Glow MD&A Q1 Year 2011

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Glow Energy Public Company Limited

Ref.GE/FIR-L-11-062 Page 1

Managements discussion and analysis of financial condition and results of operations

Overview

Glow Energy Public Company Limited and its subsidiaries are one of the largest private electricity generators and providers of industrialutilities in Thailand and neighboring country. We operate IPP and cogeneration facilities (most of which operate as SPPs under

Thailands SPP program) and our core business is to produce and supply electricity to EGAT and electricity and steam to industrialcustomers in the MIE1 Area. As of March 31, 2011, we had a total generating capacity of 1,945 MW of electricity and 1,046 tons per

hour of steam.We recordedtotal revenuesof Baht 8,956.9 million in the first quarter 2011, a 5.1 per cent decreased from Baht 9,438.8 million in thesame period 2010. Our normalized net profit2 (net profit excluding net exchange gains/losses3), which is the basis used to determineour dividend distribution, was Baht 1,002.8 million in the first quarter 2011, a 26.7 per cent decrease from Baht 1,367.8 million in the

same period 2010. As of March 31, 2011, we had total assets of Baht 108,018.6 millionand total liabilities of Baht 69,217.2 million.

Revenues

We derive our revenues primarily from sales of electricity to EGAT and sales of electricity, steam and clarified and demineralized water

to industrial users in the MIE Area. The following table breaks down our revenues by source for the periods indicated:

(Baht millions) (%) (Baht millions) (Baht millions) (%)Revenues from Sales of Goods and Rendering of Services

Electricity

Sales to EGAT by IPPs 2,715.4 30.3 2,986.2 31.6 (270.9) (9.1)

Sales to EGAT by SPPs 2,317.1 25.9 2,327.7 24.7 (10.6) (0.5)

Sales to Industrial Customers 2,637.8 29.5 2,358.0 25.0 279.8 11.9

Total 7,670.3 85.6 7,671.9 81.3 (1.7) (0.0)

Steam 1,149.2 12.8 1,072.6 11.4 76.6 7.1

Processed water 94.9 1.1 79.1 0.8 15.8 20.0

Total 8,914.4 99.5 8,823.6 93.5 90.7 1.0

Other Income 42.5 0.5 615.2 6.5 (572.7) (93.1)

Total Revenues 8,956.9 100.0 9,438.8 100.0 (482.0) (5.1)

Revenues

Year to Date Ended March 31,

(%)

2011 2010 Difference

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

2011 2010 Difference %

Electricity dispatch (GWh)

To EGAT by IPPs (1) 1,287.0 1,473.5 (186.5) (12.7)

To EGAT by SPPs 882.5 933.2 (50.6) (5.4)

To Industrial Customers 990.4 864.5 125.8 14.6

Total 3,159.9 3,271.2 (111.3) (3.4)

Steam (thousands of tons) 1,422.3 1,359.3 63.0 4.6

Processed water (thousand of cubic meters) 3,109.4 2,571.1 538.3 20.9


Volumes Sold

Note:(1)Included Electricity dispatch by Houay Ho Power YTD 2011 = 25 GWh, YTD 2010 = 103 GWh

1 Map Ta Phut Industrial Estate in Rayong Province

2 Definition of Normalized Net Profit is amended to Net Profit excluded net exchange gain/loss from foreign exchange rate, from Net Profit excluded

unrealized gain/loss from foreign exchange

3 Excluded net gain/loss on foreign exchange attributed to minority shareholders in subsidiaries

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Revenues from Sales of Goods

Electricity Sales to EGAT

We sell electricity to EGAT under our EGAT power purchase agreements 1. We are currently party to 2 IPP power purchase agreements,in respect of 713 MW of electricity located in Thailand and 128 MW of electricity located in Lao PDR in which 126 MW sales to EGAT

and 2 MW to Electricite Du Laos (EdL) and a total of 8 SPP power purchase agreements, in respect of an aggregate of 590 MW ofelectricity.

Electricity Sales to Industrial Customers

We sell electricity to our industrial customers under our power supply agreements. As of March 31, 2011, we were party to a total of 42power supply agreements with 31 industrial customers in respect of an aggregate of 616 MW of electricity.

Steam Sales

We sell steam to our industrial customers under our steam supply agreements. As of March 31, 2011, we were party to a total of 24

steam supply agreements with 18 industrial customers in respect of an aggregate of 805 tons per hour of steam.

Processed Water Sales

We sell clarified water and demineralized water to our industrial customers under our water supply agreements. As of March 31, 2011,we were party to a total of 13 water supply agreements with 9 customers in respect of an aggregate of 1,576 cubic meters per hour of

water.

Expenses

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

(Baht millions) (%) (Baht millions) (Baht millions) (%)

Cost of Sales of Goods

Fuel

Natural Gas 5,192.5 69.2 5,348.4 74.7 (155.9) (2.9)Coal 753.2 10.0 460.7 6.4 292.5 63.5

Diesel 1.8 0.0 1.8 0.0 0.0 0.1

Maintenance 205.3 2.7 163.4 2.3 41.9 25.6

Depreciation / Amortization 741.5 9.9 687.4 9.6 54.1 7.9

Other 402.7 5.4 376.7 5.3 26.0 6.9

Total Cost of Sales of Goods 7,297.0 97.3 7,038.4 98.3 258.6 3.7

Selling and Administrative Expenses(1)

Depreciation / Amortization 13.4 0.2 7.3 0.1 6.1 83.1

General 113.1 1.5 111.6 1.6 1.5 1.4

Total Selling and Administrative Expenses 126.5 1.7 118.9 1.7 7.6 6.4

Other Expenses 75.7 1.0 2.1 0.0 73.5 >100

Tota l Expenses 7,499.2 100.0 7,159.4 100.0 339.7 4.7


(%)

Expenses

2011 2010 Difference

Note:

(1) The data was reclassified in compliance with the Notification of the Department of Business Development regarding The BriefParticulars in the Financial Statements B.E. 2552 dated January 30, 2009 regarding the preparation and submission of financialstatements and reports for the financial position and result of operations of the listed companies.

1 Under IPP program, sell to EGAT consists of Availability Payment and Energy Payment whereas under SPP program sell to EGAT consists of CapacityPayment and Energy Payment.

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

(Baht millions) (%) (Baht millions) (Baht millions) (%)

IPP Facilities

Natural Gas 1,958.9 84.4 2,091.0 84.3 (132.1) (6.3)Coal - - - - - -

Diesel 1.8 0.1 1.8 0.1 0.0 0.1

Maintenance 15.3 0.7 8.2 0.3 7.1 87.3

Depreciation/Amortization 291.5 12.6 306.1 12.3 (14.7) (4.8)

Others 53.3 2.3 72.2 2.9 (18.9) (26.2)

Total Cost of Sales 2,320.8 100.0 2,479.3 100.0 (158.5) (6.4)

Cogeneration Facilities

Natural Gas 3,233.5 65.0 3,257.4 71.4 (23.8) (0.7)

Coal 753.2 15.1 460.7 10.1 292.5 63.5

Diesel - - - - - -

Maintenance 190.0 3.8 155.2 3.4 34.8 22.4

Depreciation/Amortization 450.0 9.0 381.3 8.4 68.8 18.0

Others 349.4 7.0 304.5 6.7 44.9 14.8

Total Cost of Sales 4,976.2 100.0 4,559.1 100.0 417.1 9.1

(%)

IPP and Cogeneration Facilities Cost of Sales of Goods Breakdown(1 )


Difference20102011

Note:

(1) The data presented herein as the cost of sales of our cogeneration facilities is our consolidated financial results less the results ofGlow IPP Co., Ltd., Houay Ho Power Co., Ltd and GHECO-One Co., Ltd. In fact, certain of these amounts are attributable toportions of our business, which are not technically our cogeneration facilities, although these amounts represent only a smallportion thereof.

Cost of Sales of Goods

Fuel

The principal fuels that we use to generate electricity and steam are natural gas and coal. Purchases of natural gas constitute our singlelargest operating expense, accounting for 69.2 per cent of our total expensesin the first quarter 2011.

The following table sets out our average gas costs for the periods indicated:


2011 2010

(Bt/mmBTU) (Bt/mmBTU) (Bt/mmBTU) (%)

Average cost

To Glow IPP 224.7 221.7 3.0 1.4To Cogeneration facilities

(2) 229.5 228.5 0.9 0.4

Average Effective Cost of Natu ral Gas(1 )

Difference

Note:

(1) These are not our actual gas prices, but are derived by taking our total natural gas expenses and dividing by total fuelconsumption of the facilities for the periods presented.

(2) This is a blended rate, reflecting principally prices paid to PTT (i) by our cogeneration facilities for gas used to supplyelectricity to EGAT and industrial customers, (ii) for gas used to fire boilers to generate steam for industrial customers. Each ofthe prices set out in (i) and (ii) are different. We also purchase small amounts of tail gas from another Thai supplier, whichprices are separate and are also factored into the foregoing rates.

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Purchases of coal accounted for 10.0 per cent of our total expenses in the first quarter 2011.

The following table sets out average coal costs for the periods indicated:


2011 2010

($/ton) ($/ton) ($/ton) (%)

Reference coal price @ 6,700 kcal/kg(2) 83.4 68.4 14.9 21.8

Freight costs(3) 12.3 11.4 0.9 7.4

Average Cost of Coal (1)

Difference

Note:

(1) This Average Cost of coal was excluded cost of biomass mix.(2) These are not our actual coal prices, which are subject to various adjustments under the terms of our coal supply contracts,

but a benchmark provided to illustrate the general movements in coal prices over the periods presented.

(3) These reflect our actual freight and insurance costs.

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

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

2011 2010

Glow IPP

Equivalent energy production (GWh) 1,262 1,371

Fuel consumption (mmBTU, HHV) 8,720,445 9,435,301

Heat rate (BTU/kWhe, HHV) 6,911 6,884

Cogeneration facilities

Allocated energy production (GWh equivalent) (2)

Gas-fired cogeneration facilities 1,591 1,633

Coal-fired cogeneration facilities (Mixed) 640 450

Fuel consumption (mmBTU, HHV)

Gas-fired cogeneration facilities 14,083,770 14,229,779

Coal-fired cogeneration facilities (Mixed) 6,726,722 4,548,166

Allocated heat rates (BTU/kWhe, HHV)

Gas-fired cogeneration facilities 8,851 8,712Coal-fired cogeneration facilities (Mixed)(3) 10,512 10,164

Production and Heat Rates(1 )


Notes:

(1) We present an allocated heat rate, which is a deemed heat rate for our cogeneration facilities that we derive by dividing the

total fuel energy consumption of such facilities over a specified period of time by the energy produced during such period. Thisis not a straightforward exercise, particularly with respect of our Glow SPP 2/SPP 3 hybrid facility, where, for purposes of suchcalculation, we are required to allocate the amount of energy produced using steam and the amount of energy usedproducing gas. We make this allocation on the basis of the contribution of each energy source to total energy input, which

involves subjective judgments and the use of simplifying assumptions. Nevertheless, this table has included production andheat rates of the new CFB 3 coal fired unit.

(2) Includes production of electricity and steam. For these purposes, steam has been converted into MW at a deemed equivalent

electrical energy value.

(3) CFB start-up gas is charged to the coal heat rates for purposes of the figures presented in this table.

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Results of operations

Year to date 2011 compared to Year to date 2010

Revenues

Revenues from sales of goods and the rendering of services, included Other income was Baht 8,956.9 million in the first quarter 2011,a 5.1 per cent decrease from Baht 9,438.8 million in the same period 2010. The decrease was attributable to the following factors:

Sales of electricity to EGAT by Glow IPP, under IPP scheme, amounted to Baht 2,675.4 million in the first quarter 2011, a 4.9per cent decreased from Baht 2,813.3 million in the same period 2010. This decrease was principally caused by loweravailability and electricity dispatch to EGAT and appreciation of Thai Baht. In the first quarter 2011, Glow IPP plant availability

was 94.4 per cent compared to 99.3 per cent in last year mainly due to shift of A-inspection from second quarter 2011 to thefirst quarter 2011. Thai Baht appreciated by 6.6 per cent from 33.02 Baht per US Dollar in the first quarter 2010 to 30.83Baht per US Dollar in the first quarter 2011. This Thai Baht appreciation adversely affects Availability Payment revenue fromEGAT.

Sales of electricity to EGAT and EDL by Houay Ho Power (HHPC), under IPP scheme, amounted to Baht 40.0 million in thefirst quarter 2011, a 76.9 per cent decreased from Baht 173.0 million in the same period 2010. This decrease was principally

caused by low rain fall during last rainy season. In the first quarter 2011, electricity dispatch was 25 GWh, a 75.7 per centdecrease from 103 GWh in the same period 2010.

Sales of electricity to EGAT by our cogeneration facilities, under SPP scheme, amounted to Baht 2,317.1 million in the firstquarter 2011, a 0.5 per cent decreased from Baht 2,327.7 million in the same period 2010 due to lower power dispatch to

EGAT and appreciation of Thai Baht, despite higher sale price mainly due to higher coal price.

Sales of electricity to industrial customers by our cogeneration facilities amounted to Baht 2,637.8 million in the first quarter2011, an 11.9 per cent increase from Baht 2,358.0 million in the same period 2010. The increase was principally caused byvolume of electricity sold increased by 14.6 per cent mainly contributed from new demand of our industrial customers,

despite lower electricity tariff as FT reduced by 5.67 satang since the beginning of 2011.

Sales of steam to industrial customers by our cogeneration facilities amounted to Baht 1,149.2 million in the first quarter2011, a 7.1 per cent increase from Baht 1,072.6 million in the same period 2010. This increase was principally caused by 4.6per cent higher sales volume, and higher steam tariff.

Sales of other products and services amounted to Baht 94.9 million in the first quarter 2011, a 20.0 per cent increase fromBaht 79.1 million in the same period 2010. This increase was principally caused by volume sold higher by 20.9 per cent.

Our Other Income consists mainly of revenue from net exchange gains, interest income and other items.

There was no net exchange gain in the first quarter 2011 whereas in the same period 2010 there was a net exchange gain ofBaht 380.5 million. This exchange gain was derived mainly from the US dollar denominated debt in Glow IPP, GHECO-One and HouayHo Power1which are being served by the US dollar-linked and US dollar revenue from sales of electricity to EGAT.

We recognized interest income of Baht 20.7 million in the first quarter 2011, an increase of Baht 6.8 million from Baht 13.9million in the same period 2010. The interest income was principally attributable to interest earned on cash held in the form of

deposits, instruments and in reserve accounts under our project financing agreements.

Others income in first quarter 2011 amounted to Baht 21.8 million decreased from Baht 220.8 million in the same period2010 due to the record of compensation on construction postponement from commercial operation delayed of CFB 3 project amountedof Baht 215.4 million in the first quarter 2010.

As a result of the foregoing, total revenues in the first quarter 2011 amounted to Baht 8,956.9 million, a 5.1 per centdecrease from Baht 9,438.8 million in the same period 2010.

Expenses

Cost of sales of goods was Baht 7,297.0 million in the first quarter 2011, a 3.7 per cent increased from Baht 7,038.4 million in the sameperiod 2010, which increase was attributable to the following factors:

IPP facilities

IPP facilities cost of natural gas from Glow IPP was Baht 1,958.9 million in the first quarter 2011, a 6.3 per cent decreasefrom Baht 2,091.0 million in the same period 2010. This decrease was principally caused by fuel volume consumptiondecreased by 7.6 per cent, as a result of lower EGAT dispatch, despite higher gas price.

IPP facilities cost of diesel from Glow IPP increased by 0.1 per cent to Baht 1.8 million in the first quarter 2011. IPP facilities maintenance costs were Baht 15.3 million in the first quarter 2011 increased by 87.3 per cent mainly due to the

routine maintenance and A inspection performed in the first quarter 2011.

1 Financial Statement of HHPC is presented in US Dollar and be consolidated into our financial statement presented in Thai Baht

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IPP facilities depreciation and amortization costs were Baht 291.5 million in the first quarter 2011, a 4.8 per cent decreasefrom Baht 306.1 million in the same period 2010.

IPP facilities other costs of sales of goods were Baht 53.3 million in the first quarter 2011, a 26.2 per cent decrease fromBaht 72.2 million in the same period 2010. IPP facilities other costs of sales of goods consist mainly of water, chemicals, andgeneral overhead costs, where overhead costs decreased slightly year on year.

Cogeneration facilities

Our cogeneration facilities cost of natural gas was Baht 3,233.5 million in the first quarter 2011, a 0.7 per cent decreasefrom Baht 3,257.4 million in the same period 2010. This decrease was principally caused by 1.1 per cent lower fuelconsumption despite higher average gas price increased by 0.4 per cent.

Our cogeneration facilities cost of coal was Baht 753.2 million in the first quarter 2011, a 63.5 per cent increase from Baht460.7 million in the same period 2010. The increase was principally because the reference coal price at FOB increased by

21.8 per cent, from 68.4 USD/ton to 83.4 USD/ton as well as the coal consumption increased by 49.0 percent due to fullquarter operation of CFB3 unit in the first quarter 2011.

Our cogeneration facilities maintenance costs were Baht 190.0 million in the first quarter 2011, a 22.4 per cent increase fromBaht 155.2 million in the same period 2010 mainly due to the A inspection of boiler in the first quarter of 2011.

Our cogeneration facilities depreciation and amortization costs were Baht 450.0 million in the first quarter 2011, a 18.0 percent increase from Baht 381.3 million in the same period 2010 due to the record of depreciation for CFB 3 unit for the wholeperiod.

Our cogeneration facilities other costs of sales of goods were Baht 349.4 million in the first quarter 2011, a 14.8 per centincrease from Baht 304.5 million in the same period of 2010.

Selling and administrative expenses in the first quarter 2011 amounted to Baht 126.5 million, a 6.4 per cent increase from Baht 118.9million in the same period 2010. This was attributable to the following factors:

Depreciation and amortization amounted to Baht 13.4 million in the first quarter 2011, an 83.1 per cent increase from Baht7.3 million in the same period 2010 due to record of depreciation for CFB 3 unit.

Other selling and administrative expenses amounted to Baht 113.1 million in the first quarter 2011, a 1.4 per cent increasefrom Baht 111.6 million in the same period 2010.

There was net exchange loss in the first quarter 2011 amounted of Baht 73.2 million, whereas no net exchange loss in the samequarter 2010. This exchange loss is derived mainly from the US dollar-denominated debt in Glow IPP, GHECO-One and Houay HoPower1 which are being served by the US dollar-linked and US dollar revenue from sales of electricity to EGAT.

As a result of the foregoing, our total expenses in the first quarter 2011 were Baht 7,499.2 million, a 4.8 per cent increase from Baht7,159.4 million in last year.

Profit Before Finance Costs and Income Tax

As a result of the foregoing, our profit before finance costs and income tax in the first quarter 2011 was Baht 1,457.7 million,a decrease of 36.1 per cent from Baht 2,279.4 million in the same period 2010.

Finance costs

Our finance costs in the first quarter 2011 were Baht 352.5 million, an increase of 13.1 per cent from Baht 311.8 million inthe same period 2010. The finance costs consist mainly of interest expenses and financial fee.

Our interest expenses in the first quarter 2011 were Baht 306.3 million, an increase of 3.1 per cent from Baht 297.0 million inthe same period 2010 mainly due to the higher net outstanding debt at Glow Energy, uncapitalized portion of interest expenses of CFB3Project started commercial operation since November 2010.

Income Tax Expenses

Our income tax expenses in the first quarter 2011 were Baht 193.0 million, an increase of 2.8 per cent from Baht 187.7million in the same period 2010. This increase was due to the expiration of BOI tax exemption of Glow IPP units.

Profit After Tax

As a result of the foregoing, our profit after tax in the first quarter 2011 amounted to Baht 912.2 million, a 48.8 per centdecrease from Baht 1,779.9 million in the same period 2010.

1 Financial Statement of HHPC is presented in US Dollar and be consolidated into our financial statement presented in Thai Baht

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Minority Interest

There was a net loss attributed to minority interest of Baht 39.5 million in the first quarter 2011, whereas the attribution tominority interest in that period of 2010 was net profit of Baht 112.6 million. The net loss attributed to minority interest in the firstquarter 2011 was principally due to net exchange loss of Baht 63.1 million in GHECO-One.

Net Profit

As a result of the foregoing, our net profit in the first quarter 2011 was Baht 951.8 million, a 42.9 per cent decrease fromBaht 1,667.3 million in the same period 2010.

Normalized Net Profit1

In the first quarter 2011, our normalized net profit, which was net income excluding Baht 51.02 million net foreign exchangeloss was Baht 1,002.8 milliona decrease of 26.7 per cent from Baht 1,367.83 million in the same period 2010. This normalized net profitis the basis used to determine our dividend distribution.

Mr. Natthapatt Tanboon-ek

Vice President Finance and Investor Relations

1, 3Definition of Normalized Net Profit is amended to Net Profit excluded net exchange gain/loss from foreign exchange rate, from Net Profit excludedunrealized gain/loss from foreign exchange

2 Excluded net foreign exchange gain/loss attributed to minority shareholders in subsidiaries.

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Glow MD&A Q1 Year 2011