational Results

140


Statements of Changes in Shareholders’ Equity


Consolidated

Issued and Total other

paid-up share Premium on Premium on Investments Translation components Non-controlling

capital share capital treasury stock Legal reserve Unappropriated available-for-sale adjustments of equity interests Total

Notes Baht Baht Baht Baht Baht Baht Baht Baht Baht Baht

Opening balance as at 1 January 2010

- As previously reported 5,264,650,000 8,601,300,000 47,373,035 530,000,000 35,914,439,291 545,189,294 (330,810,419) 214,378,875 521,174,207 51,093,315,408

- Retrospective adjustments from

changes in accounting policies 2.2.1 - - - - 501,215,368 - - - - 501,215,368

- As restated 5,264,650,000 8,601,300,000 47,373,035 530,000,000 36,415,654,659 545,189,294 (330,810,419) 214,378,875 521,174,207 51,594,530,776

Changes in shareholders' equity for the year

- Additional investment in a subsidiary - - - - - - - - (19,422,872) (19,422,872)

- Dividends paid 28 - - - - (2,763,090,964) - - - (107,987,288) (2,871,078,252)

- Total comprehensive income (expenses)

for the year (restated) - - - - 6,802,559,659 664,398,097 (957,799,151) (293,401,054) 115,330,432 6,624,489,037

Closing balance as at 31 December 2010 5,264,650,000 8,601,300,000 47,373,035 530,000,000 40,455,123,354 1,209,587,391 (1,288,609,570) (79,022,179) 509,094,479 55,328,518,689


- As previously reported 5,264,650,000 8,601,300,000 47,373,035 530,000,000 39,943,589,830 1,209,587,391 (1,288,609,570) (79,022,179) 509,094,479 54,816,985,165


changes in accounting policies 2.2.1 - - - - 511,533,524 - - - - 511,533,524

- As restated 5,264,650,000 8,601,300,000 47,373,035 530,000,000 40,455,123,354 1,209,587,391 (1,288,609,570) (79,022,179) 509,094,479 55,328,518,689


- Dividends paid 28 - - - - (2,762,790,048) - - - (80,356,721) (2,843,146,769)

- Total comprehensive income

for the year - - - - 4,989,534,456 (146,130,436) 1,077,987,078 931,856,642 126,289,149 6,047,680,247

Closing balance as at 31 December 2011 5,264,650,000 8,601,300,000 47,373,035 530,000,000 42,681,867,762 1,063,456,955 (210,622,492) 852,834,463 555,026,907 58,533,052,167

Other components of equity

Other comprehensive income

Retained earnings (expenses)

141


Statements of Changes in Shareholders’ Equity


Company

Other comprehensive

Issued and income

paid-up share Premium on Premium on Investments Total other

capital share capital treasury stock Legal reserve Unappropriated available-for-sale components of equity Total

Notes Baht Baht Baht Baht Baht Baht Baht Baht


- As previously reported 5,264,650,000 8,601,300,000 47,373,035 530,000,000 31,270,451,013 555,962,823 555,962,823 46,269,736,871


changes in accounting policies 2.2.1 - - - - 466,656,812 - - 466,656,812

- As restated 5,264,650,000 8,601,300,000 47,373,035 530,000,000 31,737,107,825 555,962,823 555,962,823 46,736,393,683


- Dividends paid 28 - - - - (2,763,090,964) - - (2,763,090,964)

- Total comprehensive income

for the year (restated) - - - - 6,168,977,649 657,060,271 657,060,271 6,826,037,920

Closing balance as at 31 December 2010 5,264,650,000 8,601,300,000 47,373,035 530,000,000 35,142,994,510 1,213,023,094 1,213,023,094 50,799,340,639


- As previously reported 5,264,650,000 8,601,300,000 47,373,035 530,000,000 34,649,480,851 1,213,023,094 1,213,023,094 50,305,826,980


changes in accounting policies 2.2.1 - - - - 493,513,659 - - 493,513,659

- As restated 5,264,650,000 8,601,300,000 47,373,035 530,000,000 35,142,994,510 1,213,023,094 1,213,023,094 50,799,340,639


- Dividends paid 28 - - - - (2,762,790,048) - - (2,762,790,048)

- Total comprehensive income (expenses)

for the year - - - - 4,894,490,943 (149,566,139) (149,566,139) 4,744,924,804

Closing balance as at 31 December 2011 5,264,650,000 8,601,300,000 47,373,035 530,000,000 37,274,695,405 1,063,456,955 1,063,456,955 52,781,475,395

Other components of equity

Retained earnings

Part 2 Section 12 Financial Position and Operational Performance

Page 142

Financial Ratios

Consolidated Financial Statements

Restated

2011 2010 2009

PER SHARE DATA (Baht)

Net Profit (loss) before Fx 9.44

13.03 15.01

Net Profit (loss) 9.48

12.92 15.07

Book Value 110.13 104.13 96.06

Dividend N/A 5.25 5.25

RATIO ANALYSIS

Liquidity ratio (Time) 11.72 10.26 8.30

Cashflows liquidity ratio (Time) 1.82

2.08 1.08

Gross profit ratio (%) 27.05 34.04 40.83 Earnings ratio (%) 37.49 45.04 50.33

Return on equity ratio (%) 8.85

12.91 16.60

Return on assets ratio (%) 7.13

10.47 13.09

Debt to equity ratio (Time) 0.25

0.21 0.23


Page 143

12.2 Explanation and analysis of financial position and oeprational performance 12.2.1 Management Discussion and Analysis

1. Operating results for year 2011 1.1 Operating results

Profit from operating of EGCO Group before foreign exchange (FX) ended December 31, 2011 was 5,301 million baht, a decrease 963 million baht compared to the same period of last year. This was mainly due to:

In 2011, EGCO Group has increased the stakes in Nam Theun 2 Power Co., Ltd. (NTPC) from 25% to 35% on September 29, 2010, which resulted in a fully booked of revenue in this year and led to an increase in revenue of 213 million baht. EGCO Group also increased additional 26.125% shares of Quezon Power (Philippines) Limited Co. (Quezon) to 52.125% on March 25, 2011, which resulted in an increase in revenue of 355 million baht. In addition, Khanom Electricity Generating Co., Ltd. (KEGCO)’s maintenance expenses, interest expenses and income tax decreased 451 million baht and Rayong Power Plant’s expenses also decreased 140 million baht. With such an increase in revenue and a decrease in expenses, EGCO Group’s would have recorded higher net profit of 1,159 million baht.

On the other hand, Available Payment (AP), according to the Power Purchase Agreement (PPAs), of Rayong Power Plant, KEGCO, BLCP Power Co., Ltd. (BLCP) and Gulf Power Generation Co., Ltd (GPG) decreased 1,404 million baht from the same period of last year.

EGCO Group also had extraordinary items in 2011 such as Quezon’s prepayment fee from refinancing and withholding tax from special dividend payment and Conal Holdings Corporation (Conal)’s change in the functional currency from the Philippine peso to U.S. dollars, totaling of 748 million baht. These led to lower profit of 2,152 million baht.

From all above mainly causes, the profit before FX was 5,301 million baht, a decreased 963 million baht from the previous year.If exculding extraordinary items, EGCO Group’s profit before FX would have been 6,049 million baht, a decrease of 215 million baht from the same period of last year.


Page 144

Summary results of net profit before FX ended December 31, 2011 Unit : Million Baht

EGCO and Subsidiaries Joint Ventures Total Change Power Generation Others Power

Generation

Increase/

2010 2011 2010 2011 2010 2011 2010 2011 (Decrease) % Total Revenues 8,005 7,253 991 856 - - 8,996 8,109 (887) (10%)

Total Expenses (7,451) (7,138) (647) (619) - - (8,098) (7,757) (341) (4%)

Share of Profit (Loss)

- - - - 5,473 5,083 5,473 5,083 (390) (7%)

NCI* before FX (76) (93) (31) (41) - - (107) (134) 27 26%

Profit (Loss) before FX

478 22 313 196 5,473 5,083 6,264 5,301 (963) (15%)

FX 11 (158) (32) 13 560 (166) 539 (311) (850) (158%)

Net profit (loss) 489 (136) 281 209 6,033 4,917 6,803 4,990 (1,813) (27%)

* NCI: Non-Controlling Interests

1.2 Capacity

As of December 31, 2011. EGCO Group’s portfolio comprises 15 operating plants with total contracted capacity with Electricity Generating Authority of Thailand (EGAT) under long-term PPAs of 3,862 MW. This resulted in EGCO Group’s market share in Thailand of 12% from a total installed capacity of 31,447 MW.

Significant events in 2011 can be summarized as follows: 1.2.1 The purchase of operating assets On March 25, 2011, EGCO completed the acquisition of an additional 26.125% interest in

Quezon, bringing EGCO’s total ownership interest in Quezon to 52.125%. In addition, EGCO completed the acquisition of 100% of the outstanding shares of Covanta Philippines Operating Inc. (CPOI), a new registered name of Pearl Energy Philippines Operating Inc. (PEPOI). PEPOI is an entity which provides operation and maintenance services to Quezon through a long-term Operation and Maintenance Agreement.

1.2.2 Development of new projects

EGCO’s business strategy places emphasis on expanding its investment in power generation in Thailand and the ASEAN countries, as well as an investment in related energy


Page 145

projects or renewable energy, including hydropower, solar and wind energy etc. The target is to provide optimum returns to shareholders by improving the profitability of our existing assets and acquiring new projects with reasonable risk and return profiles, to maintain market share as a leading energy company and to strengthen its financial position and operating results for EGCO Group.

The development of new projects in 2011 can be summarized as follows: - On January 4 and February 11, 2011, EGCO has been awarded the licenses for 2010

Firm Small Power Producer Cogeneration projects from EGAT in accordance with the resolution of the Energy Regulatory Commission. The projects are TJ Cogen, TP Cogen and SK Cogen, which have contracted capacity with EGAT of 90 MW each for 25 years and signed PPAs with EGAT on November 25, 2011.

i. On March 1, 2011, EGCO acquired a 12.50% interest in Xayaburi Power Company Limited (XPCL) from CH.Karnchang Public Company Limited. XPCL is a company dedicated to the development of Xayaburi hydropower project which is a run-of-river dam on the Mekong River in Laos PDR. XPCL has entered into the PPA with EGAT to sell 1,220 MW, the commercial operation date is currently scheduled for January 2019.

ii. On December 22, 2011, Natural Energy Development Company Limited (NED) has started its commercial operation of phase 1 of 8 MW and expected to complete the whole project within first half of 2012. The company is the largest solar power plant using thin-film solar cells in the world with total installed capacity of 73 MW (DC)/55 MW (AC). EGCO has 33.33% ownership in NED.

Significant investments in the post statement of financial position can be summarized as

follows: iii. On January 18, 2012, EGCO acquired 90% stakes in Theppana Wind Farm Company

Limited (Theppana). Theppana is the wind power plant, located in Chaiyaphum province. iv. On January 23, 2012, EGCO acquired 99.99% stakes in SPP4 Co., Ltd (SPP4) from

MEMC Singapore Pte Ltd. SPP4 is the solar power plant with installed capacity of 6 MW, located in the boundary between Srisaket and Ubon Ratchatani province. In addition, the plant is the first private solar power project equipped with the tracking system. The commercial operation date, electricity generation and distribution system for the Provincial Electricity Authority (PEA) was on January 24, 2012.


Page 146

The investment in both projects is in line with EGCO’s goal to expand its business towards the renewable energy and also meets with the government policy regarding renewable projects for 10 years.

2. Future Plans EGCO has planned to increase its market shares in power business by development

or acquisition of domestic or regional projects taking into account the feasibility of the projects, EGCO’s experiences and expertise to increase the value to the projects, costs of capital with acceptable risks. The projects under study and development are as follows:

2.1 Prefeasibility study of Independent Power Producer investment using the existing location of Rayong and Khanom power plants.

2.2 Development of 3 Small Power Producer projects in Phatumthani and Ratchaburi province and NED’s solar project as mention in 1.2.2.

2.3 Study on the opportunity to invest in renewable energy projects. Current projects under study are solar farms and wind farms.

2.4 Study on the opportunity to invest in overseas Independent Power Producer projects. EGCO has high potential to be a partner in both existing and new investment projects given its strong technical knowledge and financial strengths.

EGCO has also developed the knowledge on energy market, investment opportunities and governance structure of other countries in the region to identify new investment projects, which eventually would increase the value of the shareholders.

3. Report and Analysis of the Operating Results EGCO has invested in the Independent Power Producer (IPP), Small Power Producer (SPP), Very Small Power Producer (VSPP), Operating and Maintenance (O&M) and Rayong power plant as an operating company as follows:

(1) Subsidiaries which can be categorized into 2 businesses: v. Power Generation

Khanom Electricity Generating Co., Ltd. (KEGCO) IPP EGCO Cogeneration Co., Ltd. (EGCO Cogen) SPP Roi-Et Green Co., Ltd. (Roi-Et Green) SPP4 Co., Ltd. (SPP4)

SPP VSPP


Page 147

Theppana Wind Farm Co., Ltd. (Theppana) VSPP vi. Others

EGCO Engineering and Service Co., Ltd. (ESCO), which invested in

O&M

Egcom Tara Co., Ltd. (Egcom Tara) Water Pearl Energy Philippines Operating Inc. (PEPOI) O&M North Pole Investment Co., Ltd. (North Pole) Holding Co.

(2) Joint Ventures in Power Generation business Gulf Electric Public Company Limited (GEC), which invested in Holding Co.

Gulf Cogeneration Co., Ltd. (GCC) SPP Nong Khae Cogeneration Co., Ltd. (NKCC) SPP Samutprakarn Cogeneration Co., Ltd. (SCC) SPP Gulf Yala Green Co., Ltd. (GYG) SPP Gulf Power Generation Co., Ltd (GPG) IPP

BLCP Power Co., Ltd. (BLCP) IPP Natural Energy Development Co., Ltd. (NED) SPP Nam Theun 2 Power Co., Ltd. (NTPC) IPP Conal Holdings Corporation (Conal), which invested in Holding Co. Western Mindanao Power Corporation (WMPC) IPP Southern Philippines Power Corporation (SPPC) IPP Alto Power Management Coporation (APMC) O&M Quezon Power (Philippines) Limited Co. (Quezon) IPP

(3) Other investments EGCO holds 18.72% of the outstanding shares in East Water Resources Development

and Management Public Company Limited (East Water) as long-term financial investment in marketable securities.

EGCO holds 12.50% of the outstanding shares in Xayaburi Power Company Limited (XPCL).

3.1 The Analysis of EGCO and Subsidiaries

3.1.1 The Analysis of EGCO and Subsidiaries in Power Generation business


Page 148

Profit (loss) before FX for 2011 ended December 31, 2011 of EGCO and Subsidiaries in Power Generation business decreased 456 million baht compared to the same period of last year. This was mainly due to the Rayong Power Plant and KEGCO as follows:

Rayong Power Plant: Unit : Million Baht

2010 2011 Increase/(Decrease) %

Total revenues 2,589 2,312 (277) (11%)

Total expenses (2,112) (2,069) (43) (2%)

Profit (Loss) before FX 477 243 (234) (49%)

- Rayong power plant’s profit (loss) before FX decreased 234 million baht. This was mainly due to the decline in AP, according to the PPA, amounting to 253 million baht and the increase in plant maintenance as planned amounting to 146 million baht. However, other costs were lower by 266 million baht, mainly due to income tax and provision of obsolete inventories.

KEGCO: Unit : Million Baht


Total revenues 2,798 2,181 (617) (22%)

Total expenses (2,358) (1,907) (451) (19%)


- KEGCO’s profit (loss) before FX decreased 166 million baht. This was mainly due to the decline in AP, according to the PPA, of 675 million baht. However, the decrease in plant maintenance as planned and other costs from interest expenses and income tax were 250 million baht and 200 million baht, respectively.

3.1.2 The Analysis of Subsidiaries in Other business Profit (loss) before FX for 2011 ended December 31, 2011 of Subsidiaries in Other business was down by 117 million baht. This was mainly due to ESCO as follows:

ESCO: Unit : Million Baht


Total revenues 730 384 (346) (47%)


Page 149

Total expenses (511) (348) (163) (32%)


- ESCO’s profit (loss) before FX sharply dropped 183 million baht, mainly from lower maintenance service income and lower spare part sales to overseas power plants.

3.2 The Analysis of Joint Ventures in Power Generation business

Profits (Loss) before FX from Joint Ventures in Power Generation business for the results of 2011 decreased by 390 million baht. This was mainly due to a decrease in profit from Conal, Quezon, BLCP and GPG whereas an increase in profit from NTPC.

The details are as follows:

Conal: Unit : Million Baht 2010 2011 Increase/(Decrease) %

Total revenues 654 898 244 37%

Total expenses (518) (895) 377 73%


- Conal’s profit (loss) before FX decreased 133 million baht, mainly due to the change in the functional currency from the Philippine peso to U.S. dollars amounting to 96 million baht.

Quezon: Unit : Million Baht 2010 2011 Increase/(Decrease) %

Total revenues 2,775 5,106 2,331 84%

Total expenses (2,254) (4,882) 2,628 117%


- Quezon’s profit (loss) before FX decreased 297 million baht. This was due mainly to an increase in prepayment fee from refinancing of 440 million baht and withholding tax from special dividend payment of 212 million baht. However, EGCO recorded higher revenue of 355 million baht from additional shares of 26.125% on March 25, 2011.


Page 150

BLCP: Unit : Million Baht 2010 2011 Increase/(Decrease) %

Total revenues 8,990 9,037 47 1%

Total expenses (6,669) (6,997) 328 5%

Profit (Loss) before FX 2,321 2,040 (281) (12%)

- BLCP’s profit (loss) before FX decreased 281 million baht, mainly due to the decline

in AP of 397 million baht, according to the PPA. In addition, BLCP’s coal supplier could not provide sufficient coal stated in Coal Supply and Transportation Agreement (CSTA) due to flooding situation in Australia. BLCP, thus, had to buy spot coal in the market in order to maintain the minimum level of coal regarding PPA. This led to an increase in fuel cost of 152 million baht.

GPG: Unit : Million Baht


Total revenues 11,447 11,381 (66) (1%)

Total expenses (9,671) (9,722) 51 1%

Profit (Loss) before FX 1,776 1,659 (117) (7%)

- GPG’s profit (loss) before FX decreased 117 million baht. This was mainly due to the decline in AP, according to the PPA, of 79 million baht and the increase in plant maintenance as planned of 140 million baht. However, other costs were down by 84 million baht.

NTPC: Unit : Million Baht 2010 2011 Increase/(Decrease) %

Total revenues 1,728 2,703 975 56%

Total expenses (1,175) (1,937) 762 65%

Profit (Loss) before FX 553 766 213 39%

- NTPC’s profit (loss) before FX increased 213 million baht, as a result of full-year recogonition and the acquisition of an additional 10% to 35% stakes in the company,


Page 151

which was completed on September 29, 2010. While in 2010 the company recognized net porfit of 25% stakes for 5 months, and 35% stakes for 3 months (NTPC’s COD was on April 30, 2010).

3.3 Financial Ratios

Profitability Ratios 2010 2011

Gross Profit Ratio 34.04% 27.05%

Operating Profit Ratio before FX 22.77% 14.60%

Profit Ratio before FX 45.41% 39.42%

Profit before FX per share (Baht) 12.96 9.75

Return on Equity before FX 13.15% 9.34%

4. Report and Analysis of Cash Flow Position As at December 31, 2011, the ending balance of cash and cash equivalents was 8,402 million baht, which was 654 million baht lower than the amount as at December 31, 2010. The details of the sources and uses of funds are as follows:

- Net cash received from operating activities was 3,201 million baht, mainly from operating activities of 2,777 million baht and working capital of 424 million baht.

- Net cash payment for investing activities was 1,557 million baht mainly due to investment in joint ventures, Quezon, PEPOI and NED totaled 6,570 million baht and short-term investment was 1,489 million baht. Meanwhile, dividend received from joint ventures and others totaled 6,518 million baht.

- Net cash payment for financing activities was 990 million baht. This was mainly due to the dividend payment to shareholders totaling 2,845 million baht, the loan repayments for EGCO Cogen, Roi-Et Green and KEGCO’s debenture totaled 724 million baht, and the interest payments of 461 million baht. Meanwhile, EGCO’s debt drawdown was 3,043 million baht.

Financial ratios 2010 2011

Debt to equity ratio (Time) 0.21 0.25


Page 152

Book value per share (Baht) 104.13 110.13

Current ratio (Time) 10.26 11.72

Quick ratio (Time) 5.59 6.69

Although, the ending balance of cash and cash equivalents was 8,402 million baht, EGCO has investment plans in 2012, which will utilize funds from cash on hand and loans from financial institutions. The debt to equity ratio may be higher than the present at 0.25 times.

Audit Fee

In 2011, EGCO and its subsidiaries paid the audit fee of 3,473,500 baht to the Office of the Auditors, comprising EGCO’s and subsidiaries’ audit fees of 1,986,390 baht and 1,487,110 baht, respectively. No other audit fee had been paid to the auditors or related parties to the auditors and the Auditors’ office.

Non-Audit Fee

EGCO’s and subsidiaries’ total non-audit fee was 28,499,322 baht which was already paid of 25,501,221 baht. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 2,998,111 baht. The details of the non-audit fee were as follows:

1. Payment to the Office of the Auditors:

In 2011, the non-audit fee for the advisory services on International Financial Reporting Standards and the audit work at EGCO and its subsidiaries offices was 2,308,130 baht which was already paid of 1,938,130 baht to the Office of the Auditors. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 370,000 baht.

2. Payment to Other Related Parties of the Auditors’ Office:

In 2011, the non-audit fee for the special purpose review and advisory services on offshore investment structure was 26,191,202 baht which was already paid of 23,563,091 baht to other


Page 153

related parties of the Auditors’ office. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 2,628,111 baht.

The engagements of the office of the Auditors and its related parties to provide the non-audit work were reported to the Audit Committee to ensure that it would not involve any conflict of interest or any review of their own work which would contaminate the independence judgment of the auditors.

Part 2 Section 13 Others

Page 154

13. Others As at December 31, 2011, there is no information which may significant impact to investors’ decision making.


Page 155

Part 3

The Certification of Information

We, the Board of Directors or the highest ranking management in Accounting, have thoroughly reviewed all information in this annual registration statement and hereby certify that all information is true, accurate and not misleading nor does it fail to disclose material facts that should be stated therein which may cause damage to the purchasers of securities. In addition, we certified that:

(1) The financial statement and the financial information in this annual registration statement has accurately disclosed the financial status, the performance, and the cash flow of the company and its subsidiaries.

(2) We account for providing the good disclosure system to ensure that the company and its subsidiaries have disclosed the accurate information as well as overseeing the compliance with such system.

(3) We account for providing the good internal control system as well as overseeing the compliance with such system. In addition, we have already disclosed the information on the internal control appraisal to the auditor and the company’s audit committee on January 11, 2555. The information consists the deficiency and significant change of the internal control as well as the incorrect practice that may affect the preparation of the financial statement of the company and its subsidiaries.

To certify that all documents are the same paper as we had certified correctness; we, hereby assigned Mr. Piya Jetasanon to affix her signature on every single page of all same certified series. If any page is not signed by Mr. Piya Jetasanon, we assume that such information is not certified.

Name Position Signature

1. Mr. Sahust Pratuknukul C President ____________________

2. Mr. Piya Jetasanon Senior Executive Vice President - Finance

____________________


Appointee Mr. Piya Jetasanon Senior Executive Vice President-

________________________


Page 156

The Certification of Information We have thoroughly reviewed all information in this annual registration statement and hereby certify that all information is true, accurate and not misleading nor does it fail to disclose material facts that should be stated therein.

To certify that all information are the same as I had reviewed and having no inquiries that such information are incomplete, false, and misleading or failing to disclose material facts that should be stated therein; I, hereby assigned Mr. Piya Jetasanon to affix her signature on every single page of all same certified series. If any page is not signed by Mr. Piya Jetasanon, we assume that such information is not certified.


Mr. Sahust Pratuknukul President ________________________


Appointee Mr. Piya Jetasanon Senior Executive Vice President-

________________________

The positions of EGCO’s Board of Directors as of January 31, 2012

Name and Position Age Education Dispute Family Relationship

between the management

Amount of Shares (%)

Working Experience

Year Position Company

1. Mr. Pornchai Rujiprapa

Chairman

Chairman, Investment

Committee

59 - Ph.D. (Regional Economics.),

University of Pennsylvania, USA

- M.Sc. (Regional Economics.),

from University of Pennsylvania,

USA

- M.P.A. (Programming Planning

Administration) from National

Institute of Development

Administration (NIDA)

- B.Sc. (Agro-Industry) from

Kasetsart University

- Certificate of Executive Program,

Class 7, Capital Market Academy

- Certificate of Directors

Accreditation Program, Thai

Institute of Directors Association

- National Defense Course (Class of

41), National Defence College

- - 0.000 October 2006-Present 2010-Present 2006-

September

2010

December 2006-2008 2005 - 2009

2003-2006 1999-2003

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

Electricity Generating Authority of Thailand Ministry of Science and Technology Ministry of Energy PTT Public Company Limited PTT Chemical Public Company Limited Ministry of Energy Office of the Prime Ministry

2. Mr. Aswin Kongsiri Independent Director Vice Chairman Chairman, Corporate

Governance and Social

Responsibility Committee


Committee Member

66 - Bachelor’s Degree ( Honours) in Philosophy, Politics and Economics, Oxford University, England

- Banff School of Advanced Management, Alberta, Canada

- The National Defense Course for the Joint State-Private Sectors,

- - 0.000 November

2011-Present

October 2010-

Present

August 2010-

Present

April 2010-

November 2011

Member of Monetary Policy

Committee

Chairman

Governor

Chairman

Bank of Thailand

Thai Orix Leasing Co., Ltd. (TOLC)

The Stock Exchange of Thailand Krungthai - Axa Life Insurance Co.,

Ltd.(KAL)

Class 6, National Defence College - Certificate of Chairman 2000

Program, Thai Institute of Directors Association

- Certificate of Directors Certification Program, Thai Institute of Directors Association

November

2010-Present

January2009-

2010

January 2009-

2010

October 2007-

Present

2007-Present

2005 – Present

1999-Present

1993-Present

1981 - Present

2005 – August

2010

2003 –

November 2008

Chairman

Director and Audit Committee

Member

Chairman

Chairman





Independent Director and Executive

Committee Member


Thoresen Thai Agencies Public Company Limited Thoresen Thai Agencies Public Company Limited Ch. Karnchang Public Company Limited

Ton Poh Thailand Fund

Bangkok Aviation Fuel Services Public

Company Limited

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

Padaeng Industry Public Company Limited Krung Thai Bank Public Co., Ltd.

Thai Rating and Information Services

Company Limited

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

57 - Ph.D. in Economics, University of Rochester, USA

- M.A. in Economics, Thammasat University

- B.A. in Economics, Thammasat University


Class 12, Capital Market Academy - The National Defense Course for

- - 0.000 August 2010-

Present

May 2010-

Present

May 2009-

Present

July 2005-

Present

2001 – April

Governor

Independent Director and Audit

Committee Member

Chairman, University Research policy

Committee


Committee Member

Secretary - General

The Stock Exchange of Thailand Thai Vegetable Oil Public Company Limited Bangkok University Pylon Public Company Limited Agricultural Futures Trading Commission

the Joint Public-Private Sectors, Class 21, National Defence College

- Politics and Governance in Democratic Systems for Executives Course 11, King Prajadhipok’s Institute


- Certificate of Audit Committee

and Continuing Development


- Certificate of Monitoring Fraud

Risk Management, Thai Institute of Directors Association

- Certificate of Monitoring the

System of Internal Control and



Quality of Financial Reporting,

Thai Institute of Directors Association

2009

2005 - 2006

1998 – 2001

1991 – 1996

Director, Audit Committee Member

and Chairman of Risk Management

Committee

Senior Executive Vice President

Senior Vice President and Spokesman

Government Housing Bank MFC Asset Management Public Company Limited Stock Exchange of Thailand

4. Mr. Thanapich Mulapruk Independent Director

Audit Committee Member

62 - LL.M., Chulalongkorn University

- LL.B., Chulalongkorn University

- Thai Bar Certificate, Thai Barrister at law of Thailand

- National Defence College, 1998

(Class 41)

- - 0.000 October, 2009-

Present

February 2009-

Present

November 2008-

Present

Director General of Department of

Special Litigation

Director

Spokesperson

Office of Attorney -General

The Airports of Thailand Public Company

Limited

Office of Attorney-General


Certification Program (class 78) ,

Thai Institute of Directors

Association



- Certificate of Audit Committee

and Continuing Development







- Certificate of Monitoring the Quality of Financial Reporting, Thai Institute of Directors Association

April 2008-

June2011

October 2005-

Present

April 2008-

October 2008

December 2006 –

September 2009

October 2007-

February 2008

2006

2004-2006

2003-2004

Director

Director

Director


Economic Crime Litigation

Director


Administrative Litigation

Deputy Director General of

Department of Economic Crime

Litigation

Executive Director of Office of

Economic Crime Litigation 1

The Port Authority of Thailand

The Transport Company Limited

The Bangkok Mass Transit Authority


The Marketing Organization for Farmers,

Ministry of Agriculture and Cooperatives




5. Police Lieutenant General Pijarn Jittirat Independent Director

Corporate Governance and

Social Responsibility

Committee Member


Committee Member

63 - Master of Public Administration,

Chulalongkorn University

- Bachelor of Public Administration,

Police Cadet Academy

- Advanced Course in

Administration, Class 29, Institute

of Administration Development

- Advanced Course in Police

Administration, Class 13

- - 0.000 2006-2008

2005-2006

2004-2005

2002-2004

Deputy Inspector-General

Commissioner, Office of Legal and

Investigation

Deputy Commissioner, Office of

Human Resources

Assistant Commissioner, Office of

Human Resources

Royal Thai Police

Royal Thai Police

Royal Thai Police

Royal Thai Police

- National Defense College Class 44

- Certificate of The Board’s Role on

Fraud Presentation and Detection ,


Association

- Certificate of Role of the

Compensation Committee, Thai



6. Mr. Somphot Kanchanaporn Independent Director

Audit Committee Member

65 - MBA, National Institute of

Development Administration

(NIDA)

- B.S. (Police Science and

Administration), California State

University at Los Angeles


Accreditation Program (DAP),


Association

- National Defense College, (Class

41st)







- - 0.000 2008-

November

2010

January 2009-

June 2010

2008-April

2009

October

2006-2008

December

2006-2008

2007

November

2003-

November

2005

August-

November

Chairman of the Inspector General

Director


Member

Chairman of Standing Committee on

Energy


Deputy Director (Executive Level 10)

Deputy Secretary-General

Ministry of Energy

B N B Inter Group Public Company

Limited

PTT Aromatics and Refining Public

Company Limited

The National Legislative Assembly

The National Legislative Assembly

Aromatics (Thailand) Public Company

Limited

The National Intelligence Agency

The Office of the National Security

Council



Quality of Financial Reporting,

Thai Institute of Directors Association

2003

7. Mr. Phaiboon Siripanoosatien Independent Director


Committee Member



Committee Member

48 - Master of Political Science,

Sukhuthai Thammathirat

University

- Bachelor of Engineering,



Certification Program, Thai


- Certificate of Public Law and

Management, Class 1, King

Prajadhipok’s Institute

- Certificate of Democratic Politics

and Governance for High-Level

Administrators, Class 7, King

Prajadhipok Institute

- Certificate of Management of

Public Economy, Class 1, King

Prajdhipok’s Institute



2009-Present

2009-Present

2008-Present

2008-Present

1998-Present

Director



Committee Member


Managing Director

Government Saving Bank

Asia Credit Securities Company Limited

Finansia Syrus Securities Public Company

Limited

Metrostar Property Public Company

Limited

Trinity Plus Company Limited

8. Mr. Wisudhi Srisuphan

Director (Authorized Director)

(Vacating the office by resignation

on February 28, 2011)

62 - M.A.A. Business Economics,

Thammasart University

- M.E. (C.E.) Lamar University ,

U.S.A.

- LLB. (Second Class Honour),

Ramkhamhaeng University

- B.Eng.in Civil Engineering,


- National Defense Course (Class

38), National Defense College

- Politics and Governance in

Democratic Systems for Executive

Course (Class 6), King

Prajadhipok’s Institute

- CMA (Class 6), Capital Market

Academy

- Certificate of Role of Chairman

Program, Thai Institute of

Directors Association




- - 0.000 November 2010-

Present

June 2010-2011

October 2006-

Present

August 2004-

Present

June 2010-Sep

2010

December 2009-

June 2010

October 2008-

2010

July 2008-June

2010

2009

2008-2009

2006-2009

2006-2009

2007-2008

2006-2008

2007

2003-2007

2005-2006


Chairman

Director

Chairman

Chairman

Chairman

Director

Vice Chairman

Director-General

Deputy Permanent Secretary

Chairman of the Board

Director

Director-General


Director-General

Director-General

Chairman

Pruksa Real Estate Public Company

Limited

CAT Telecom Public Company Limited

Office of the Council of State

Real Estate Information Center

Sunshine Corporation Public Company

Limited

Siam City Bank Public Company Limited

The Electricity Generating Authority of

Thailand

Dhipaya Insurance Public Company

Limited

The Custom Department, Ministry of

Finance

Ministry of Finance

The Government Saving Bank

Thai Airways International Public

Company Limited

The Custom Department, Ministry of

Finance

Thailand of Tobacco Monopoly,

Ministry of Finance

The Excise Department, Ministry of

Finance

The Treasury Department, Ministry of

Finance

CAT Telecom Public Company Limited

2002-2006

2000-2006

2000-2005

2002-2003

1999-2002

Director


Director

Director-General

Comptroller-General

PTT Exploration and Production Public

Company Limited

The Government Housing Bank

PTT Public Company Limited

Fiscal Policy Office, Ministry of Finance

The Comptroller’s Department, Ministry of

Finance

9. Mr. Kurujit Nakornthap

Director Corporate Governance and

Social Responsibility Committee Member

(Authorized Director)


on December 1, 2011)

56 - Ph.D. in Petroleum Engineering,

University of Oklahoma, U.S.A.

- Mater of Science in Petroleum

Engineering, University of

Oklahoma, U.S.A.

- Bachelor of Science (with Special

Distinction) in Petroleum

Engineering, University of

Oklahoma, U.S.A.

- The Civil Service Executive

Program for Senior Civil Servants

(Visionary Leadership, Class 46)

by OCSC, Bangkok

- Senior Executive Program

(SEP60), at the London Business

School, U.K.

- Certificate of Director

Accreditation Program, Thai

Institute of Directors Association - Certificate of Audit Committee

Program, Thai Institute of

Directors Association - National Defense College (Class

2551 (2008-2009)), Thailand - Top Executive Program in

Commerce and Trade (TEPCoT3), 2010

- - 0.000 2011-Present

November 2010-

Present

September 2008-

November 2010

December 2006-

September 2008

Jan 2006-

December 2006

Director


Director General, Department of

Mineral Fuel


Deputy Director General, Department

of Mineral Fuels,

Electricity Generating Authority of Thailand Ministry of Energy

Ministry of Energy

Ministry of Energy

Ministry of Energy

10. Mr. Kulit Sombatsiri Director Corporate Governance and


48 - MBA, University of Southern

California, USA

- MPA, San Diego State University,

USA

- - 0.000 2011-Present

Oct 2011-Present

2009-Present

Director

Inspector General

Director

Electricity Generating Authority of Thailand Ministry of Finance Krung Thai Asset Management Public

Committee Member (Authorized Director)

- BA, Public Administration,

Ramkhamhaeng University






Mar 2010-Sep

2011

Sep 2008-Feb

2010

2007-Aug 2008

2005-2007

State Enterprise Development Advisor

Deputy- Director General

Director, Bureau of Monetary

Management

Deputy Secretary General

Company Limited The State Enterprise Policy Office,

Ministry of Finance

The State Enterprise Policy Office,

Ministry of Finance

The Treasury Department, Ministry of

Finance

The National Telecommunications

Commission

11. Mr. Somboon Arayaskul

Director Investment Committee

Member Corporate Governance and


Committee Member



on October 1, 2011)

58 - Master of Engineering (Mechanical

Engineering), Villanova University,

U.S.A.

- Bachelor of Engineering (Mechanical

Engineering), Mapua Institute of

Technology, Philippines


- Certificate of the General Manager Program, Harvard Business School

- - 0.000 December 2007-

Present

April 2008-

January 2009

October 2006-

December 2007

Deputy Governor- Development Director Vice President - Thermal Power Plant Construction

Electricity Generating Authority of Thailand Ratchaburi Electricity Generating Holding

Public Company Limited

Electricity Generating Authority of

Thailand

12. Mr. Surasak Supavititpatana

Director Investment Committee

Member (Authorized Director)

59 - Bachelor of Engineering (Electrical

Engineering), Kasetsart University


Public Economy for Executive,

King Prajadhipok’s Institute


- Certificate of Finance for

Executive Decision, Continuing

Education Center, Chulalongkorn

University

- Certificate of Positioning Utility

Executives for Change, University

of Idaho

- Certificate of Air War College,

High Education Institute

- - 0.000 January 2010-

Present

October 2006-

January 2010

November 2000-

September 2006

Deputy Governance –Generation

Assistant Governor –Power Plant 2

Mae Moh Power Plant Production

Division Manager


Thailand


Thailand


Thailand

13. Mr. Thawat Vadjanapornsithi

Director Nomination and Remuneration

Committee Member (Authorized Director)


Engineering), Chulalongkorn

University


Public Economy for Executive

(Class 7), King Prajadhipok’s

Institute

- Certificate of Directors Certification Program (Class 86), Thai Institute of Directors Association


Executive Decision, Continuing

Education Center, Chulalongkorn

University

- Certificate of Masterful Coaching

Workshop, Hay Group

- Certificate of Senior Executive

Development Program-2,

Foundation for International

Human Resource Development

- - 0.000 October 2010-

Present

January 2010-

September

2010

October 2008-

December 2009

December 2007-

September 2008

Deputy Governance –Corporate Social

Responsibility, Acting EGAT

Spokesman

Assistant Governor –Human

Resources

Assistant Governance –Corporate


Assistant Governance –

Administration, Development Area


Thailand


Thailand


Thailand


Thailand

14. Mr. Peter Albert Littlewood

Director




60 MA (1st Class Honours),

Cambridge University, UK

- - 0.000 2009-Present

2003 – Present

2001-2010

2000 - 2005

2000 - 2005

2000 - 2005

1999 – 2003

1998

Director

Executive Director and Chief

Operating Officer

Director

Director

Director

Director

Project Manager for CLP’s

generating plant projects

General Manager for CLP’s

generation business group and later


CLP Power Asia Limited, Hong Kong

BLCP Power Limited

Rayong Electricity Generating Co., Ltd.

Khanom Electricity Generating Co., Ltd.

EGCO Engineering & Service Co., Ltd.

CLP Group

CLP Group

for CLP strategic development

15. Mr. Hideaki Tomiku

Director Chairman, Nomination and

Remuneration Committee Investment Committee


54 International Law, Tokyo University - - 0.00 2009-Present

May 2009-

Present

2006 –2011

2003 – 2006

2001 –2003

Director

Chief Executive Officer

Director and Executive Vice President

Deputy General Manager, Head of

International IPP

Assistant General Manager,

Power, Generation & Marketing for

Japanese Market


Diamond Generating Asia, Limited

OneEnergy Limited

Mitsubishi Corporation


16. Mr. Mark Jobling

Director

Chairman, Nomination and Remuneration





40 - Bachelor of Economics, Monash

University

- Bachelor of Laws (Honours),

Monash University

- Barrister and Solicitor (Victoria)

- Solicitor (Hong Kong)

- - 0.00 2009-Present

2009-2011

2006-2009

2003-2006

Director

Managing Director-Southeast Asia

Chief Executive Officer

Senior Vice President –Business

Development

General Counsel


CLP Holdings OneEnergy

OneEnergy

CLP Power Asia

17. Mr. Shinji Tsuchiya

Director




41 - Bachelor of Engineering

(Mechanical Engineering), Keio

University

- - 0.00 April 2009-

Present

November

2005 – March

2009

November 2005

Head of Southeast Asia IPP Team

Manager

Commercial Director

Global Power Generation and Marketing

Unit of Mitsubishi Corporation

Power Generation and Marketing

Internatinal Unit of Mitsubishi Corporation

Electricidad Aguila de Tuxpan (co.)

Electricidad Sol de Tuxpan

18. Mr. Toshiro Kudama

Director


53 - Master of Mechanical Engineering,

Tokyo Institute of Technology

- Bachelor of Mechanical

Engineering, Tokyo Institute of

Technology

- - 0.00 2010-Present

2006 – 2010

Executive Officer, Executive General

Manager, International Affairs

Department

Executive General Manager,

International Affairs Department

The Tokyo Electric Power Company, Inc.

1997 –2006

Manager and General Manager,

Business Development Group,

International Affairs Department

19. Mr. Akio Matsuzaki

Director



on January 29, 2012)

55 - Master of Energy Science, Tokyo

Institute of Technology

- Bachelor of Applied Physics,

Tokyo Institute of Technology

- - 0.00 2011-Present

2010-2011

2007-2010

1999-2007

General Manager, Chiba Thermal

Power Station, East Thermal Power

Office

General Manager, Overseas Power

Business, Thermal Power Department

Executive Vice President and Chief

Operation Officer, TeaM Energy

Corporation, Philippines

General Manager, Overseas Project

Group, Thermal Power plant

Engineering Center, Thermal Power

Department


20. Mr. Ryota Sakakibara

Director


Member


39 - Bachelor of Economics, The

University of Tokyo

- - 0.00 2011-Present

2009-2011

2009-2011

2006-2009

Assistant General Manager

Head of Southeast Asia IPP Team

Asia & Oceania Business Unit

New Energy & Power Generation

Division

Director

Manager


Diamond Generating Asia, Limited

Natural Energy Development Company

Limited

OneEnergy Limited

21. Mr. Satoshi Yajima

Director


44 - Bachelor of Electrical Engineering,

Waseda University, Japan

- - 0.00 2002-Present

General Manager, Overseas Business

Group 2 International Affairs

Department


22. Mr. Vinit Tangnoi

President and Director

Chairman, Risk Management

Committee

Chairman, Group Business

Committee

Chairman, Good Corporate

Governance Committee

Chairman, EGCO

Management Committee


Member



Committee Member


(Mr. Vinit Tangnoi’s contract as

President expired on September 30,

2011)


on January 1, 2012)

60 Master of Science (Industrial Engineering), University of Texas at Arlington, U.S.A.

B.Eng. (Mechanical), Kasetsart University

Certificate of Advance Management Program, Harvard Business School, Harvard University, U.SA.

Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University

Certificate of Army War College Regular Program, Institute of Army Academics

Certificate of Directors Certification Program, Thai Institute of Directors Association

Certificate of Leader Program,

Capital Market Academy

- - 0.000 Mar2011-

Sep2011

Aug2009-Sep

2011

Jan 2009-Sep

2011

Oct2008-Sep

2011

Oct2008-Sep

2011

Oct 2008-Sep

2009

Oct 2008-Sep

2009

Dec2007-

Sep2008

2006-2008

March, 2006

October, 2005

June, 2005

October, 2004

October, 2003

Director

Chairman

Chairman

Chairman

Chairman

Director

Chairman

Deputy Governor-Generation

Director

Director

Deputy Governor-System Control

Senior Executive Vice President-

System Control

Assistant Chief Executive Officer-

Planning

Assistant Governor-Policy and

Planning

Assistant Governor-Fuel Management

Xayaburi Hydropower Company Limited


Gulf Electric Company Limited

Khanom Electricity Generating Company

Limited

EGCO Engineering and Service Company

Limited


Rayong Electricity Generating Company

Limited


Thailand

EGAT International Co., Ltd.

Ratchaburi Electricity Generating Holding

Public Company Limited


Thailand


Thailand


Thailand


Thailand


Thailand

23. Mr. Sahust Pratuknukul

Director Nomination and Remuneration

Committee Member ( During April 22, 2010-September

30, 2011)

President and Director

Chairman, Risk Management

Committee

Chairman, Group Business

Committee

Chairman, Good Corporate

Governance Committee

Chairman, EGCO

Management Committee


Member



Committee Member

(Appointed to be President on

October 1, 2011)



Engineering), Chulalongkorn

University

- Certificate of the Joint Public-

Private Sectors Regular Course,

National Defence College

- Certificate of Senior Executive

Development Program-1, GE Co.,

Ltd.


Executive Decision Program,

Continuing Education Center,





- - 0.000 Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct2011-Present

Oct, 2010-Sep

2011

Jan 2008-Dec

2010

Oct 1, 2006

Oct 1, 2005

Oct. 1, 2003

Chairman

Chairman

Chairman

Director

Deputy Governor-Policy and Planning

Director

Assistant Governor-Policy

Assistant Chief Executive Officer-

Planning

Director, Energy Economic Division

Gulf Electric Company Limited


Limited

EGCO Engineering and Service Company

Limited


Electricity Generating Authority of Thailand EGAT International Co., Ltd. Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand Electricity Generating Authority of Thailand

The positions of the Management and the Control Persons as of December 31, 2011

Name and Position Age Education Dispute

Family Relationship between the management


Working Experience


1. Mr. John M. Palumbo

Senior Executive Vice

President -Business

Development -International

Risk Management Committee

Member

Good Corporate Governance

Committee Member

Group Business Committee

Member

EGCO Management

Committee

48 - Bachelor of Science in Mechanical

Engineering (Honors), Columbia -

University, School of Engineering

and Applied Science, New York.

- - 0.000 2011-Present

2011-Present

2011-Present

August 2009-

2010

2004 –2010

30 Jan 07-

November 08

2005-May 2008

2004 – April

2007

2003 – 2004

2003 - 2004

2003

Director

Director

Director

Director

Director

Director

Director

Director

Independent Consultant to the

Managing Director and the Head

of the Southeast Asia Business

Team Leader & Infrastructure

Specialist,

Independent Consultant to Chief


Limited

EGCO Engineering & Service Company

Limited

North pole Investment Company Limited

Natural Energy Development Company

Limited

Gulf Electric Public Company Limited


EGCO Joint Ventures & Development

Company Limited


China Light & Power Group

(Hong Kong)

ADB Technical Assistance Program

International Power PLC.




Working Experience


1995 – 2003

Executive Officer

Principal and Managing Director

Delta Associates (Thailand) Limited

2. Mr. Voravit Potisuk


President -Business

Development-Domestic


Member


Committee Member


Member

EGCO Management

Committee

54 - MBA, The University of The Thai

Chamber of Commerce

- B.Eng. (Electrical &

Communication) Chulalongkorn

University




- Executive Leadership Program

(ELP-NIDA Wharton)

- - 0.000 2011-Present

2011-Present

2011-Present

2011-Present

2011-Present

2010-2011

2010-2011

2004-2011

1996-2004

2002-2003

Director

Director

Director

Director

Director

Director

Director

Executive Vice President-Business

Development

Senior Vice President - Engineering

Business Division

Acting Managing Director


Limited


Limited




Quezon Generating Company Ltd,

Philippines

Conal Holdings Corporation, Philippines

Electricity Generating Public Company

Limited


Limited

Egcom Tara Company Limited

3. Mr. Piya Jetasanon


President – Finance and

Corporate Services


54 - MBA, Ramkhamhaeng University

- B.A. (Economics), Thammasat

University


- - 0.000 2011-Present

2011-Present

2011-Present

2011-Present

2011-Present

Director

Director

Director

Director

Director



EGCO International (BVI) Limited

North pole Investment Company Limited





Working Experience


Member


Member


Committee Member

EGCO Management

Committee

Certification Program, Thai Institute of

Directors Association

- Certificate of TLCP Executive

Development Program, Thai Listed

Companies Association

2011-Present

2007 - Present

2007

2005-Present

2003-2005

1996 – 2003

1994 – 1996

Director

Director

Director

First Senior Vice President – Finance

Senior Vice President – Finance

Manager – Finance Division

Manager- Treasury Management

Section

Limited


Limited


Thai LNG Power Corporation Ltd.


Limited


Limited


Limited


Limited

4. Mr. Chumsak Desudjit

Senior Executive Vice President

Director-Rayong Power Plant


Member


Member


Committee Member

EGCO Management

Committee

56 - B. Eng. (Mechanical Engineering),





- Certificate in Executive Leadership

Program, Joint Program NIDA-

Wharton, University of

Pennsylvania

- Graduate Diploma in Management

of Public Economy(MPE-7) , King

- - 0.000 2011-Present

2008 – 2009

2009-Present

2009-Present

2007-Present

2009-Present

2009-Present

Director

Director and Managing Director

Chairman

Chairman

Chairman

Director

Director



Limited

Roi-Et Green Company Limited




Limited


Limited




Working Experience


Prajadhipok’s Institute 2008-2009

2006 – 2550

2001 -2007

1998 -2000

Director

Director

Deputy Managing Director Operation

Group

Operation Division Manager

Gulf Cogeneration Company Limited

Nongkhae Cogeneration Company Limited

Samutprakarn Cogeneration Company

Limited



Limited


Limited

5. Mr. Chankij Jearaphunt


President

Managing Director –Khanom

Electricity Generating

Company Limited


Member


Member


Committee Member

EGCO Management

56 - Master of Public Administration (MPA)

National Institute of Development

Administration (NIDA)

- B. Eng. (Electrical Engineering),


- - 0.000 2004 – Present

2004 – Present

2004-Sept 2009

April 08-Present

April 07-April 09

2002 - April 08

Director and Managing Director

Director

Director

Director

Chairman


Limited


Limited


Limited

Gulf Energy Company Limited;

Gulf IPP Company Limited; and

Gulf Power Generation Company Limited

Roi-Et Green Company Limited; and





Working Experience


Committee

2006 - April 07

1998 – 2004

Director

Director

Deputy Managing Director-Operation,

Gulf Cogeneration Company Limited;

Nongkhae Cogeneration Company Limited

Samutprakarn Cogeneration Company

Limited

Roi-Et Green Company Limited; and



Limited

6. Mr. Wajarapong Palakawong Na

Ayudhya

Managing Director- Egco

Engineering & Service

Company Limited


Member


Member


Committee Member

EGCO Management

Committee

58 - Bachelor Degree of Mechanical

Engineering, Chulalongkorn

University - Certificate of Directors

Certification Program, Thai Institute of Directors Association

- Certificate of NIDA Executive Leadership Program, Joint Program NIDA-Wharton of University of Pensylvania

- Certification of The Senior Executive Program, Sasin Graduate Institue of Business

- - 0.000 2011-Present

2011-Present

Mar 2011 –

Present

Mar 2011 –

Present

May 2008 –

Present

Nov 1999 –

Present

May 1997 – Feb

Director

Director

Director

Managing Director

Chairman

Director

Deputy Managing Director -


Limited

Egco Engineering and Service Company

Limited

Covanta Philippines Operating Inc.

EGCO Engineering & Service Co.,Ltd.

EGCOM Tara Co., Ltd.

Agro Energy Co.,Ltd.

EGCO Engineering & Service Co.,Ltd.




Working Experience


2011 Operation

7. Mr. Suvapan Chomchalerm

Executive Vice President –

Finance

51 - M.Sc. (Accounting), Thammasat

University

- B.Sc. (Accounting), Chulalongkorn

University

-

- - 0.000 May 2010-May

2011

2000 – April

2010

1994 – 2000

Deputy Managing Director & Chief Financial Officer ( EGCO’s Representative) Senior Vice President - Accounting and

Budget Division

Manager-Accounting and Budget

Analysis Section, Accounting and

Budget Division

BLCP Power Limited


Limited

8. Mr. Nattanont Meesuksabai

Senior Vice President -Accounting and

Budget

51 - Master of Business Administration (MBA),

Chulalongkorn Univerity

- B.Sc. (CostAccounting), Chulalongkorn

University

- - 0.000 2011 - Present

2009 – April 2011

2005 – 2009

1997 – Sept 2005

Senior Vice President- Accounting and Budget

Division Manager

Administration Division Manager

Internal Audit Section Manager

(Accounting Section Manager)


EGCO Engineering and Service Company Limited



9. Ms. Somsiri Yoosook

Senior Vice President - Finance

47 - Master of Business Administration

(Finance), Youngstown State University

U.S.A.

- Bachelor of Science (Accounting)

(2nd Class Honors), Kasetsart University

- - 0.000 2011 - Present

2003 -April

2011

2001 – 2002

1996 – 2003

1994 - 1995

Senior Vice President - Finance

Vice President–Subsidiaries Finance

Vice President–Project Finance

Manager - Loan Section

Manager – Disbursement Section




Khanom Electricity Generating Company Limited


เอกสารแนบ 2 : ขอ้มลูการดํารงตําแหน่งของผูบ้รหิารและผูม้อีํานาจควบคมุ

The Positions of EGCO's Management and the Control Persons in the Subsidiaries and Other Related Companies as of December 31, 2011

EGCO1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

1 Mr. Pornchai Rujiprapa DDD, XX DDD2 Mr. Aswin Kongsiri DD, I, N, CC3 Dr. Chaipat Sahasakul I, AA4 Pol Lt Gen Pijarn Jittirat I, C, N5 Mr. Somphot Kanchanaporn I, A6 Mr. Phaiboon Siripanoosatien I, N, C7 Mr. Thanapich Mulapruk I, A8 Mr. Kulit Sombatsiri D,C D9 Mr. Surasak Supavititpatana D, X Deputy Governor10 Mr. Toshiro Kudama D11 Mr. Akio Matsuzaki D12 Mr. Hideaki Tomiku D, NN, X D13 Mr. Ryota Sakakibara D,X14 Mr. Vinit Tangnoi D, N Engineering Level 14

15 Mr. Sahust PratuknukulD, President, X, C, SS, GG

Engineering Level 14 DDD DDD DDD

D DDD

16 Mr. John Palumbo SEVP-Business Development-, S,G D D D D D D D17 Mr. Voravit Potisuk SEVP-Business Development- Domestic, S,G D D D18 Mr. Piya Jetasanon SEVP-Finance & Corporate Services, S, G D D D D D D D19 Mr. Chumsak Desudjit SEVP, S, G D DDD D DDD DDD20 Mr. Chankij Jeraphunt SEVP, S, G D, Managing Director D D D D D21 Mr. Wajarapong palakawong Na Ayudhay SEVP, S, G D, Managing Director22 Mr. Suvapan Chomchalerm EVP23 Miss. Somsiri Yoosook SVP-Finance24 Mr. Nuttanont Meesuksabai SVP-Accounting and Budget25 Miss Busakorn Kakanumpornwong Company Secretary, SVP-Corporate Secretary

RemarkA. DDD = Chairman DD = Vice Chairman D = Director XX = Chairman of Investment Committee X = Investment Committee Member I = Independent Director AA = Chairman of Audit Committee A = Audit Committee Member NN = Chairman of Nomination and Remuneration Committee N = Nomination and Remuneration Committee Member

CC = Chairman of Corporate Governance and Social Responsibility Committee C= Corporate Governance and Social Responsibility Committee Member SS = Chairman of Group Business Committee S = Group Business Committee Member GG = Chairman of Good Corporate Governance Committee G = Good Corporate Governance Committee Member

B. 1 = Electricity Generating Authority of Thailand 9 = Roi-Et Green Co., Ltd. 17 = Quezon Generating Co., Ltd. 25 = BLCP Power Limited2 = TEPDIA Generating B.V. 10 = Nam Theun 2 Power Co., Ltd. 18 = Quezon Power Inc. 26 = Natural Energy Development Co., Ltd.3 = Khanom Electricity Generating Co., Ltd. 11 = Gulf Electric Public Company Limited 19 = Conal Holdings Corporation 27 = Egcom Tara Co., Ltd.4 = EGCO Cogeneration Co., Ltd. 12 = Gulf Power Generation Co., Ltd. 20 = Northern Mindanao Power Corporation5 = EGCO Engineering and Service Co., Ltd. 13 = Gulf Cogeneration Co., Ltd. 21 = Alsing Power Holdings, Inc.6 = EGCO International (BVI) Ltd. 14 = Gulf Energy Co., Ltd. 22 = Southern Philippines Power Corporation7 = EGCO Green Energy Co., Ltd. 15 = Gulf IPP Co., Ltd. 23 = Alto Power Management Corporation8 =North Pole Investment Co., Ltd. 16 = GPI Quezon Ltd. 24 = Peral Energy Philippines Operating Inc.

Joint VenturesName Major Shareholders Subsidiaries (Core Business) Subsidiaries


The Positions of KEGCO's Management and the Control Persons in EGCO Group Companies as of December 31, 2011

KEGCO1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1 Mr. Sahust Pratuknukul DD DD DD D DD2 Mr. Piya Jetasanon D D D D D D3 Mr. John Palumbo D D D4 Mr. Voravit Potisuk D D D D D5 Mr. Chumsak Desudjit D DD D DD DD6 Mr. Wajarapong Palakawong Na Ayudhya D D, Managing Director DD8 Mr. Chankij Jearaphunt D, Managing Director D D D D D9 Mr. Mana Vitvaskul Deputy Managing Director - Operation10 Mrs. Krisna Pinkaew Deputy Managing Director - Finance and Administration11 Mr. Tanit Kalunkul Maintenance Division Manager12 Mr. Amnat Tippayasak Operation Division Manager13 Mr. Apichai Komhint Account & Budget Division Manager14 Mr. Pairote Boonmak General Affairs Division Manager

RemarkA. DD = Chairman D = Director B. 1 = EGCO Cogeneration Co., Ltd. 8 = Gulf Power Generation Co., Ltd. 16 = Eastern Water Resources Development and Management Public Co., Ltd.

2 = EGCO Engineering & Service Co., Ltd. 9 = Gulf Cogeneration Co., Ltd. 17= Natural Energy Development Co., Ltd.3 = EGCO International (BVI) Ltd. 10 = Nongkhae Cogeneration Co., Ltd. 18= North Pole Investment Co., Ltd.4 = EGCO Green Energy Co., Ltd. 11 = Samutprakarn Cogeneration Co., Ltd.5 = Roi-Et Green Co., Ltd. 12 = Gulf Energy Co., Ltd.6 = Egcom Tara Co., Ltd. 13 = Gulf IPP Co., Ltd.7 = Gulf Electric Public Co., Ltd. 14 = Nam Thuen 2 Power Co., Ltd.

15 = BLCP Power Limited Ltd.

Name Other Companies in EGCO Group


The Positions of EGCO Cogen's Management and the Control Persons in EGCO Group Companies as of December 31, 2011

EGCO Cogen1 2 3 4 5 6 7 8 9 10 11 12 13 14

1 Mr. Chumsak Desudjit DD D D DD DD2 Mrs. Wimolwan Sasanawin D3 Mr. Piya Jetasanon D D D D D4 Mr. Supoth Chantavilartkul D, General Manager5 Mr. Yasuhiro Koide D D D

RemarkA. DD = Chairman D = DirectorB. 1 = Khanom Electricity Generating Co., Ltd. 8 = North Pole Investment Co.,Ltd.

2 = EGCO Engineering & Service Co., Ltd. 9 = Nam Theun 2 Power Co., Ltd.3 = EGCO Green Energy Co., Ltd. 10 = BLCP Power Limited4 = Roi-Et Green Co., Ltd. 11 = Gulf Energy Co., Ltd.5 = Egcom Tara Co., Ltd. 12 = Conal Holdings Corporation6 = Gulf Electric Public Co., Ltd. 13 = Northern Mindanao Power Corporation7 = EGCO International (BVI) Ltd. 14 = Quezon Generating Co., Ltd.

Name Other Companies in EGCO Group

1

Attachment # 3 AUDIT COMMITTEE’S REPORT

The Audit Committee of EGCO consists of 3 independent directors whose qualifications, experience, and expertise are in accounting, finance, economics, law, organization management and energy business. The Chairman of the Audit Committee is Mr. Chaipat Sahasakul, and the other 2 members are Mr. Somphot Kanchanaporn and Mr. Thanapich Mulapruk.

The Audit Committee has performed its duties in conformity with the mission entrusted by the Board of Directors as prescribed in the Audit Committee Charter which is in compliance with those specified by The Stock Exchange of Thailand (SET): the Audit Committee’s Qualification and Scope of Duties and Responsibilities B.E. 2551. The Audit Committee regularly reports the Committee’s Minutes of Meetings to the Board of Directors.

The Audit Committee held 17 meetings in 2011 with all committee members attending each meeting. The Committee Meeting Attendance Report is shown in Table 2: Board and Committee Meeting Attendance Report in Corporate Governance section.

The Audit Committee’s performance can be summarized as follows.

1. Review of financial statements

- To review the quarterly and the annual financial statements with the external auditors and the Management to ensure compliance with the generally accepted accounting principles. The disclosures were complete, accurate, reliable, and in compliance with related laws and regulations. The Committee also considered the adoption of the new accounting standards, the new financial reporting standards, the new interpretation and amendments to accounting standards , and the adjusted accounting standards and accounting frameworks relating to EGCO.

- To review the Management Discussion and Analysis (MD&A) with the Management to ensure its accuracy, adequacy and usefulness to shareholders and investors for making their investment decisions.

- To hold exclusive meeting with the external auditors to ensure their independence.

- To consider other services performed by the audit firm’s group companies for EGCO and its subsidiaries. It was determined that the scopes of work and fees

2

for other services were not significant and did not influence the independence of the auditor.

2. Review of the internal control systems

The Audit Committee reviewed the sufficiency and effectiveness of the internal control systems by considering the internal auditor’s and the external auditor’s reports. The external auditor agreed that there was no significant shortcoming in the year 2011. In addition, the Committee considered the results of the internal control evaluation of EGCO and its subsidiaries together with the internal control questionnaires which were prepared in compliance with the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) guidelines, The Stock Exchange of Thailand (SET), and the Securities and Exchange Commission (SEC). The evaluation result for the year 2011 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system.

3. Oversight of internal audit

- To approve scope of work and annual audit plan which included Management Audit.

- To review internal audit report by demanding that the Internal Audit Division directly reports to the Audit Committee.

- To review budget and manpower of the Internal Audit Division, the professional development of internal auditors, and Chief Internal Auditor’s KPI. The Committee also reviewed the performance of Chief Internal Auditor’s to ensure the Internal Audit Division’s independence.

4. Review of compliance with laws relating to EGCO’s business

The Audit Committee reviewed with the Management to ensure that EGCO’s activities are in compliance with the securities and exchange laws, requirements of SET and SEC, as well as other laws relating to EGCO’s business. In addition, the Committee acknowledged that employees at senior vice president level and upward reviewed their compliance with related laws before signing and submitting Annual Representation Letter to their immediate supervisors.

3

5. Review of connected transactions

The Audit Committee considered the accuracy and adequacy of EGCO’s disclosure on related-party transactions or any transactions that might cause conflict of interest to ensure that EGCO had complied with business conditions and requirements of SEC.

6. Review of risk management

The Audit Committee reviewed with the Management the risk management policy, and the compliance with such policy and EGCO’s risk management guidelines. In addition, fraud risk prevention and monitoring practice for EGCO Group was prepared to ensure that EGCO and its subsidiaries had an appropriate risk management system that followed the COSO Enterprise Risk Management. , The current and future major risks had been considered for mitigation and management. Additional measures were set for risk management improvement as well.

7. Review of good corporate governance

- To enhance other good corporate governance practices such as providing the channel for employees and shareholders to direct their complaints, suspected violation of laws and Code of Conduct and questions about the financial statements and internal control systems by email to [email protected]. Whistleblower system was also set up.

- To review and acknowledge the Code of Conduct Compliance Statement and General Representation Letter submitted by the President to the Chairman. The process of preparing those statements as well as their contents provided the assurances to the Committee that EGCO’s operations were in compliance with the Code of Conduct and the internal control systems and that the financial information and disclosures were accurate, complete and reliable.

8. Audit Committee’s self assessment

The Audit Committee assessed the Audit Committee’s performance for the year 2011 by completing the Audit Committee’s Self-Assessment Form which complied with SET’s regulations and international good practice. The result of this self-assessment was reported to the Board of Directors. The 2011 assessment result was that the composition, qualifications, duties, and responsibilities of the Audit

4

Committee were still in accordance with the Audit Committee Charter, the Stock Exchange of Thailand’s guidelines, and the international good practices.

9. Review of the Audit Committee Charter

The Audit Committee reviewed the Audit Committee Charter to ensure that the duties entrusted to them in 2011 were achieved and complied with international practices and those specified by the SET’s Audit Committee Best Practice Guidelines, while also being appropriate for EGCO’s business.

10. Appointment of the external auditor

The Committee reviewed the auditors’ performance in 2011 and recommended to the Board of Directors that PricewaterhouseCoopers ABAS Ltd., Mr.Somchai Jinnovart Certified Public Accountant (Thailand) No. 3271, Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977, Mr. Chaisiri Ruangritchai Certified Public Accountant (Thailand) No. 4526, and Ms. Amornrat Pearmpoonvatanasuk Certified Public Accountant (Thailand) No. 4599, be appointed by the shareholders as the Company’s auditors for 2012 due to their independence, professional practices, appropriate experience, SEC approval and discharging their duties effectively.

Based on the above practices, the Committee was of the opinion that EGCO’s 2011 financial statement was accurate, complete, and reliable. The internal control system was adequate and appropriate. Operations were in compliance with the Securities and Exchange Act, regulations of The Stock Exchange of Thailand and laws relating to the business of EGCO. In addition, information disclosure in case of related-party transaction or conflict of interest was correct and complete.

Mr. Chaipat Sahasakul

Chairman of the Audit Committee

Documents

Annual registration statement