RATCH: Annual Report 2006

The leading private electricity generating company in the region

with a commitment to secure relationships in different areas

to continuously operate successful electricity generating business

We generate energy for the country

We create profitability and return it to the shareholders

We empower the organization with good corporate governance practice

We empower social, community, and environmental development

We empower... for sustainable growth

Ratchaburi Electricity Generating Holding Public Company Limited










Total Assets Net Profit

Financial Overview

Unit : Million Baht

RATCH2006

Financial Overview

2006 2005 2004

Total Assets 72,105.05 69,940.54 69,494.19

Total Revenues 51,848.22 44,836.83 40,416.43

Net Profit 6,106.04 6,066.36 6,487.03

EBITDA (Million Baht) 10,430.12 10,343.52 10,433.79

Earnings Per Share (Baht/share) 4.21 4.18 4.47

Book Value Per Share (Baht/share) 23.93 21.72 19.63

Dividend Per Share (Baht/share) 2.10 2.00 2.00

002Ratchaburi Electricity Generating Holding Public Company Limited

Financial Ratios

Liquidity Ratio 2006 2005 2004

Current Ratio (Times) 2.02 2.05 1.86

Quick Ratio (Times) 1.81 1.80 1.67

Cash Flow from Operation to

Current Liabilities (Times) 0.73 0.96 0.72

Accounts Receivable Turnover (Times) 6.64 6.68 8.54

Average Collection Period (Days) 55 54 43

Accounts Payable Turnover (Times) 7.58 7.43 7.54

Average Payment Period (Days) 48 49 48

Profitability Ratio 2006 2005 2004

Gross Profit Margin (%) 14.74 17.16 18.99

Net Profit Margin (%) 11.78 13.53 16.05

Return on Equity (%) 18.45 20.24 24.39

Efficiency Ratio 2006 2005 2004

Return on Assets (%) 8.60 8.70 9.50

Return on Fixed Assets (%) 19.14 18.17 18.14

Assets Turnover (Times) 0.73 0.64 0.59

EBITDA to Assets (%) 14.69 14.84 15.27

EBITDA to Fixed Assets (%) 22.48 21.43 20.86

Financial Policy Ratio 2006 2005 2004

Debt to Equity (Times) 1.08 1.22 1.44

Debt Service Coverage Ratio (DSCR) (Times) 2.41 2.33 2.52

003A n n u a l R e p o r t 2 0 0 6

1. Studies and Development for the New Sited of IPP Project In 2006, the Company has conducted a feasibility study of a potential site in the central and eastern parts of Thailand to

make itself ready for a new round bidding of the Independent Power Producer (IPP) project in 2007. Together with the consulting

firms, the Company has filed in a draft proposal covering studying details in various topics ranging from engineering to

technological suitability, production capacity, cost of production, return on investment, work plan and development directions.

Besides, preparation was made for both conducting an Environmental Impact Assessment Study and the project’s financial

planning to support the development of the project.

2. The Ratchaburi Powerûs Power Plant Project In 2006, construction of the Ratchaburi Power Company Limited (RPCL) – Power Plant Project in Ratchaburi Province, has

been commenced. The project consists of two blocks of Combined Cycle Power Plant with 700 megawatts production capacity

each. It has been constructed as it has been scheduled with well acceptance from surrounding communities. The construction of

the first block is expected to be completed and to start its Commercial Operation Date (COD) in March 2008 while the second

block will start its COD in June 2008. The effective capacity to the Company generating from this project is 350 megawatts

according to the 25 percent stake holding in Ratchaburi Power Company Limited.

3. Power Plant Projects in Lao PDR • The 615 MW Nam Ngum 2 Hydro Power Plant : In 2006, the Power Purchase Agreement (PPA) was negotiated

and agreed by the Electricity Generating Authority of Thailand (EGAT), in which specifies electricity tariffs for the 25 years

concession. Moreover, the Company has also negotiated with a group of financial institutions, which resulted in the concurrences

of the Loan Agreement and PPA on May 26, 2006. The Project had its first initial drawdown on June 30, 2006, and it is, now,

under construction. This plant is expected to start its commercial operation by 2013. As the Company holds 25 percent of

the Nam Ngum 2 Hydro Power Plant, this will increase the Company’s production capacity by 153.75 megawatts.

• The 440 MW Nam Ngum 3 Hydro Power Plant : Together with MDX Lao Company Limited, the Company had

successfully negotiated with EGAT, regarding to the electricity tariff structure and the conditions of power purchase by EGAT.

The Memorendum of Understanding (MOU) on power purchase from the Nam Ngum 3 Hydro Power Plant was eventually signed

between EGAT and the project’s consortium; which are MDX Lao Company Limited, Marubeni Corporation and the Company on

December 18, 2006. The Company expects to hold 25 percent shares in this project and will negotiate terms and conditions of

the long-term PPA with EGAT. It is expected that the joint venture agreement and the PPA will be executed within 2007, and

consequently construction period will be last about 5-6 years before the plant starts its first commercial operation in 2013.

4. Associated Gas Power Plant Project (Pratu Tao-A) The 1.75 megawatt project is situated at Kong Sub-District, Kongkrailart District, Sukhothai Province. On January 17, 2006,

an associated gas purchase agreement was signed with PTTEP Siam Limited and the PTT Exploration and Production Public

Company Limited (PTTEP). Afterward, on September 11, 2006, a Power Purchase Agreement was signed with EGAT, and the

project was granted an investment privilege from the Board of Investment (BOI) on December 29, 2006. The project has conducted

public relations activities at the site to promote understanding and support from local communities.

5. A Study to Develop Renewable Energy Power Plant To support the future renewable energy policy enacted by the government, the Company by its subsidiary, Ratchaburi Energy

Company Limited, has been doing a feasibility study over the development of power plant based on renewable resources as follows.

• A wind-powered plant : To study the feasibility of the potential area, collecting and recording all related information

such as wind velocity data, economic analysis, financial consideration and return on investment.

• A project on an alternative energy : The Company has been assessing a possibility to co-invest in Stirling Solar

System. The Company has also monitored and reviewed details of the Solar Thermal Power Plant.

• An ethanol production plant (alcohol with 95 percent purity) using shredded cassava as raw material, Siam Ethanol

Exports Company Limited - which the Company holds 15 percent of the total stake- has a capacity to produce ethanol at 30

million liters per year. The plant is under construction and is expected to run its operation in 2007.

Highlights of Operation in 2006

RATCH2006

Highlights of Operationin 2006


6. Social Management Activities In 2006, the Company has restructured the Ratchaburi Power Plant’s Communication Center to be the mechanism to

cooperate with the local communities, creating a strong relationship and acceptance on the Power Plant from people and leaders

in the communities. At the same time, this center is also closely responsible for Ratchaburi Power Plant’s Community

Development Project that is currently operated by the Population and Community Development Association. (PDA),which aims

to create concrete outcomes and certain that accurate information was given to relevant authorities for better cooperation and

support of our power plant project.

The Company has also budgeted a fund with an aim to develop life quality of people in Ratchaburi Province, composed of

a fund for developing life quality for Damnern Saduak District, a fund for Photharam District, a fund for Mueang District and

a fund for improving quality of life for community in general areas of Ratchaburi Province.

As a result, people in the communities, their leaders and government agencies in areas surrounding the Ratchaburi Power

Plant have increasingly accepted the power plant project and its expanded unit.

7. Corporate Governance Awards • The Company was awarded the “Distinction in Maintaining Excellent Corporate Governance Report” from the Stock

Exchange of Thailand (SET) in the SET Awards 2006, held by SET and Money & Banking Magazine on July 26, 2006. The award was

given to listed companies that can maintain corporate governance reporting standards for the second consecutive year.

Altogether, only 16 listed companies were given this award.

• Based on the survey of the Institute of Directors (IOD) together with the SET and the Securities and Exchange

Commission (SEC) on corporate governance practices of listed companies in 2006, the Company was ranked “excellent” and was

one of the nine firms being ranked at such level. The evaluation was divided into five rankings: namely, “excellent,” “very good,”

“good,” “fair,” and “pass.” The scores were given on the basis of transparency and disclosure on the Form 56-1, notice to attend

Shareholder’ s Annual General Meeting (AGM), information revealed on the Company website and news released through the

system of the SET and other information pressed to the public.

• The Company was given 93.14 scores out of 110 total scores in the AGM Assessment Program conducted by the SEC.

433 listed companies were subjected to this assessment; with the overall average score of 71 and the highest score evaluated

of 105.

• On December 22, 2006, Ratchaburi Electricity Generating Company Limited-the main subsidiary of the Company was

awarded for its outstanding business moral and ethic from the Thai Chamber of Commerce. The project has been held since 2004,

with an aimed to promote business ethics among members. Ratchaburi Electricity Generating Company Limited was one among

11 companies that were given this award, which truly reflected that its management is based on the corporate governance

principles. The award also signified its outstanding performances in production activity, employee welfare, communities concerns

and sincerity to develop the quality of life of people living around the Power Plant and in Ratchaburi Province on a long-term basis.

8. Credit Ratings and the Companyûs Credit Rating Trend On July 27, 2006, TRIS Rating Company Limited (TRIS) announced their confirmation on the Company’s credit rating at

“AA-”, reflecting a constant flow of dividend income received from the main subsidiary-Ratchaburi Electricity Generating

Company Limited- and the fact that the Company has high quality power plants as well as its product investment policy.

However, the Company itself holds some weakness that the lender of the Company has subsequent right to claim over the asset

after the lender of Ratchaburi Electricity Generating Company Limited, and that the future government policy over the

privatization is uncertain.

Still, TRIS has rated the Company’s credit rating trend as “stable” to reflect its expectation over the fact that the Company

would constantly receive dividend from Ratchaburi Electricity Generating Company Limited and other power plants. Over more,

TRIS has also expected that the Company shall always make cautious investment decisions in the future.

On July 27, 2006, TRIS has confirmed to maintain their credit rating on Ratchaburi Electricity Generating Company

Limited, the Company’s main subsidiary, at “AA” rewarded to its steady cash flow generated by its Ratchaburi Power Plant that

operated with modern and high technology equipment by experienced and expertise persons in managing power plants.

005A n n u a l R e p o r t 2 0 0 6

Message from the Chairman of the Board of Directors

Dear Shareholders

Year 2006 was marked as an auspicious time for Thailand and Thai people as the entire country have celebrated

the 60th Anniversary of His Majesty’s Accession to the Throne. The government and private sectors have jointly

organized memorable, once in a lifetime celebrations that immensely impressed people not only in Thailand but also

in other countries.

On the other hand, 2006 was a year of structural change for the country, in terms of economy, society,

environment and politics, which had direct effects on the energy business. The global oil price fluctuation had brought

a massive negative impact on overall economic growth. One of the most severe nationwide flooding and changes in

the government and policies have forced every organization in every sector to alter their management policy

responsively.

Ratchaburi Electricity Generating Public Company Limited (“The Company”), a leading electricity generating

company in Thailand, had to adjust its visions, missions and policies to be in line with the government’s new energy policy.

The Company has prepared for its investment expansion in order to keep its consistent growth and to implement its

efficient management based on the Good Corporate Governance guideline of the Stock Exchange of Thailand (SET).

Powering the Growth

Last year, the Company has invested in subsidiaries and co-invested with other companies to develop various

projects, including the existing projects implemented continuously from 2005 and the new project introduced in 2006.

These projects include 1) the development of Ratchaburi Power Company Limited (RPCL)’s Power Plant with 1,400-

megawatt production capacity in Ratchaburi province in which the Company holds 25 percent and is expected to

operate in 2008; 2) the development of the Nam Ngum 2 Hydro Power Plant in Lao PDR with 615-megawatt

ç...With outstanding operating performance, consistent project development and its responsive

and competitiveness, it can be assured that

the Company will continue to develop and achieve

consistent progress in our business operations....é

RATCH2006

Message from the Chairmanof the Board of Directors


production capacity which commercial operation expected to be in 2013; 3) the development of the Nam Ngum 3

Hydro Power Plant in Lao PDR with 440-megawatt production capacity which is expected to be completed and start

operation in 2013; and 4) the development of small renewable energy power plant which will produce electricity from

the associated gas from Pratu Tao-A oil rig in Sukhothai province with 1.75-megawatt production capacity, expected to

start its operation in 2007.

The Company’s subsidiary, Ratchaburi Energy Company Limited has also continued with its investment in

related businesses. The subsidiary invested in an alcohol manufactoring plant of Siam Ethanol Exports Company

Limited, with 15 percent stake. This plant is located in Rayong province. It has a total alcohol production capacity of 30

million liters per year and will start to produce and sell alcohol in 2007.

Ready for future

The Company has been preparing to bid in the Independent Power Producer (IPP) project in 2007 to cope

with increasing domestic demand for electricity, in accordance with Thailand’s Power Development Plan 2007-2021.

The Company has conducted a feasibility study of the projects and its potential location as well as started some

community relation works to prevent possible conflicts or objection from communities against the mega-project

development. The Company is now ready to participate in the bidding process and is confident that it will be able to

expand the group’s electricity generation capacity constantly in the future.

In addition, the Company has been prepared to expand its investment in neighboring countries, in order to

achieve its goal- to become a leading electricity producer in the region.

Towards Business Excellence

In 2006, the Company has restructured its organization to cope with changes and to support its business

expansion in the future. Such restructure included the implementation of information system technology in human

resource management to enhance employees’ morale and equitable treatment in human resource management, in

accordance with the good corporate governance principle.

Continuous Growth

Last year, the Company’s operating performance has grown constantly, reflecting its achievement in managing

business in accordance with the Company’s policy. At the end of 2006, the Company’s reported Baht 51,848 million

consolidated revenue, increasing by Baht 7,011 million from 2005, while its expense and tax were Baht 45,742 million.

Thus, its net profit was accounted to be Baht 6,106 million, or Baht 4.21 earning per share. Total assets were recorded at

Baht 72,105 million, increasing by Baht 2,165 million. These financial results clearly reflect the Company’s management

and operational efficiency that increases investors’ confidence. TRIS Rating Company Limited has maintained

organizational rating result on the Company and Ratchaburi Electricity Generating Company Limited-the Company’s

subsidiary at the same rating level as 2005, which are “AA-” and “AA” respectively.

The Company also values community relations and development of communities surrounding Ratchaburi

Power Plant as a very essential composition to the success operation of the Ratchaburi Power Plant and the

construction of the extension project. The Company’s commitment has earned a very strong recognition and

perception from communities, community leaders, and government agencies. This bonded relationship has enabled

the Company to operate its business smoothly according to its plan.

007A n n u a l R e p o r t 2 0 0 6

Recognition for success

Awards and recognitions the Company achieved provide great inspiration for the Company to move forward.

In 2006, the Company received “Distinction in Maintaining Excellence Corporate Governance Report Award” from

the SET Awards 2006 organized by SET and Money & Banking magazine. The award is granted in recognition of an

outstanding company that has successfully maintained high standard for good corporate governance report for two

consecutive years.

At the Corporate Governance Report of Thai Listed Companies 2006 organized by Thai Institute of Directors

Association (IOD), SET, and the Securities and Exchange Commission (SEC), the Company was one of nine companies

rated “Excellent” based on the good corporate governance guidelines of Organization for Economic Corporation and

Development (OECD) and SET, which take into account the right of shareholders, equitable treatment of shareholders,

stakeholders’ role, disclosure of information, transparency, the responsibility of the Company’s Board of Directors.

Besides, the Company also participated in the Annual General Meeting (AGM) Assessment Program, organized

by the SEC. In 2006, among 433 companies participated in this program, the Company has achieved 93.14 point from

110 full scores.

Ratchaburi Electricity Generating Company Limited, the core subsidiary of the Company, has also adopted the

same ethical business operation principles. It is one of 11 companies that won the “Company with Outstanding Ethical

Practice by the Thai Chamber of Commerce 2006” awarded by the Thai Chamber of Commerce Board. Considering that

62 companies participated in the program, it clearly reflects that the subsidiary has committed to good corporate

governance, strength in production, employee care, social responsibility, and sincerity in quality of life development for

people living around the Power Plant in Ratchaburi Province.

With outstanding operating performance, consistent project development and its responsive and

competitiveness, it can be assured that the Company will continue to develop and achieve consistent growth in our

business area. Moreover, because our shareholders have continuously trusted and supported the Company on the

same patch for the past six years, the Board of Directors, the management and all our employees have been inspired

to further improve their performance and efficiency to drive the growth of the organization and the country.

ç...In 2006, the Company received Distinction in Maintaining Excellence Corporate

Governance Report Award from the SET Awards 2006 organized by SET and Money & Banking magazine....é

Cherdpong Siriwit Chairman


Power of the FUTURE Electricity is crucial to the country’s development, drives

national economic progress and plays an important part

in people’s lives.

Our long-term experience and expertise make strong ground

for our contribution to healthy society.

We, with our vital responsibility in electricity generating

and development, are committed to generate power

that drives the country towards sustainable development.

009A n n u a l R e p o r t 2 0 0 6

Board of Directors

Mr. Cherdpong Siriwit

- Chairman

- Independent Director

- Chairman, Human Resources and Remuneration

Committee

Age 60

Shareholders’ Equity (%) None

Attendance to the Board of Directors’

meeting in 2006: 13 from total 13 meetings

Education / Training

- Master of Economics, Georgetown University,

U.S.A.

- Bachelor of Economics (Hons.),

Thammasat University

- Diploma, National Defence College (Class 40)

- Certificate, King Prajadhipok’s Institute “Politics

and Governance in Democratic Systems for

Executive” (Class 5)

Mr. Viravat Chlayon

- Independent Director

- Chairman, Risk Management Committee

- Member, Audit Committee

Age 67

Shareholders’ Equity (%) 0.0006



Mr. Pongpayome Vasaputi

Director

Age 58



meeting in 2006: 1 from total 1 meeting


- Bachelor of Engineering (Mechanical Engineering),

Chulalongkorn University


- Certificate, Psychological Operation Staff Course,

Applied Psychology Institute (Class 57)

- Certificate, Advanced Management Program

(AMP), Harvard Business School, Harvard University,

U.S.A.


- Master of Development Administration (Hons.),

NIDA

- Bachelor of Political Science (Hons.),



- Certificate, District Officers Course, The Institute

of Administration Development (Class 16)

- Certificate, Senior Governing Officers Course,

The Institute of Administration Development

(Class 20)

RATCH2006

Board of Directors



- Certificate, The Civil Service Executive Development

Program (Class 13), The Civil Service Training

Institute

- Certificates, Chairman Program,

Director Accreditation Program, and Finance for

Non-Finance Director Program, Thai Institute of

Directors Association (IOD)

Working Experiences

Current

Chairman, Ratchaburi Electricity Generating

Holding Public Company Limited

Other Current Position Related to the

Company’s Business

- Chairman, PTT Public Company Limited

- Chairman, PTT Exploration and Production Public

Company Limited

- Chairman, Thai Oil Public Company Limited

- Chairman, Rayong Refinery Public Company Limited

- Chairman, PTT Chemical Public Company Limited

- Director, Thaioil Power Company Limited

Previous

- Permanent Secretary, Ministry of Energy

- Deputy Permanent Secretary, Ministry of Industry

- Chairman, EGAT

- Secretary-General, Thai Industrial Standards

Institute (TISI), Ministry of Industry

- Director-General, Department of Mineral

Resources (DMR), Ministry of Industry

- Director-General, Office of Industrial Economics,

Ministry of Industry

- Deputy Director - General, Office of Industrial

Economics, Ministry of Industry

- Secretary - General, Office of the Cane and Sugar

Board, Ministry of Industry

- Certificates, Director Accreditation Program,

Finance for Non-Finance Director Program,

Seminar on “Audit Committee : 5-year experiences

toward Effectiveness”, Seminar on “Independence

of Director and Conflict of Interest Management”,

and Workshop on “Setting the CEO Performance

Plan and Evaluation”, Thai Institute of Directors

Association (IOD)

Working Experiences

Current

- Director, Suan Lung Rama IX Foundation

- Board member, The Institute for the Promotion

of Teaching Science and Technology



- None

Working Experiences

Current

Permanent Secretary, Ministry of Interior



Director, EGAT

Previous

- Governor, EGAT

- President-Mineral Business, EGAT

- Deputy Governor-Administration, EGAT

- Chairman, Electricity Generating Public Company

Limited

Previous

- Deputy Permanent Secretary, Ministry of Interior

- Governor of Nakhonratchasima Province, Phuket

Province, Narathiwat Province, and Tak Province

- Director-General, Department of Disaster

Prevention and Mitigation, Ministry of Interior

- Director-General, Department of Local

Administration, Ministry of Interior

011A n n u a l R e p o r t 2 0 0 6

011A n n u a l R e p o r t 2 0 0 6

Mr. Chulasingh Vasantasingh Director

Age 56




Mr. Panich Pongpirodom - Independent Director

- Member, Risk Management Committee

Age 57




Mr. Lae Dilokvidhyarat

Director

Age 59



meeting in 2006: - from total 1 meeting


- Master of Development Studies, Institute of

Social Studies, Hague, The Netherlands

- Bachelor of Political Science,


- Certificates, Director Certificate Program, Audit

Committee Program, and Finance for Non-Finance

Director Program, Thai Institute of Directors

Association (IOD)


- Master of Comparative Law (MCL.), University of

Illinois, U.S.A.

- Bachelor of Laws (LLB.) (Hons.), Chulalongkorn

University

- Barrister-at-Law, The Institution of Legal Education

- Diploma, National Defence College

- Certificate, Harvard Business School, U.S.A.

- Certificate, Director Certificate Program,

Thai Institute of Directors Association (IOD)


- Ph.D. of Engineering (Coastal Engineering),

Asian Institute of Technology

- Master of Engineering (Coastal Engineering),


• Master of Engineering (Sanitary Engineering),


- Bachelor of Engineering (Civil Engineering),



- Certificate, Senior Governing Course (Class 32)



Working Experiences

Current

Associate Professor (Director of Labour and

Management Development Centre), Faculty

of Economics, Chulalongkorn University



Director, EGAT

Previous

- Overseas Expert on Human Resource Development,

Japan International Cooperation Agency (JICA)

- National Programme Coordinator: International

Programme on the Elimination of Child Labour

(ILO-IPEC)

Working Experiences

Current

- Deputy Attorney General

- Director, Thai Bar Association

- Director, The Property of Chulalongkorn University



- Director, PTT Exploration and Production Public

Company Limited

- Director, EGAT

Previous

- Inspector-General, Department of Inspector

General

- Director-General, Department of Legal Counsel,

Office of the Attorney General

- Director-General, Department of Litigation of

Attorney General, Office of the Attorney General

- Director-General, Department of International

Affairs, Office of the Attorney General

- Director, Eastern Water Resources Development

and Management Public Company Limited

- Director and member of Audit Committee,

New Bangkok International Airport Public

Company Limited

- Director, Mass Communication Organization

of Thailand

- Certificates, Director Accreditation Program,

Understanding the Fundamental of Financial

Statements Program, and Seminar on “Setting

the CEO Performance Plan and Evaluation,


Working Experiences

Current

- Director-General, Department of Alternative

Energy Development and Efficiency, Ministry

of Energy



- None

Previous

- Director–General, Department of Energy Business,

Ministry of Energy

- Inspector-General, Ministry of Energy

- Deputy Director–General, Department of

Alternative Energy Development and Efficiency,

Ministry of Energy

- Deputy Director–General, Department of

Energy Development and Promotion, Ministry

of Science, Technology and Environment

- Executive Director of Bureau of Energy Study,

Research and Development, Department of

Energy Promotion and Development

- Executive Director of Bureau of Energy

Development and Maintenance, Department

of Energy Promotion and Development

013A n n u a l R e p o r t 2 0 0 6

013A n n u a l R e p o r t 2 0 0 6

Ms. Sutharat Angchanpen - Director

- Member, Risk Management Committee

Age 59



meeting in 2006: 1 from total 1 meeting

Mr. Kraisi Karnasuta Director

Age 59




Mr. Suchart Thada-Thamrongvech - Independent Director

- Chairman, Audit Committee

Age 54





- Ph.D. of Economics, McMaster University, Canada

- Master of Sciences, Economics, The London

School of Economics and Political Science,

United Kingdom

- Bachelor of Economics (Hons.),


- Diploma, National Defence College (Public and

Private Program: Class 1)


Director Accreditation Program, Audit Committee

Program, Finance for Non-Finance Director

Program, Fostering a Board and Management

Education / Training - Bachelor in Engineering (Electrical Engineering)

(2nd Class Honor), Chulalongkorn University

- Certificate, Management of Public Economy

for Executive, King Prajadhipok’s Institute



Working Experiences

Current - Deputy Governor-Development, EGAT


- Master of Engineering (Electrical Engineering),

University of Washington, U.S.A.

- Bachelor of Engineering (Electrical Engineering),




(AMP), Harvard Business School, Harvard University,

U.S.A.

- Certificate, Director Certificate Program, Thai

Institute of Directors Association (IOD)



Team Program, and Seminar on “Audit Committee:

5-year Experiences toward Effectiveness”,


Working Experiences

Current

- Associate Professor of Economics, Faculty of

Economics, Ramkhamhaeng University

- Independent Director and Audit Committee,

Siam City Bank Public Company Limited

- Director, Rayong Refinery Public Company Limited

- Director, Petroleum Committee

- Director, Council of the North Eastern University



- Independent Director and member of Audit

Committee, PTT Public Company Limited

Previous

- Eminent Advisor to the Prime Minister in the

Field of Economics

- Advisor to the Minister of Commerce

- Policy Advisor to the Minister of Energy

- Vice Rector for International Affairs and Research,

Ramkhamhaeng University

- Director, Provincial Waterworks Authority

- Director, Bangkok Metropolitan Bank Public

Company Limited

- Director and Chairman of the Audit Committee,

Bangkok Rubber Public Company Limited

- Director and Chairman of the Audit Committee,

Pan asia Footwear Public Company Limited

- Director, Metropolitan Waterworks Authority

- Director, Bank for Agriculture and Agricultural

Cooperatives

- Director, Rice Policy Committee

- Advisor to the Board of Investment

- Director, Securities and Exchange Commission,

Thailand

Working Experiences

Current

- Governor, EGAT



- Director, EGAT

- Chairman, Ratchaburi Electricity Generating

Company Limited

Previous

- Deputy Governor-Policy and Planning, EGAT

- President, Electricity Generating Public Company

Limited

- President, Maintenance Business, EGAT

- Assistant Governor in Transmission System

Operation, EGAT

- Director-System Control and Operation Division,

EGAT


Company’s Business - Director, SouthEast Asia Energy Limited

Previous - Director, Ratchaburi Electricity Generating

Company Limited

- Deputy Governor-Transmission System

Development, EGAT

- Deputy Governor-System Control, EGAT

- Assistant Governor-System Control, EGAT

- Assistant Governor-Transmission System

Maintenance, EGAT

015A n n u a l R e p o r t 2 0 0 6

015A n n u a l R e p o r t 2 0 0 6

Mr. Narong Sitasuwan - Director

- Managing Director

Age 58



meeting in 2006 : 12 from total 13 meetings

Mr. Areepong Bhoocha-oom - Independent Director

- Member, Audit Committee

- Member, Human Resources and Remuneration

Committee

Age 49



meeting in 2006 : 12 from total 13 meetings

Mr. Chanin Vongkusolkit Director

Age 54




Mr. Vinit Tangnoi - Director

- Member, Human Resources and Remuneration

Committee

Age 55



meeting in 2006: - from total 1 meeting


- Master of Science in Industrial Engineering,

University of Texas-Arlington, U.S.A.

- Bachelor in Engineering (Mechanical Engineering),

Kasetsart University

- Certificate, Advanced Management Program,

Havard Business School

- Certificate, Senior Executive Program, Sasin

Graduate Institute of Business Administration

of Chulalongkorn University


- Master of Business Administration (Finance),

St.Louis University, U.S.A.

- Bachelor in Economics, Thammasat University




- Ph.D. of Finance, University of Mississippi, U.S.A.

- Master of Business Administration (Finance),

Marshall University, U.S.A.

- Bachelor of International Management, Boston

University, U.S.A.




- Master of Engineering (Mechanical and Aerospace

Engineering), Illinois Institute of Technology,

U.S.A.

- Bachelor of Engineering, Mechanical Engineering


- Certificate, Electralis 2001, Belgium

- Certificate, Eighth International Training Program

on Utility Regulation & Strategy, University of

Florida, U.S.A.



- Certificate of Army War College Regular,

Institute of Army Academics



Working Experiences

Current

Deputy Governor-System Control, EGAT



Chairman, District Cooling System and

Power Plant Company Limited

Previous

- Assistant Governor-Policy and Planning, EGAT

- Assistant Governor-Fuel Management, EGAT

Working Experiences

Current

- Director, Federation of Thai Capital Market

Organizations

- Vice Chairman, Listed Companies Association

- Director, The Erawan Group Public Company

Limited

- Director, Mitr Phol Sugar Company Limited



- Director and Chief Executive Officer,

Banpu Public Company Limited

- Director, BLCP Power Company Limited

Previous

- Director, Tri Energy Company Limited

- Director, United Standard Terminal Company

Limited

- Director, United Securities Public Company Limited

Working Experiences

Current

- Deputy Director - General, State Enterprise

Policy Office, Ministry of Finance

- Director, Airport Authority of Thailand Public

Company Limited



- Director, Ratchaburi Electricity Generating

Company Limited

Previous

- Director, Ratchaburi Energy Company Limited

- Director, Padaeng Industry Public Company

Limited

- Director, Krungthai Card Public Company Limited

- Director, Office of State Enterprise and Government

Securities, Ministry of Finance

- Certificate, Positioning Utility Executives

for Change (PUEC), U.S.A.

- Certificate, International Course for Executives

in Globalization Era, U.S.A.



Working Experiences

Current

- Managing Director, Ratchaburi Electricity

Generating Public Company Limited




Company Limited


- Director, Ratchaburi Power Company Limited

- Director, SouthEast Asia Energy Limited

- Engineer level 14 (Equivalent to Deputy

Governor), EGAT

Previous

- President, Generating Business, EGAT

- Senior Deputy Governor, Generation Group, EGAT


- Vice President-Maintenance Business, EGAT

- Director, Electricity Generating Public Company

Limited

- Director, Rayong Electricity Generating Company

Limited

- Director, Khanom Electricity Generating Company

Limited

- Director, EGCO Engineering & Service Company

Limited

017A n n u a l R e p o r t 2 0 0 6

017A n n u a l R e p o r t 2 0 0 6

1 2 3 4 5 6 7 8 9

1. Mr. Narong Sitasuwan Managing Director

2. Mr. Thawat Vimolsarawong Deputy Managing Director-Business Ventures

3. Ms. Vajana Angsukomutkul Deputy Managing Director-Accounting and Finance

4. Mr. Prachuab Ujjin Deputy Managing Director, seconded to be the Managing Director of

the Ratchaburi Electricity Generating Company Limited

5. Mr. Peerawat Pumthong Assistant Managing Director-Business Ventures

6. Mrs. Arunee Rojanapenkul Assistant Managing Director-Accounting and Finance

and Acting Director, Finance Division

7. Mr. Prayut Thongsuwan Assistant Managing Director-Administration

8. Mr. Somnuk Jindasup Assistant Managing Director, seconded to be the Deputy Managing Director

of the Ratchaburi Electricity Generating Company Limited

9. Mr. Vatchara Noomahan Assistant Managing Director, seconded to be the President of

the Tri Energy Company Limited

RATCH2006

Executive Officers

Executive Officers



1 Mr. Narong Sitasuwan Director and Managing Director

Age 58


- Master of Engineering (Mechanical and Aerospace

Engineering), Illinois Institute of Technology, U.S.A.

- Bachelor of Engineering (Mechanical Engineering)


- Certificate, Electralis 2001, Belgium

- Certificate, Eighth International Training Program

on Utility Regulation & Strategy, University of

Florida, U.S.A.

- Certificate, Positioning Utility Executives for

Change (PUEC), U.S.A.

- Certificate, International Course for Executives

in Globalization Era, U.S.A

- Certificate, Director Certification Program,


Working Experiences

Current

Managing Director, Ratchaburi Electricity

Generating Holding Public Company Limited




Company Limited


- Director, Ratchaburi Power Company Limited

- Director, SouthEast Asia Energy Limited

- Engineer level 14 (Equivalent to Deputy

Governor), EGAT

Previous

- President, Generating Business, EGAT

- Senior Deputy Governor, Generation Group,

EGAT


- Vice President, Maintenance Business, EGAT

- Director, Electricity Generating Public Company

Limited

- Director, Rayong Electricity Generating Company

Limited

- Director, Khanom Electricity Generating Company

Limited

- Director, EGCO Engineering & Service Company

Limited

Mr. Thawat Vimolsarawong Deputy Managing Director-Business Ventures

Age 57


- Bachelor of Engineering,


- Certificate, Effective Leadership Management,

Strategic Resources International, U.S.A.

- Certificate, Strategic Asset Management,

Power Management Institute, U.S.A.

- Certificate, Global Leadership 2000, School of

Business and Economics, Institute of Research

and Business Development, U.S.A.

- Certificate, Global 2000 Strategic Management,

University of California, U.S.A.

- Certificate, Psychological Operations Staff

Course, Applied Psychology Institute

- Certificate, Senior Executive Program, SASIN

Graduate Institute of Business Administration,


Working Experiences

Current

Deputy Managing Director-Business Ventures,

Ratchaburi Electricity Generating Holding Public

Company Limited



- Chairman, Ratch Udom Power Company Limited

- Chairman, Ratchaburi Alliances Company Limited

- Chairman, Ratchaburi Energy Company Limited

- Director and Managing Director, Chubu

Ratchaburi Electric Services Company Limited

- Director, Siam Ethanol Exports Company Limited

- Executive Director, Ratchaburi Power Company

Limited

- Executive Director, SouthEast Asia Energy

Limited

- Engineer level 13 (Equivalent to Assistant

Governor), EGAT

Previous

- Director, Mechanical Maintenance Division,

EGAT

- Manager, Maintenance Service Management

Division, EGAT

- Manager, Maintenance Service Management

Sub- division, EGAT

2

019A n n u a l R e p o r t 2 0 0 6

019A n n u a l R e p o r t 2 0 0 6

Ms. Vajana Angsukomutkul Deputy Managing Director-

Accounting and Finance

Age 60


- Master of Business Administration (Executive),

SASIN Graduate Institute of Business Administration,


- Bachelor of Accountancy (2nd Class Honor),


- Certificate Program, Chief Financial Officer (CFO),

Federation of Accounting Professions

Working Experiences

Current

Deputy Managing Director-Accounting and

Finance, Ratchaburi Electricity Generating Holding

Public Company Limited



- Director and Managing Director, Ratchaburi

Energy Company Limited


Previous

- Assistant Director, Controller Division, EGAT

- Chief, Account Finance and Budget Report

and Analysis Department, Controller Division,

EGAT

Mr. Prachuab Ujjin Deputy Managing Director,

seconded to be the Managing Director of

the Ratchaburi Electricity Generating

Company Limited

Age 55


- Master of Science (Electrical Engineering),

University of Missouri-Columbia, U.S.A.

- Bachelor of Engineering (Electrical Engineering),



(AMP), Harvard Business School, Boston MA,

U.S.A.




- Certificate, Director Certification Program,


Working Experiences Current Deputy Managing Director, seconded to be

the Managing Director of the Ratchaburi

Electricity Generating Company Limited

Other Current Position Related to the Company’s Business - Chairman, Ratchaburi Gas Company Limited

- Director, Chubu Ratchaburi Electric Services

Company Limited

- Executive Director, Ratchaburi Power Company

Limited

Previous - Director, Ratchaburi Power Plant Division, EGAT

- Director, Efficiency Control Division, EGAT

- Assistant Director, Efficiency Control Division,

EGAT

Mr. Peerawat Pumthong Assistant Managing Director-

Business Ventures

Age 48


- Master of Business Administration, Monash

University, Australia, Certificate of Merit in

International Business

- Master of Engineering, Asian Institute of

Technology (AIT)

- Bachelor of Engineering (2nd Class Honor),

Khonkaen University

- Certificate in ASEAN Executive Development

Program, Business School, Thammasart University

- Certificate in Electric Power Development from

Swedish Board of Investment and Technical

Support (BITS), Sweden

- Certificate, ASEAN Executive Program, General

Electric International Operation Company, inc.,

U.S.A.

Working Experiences Current Assistant Managing Director-Business Ventures,


Company Limited

Other Current Position Related to the Company’s Business - Director, Ratchaburi Alliances Company Limited


- Director, Siam Ethanol Exports Company Limited

- Advisor to the Senate Standing Committee on

Economics, Commerce and Industry

Previous - Senior Director, Business Management Division,


Company Limited

- Chief, Business Venture Group Portfolio

Management Division, EGAT

3

4

5



Mrs. Arunee Rojanapenkul Assistant Managing Director-

Accounting and Finance and

Acting Director, Finance Division

Age 59

Education / Training - Bachelor of Accountancy,


- Certificate, Chief Financial Officer (CFO),





- Certificate, Advanced Mini MBA, Chulalongkorn

University

- Certificate, Mini MBA, Chulalongkorn University

Working Experiences Current Assistant Managing Director-Accounting and

Finance and Acting Director-Finance Division

Ratchaburi Electricity Generating Holding


Other Current Position Related to the Company’s Business - Director and Managing Director, Ratchaburi

Gas Company Limited

- Director and Managing Director, Ratch Udom

Power Company Limited

- Director and Managing Director, Ratchaburi

Alliances Company Limited

Previous - Director, Finance Division, Ratchaburi Electricity


- Director, Accounting Division, Ratchaburi

Electricity Generating Holding Public Company

Limited

- Accountant Level 10, Chief-Financial Analysis

and Budgeting Group, Domestic Power Purchase

Division, EGAT


- Master of Public and Private Management, The

National Institute of Development Administration

- Bachelor of Political Sciences (Public

Administration), Thammasat University


Electric International Operation Company, Inc.,

U.S.A.




- Certificate, Advanced Mini MBA,


Working Experiences

Current

Assistant Managing Director -Administration,


Company Limited



- Director, Ratchaburi Gas Company Limited

- Director, Ratch Udom Power Company Limited

Previous

- Director, General Administration Division,

Ratchaburi Electricity Generating Holding


- Director, Ratchaburi Power Plant Communication

Center

- Chief-Procurement and General Services

Department, Demand Side Management and

Planning Division, EGAT

Education / Training - Master of Engineering (Electrical Engineering),


- Bachelor of Science (Electrical Engineering)

(2nd Class Honor), King Mongkut’s Institute of

Technology North Bangkok Campus


Electric International Operation Company,

Inc., U.S.A.




- Certificate, Advanced Mini MBA, Chulalongkorn

University

Working Experiences

Current

- Assistant Managing Director, seconded to be

the Deputy Managing Director of the Ratchaburi

Electricity Generating Company Limited

Previous

- Director, Operating Division, Ratchaburi Electricity

Generating Company Limited

- Chief, Plant Maintenance Department Wang-

Noi Power Plant, EGAT

- The Cogen (SPP) Operation Project Team Leader,

EGAT

8

7

6

Mr. Somnuk Jindasup Assistant Managing Director, seconded

to be the Deputy Managing Director of

the Ratchaburi Electricity Generating

Company Limited

Age 48

Mr. Prayut Thongsuwan Assistant Managing Director-Administration

Age 48

021A n n u a l R e p o r t 2 0 0 6

021A n n u a l R e p o r t 2 0 0 6

9

10 Education / Training

- Master of Management, Asian Institute of

Management (AIM), Philippines

- Bachelor of Arts-Accounting,




- Certificate, ASEAN Executive Development

Program, Business School, Thammasart University

- Certificate, The Job of the Chief Financial Officer,

New York Salomon Center & Singapore Institute

of Management, Singapore

- Certificate, Managerial Skills Enhancement, SASIN



Working Experiences

Current

- Senior Director, Portfolio Management Division,


Company Limited

Previous

- Senior Director, Finance Division, Ratchaburi


Limited

- Senior Director, seconded to be the Director-

Finance & Accounting of the Tri Energy Company

Limited

- Vice President level 11 Banpu Public Company

Limited Group, seconded to be the Director–

Finance and Accounting, Tri Energy Company

Limited

- Senior Manager–Investment Division, Banpu


- Senior Manager–Finance Division, Banpu Public

Company Limited


- Master Degree in Management, SASIN Graduate

Institute of Business Administration,


- Master of Engineering (Electrical Engineering),


- Bachelor of Engineering (Electrical Engineering)

(2nd Class Honor), Kasetsart University

Working Experiences

Current

- Assistant Managing Director, seconded to be

the President of the Tri Energy Company Limited

Previous

- Senior Director, Ratchaburi Electricity Generating

Holding Public Company Limited, seconded to be

the President of Tri Energy Company Limited

- Senior Vice President Level 12, Banpu Public

Company Limited Group, seconded to be the

President of the Tri Energy Company Limited

- Vice President Level 11, Banpu Public Company

Limited Group, seconded to be the Operations

Director of the Tri Energy Company Limited

- Assistance Vice President of Business Development–

Power, Banpu Public Company Limited

11 Mrs. Darunee Abhinoraseth Senior Director, seconded to be

the Chief Financial Officer, Ratchaburi Power

Company Limited

Age 56


- Master of Business Administration (Executive),

SASIN Graduate Institute of Business Administration,


- Bachelor of Accountancy (2nd Class Honor),


- Certificate, Certified Investment and Securities

Analysts (CISA) Level1 (Academic Year 2002),

Securities Analysts Association






Working Experiences

Current

- Senior Director, seconded to be the Chief

Financial Officer of the Ratchaburi Power

Company Limited

Previous



Limited

- Director, Finance Division, Ratchaburi Electricity


- Assistant Director, Portfolio Management

Division, EGAT

Mr. Ni – run Wongchanglor Senior Director,

Portfolio Management Division

Age 46

Mr. Vatchara Noomahan Assistant Managing Director, seconded

to be the President of the Tri Energy

Company Limited

Age 54



12 Mr. Suchart Avusosakul

Director, Accounting Division

Age 55


- Bachelor of Accountancy,


- Bachelor of Law, Sukhothai Thammathirat Open

University




Working Experiences

Current



Limited




Previous

- Director, Accounting and Finance Division,

Ratchaburi Electricity Generating Company

Limited

- Chief, Operative and Hydro Plant Audit

Department, EGAT

- Chief, Generation and Transmission System

Business Audit Department, EGAT

13 Mr. Thoedpan Indramaha

Director, Internal Audit Division

Age 51


- Bachelor of Accountancy,





Working Experiences

Current

- Director, Internal Audit Division, Ratchaburi


Limited

Previous

- Chief-Computer Audit Department, Internal

Audit Division, EGAT

14 Ms. Raywadee Srikongyos

Director, General Administration Division

Age 48


- Bachelor of Administration (1st Class Honor),

University of Thai Chamber of Commerce

- Certificate, Mini MBA, Thammasat University

- Certificate, Fixed Income Primer Program,

Lehman Brothers, U.S.A.

Working Experiences

Current

- Director, General Administration Division,


Company Limited

Previous

- Manager, Compliance Department, Ratchaburi


Limited

- Manager, Financial Planning and Management

Department, Ratchaburi Electricity Generating


- Administrative officer Level 9, Cash Management

and Loans Division, Treasury Department, EGAT

023A n n u a l R e p o r t 2 0 0 6

023A n n u a l R e p o r t 2 0 0 6

15 Mr. Nawapol Disathien

Director, Legal Division

Age 36


- Master of Laws in International Legal Studies,

Golden Gate University School of Law, U.S.A.

- Bachelor of Laws, Thammasat University

- Certificate, Public Law, Thammasat University




Working Experiences

Current

- Director, Legal Division, Ratchaburi Electricity


Previous

- Manager, Legal Department,


Company Limited

- Legal Counsel, Siam City Cement Public Company

Limited

- Attorney, Tilleke & Gibbins International Limited

- Manager, Legal Department, Charoen Pokphand

Foods Public Company Limited

16 Mr. Thirapong Subpa-Asa

Power Plant Development Project

in LAO PDR

Age 54


- Master of Engineering (Mechanical Engineering),

Ohio State University, U.S.A.

- Bachelor of Engineering (Mechanical

Engineering), Chulalongkorn University

Working Experiences

Current

- Director, Power Plant Development Project in

LAO PDR, Ratchaburi Electricity Generating


Previous

- Engineer 10, Mechanical Maintenance Division,

EGAT

17 Mr. Raluke Satayaporn

Director, seconded to be

the Executive Technical Coordinator,

SouthEast Asia Energy Limited

Age 47


- Master of Engineering (Civil Engineering),


- Bachelor of Engineering (Civil Engineering),

Kasetsart University




- Certificate, Professional Engineer Level of the

Engineering Association of Thailand

- Certificate, Project Planning and Control

Working Experiences

Current

- Director, seconded to be the Executive Technical

Coordinator of the SouthEast Asia Energy Limited

Previous

- Director, Engineering and Contract Division,

Ratchaburi Energy Company Limited

- Engineer level 10, Chief of Field Engineering

Project Department, EGAT

- Engineer level 9, Assistant Chief of Designing/

Construction Management Team, EGAT

- Engineer level 9, Hydropower Construction

Division, EGAT



Brighter Energy from Inspiration

Human resource development is crucial to drive the entire

organization into the right direction.

Good Corporate Governance is the principle for

strengthening people’s capability and state-of-the-art

technology, which inspire us to move towards our goal.

025A n n u a l R e p o r t 2 0 0 6

025A n n u a l R e p o r t 2 0 0 6

Remuneration for the Companyûs Directors and Executives

Monetary Remuneration Significant Criteria 1. A director’s bonus was allocated in accordance with the period that the director was in office. In case a director

holding directorship in the Company and other subsidiaries simultaneously for a period of time, the director

shall receive a bonus only from the company that allocated a higher bonus payment for the particular period.

2. An director who is the Company’s executive did not receive meeting allowance but was entitled to receive

a bonus as a director of the Company.

3. The meeting allowances were paid to the Board of Directors, the Audit Committee, the Human Resources

and Remuneration Committee, and the Risk Management Committee.

1) Ratchaburi Electricity Generating Holding Public Company Limited

1.1 Remuneration for the Board of Directors

Note : The Board of Directors consists of 13 members 1/ In the year 2006, 5 new directors were appointed to the Board. - Mr. Panich Pongpirodom was appointed on 1 May 2006. - Mr. Pongpayom Vasaputi, Mr. Lae Dilokvidhyarat, Ms. Sutharat Angchanpen and Mr. Vinit Tangnoi were appointed on 1 December 2006. 2/ In the year 2006, 5 directors were resigned from the Board. - Mr. Viroj Klangboonkrong was resigned on 1 May 2006. - Mr. Kumphuy Jirararuensak and Mr. Boonchoo Direksathapon were resigned on 1 October 2006. - Mr. Sujarit Patchimnun and Mr. Pala Sookawesh were resigned on 15 November 2006. 3/ In the year 2005, 1 director was appointed to the Board. - Mr. Narong Sitasuwan was appointed on 1 October 2005 and was appointed Managing Director on 21 April 2006. 4/ In 2005, 1 director was resigned from the Board. - Mr. Narongsak Vichetpan was resigned from the Board on 1 October 2005. 5/ Bonus for the directors in 2005 were paid in April 2006 complying with the resolution of the Shareholders’ Annual General Meeting on April 20, 2006. 6/ Chairman of the Board and Chairman of the Human Resources and Remuneration Committee 7/ Chairman of the Audit Committee 8/ Chairman of the Risk Management Committee 9/ Audit Committee 10/ Human Resources and Remuneration Committee 11/ Risk Management Committee 12/ Independent Directors

1 Mr. Cherdpong Siriwit 6/, 12/ 12 720,000.00 12 1,250,000.00 1,970,000.00

2 Mr. Areepong Bhoocha-oom 9/, 10/, 12/ 12 686,000.00 12 1,000,000.00 1,686,000.00

3 Mr. Viroj Klangboonkrong 2/, 11/, 12/ 4 208,000.00 12 1,000,000.00 1,208,000.00

4 Mr. Sujarit Patchimnun 2/ 10.5 394,000.00 12 1,000,000.00 1,394,000.00

5 Mr. Pala Sookawesh 2/ 10.5 384,000.00 12 1,000,000.00 1,384,000.00

6 Mr. Suchart Thada-Thamrongvech 7/, 12/ 12 624,000.00 12 1,000,000.00 1,642,000.00

7 Mr. Viravat Chlayon 8/, 9/, 12/ 12 690,000.00 12 1,000,000.00 1,690,000.00

8 Mr. Kumphuy Jirararuensak 2/, 10/ 9 408,000.00 12 1,000,000.00 1,408,000.00

9 Mr. Narongsak Vichetpan 4/ - - 9 750,000.00 750,000.00

10 Mr. Chanin Vongkusolkit 12 450,000.00 12 1,000,000.00 1,450,000.00

11 Mr. Chulasingh Vasantasingh 12 460,000.00 12 1,000,000.00 1,460,000.00

12 Mr. Kraisi Karnasuta 12 470,000.00 12 1,000,000.00 1,470,000.00

13 Mr. Boonchoo Direksathapon 2/, 11/ 9 268,000.00 12 1,000,000.00 1,268,000.00

14 Mr. Panich Pongpirodom 1/ 8 368,000.00 - - 368,000.00

15 Mr. Pongpayom Vasaputi 1/ 1 40,000.00 - - 40,000.00

16 Mr. Lae Dilokvidhyarat 1/ 1 30,000.00 - - 30,000.00

17 Ms. Sutharat Angchanpen 1/, 11/ 1 40,000.00 - - 40,000.00

18 Mr. Vinit Tangnoi 1/, 10/ 1 30,000.00 - - 30,000.00

19 Mr. Narong Sitasuwan 3/ 12 130,000.00 3 250,000.00 380,000.00

6,400,000.00 13,250,000.00 19,650,000.00

Holding Holding No. Names

Period of Meeting Period of Bonus 5/ Total

2006 Allowance 2005 Remuneration (months) (months)

Unit : Baht

RATCH2006

Directors & Executives’Remuneration



1.2 Remuneration of the Company’s Executives

Unit : Million Baht

Salary 15 1/ 31 . 437

Bonus 14 15 . 060

Provident Fund 15 1/ 1 . 572

Total 48 . 069

Remuneration Number of persons Amount

2. Ratchaburi Electricity Generating Company Limited

1/ The Board of Directors consisted of 9 members. During the year, there were directors resigned and appointed on various occasions. 2/ There were 6 executives including assignment from Ratchaburi Electricity Generating Holding Public Company Limited, and during the year, there was rotation among executives in the Company’ s group.

3. Ratchaburi Energy Company Limited

1/ The Board of Directors consisted of 4 members. During the year, there was a restructuring in the company’s organization and its management. The executives from the Ratchaburi Electricity Generating Holding Public Company Limited Group were appointed as directors and did not receive remuneration since 22 March 2006. 2/ There were 3 executives. During the year, there was a restructuring in the organization and its management. The executives were appointed by the Ratchaburi Electricity Generating Holding Public Company Limited’s Group and have not received remuneration since 1 March 2006. 4) Ratchaburi Gas Company Limited, Ratch Udom Power Company Limited, and Ratchaburi Alliances Company Limited The Directors and executives of these companies have not receive remuneration because they were

appointed from the executives of Ratchaburi Electricity Generating Public Company Limited’s Group.

1/ The Company had 17 executives and during the year, 1 executive was retired and 2 executives were assigned as the secondment in Ratchaburi Electricity Generating Company Limited.

Unit : Million Baht

2.1 Board of Directors

Meeting Allowance 12 1/ 2 . 773

Bonus 8 1/ 6 . 472

Total 9 . 245

2.2 Executives

Salary 7 2/ 12 . 896

Bonus 6 5 . 761


Total 19 . 302


Unit : Million Baht

3.1 Board of Directors

Meeting Allowance 6 1/ 0 . 376

Bonus - -

Total 0 . 376

3.2 Executives

Salary 10 2/ 1 . 053

Bonus - -


Total 3 . 231


027A n n u a l R e p o r t 2 0 0 6

027A n n u a l R e p o r t 2 0 0 6

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d F

inan

ce a

nd

Act

ing

Dir

ecto

r - F

inan

ce D

ivis

ion

_

_ _

1 _

_ _

1 1

_ _

_ _

1 _

19

Mr.

Pray

ut

Th

on

gsu

wan

A

ssis

tan

t M

anag

ing

Dir

ecto

r-

Ad

min

istr

atio

n

_ 8,

000

8,00

0 1

_ _

_ 1

1 _

_ _

_ 1

_

20

Mr.

Som

nu

k J

ind

asu

p

Ass

ista

nt

Man

agin

g D

irec

tor a

s

Dep

uty

Man

agin

g D

irec

tor o

f RG

N

/A(5

) 7,

300

_ _

_ _

_ _

_ _

_

21

Mr.

Vatc

har

a N

oo

mah

an

Ass

ista

nt

Man

agin

g D

irec

tor a

s

Pres

iden

t o

f TEC

O

_ _

_ _

_ _

_ _

_ _

_ _

_ _

_

22

Mr.

Such

art

Avu

sosa

kul

Dir

ecto

r - A

cco

un

tin

g D

ivis

ion

N

/A(5

) 20

,000

_

1 _

_ _

_ _

_

_

Th

e Sh

areh

old

ing

s o

f th

e D

irec

tors

an

d t

he

Exec

uti

ves

that

res

ign

ed fr

om

his

/her

po

sito

n d

uri

ng

th

e Ye

ar 2

00

6(4

)

1

Mr.

Suja

rit

Pat

chim

nu

n

Dir

ecto

r _

_ _

_ _

_ _

_ _

_ _

_ _

_ _

2

Mr.

Vir

oj

Kla

ng

bo

on

kro

ng

D

irec

tor

_ 35

,000

35

,000

_

_ _

_ _

_ _

_ _

_ _

_

3

Mr.

Pala

So

oka

wes

h

Dir

ecto

r _

_ _

_ _

_ _

_ _

_ _

_ _

_ _

4

Mr.

Kam

ph

uy

Jir

arar

uen

sak

Dir

ecto

r 21

,719

21

,719

_

_ _

_ _

_ _

_ _

_ _

_ _

5

Mr.

Bo

on

cho

o D

irek

sath

apo

n

Dir

ecto

r 69

,576

69

,576

_

1 _

_ 1

1 1

1 _

_ _

_ _

Uni

t : S

hare

No

te

(1)

The

num

bers

of R

ATC

H s

hare

s he

ld b

y th

e D

irec

tors

and

the

Exe

cuti

ves

of t

he C

ompa

ny h

as in

clud

ed t

hose

hel

d by

the

ir s

pous

e an

d th

eir

min

or c

hild

ren

(in a

ccor

danc

e w

ith

the

SEC

reg

ulat

ion

No.

Sor

jor

14/2

540)

. The

tab

le s

how

s th

e se

curi

ties

tha

t he

ld b

y D

irec

tors

, Man

agin

g D

irec

tor,

all E

xecu

tive

s in

the

1st

to 4

th ra

nk in

pos

itio

n fr

om M

anag

ing

Dir

ecto

r, an

d th

e D

ivis

ion

Dir

ecto

r of A

ccou

ntin

g an

d Fi

nanc

e (in

acc

orda

nce

wit

h th

e SE

C re

gula

tion

No.

Gor

jor 4

4/25

43).

(2

) Th

e nu

mbe

rs o

f the

deb

entu

res

and

com

mon

sha

res

of th

e af

filia

ted

com

pani

es’s

held

by

the

Dir

ecto

rs a

nd th

e Ex

ecut

ives

of t

he C

ompa

ny re

pres

ent o

nly

the

part

that

hel

d by

eac

h D

irec

tor a

nd th

e Ex

ecut

ive

sole

ly (i

n ac

cord

ance

wit

h th

e Pu

blic

Com

pany

Lim

ited

Act

, Sec

tion

88

(2))

.

(3

) Th

e nu

mbe

rs o

f Rat

chab

uri E

lect

rici

ty G

ener

atin

g C

ompa

ny L

imite

d de

bent

ure

1/20

05 in

this

tabl

e re

pres

ent t

he d

eben

ture

hol

ding

s of

eac

h D

irec

tor a

nd E

xecu

tive

sol

ely.

(3.1

) Ra

tcha

buri

Ele

ctri

city

Gen

erat

ing

Com

pany

Lim

ited

debe

ntur

e 1/

2005

Ser

ies

1: 3

yea

rs , i

ssue

d Ju

ly 2

9, 2

005

at th

e va

lue

of B

aht 1

,000

per

uni

t

(3.2

) Ra

tcha

buri

Ele

ctri

city

Gen

erat

ing

Com

pany

Lim

ited

debe

ntur

e 1/

2005

Ser

ies

2: 5

yea

rs, i

ssue

d Ju

ly 2

9, 2

005

at th

e va

lue

of B

aht 1

,000

per

uni

t

(4

) Th

e Sh

areh

oldi

ngs

of th

e D

irec

tors

and

the

Exec

utiv

es th

at re

sign

ed fr

om h

is/h

er p

osito

n du

ring

the

Year

200

5 re

pres

ents

the

num

ber o

f sec

urit

ies

held

by

that

per

son

unti

l the

dat

e of

his

/her

reti

rem

ent o

r res

igna

tion

from

the

Com

pany

.

(5

) N

/A =

No

info

rmat

ion

of s

hare

hel

d by

that

dir

ecto

r or e

xecu

tive

in 2

005

due

to th

e fa

ct th

at s

uch

dire

ctor

or e

xecu

tive

was

app

oint

ed to

his

/her

pos

itio

n in

200

6

The

Ab

bre

via

tio

ns

of C

om

pa

nie

s’s

Na

mes

EG

AT =

Ele

ctri

city

Gen

erat

ing

Aut

hori

ty o

f Tha

iland

RA

TCH

= R

atch

abur

i Ele

ctri

city

Gen

erat

ing

Hol

ding

PC

L. -

RG =

Rat

chbu

ri E

lect

rici

ty G

ener

atin

g C

o.,L

td. -

RG

AS

= R

atch

abur

i Gas

Co.

,Ltd

. - R

UD

P =

Rat

ch U

dom

Pow

er C

o.,L

td. -

RA

= R

atch

Alli

ance

s C

o.,L

td. -

RE

= R

atch

abur

i Ene

rgy

Co.

,Ltd

. - T

ECO

= T

ri E

nerg

y C

o.,L

td. -

RPC

L =

Rat

chab

uri P

ower

Co.

,Ltd

. - S

iam

Eth

anol

= S

iam

Eth

anol

Exp

orts

Co.

,Ltd

. - C

RESC

O =

Chu

bu R

atch

abur

i

El

ectr

ic S

ervi

ces

Co.

,Ltd

. - S

EAN

= S

outh

East

Asi

a En

ergy

Ltd

.

Ch

an

ges

of D

irec

tor/

Exec

uti

ve P

osi

tio

ns

Du

rin

g th

e Ye

ar

2006

N

o. 2

M

r. Pa

nich

Pon

gpir

odom

was

ass

igne

d to

be

the

Com

pany

’s D

irec

tor i

n pl

ace

of M

r. Vi

roj K

lang

boon

kron

g, w

ho re

sign

ed b

y hi

s re

tire

men

t fro

m E

GAT

, eff

ecti

ve fr

om M

ay 1

, 200

6 on

war

ds (b

y th

e re

solu

tion

of t

he B

oard

of D

irec

tors

Mee

ting

No.

4/2

006

date

d A

pril

21, 2

006)

.

N

o. 3

M

r. Po

ngpa

yom

e Va

sapu

ti w

as a

ssig

ned

to b

e th

e C

ompa

ny’s

Dir

ecto

r in

plac

e of

Mr.

Suja

rit P

ajch

imnu

n, w

ho re

sign

ed b

y hi

s re

tire

men

t fro

m h

is p

osito

n in

EG

AT’s

Boar

d , e

ffec

tive

from

Nov

embe

r 29,

200

6 on

war

ds (b

y th

e re

solu

tion

of t

he B

oard

of D

irec

tors

Mee

ting

No.

12/

2006

dat

ed N

ovem

ber 2

9, 2

006)

.

N

o. 4

M

r, La

e D

ilokv

idha

yara

t was

ass

igne

d to

be

the

Com

pany

’s D

irec

tor i

n pl

ace

of M

r. Pa

la S

ooka

wes

h , w

ho re

sign

ed b

y hi

s re

tire

men

t fro

m h

is p

osito

n in

EG

AT’s

Boar

d , e

ffec

tive

from

Nov

embe

r 29,

200

6 on

war

ds (b

y th

e re

solu

tion

of t

he B

oard

of D

irec

tors

Mee

ting

No.

12/

2006

dat

ed N

ovem

ber 2

9, 2

006)

.

N

o. 8

M

iss

Suth

arat

Ang

chan

pen

was

ass

igne

d to

be

the

Com

pany

’s D

irec

tor i

n pl

ace

of M

r. Ka

mph

uy J

irara

ruen

sak,

who

resi

gned

by

his

reti

rem

ent f

rom

EG

AT, e

ffec

tive

from

Nov

embe

r 29,

200

6 on

war

ds (b

y th

e re

solu

tion

of t

he B

oard

of D

irec

tors

Mee

ting

No.

12/

2006

dat

ed N

ovem

ber 2

9, 2

006)

.

N

o. 9

M

r. Vi

nit T

angn

oi w

as a

ssig

ned

to b

e th

e C

ompa

ny’s

Dir

ecto

r in

plac

e of

Mr.

Boon

choo

Dir

eksa

thap

on, w

ho re

sign

ed b

y hi

s re

tire

men

t fro

m E

GAT

, eff

ecti

ve fr

om N

ovem

ber 2

9, 2

006

onw

ards

(by

the

reso

luti

on o

f the

Boa

rd o

f Dir

ecto

rs M

eeti

ng N

o. 1

2/20

06 d

ated

Nov

embe

r 29,

200

6).

N

o. 1

1 M

r. C

hani

n Vo

ngku

solk

it is

the

Dir

ecto

r tha

t had

bee

n ap

poin

ted

by B

anpu

PLC

., w

hich

hol

ds 1

4.99

% o

f RAT

CH

sha

res.

He

also

has

his

pos

itio

n as

the

Chi

ef E

xecu

tive

Off

icer

at B

anpu

PLC

.

N

o. 1

3 M

r. N

aron

g Si

tasu

wan

was

ass

igne

d to

be

the

Man

agin

g D

irec

tor o

f RAT

CH

in p

lace

of M

r. Bo

onch

oo D

irek

sath

apon

who

reac

hed

his

age

reti

rem

ent f

rom

the

Com

pany

, eff

ecti

ve fr

om A

pril

21, 2

006

onw

ards

(by

the

reso

luti

on o

f the

Boa

rd o

f Dir

ecto

rs M

eeti

ng N

o. 4

/200

6 da

ted

Apr

il 21

, 200

6)



Caring and Developing ENVIRONMENT

Environment and community are our key area of concerns.

We believe that to successfully grow a business, we need

cooperation from community and good environment.

We, with our intention to contribute to community and

environmental development, are involed with many

community projects, such as Ratchaburi Power Plant’s

Community Development Project which was initiated

to enable community self-sustainability leading to greater

community’s cooperation with the Power Plant

for better environment.

029A n n u a l R e p o r t 2 0 0 6

029A n n u a l R e p o r t 2 0 0 6

Organization Chart

Board of Directors

Human Resources and Remuneration Committee

Deputy Managing Director-Business Ventures

Power Plant Development

Project in LAO PDR

Portfolio Management

Division

Assistant Managing Director-Business Ventures

Deputy Managing Director-Accounting and Finance

Assistant Managing Director-Accounting and Finance

Investment Assessment Department

Strategic Planning Department

Corporate Investment Analysis

Department

Engineering and Energy Technology

Department

Business Development

Division

Accounting Division

General Accounting Department

Management Accounting and

Budgeting Department

Investor Relations Department

Affiliates Accounting and Tax Management

Department

Finance Division

Treasury Department

Financial Planning and Management Department

Compliance Department

RATCH2006

Organization Chart

Risk Management Committee

Managing Director

Corporate Secretary Department


Audit Committee

Internal Audit Division

Internal Audit Department Risk Management Department

Group Company Management

Ratchaburi Electricity Generating Company Limited

ë Deputy Managing Director seconded to be the Managing

Director

ë Assistance Managing Director seconded to be the Deputy

Managing Director

Tri Energy Company Limited

ë Assistance Managing Director seconded to be the President

ë Senior Manager seconded to be the Director-Finance & Accounting

Ratchaburi Power Company Limited

ë Senior Director seconded to be the Chief Finance Officer


ë Director seconded to be the Executive Technical Coordinator

ë Manager seconded to be the Financial Manager

As of 31 December 2006

Assistant Managing Director-Administration

General Administration Division

Procurement and Service Department

Information System Development Department

Human Resource Department

Public Relations Department

Computer and Network Operations

Department

Legal Division

031A n n u a l R e p o r t 2 0 0 6

Board of Directors At present, the Company’s Board of Directors consists of 13 members, whose names are listed as follows.

No. Directorûs Name Position

1. Mr. Cherdpong Siriwit - Chairman (Independent Director)

Second-term Director - Chairman of the Human Resources and

Remuneration Committee

2. Mr. Viravat Chlayon - Independent Director

Second-term Director - Chairman of the Risk Management Committee

- Member of the Audit Committee

3. Mr. Pongpayome Vasaputi - Director

First-term Director

4. Mr. Lae Dilokvidhyarat - Director

First-term Director

5. Mr. Chulasingh Vasantasingh - Director

Second-term Director

6. Mr. Panich Pongpirodom - Independent Director

First-term Director - Member of the Risk Management Committee

7. Mr. Suchart Thada-Thamrongvech - Independent Director

Second-term Director - Chairman of the Audit Committee

8. Mr. Kraisi Karnasuta - Director


9. Ms. Sutharat Angchanpen - Director

First-term Director - Member of the Risk Management Committee

10. Mr. Vinit Tangnoi - Director

First-term Director - Member of the Human Resources and Remuneration

Committee

11. Mr. Chanin Vongkusolkit - Director


12. Mr. Areepong Bhoocha-oom - Independent Director

Third-term Director - Member of the Audit Committee

- Member of the Human Resources and Remuneration

Committee

13. Mr. Narong Sitasuwan - Director

Second-term Director - Managing Director

- Secretary to the Board of Directors

Management Structure

RATCH2006

Management Structure



According to the Company’s Articles of Association, the Board of Directors and terms of their members shall be as

follows.

- The number of Directors shall be no less than 7 but not exceeding 13.

- No more than one-third of all Directors shall be Executive Directors.

- No less than one-third of all Directors shall be Independent Directors, with a minimum number of 3

Independent Directors.

- Chairman of the Board shall be a Non-Executive Director and not the same person as the Managing

Director. The Board of Directors shall appoint the Chairman from Directors.

- Directors shall be appointed by the Annual General Shareholders’ Meeting (AGM). At every AGM,

one-third of the Directors shall retire from office. Directors with the longest stay in office shall retire.

A retiring Director by a rotation of office may be re-elected.

- In case any Director resigns by reasons other than a rotation of office, the Board of Directors shall

elect any person to replace the resigned Director. The Director so appointed shall retain his/her office

during such time only as the resigned Director is entitled to retain.

- Directors of the Company shall remain in their offices for no more than 3 consecutive terms and his/

her age shall not exceed 72 years old.

As shareholder’s representatives, the Board of Directors have a fiduciary duty to manage all the Company’s

businesses, formulate and approve policies and operation plans as well as supervise the management’s operations to

ensure the most efficiency, effectiveness and strict compliance with policies, applicable laws, the Articles of Association,

resolutions of the Shareholders’ Meeting, relevant rules and regulations and business ethics that will eventually fulfill the

Company’s objectives.

At present, the Managing Director is appointed as the Board of Directors’ Secretary, and, at the same time “the

Corporate Secretary Department” is set up to handle meetings, administration works and coordination activities of the

Board of Directors.

Independent Director

Independent Director, according to the definition in the Company’s Articles of Incorporation regarding the Board

of Directors, means director who is not a representative of any major shareholders, can undertake his/her duties

independently from any major shareholders, management or any other related persons, is neither top executive,

employee nor consultant receiving salary from the Company, and is not an Executive Director of the Company (at present,

Executive Board of Directors is not yet established), Independence Director shall not hold more than 0.5 percent of paid-

up capital of the Company, its subsidiaries, affiliates, joint ventures or other relevant firms. Independent Director shall be

the one who can take care of all shareholders’ interests on an equal basis, and has no conflicts of interest with the

Company. Each Independent Director shall attend the Board of Directors’ Meeting to make decision in every important

issue. To recruit an Independent Director, the Company follows the nomination procedures in recruiting directors and top

management, the details of which are described in Page 36

Of the 13-member Board of Directors of the Company, 5 of them are Independent Directors based on the

definition described above. Their names are listed as follows:

1. Mr. Cherdpong Siriwit

2. Mr. Suchart Thada-Thamrongvech

033A n n u a l R e p o r t 2 0 0 6

033A n n u a l R e p o r t 2 0 0 6

3. Mr. Viravat Chlayon

4. Mr. Panich Pongpirodom

5. Mr. Areepong Bhoocha-oom

Each Independent Director undertakes his/her duties with independent judgment to ensure that the Company’s

policies, operation plans and actions comply with the laws, the Company’s objects, Articles of Association, and the

resolutions of the Shareholders’ Meeting with an aim to guarantee equal protection to interests of all shareholders.

The Audit Committee

The Audit Committee of the Company consists of 3 Independent Directors appointed by the Board of Directors

based on their expertise, experiences and qualifications, as defined by the regulation of the Stock Exchange of Thailand

(SET). One of the Company’s management acts as the Secretary of the Audit Committee. The names of the committee are

listed as follows.

1. Mr. Suchart Thada-Thamrongvech Chairman of the Audit Committee

2. Mr. Viravat Chlayon Member of the Audit Committee

3. Mr. Areepong Bhoocha-oom Member of the Audit Committee

4. Mr. Thoedpan Indramaha Internal Audit Division Director acting as the Secretary of the

Audit Committee

The Audit Committee performs its tasks, as described in the Company’s Articles of Incorporation approved by the

Board of Directors, in accurately and adequately auditing the Company’s financial statements, in order to make sure that

the Company has an appropriate and effective internal control system. The Audit Committee also has responsibility to

review that the Company complies with the Securities and Exchange Commission Acts and the Stock Exchange of

Thailand’s rules and regulations and other laws relating to the Company’s business. When performing their duties, the

Audit Committee has authority to invite Directors, or employees regardless of their positions to attend the meeting or to

clarify and answer any question relating to the Committee’s duties and responsibilities. The Audit Committee can discuss

with the Company’s expert or consultant (if any) or hire a third-party consultant or specialist if necessary at the

Company’s expense.

The Audit Committee also has a duty to select and propose for the appointment of the auditor of the company

and its subsidiaries and recommend the auditor’s fee for the Board of Director’s concurrence and for the approval from

the Shareholders’ Meeting respectively. Details of the appointment of the auditor and the auditor’s fee are described in

Page 86 The Audit Committee shall review the disclosure of the Company’s information in case there is any connected

transaction or if the transaction may lead to a conflict of interests. The Audit Committee’s report signed by its Chairman

appears in Page 86

The Audit Committee also has a significant role to govern the Internal Audit Division’s operations. The Audit

Committee is required to approve the scope of operation, annual audit plan, budget and personnel recruitment of the

Internal Audit Division. The Committee also reviews the appointment, reshuffle or termination of the Internal Audit

Division Director. The Internal Audit Division’s audit reports and its status of independence are also taken into the

committee’s scrutiny.

In 2006, the Audit Committee held 5 meetings in February, May, July, August and November. All members of the

Audit Committee attended all the 5 meetings except for the meeting in November, where Chairman of the Audit Committee

had to travel overseas and assigned Mr.Viravat Chlayon, member of the Audit Committee, to preside over that meeting.



The Human Resources and Remuneration Committee

The Human Resources and Remuneration Committee consists of 3 directors who are appointed by the Board of

Directors. One of the Company’s management acts as the Committee’s Secretary. The names of the members are listed as

follows:

1. Mr. Cherdpong Siriwit Chairman of the Human Resources and Remuneration Committee

2. Mr. Vinit Tangnoi Member of the Human Resources and Remuneration Committee

3. Mr. Areepong Bhoocha-oom Member of the Human Resources and Remuneration Committee

4. Ms. Vajana Angsukomutkul Deputy Managing Director-Accounting and Finance, acting as the

Secretary of the Human Resources and Remuneration Committee

The Human Resources and Remuneration Committee’s authorities and responsibilities are defined in the

Company’s Articles of Incorporation, which is approved by the Board of Directors. Its authorities and responsibilities cover

the entire tasks concerning the management of human resources and remuneration of the Board of Directors, Sub-

committees, and top management of the Company. The committee has duty to formulate the Company’s visions and

strategies on human resources management of the Company’s Group as well as their Management Development Plan.

The committee’s responsibilities include the monitoring that the Board of Directors of the Company’s Group has

appropriate size and good components responsively to the changing environment .The Human Resources and

Remuneration Committee is also required to establish the clear, transparent and appropriate policy, criteria, and

procedure in nominating, selecting, removing or terminating Directors and top management of the Company’s Group to

ensure that all companies in the Company’s Group have high qualified management team who have appropriate

competency and experiences to run the Company’s business successfully and effectively.

Moreover, the Human Resources and Remuneration Committee establishes a policy and strategies on

compensation which includes salary, meeting allowance, per diem, bonus and other benefits to Directors and top

management in the Company’s Group before proposing them to the Board of Directors for further approval.

Consideration and approval will be based on clear and transparent criteria in order to induce, retain and motivate high

qualified and high potential human resources. The Human Resources and Remuneration Committee also formulates

effective guidelines, procedures and process for assessing the performance of the Board of Directors and top

management of the Company’s Group against the target mutually agreed in advance each year. These targets shall be

relevant to the Company’s Business Plan and set up in order to review the management’s annual remunerations by taking

duties, responsibilities, related risks and long term values to shareholders into consideration.

When performing their job, the Human Resources and Remuneration Committee are authorized to discuss with the

Company’s specialist or consultant (if any) or hire a third-party consultant or specialist if necessary at the Company’s expense.

In 2006, the Human Resources and Remuneration Committee convened 4 meetings in February, April, November

and December. All members had attended every arranged meeting.

The Risk Management Committee

The Risk Management Committee consists of 3 members appointed by the Board of Directors. One of the Company’s

management acts as its Secretary. The names of the members are listed as follows:

1. Mr. Viravat Chlayon Chairman of the Risk Management Committee

2. Mr. Panich Pongpirodom Member of the Risk Management Committee

3. Ms. Sutharat Angchanpen Member of the Risk Management Committee

4. Mr. Thoedpan Indramaha Internal Audit Division Director acting as the Secretary of the Risk

Management Committee

035A n n u a l R e p o r t 2 0 0 6

035A n n u a l R e p o r t 2 0 0 6

The Risk Management Committee’s authorities and responsibilities are defined in the Company’s Articles of

Incorporation, which is approved by the Board of Directors. The committee shall review the Company’s risk management

policy and framework, which would cover all the major risks; namely, financial risk, investment risk, internal risk and

external risk, before proposing them to the Board of Directors for approval. The committee is also required to establish

risk management strategy and guideline that is in line with the Company’s risk management policy.

The Risk Management Committee has authority to invite Directors, and/or operational employees to discuss,

clarify or answer questions relating to their scope of duties and responsibilities. The committee is able to discuss with the

Company’s specialist or consultant (if any) or hire a third-party advisor or specialist, if necessary, at the Company’s expense.

The Risk Management Committee appoints a Risk Management Working Group as a mechanism to supervise and

monitor the operation. The working group has a duty to pinpoint nature of the risks and risk factors, study and analyze all

internal and external risk factors that may effect the Company’s operation. Moreover, the Risk Management Working Group

has to study and suggest guidelines and, finally, write a risk management report for the Risk Management Committee’s

consideration.

In 2006, the Risk Management Committee convened 3 meetings in January, June and September. All members

had attended every arranged meeting.

Authorized Directors As the Company’s Signatory

According to the Company’s Affidavit, the authorized Directors as the Company’s signatory are the signature of

Mr. Cherdpong Siriwit, Chairman, or Mr. Narong Sitasuwan, Managing Director, with the Company’s Seal; or the joint

signatures of two Directors out of seven Directors namely Mr. Lae Dilokvidhyarat, Mr. Pongpayome Vasaputi, Mr. Vinit

Tangnoi, Ms. Sutharat Angchanpen, Mr. Chulasingh Vasantasingh, Mr. Chanin Vongkusolkit and Mr. Kraisi Karnasuta , with

the Company’s Seal.

Recruitment and Nomination Procedures of Directors and Top Management

To ensure that the Company’s Group have a management team of required qualification, knowledge, competency

and experience, the Human Resources and Remuneration Committee is designated to formulate a clear-cut and

transparent policy, criteria and procedure on human resources and remuneration management for Directors and top

management of the Company’s Group. The Human Resources and Remuneration Committee shall recruit the Directors

and top management of the Company’s Group by reviewing the nominee’s educational background, knowledge, skills

and work experiences, which should benefit their designated missions and the Company’s overall operations.

In addition, to nominate the Company’s Director, consideration must also be made on the basis of necessary

qualifications and skills of an individual to work together as a team. This will be based on a number of factors ranging

from age to specialized skills that help harmonize the Company’s business as well as the dedication and commitment to

devote time and effort as the Director. The ultimate goal is to ensure a strong Board of Directors that can fulfill the

Company’s need at a particular point in time.

The Human Resources and Remuneration Committee shall propose its opinion to the Board of Directors of the

Company’s Group for further appointment of their Directors and top management.

Directors representing major shareholders such as EGAT and Banpu Public Company Limited, that have right to

nominate to the Company’s Board of Directors, have been through the selecting procedure in which background and

qualifications proper and necessary in governing the Company’s businesses are taken into consideration. The Managing

Director and Deputy Managing Director-Business Ventures, who are EGAT’s top management and seconded to work at

the Company, have also through the proper selecting procedure.



To be the leading ELECTRICITY Company

Ratchaburi Electricity Generating Holding Public Company

Limited is a private company with remarkable capability

and constant growth.

We have hight-standard management, strong partners,

state-of-the-art technology, experienced people and high

recognition in the industry and community.

Today… we are ready to move forward to become the leader

in power generating and development of the region…

We are powering for the future.

037A n n u a l R e p o r t 2 0 0 6

037A n n u a l R e p o r t 2 0 0 6

Share Distribution by Nationality

Top 10 Major Shareholders of Ratchaburi Electricity Generating Holding Public Company Limited, as at September 5, 2006

45.00% The Electricity Generating Authority of Thailand (EGAT)

14.99% BANPU Public Company Limited (Grouped)

4.63% Social Security Office

Source : Thailand Securities Depository Company Limited

2.62% The Govermment

Saving Bank

2.20% CHASE NOMINEES LIMITED (Grouped)

1.97% INVESTORS BANK AND TRUST COMPANY

1.20% AMERICAN INTERNATIONAL ASSURANCE COMPANY (Grouped)

0.84% EGAT Employees Provident Fund

0.74% VAYUPAK FUND

0.72% HSBC (Grouped)

Thai 21,274 1,310,415,325 90.37

Foreign 85 139,584,675 9.63

Total 21,359 1,450,000,000 100.00

Ratchaburi Electricity Generating Holding Public Company Limited specifies the portion of shares held by the foreign shareholders at 25 percent from the total of shares.

Major Shareholders

Top 10 Major Shareholders 1,086,078,957 74.91

Portion of Shares held by Minor

Shareholders 363,921,043 25.09

From the Total Shares of 1,450,000,000 100.00

Shareholders Number of Number of % Shareholders Shares

Shareholders Number of % Shares

RATCH2006

Major Shareholders



As at September 5, 2006

No. Name Number of Shares %

1 The Electricity Generating Authority of Thailand (EGAT) 652,500,000 45.00

2 BANPU Public Company Limited (Grouped) 217,400,000 14.99

Banpu Public Company Limited 110,300,000

Banpu Power Company Limited 107,100,000

3 Social Security Office 67,179,800 4.63

Social Security Office 66,712,700

Social Security Office by MFC Asset management Public Company Limited 187,900

Social Security Office by Kasikorn Asset Management Company Limited 118,200

Social Security Office by One Asset Management Limited 161,000

4 The Government Savings Bank 38,000,000 2.62

5 CHASE NOMINEES LIMITED (Grouped) 31,849,058 2.20

CHASE C.S. CENTRAL NOMINEES LIMITED 46 137,090

CHASE NOMINEES LIMITED 30,197,100

CHASE NOMINEES LIMITED 1 157,700




6 INVESTORS BANK AND TRUST COMPANY 28,521,599 1.97

7 AMERICAN INTERNATIONAL ASSURANCE COMPANY (Grouped) 17,357,400 1.20

AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED - AIA D-PLUS 3,118,400

AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-AIA1 3,700,000

AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-AIA2 3,034,700

AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-AIA5B 3,304,300

AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-AIA5E 4,200,000

8 EGAT Employees Provident Fund 12,123,900 0.84

EGAT Employees Provident Fund (Registered) By Siam Commercial Bank Public

Company Limited 7,635,000

EGAT Employees Provident Fund (Registered) By ING Funds (Thailand) Company Limited 4,488,900

9 VAYUPAK FUND 10,762,700 0.74

VAYUPAK FUND 1 by Krung Thai Asset Management Public Company Limited 5,381,350

VAYUPAK FUND 1 by MFC Asset management Public Company Limited 5,381,350

10 HSBC (Grouped) 10,384,500 0.72

HSBC (SINGAPORE) NOMINEES PTE LIMITED 3,494,300

HSBC BANK PLC-CLIENTS GENERAL A/C 5,562,200

HSBC INSTITUTIONAL TRUST SERVICES (ASIA) LIMITED 1,320,000

HSBC INVESTMENTS HOLDINGS (BAHAMAS) LIMITED 8,000

Total of Shares held by top 10 Major Shareholders 1,086,078,957 74.91

Portion of Shares held by Minor Shareholders 363,921,043 25.09

From the Total Shares of 1,450,000,000 100.00

Source : Thailand Securities Depository Company Limited

Note 1. Electricity Generating Authority of Thailand (EGAT) (changed its name form EGAT Public Company Limited) is a state-owned enterprise that operates and co-invests with other parties in electricity power and related business. EGAT is the largest shareholder of the Company, that has 7 representatives in the Company’s 13-member Board of Directors. 2. Banpu Group is a group of Banpu Public Company Limited and its associated company that engageged in core business on coal and electricity power in Thailand and overseas. The Vongkusolkit family and their related companies are its major shareholders. Banpu Public Company Limited has its a representative in the Company’s 13-member Board of Directors. 3. The Government Savings Bank is a legal entity and a state-owned enterprise operating as a financial institute guaranteed by the government. The Bank is under supervision of the Ministry of Finance. Currently, the Bank is a lender of Ratchaburi Electricity Generating Company Limited, which is a subsidiary of the Copany with Baht 2,395 million outstanding debt as of December 31, 2006. 4. Employees’ Provident Fund of EGAT changed its name from Employees’ Provident Fund of EGAT Public Company Limited. The Fund’s Committee is responsible for the fund management policy, comprises representatives from both employers and employees of EGAT, Ratchaburi Electricity Generating Holding Public Company Limited, Ratchaburi Electricity Generating Company Limited, Ratchaburi Energy Company Limited.

Top 10 Major Shareholders

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039A n n u a l R e p o r t 2 0 0 6

Shareholding Structure

RATCH2006

Shareholding Structure


Nature of Business

Founded on 7 March 2000, the Company is currently registered with Baht 14,500 million paid-up capital. Its business is

to invest in subsidiaries and joint venture companies as a holding company. At present, the Company owns 99.99 percent

shares of its five subsidiaries; namely, Ratchaburi Electricity Generating Company Limited, Ratchaburi Gas Company Limited,

Ratch Udom Power Company Limited, Ratchaburi Alliances Company Limited and Ratchaburi Energy Company Limited.

Through these subsidaries investments, Ratchaburi Gas Company Limited holds 50 percent of Tri Energy Company Limited’s

shares, while Ratchaburi Alliances Company Limited holds 25 percent of Ratchaburi Power Company Limited, and Ratchaburi

Energy Company Limited holds 15 percent in Siam Ethanol Exports Company Limited. The Company also holds 25 percent of

SouthEast Asia Energy Limited’s shares. SouthEast Asia Energy Limited holds 100 percent of Nam Ngum 2 Power Company

Limited’s shares in order to develop the Nam Ngum 2 Hydro Power Plant Project. In addition, the Company has made direct

investment in 49.99 percent of Chubu Ratchaburi Electric Services Company Limited’s shares. However, its major incomes

come from dividends of its subsidiary; namely, Ratchaburi Electricity Generating Company Limited and Ratchaburi Gas

Company Limited.

The Company has formulated its strategies and business plans that correspond to its development and expansion

goals focusing on investment in the power and other related business where it provides adequate financial support for

investment and actively participating in the formulation and monitoring of the operations of the companies it has invested.

Subsidiaries Ratchaburi Electricity Generating Company Limited

Location : 128 Moo 6, Phikunthong Subdistrict, Mueang District, Ratchaburi, 70000 Thailand

Tel. (66) 2978 5111-9, (66) 3236 5740 ext. 3210 Fax. (66) 2978 5110, (66) 3236 5740 ext. 3204

Nature of business : Electricity generation

Shareholding Equity : 99.99 percent

Registered capital : Baht 18,275 million

Paid registered capital : Baht 18,275 million

Status : Ratchaburi Power Plant comprises of two units of Thermal Power Plant, which generates 735

megawatts each and three blocks of Combined Cycle Power Plant, which generates 725

megawatts each. The total installed capacity of Ratchaburi Power Plant is 3,645 megawatts.

The Company has a 25-year Power Purchase Agreement with the EGAT and the plants have

started commercial operation since October 2000.

Ratchaburi Gas Company Limited

Location : 19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10900

Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321

Nature of business : Investing in electricity generating business


Registered capital : Baht 500 million

Paid registered capital : Baht 500 million

Status : Holds 50 percent stake in Tri Energy Company Limited, where the Company has production

capacity of 350 megawatts in accounts. Ratchaburi Gas Company Limited has 20-year Power

Purchase Agreement with the EGAT and has started commercial operation in July 2000.

Ratch Udom Power Company Limited

Location : 19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10900

Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321

RATCH2006Nature of Business

0PB 041Ratchaburi Electricity Generating Holding Public Company Limited A n n u a l R e p o r t 2 0 0 6



Registered capital : Baht 420.90 million

Paid registered capital : Baht 420.90 million

Status : Holds 99.99 percent in Ratchaburi Alliances Company Limited’s shares.

Ratchaburi Alliances Company Limited

Location : 19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10900 Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321



Registered capital : Baht 420.20 million


Status : Holds 25 percent in Ratchaburi Power Company Limited’s shares, which accounts for 350 megawatts of the Company’s production capacity ratio.


Location : 19 SCB Park Plaza, Tower 3 East, 21th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10900 Thailand Tel. (66) 2978 5200 Fax. (66) 2937 9541

Nature of business : Investing in renewable-energy power generating business and investing in related businesses




Status : Holds 15 percent shares in Siam Ethanol Exports Company Limited which operates 95-percent pure alcohol production for export. Besides, Ratchburi Energy Company Limited has developped the Associared Gas Power Plant Project, using the associated gas from Pratu Tao-A oil rig with 1.75 megawatts production capacity.

Joint Venture Companies Tri Energy Company Limited

Location : 1550 Thanaphum Tower, 16th Floor, New Petchburi Road, Makasan, Ratchatavee, Bangkok 10320 Thailand Tel. (66) 2207 0307-14 Fax. (66) 2207 0315-16


Shareholding Equity : Ratchaburi Gas Company Limited holding 50 percent

Registered capital : Baht 3,423.80 million

Paid registered capital : Baht 3,423.80 million

Status : Located in Ratchaburi province, Tri Energy Power Plant operates one block of Combined-Cycle Power Plant with 700 megawatts production capacity, and has a 20-year Power Purchase Agreement with EGAT. The company started commercial operation in July 2000. Its shareholders are Texaco Thailand Energy Company I and Ratchaburi Gas Company Limited which holds 50 percent of its shares each.

Ratchaburi Power Company Limited

Location : 1828 Sukhumvit Road, Bang Chak, Pra Khanong, Bangkok 10260 Thailand

Tel. 0 2344 5111 Fax. 0 2332 3882

042 043Ratchaburi Electricity Generating Holding Public Company Limited A n n u a l R e p o r t 2 0 0 6



Shareholding Equity : Ratchaburi Alliances Company Limited holding 25 percent



Status : Ratchaburi Power’s Power Plant is located in the same premise of Ratchaburi Power Plant,

Ratchaburi province. It has a long-term Power Purchase Agreement with EGAT for 25 years.

At present, the company is building two blocks of Combined Cycle Power Plant, which generates

700 megawatts each. The first block is expected to commercially operate in March 2008 and

the second block in June 2008. Ratchaburi Power Company Limited’s shareholders consist of Union

Energy Company Limited which holds 10 percent, Chubu Electric Power Company International

B.V., holds 15 percent, Toyota Tsusho Corporation, holds 10 percent shares, Hong Kong Electric

International Power (Mauritius) Limited, holds 25 percent, and PTT Public Company Limited and

Ratchaburi Alliances Company Limited, holds 15 percent and 25 percent of its shares, respectively.


Location : 587 Viriyathavorn Bldg, 20th Floor, Sutthisarn Vinijchai Road, Din Daeng, Din Daeng, Bangkok

10400 Thailand Tel. (66) 2275 4873 Fax. (66) 2691 8307

Nature of business : Investing in electricity generating business in Lao People’s Democratic Republic (Lao PDR)

Shareholding Equity : The Company’s holding 25 percent



Status : SouthEast Asia Energy Limited holds 100 percent stake in Nam Ngum 2 Power Company Limited

in Lao PDR. Its total production capacity is 615 megawatts and its production capacity accounts

for 153.75 megawatts of the Company’s total production capacity ratio. SouthEast Asia Energy

Limited has signed a long-term Power Purchase Agreement with EGAT for 27 years from the initial

operation date and is expected to start its commercial operation in 2013. Its shareholders consist

of Ch.Karnchang Public Company Limited which holds 28.50 percent, Laos PDR holds 25 percent,

Bangkok Expressway Public Company Limited holding 12.50 percent, while P.T. Construction &

Irrigation holds 4.0 percent, Shlapak Development Company holds 4.0 percent, Team Consulting and

Management Company Limited holds 1.0 percent and the Company holds 25 percent.

Nam Ngum 2 Power Company Limited

Location : Lao PDR Tel. (007) 856 21 223 215 Fax. (007) 856 21 215 500


Shareholding Equity : SouthEast Asia Energy Limited holding 100 percent

Registered capital : USD 10 million

Paid registered capital : USD 7 million

Status : Nam Ngum 2 Power Company Limited is the operator of Nam Ngum 2 Hydro Power Plant, with

615 megawatts production capacity, which has a long-term Power Purchase agreement with

EGAT for 27 years from the initial operation date and is expected to start its commercial

operation in 2013.

Siam Ethanol Exports Company Limited

Location : 88 Moo 8, Nonglalork Subdistrict, BanKai District, Rayong 21120 Thailand

Tel. (66) 3862 6025 Fax. (66) 3862 6025



Nature of business : Producing 95-percent pure alcohol for export

Shareholding Equity : Ratchaburi Energy Company Limited holding 15 percent



Status : Siam Ethanol Exports Company Limited has received a license to produce 100,000 liters of

alcohol per day, 30 million liters of alcohol a year. Located in Rayong province, the company is

expected to start commercial operate in 2007. Mr. Krittiponge Phatcharapinyopong,

Mr. Suwan Lertpunyaroj, Ve Wong Corporation and Ratchaburi Energy Company Limited holds

21 percent, 15 percent, 49 percent and 15 percent of its shares, respectively.

Chubu Ratchaburi Electric Services Company Limited

Location : 128 Moo 6, Phikunthong Subdistrict, Mueang District, Ratchaburi 70000 Thailand

Tel. (66) 2978 5180, (66) 3236 5740 ext. 3210 Fax. (66) 2978 5126, (66) 3236 5740 ext. 3204

Nature of business : Operate and maintain power plants




Status : Chubu Ratchaburi Electric Services Company Limited signed a deal to operate and maintain

power plants for Ratchaburi Power Company Limited for a total period of 14 years, effective from

initial operation date in June 2008. Its major shareholders are Chubu Electric Power

(Thailand) Company Limited and the Company, which holds 49.99 percent each.

Income structure of the Company, its Subsidiaries and Joint ventures in 2006 Major incomes of the Company come from dividends from Ratchaburi Electricity Generating Company Limited, whose

incomes are from the 25-year Power Purchase Agreement (PPA) it has executed with the EGAT. A basic income structure

under Ratchaburi Power Plant’s PPA can be divided into two major parts as follows.

1. Availability Payment (AP)

The Availability Payment is set up to cover all investments which include loans, loan interest, shareholders’ returns

and fixed operating expenses such as maintenance costs and administrative costs. In general, the AP will depend on whether

a power plant is ready to generate and transmit power as required by the EGAT regardless whether or not the EGAT orders

the plant to start distributing the power.

2. Energy Payment (EP)

Ratchaburi Electricity Generating Company Limited will receive the EP as soon as it generates power and transmits

the energy into the EGAT’s system. The EP consists of two parts as follows:

2.1 Fuel Payment

2.2 Variable Operating and Maintenance Payment

For an income structure of the joint venture business which invests in a power-generation business; namely, Tri Energy

Company Limited, in which Ratchaburi Gas Company Limited holds 50 percent therein, the Company’s income can be divided

into two parts – the AP and the EP, similar to Ratchaburi Electricity Generating ’s basic income structure.

For incomes of Siam Ethanol Exports Company Limited which Ratchaburi Energy holds 15 percent of its shares and

which has a capacity to produce 100,000 liters or alcohol a day or 30 million liters a year under the license to produce alcohol

for export, all incomes will come from the sale of 95 percent pure alcohol to overseas clients. Sales price will be based on

alcohol price in the world’s markets. Siam Ethanol Exports Company Limited meanwhile, will start its and running in 2007.



The Company has already paid an interim dividend for the first six months of 2006 (January-June 2006) to its

shareholders at Baht 1 a share on September 18, 2006.

2005-2006 Income Structure of the Company

Companyûs Income Types of Income Operator Shareholding 2006 2005 Ratio Baht % Baht % Incomes from sales of Ratchaburi Electricity Generating Company Limited 99.99 - AP 12,222.42 23.57 12,394.50 27.64 - EP 38,150.28 73.58 31,640.46 70.57

Service incomes Ratchaburi Electricity Generating Holding Public Company Limited* 143.19 0.28 28.06 0.06

Profit (loss) sharing in Tri Energy Company Limited 50.00 ** 834.62 1.61 468.55 1.04 joint-venture businesses Ratchaburi Power Company Limited 25.00 (96.31 ) (0.19 ) (91.56 ) (0.20 ) Siam Ethanol Exports Company Limited 15.00 (0.90 ) - (0.93 ) - Chubu Ratchaburi Electric Services Company Limited 49.99 4.43 0.01 (2.90 ) (0.01 ) SouthEast Asia Energy Limited 25.00 (14.34 ) (0.03 ) (1.15 ) -

Interest incomes Ratchaburi Electricity Generating Holding Public Company 346.55 0.67 115.67 0.26 Limited Ratchaburi Electricity Generating Company Limited 99.99 199.58 0.38 160.03 0.36 Ratchaburi Energy Company Limited 99.99 3.68 0.01 2.77 0.01 Ratchaburi Gas Company Limited 99.99 - - 0.03 - Ratch Udom Power Company Limited 99.99 0.01 - 0.01 -

Others Ratchaburi Electricity Generating Holding Public Company Limited 0.49 - 3.74 0.01 Ratchaburi Electricity Generating Company Limited*** 99.99 54.52 0.11 119.53 0.26 Ratchaburi Energy Company Limited 99.99 - - 0.02 -

Total 51,848.22 100.00 44,836.83 100.00

Dividend Payment Policy Ratchaburi Electricity Generating Company Limited has a policy to pay dividend at the 100 percent of its net profit after the deduction for legal reserve and other reserves that sqecified as conditions in the loan agreement.

Ratchaburi Electricity Generating Holding Public Company Limited has a policy to pay dividend at the portion no less than 40 percent of its net profit after the deduction of legal and other reserves.

The following are dividends that the Company has paid to its shareholders since is inception:

/1 The Company has to deduct for the legal reserve at the rate of not less than 5 percent of its annual net profit until the amount of such legal reserve is not less than 10 percent of the Company’s registered and paid up capital, or Baht 1,450 million. In 2005, the legal reserve of the Company was Baht 1,299 million, therefore, only in 2006 the Company had to deduct only Baht 151 million as another amount for such reserve. As a result, the Company’s net profit after legal and other reserves at Baht 5,955 million. /2 This number is an amount proposed for consideration and resolution from the Shareholders’ Annual General Meeting 2006, which will be held on April 20, 2007

Net profit of the Company and Net Profit after legal % of Amount of Dividend Number of RATCH Dividend per Year

its Subsidiaries (Million Baht) and other reserves Dividend Payment Paid (Million Baht) Shares (Million Share) Share (Baht) 2001 3,060 2,907 49.9 1,450 1,450 1.00

2002 4,729 4,492 48.4 2,175 1,450 1.50

2003 5,424 5,153 49.2 2,537 1,450 1.75

2004 6,487 6,162 47.1 2,900 1,450 2.00

2005 6,066 5,763 50.3 2,900 1,450 2.00

2006 6,106 5,955 /1 51.1 3,045 1,450 2.10 /2

* In 2006, the Company received development fee from Ratchaburi Power Company Limited in the amount of Baht 101.33 million as specified in the Service Agreement dated February 27, 2004. ** The Company has increased the shareholding in Tri Energy Company Limited from 37.50 percent to 50 percent, on March 9, 2005. *** The 2005 income was included with the Baht 106 Million Compensation from the Combustion Sytem improvement period



The Industry and Competition

Power Consumption In 2006, power demand in Thailand reached 141,980 gigawatt-hour, 5.3 percent higher than the previous year

(yet lower than the demand forecast by the Thailand Load Forecast Sub-Committee of 6.6 percent). One reason was related to

the Ministry of Energy’s measures and relentless campaigns for energy conservation and efficient energy consumption. The

peak load occurred on May 4, 2006 at 1.30 p.m. amounted 21,064 megawatts which 2.56 percent higher from the previous

year peak load. As of December 31, 2006, Thailand installed generating capacity totaled 27,271 megawatts out of which

15,795 megawatts belonged to EGAT, 640 megawatts import, and 10,836 megawatts purchased from local IPPs and SPPs.

Overview on Developments of IPPûs and EGATûs Projects The 1,400 megawatts coal-fired BLCP thermal power plant has started its commercial operation into the EGAT’s

system since October 2006. In addition, there are two Combined-Cycled Power Plants currently under construction; namely,

the 1,400-megawatt Ratchaburi Power’s Power Plant (held 25 percent by Ratchaburi Alliances Company Limited) and the

1,400-megawatt Gulf Power Generation Power Plant. Besides, EGAT has been obtained an approval to construct four

Combined Cycle Power Plant Projects, with total generation of 2,800 megawatts. As a result, the total generation capacity of

projects currently under construction is around 5,600 megawatts and the commercial operation dates of all projects are

scheduled within 2010.

Currently, the Company is negotiating to invest with expected 25 percent shareholding in several overseas projects,

which have signed agreements to sell their power to EGAT. These projects include the 615-megawatt Nam Ngum 2 Hydro

Power Plant and the 440-megawatt Nam Ngum 3 Hydro Power Plant in Lao PDR. In addition, the Company is ready to submit

a bid in the upcoming solicitation for IPP power plants in 2007 as set by the Ministry of Energy. The Company has undertaken

project feasibility studies both at the existing location and new sites for being most responsive to the bidding requirements

and conditions. The Company’s expansion project on the 725-megawatt Ratchaburi Power Plant Block 4 has been prepared

with common facilities that will lead to competitive generating cost and eventually benefit the end users.

Energy Policy The National Energy Policy and Development Plan have been approved by the National Energy Policy Council (NEPC) and

the Cabinet on November 6, 2006 and November 21, 2006 respectively. The substance related to power is summarized as

follows:

1. Restructure and Improve the Energy Industry Management so as to optimize the efficiency of the national

energy management.

• Speed up the drafting and enforcement of the Energy Act with a view to distinctly separating the policy-making

features from the regulatory ones. The regulation of the energy industry will cover the electricity and natural gas industry,

and an Independent Regulatory Body will be established

2. Procure Energy so as to ensure sufficiency and security of energy supply.

• Revise Thailand's Power Development Plan:

o Adjust the load forecast to be more suitable and correspond with the economic conditions so as to ensure

appropriate investment in the power sector and hence adequate supply to meet the demand.

o Promote greater participation of the private sector in power generation by accelerating the issuance of

a request for proposals for power purchase from Independent Power Producers (IPPs).

o Diversify fuel sources and types for power generation, including power purchase from neighboring

countries, to ensure energy security and price stability, taking into account the generation costs,

environmental impact and consumers’ benefits.

RATCH2006

The Industry & Competition



3. Promote Energy Conservation and Energy Efficiency

• Support the purchase of power from power producers using the cogeneration system, which is an efficient system

for power generation, via the Regulations for the Purchase of Power from Small Power Producers (SPPs) and the Regulations

for the Purchase of Power from Very Small Power Producers (VSPPs) at a suitable amount of purchasing capacity.

4. Promote Alternative Energy Suitable for Thailand in order to diversify fuel types and reduce dependency on

energy import.

• Support the purchase of power generated from renewable energy, such as agricultural residue, industrial

wastes, biogas, garbage, wind and solar energy, in a suitable proportion and with appropriate purchasing prices by speeding

up the announcement on the increase of purchasing capacity from VSPPs and the establishment of purchasing price adders

from the prices specified in the Regulations.

• Establish a public organization to carry out the promotion of renewable energy utilization in the communities

to bring about tangible and sustainable outcome as its implementation would be flexible and efficient.

• Support the policy study, research and development on alternative energy so as to determine practical

guidelines on alternative energy development of the country.

5. Establish the Energy Price Structure so that energy pricing would be transparent, fair and would reflect the

actual costs.

• Revise the calculation method of the Fuel Adjustment Charge (Ft) to be more appropriate and fairer, allowing

the pass-through of fuel costs and power purchasing prices under efficient operation.

6. Establish Measures Pertaining to Clean Energy to reduce the environmental impact resulting from various

forms of energy industry operation.

• Attach importance to the reduction of environmental impact resulting from energy business development by

entrusting joint responsibility for the costs of environmental protection and solution to energy producers, distributors and

consumers.

• Comply with the environmental commitments that have been ratified by Thailand in the international forums.

• Join the international cooperation in implementing environmental measures pertaining to the energy industry

operation to enhance sustainable energy development.

• Forge ahead the Clean Development Mechanism (CDM) to promote efficient use of energy and to enhance

greater use of renewable energy.

7. Promote the Private Sector and General Public Participation in Policy-Making to create understanding and

cooperation in energy development of the country.

• Promote participation in determining energy policy and measures so that energy development would be sustainable.

The policy also covers the study and research to formulate energy management that is sustainable and complies with

the philosophical principle of Sufficiency Economy in energy procurement, sustainable energy development, energy efficient

consumption, and promotion of competition in energy business.



TOTAL EGAT GENERATION REQUIREMENT January 2007 (Adjusted April 2006) : Base Case

Peak Energy Year MW Increase GWh Increase

Load Factor

MW % GWh % %

Source : Ministry of Energy

Forecast

2006 (2549) 21,064 527 2.56 141,980 7,153 5.30 76.95

2007 (2550) 22,567 1,503 7.14 151,019 9,040 6.37 76.39

2008 (2551) 24,011 1,444 6.40 159,348 8,329 5.52 75.76

2009 (2552) 25,279 1,269 5.28 168,300 8,952 5.62 76.00

2010 (2553) 26,690 1,411 5.58 177,638 9,337 5.55 75.98

2011 (2554) 28,124 1,433 5.37 186,694 9,056 5.10 75.78

2012 (2555) 29,810 1,686 6.00 197,816 11,122 5.96 75.75

2013 (2556) 31,569 1,760 5.90 209,568 11,752 5.94 75.78

2014 (2557) 33,401 1,832 5.80 221,851 12,283 5.86 75.82

2015 (2558) 35,467 2,066 6.18 235,637 13,786 6.21 75.84

2016 (2559) 37,637 2,170 6.12 250,060 14,423 6.12 75.85

2017 (2560) 39,816 2,179 5.79 264,561 14,501 5.80 75.85

2018 (2561) 42,049 2,233 5.61 279,505 14,944 5.65 75.88

2019 (2562) 44,336 2,287 5.44 294,743 15,239 5.45 75.89

2020 (2563) 46,737 2,401 5.42 310,722 15,979 5.42 75.89

2021 (2564) 49,213 2,476 5.30 327,182 16,460 5.30 75.89

Average Growth

2007-2021 - 1,877 5.82 - 12,347 5.72 -

Thailand Load Forecast Subcommittee

January 26, 2007

Load Forecast Load forecast by Thailand Load Forecast Sub-committee (updated in January 2007) is depicted as follows:



The Ministry of Energy has set up a framework on the solicitation from IPPs in 2007 where it will take into

consideration an increasing demand, purchase volume, bidder qualifications and promotion of non-natural gas-fired.

In addition, the conditions on environment and community responsibilities will be added to the bidding documents.

Currently, competitions in the power business is getting more fierce since all operators require continuous growth

and business expansion while the demand growth tends to be at diminishing rate and the policies strictly enforce on

efficient energy, alternative energy and renewable energy consumption taking more concerns on environmental impacts and

communities quality of life. The Company realizes the situation and has set its policy to accommodate this tough

environment. It pledges to maintain the community’s peace, hold on to environmental and social responsibilities and to be

a trusted member of the community. Also, it will persist on safety and healthy workplace to obtain confidence from all

stakeholders, at large and on equal basis.

New Power Plant Gas Turbine and

Reserved

Year

Natural Gas Coal

Hydro Power RPS Imported Total

Margin

Megawatt Megawatt

Megawatt Megawatt Megawatt Megawatt

%

2011 700 - 500 35 597 1,832 16.9

2012 1,400 - - 70 - 1,470 15.6

2013 700 1,400 - 105 990 3,195 17.2

2014 700 700 - 70 - 1,470 15.6

2015 700 1,400 - 105 400 2,605 16.8

Total 4,200 3,500 500 385 1,987 10,572

2016 700 700 - 70 450 1,920 15.7

2017 700 1,400 - 105 460 2,665 15.4

2018 1,400 1,400 - 140 490 3,430 15.9

2019 1,400 1,400 - 140 510 3,450 15.4

2020 1,400 700 460 128 540 3,228 15.1

2021 700 1,400 230 117 560 3,007 15.1

Total 6,300 7,000 690 700 3,010 17,700

Grand Total 10,500 10,500 1,190 1,085 4,997 28,272

Source : Ministry of Energy

Draft Power Development Plan The Ministry of Energy proposed on November 15, 2006 a newly revised draft Power Development Plan in which the portion

of fuel to be consumed by new power plants and the power purchase from foreign countries have been preliminary determined

as follows; 40 percent natural gas-fired, 40 percent coal-fired, and 20 percent import. Details are as hereunder illustrated:



The Company’s Board of Directors has agreed that when operating its business the Company may experience

a variety of risk factors. However, to meet the international standards of risk management through good corporate

governance, which will lead to end outcome in customer satisfaction and preferable returns for shareholders and all

stakeholders, the Company’s Board of Directors has set the philosophy and policy for risk management as follows:

Risk Management Philosophy “The Company is confident in and aware of the importance of effective risk management and control, which will

enable the Company to run its business with stability, continuity, and an acceptable level of risk. It is used as a management

tool to maximize the Company’s success opportunity, while minimizing the possibility of failure and loss, and reducing

the uncertainty in the Company’s overall performance that will eventually lead to the Company’s objectives achievement.”

Risk Management Policy 1. Promoting the culture of risk management to encourage understanding, awareness and joint responsibility

in controlling the impact towards the Company in the company-wide management and operations.

2. Providing sufficient and accepted international standard process, framework and measures for indicating,

analyzing, assessing, prioritizing, managing, controlling, monitoring, reporting, evaluating and communicating the

information of risks on a continuous, regular and company-wide basis.

3. Measuring the risk in terms of quality, such as the Company’s reputation and image, and in terms of quantity, such as

loss, revenue decrease, and expense increase based on risk exposure and impact.

4. Setting acceptable risk limit to control the magnitude of damages, and also identifying incidents or risk degrees

that are warning signs for the employees to perform any action to mitigate it within such limit.

5. Constructing written operational manuals for all executives and employees to abide by, in order to control the

operational risk.

The Company’s Board of Directors appointed the Risk Management Committee comprising three directors, to be in

charge of screening policy, setting strategies and risk management framework, controlling, monitoring, maintaining risk level,

and effectively managing risks of the entire organization.

The Company has established a Risk Management Working Group (Working Group) comprising the Company’s

top executives. The Working Group is responsible for analyzing and assessing risks, managing risks to comply with

the policy set by the Company’s Board of Directors, and preparing quarterly risk management report to the Company’s

Board of Directors.

In recent organization restructuring, the Risk Management Department was established to coordinate risk

management at functional level. The Company also provided a workshop on risk management for employees from every line

function of the Company’s Group.

In 2006, the Risk Management Committee reviewed both internal and external factors that may affect the Company’s

ability to achieve its goals and agreed to classify the Company’s risks into three categories as follows:

1. Investment Risks mean the risks arising from project investment.

2. Financial Risks mean the risks from lack of liquidity and insufficiency of capital to invest in a project.

3. Management risks mean the risks occurred from mistakes in management, operational procedures, human

errors and internal factors or situations.

Risks from Business Operation

RATCH2006

Risks from BusinessOperation



Investment Risks The Company has a policy to invest in electricity generating and related businesses, taking into account the return

for shareholders, employees and the public.

To examine risk factors on the Company’s investment, the process is divided into four phases as follows:

Phase 1: Project Selection

The Company put much importance in considering risk factors related to the project selection. Those factors to be

reviewed include economic, social, and political situations as well as technological changes. The projects that are in line

with the Company’s policies and strategies will be selected.

Phase 2: Strategic Partner Selection

In deciding investment in each project, the Company thoroughly and prudently studied the feasibility and returns

on investment. In selecting strategic partner, the Company would consider financial risks, conflict of interest and the policies

of the potential strategic partner in order to ensure that they are in line with the Company’s investment policies and

strategies. Roles and responsibilities of each party were clearly identified in order to create synergy. In addition, in this phase,

the Company has to consider risks related to environment impact, financial support that enables the project to achieve its

goal, all agreements with business partners, and public and community acceptance.

Phase 3: Project Development

The Company has four projects under development as follows:

• The construction of Combined-Cycle Power Plant Project of 1,400 megawatt generating capacity in the

Ratchaburi Power Plant’s area. The project is operated by an affiliated company, Ratchaburi Power Company

Limited.

• The construction of an Alcohol-manufacturing Plant of 30 million liters per year production capacity.

The project is operated by an affiliated company, Siam Ethanol Exports Company Limited.

• The construction of a Hydro Power Plant – Nam Ngum 2 of 615 megawatt generating capacity. The project

investment is made through SouthEast Asia Energy Limited.

• The Flare Gas Fired Power Plant Project of 1.75 megawatt generating capacity. The project investment is made

through Ratchaburi Energy Company Limited.

The four projects are exposed to some risks that the project might not be completed on schedule that would cost

the Company extra expenses. The Company has closely followed up the project’s progress on a regular basis. The Company has

nominated its representatives to be members of the Board of Directors or management of each joint venture or affiliate

company to monitor the progress, and take part in setting regulations and directions of the project effectively, in order to

control the budget spending and carry on the construction plan.

Phase 4: Commercial Operations

There are two projects already operated; the first project is 3,645 megawatt Ratchaburi Power Plant and the second

one is a 700 megawatt Combined-Cycle Power Plant operated by Tri Energy Company Limited (350 megawatts out of which

belongs to the Company Group). While Ratchaburi Electricity Generating Company Limited and Tri Energy Company Limited

are responsible for electricity generating and operational risk management in order to maintain technical characteristics

including Contracted Capacity and Contracted Operating Characteristics (COC), the Company has responsibility to follow up,

review, supervise and provide support to ensure risk management complies with international standards, which will enable

the Company to achieve its returns on investment target.



The Company’s major income is generated from the operations of Ratchaburi Electricity Generating Company

Limited, the Company’s major subsidiary that has a long-term power purchase agreement with EGAT, which already includes

the availability payment (AP) and energy payment (EP) that covers all related risks. Therefore, the Company is confident

of having constant income as projected throughout the agreement period.

Although the Company the possibility that Ratchaburi Electricity Generating Company Limited may not achieve its

targets is very low, the subsidiary company still have to manage its own risks as follows:

1. Availability Payment (AP)

According to the Power Purchase Agreement (PPA), EGAT is obliged to pay the AP which is in line with the agreed

COC while Ratchaburi Electricity Generating Company Limited is obliged to maintain technical characteristics and liable for

penalty payment in case availability does not meet the contracted level.

However, to minimize the risk of the revenue reduction that may occur by the penalty payment deducted from the

full AP, the certain limitation on such penalty was defined in the PPA. It was stated in the PPA that in case the fine is less than

the minimum payment (or 0.5 percent of the full annual AP), the fine is not subject to be paid. At the same time, the fine shall

not exceed the maximum charge (or 2 percent of the full annual AP).

2. Fuel Prices

The changes of natural gas prices do not affect Ratchaburi Electricity Generating Company Limited since the

calculation of Energy Payment (EP) under the PPA is based on the actual price of natural gas each month. EGAT as the

purchaser will take risk from the fluctuation of energy prices. However, Ratchaubri Electricity Generating Company Limited

must maintain the actual Heat Rate at the level below or equivalent to the rate stated in the PPA.

3. The Heat Rate of the Plants

Ratchaburi Electricity Generating Company Limited will receive a Fuel Payment, which is a part of the EP, in

accordance with the Heat Rate of the plants (the rate of utilizing heat in generating one unit of electricity) specified in the

PPA. The received EP will be recorded as the fuel costs in operating the power plants. Although the Heat Rate specified in the

PPA covers the margin to compensate the depreciation of machines and equipment in the long run, Ratchaburi Electricity

Generating Company Limited still holds certain risk on the Heat Rate in case that the actual Heat Rate is higher than the rate

stated in the agreement. Consequently, Ratchaburi Electricity Generating Company Limited will be liable for the additional

fuel costs.

4. Fuel Quality

The quality of fuel is clearly specified in the Gas Sale Agreement (GSA). In case that PTT Public Company Limited

(PTT) supplies fuel with the quality lower than that specified in the GSA, Ratchaburi Electricity Generating Company Limited

is entitled to reject that fuel, and it is regarded that PTT is unable to deliver the qualified fuel. Ratchaburi Electricity

Generating Company Limited does not take risk from such unqualified fuel supplied by PTT or from its rejection of the

unqualified fuel since the cases do not effect the availability under the PPA.

5. Operational Cost

According to the PPA, the AP will be adjusted into 2 cases; the expenses in Thai baht will be adjusted accordingly

to the Thai Consumer Price Index (CPI), and the expenses in US dollars, such as expenses on imported spare parts and

equipment, will be adjusted accordingly to the Manufacturers Unit Value Index (MUV Index) and to the exchange rates as

EGAT will absorb the risk for the extra expenses as specified in the PPA. Ratchaburi Electricity Generating Company Limited,

however, is liable for the risk in case the actual expenses adjusted and higher than the Thai CPI or the MUV Index.

Nevertheless, only for the expenses on imported spare parts, if the adjusted prices are higher than the MUV Index, EGAT will

share the responsibility for extra expenses in the proportion stated in the agreement.



To mitigate the risk caused by the increasing prices of the plant spare parts or by the more spare parts employed

than the estimated expense for improving safety and efficiency of gas turbine, Ratchaburi Electricity Generating Company

Limited entered into the Contractual Services Agreement (CSA) with the Joint Ventures between General Electric

International Operation Co., Inc and GE Energy Parts, Inc. The CSA of USD 451 million is effective since the signed date until

the final operating date of the gas turbine according to the PPA.

6. Power Plant Operation and Maintenance

According to the Power Plant Operation and Maintenance Agreement (OMA), Ratchaburi Electricity Generating

Company Limited has outsourced the works to EGAT with the conditions concerning incentive and penalty that were

mutually agreed and set in order to control the EGAT’s operation based on the key factors namely the Availability Payment

(AP) and Plant Efficiency.

In case EGAT’s operation causes the power plant the less in AP or the less in Plant Efficiency, Ratchaburi Electricity

Generating Company Limited will receive a fine from EGAT as specified in the OM, which, however, may not cover such a loss

in revenue as stated in the PPA. Nevertheless, since EGAT is specialized and experienced in the operation and maintenance of

power plants in Thailand for more than 30 years, it is of very less opportunity that such incident occurs, except that there in

any accident or machinery malfunction.

In case of force majeure, Ratchaburi Electricity Generating Company Limited has an insurance covering all risks

that may occur to machines, property and people, including the third party.

7. Political Risks

7.1 The Acquisition by Government Agency

The acquisition by a governance agency, whether it is the physical acquisition of the power plant or the share

acquisition, will be considered the Force Majeure resulted from the Government action under the PPA and Ratchaburi

Electricity Generating Company Limited still have the right to receive the AP. In case the acquisition prolongs more than one

year, EGAT has the right to revoke the PPA but it has to pay the revocation fee equivalent to the total sum of the Company’s

remaining liabilities, retained earnings, reserved funds and shareholders’ dividend.

7.2 Legislation Changes

In case the changes of laws affect the capital, revenue, or expenses of Ratchaburi Electricity Generating

Company Limited in the amount exceeding the number specified in the PPA, EGAT and Ratchaburi Electricity Generating

Company Limited will jointly discuss the adjustment of AP and EP. If legislation changes affect the company’s ability to abide

by the PPA, the situation will be considered as an uncontrollable situation incurred by the government’s action. The Company

will continue to be entitled to receive the AP.

Financial Risk 1. Financial Liquidity

In financial liquidity management, the Company has taken into account the sufficiency of funds for project

investment and the Company’s operations by preparing the financial plans, cash flow projection of dividends from

subsidiaries and joint venture business. The business operations have been monitored closely and the financial projection

and plans have been reviewed on a regular basis in order to ensure that the Company’s investment plan has been in line with

the financial market situation. The Company has continuously monitored the financial market and other financial instruments

to minimize financial cost and mitigate any associated risk that might occur.



2. Debt Service Capability

Ratchaburi Electricity Generating Company Limited, a subsidiary of the Company, has secured loans in Thai baht

from six domestic financial institutions under the loan agreement dated June 23, 2005, which requires the Ratchaburi

Electricity Generating Company Limited to repay the principal and interests until 2015. As of December 31, 2006, the accrued

balance under the agreement is Baht 23,242,996,000. On July 29, 2005 the Ratchaburi Electricity Generating Company

Limited issued and offered debenture amount of Baht 10,000,000,000 comprising three-year and five-year debentures. As of

December 31, 2006, the outstanding balance of the debenture is Baht 6,500,140,000. According to the loan agreements, the

subsidiary company must maintain the Debt Service Coverage Ratio at no less than 1.1 : 1. In case Ratchaburi Electricity

Generating Company Limited fails to maintain the Debt Service Coverage Ratio or the loan agreements, the creditors will fine

or confiscate the security, which may affect its operations. Ratchaburi Electricity Generating Company Limited has already

prepared for such risks by allocate financial reserves for loans and interest payment. However, since the first initial drawdown,

Ratchaburi Electricity Generating Company Limited has never failed to meet the loan covenance in all respect resulting in no

such kind of default according to loan agreement.

3. Interest Rate

The interest rate, as specified in the long-term loan and the five-year debentures (for the interest paid in the

3rd - 5th year) of Ratchaburi Electricity Generating Company Limited, is based on MLR rate. According to the Power Purchase

Agreement (PPA) entered into with EGAT, Ratchaburi Electricity Generating Company Limited will receive its revenue

with MLR indexation from EGAT, resulting in no interest rate risk.

4. Exchange Rate

Though income, loans and most of the expenditures of Ratchaburi Electricity Generating Company Limited are

in Thai baht, there is exchange rate risk arising from the purchase of imported equipment and spare parts. However, EGAT

has compensated to the exchange rate volatility for importing cost as a part of revenue under the PPA entered into with

EGAT.

Management Risk 1. Human Resource

The Company realizes that employees are valuable resources and, therefore, manages well the risks related to its

employees. The Company ensures effective recruitment and selection process, provides appropriate and fair remunerations

and benefits to retain qualified human resource, develops human capability, and regularly reviews work process and system

to support the Company’s business expansion.

In 2006, the Company launched an organizational restructure to be in line with the Company’s business

expansion. The Company continuously provided training to its employees at all levels according to the annual human

resource development plan to increase their capability and potential. The action is to increase capability of its employees in

all levels to be able to replace vacancies when needed and appropriate.

The Company studied and reviewed its remuneration structure in order to retain and motivate qualified

employees and to be competitive in the labour market. The Company also improved its Human Resource Information System

(HRIS) and performance appraisal system in order to ensure that its human resource management effectively supports the

Company’s policy.



2. Corporate Communications

The Company has communicated, educate and create understanding on electricity generating plant business to

community and consistently operate community relations activities. The Company has also been involved in the

development and management of public projects through the Ratchaburi Power Plant’s Community Development Project

in order to promote quality of life in nearby communities and society at large.

For risk related to corporate communication that may affect the Company’s operations, the Company highly

emphasize on fair, consistent and equal information disclosure to the public in accordance to the corporate governance

principles of listed companies. In 2006, the Company focused on educating the public and community on power business

operations and electricity generating activities. Good understanding among the local communities on electricity generating

process has been well established, resulting in greater cooperation in community development in the future.

To promote continuity in the development of surrounding communities, the Company has paid high importance

to sustainable development. It has support the Population and Community Development Association (PDA) in the

implementation of the Ratchaburi Power Plant’s Community Development Project in improving quality of life, promoting

career development and upgrading the living of surrounding communities, which resulted in stronger and healthier

communities, better quality of life and better public perception towards the Company’s business and operations.

In new project development, the Company has a clear policy that it will closely participate in community projects,

starting from project initiation. The development of these projects are mainly based on community benefits in order to

create mutual benefits and acceptance of such project development, which strongly promotes sustainable community

development in parallel to the Company’s project development.



According to the government’s policy encouraging the private sector to compete in power generation industry,

it is expected that in the first quarter of 2007, the Ministry of Energy will issue a Request for Proposal (RFP) for Independent

Power Producers (IPPs) to submit a power purchase proposal to the Electricity Generating Authority of Thailand (EGAT),

the sole power purchaser in Thailand. The total power purchased from the IPPs will be 3,000-4,000 megawatts and

commercial operation will start between 2011-2013.

Aside from buying power domestically, the Thai Government also promotes the power purchase from neighboring

countries such as Lao PDR, Myanmar, Malaysia, and China. On December 20, 2006, the Thai and Lao PDR governments signed

an Memorendum of Understanding (MOU) where electricity purchase from Lao PDR will be increased from 3,000 megawatts

up to 5,000 megawatts. The power purchase from Myanmar is expected to be approximately 1,500 megawatts. As for Thailand

and Malaysia, the current purchase is at 300 megawatts and it is expected to be increased up to 600 megawatts in the near future.

At the same time, the government also promotes renewable energy power plant projects such as biomass, wind and

solar energy. There will be a solicitation to purchase electricity from renewable energy power plants and dispatching

regulations, plant characteristics and configurations and tariffs will be specially determined for renewable power plants.

In addition, the power purchase from Very Small Power Producers (VSPPs) will be increased from one megawatt to no more

than 10 megawatts.

As a result of the said government’s policy, the Company, as an IPP, perceives investment opportunities to expand

its generating capacity domestically and internationally to increase returns to the shareholders. The modern, safe and

environmental-friendly production process is focused so that the Company has determined the framework for its future

power production and distribution projects as follows:

1. IPP Power Plant Projects The Company is prompt and prepared for the new IPP power plant bidding. It has processed a potential site selection,

conducted feasibility studies and an environment impact assessment, prepared a financial plan and undertaken community

relations work to gain acceptance from local people. To participate in the 2007 IPP bidding, the Company conducted project

feasibility studies and new project development plan as follows:

1.1 Ratchaburi Combined Cycle Power Plant Block 4

The 700-750-megawatt Ratchaburi Combined Cycle Power Plant Block 4 uses natural gas from Myanmar as its

primary fuel. The plant is one of the most well prepared since it has furnished with common facilities such as a demineralization

plant, a wastewater treatment system and utility system. The project’s Environment Impact Assessment (EIA) report was

approved by the Natural Resource and Environment Policy and Planning Office on March 7, 2005.

1.2 Tri-Energy Combined Cycle Power Plant Block 2

Ratchaburi Gas Company Limited, the Company’s subsidiary, co-developed the Tri-Energy Power Plant, Block. 2,

with Texaco Thailand Energy Company One, an affiliate of Chevron Corporation, in the Tri-Energy Power Plant compound in

Ratchaburi Province. The area is equipped with fundamental infrastructure and therefore ready for project development.

At the same time, the project’s EIA report was approved by the Natural Resource and Environment Policy and Planning

Office on November 10, 2005.

1.3 New Combined Cycle Power Plants in the Central and Eastern Region of Thailand

The Company has selected a potential site in the Central and Eastern part of Thailand to develop two natural

gas-fired Combined Cycle Power Plants, which critical factors for power generation for example siting, size and description

of area, rules and regulations of land use in the area, possibility for area development, and support from local community, will

be taken into consideration. Then, feasibility studies will be made on both technical and financial respects including the

selection of Engineering Procurement and Construction (EPC) contractor. Currently, the project is being studied for its

environment impact assessment (EIA).

Future Projects

RATCH2006

Future Projects



1.4 A Coal-Fired Thermal Power Plant in the Southern part of Thailand

Since as much as 70 percent of the country’s power plants rely on natural gas as fuel for generation, the

government has a policy to increase the portion of Coal-Fired Power Plants for the sake of national power system security.

The Company has searched for potential sites both in Thailand and in neighboring countries to develop a coal-fired power

plant. The area will be selected based on community support and acceptance as the first prioritized factor before considering

other factors related to power generation. The project is currently being studied on its technical and pricing soundness.

2. Overseas Power Plant Projects The Company is seeking investment opportunities in Lao PDR, Myanmar and Vietnam to build a power plant of which

generated power may be either sold to Thailand or in those countries. At present, there is a plan to develop the following

power plants in neighboring countries:

2.1 The Nam Ngum 3 Hydro Power Plant

A group of project developers which the Company plans to hold 25 percent of its shares entered into an MOU

with EGAT on December 18, 2006 to purchase power from the Nam Ngum 3 Hydro Power Plant. The MOU contains important

criteria for further discussion in order to come up with a power purchase agreement. The project, which will be situated in the

Northern part of Lao PDR, has a total production capacity of 440 megawatts and is expected to complete its construction and

commercially operate by early 2013. The plant will enter into a long-term power purchase agreement with EGAT for 27 years.

2.2 A Power Plant in the Southern part of Lao PDR

The Company and the firm that had an MOU with the Lao PDR Government is studying the feasibility to develop

several projects concurrently of which the generated power will be sold to the lower Northeastern provinces of Thailand.

When technical and financial studies reveal that the project is feasible, the Company will negotiate with EGAT on the tariff

and on the long term power purchase agreement.

2.3 Power Plant Projects in Myanmar and Vietnam

The Company is seeking an opportunity to invest in a Combined Cycle Power Plant and a Hydro Power Plant in

Myanmar of which the generated power will be sold to Thailand.

As for Vietnam, the Vietnamese Government is currently promoting foreign investors to invest in power sector

since domestic supply cannot meet with local demands. The promotion includes exemptions of import duty on machines

and equipment and income tax. The Company is currently negotiating with a co-investor in Vietnam.

3. Renewable Energy Power Plants Renewable energy is clean, sustainable and reduces environmental impacts. It also promotes further development of

sustainable energy and decreases dependence of imported energy. The Company ranks investment in renewable energy

power plant among its priorities as it is one of the government’s major policies and it has studied a feasibility to develop

a wind power plant and a solar thermal power plant, which can be summarized as follows:

3.1 Wind Power Plant

The Company has studied sources of wind power and monitored wind power generation technology based on

wind velocity in Thailand. It also keeps updated with the technology of wind turbines suitable for speeds of wind found in

Thailand as well as calculates the cost of wind power generation to determine a possibility to develop it as a source of future

energy to respond to the government’s renewable energy development policy.

3.2 Solar Thermal Plant

The Company plans to expand its investment into an alternative energy business, which will be based on highly-

efficient technology and should be a long-term investment to increase its competitiveness in the long run. So far, it has

studied and looked into several alternative energy projects for future development opportunities.



For fiscal year ending December 31, 2006

Value Connected Transaction Related parties (Million Reasons Baht)

Transaction with Related Companies

Ratchaburi Electricity Generating Holding Public Company Limited 1. Provision Management Service Agreement 1.1 Providing services related to internal audit, legal, secretariat Ratchaburi 2.66 Ratchaburi Electricity Generating Co., Ltd. does not of the Board of Directors, information technology and Electricity have these functions while the the Company can financial management Generating Co., Ltd. provide. The service fee is charged on actual time • In 2006, service income was Baht 2.66 Million (agreement signed spent based on market rate. • As of December 31, 2006, other account receivable and on January 4, 2006) management service receivable for December 2006 were Baht 0.27 Million

1.2 Providing services related to internal audit, legal, secretariat Ratchaburi Energy 0.05 Ratchaburi Energy Co., Ltd. does not have experts of the Board of Directors, information technology, Co., Ltd. with these skills while the Company can provide. and financial management (agreement signed The service fee is charged on actual time spent • In 2006, service income was Baht 0.05 Million on January 4, 2006) based on market rate.

1.3 Providing management service by assigning executives Chubu Ratchaburi 5.00 Chubu Ratchaburi Electric Services Co., Ltd. to Chubu Ratchaburi Electric Services Co., Ltd. Electric Services requests for the service and the Company has an as the Managing Director Co., Ltd. expert in this area. The service fee is based on • In 2006, service income was Baht 5.00 Million (agreement signed market rate for the person is such position. • As of December 31, 2006, other account receivable and on January 1, 2006) management service receivable for December 2006 were Baht 0.45 Million

1.4 Providing engineering service to the power generating from Ratchaburi Energy 0.30 Ratchaburi Energy Co., Ltd. does not have the function. associated gas power plant project to Ratchaburi Energy Co., Ltd. Co., Ltd. The service fee is similar to the market rate at Baht • In 2006, service income was Baht 0.30 Million (agreement signed 0.02 Million per month (excluding VAT) additional • As of December 31, 2006, other account receivables and on May 23, 2006) with other actual expenses. management service receivable for December 2006 were Baht 0.02 Million

1.5 Assigning three representatives to Tri Energy Co., Ltd. Tri Energy Co., Ltd. 19.70 Tri Energy requests for the service. The service fee as the President, Accounting and Finance Manager and (agreement signed is based on market rate, which according to the Administration and Contract Management Manager on November 14, greement starts at Baht 1.42 Million per month • In 2006, service income was Baht 19.70 Million 2006) (excluding VAT) and increases 6 percent per year. • As of December 31, 2006, other accounts receivable and management service receivable for November and December 2006 were Baht 1.81 Million

1.6 Providing internal audit, secretariat of the Board of Directors, Siam Ethanol Exports 0.35 Siam Ethanol Exports does not have these legal and accounting and finance services to Siam Ethanol Co., Ltd. (agreement functions. The service fee is charged on actual hour Exports Co., Ltd. signed on January spent based on market rate, which is Baht 0.03 • In 2006, service income was Baht 0.35 Million 4, 2006 and March Million per month (excluding VAT) additional with • As of December 31, 2006, other accounts receivables 1, 2006) other actual expenses. and management service receivable for December 2006 were Baht 0.03 Million

1.7 Assigning an executive to Ratchaburi Power Co., Ltd. Ratchaburi Power 3.00 Ratchaburi Power Co., Ltd. requests for the service. as its financial manager Co., Ltd. (agreement The service fee is based on market rate at • In 2006, service income was Baht 3.00 Million signed on March Baht 0.30 Million per month (excluding VAT). 1, 2006)

1.8 Assigning two persons to SouthEast Asia Energy Ltd. SouthEast Asia 3.40 SouthEast Asia Energy requests for the service. to work in engineering and finance units Energy Ltd. The service fee is based on market rate at • In 2006, service income was Baht 3.40 Million (agreement signed Baht 0.32 Million per month (excluding VAT). • As of December 31, 2006, account receivable and on April 10, 2006) management service receivable for December 2006 were Baht 0.34 Million

RATCH2006

Transaction with Related Companies



Value Connected Transaction Related parties (Million Reasons Baht) 1.9 Hiring Ratchaburi Energy Co., Ltd. to monitor the design Ratchaburi Energy 0.36 The Company does not have the function while

and construction of Nam Ngum 2 Hydro Power Plant Co., Ltd. Ratchaburi Energy Co., Ltd. can provide. The service

for two months from January-February 2006 (agreement signed fee is charged according to the agreement

• In 2006, the service fee was Baht 0.36 Million on January 17, 2006) at Baht 0.36 Million per month (excluding VAT),

which is similar to the market rate.

2. Public relations Service Agreement for Ratchaburi Power Ratchaburi Power 10.40 The Ratchaburi Power Plant Communication

Co., Ltd. Co., Ltd. Center provides publicity services to Ratchaburi

• In 2006, service income was Baht 10.40 Million (agreement signed Power Co., Ltd. by charging actual expenses as

• As of 31 December 2006, account receivable and on 1 June 2004) agreed which is fair and reasonable.

management service receivable for December 2006

were Baht 6.11 Million

3. Agreement between Ratchaburi Power Co., Ltd.’s Ratchaburi Power 101.33 The Company has operated the Ratchaburi Power’s

shareholders, in which the Company receives project Co., Ltd. Power Plant construction until financial close

development fee (agreement signed period. All shareholders will receive the fair and

• In 2006, project development income was Baht 101.33 Million on February 27, reasonable project development fee according

2004) to their investment.

4. The Company’s loan extension to subsidiaries

4.1 Loan extended through promissory notes to Ratchaburi Ratchaburi 0.83 Ratchaburi Electricity Generating Co., Ltd. needed

Electricity Generating Co., Ltd. Electricity short-term loans. Interest rate charge was based on

In 2006, loans extension details are: Generating Co., Ltd. Siam Commercial Bank Plc.’s one-year fixed deposit

• As of June 30, 2006, total amount was Baht 1,285 Million (the Board of for corporate customers plus one percent,

(Repaid on July 3, 2006) Directors’ which is fair and reasonable.

• As of August 1, 2006, total amount was Baht 200 Million resolutions

(repaid on August 2, 2006) No. 11/2005 and

• As of October 31, 2006, total amount was Baht 950 Million 6/2006)

(repaid on November 1, 2006)

• In 2006, interest income was Baht 0.83 Million

4.2 Loan extended to Ratchaburi Gas Co., Ltd. Ratchaburi Gas 28.07 The loan was used to invest in Tri Energy Co., Ltd..

through promissory notes. The total loan as of Co., Ltd. Interest rate charge was based on Siam Commercial

December 31, 2006 was Baht 360.20 Million (the extraordinary Bank Plc.’s one-year fixed deposit for corporate

• In 2006, interest income was Baht 28.07 Million shareholders’ customers plus one percent, which is fair and

• As of December 31, 2006, other account receivables meeting resolution reasonable.

and interest receivable were Baht 1.18 Million No. 1/2003 and the

Board of Directors’

resolution No. 2/2005)

4.3 Loan extended to Ratchaburi Power Co.,Ltd. Based on Ratchaburi Power 3.39 The loan was used to pay for project development

25 percent equity, loan was provided within Baht 850 Co., Ltd. (the Board before long-term loan from financial institute was

Million limit. From 2004-2006, Baht 649.56 Million was of Directors’ disbursed. Loan condition included interest rate,

borrowed and was fully repaid on March 1, 2006. resolution similar to the financial institutions’ loan condition.

• In 2006, interest income was Baht 3.39 Million No. 11/2005)

4.4 Loan extended to Ratch Udom Power Co., Ltd. Ratch Udom Power 2.78 The loan was further extended to Ratchaburi

through promissory notes. As of December 31, 2006, Co., Ltd. (The Board Alliancs Co., Ltd. for investing in Ratchaburi Power

the total amount was Baht 143.83 Million of Directors’ Co., Ltd.. Interest rate charge was based on Siam

• In 2006, the interest income was Baht 2.78 Million resolution Commercial Bank Plc’s one-year fixed deposit for

• As of December 31, 2006, other account receivable No. 2/2006) corporate customers plus one percent, which is

and interest receivable Baht 2.78 Million reasonable.



Value Connected Transaction Related parties (Million Reasons Baht) Ratchaburi Electricity Generating Co., Ltd.

5. Power Purchase Agreement – Ratchaburi Power Plant EGAT (agreement 50,372.70 Ratchaburi Electricity Generating Co., Ltd. has to

Ratchaburi Electricity Generating Co., Ltd. entered a 25-year signed on supply power produced at its power plant to

Power Purchase Agreement with EGAT October 9, 2000) EGAT and in turn receives income from EGAT

• In 2006, power sales income is Baht 50,372.70 Million according to the conditions set in the Power

• As of 31 December 2006, connected transactions are Purchase Agreement, which is in line with normal

as follows: business practice.

o Trade account receivables at Baht 8,644.76 Million

o Long-term trade account receivables at Baht 24.75 Million

6. Fuel Oil Purchase EGAT 1,549.54 According to the Power Purchase Agreement,

EGAT supplies heavy oil to Ratchaburi Electricity Generating EGAT is responsible for supplying fuel and heavy

Co., Ltd. oil at market price.

• In 2006, heavy oil expenses were Baht 1,549.54 Million

• As of December 31, 2006, trade account payable was

Baht 176.21 Million

7. Station Service Power Purchase Agreement EGAT (agreement 105.92 The Company had to buy electricity from EGAT

Ratchaburi Electricity Generating Co., Ltd. signed with EGAT signed on for its power plant operation and water supply

a station service power supply agreement to be used as November 1, 2000) system at the same rate as other users.

power reserve and for water supply system

• In 2006, expenses were Baht 105.92 Million

• As of December 31, 2006, the connected transactions were:

o Account payable for November at Baht 7.02 Million

o Accrued expenses for December at Baht 16.98 Million

8. Operation and Maintenance Service Agreement EGAT (agreement 889.58 EGAT has an experience and expertise in operating

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to signed on and maintaining power plant. According to

operate and maintain Ratchaburi Power Plant, including October 26, 2000) the agreement, the service charge starts from

general maintenance and major overhaul, for nine years. Baht 633 Million per year and is adjusted according

• In 2006, total expenses were Baht 889.58 Million to the Consumer Price Index, which is a normal

• As of December 31, 2006, the connected transaction business practice.

details are as follows:

o Account payable was Baht 10.22 Million

o Accrued expenses were Baht 12.22 Million

o Prepaid expenses and OMA charges were Baht 9.70 Million

9. Parts of Gas Turbine Management Agreement EGAT (agreement 14.70 The Company does not have employees specialized

Ratchaburi Electricity Generating Co., Ltd. signed a 12-year signed on in this area while EGAT does. Starting service charge,

agreement with EGAT for Parts of Gas Turbine Model August 1, 2002) according to the agreement, is Baht 12 Million per

MS9001FA management. Service fees are divided into year and adjusted according to Consumer Price

monthly service fee and actual cost incurred. Index, which is in line with normal business practice.

• In 2006, total expenses were Baht14.70 Million, including

o Monthly service charge at Baht 13.56 Million

o Customs expenses at Baht 1.14 Million

• As of December 31, 2006, the connected transaction


o Account payable at Baht 1.24 Million

o Accrued expenses for December at Baht 1.21 Million



Value Connected Transaction Related parties (Million Reasons Baht) 10. Environmental service agreement

10.1 Environmental quality monitoring service agreement EGAT (agreement 3.64 The Company does not have employees

for Ratchaburi Power Plant signed on specialized in this area while EGAT does.

Ratchaburi Electricity Generating Co., Ltd. hired EGAT May 29, 2006) The service charge, according to the agreement,

to provide environment quality monitoring service for is Baht 3.64 Million per year (excluding VAT),

the Ratchaburi Power Plant practice. which is in line with normal business.

• In 2006, total expenses were Baht 3.64 Million

• As of December 31,2006, advanced payment was

Baht 0.36 Million

10.2 Environment quality monitoring service for heavy EGAT (agreement 1.16 The Company does not have employees specialized

oil supply system signed on May in this area while EGAT does. The service charge,

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to 29, 2006) according to the agreement, is Baht 1.16 Million

provide environment quality service for its heavy per year (excluding VAT), which is in line with

oil supply system normal business practice.

• In 2006, expenses were Baht 1.16 Million

• As of December 31, 2006, advanced payment was

Baht 0.07 Million

11. Environmental management and monitoring (ISO14001) EGAT (agreement 0.46 The Company does not have employees specialized

agreement signed on in this area while EGAT does. The service fee is

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to August 13, 2002) charged based on actual expense, which is in

provide and monitor environmental management (ISO14001) line with normal business practice.

• In 2006, total expenses were Baht 0.46 Million

12. Agreement for Flue Gas Desulferization service at Ratchaburi

Power Plant

12.1 Renovation of Flue Gas Desulferization (FGD) System EGAT (agreement 62.01 The Company does not have employees specialized

at the Thermal Power Plant Unit 1 signed on in this area while EGAT does. According to the

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to March 9, 2006) agreement, the service fee is Baht 62.01 Million

renovate Flue Gas Desulferization Plant for the Thermal (excluding VAT), which is in line with normal

Power Plant Unit 1. business practice.

• In 2006, total expenses were Baht 62.01 Million,

which were reimbursed from insurance companies

12.2 FGD #1 Demolition and Foundation Construction EGAT (contract 7.32 The Company does not have employees

Contract signed on specialized in this area while EGAT does.

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to April 11, 2006) According to the agreement, the service fee is

demolish the Flue Gas Desulferization for the Thermal Baht 7.32 Million (excluding VAT), which is

Power Plant Unit 1. in line with normal business practice.

• In 2006, the total expenses were Baht 7.32 Million,


12.3 FDG#1 Guillotine Shutter Work renovation contract EGAT (agreement 1.23 The Company does not have employees

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to signed on specialized in this area while EGAT does.

renovate the FDG#1 Guillotine Shutter Work renovation September 12, According to the agreement, the service fee is

at the Thermal Power Plant Unit 1. The contract ends 2006) Baht 4.90 Million (excluding VAT), which is in line

on February 15, 2007 with normal business practice.

• In 2006, the expenses were Baht 1.23 Million, which

were reimbursed from insurance companies



Value Connected Transaction Related parties (Million Reasons Baht) 12.4 FGD#1 Project Management Contract EGAT (agreement 30.00 The Company does not have employees specialized

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to signed on April in this area while EGAT does. According to

provide FGD#1 Project Management for the Thermal Power 20, 2006) the agreement, the service fee is Baht 3.00 Million

Plant Unit 1. The contract will end on October 31, 2007. per month (excluding VAT), which is in line with

• In 2006, total expenses were Baht 30.00 Million, normal business practice.

which were reimbursed from insurance companies.

• As of 31 December 2006, the connected transaction


o Account payable – EGAT at Baht 3.21 Million

o Accrued expense-EGAT for December at Baht 3.21 Million

12.5 FGD#1 Restoration Contract EGAT (contract 294.00 The Company does not have employees specialized

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to signed on June in this area while EGAT does. According to the

build FGD#1 restoration for the Thermal Power Plant 27, 2006) agreement, the service fee is Baht 420 Million

Unit 1. The contract will end on October 31, 2007. (excluding VAT), which is in line with normal

• In 2006, total expenses were Baht 294.00 Million, business practice.


• As of December 31, 2006, the connected transaction


o Account receivable – EGAT at Baht 2.61 Million

13. Air Heater Heating Element Production for Ratchaburi Power EGAT, (agreement 2.57 The Company does not have employees specialized

Plant Contract signed on in this area while EGAT does. According to the

Ratchaburi Electricity Generating Co., Ltd. hired EGAT to produce September 21, 2006) agreement, the service fee is Baht 25.65 Million

Air Heater Heating Element for its Thermal Power Plant. (excluding VAT) which is paid in three installments

The contract will end on May 29, 2007. according the work progress, which is in line with

• As of December 31, 2006, advanced payment was normal business practice.

Baht 2.57 Million

14. Asset Purchase Agreement EGAT (agreement 2.10 According to the asset purchase agreement, EGAT

Ratchaburi Electricity Generating Co., Ltd. made a power plant signed on has to demolish and construct the wall of the TP

purchase agreement with EGAT. October 9, 2000) Fuel Oil Tank Farm. The Company, however, later

• In 2006, total income was Baht 2.10 Million considered that it was not necessary to demolish

• As of December 31, 2006, account receivable was the wall. EGAT, therefore, compensated by paying

Baht 2.10 Million expenses for future renovation if necessary at Baht

2.10 Million, which is in line with normal business

practice.

15. Land lease agreements

15.1 Land lease agreement for Power Plant construction Ratchaburi Power 9.78 Ratchaburi Power Plant has appropriate facilities

Ratchaburi Electricity Generating Co., Ltd. leases a 143-rai Co., Ltd. (agreement and infrastructure for electricity generating

plot of land to Ratchaburi Power Co., Ltd. for power plant signed on business. Annual land lease fee is Baht 10.90 Million

construction. June 7, 2004) and adjusted according to Consumer Price Index

• In 2006, total income was Baht 9.78 Million every five years, which is in line with normal

• As of December 31, 2006, advanced income received business practice.

was Baht 1.40 Million

15.2 Land lease agreement for gas station Ratchaburi Power 0.13 Ratchaburi Power Plant has appropriate facilities

Ratchaburi Electricity Generating Co., Ltd. leases 2-rai pot Co., Ltd. (agreement and infrastructure for electricity generating business.

to Ratchaburi Power Co., Ltd. for construction of a gas signed on Annual land lease fee is Baht 0.15 Million and

receiving station. October 21, 2005) adjusted according to Consumer Price Index every

• In 2006, income was Baht 0.13 Million five years, which is in line with normal business

• As of December 31, 2006, advanced income received practice.

was Baht 0.02 Million



The connected transaction mentioned above have already approved by the Audit Committee and the Board of Directors of the Company.

Relationship between Parties Engaged in Connected Transaction are as follows: 1. The Company and Ratchaburi Electricity Generating Company Limited 1.1 The Company holds 99.99 percent in Ratchaburi Electricity Generating Company Limited. 1.2 Some of the Company’s executives are directors of Ratchaburi Electricity Generating Company Limited. 2. The Company and Ratchaburi Energy Company Limited 2.1 The Company holds 99.99 percent in Ratchaburi Energy Company Limited. 2.2 Some of the Company’s executives are directors of Ratchaburi Energy Company Limited. 3. The Company and Ratchaburi Gas Company Limited 3.1 The Company holds 99.99 percent in Ratchaburi Gas Company Limited. 3.2 Some of the Company’s executives are directors of Ratchaburi Gas Company Limited. 4 The Company and Ratch Udom Power Company Limited 4.1 The Company holds 99.99 percent in Ratch Udom Power Company Limited. 4.2 Some of the Company’s executives are directors of Ratch Udom Power Company Limited. 5 The Company and Ratchaburi Alliances Company Limited 5.1 Ratch Udom Power Company Limited, a subsidiary of the Company, holds 99.99 percent in Ratchauri Alliances Company Limited. 5.2 Some of the Company’s executives are directors of Ratchaburi Alliances Company Limited. 6 The Company and Tri Energy Company Limited 6.1 Ratchaburi Gas Company Limited, which is a subsidiary of the Company, holds 50.00 percent in Tri Energy Company Limited. 6.2 Some of the Company’s directors and executives are directors of Tri Energy Company Limited. 7. The Company and Ratchaburi Power Company Limited 7.1 Ratchaburi Alliances Company Limited, which is a subsidiary of the Company, owns 25 percent in Ratchaburi Power Company Limited. 7.2 Some of the Company’s executives are directors of Ratchaburi Power Company Limited. 8 The Company and EGAT 8.1 EGAT is the major shareholder owning 45 percent in the Company. 8.2 Some of EGAT’s directors and executives are directors of the Company. 9 The Company and Siam Ethanol Exports Company Limited 9.1 Ratchaburi Energy Company Limited, which is a subsidiary of the Company, holds 15 percent in Siam Ethanol Exports Company Limited. 9.2 Some of the Company’s executives are directors of Siam Ethanol Exports Company Limited. 10 The Company and SouthEast Asia Energy Limited 10.1 The Company owns 25 percent in SouthEast Asia Energy Limited. 10.2 Some of the Company’s executives are directors of SouthEast Asia Energy Limited. 11 The Company and Chubu Ratchaburi Electric Service Company Limited 11.1 The Company holds 50 percent in Chubu Ratchaburi Electric Service Company Limited. 11.2 Some of the Company’s executives are directors of Chubu Ratchaburi Electric Service Company Limited. 12 Ratchaburi Electricity Generating Company Limited and EGAT 12.1 Some of EGAT’s directors and executives are directors of Ratchaburi Electricity Generating Company Limited.

Value Connected Transaction Related parties (Million Reasons Baht) 15.3 Space rental and infrastructure service Chubu Ratchaburi 0.35 Chubu provides the power plant operation and

Ratchaburi Electricity Generating Co., Ltd. allowed Chubu Electric Services maintenance service to Ratchaburi Power Co., Ltd.

Ratchaburi Electric Services Co., Ltd. to rent 140 square Co., Ltd. (agreement at Baht 0.02 Million and infrastructure at Baht 0.01

meter space for its office. sign on Million (excluding VAT), which is similar to market

• In 2006, the income was Baht 0.35 Million 14 February 2006) price.



RATCH2006

Management Discussion& Analysis

1. Business Operation Ratchaburi Electricity Generating Holding Public Company Limited (the Company) has invested through the

subsidiaries and joint ventures to develop projects constantly such as the Nam Ngum 2 Hydro Power Plant Project with total

capacity of 615 megawatts. On May 26, 2006, the Project has signed Power Purchase Agreement with EGAT and signed

the Loan Agreement with financial institutions. The Project has been operated and expected its commercial operation in the

year 2013. Through the 25 percent shareholding in Nam Ngum 2, this project, the Company’s capacity in this plant is 153.75

megawatts.

On December 18, 2006, the Company and other project developers of Nam Ngum 3 Hydro Power Project (with total

capacity of 440 megawatts) have signed and entered into the Memorandum of Understanding (MOU) concerning the power

purchase with EGAT. The Company plans to invest in 25 percent stake of the Project, and expects to complete all agreements

within 2007. The Project will take five to six years to complete its construction before its commercial operation in the year

2013.

In addition, the Company has developed a small renewable energy power plant, the Associated Gas Power Plant

Project using a by product from crude oil production at Pratu Tao-A in Sukhothai Province, with the total capacity 1.75

megawatts. This project is expected to generate power in the year 2007. Through the 15 percent shareholding in Siam

Ethanol Exports Company Limited, the Company has developed the ongoing Project in Alcohol Manufacturing Plant in

Rayong, which has capacity of 30 million liter per year. The Project is expected to generate in the year 2007.

On July 27, 2006, TRIS Rating Company Limited (TRIS) has affirmed the Company’s rating at “AA-“ with “stable” outlook.

The “AA-“ rating of RATCH reflects reliable dividends from its wholly-owned operating of principle subsidiary, Ratchaburi

Electricity Generating Company Limited, its good quality power plant portfolio and its conservative investment policy. While

the “stable” outlook reflects an expectation that the Company will receive reliable dividend from Ratchaburi Electricity

Generating Company Limited and other power plant investments. Besides the Company is expected to maintain its

conservative investment policy. At the same time, TRIS has also affirmed the company rating of Ratchaburi Electricity

Generating Company Limited and the ratings of its senior secured debentures at “AA” with “stable” outlook which reflects its

stable cash flow from the well-designed project structures, state-of-the-art power plants, the long experience in the power

sector, and its proven record of managing power plant operations. While the “stable” outlook reflects TRIS expectation that

Ratchaburi Electricity Generating Company Limited will continue to receive stable cash flows from the Ratchaburi Power

Plant. Furthermore, the plant is expected to maintain its operational performance in line with the targets of the Power

Purchase Agreements (PPA).

1.1 Operating Performances of the year 2006

1.2 Analysis of Income

The Company’s total revenues of the year 2006 was Baht 51,848.22 million, increased from Baht 44,836.83 million in

2005 by Baht 7,011.39 million or 15.64 percent. The main reasons of this matter are as follows:

Unit : Million Baht

2006 2005 Increase % (Decrease)

Revenue 51,848 . 22 44,836 . 83 7,011 . 39 15 . 64

Cost of sales and expenses 45,742 . 18 38,770 . 47 6,971 . 71 17 . 98

Net Profit 6,106 . 04 6,066 . 36 39 . 68 0 . 65

Earning per share (Baht) 4 . 21 4 . 18 0 . 03 0 . 72

Management Discussion & Analysis



1) The electricity sales for the year 2006 was Baht 50,372.70 million, increased by Baht 6,337.74 million or 14.39

percent from Baht 44,034.96 million of the year 2005. This main reasons comprise of :-

- Revenue received from the Energy Payment increased by Baht 6,509.82 million. This mainly was due to increase

in energy generation, resulting in higher consumption and higher prices of natural gas and fuel oil in 2006. In addition, the

rise of prices of natural gas and oil in the year 2006.

- Revenue received from the Availability Payment decreased by Baht 172.08 million. The main reason was due to

the fact that the average of Base Availability Credit (BAC) in the year 2006 was lower than the year 2005 as specified in the

Power Purchase Agreement (PPA).

2) Other income was Baht 748.03 million, increasing by Baht 318.16 million from Baht 429.86 million. The main reasons

comprise of :-

- Interest income increased Baht 271.31 million due to an increase in cash and cash equivalents and a rise in

interest rates during the year 2006.

- The management service fee increased by Baht 115.13 million due to the Company received development fee

from Ratchaburi Power Company Limited in the amount of Baht 101.33 million along with the Shareholders’ Agreement on

February 27, 2004.

3) Share of profit of joint ventures of the year 2006 were Baht 727.50 million increasing by Baht 355.49 million from

share of profit of joint ventures in the amount of Baht 372.01 million in the year 2005. The main reason is the Company

recorded share of profit of Tri Energy Company Limited increasing by Baht 366.07 million due to the share of profit of Tri

Energy Company Limited for the year 2006 recorded gain on foreign exchange in the amount of Baht 401.78 million whereas

the year 2005 recorded loss on foreign exchange in the amount of Baht 192.25 million. However, the operating income of Tri

Energy Company Limited for the year 2006 before gain on foreign exchange was lower than that of in the year 2005. The

reason was the power plant was shutdown for maintenance during the year 2006.

1.3 Analysis of Costs of Sales and Expenses

Costs and expenses of the year 2006 totalled Baht 45,742.18 million, increasing by Baht 6,971.71 million or 17.98

percent from Baht 38,770.47 million of the year 2005. The underlying reasons are as follows:

1) Costs of sales amounted to Baht 42,948.51 million, increasing by Baht 6,469.98 million or 17.74 percent from the

year 2005, This matter comprises of:

- An increase in fuel costs for the year 2006 was Baht 6,299.14 million. This mainly was due to increase in energy

generation, resulting in higher consumption and higher price of natural gas and oil in the year 2006. Fuel cost

was recorded in Energy Payment in the electricity revenues.

- The maintenance service expenses and spare part expenses in the year 2006 decreased by Baht 377.13 million

due to less maintenance service than the year 2005.

- The repair and maintenance expenses in the year 2006 increased by Baht 380.17 million due to in the year

2006 the Company recorded maintenance expenses according to the Contractual Service Agreement (CSA)

in the amount of Baht 885.70 million, higher than the repair maintenance expenses Bath 505.53 million in the

year 2005.

2) The administration expenses for the year 2006 was Baht 497.57 million, decreasing by Baht 463.44 million or 48.22

percent from Baht 961.01 million in the year 2005. The main reason was in the year 2006, there was no expense of

refinancing while in the year 2005 the expense of this transaction was Baht 466.21 million.

3) In the year 2006, the reserve for damage cost from fire cause at the Flue Gas Desulfurisation unit at Thermal Power

Plant Unit 1 on October 13, 2005 was recorded at Baht 750.24 million which was being under claim process with the

insurance company.



4) Interest expenses for the year 2006 was Baht 1,443.75 million, increasing by Baht 234.87 million or 19.43 percent

from Baht 1,208.88 million in the year 2005 according to the average interest rates for long term loans and debentures of the

year 2006 which were 4.60 percent per annum, which is higher than the 3.50 percent per annum in the year 2005. However,

interest expenses were compensated in the Availability Payment.

2. Analysis of Financial Status 2.1 Analysis of Assets

1) The current assets increased by Baht 3,926.18 million. The main reasons are as follows:

- Trade receivable increased by Baht 2,108.44 million since sales revenue on November and December 2006 was

higher than that on November and December 2005. The mainly reason was on November and December 2006

the Power Plant was shutdown less often than in the year 2005.

In the year 2006, there was no allowance for doubtful receivables based on no overdue outstanding amounts

at the year ended. Account Receivable Turnover in the year 2006 and 2005 were 6.64 times and 6.68 times

respectively.

- An increase in cash and cash equivalents, short-term investments and long-term investments due within one

year in the amount of Baht 1,699.35 million which result from the higher working capital.

2) The non current assets decreased by Baht 1,761.67 million. The main reasons are as follows:

- Net property, plant and equipment decreased by Baht 2,328.23 million due to the depreciation of the year.

- Long-term loans to related parties was Baht 649.56 million decreased from the end of the year 2005. The main

reason was Ratchaburi Power Company Limited had repaid the Company on March 1, 2006.

- Gain/Loss Shared in joint ventures increased by Baht 950.19 million. The main reason was share of profit in Tri

Energy Company Limited, increased by the amount of Baht 616.35 million and net investment in the year 2006

of SouthEast Asia Limited, Ratchaburi Power Company Limited and Siam Ethanol Exports Company Limited

increased along with the proportional of shares of the companies in the amount of Baht 281.25 million, Baht

146.25 million and Baht 13.46 million respectively.

Unit : Million Baht


Current Assets 22,226 . 40 18,300 . 22 3,926 . 18 21 . 45

Non Current Assets 49,878 . 65 51,640 . 32 (1,761 . 67) (3 . 41)

Total Assets 72,105 . 05 69,940 . 54 2,164 . 51 3 . 09

Unit : Million Baht


Current Liabilities 11,009 . 62 8,943 . 22 2,066 . 40 23 . 11

Non Current Liabilities 26,400 . 03 29,507 . 95 (3,107 . 92) (10 . 53)

Total Liabilities 37,409 . 65 38,451 . 17 (1,041 . 52) (2 .71)

Shareholders’ Equity 34,695 . 40 31,489 . 37 3,206 . 03 10 . 18

Total Liabilities and Shareholders’ Equity 72,105 . 05 69,940 . 54 2,164 . 51 3 . 09



Periods Interest Rate (%)

25 July 2005 – 24 July 2007 MLR – 2.5

25 July 2007 – 24 July 2009 MLR – 2.0

25 July 2009 – 24 July 2015 MLR – 1.5

2.2 Analysis of Liabilities and Shareholders’ Equity

1) Current Liabilities increased by Baht 2,066.40 million. This was due to trade payable increased by Baht 1,397.74

million due to higher consumption and higher price of natural gas and oil on November and December 2006 when compare

with those on November and December 2005 and the recording of reserve for damage cost from fire cause at the Flue Gas

Desulfurisation in the amount of Baht 750.24 million.

2) Non-Current Liabilities decreased by Baht 3,107.92 million. The underlying factor was the repayment of debenture

amounting Baht 2,333.24 million and long-term loan amounting Baht 509.50 million.

As at December 31,2006 Ratchaburi Electricity Generating Company Limited has long-term loans from financial

institutions in the amount of Baht 23,013.55 million, which has interest rate as follow:

And as at December 31,2006 the subsidiary issued unsubordinated and secured debentures in the amount of

Baht 6,494.40 million comprise of two Tranche. Tranche B1 has a three-year repayment period and a fixed interest rate of 3.67

percent per annum and Tranche B2 has a five-year repayment period and a fixed interest rate of 3.67 percent per annum a for

the first and second year and Minimum Lending Rate (MLR) minus 2 percent per annum throughout the remaining periods.

3) Shareholders’ Equity increased by Baht 3,206.03 million. The main reasons were as follows:

- The Company and its subsidiaries operating profit for the year 2006 amounted to Baht 6,106.04 million.

- The Company’s shareholders approved the allotment of the Company’s profit for the dividend payment for the

operating results in the second half year of 2005 in the amount of Baht 1,450 million (Baht 1.00 per share), in accordance with

the Annual General Meeting of Shareholders on April 20, 2006, which was paid on May 16, 2006.

- The Board of Directors of the Company passed the resolutions to approve the interim dividend payment for

the operating results for the first six month period of 2006 in the amount of Baht 1,450 million (Baht 1.00 per share), in

accordance with the Board of Directors’ Meeting on August 21, 2006, which was paid on September 18,2006.

2006 2005

1) Current Ratio (Times) 2.02 2.05

2) Net Profit Margin (%) 11.78 13.53

3) Return on Equity (%) 18.45 20.24

4) Return on Assets (%) 8.60 8.70

5) EBITDA (Million Baht) 10,430 10,344

6) EBITDA to Assets (%) 14.69 14.84

7) Debt to Equity (Times) 1.08 1.22

8) Debt Service Coverage Ratio (DSCR) (Times) 2.41 2.33

9) Book Value per Share (Baht) 23.93 21.72

10) Earnings per Share (Baht) 4.21 4.18



2.3 Major Financial Ratios of the year 2006 and 2005.

3. Analysis of Cash Flows The ending balance of cash and cash equivalents of the Company and its subsidiaries as at December 31, 2006 was

Baht 3,124.49 million, which was decreased by Baht 1,263.60 million or 28.80 percent, from Baht 4,388.09 million on December

2005. The details are summarized below:

1) Net cash provided by operating activities decreased in the amount of Baht 1,288.34 million. The main reasons were

an increase in account receivable that cuts down the cash flow in the amount of Baht 2,217.00 million and account payable

that tops up the cash flow in the amount of Baht 976.04 as clarified in 2.1(1) and 2.2 (1) respectively.

2) Net cash payments from investing activities increased in the amount of Baht 4,293.81 million. The main reason

was an increase in deposits at financial institutions and short-term investments in the amount of Baht 4,483.21 million.

3) Net cash payment in financing activities decreased from the year 2005 in the amount of Baht 501.57 million.

The main reason was the repayment of long-term loans and dividend paid to shareholders had decreased in the amount

Unit :Million Baht


Net cash receipts from operating activities 7,285 . 88 8,574 . 22 (1,288 . 34) (15 . 03)

Net cash receipts (payment in) from

investing activities (2,806 . 53) 1,487 . 28 (4,293 . 81) (288 . 70)

Net cash (payment in) from financing activities (5,742 . 95) (6,244 . 52) 501 . 57 (8 . 03)

Net increase (decrease) in cash and

cash equivalents (1,263 . 60) 3,816 . 98 (5,080 . 58) (133 . 10)

Beginning balance 4,388 . 09 571 . 11 3,816 . 98 668 . 34

Ending balance 3,124 . 49 4,388 . 09 (1,263 . 60) (28 . 80)



Good Corporate Governance Report

The Company’s Board of Directors has a strong commitment to implement good corporate governance in the

Company’s management with an aim to achieve sustainable growth. As a result, the Company received numerous significant

awards and recognition in 2006 as follows:

1) The Company received “Distinction in Maintaining Excellent Corporate Governance Report” at the SET Awards

2006, jointly organized by the Stock Exchange of Thailand (SET) and Money and Banking magazine, on 26 July 2006. The

award is presented to outstanding listed companies which have successfully maintained high standards for good corporate

governance report for two consecutive years. The Company was one of the 16 companies receiving this award.

2) The Company was one of the nine companies receiving the “Excellent” corporate governance practice recognition

from the Corporate Governance Report of Thai Listed Companies 2006 Program arranged by Thai Institute of Directors

Association (IOD) in cooperation with SET and the Securities and Exchange Commission (SEC). The assessment is categorized

into five levels including “Excellence”, “Very Outstanding”, “Outstanding”, “Good” and “Pass”. Data and information published on

the annual report, Form 56-1, shareholders’ meeting notice and minutes, information disclosed on the Company’s website

and through SET’s channel, and other information released to the public has been audited and scrutinized.

3) The Company participated in the assessment of the Shareholders’ Annual General Meeting arrangement,

organized by SEC, Thai Investor Promotion Association, and the Association of Listed Companies, and was given 93.14 scores

in the assessment, which is among the highest scored companies from the total 433 listed companies participating in the

program. With total score of 110, the highest score achieved by a participating company is 105 and the average score is 71.

Its subsidiary, Ratchaburi Electricity Generating Company Limited also won the “Company with Outstanding Ethical

Practice by the Thai Chamber of Commerce 2006”, which is a recognition award initiated and organized every year by the Thai

Chamber of Commerce since 2003. In 2006, there were 62 companies participating in the project and Ratchaburi Electricity

Generating Company Limited is one of the 11 companies winning the awards. The judging process involved an audit by

a judging committee comprising independent institutes including Thai Chamber of Commerce, IOD, Thailand Management

Association, and government agencies including the Revenue Department, the Business Development Department, Thai

Chamber of Commerce University, the Economic Reporters Association and the Association of Thai TV Reporters under Royal

Patronage who also represent Thai media. Judging criteria include fair treatment of employees, partners, customers, creditors

and shareholders, information disclosure and transparency, responsibility towards consumers and business partners,

integrity, ethics promotion activities, social responsibility activities, the promotion, treatment and conservation of

environment, individual freedom, risk reduction and best practice.

1. Corporate Governance Policy Since the Company’s inception in 2000, the Board of Directors has recognized the importance of consistently

managing and operating the Company with integrity and transparency. The Company has prepared business ethics

document, namely Corporate Code of Conduct, Code of Ethics for Executives and Code of Ethics for Employees, to be used as

guidelines for the Board of Directors, the management and employees at all levels. Later, when SET formulated Good

Corporate Governance Practice, the Board of Directors has taken into account the guidelines together with the six good

corporate governance principles as follows:

(1) Accountability – the commitment to successfully completing the work and being responsible for the outcome

(2) Responsibility – the intention to work at best capacity and through consistent knowledge development in order

to cope with both internal and external changes

(3) Equitable Treatment – the fair and equal treatment of all stakeholders

(4) Vision to Create Long Term Value – the proposal to create sustainable – growth of the Company

(5) Promotion of Best Practice – the foundation to support effective and efficient performances of all management

and employee

(6) Social and Environment Awareness – to be responsible for the community and environment

RATCH2006Good CorporateGovernance Report



The Company Group’s Good Corporate Governance Policy was written and announced in 2003. Details are as follows:

1. Ensuring all operations and management activities comply with the Good Corporate Governance principles where

conflict of interest is carefully eliminated with integrity, good reasons, independence from all influences and within

ethical framework

2. Arranging for effective and sufficient financial and operation control, internal audit and risk management

3. Promoting and supervising to ensure correctly, timely and transparent disclosure of information and crucial

information of the Company

4. Promoting equal treatment of all shareholders according to public company limited management principles

5. Promoting and supervising to ensure proper treatment and protection of rights of stakeholders including

customers, employees, business partners, shareholders, investors, creditors, competitors, independent auditors,

governmental organizations and communities

(The Good Corporate Governance Policy is posted on the Company’s website under “Corporate Governance” section

to provide shareholders with easy access to the information)

After the policy announcement, the Company has constantly monitored and updated the policy to ensure it is in line

with good corporate governance practice generally accepted in Thailand and abroad. The Company realized that the practice

is very important to create efficient organization’s structure, operational system and process which will increase

competitiveness and long-term value for shareholders. The practice also makes strong foundation for sustainable growth

while promoting clarity and transparency and enabling the Company to operate and generate the highest possible benefits

to the Company’s stakeholders. To support effective implementation of the practice, the Company has incorporated the good

governance practice into the Company’s vision, mission and policy. The Company has established the “Good Corporate

Governance Working Group” to engage in the Company management and all employees and to act as a mechanism for

monitoring, supervising, improving, transferring policy from the top management level to operational level employees,

acknowledging problems, challenges and recommendations from employees in all level, and evaluating works to achieve the

Company’s goal. The Committee comprises executives from all divisions and is responsible for reviewing and considering

related regulations, practices and guidelines, presenting results of the study and recommendations, and implementing the

recommended solutions.

2. Shareholdersû Rights The Board of Directors realized that shareholders are the business owners who are not directly involved with the

Company’s management but authorized the Board of Directors to run the business on their behalf. The Company, therefore,

has a policy to maintain equal protection to interests and rights of all shareholders by concentrating on enabling

shareholders, who are regarded as the business owners, to receive information about the Company’s operation and to

participate in decision making process. The Company has arranged the shareholders’ meetings in accordance with legal

requirements and guidelines set by concerned authorities and agencies. The Company has a duty and responsibility to

ensure the meetings are transparent and fair as well as are in recognition to the benefits of shareholders and stakeholders as

follows:

• The Company organized the Shareholders’ Annual General Meeting once a year, and within four months after the

closing date of its accounting books. In case of urgent matter that affects or is directly involved with shareholders’ benefits or

related rules and laws and needs approval from shareholders, the Company will call an extraordinary shareholders’ meeting.

• After the Board of Directors resolved to organize a shareholders’ meeting, the Company informed the shareholders

of the date, time, place and agenda together with details via SET’s ELCID within the same day that the Board of Directors

made decision or before 9.00 a.m. of the next working day.

• The Company delivered to the shareholders the meeting notice to inform them of date, time, meeting place

together with a map, meeting agenda which is arranged according to their priority and chronology, background, reasons and

key issue of each agenda tabled for consideration or acknowledgement. The information included the Board of Directors’

opinion on each agenda to support shareholders’ decision. The Company also delivered to the shareholders the related

document including previous meeting report for the shareholders to discuss and certify, the document that the shareholders

of all types have to present to attend the meeting and meeting rules which enable the shareholders to clearly understand

including the list of attendees and voting rules. Furthermore, the Company sent to the shareholders the annual report of the

Board of Directors which contains critical information about the Company’s performance in the previous year and future


projects, balance sheet and profit and loss statement, proxy appointment as designed by the Department of Business

Development for the shareholders to assign a representative to attend the meeting and vote on their behalf. The Company

sent the meeting notice to the shareholders no less than 14 days prior to the meeting date. It also published the notice on

the Company’s website under the “Investors’ Information” section and advertised the meeting announcement in Thai and

English language newspapers for three consecutive days and no less than three days before the meeting.

• The Company invited shareholders to submit their questions and suggestion prior to the meeting. The Company

provided communications channel on its website by contributing one section for this activity. The shareholders can also use

other communication channels they find convenient and appropriate. The Company considered that receiving questions and

suggestions beforehand will enable the Company to prepare clearer information and additional explanation to the

shareholders.

• In the shareholders’ meetings, the Company provided convenience to the shareholders by preparing appropriate

and convenient venue where the shareholders could register two hours before the meeting time. The shareholders who

could not attend the meeting could assign other persons or the Company’s independent directors or Managing Director to

attend and vote on their behalf.

• The Company offered opportunities for the shareholders who arrived after the meeting already began to express

their opinion and vote on the agenda which was under discussion and not yet been voted.

• At the opening of the meeting, the chairman announced the quorum and declared all meeting procedures

including vote counting. During the meeting, the chairman would allow sufficient time and opened opportunities for the

shareholders to ask questions and request additional information or express their opinion openly and equally. The Company

prepared separate ballots for each agenda for each shareholder. To ensure rapid and accurate tally system, the Company used

a computerized system to tally the votes, which also increases transparency.

• To ensure transparent meeting, the chairman informed the meeting of each decision on each agenda as well as

agree, disagree and abstain votes.

• The meeting discussed and considered each agenda in the order set prior to the meeting as stated in the meeting

notice. The Company did not add urgent agenda without informing the shareholders in advance. The Company, however,

opened for other agenda (if any) to allow opportunities for the shareholders to make suggestion, express their opinion and

ask questions about the Company’s operation.

• The Company immediately informed SET the meeting resolution once the meeting was over, or no later than

9.00 a.m. of the next working day through SET’s ELCID.

• The Company usually completed the meeting report on time. The meeting report correctly and clearly stated

details, important information, resolutions and vote tally of each agenda. The report was presented to SET and the Registrar

within 14 days from the meeting date and published the report on the Company’s website under “Investors’ Information”

section for shareholders to easily review.

• For the Shareholders’ Annual General Meeting and dividend payment in the past year, the Company arranged for

the closing of the Company’s registration book twice. The Company’s registration book was first closed for shareholders to

receive the right to attend the shareholder’s meeting where the shareholders shall consider and approve annual dividend

payment. The second time was for maintaining the shareholders’ right to choose whether they wish to maintain their

shareholding status in order to receive dividend after the shareholders’ meeting has resolution on annual dividend payment.

• The Company clearly set direction for transparent operations and disclosed shareholding structure in its

subsidiaries and joint ventures. The shareholding structure is not crossed to ensure shareholder’s confidence of transparency

and that they will receive complete and fair returns. In approving connected transactions and/or significant items,

stakeholders are not allowed to vote.

• The Company has arranged for the shareholders to be treated well and equally and to receive basic rights

including the right to receive share certificates and share transfer, the right to receive correct and clear information, the right

to attend meetings and vote on important transactions, the right to choose directors to manage the Company, and the right

to receive profit sharing from the Company which comes in the form of dividend and/or other rights.

• To prevent exploitation of unpublished inside information, the Company made an announcement (dated

6 February 2000) prohibiting its directors, executives, employees, temporary staff, their spouses and children who have not

attained manhood from using unpublished inside information to buy, sell, transfer or receive the Company’s shares. The


Company’s announcement (dated 5 February 2003) requires its executives, employees, and temporary staff to directly report

any changes in the company’s portfolio of themselves, their spouses, and children who have not attained manhood to the

Company’s managing director within three working days after the changes happen.

• The Company assigned a unit to be responsible for coordinating with and distributing information through SET

(ELCID) and other communication channels. The information disclosed included financial and non-financial information

including operating performance, financial statements and the management discussion and analysis (MD&A) every quarter

which stated the status, operating performance and future trend, etc. The information is distributed equally, fair, and correctly

to shareholders in Thailand and overseas.

• The Company’s shareholders can also contact the Company’s directly or through its website which contains

information in both Thai and English and is consistently updated.

3. Stakeholdersû Rights The Company takes into account the rights of all stakeholders. The Company’s Code of Ethics is used as guidelines for

clear and fair approaches for all groups of stakeholders. The Company’s executives and employees have acknowledged and

strictly respected the Code of Ethics which covers key practices based on scope of responsibility of all involved persons as

follows:

Shareholders:

• The Company considers continuous and sustainable growth in order to offer the highest possible long-term value

to its shareholders.

• The Company respected shareholders’ right in acquiring important information which is used for assessing the

Company’s operating performance. The Company shall disclose correct operating performance, including financial

statement, to shareholders on regular basis and according to international practice which is generally accepted in the capital

markets in Thailand and overseas.

• The Company has a policy to maintain accuracy in recording accounting items in accordance to accounting

standards and related laws. The information is audited by the internal auditors, the Audit Committee and the Company’s

independent auditors.

Business partners:

• The Company has ensured that standardized and ethical procurement process is in place under the following

principles

- There must be competition among bidders and proper and fair selection.

- Certain criteria in assessing and selecting business partners are in place.

- Agreements must be prepared properly in accordance with internationally accepted standards.

- The management and monitoring of contract are in place to ensure every condition under the agreement is

respected and to prevent corruption in every procurement procedure.

• The Company intends to strengthen and maintain sustainable relationship with business partners who have clear

objectives in terms of technical quality, value of goods, and services that are worth investment, and trust each other.

• The Company has no policy to allow its directors and employees to receive personal benefits from business

partners.

• The Company strictly follows competition rules.

• The Company shall not search for competitors’ confidential information through inappropriate or corrupted ways.

• The Company shall not make groundless accusation of its competitors.

Employees:

• The Company fairly offers appropriate benefits to employees.

• The Company provides safety both in work environment for its employees and the property of the employees and

the Company.

• The Company equally, honestly and equitably promotes, transfers, rewards or punishes employees by considering

each employee’s capability.


• The Company equally and consistently offers opportunities for all employees to develop their knowledge and

skills.

• The Company strictly complies with laws and regulations related to its employees.

Society and Environment

• In operating its business, the Company has a policy to take into account the environment and fully respects

relevant environmental laws and regulations.

• The Company encourages its employees to take responsibility towards the environment.

• The Company consistently and continuously exchanges knowledge and experience with other people and

organizations to ensure appropriate environmental conservation, production improvement and operations that fully address

the quality of environment.

• The Company respects local culture and tradition.

• The Company appropriately participates in various activities initiated by the communities in which it is operating.

Stakeholders can directly contact the Company or through other channels provided, including the Company’s website

which provides convenience in two-way communications, and other channels that the stakeholders find more appropriate.

4. Shareholdersû Meetings In 2006, the Company held the Shareholders’ Annual General Meeting (AGM) on April 20, 2006. The Company prepared

and sent the notification to attend AGM and its related documents 14 days before the meeting date to every shareholder

whose name appeared in the Company’s registration book on its the closing date. The Company also published an

announcement in Thai and English daily newspapers for three consecutive days and no less than three days before the

meeting date to ensure that shareholders had the opportunity to learn about the meeting schedule and agenda and had

sufficient time to study and understand all document in advance. The Company prepared related and necessary information

as well as the Board of Director’s opinion on every agenda, such as names, profile and brief information of nominees for

director election. At the beginning of the meeting, the chairman announced to the meeting names of the attending directors,

auditor and legal advisors and informed meeting and voting rules. Throughout the meeting, the Company opened

opportunity for shareholders to fully air their views and expressed their useful opinions, encouraged questions and provided

ballots for every shareholder attending the meeting for voting. Computerized system is used to tally votes. Each agenda is

consider and voted separately. The appointment of individual director and directors’ remuneration approval are considered

and voted separately. The report, which was prepared in writing, recorded important information of each agenda, including

voting result of each agenda which specified in detail the agree, disagree and abstention votes, questions, answers, opinions

and recommendations. The report was disseminated through the Company’s website within 14 days after the Shareholders’

Annual General Meeting and after the report was sent to SET in order that the shareholders can follow up and check the

information. The report was also sent to the Registrar (the Department of Business Development) for review and reference.

5. Leadership and Vision The Company’s directors have different skills, knowledge, capability and experience in many disciplines, which

enhances management efficiency. The Company’s directors, as the leader of the organization, play a key role in leading the

Company to success. The directors plan and formulate strategies and policy to increase organizational competitiveness,

which means the organizational growth, increasing long-term value to shareholders, and responsibility for all stakeholders.

With integrity and ethics, the Company’s directors are responsible for ensuring that the Company operation fully complies

with the law, related regulations and decision made in the shareholders’ meetings, and ensuring that the executives’

management and administration are in line with the Company’s goals and preset framework for the maximum benefits of

shareholders while taking into account the best benefits of society.

Each of the Company’s director realizes the responsibility towards the shareholders who are the business owners

and have the right to appoint the directors. The directors perform and take responsibility in operating the business for

the best benefits of the shareholders, or Fiduciary Duty. Their four duties are Duty of Care, Duty of Loyalty, Duty of Obedience

and Duty of disclosure.

The Company’s directors maintain independence in decision making for the best possible benefits of the Company

and its shareholders. The directors play a vital role in formulating, approving, and reviewing vision, mission, key policies,

financial goals and budget, and strategic plans, monitoring operation results of the management to regularly keep track of


Courses Directors Chairman Director Certificate Director Accreditation Audit Finance for Non- Program Program Committee Finance Director

Mr. Cherdpong Siriwit P P P Mr. Viravat Chlayon P P Mr. Pongpayome Vasaputi

Mr. Lae Dilokvidhyarat P P P Mr. Chulasingh Vasantasingh P Mr. Panich Pongpirodom P Mr. Suchart Thada-Thamrongvech P P P P Mr. Kraisi Karnasuta P Ms. Sutharat Angchanpen P P Mr. Vinit Tangnoi P Mr. Chanin Vongkusolkit P Mr. Areepong Bhoocha-oom P Mr. Narong Sitasuwan P

business progress, providing timely advice and help in adjusting plans that may not on the right track, ensuring sufficient

internal control and regular monitoring, and providing policy on appropriate risk management which is a very important and

urgent policy that the Company has to implement and materialize. The directors approved annual key performance indices

and evaluation criteria in the beginning of the year and required performance report on regular basis for efficient

monitoring, reviewing and adjustment. By the end of the year, the indices and criteria will be used for evaluating performance

of the management and the Board of Directors, which is linked to remuneration determination. The sub-committees

including the Audit Committee, Risk Management Committee and Human Resources and Remuneration Committee also play

crucial roles in supervising and monitoring closely the management performance.

In addition to appraising the Company’s performance against the preset criteria, the Board of Directors has

implemented self assessment measures since 2002. The factors considered cover many important areas, including directors’

readiness, strategy formulation and business planning, risk management and internal control, conflict of interest prevention,

financial and performance report monitoring, the Board of Directors’ meeting and nomination of the Board of Directors and

the management. Results were used in reviewing and improving their future work process.

The Company has followed SET’s guideline which viewed that a director of a listed company should hold directorship

in no more than five listed companies. However, the present Chairman of the Board of Directors (Mr. Cherdpong Siriwit) is

a highly capable and has great experience in energy industry and therefore holds the position of Chairman of the Board in

other listed companies, including PTT Public Company Limited, PTT Exploration and Production Public Company Limited, Thai

Oil Public Company Limited, Rayong Refinery Public Company Limited, and PTT Chemical Public Company Limited, and

a director of Thai Oil Power Company Limited, all of which are subsidiaries of PTT Public Company Limited. The appointment

was for the benefit of directing all the companies under the PTT Group into the same direction. For the Managing Director,

who holds the highest position in the Company’s management, the Company has limited his directorship in other state

enterprises and listed companies to no more than five, not including subsidiaries, associated companies and joint venture

business, in order to enable him to fully perform his tasks, increase opportunities to exchange experience and strengthen

relationship with business partners and other organizations that will benefit the Company’s operations.

To assist the newly appointed directors in their assignment, the Company provided them with a summary of the

Company’s businesses, the Company Group’s structure, organizational structure, their operations, the Articles of Association,

rules and regulations, key policies, Code of Conduct and directors’ rules based on the requirements of SET and SEC.

Furthermore, to promote understanding of roles, duty and responsibility as well as necessary skills for the directors to

do their job best as the directors of a listed company, the Company has a policy to encourage the directors to participate in

seminars arranged by related organizations, such as the IOD and SET. The directors who attended trainings and seminars

organized by IOD are as follows:


Operating a business based on full compliance with rules and regulations set by the government’s supervising

agencies is one of the Company’s crucial principles. In the Board of Directors meetings, the management prepared

information summary and presented to the Board of Directors for their acknowledgement of such announcement, rules,

regulations and memorandum, both newly written and amendment version issued by SEC and SET.

Directors and management perform duties as designated or as the status and title holder in the Company or as

seconded in any affiliates for the Company’s benefit. In case there is any lawsuit claiming due to such performance, the Legal

Department will be responsible for its defense until the case becomes final. The Company has set aside Baht 2 million a year

as a reserve for loss, including damages, cost of legal defense, fines, compensations by court’s order, civil penalties as

applicable by law or any other money which is considered punishment or warning where the Company will be liable for such

loss if the duty is duly performed as a result of his/her authority whether or not such action is taking place now or was done

in the pass unless it is a fraud or corruption which the Company shall not be responsible for any loss incurred and will

demand all expenses resulting from defending such a case from the corrupted or fraudulent directors or executive officers.

The Company also sent concerned staff to attend training course for Board of Directors Secretary, as well as other

relevant courses, organized by the IOD. This is to improve their knowledge and understanding of their responsibility that are

crucial to support the Board of Directors’ operations.

When directors need more related information, they can contact the Company’s high-level executives. The Company

also assigned the Corporate Secretary Department to coordinate and render the secretariat and administration works for the

Company’s directors.

6. Conflict of Interests With commitment to good corporate governance practice, the Company’s Board of Directors has ensured

transparency in business operations and prevented conflict of interest. To maintain transparency and prevent personal

interests, the Company’s Board of Directors have implemented guidelines prohibiting directors, executives, employees,

temporary staff, spouse and children who have not attained manhood from using the Company’s internal information, which

is important and yet not disclosed to the public, for their own or others’ interests. Anyone breaking this rule will be

disciplinarily punished.

The Audit Committee has reported to the Board of Directors every quarter about connected transactions which were

carefully reviewed based on SET’s rules and regulations. Such connected transactions are disclosed on page 58-63 of the

Annual Report and in the Form 56-1.

7. Business Ethics The Company has introduced Code of Conduct, Code of Ethics for Executives and Code of Ethics for Employees as

guidelines in its operations and actions with full concerns to the responsibility for shareholders, social and environment

responsibility, ethical practices toward customers, business partners, the Company, oneself, colleagues, supervisors,

subordinates, society and political sector. The Board of Directors is responsible for arranging a system to ensure the Company

operates in accordance with applicable law and relevant ethical practice. The code of ethics are based on the strong belief

that sustainable and successful business operations and leadership can be achieved not only through commitment to work,

technology development, efficient management and corporate good governance practice but also business ethics,

transparency, morale, responsibility for stakeholders, society and environment. (The three codes of conduct are published on

the Company’s website.)

8. Balance of Power of Non-Executive Directors The 13-member Board comprises 12 non-executive directors (including five independent directors) and one executive

director. The number of independent directors are more than one third of the entire Board. Chairman of the Board is an

independent, non-executive director and is not the same person as the Managing Director. Responsibilities of the Board

members are clearly identified, ensuring that the directors properly act as a representative of shareholders and there is

sufficient balance of power. To enhance the Board’s efficiency, the Company has set up three Sub-Committees to assist the

Board in different areas including the Audit Committee, the Human Resource and Remuneration Committee and the Risk

Management Committee. Their duties and responsibilities are published on page 34-36 of the Annual Report.

The Company highly places importance on the dependence in decision making of the Board of Directors for

maximum benefits of the Company and overall shareholders. Every director performs his/her duties with integrity and care to

protect the Company’s benefits as he/she realizes his/her status as a representative of the shareholders and the responsibility

in leading, monitoring, supervising, giving advice and assistance in the management operation.


To encourage the non-executive directors’ meeting, the Board of Directors provide the non-executive directors’

meeting at least once a year. In 2006, the Board organized a non-executive directors’ meeting in December 2006. The issues

discussed in the meeting include directors’ self assessment and recommendations for increasing the Board’s efficiency

namely the Board of Directors’ meeting, management supervision, sub-committee supervision, management’s report,

business plan, internal audit system and corporate performance assessment.

9. Aggregation or Segregation of Positions The Company has clearly separated responsibilities in policy formulation, supervision, and management. The

Chairman is an independent director, not the same person as the Managing Director, has no relations to the management, is

the leader and plays an important role in making decision on the Company’s policy as agreed at the Board of Directors’

meeting which considered and jointly worked with the management on business goal setting. The Chairman of the Board

leads and ensures the Board of Directors’ meeting is effective and efficient, by encouraging every director to participate in

the meeting and openly share their opinion. The Chairman supports and regularly provides advices on business operations

through the Managing Director without intervening in the management’s responsibility. The Managing Director, who holds

the highest position in the management, is responsible for routine management. Scope of responsibility of the Managing

Director and the person in charge of this position is clearly set.

The Managing Director is obliged to manage and operate the Company in compliance with the objectives, rules and

resolutions of the Board of Directors’ meeting in which independent directors participated. The Managing Director also has

the authority to manage permanent and contractual employees. In managing the Company’s business, the Managing

Director who reports to the Board of Directors has the authority to hire, appoint, punish, terminate, promote and adjust

salaries of employees and contractual staff members. This, however, is limited to the employees or contractual staff members

to whom these actions are enforced by the Board of Directors’ or the Company’s rules and regulations to be authorized and

approved by the Board of Directors. The Managing Director also has the authority to set work conditions for employees and

contractual staff members, order and announce direction for business operation which is neither contrary to the Company’s

rules and regulations nor the Board of Directors’ resolution. The Managing Director will undertake other businesses under the

Company’s rules and regulations and the Board of Director’s resolution, and sets the scope of works for employees and

contractual staff members at all levels.

In terms of outsiders-related actions and businesses, the Managing Director has the authority to take action on behalf

of and binding to the Company except for those actions and businesses that the Managing Director or any person having

conflict of interest as stakeholders or contrary party to the Company or its subsidiaries. In such case the Managing Director

may take action only under approval by the Board of Directors meeting in which independent directors attended. For this

action, the Managing Director may authorize other person to take action on his behalf, except in any business that may bind

the Company as the borrower, buyer or order maker and involves a project worth more than Baht 30 million. Any juristic act

made by the Managing Director, which violates the Company’s rules and regulations or the Board of Directors’ resolution, will

not hold the Company liable, except ratification is made by the Board of Directors.

The Managing Director has authority to approve the procurement not exceeding Baht 30 million each, and the

donation not exceeding Baht 100,000 each. The donation not exceeding Baht 300,000 each has to be proposed for approval

from the Chairman of the Board and the donation of higher value each is under the authority of the Board of Directors.

When the Managing Director is not in office or not able to perform his tasks, or when the position is vacant, the

Deputy Managing Directors will take charge as the Acting Managing Director as orderly appointed by the Board of Directors.

The Acting Managing Director has the same authority and scope of responsibility as the Managing Director except for the

authority as the member of the Board of Directors.

10. Remuneration of Directors and the Management Since 2005, the Company has set a written policy and criteria on remuneration of directors and the management in

order to ensure that the remuneration is based on the clear and appropriate criteria, method and process, in line with the

current situation, provides maximum benefits to the operations of the Company Group and motivate and retain qualified

human resources.


Remuneration for the directors and top executives is related to the goal and performance of the Company Group,

their responsibility, and the practice in other companies in the same industry in terms of business and size. The remuneration

is also determined to motivate and retain human resources of required knowledge, capability, skills and experience that

contribute to the success of the Company Group.

The directors who are assigned to take extra responsibility, such as being appointed to Sub-Committees, will receive

additional remuneration. The executive director will receive remuneration as a director that is linked to both corporate and

the Board’s performance. The Board of Directors’ remuneration is submitted to the shareholders’ meeting for approval on

annual basis. Currently, the remuneration is classified into two types: annual bonus and meeting allowances.

Remuneration of the top management is in line with the policy and criteria set by the Board, and is considered and

reviewed by the Human Resource and Remuneration Committee based on the key performance indices set earlier. The Board

will finally approve the remuneration of the management.

As required by the SEC, the remuneration of directors and the management is revealed on page 26-27.

11. Board of Directorsû Meetings The Company annually scheduled the Board of Director’s meetings in advance. Tentatively, the meeting is organized

on the third Monday of each month. Next meeting schedule was confirmed in each meeting to ensure the directors and

management were informed of the schedule and were able to fix their schedule in order to achieve effective meetings. There

are some additional meetings as necessity occurs. Sub-Committees’ meetings are also scheduled in advance.

Meeting agenda was clearly categorized and monthly schedule was clearly prepared. The Chairman and Managing

Director, who also acted as the Secretary to the Board, jointly discussed the meeting agenda to ensure the important

activities were covered and informed the directors in advance as well as sent meeting notice to them beforehand. However,

the directors might propose other meeting agenda with 10 day advance notice. For urgent matters or any critical events that

may have direct or indirect impact on the Company, the directors were allowed to submit and propose to the meeting during

the Board of Directors’ meeting.

The Company usually sent meeting notice together with agenda and document to each of the director approximately

seven days before the meeting date so that the directors had sufficient time to study them beforehand. During the meeting,

the Chairman encouraged each director to fully express their opinion and consider each agenda carefully, as well as allowed

sufficient time for the management to provide enough information for the directors to discuss on the matter. Directors could

express their opinion openly and freely. Every director regards it is his/her duty to attend every meeting except when

necessary. Top executives are present at the Board meeting to clarify or provide additional information on the matter, which

assisted the directors in making decision and allowed the executives to observe the Board of Directors’ operations.

Each meeting lasted for two hours averagely. The Company assigned the “Corporate Secretary Department” to render

secretariat and administrative works including meeting arrangement, document preparation for the Board of Directors’

meeting and shareholders’ meetings of the Company and its subsidiaries, recording, preparing and keeping meeting minutes

of the Board’s and shareholder’s meetings for the Company and its subsidiaries, provision of information for consideration,

support, and facilitating and coordinating on any activities and administrative works of the Company’s and subsidiaries’

Board. The Board’s meeting minutes produced in writing, included complete materialized information, and was completed

within three days after the meeting. After the meeting, the concerned divisions were informed of the Board’s resolutions for

further implementation. The Company arranged proper place for keeping the meeting minutes, which can be checked,

investigated and referred to at any time.

In 2006, the Board and Sub-Committees arranged meetings as follows:

• The Board held 13 regular and special meetings

• The Audit Committee held five meetings

• The Risk Management Committee held three meetings

• The Human Resources and Remuneration Committee held four meetings


12. Sub-Committees The Board of Directors have set up various Sub-Committees, each of which comprises non-executive members, to

assist the Board of Directors in screening and reviewing assigned tasks to ensure accuracy and completion before submitting

to the Board for approval or concurrence as the case may be.

The Sub-Committees include

• The Audit Committee

• The Human Resources and Remuneration Committee

• The Risk Management Committee

The responsibility of each sub-committee is shown on page 34-36. Each Sub-Committee regularly reported to the

Board of Directors.

13. Internal Control and Audit It is regarded that internal control both at managerial and operational levels is very important, thus, clearly specifies

scope of responsibility and authority of the management and employees in writing to ensure sufficient internal control

which is appropriate for the Company’s business operations. The Company provides for sufficient control on the Company’s

assets and property utilization and clearly identifies scope of responsibility of every level of operational staff to create check

and balance. Accurate, systematic and timely financial reports are provided for the management and public disclosure.

Remarks: - The figure before / shows the number of meetings the director attended

- The figure behind / shows the total number of meetings held while the director was in office

- Mr. Viroj Klangboonkrong was resigned since 1 May 2006

- Mr. Panich Pongpirodom was appointed as the Company’s Director since 1 May 2006

- Mr. Kamphuy Jirararuensak and Mr. Boonchoo Direksathapon were resigned since 1 October 2006

- Mr. Pala Sookawesh and Mr. Sujarit Patchimnun were resigned since 15 November 2006

- Mr. Pongpayome Vasaputi, Mr. Lae Dilokvidhyarat, Ms. Sutharat Angchanpen, and Mr. Vinit Tangnoi were appointed the Company’s Directors since 1 December 2006

Name of Directors Board of Audit Risk Management Human Resources and Directors Committee Committee Remuneration Committee

The participation of each director at the said meetings is as follows:

Mr. Cherdpong Siriwit 13 / 13 4 / 4

Mr. Viravat Chlayon 13 / 13 5 / 5 3 / 3

Mr. Suchart Thada-Thamrongvech 13 / 13 4 / 5 1 / 1

Mr. Chulasingh Vasantasingh 10 / 13

Mr. Kraisi Karnasuta 11 / 13

Mr. Chanin Vongkusolkit 10 / 13

Mr. Areepong Bhoocha-oom 12 / 13 5 / 5 4 / 4

Mr. Narong Sitasuwan 12 / 13

Mr. Panich Pongpirodom 9 / 9 2 / 2

Mr. Pongpayome Vasaputi 1 / 1

Mr. Lae Dilokvidhyarat 0 / 1

Ms. Sutharat Angchanpen 1 /1

Mr. Vinit Tangnoi 0 / 1 0 / 1

Mr. Viroj Klangboonkrong 4 / 4 1 /1 1 / 1

Mr. Kumphuy Jirararuensak 10 / 10 2 / 2

Mr. Boonchoo Direksathapon 10 / 10 2 / 2

Mr. Pala Sookawesh 8 / 11

Mr. Sujarit Patchimnun 8 / 11


The Company has the Internal Audit Division which is responsible for auditing all activities to ensure that the

Company’s operation is in accordance with the policy and guidelines set by the management, and achieves the goals and

objectives.

The Company has assessed the sufficiency and appropriateness of internal control according to the COSO-Internal

Control Integrated Framework in five areas as follows:

1. Control Environment for assessing the environment or factors arranged to ensure the internal control is required

by the Company

2. Risk Assessment for analyzing risk impact and formulating measures to manage risks that may prevent the

Company from achieving its preset goal

3. Control Activities for evaluating the appropriateness of scope of responsibility and scope of authorization in

approving various activities such as procurement, expense approval and accounting record

4. Information and Communication for communicating the complete, accurate and updated information which is

sufficient for decision making

5. Monitoring to ensure that every task has been implemented and is in line with the preset procedures in order to

achieve corporate goals

In assessing the sufficiency and appropriateness of internal control system, the Company has reviewed, improved,

corrected and updated it to be proposed to the Audit Committee every year. In 2006, the assessment result indicated that the

Company has sufficient internal control system appropriate for the Company’s operations.

14. Board of Directorsû Report The Board of Directors is responsible for the consolidated financial statements of the Company and its subsidiaries

and financial information published in the annual report. The financial statements are made to the generally accepted

accounting standards in Thailand. The Company adopts proper accounting policy and consistently adheres to it, uses

thorough consideration and makes careful projection. The Company also sufficiently discloses significant information in the

financial statements.

The Board arranges for efficient internal control system, which provides reasonable confidence that the accounting

record is accurate, complete and sufficient to sustain the Company’s assets, and to unveil weakness to prevent corruption or

any significant irregularities. The Audit Committee is responsible for the quality of the financial statements and internal

control system. The Audit Committee’s opinion on this matter is published in the Audit Committee’s Report on page 86.

The Board regards that the Company’s internal control is satisfactory and can create reasonable confidence on the

financial statements credibility of the Company’s and its subsidiaries as of 31 December 2006. The Board has prepared

a report on its responsibility on financial statements as published on page 87.

15. Investorsû Relations The Board of Directors realizes that the Company’s financial and non-financial information have impact on decision of

investors and stakeholders. The Company, therefore, puts high importance to the accurate, complete, transparent and equal

disclosure of significant information through various information distribution channels of SET and the Company’s website.

The Company regularly held meetings between its management and analysts and investors to equally provide information

and address their concerns.

The Company has assigned the “Investor Relations Department” to communicate and provide information and news

on the Company’s activities to institutional investors, shareholders, analysts, concerned governmental organizations and

general public. Investors can contact the department at Tel. (66) 2978 5086-7 or at website: www.ratch.co.th or via e-mail

address: [email protected].

In 2006, the Company provided information through following activities:

• Analysts meeting to announce quarterly operating performance, allowing opportunity for analysts to meet with

the Company’s management and receive answers to their questions. Meeting document was published on the Company’s

website.

• Analysts and individual investors’ visit to Ratchaburi Power Plant, offering opportunity for them to learn about the

Company’s modern electricity generating process and efficient environment management system of the plant.


• Preparation of Form 56-1 and annual report (Form 56-2) for publishing through SET’s ELCID and on the Company’s

website. Annual report is sent to shareholders and those who are interested in the Company’s performance on annual basis.

16. Human Resource Responsibility The Company highly values human resources, which is a key factor enabling all operations to achieve its goal. Based

on its commitment to develop and maintain human resource in order to generate outstanding performance and sustainable

growth, the Company has formulated policy and continuously implemented efficient human resource programs. The

Company arranges organizational structure to include a department directly responsible for to human resource and gives

high importance to recruiting qualified employees to join the team. The Company has a plan to increase the capability of its

human resource in line with the Company’s business expansion. The Company promotes human resource development to

enhance their knowledge and ability, enable them to continuously create good work, and prepare them to be ready for

competition and the Company’s business direction. In addition to on-the-job training and work rotation to enhance

individual employee’s skills and capability, the Company has provided internal and external trainings and supported seminars

within and outside the country to encourage employees to work better within their scope of responsibility and with integrity

and ethical practices. The Company also supports employee career path development through systematic career

development programs.

The Company creates and promotes unique organizational culture that is embraced by the management and

employees. RATCH’s culture is as follows:

R – Respect, meaning the respect given to value and diversity of its employees and the provision of

opportunity for all to participate in the Company’s activities

A – Awareness, meaning awareness and knowledge in related areas and the thirst for knowledge which is a key

self-development factor

T – Teamwork, meaning team spirit, unity and commitment to solving problems in constructive way to achieve

mutual success

C – Creativity, meaning to have new ideas and creativity that promotes work improvement

H – Honesty, meaning to have integrity, discipline and ethics

The Company values internal communications that is crucial to create good understanding among employees. The

Company, therefore, promotes mutual learning and participation among its employees through the Intranet system and the

meeting of the Welfare Committee that represent all employees. Employees are encouraged to participate in ensuring work

excellence practice. Services and benefits are provided in accordance to the Company’s business and labor market. For

performance appraisal, clear objective is clearly and mutually set in advance by the supervisor and subordinates and used as

the guideline for performance appraisal and remuneration consideration.

In previous year, the Company has improved and implemented Human Resource Information System (HRIS)

to increase efficiency in human resource management, focusing on systematic assessment based on appropriate principles.

The Company also joined leading players in the industry in conducting a research on salary and benefit standard in

the industry and used the findings as a guideline in deciding appropriate rewards and benefits that are attractive enough

to retain qualified human resources that is in line with the Company’s performance.


Environmental and social responsibilities are important in achieving sustainable success in our business operation.

Thus, the Company requires for all of its electricity generating plants to implement sufficient environmental protection

measures and to control possible impact from its activities in compliance to the related laws and safety regulations. In

conjunction, the development and contribution to enhance the quality of life for people living in nearby community are

implemented simultaneously.

In the past year, the Ratchaburi Power Plant, operated by the Company’s major subsidiary Ratchaburi Electricity

Generating Company Limited, has strictly followed the practice of prevention, correction and control of environmental

impact that has been set in the Ratchaburi Power Plant’s Environmental Impact Assessment Report (EIA) approved by the

National Environment Board on March 2, 1996. The Company also set its safety measures to control and prevent possible

impact as much as possible. Last year, the Company was assessed under the EMS ISO 14001 version 2004 by Det Norske

Veritas Company Limited, and, eventually, the Company has received the certification on July 14, 2006.

Environmental Management The Ratchaburi Power Plant has strictly followed the environmental impact reduction and environmental quality

monitoring plan, and regularly prepared and provided the report on such matters to the Office of the Natural Resources and

Environment Policy and Planning semiannually. Significant environmental management standards already implemented are

as follows:

• Continuous Emission Monitoring Systems (CEMs): the system collected emission sample from the end of

smokestacks at Ratchaburi Power Plant every 15 minutes to measure and keep record of carbon dioxide, nitrogen, sulfur

dioxide, carbon monoxide and dust. In the past year, the contaminated air index measured at the Ratchaburi Power Plant was

under the control limit, according to the standards specified by the ministerial announcement of the Ministry of Industry B.E.

2547 on contaminated substances emitted from electricity generating and distribution plants, and the ministerial

announcement of the Ministry of Science, Technology and Environment (B.E. 2539).

• Air Quality Measurement: The Company has installed a measuring tool at the end of each smokestack as well as

introduced Ambient Air Quality Monitoring Systems (AAQMs) by installing four permanent air quality monitoring stations in

the community near the power plant for 24-hour monitoring of sulfur dioxide, nitrogen dioxide, ozone and dust smaller than

10 micron, and dust levels. The monitoring showed that the level of pollutants, especially sulfur dioxide and nitrogen dioxide

in the air around the power plant was relatively low by the standards specified in the National Environment Board

announcements No. 10 (B.E. 2538), No. 21 (B.E 2544), and No. 24 (B.E. 2547).

• Waste Water Management: The analysis of waste water sample collected at the end of the pipes which are

approximately three kilometers from the Retention Pond No. 2 before being released to the irrigation canal (Bang Pa Canal)

shows that water quality index successfully met the Irrigation Department’s standards on waste water released to irrigation

system, the control standards on releasing waste water from industrial plant and industrial estates, and the Ministry of

Science, Technology and Environment announcement No. 23 (B.E. 2539).

• Surface Water Quality: Ratchaburi Power Plant collected water sample from four locations – Mae Klong River

at Ban Tha Rab, and three areas in Bang Pa Canal – before, after and at the Power Plant’s water release area. The water

sample was analyzed against the quality standard of surface water under the National Environment Board announcement

No. 8 (B.E. 2537). The analysis shows that the level of Dissolved Oxygen (DO) and the level of Biological Oxygen Demand

(BOD) in the four water samples varied in different seasons. As a result, the Ratchaburi Power Plant has tightened its standards

for monitoring surface water, especially for water in Bang Pa Canal. The Power Plant installed water quality measurement

tools before and after the Power Plant’s water release point, in order to continuously monitor water qualities including PH,

electricity conduction, temperature, DO and BOD levels.

• Noise Control: Ratchaburi Power Plant has measured loudness at the plant and nearby community four times

a year regularly. Noise measurement instruments have been installed to keep track of noise level 24-hours for three

consecutive days. Results shows that the noise level occurred by the power generating procedure was below 70 decibel and

RATCH2006Environmental and Social Responsibilities

Environmental and Social Responsibilities


the maximum noise was below 115 decibel which are within the allowed range specified in the National Environment Board

announcement No. 15 (B.E. 2540).

Safety Measures To effectively prevent and reduce possible impact, Ratchaburi Power Plant carefully formulated Safety Measures that

include planning and sparing sufficient space between buildings and facilities in the power plant area to prevent possible

accident from spreading, and installing advanced safety equipment, especially the automatic fire prevention equipment in

the area that risks of fire accident may occur while the electricity generators are operating.

Sub-systems used for fire prevention in the Power Plant are listed as follow;

• Fire alarm system: smoke and heat detectors were installed in every building within the Power Plant and

interoperate with the automatic fire distinguishing system. When the devices detect smoke and heat, they will immediately

send signal to the fire alarm and control equipment. Once there is flame, the detectors will activate the automatic fire

extinguishers. Automatic water sprinklers that have been installed around transformers will immediately sprinkle water once

receiving fire alarm signal.

• Fire prevention branches and hydrants: were installed within the electricity generating buildings and every 100

meters on roads around the buildings.

• Gas fire distinguisher: the automatic system interoperates with the fire alarm system. There are three gas fire

distinguishing systems as follows:

- Carbon Dioxide Fire Prevention System is used in emergency in front of the gas turbine unit

- The FM200 system is used at electricity system room. FM200 is an environmentally friendly gas that does not

harm the global atmosphere

- Inert gas is used when fire breaks up at generator control room.

• Foam system is located at every oil tank. The system will immediately activate when receive signal from fire alarm

system. It will inject foam under oil tank to prevent fire from spreading. Sprinklers around gas tank will also spray water to

cool down the tanks, preventing tanks from deforming and prevent fire from spreading to the nearby oil tanks.

• Water pumps and water resources is separated into two units as follows;

- Unit 1: pumping water from raw water reservoir, which has 1.6 million cubic meters of water. This will be used

for fire accident at the Combined-Cycle Power Plant.

- Unit 2: pumping water from two 8,800 cubic meter water tanks. The Unit 2 will be used in case of fire at the

Combined-Cycled Power Plant

However, in case one of the water pump units does not work, water from other area can be channeled into the fire spot.

In addition, the Ratchaburi Power Plant employs loss management system for its safety management within the

Power Plant. This includes rules for people working in the Power Plant and employees and practice guidelines for contractors

who have to work in the Power Plant area. The Company regularly train and remind its staff of safety rules that covers general

safety measure, safety measure for working in high places, safety for working in poor ventilated areas, rules on working on

high risk areas such as rules related to working with electricity system, and loading and unloading hydrogen, and chlorine

tank change, before they start to work. In 2006, the Company upgraded the high-risk work supervision measure. In addition

to strict control, the company introduced four-hour after-work monitoring system.

In case that the accident prevention equipment fails to perform and the accident starts to expand, the Ratchaburi

Power Plant has already prepared systematic emergency plan to limit and minimize possible losses. In its emergency plan, the

plant is prepared for emergency in four areas – the Thermal Power Plants area, the Combined-Cycled Power Plants area, and

another two areas surrounding production buildings and warehouse. The Ratchaburi Power Plant clearly assigns specific

person to take care of each area in case of emergency. Fire drill is held regularly on yearly basis. In 2006, the Ratchaburi Power

Plant held an internal fire drill, in cooperation with PTT Public Company Limited’s Pipe System Operation Center Region 5,



Mueang Ratchaburi Administration’s Disaster Relief Unit, the Disaster Relief Unit of the Baan Rai District Administration in Mueang District, Ratchaburi Hospital’s Emergency Unit, and the Director of Disaster Prevention Department of Mueang District. The Company invited public and private organizations and media to observe the training and advice on improvement. The project was completed on November 8, 2006.

Social Responsibility In addition to efficient environmental management, the Company realizes its duty to build and maintain recognition from nearby community. In the past year, the Company operated two important social responsibility projects to meet with the requirement of the nearby community. The projects are successful and have made significant progress.

1. Ratchaburi Power Plant’s Community Development Project

The progress report of the project in the past one year indicated that communities around the Power Plant are stronger, have better quality of life and environment. Major progresses are as follows:

• Ratchaburirom Park Project : With an objective to make it district park, the Company has completely created two park for the community- the Tha Ruea Ratchaburirom Park located in Phang Phuai sub-district, Damnern Saduak District and Ban Rai Ratchaburirom and transferred the parks to their Sub-district Administrative Organization. Another three parks are in progress, including those in, Sam Ruean sub-district in Mueang District, Don Sai sub-district, and Ban Singh sub-district in Photharam District.

• Village Bank and Revolving Funds : In 2006, three village banks and revolving funds were established, making the total number of 24 banks. Currently, total members of the village bank and revolving funds are 3,879 persons, increasing 518 persons or 15.41 percent from the year 2005. Total fund is Baht 14,442,185 representing an increase of 53.66 percent or Baht 5,043,466.

• Community Development : The Company aims to promote skills development, enabling local residents to generate higher income. In 2006, the number of skill groups has increased from 34 to 60 groups and the number of members is now 1,484 persons. The project also built three additional career group networks , which are organic agricultural network, occupation network, and cow raiser network.

• Bang Pa Canal Conservation : The project is aimed on creating awareness on water resource development and promoting cooperation that comes in the form of management committee, comprising of representatives from the government and communities. The project participants cooperated in conducting Bang Pa Canal survey to collect information about problems and to find the best possible solutions. At present, 9 clubs were established in four sub-districts, namely Sam Ruan, Phikun Thong, Ban Rai and Phang Phuai. After all, the Bang Pa Canal Conservation Network was established, a conservation and development plan of Bang Pa Canal, district level and five conversation and development plans of Bang Pa Canal, village level have been finished and applied, and 58 surveys of the water resources have been achieved.

• Health and environment : the Company held activities to promote health knowledge to people who live in surrounding communities and encouraged community involvement in public health development. Organic and bio fertilizer has been promoted. The project also supports the study and development of garbage management, which improves the environment of the community. People have changed their garbage disposal habit. The involved communities have high awareness on environment. Participation in various activities increased by more than 100 percent.

In addition to the Ratchaburi Power Plant’s Community Development Project, the Company provided social services in other areas as follows:

• Health:

The Company arranged mobile medical and dental unit to provide service to people living around Ratchaburi Power Plant. The Company also has had a very good cooperation from private organizations in providing various free services, such as hair cut, Thai massage and eye check. In the past year, the Company also added the new eyeglasses making service to 133 elderly people who need eyeglasses but do not have financial support. People in the surrounding communities were highly satisfied with the widely recognized mobile medical and dental unit.



• Sports:

The Company sponsor Ratchaburi Province male football team in the national tournament. The team won the Provincial League 2 and was granted the right to enter the Provincial League 1- the professional football league. Consequently, this project has promoted football development in Ratchaburi province, which is now ready to start a professional football club, which is able to welcome visiting teams to play in its home. Football development plan has been continuously prepared. People in Ratchaburi province are very proud of their male football team, which has brought pride and fame to the province and to the Company as the province main contributor and supporter.

• Education:

To promote and enhance education opportunity to children, the Company has offered scholarships to poor children with good academic record in 27 schools near the Ratchaburi Power Plant. The scholarship students have to pass the criteria that corporately set by all participating schools. In the past year, 870 scholarships were presented, including 704 scholarships of Baht 2,000 each for primary school students, and 166 scholarships of Baht 3,000 each for high school students. The Ratchaburi Governor granted an honor to present the scholarships to students.

The Company also supports the establishment of four funds for quality of life development, which are the Quality of Life Fund for Mueang District, the Quality of Life Fund for Photaram District, the Quality of Life Fund for Damnern Saduak District, and the Quality of Life Fund for Ratchaburi Province, which is responsible for the improvement of quality of life of people in six districts and one sub-district Each fund management committee is comprising of representatives from government organizations and from people in the community, in order to ensure that these funds are managed effectively for the best benefits of the people and to achieve the funds objectives. The establishments of these funds result in good public understanding of the Company’s commitment to social development and the betterment of people living in Ratchaburi province and its sincere responsibility to community development.

2. Ratchaburi Power Plant’s Pollution and Environment Problem Solving Project

The project was initiated to encourage public participation in monitoring the operations of Ratchaburi Power Plant in accordance the Company’s intention to enhance relationship between the Power Plant and its surrounding communities to live and grow together based on good understanding and recognition.

Rajabhat Institute University, Jom Bueng Village, Ratchaburi province, is the project leader conducting a project study. This institute works closely with specialists and scholars from Chulalongkorn and Mahidol universities, as independent third-party, to study on economic and social as well as scientific and technology aspects. The study covers 72 villages located within five-kilometer range from the Power Plant and seven villages outside this range. Objectives of the study are as follows:

• Collecting and studying secondary data on population, economy, problems on people living near the power plant that may arise from the power plant activities

• Collecting and analyzing sample of air, soil, water, plants and thermal infrared imagery to find the causes of problem and impact that communities are concerned with

• Studying the changes of types and numbers of insects around the power plant

• Discussing with the people in the local community and surveying their opinions about pollution problems and the Ratchaburi Power Plant

• Analyzing the relationship between scientific rationale and belief or perception about pollution of people living near the Power Plant

• Providing suggestions that are accepted by all parties

• Preparing future monitoring plan for the Power Plant operations

Key study process includes public participation and project information distribution, as well as technical hearing on the study results among specialists. The project is expected to complete in February 2007.

Moreover, Ratchaburi Electricity Generating Company Limited realizes the problem of ozone gas, thus, it has hired SECOT Company Limited to conduct survey and analyze the causes of ozone increase in Ratchaburi Province. The report will be complete in October 2007.





Audit Committeeûs Report

The Audit Committee of the Ratchaburi Electricity Generating Holding Public Company Limited comprised of

three members. Mr. Suchart Thada-Thamrongvech is the chairman of the Audit Committee. Mr. Viravat Chlayon, and

Mr. Areepong Bhoocha-oom are audit committee members. Mr. Thoedpan Indramaha, Director of the Internal Audit

Division acts as the Committee’s secretary.

The Audit Committee members have the qualifications of independent directors as specified in the Company’s

regulation on Company Directors B.E. 2549. Under the regulation, the committee members must not be nominees of the

major shareholders in order to retain independence from major shareholders, executives and related persons, and must

not be neither senior executives nor staff or consultant receiving salary from the Company. None of the committee

members holds more than 0.5% of paid-up capital of the Company.

The Audit Committee has the responsibility as specified in the Company’s regulation on Audit Committee B.E. 2549.

In 2006, the Audit Committee held five meetings. All the Audit Committee members attended the meeting except

for the fifth meeting when Mr. Suchart Thada-Thamrongvech traveled abroad. The management of the Company and its

subsidiaries and the auditors participated in the meetings to present information, obtain opinions and suggestions that

are useful to the management of the Company. The results of each meeting were presented to the Board of Directors of

the Company and its subsidiaries for their acknowledgement. Significant activities are as follows:

• Reviewing that the internal control is sufficient and appropriate, especially in five areas including control

environment, risk assessment, control activities, information and communication measure, and monitoring. The reviews

showed that the Company and its subsidiaries have sufficient and appropriate internal control system, which provided

confidence that all business activities will achieve the objectives and goals set by the management.

• Reviewing quarterly and annual financial statements of the Company and its subsidiaries in cooperation with

the auditor prior to presentation to the Board of Directors of each company. It is confirmed that the financial statements of

the Company and its subsidiaries complied with the generally accepted accounting standards and with sufficient

disclosure.

• Reviewing the reasonableness and disclosure of connected transactions. It is found that most of the connected

transactions are long-term agreement with EGAT, which is the Company’s major shareholder. The management reported

progress and changes in these transactions to the Audit Committee every quarter.

• Reviewing the company’s compliance to securities and stock exchange and related business laws and

regulations. The result showed that business activities of the Company and its subsidiaries complied with the related laws

and regulations.

• Reviewing performance and recommendations of the Internal Audit Division, which follows the audit plan

approved by the Audit Committee. The Committee viewed that the Company and its subsidiaries have sufficient and

appropriate internal control and transparent corporate governance with no significant irregularities.

The Audit Committee agreed to propose the Board of Directors to hire PriceWaterhouse Coopers ABAS Company

Limited and appointed Miss Nangnoi Chaorentaweesap (registration no. 3044) or Mrs. Anothai Leekitwattana (registration

no. 3442), or Mr. Prasan Chuapanich (Registration no. 3051) as the auditor for the Company and its subsidiaries in 2007,

for the fourth consecutive year. The audit fee is Baht 2,233,000 (the fee in 2006 was Baht 1,771,000), which is the part of the

Company at the amount of Baht 692,200 (the fee in 2006 was Baht 478,500). The Company did not hire PriceWaterhouse

Coopers ABAS Company Limited to provide other services to the Company and its subsidiaries except for the auditing

purpose.

Mr. Suchart Thada-Thamrongvech

Chairman of the Audit Committee



The Board of Directorsû Report on Its Responsibility to Financial Report

The Board of Director is responsible for the consolidated financial statements and the company financial statements

of Ratchaburi Electricity Holding Public Company Limited including financial information as appeared in this annual report.

The financial statements were stated in accordance with generally accepted accounting principles, applying the appropriate

accounting policies and consistently adhered with careful discretion and best estimation in the preparation. Besides,

significant information was disclosed sufficiently in the notes accompanying the financial statements for the benefit of

shareholders and investors in a transparent manner.

The Board of Directors has provided and maintained the appropriate and efficient internal control system to

reasonably ensure that the accounting data are accurate, complete, and sufficient to maintain its assets and to prevent

fraud and materially irregular operation.

In this regard, the Board of Directors has appointed the Audit Committee to review the accounting policies, the

quality of the financial reports, the internal control, and internal audit system. The opinions of the Audit Committee with

regard to the matters, which appear in the Report of the Audit Committee, are already shown in this annual report.

The consolidated financial statements and the company financial statement of the Company have been audited by

the Company’s Auditor, namely PricewaterhouseCoopers ABAS Limited. In auditing the Board of Directors provided all

relevant information and documents to enable the Auditor to examine and express his opinion in conformity with

generally accepted standards, The Auditor’s opinion, which appears in the auditor’s report, is already shown in this annual

report.

The Board of Directors is of the opinion that the overall internal control system in five areas including organizational

structure and environment, risk management, information system and communication control activities and monitoring

system of the Company is satisfactory and can bring about reasonable confidence that the consolidated financial

statements and the company financial statements of the Company for the year ending December 31,2006 are reliable and

prepared in conformity with generally accepted accounting principles and carried out accurately in accordance with law

and all relevant rules and regulations.

Cherdpong Siriwit Narong Sitasuwan

Chairman Director and Managing Director



Auditorûs Report

To the Shareholders of Ratchaburi Electricity Generating Holding Public Company Limited

I have audited the accompanying consolidated and company balance sheets as at 31 December 2006 and 2005, and

the related consolidated and company statements of income, changes in shareholders’ equity, and cash flows for the

years then ended of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries, and of

Ratchaburi Electricity Generating Holding Public Company Limited, respectively. The Company’s management is

responsible for the correctness and completeness of information in these financial statements. My responsibility is

to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan

and perform the audits to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made

by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a

reasonable basis for my opinion.

In my opinion, the consolidated and company financial statements referred to above present fairly, in all material

respects, the consolidated and company financial position as at 31 December 2006 and 2005, and the consolidated

and company results of operations, and cash flows for the years then ended of Ratchaburi Electricity Generating

Holding Public Company Limited and its subsidiaries, and of Ratchaburi Electricity Generating Holding Public

Company Limited, respectively, in accordance with generally accepted accounting principles.

Nangnoi Charoenthaveesub

Certified Public Accountant

(Thailand) No. 3044

PricewaterhouseCoopers ABAS Limited

Bangkok

9 February 2007




As at 31 December 2006 and 2005

C o n s o l i d a t e d C o m p a n y

Notes 2006 2005 2006 2005 Baht Baht Baht Baht

The notes to the consolidated and company financial statements on pages 095 to 119 are an integral part of these financial statements.

ASSETS

Current Assets

Cash and cash equivalents 3 3,124,488,996 4,388,090,118 560,827,669 1,527,141,359

Short-term investments - held-to-maturity 4 7,760,363,283 4,849,496,812 6,925,564,295 3,650,000,000

Long-term investments due within one year 4 -

- Promissory notes and bills of exchange, net 281,707,147 114,446,940 - -

- Marketable securities - held-to-maturity 62,401,234 177,576,334 - -

Trade receivable from a related party 19 8,644,763,373 6,536,324,588 - -

Advances to and other receivables from

related parties 19 26,152,142 21,432,700 9,031,734 11,579,428

Spare parts and supplies, net 5 1,798,959,085 2,084,298,915 - -

Other current assets 527,561,506 128,548,731 81,536,552 38,171,609

Total Current Assets 22,226,396,766 18,300,215,138 7,576,960,250 5,226,892,396

Non-Current Assets

Long-term trade receivable from a related party 19 24,754,154 29,704,985 - -

Long-term investments 4 -

- Promissory notes and bills of exchange, net 509,819,395 276,644,969 509,819,395 -

- Marketable securities - held-to-maturity, net 119,065,766 81,480,273 100,000,000 -

Long-term loans to related parties 19 - 649,555,838 504,031,000 1,199,755,838

Long-term receivable from related parties 19 - - 3,969,121 1,217,223

Investments in subsidiaries 6 - - 25,713,492,339 25,032,680,859

Interests in joint ventures 6 3,985,924,832 3,035,731,484 321,035,003 49,699,965

Property, plant and equipment, net 7,8 45,233,230,330 47,561,454,787 40,332,970 42,993,157

Other non-current assets 5,860,608 5,749,330 5,402,854 4,745,881

Total Non-Current Assets 49,878,655,085 51,640,321,666 27,198,082,682 26,331,092,923

Total Assets 72,105,051,851 69,940,536,804 34,775,042,932 31,557,985,319

Balance Sheets





LIABILITIES AND

SHAREHOLDERS’ EQUITY

Current Liabilities

Trade payable 6,185,411,188 4,896,779,093 - -

Trade payable to a related party 19 176,212,088 67,098,687 - -

Current portion of long-term loans, net 8

- Long-term loans from financial institutions 777,686,273 481,689,873 - -

- Debentures 2,330,229,831 2,330,229,831 - -

Amounts due to related parties 19 24,211,608 187,791,528 3,494,595 627,341

Other payables 187,547,730 287,003,523 - -

Unearned revenue and accrued expenses to

related parties 19 35,039,268 95,784,839 - -

Other current liabilities

- Corporate income tax payable 42,696,503 25,761,655 - -

- Value added tax payable 231,048,663 183,690,881 917,318 861,404

- Reserve for loss from fire cause 11 750,240,421 - - -

- Dividends payable 10,500,286 10,710,442 10,500,286 10,710,442

- Others 258,791,740 376,680,505 64,728,735 56,420,543

Total Current Liabilities 11,009,615,599 8,943,220,857 79,640,934 68,619,730

Non-Current Liabilities

Long-term loans, net 8

- Long-term loans from financial institutions 22,235,859,678 23,013,545,951 - -

- Debentures 4,164,174,576 6,494,404,407 - -

Total Non-Current Liabilities 26,400,034,254 29,507,950,358 - -

Total Liabilities 37,409,649,853 38,451,171,215 79,640,934 68,619,730

Shareholders’ Equity

Share capital 9

Authorised share capital 14,500,000,000 14,500,000,000 14,500,000,000 14,500,000,000

Issued and paid-up share capital 14,500,000,000 14,500,000,000 14,500,000,000 14,500,000,000

Premium on share capital 1,531,778,000 1,531,778,000 1,531,778,000 1,531,778,000

Retained earnings

Appropriated

- Legal reserve 10 1,450,000,000 1,298,771,531 1,450,000,000 1,298,771,531

Unappropriated 17,213,623,998 14,158,816,058 17,213,623,998 14,158,816,058

Total Shareholders’ Equity 34,695,401,998 31,489,365,589 34,695,401,998 31,489,365,589

Total Liabilities and Shareholders’ Equity 72,105,051,851 69,940,536,804 34,775,042,932 31,557,985,319



As at 31 December 2006 and 2005

Balance Sheets





Sales 19 50,372,699,091 44,034,963,981 - -

Cost of sales 19 (42,948,507,121 ) (36,478,528,496 ) - -

Gross profit 7,424,191,970 7,556,435,485 - -

Administrative expenses 19 (497,564,872 ) (961,011,679 ) (256,042,028 ) (209,236,066 )

Directors’ remuneration 15 (27,028,366 ) (32,305,243 ) (19,225,799 ) (19,759,500 )

Profit (loss) from sales 6,899,598,732 6,563,118,563 (275,267,827 ) (228,995,566 )

Other income 19

- Management service income 143,193,460 28,062,131 146,180,529 29,555,792

- Interest income 549,822,282 278,509,568 378,236,963 136,802,376

- Others 55,011,013 123,291,404 490,741 3,736,913

Other expense 11.1 (750,240,421 ) - - -

Operating profit (loss) 11 6,897,385,066 6,992,981,666 249,640,406 (58,900,485 )

Share of profit of subsidiaries and joint ventures 6 727,499,223 372,010,431 5,856,396,003 6,125,257,233

Profit before interest and tax 7,624,884,289 7,364,992,097 6,106,036,409 6,066,356,748

Interest expenses (1,443,753,384 ) (1,208,882,850 ) - -

Corporate income tax 12 (75,094,496 ) (89,752,499 ) - -

Net profit for the year 6,106,036,409 6,066,356,748 6,106,036,409 6,066,356,748

Basic earnings per share 13

Net profit for the year 4.21 4.18 4.21 4.18



For the years ended 31 December 2006 and 2005

Statements of Income



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Cash flows from operating activities

Net profit for the year 6,106,036,409 6,066,356,748 6,106,036,409 6,066,356,748

Adjustments to reconcile net profit to net cash

provided by operations:

- Depreciation 7 2,710,308,660 2,640,549,605 18,646,695 26,126,551

- Allowance for obsolescence spare parts

and supplies 5 64,108,609 61,419,106 - -

- Amortisation of deferred financing fee 8 30,822,296 276,560,912 - -

- Unrealised currency exchange (gains)/losses (5,257,129 ) 98,248 52,698 -

- Share of profit of investments in subsidiaries

and joint ventures 6 (727,499,223 ) (372,010,431 ) (5,856,396,003 ) (6,125,257,233 )

- Gain on disposals of property, plant and

equipment (98,842 ) (5,736,077 ) (221,366 ) (3,472,350 )

- (Gain)/loss on write off of property,

plant and equipment (7,745,805 ) 376,119 3,067 -

- Reserve for loss from fire cause 11 750,240,421 - - -

- Others 2,196,256 2,519,857 - -

Cash flows before changes in operating assets

and liabilities 8,923,111,652 8,670,134,087 268,121,500 (36,246,284 )

Changes in operating assets and liabilities:

(excluding the effects of acquisition and disposal)

- Trade receivable from a related party (2,103,487,954 ) 113,710,034 - -

- Advances to and other receivables from

related parties (4,719,442 ) 78,822,343 (204,205 ) (8,656,528 )

- Spare parts and supplies (72,396,161 ) (538,991,309 ) - -

- Other current assets and non-current assets (471,346,326 ) (17,130,291 ) (73,348,772 ) (23,439,394 )

- Trade payable and trade payable

to a related party 1,397,745,496 103,065,767 - -

- Amounts due to related parties and

other payables (258,511,491 ) 60,135,999 2,867,254 627,341

- Unearned revenue and accrued expenses

to related parties (60,745,571 ) 57,545,471 - -

- Other current liabilities (63,771,632 ) 46,929,402 8,311,408 10,832,165

Net cash receipts from (payments in) operating

activities 7,285,878,571 8,574,221,503 205,747,185 (56,882,700 )




Statements of Cash Flows




Cash flows from investing activities Net cash payments of short-term investments (2,887,662,391 ) (2,177,419,968 ) (3,256,777,031) (1,047,686,643 ) Net cash receipts from deposits at financial institutions and short-term investments used as collateral - 3,772,965,936 - - Cash receipts from redeems of long-term investments 290,305,920 782,142,880 - - Cash payments of long-term investments (599,279,804 ) - (599,279,804) - Cash payments of long-term investments used as collateral - (127,826,100 ) - - Cash receipts from redeems of long-term investments used as collateral - 363,334,023 - - Payment of short-term loan to a related party - - (2,655,000,000 ) (35,000,000 ) Receipt from short-term loan to a related party - - 2,655,000,000 35,000,000 Acquisition of interest in joint ventures 6 - (579,035,400 ) - (53,750,000 ) Payments for additional capital of joint ventures (267,081,000 ) - (225,000,000 ) - Payments for additional paid-up of shares of joint ventures 6 (173,874,000 ) (8,970,000 ) (56,250,000 ) - Receipt from decrease in capital of a subsidiary - - 50,000,000 - Payment of long-term loan to related parties - (242,747,957 ) (143,831,000 ) (768,033,357 ) Receipts from long-term loans to related parties 649,555,838 - 839,555,838 467,885,400 Dividends received from a subsidiary and a joint venture 6 218,260,875 483,152,544 5,135,499,486 5,562,540,900 Proceeds from disposal of property, plant and equipment 3,655,512 12,090,629 3,653,912 3,793,670 Purchases of property, plant and equipment (40,408,487 ) (790,405,183 ) (19,422,120 ) (25,488,304 ) Net cash receipts from (payments in) investing activities (2,806,527,537 ) 1,487,281,404 1,728,149,281 4,139,261,666

Cash flows from financing activities Receipts from short-term loans 2,560,000,000 10,000,000,000 - - Repayments of short-term loans (2,560,000,000 ) (10,000,000,000 ) - - Receipts from long-term loans 8 - 24,251,548,733 - - Repayments of long-term loans 8 (509,502,000 ) (36,274,015,493 ) - - Receipts from issuance of debentures 8 - 9,990,000,000 - - Repayments of debentures 8 (2,333,240,000 ) (1,166,620,000 ) - - Dividends paid to shareholders (2,900,210,156 ) (3,045,432,880 ) (2,900,210,156 ) (3,045,432,880 ) Net cash payments in financing activities (5,742,952,156 ) (6,244,519,640 ) (2,900,210,156 ) (3,045,432,880 )

Net increase (decrease) in cash and cash equivalents (1,263,601,122 ) 3,816,983,267 (966,313,690 ) 1,036,946,086 Beginning balance 4,388,090,118 571,106,851 1,527,141,359 490,195,273 Ending balance 3,124,488,996 4,388,090,118 560,827,669 1,527,141,359

Cash and cash equivalents are made up as follows: - Cash on hand and deposits at financial institutions 236,387,871 403,822,540 118,281,606 177,613,364 - Short-term investments - maturity within three months 2,888,101,125 3,984,267,578 442,546,063 1,349,527,995 3,124,488,996 4,388,090,118 560,827,669 1,527,141,359

Non-cash transactions: Purchase of machinery and equipment which has not been paid - 80,176,136 - - Purchase of machinery for construction which has not been paid 10,194,770 - - - Transfer advance payments to property, plant and equipment - 400,000,000 - - Transfer of machinery and equipment to other receivable - 33,664,430 - - Transfer from spare parts and supplies to property, plant and equipment 293,627,382 - - - Transfer from other receivables to machinery and equipment 33,664,430 - - -

Supplementary information for cash flows: Interest paid 1,443,987,987 1,208,004,740 - - Tax paid 65,822,252 84,555,475 7,594,602 1,964,562




Statements of Cash Flows



1. General information Ratchaburi Electricity Generating Holding Public Company Limited (the Company) is a public company limited, incorporated and resident in Thailand. The address of its registered office is 19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok, Thailand.

The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries and joint ventures are referred to as the Group.

The principal business of the Group is to generate and sell electricity to Electricity Generating Authority of Thailand (EGAT) and to invest in other companies, whose objectives are equivalent or similar to the Company’s objective, which is the Power Plant business. As at 31 December 2006, the Group employs 146 people (2005: 137 people).

These consolidated and company financial statements were authorised for issue by the management on 9 February 2007.

2. Accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below.

2.1 Basis of preparation

The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535.

The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates.

An English version of the consolidated and company financial statements have been prepared from the statutory consolidated and company financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory consolidated and company financial statements shall prevail.

2.2 Accounting standard effective from 1 January 2007

According to the notification of Federation of Accounting Professions No.26/2549 dated on 11 October 2006 and No.32/2549 dated on 3 November 2006 relating to the amendment of TAS 44 “Consolidated financial statements and accounting for investment in subsidiaries” and TAS 45 “Accounting for investments in Associates” which require the change from the equity method of accounting to cost method of accounting for the investment in subsidiaries and associates presented in the separated financial statements. In according to the cost method of accounting, income from the investment will be recognised when dividends are declared. The notification is mandatory from 1 January 2007. The Company also applies the cost method of accounting for interest in joint venture presented in the separate financial statements.



Notes to the Consolidated and Company Financial Statements



2.3 Group accounting - investments in subsidiaries, and interests in joint ventures

2.3.1 Investments in subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

Inter company transactions, balances and unrealised gains (losses) on transactions between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in subsidiaries are reported using the equity method of accounting.

A list of the Group’s principal subsidiaries is shown in Note 6.

2.3.2 Interests in joint ventures

The Group’s interests in jointly controlled entities are accounted for by the equity method of accounting in the consolidated and company financial statements. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that it is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the Group’s purchase of assets from the joint ventures until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realisable value of assets or an impairment loss, the loss is recognised immediately.

A list of the Group’s principal joint ventures is shown in Note 6.

2.4 Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated and company financial statements are presented in Thai Baht.

Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of income.

2.5 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flows statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, short-term highly liquid investments with original maturity of three months or less.

2.6 Trade accounts receivable

Trade accounts receivable are carried at original invoice amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified.



2.7 Spare parts and supplies

Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated based on the moving average basis. The spare parts are categorised as fuel, specific spare parts and common spare parts. Specific spare parts are used for specific plant equipment in the power plant.

The allowance for specific spare parts is calculated using the straight-line method to write off the balances of specific spare parts on hand at the year end over the remaining useful life of the power plant.

2.8 Investments

Investments other than investments in subsidiaries and interests in joint ventures are classified as held-to-maturity. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date, which are classified as current assets.

Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Held-to-maturity investments are carried at amortised cost using the effective rate.

A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income.

2.9 Intangible assets

2.9.1 Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of joint ventures is included in interests in joint ventures. Goodwill is amortised using the straight-line method over its estimated useful life. Goodwill is tested for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.

2.9.2 Development expenditure

Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the period of its expected benefit.

2.10 Property, plant and equipment

Property, plant and equipment are initially recorded at cost. Plant and equipment are stated at historical cost less accumulated depreciation.

Depreciation is calculated using the straight-line method to write off the cost of each asset, except for land which is considered to have an indefinite life, to their residual values over their estimated useful lives as follows:



Equipment for the Gas Turbine power plant will be depreciated when it is in use.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Repair and maintenance expenses are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Repair and maintenance expenses of equipment for the operation of gas turbines in the combined cycle power plant are according to the Contractual Service Agreement for the Combined Cycle Generating of Ratchaburi Power Plant with the Consortium of General Electric International Operations Co., Inc. and GE Energy Parts, Inc. It is recorded by using the straight-line method relating to the contract period and charged to the income statement during each financial period (Note 20).

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.

2.11 Deferred income taxes and income taxes

The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the carrying amounts and tax base of assets and liabilities in the consolidated or company financial statements.

Subsidiaries have certain promotional privileges from the Board of Investment, which include exemption of income tax as described in Note 16. Income tax presented in the consolidated and company statements of income relates to non - BOI promoted activities.

2.12 Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the straight-line method, any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of income over the period of the borrowings.

2.13 Employees’ benefits

The Group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund and managed by fund managers. The provident fund is funded by payments from employees and by the relevant Group companies. Contributions to the provident fund are charged to the consolidated and company statements of income in the year to which they relate. The Group does not recognise liabilities in respect of employee benefit potentially payable under the Thai Labour Law.

Years

Power plant, substations and transmission system 25

Equipment for Gas Turbine power plant 5 - 25

Operating and maintenance equipment and Equipment for Wind power plant 5

Buildings and structures 5 and 20

Furniture, fixtures and office equipment 5

Vehicles 5



2.14 Revenue recognition

A subsidiary has entered into a 25-year Power Purchase Agreement with Electricity Generating Authority of Thailand (EGAT) whereby the subsidiary will deliver the Net Electrical Generation to EGAT. Revenue comprises Availability Payments and Energy Payments. Availability Payments are recognised according to the terms set out in the Power Purchase Agreement, as conditions are met essentially on a time basis of power plant operation, net amount of sales taxes and discounts. Energy Payments are calculated based on electricity delivered.

Service income is recognised on the performance of services.

Interest income is recognised on an accrual basis unless collectibility is in doubt.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Revenue from sales and service within the Group are eliminated in the consolidated financial statements.

2.15 Dividends

Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the Annual Shareholders’ meeting.

2.16 Provisions

Provisions, which exclude the provisions relating to employee benefits, are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

2.17 Segment reporting

The Group engages in the power plant business through its own operations and through investments. Management considers its activities as an integrated and complementary line of business and determines that the Group has only one major business segment. Moreover, in terms of operating locations and market areas, the Group has only one geographical segment because it operates solely in Thailand.

2.18 Comparatives

The comparative figures have been adjusted to conform with changes in presentation in the current year.

3. Cash and cash equivalents

Cash on hand 180,000 210,000 100,000 100,000

Deposits held at call with banks 236,207,871 403,612,540 118,181,606 177,513,364

Short-term investments - maturity

within three months 2,888,101,125 3,984,267,578 442,546,063 1,349,527,995

Cash and cash equivalents 3,124,488,996 4,388,090,118 560,827,669 1,527,141,359

Consolidated Company 31 December 31 December 31 December 31 December As at 2006 2005 2006 2005 Baht Baht Baht Baht



As at 31 December 2006, deposits held at call with banks bear interest at the rates of 0.125% to 3.50% per annum (2005: 0.125% to 2.50% per annum) and short-term investments - maturity within three months bear interest at the rates of 4.50% to 5.15% per annum (2005: 1.875% to 4.08% per annum).

4. Short-term and long-term investments - Held-to-maturity On 23 June 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, had entered into the refinancing facilities agreement. The new loan agreement does not require the subsidiary to pledge investments as collateral and to maintain cash reserves for repayment of principal and interest. However, at the Board of Director’s meeting of the subsidiary held on 11 July 2005, it has approved the policy to maintain cash reserves for repayment of principal and interest in the next quarter. As at 31 December 2006, such reserves amounting to Baht 876.17 million were included in short-term investments and long-term investments (as at 31 December 2005: Baht 940.06 million).

Short-term and long-term investments - Held-to-maturity are as follows:

Short-term investments

Time deposit receipts 3,000,000,000 4,096,000,000 3,000,000,000 3,650,000,000

Promissory notes 1,500,000,000 300,000,000 1,500,000,000 -

Bonds - 453,496,812 - -

Bills of exchange, net 3,260,363,283 - 2,425,564,295 -

Total short term investments 7,760,363,283 4,849,496,812 6,925,564,295 3,650,000,000

Long-term investments due within one year

- Promissory notes and bills of exchange 281,707,147 114,446,940 - -

- Marketable securities 62,401,234 177,576,334 - -

Total long-term investments due within one year 344,108,381 292,023,274 - -

Long-term investments, net

- Promissory notes and bills of exchange, net 509,819,395 276,644,969 509,819,395 -

- Marketable securities, net 119,065,766 81,480,273 100,000,000 -

Total long-term investments, net 628,885,161 358,125,242 609,819,395 -

Total Short-term investments and long-term

investments - Held-to-maturity 8,733,356,825 5,499,645,328 7,535,383,690 3,650,000,000


As at 31 December 2006, short-term investments bear interest at the rates of 5.00% to 6.40% per annum (2005: 2.875% to 4.20% per annum) and long-term investments bear interest at the rates of 6.70% to 6.90% per

annum (2005: 2.10% to 5.81% per annum).


Allowance for obsolescence represents allowance against specific spare parts.

6. Investments in subsidiaries and interests in joint ventures 6.1 The Group’s principal subsidiaries and joint ventures that were incorporated as a limited company in Thailand are as follows:

Subsidiaries

Ratchaburi Electricity Generating Company Limited, a 99.99% owned subsidiary of the Company, has objective to develop and operate the Ratchaburi Power Plant comprising Thermal Generating Units and Combined Cycle Generating Units. The output is sold to EGAT under a 25-year Power Purchase Agreement.

Ratchaburi Energy Company Limited, a 99.99% owned subsidiary of the Company, has objective to develop and operate power plant including investing in the power energy business.

Ratchaburi Gas Company Limited, a 99.99% owned subsidiary of the Company, has objective to invest in the power energy business.

- Within 1 year 854,500,395 290,305,920 509,819,395 -

- Later than 1 year and not later than 5 years 117,983,820 361,323,700 100,000,000 -

- Later than 5 years - 1,341,120 - -

Total 972,484,215 652,970,740 609,819,395 -

Add Premium/(Discount) 509,327 (2,822,224 ) - -

972,993,542 650,148,516 609,819,395 -

Less Current portion (344,108,381 ) (292,023,274 ) - -

628,885,161 358,125,242 609,819,395 -


The maturity of long-term investments is as follows:

5. Spare parts and supplies, net

Fuel 622,299,299 589,935,934 - -

Specific spare parts 1,303,904,225 1,231,879,704 - -

Common spare parts 94,993 1,194,883 - -

Spare parts in transit 46,159,384 370,678,601 - -

Total 1,972,457,901 2,193,689,122 - -

Less Allowance for obsolescence (173,498,816 ) (109,390,207 ) - -

Spare parts and supplies, net 1,798,959,085 2,084,298,915 - -


101A n n u a l R e p o r t 2 0 0 6

Ratch Udom Power Company Limited, a 99.99% owned subsidiary of the Company, has objective to invest in the power energy business.

Ratchaburi Alliances Company Limited, a 99.99% owned subsidiary of Ratch Udom Power Company Limited, has objective to invest in the power energy business.

Joint ventures

Tri Energy Company Limited, a 50.00% owned joint venture of Ratchaburi Gas Company Limited, has objective to generate electricity for sale solely to EGAT under a 20-year Power Purchase Agreement.

Ratchaburi Power Company Limited, a 25.00% owned joint venture of Ratchaburi Alliances Company Limited, has objective to develop the 1,400-Megawatt power project, the location will be within the existing power plant complex of Ratchaburi Electricity Generating Company Limited in Ratchaburi province.

Siam Ethanol Exports Company Limited, a 15.00% owned joint venture of Ratchaburi Energy Company Limited, has objective to produce alcohol for export.

Chubu Ratchaburi Electric Services Company Limited, a 49.99% owned joint venture of the Company, has objective to provide operation and maintenance services for the gas-fired combined cycle power plant to Ratchaburi Power Co., Ltd.

SouthEast Asia Energy Limited, a 25.00% owned joint venture of the Company, has objective to operate the hydro-electric power plant project (Nam Ngum 2) in the Laos People’s Democratic Republic.

6.2 Investments in subsidiaries and interests in joint ventures are as follows:

Investments in subsidiaries - - 25,713,492 25,032,680

Interests in joint ventures 3,985,924 3,035,731 321,035 49,700

Total investments in subsidiaries

and interests in joint ventures 3,985,924 3,035,731 26,034,527 25,082,380


The movements in investments in subsidiaries and interests in joint ventures can be analysed as follows:

Consolidated Company

Bahtû000 Bahtû000

For the year ended 31 December 2006

Opening book value 3,035,731 25,082,380

Payment for additional paid-up share of joint ventures 173,874 56,250

Payment for additional capital of joint ventures 267,081 225,000

Receipt from decrease in capital of a joint venture - (50,000 )

Share of profit of subsidiaries and joint ventures 727,499 5,856,396

Dividends received from a subsidiary and a joint venture (218,261 ) (5,135,499 )

Closing book value 3,985,924 26,034,527


Payment for additional paid-up share of joint ventures

During the year ended 31 December 2006, SouthEast Asia Energy Limited, a joint venture, called for

additional paid-up share capital. The Company paid for the additional paid-up share capital in the same proportion

as its original investment of 25.00% amounting to Baht 56.25 million

During the year ended 31 December 2006, Siam Ethanol Exports Company Limited, a joint venture, called for

additional paid-up share capital. Ratchaburi Energy Company Limited, a subsidiary, paid for the additional paid-up

share capital in the same proportion as its original investment of 15.00% amounting to Baht 13.46 million.

During the year ended 31 December 2006, Ratchaburi Power Company Limited, a joint venture, called for

additional share capital. Ratchaburi Alliances Company Limited, a subsidiary, paid for the additional paid-up share

capital in the same proportion as its original investment of 25.00% amounting to Baht 104.17 million.

Payment for additional capital of joint ventures

During the year ended 31 December 2006, Ratchaburi Power Company Limited, a joint venture, registered

additional authorised share capital from 16.65 million shares to 23.25 million shares with a par value of Baht 100 per

share and called for partial payment. Ratchaburi Alliances Company Limited, a subsidiary, paid for the additional

authorized share capital in the same proportion as its original investment of 25.00% amounting to Baht 42.08

million.

During the year ended 31 December 2006, SouthEast Asia Energy Limited, a joint venture, registered

additional authorised share capital from 40 million shares to 400 million shares with a par value of Baht 10 per share

and called for partial payment. The Company paid for the additional authorized share capital in the same proportion

as its original investment of 25.00% amounting to Baht 225 million.

Receipt from decrease in capital of a subsidiary

At the Annual Shareholders’ meeting 2005 on 21 March 2006 and the Extraordinary shareholders’ meeting 1/

2006 on 7 April 2006, of Ratchaburi Energy Company Limited, a subsidiary, passed a resolution to approve decrease

of authorised share capital from 19 million ordinary shares with a par value of Baht 10 per share to 14 million

ordinary shares with a par value of Baht 10 per share. On 17 July 2006, the subsidiary paid the amounting of Baht 50

million to Ratchaburi Electricity Generating Holding Public Company Limited, the parent company and it registered

the decreased share capital with the Ministry of Commerce on that date.

Dividends received from a subsidiary

During the year ended 31 December 2006, Ratchaburi Electricity Generating Company Limited, a subsidiary,

approved to pay additional dividends in respect of 2005 performance for 1,827.50 million shares of Baht 1.61 per

share, totalling Baht 2,942.50 million. The Company received dividends in May 2006. It also approved the payment

of interim dividends in respect of 2006 performance for 1,827.50 million shares of Baht 1.20 per share, totalling Baht

2,193 million. The Company received dividends in September 2006.

Dividends received from a joint venture

During the year ended 31 December 2006, Tri Energy Company Limited, a joint venture, paid dividends for

34.237 million shares of Baht 5.15 and Baht 7.60 per share. Ratchaburi Gas Company Limited, a subsidiary, received

dividends for its portion of 50.00% amounting to Baht 88.16 million in June 2006 and amounting to Baht 130.10

million in December 2006.

103A n n u a l R e p o r t 2 0 0 6

Company 31 December 2006

Portion of Cost Equity Business Investment Method Method Dividends % Bahtû000 Bahtû000 Bahtû000

Ratchaburi Electricity Generating Co., Ltd. Electricity generating 99.99 18,275,000 22,497,103 5,135,499

Ratchaburi Energy Co., Ltd. and its joint venture Electricity generating 99.99 140,000 90,514 -

Siam Ethanol Exports Co., Ltd. (construction phase)

and investing in power

energy business

Ratchaburi Gas Co., Ltd. and its joint venture Investing in power 99.99 1,165,903 2,931,269 -

Tri Energy Co., Ltd. energy business

Ratch Udom Power Co., Ltd. and its subsidiary Investing in power 99.99 420,900 194,606 -

Ratchaburi Alliances Co., Ltd and its joint venture energy business

Ratchaburi Power Co.,Ltd.

Chubu Ratchaburi Electric Services Company Limited Provide operation and 49.99 10,000 11,531 -

maintenance services

SouthEast Asia Energy Limited Electricity generating 25.00 325,000 309,504 -

(construction phase)

20,336,803 26,034,527 5,135,499

The principal subsidiaries and joint ventures, which are all incorporated in Thailand, are as follows:

Company 31 December 2005


Ratchaburi Electricity Generating Co., Ltd. Electricity generating 99.99 18,275,000 22,471,866 5,562,541

Ratchaburi Energy Co., Ltd. and its joint venture Electricity generating 99.99 190,000 142,081 -

Siam Ethanol Exports Co., Ltd. (not yet operating) and

investing in power

energy business

Ratchaburi Gas Co., Ltd. and its joint venture Investing in power 99.99 1,165,903 2,124,823 -

Tri Energy Co., Ltd. energy business

Ratch Udom Power Co., Ltd. and its subsidiary Investing in power 99.99 420,900 293,910 -

Ratchaburi Alliances Co., Ltd and its joint venture energy business

Ratchaburi Power Co.,Ltd.



(not yet operating)


(development phase)

20,105,553 25,082,380 5,562,541


The principal joint ventures, which are all incorporated in Thailand, are as follows:

Consolidated 31 December 2006


Tri Energy Co., Ltd. Electricity generating 50.00 1,809,210 3,292,495 218,261

Ratchaburi Power Co., Ltd. Electricity generating 25.00 562,500 340,585 -


Siam Ethanol Exports Co., Ltd. Produce alcohol for export 15.00 33,788 31,809 -






2,740,498 3,985,924 218,261

Consolidated 31 December 2005


Tri Energy Co., Ltd. Electricity generating 50.00 1,809,210 2,676,141 483,152

Ratchaburi Power Co., Ltd. Electricity generating 25.00 416,250 290,640 -

(development phase)

Siam Ethanol Exports Co., Ltd. Produce alcohol for export 15.00 20,333 19,250 -

(development phase)



(not yet operating)


(development phase)

2,299,543 3,035,731 483,152

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8. Long-term loans, net The long-term loans are Thai Baht loans as follows:

Current portion of long-term loans from

financial institutions and debentures

Current portion of long-term loans from financial institutions 805,498,400 509,502,000 - -

Less Deferred financing fee amortised within one year (27,812,127 ) (27,812,127 ) - -

Current portion of long-term loans from financial institutions, net 777,686,273 481,689,873 - -

Current portion of unsubordinated and secured debentures 2,333,240,000 2,333,240,000 - -

Less Deferred financing fee amortised within one year (3,010,169 ) (3,010,169 ) - -

Current portion of unsubordinated and secured debentures, net 2,330,229,831 2,330,229,831 - -

Long-term loans from financial institutions

Long-term loans from financial institutions 22,437,497,600 23,242,996,000 - -

Less Deferred financing fee amortised more than one year (201,637,922 ) (229,450,049 ) - -

Long-term loans from financial institutions, net 22,235,859,678 23,013,545,951 - -

Unsubordinated and secured debentures 4,166,900,000 6,500,140,000 - -

Less Deferred financing fee amortised more than one year (2,725,424 ) (5,735,593 ) - -

Unsubordinated and secured debentures, net 4,164,174,576 6,494,404,407 - -

Total long-term loans from financial institutions and debentures 29,743,136,000 32,585,878,000 - -

Less Deferred financing fee (235,185,642 ) (266,007,938 ) - -

Total long-term loans from financial institutions and

debentures, net 29,507,950,358 32,319,870,062 - -


Company

Equipment and vehicles Baht

At 31 December 2005 Cost 130,288,480 Less Accumulated depreciation (87,295,323 ) Net book value 42,993,157

Year ended 31 December 2006 Opening net book value 42,993,157 Additions 19,422,121 Disposals, net (3,435,613 ) Depreciation charge (Note 11) (18,646,695 ) Closing net book value 40,332,970

At 31 December 2006 Cost 143,697,158 Less Accumulated depreciation (103,364,188 ) Net book value 40,332,970

107A n n u a l R e p o r t 2 0 0 6

The movements in the long-term loans are as follows:

Consolidated Company

Baht Baht For the year ended 31 December 2006

Opening net book amount 32,319,870,062 -

Repayments of long-term loans (509,502,000 ) -

Repayments of debentures (2,333,240,000 ) -

Amortisation of deferred financing fee 30,822,296 -

Closing net book amount 29,507,950,358 -

The original long-term loans were secured liabilities under the Loan Agreement dated 9 October 2000 which were amended on 20 June 2002 and 27 June 2003. The long-term loans are secured over land, buildings, power plant and equipment of a subsidiary. In addition, the Power Purchase Agreement, the Asset Purchase Agreement, the Major Maintenance Agreement, insurance policies and other related agreements with the lenders had been assigned as collateral in accordance with the conditions under the Loan Agreement.

On 16 June 2005, the subsidiary entered into an underwriting agreement with four local financial institutions. Under the agreement, these four financial institutions had jointly agreed to underwrite the refinancing facilities totalling Baht 34,262 million, which comprised Tranche A long-term credit facilities of Baht 24,262 million, debenture facilities of Baht 10,000 million and Tranche C short-term credit facilities of Baht 10,000 million as temporary facilities before completion of debenture issuance to refinance the full amount of existing loans.

On 23 June 2005, such subsidiary entered into a loan agreement with six local financial institutions which comprised Tranche A long-term credit facilities of Baht 24,262 million and Tranche C short-term credit facilities of Baht 10,000 million. On 25 July 2005, the subsidiary drew down the Tranche A and Tranche C credit facilities totalling of Baht 34,262 million to repay the full amount of the existing loans. On that day the subsidiary redeemed the mortgage and pledge as collateral of land, buildings, power plant and equipment and investment in securities toward the existing loans, and mortgaged and pledged land, building, power plant and equipment as collateral in accordance with the refinancing agreement and debentures.

According to the debt restructuring, the subsidiary paid the penalty charge on prepayment of existing loans amounting to Baht 154.50 million, and write off deferred financing fee for prepayment of existing loans amounting to Baht 236.52 million, which are recorded as administrative expenses in the third quarter of 2005.

During 26 to 29 July 2005, the subsidiary issued and distributed the unsubordinated debentures, bearing the name of the holders, secured, with the debenture holder representative and principal installment repayments to the general public and institutional investors. The debenture comprised Tranche B1 of Baht 7,000 million with a three-year repayment period and a fixed interest rate of 3.67% per annum and Tranche B2 of Baht 3,000 million with a five-year repayment period and a fixed interest rate of 3.67% per annum for the first and second year and Minimum Lending Rate (MLR) minus 2 per annum throughout the remaining periods. The subsidiary used proceeds from issuing of debentures amounting to Baht 10,000 million to pay the full amount of Tranche C short-term credit facilities on 29 July 2005.


Periods Interest (%)

25 July 2005 - 24 July 2007 MLR - 2.5

25 July 2007 - 24 July 2009 MLR - 2.0

25 July 2009 - 24 July 2015 MLR - 1.5

9. Share capital and premium on share capital

As at 31 December 2004 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

Issue of shares - - - -

As at 31 December 2005 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

Issue of shares - - - -

As at 31 December 2006 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

The maturities of long-term loans are as follows:

- Within 1 year

Long-term loans from financial institutions 805,498,400 509,502,000 - -


- Later than 1 year and not later than 5 years



- Later than 5 years


29,743,136,000 32,585,878,000 - -


As at 31 December 2006, the total authorised number of ordinary shares is 1,450,000,000 shares (31 December 2005: 1,450,000,000 shares) with a par value of Baht 10 per share (31 December 2005: Baht 10 per share).

All issued shares are fully paid.

Long-term credit facilities (Tranche A) are subject to the Minimum Lending Rate (MLR) minus margins as follows:

Premium on Number of Ordinary shares share capital Total Shares Baht Baht Baht

109A n n u a l R e p o r t 2 0 0 6

10. Legal reserve

Opening balance 1,298,771,531 995,371,531 1,298,771,531 995,371,531

Appropriation during the year 151,228,469 303,400,000 151,228,469 303,400,000

Closing balance 1,450,000,000 1,298,771,531 1,450,000,000 1,298,771,531

Consolidated Company 2006 2005 2006 2005 Baht Baht Baht Baht

Fuel costs 37,780,677,994 31,481,542,696 - -

Depreciation on property, plant and equipment (Note 7) 2,710,308,660 2,640,549,605 18,646,695 26,126,551

Service charges for operation and maintenance expenses

(Note 20) 760,785,170 726,387,969 - -

Spare parts, repair and service charges for major

maintenance 1,285,568,854 1,282,525,399 - -

Insurance premium 242,778,217 177,907,099 - -

Staff costs 155,563,710 145,551,720 98,022,121 83,000,819

Amortisation of deferred financing fee 30,822,296 40,036,717 - -

Reserve for loss from fire cause 750,240,421 - - -

Write off deferred financing fee for prepayment of

existing loans - 236,524,195 - -

Financing fee for new loans - 55,911,191 - -

Penalty charge on prepayment of existing loan - 154,500,674 - -

Consolidated Company 2006 2005 2006 2005 Baht Baht Baht Baht

11.1 Reserve for loss from fire cause

As a result of the fire at the Flue Gas Desulfurisation (FGD) unit at Thermal Power Plant Unit 1 on 13 October 2005, a subsidiary is in the process of FGD restoration. As at 31 December 2006, the process has not yet been completed. The insurance company made partial payment for the damage from the fire. A subsidiary and the insurance company are still in negotiation with respect to the insured sum from which to calculate the compensation. As at 31 December 2006, a subsidiary assessed and recorded a reserve for the loss from the fire totalling Baht 750 million.

Under the Public Companies Act B.E. 2535, the Company is required to set aside as a statutory reserve at least 5% of its net profit until the reserve is not less than 10% of the registered capital. The reserve is non-distributable.

11. Operating profit The following expenditure items have been charged in arriving at operating profit:


12. Corporate income tax Corporate income tax of Baht 75.09 million, which is presented in statement of income for the year ended �31 December 2006, is calculated by 30% on taxable income from non-BOI promoted activities amounting of Baht 250.31 million, see Note 17.

13. Earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

Net profit attributable to shareholders (Baht) 6,106,036,409 6,066,356,748 6,106,036,409 6,066,356,748

Weighted average number of ordinary shares in issue

(share) 1,450,000,000 1,450,000,000 1,450,000,000 1,450,000,000

Basic earnings per share (Baht) 4.21 4.18 4.21 4.18

Consolidated Company 2006 2005 2006 2005

There are no dilutive potential ordinary shares in issue during the years presented.

14. Dividends At the Board of Directors’ meeting held on 21 August 2006, it was approved to pay interim dividends in respect of 2006 performance for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450 million. These dividends were paid to the shareholders in September 2006.

At the annual shareholders’ meeting held on 20 April 2006, it was approved to pay dividends in respect of 2005 performance as follows:

(a) Interim dividends for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450 million. These interim dividends were paid to shareholders in September 2005.

(b) Dividends for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450 million. These dividends were paid to shareholders in May 2006

At the annual shareholders’ meeting held on 20 April 2005, it was approved to pay dividends in respect of 2004 performance as follows:

(a) Interim dividends for 1,450 million shares of Baht 0.90 per share, totalling Baht 1,305 million. These interim dividends were paid to shareholders in October 2004.

(b) Dividends for 1,450 million shares of Baht 1.10 per share, totalling Baht 1,595 million. These dividends were paid to shareholders in May 2005

15. Directorsû remuneration Directors’ remuneration for the year ended 31 December 2006 in the consolidated and company statements of income is Baht 27.03 million and Baht 19.23 million, respectively (2005: Baht 32.30 million and Baht 19.76 million, respectively) comprises meeting fees and bonus. Expenses were approved at the Company’s Annual Shareholders’ meeting.

111A n n u a l R e p o r t 2 0 0 6

16. Provident fund The Group joined the contributory employees’ provident fund of Electricity Generating Authority of Thailand (EGAT) for their employees. Membership of the fund is on a voluntary basis. The contributions comprise the employees’ and the Group’s contribution at the same rate. The funds are managed by authorised fund managers in accordance with the Provident Fund Act B.E. 2530.

17. Promotional privileges Ratchaburi Electricity Generating Company Limited

On 22 November 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, received promotional privileges from the Office of the Board of Investment for two promotional certificates comprising Thermal Generating Power Plant and Combined Cycle Generating Power Plant. Under these privileges, the subsidiary has received exemption from certain taxes and duties as detailed in the certificates, including exemption from corporate income tax for a period of 8 years from the date of the first revenue earned (31 October 2000 for the Thermal Generating Power Plant and 18 April 2002 for the Combined Cycle Generating Power Plant). As a promoted entity, the subsidiary is required to comply with the terms and conditions as specified in the promotional certificates.

The revenues for promoted and non-promoted business activities for the years ended 31 December 2006 and 2005 are as follows:


On 29 December 2006, Ratchaburi Energy Company Limited, a subsidiary, received promotional privileges from the Office of the Board of Investment for PTO – An associated gas power plant project. Under these privileges, the subsidiary has received exemption from certain taxes and duties as detailed in the certificate, including exemption from corporate income tax for amounts not exceeding 100% of capital investment exclude cost of land and working capital, for a period of 8 years from the date of the first revenue earned. As a promoted entity, the subsidiary is required to comply with the terms and conditions as specified in the promotional certificate. As at 31 December 2006, the project is during construction phase.

18. Financial instruments Foreign Currency Risk

The Group has no significant foreign currency risk since the major business transactions of the Group are carried out in Thai Baht. In respect of currency exchange risk, which mainly relates to the purchase of spare parts and maintenance expenses in US Dollars, the Group manages its short-term exchange risk by entering into forward exchange contracts, normally of a maturity of no longer than 30 days. In addition, the pricing formula contained in the PPA with EGAT allows for the inclusion of the exchange risk factor relating to the purchase of spare parts and maintenance expenses.

2006 2005 Baht Baht

BOI promoted activities 50,398,054,150 44,035,546,576

Non BOI promoted activities 228,743,983 278,978,176

50,626,798,133 44,314,524,752


Trading for speculative purposes is prohibited. All derivative transactions are subject to approval by the managing director of each company before execution. Decisions on the level of risk undertaken are confined to the managing director of each company, which has established limits by transaction type and by counter party.

Credit Risk

The Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high quality institutions. The Group’s policy is designed to limit exposure with any one institution and to invest its excess cash in low risk investment accounts. The Group has not experienced any losses on such accounts.

The Group has no significant credit risk with any single counterparty or group counterparties as the only customer of the Group is EGAT, a State Enterprise.

Interest Rate Risk

Interest rate risk arises from the fluctuations in market interest rates, which may have a negative effect on current and future operations of the Group. Management believes that exposure to interest rate risk is minimal because the floating interest rate according to the condition in the long-term loans agreements (Note 8) is included in the availability payment as specified in the Power Purchase Agreement (Note 20). Therefore, the Group does not enter into a hedging agreement to protect against such risk.

19. Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

A major shareholder of the Company is Electricity Generating Authority of Thailand (EGAT) which holds 45% of the Company’s total ordinary shares, and EGAT Employee’s Provident Fund, which holds about 0.84% of the Company’s total ordinary shares. The Company’s remaining shares are widely held.

Information regarding the Company’s subsidiaries and joint ventures is shown in Note 6.

During the year, the Group has entered into a number of transactions with related parties, the terms are agreed in the agreement. Purchases of fuel oil and electricity from EGAT are at market price.

Details of the agreements made with the related parties are shown in Note 20.

The following material transactions were carried out with related parties:

113A n n u a l R e p o r t 2 0 0 6

Consolidated Company 2006 2005 2006 2005 For the years ended 31 December Bahtû000 Bahtû000 Bahtû000 Bahtû000

(a) Sales, management service income, interest income and other income

Sales

- Electricity Generating Authority of Thailand (Note 20) 50,372,699 44,034,964 - -

Management service income

- Subsidiaries - - 3,009 1,614

- Joint ventures 143,193 28,062 143,172 27,942

Interest income

- Subsidiaries - - 31,684 21,132

- Joint ventures - 16,196 3,395 16,196

Other income

- Electricity Generating Authority of Thailand 2,100 5,723 - -

- Joint ventures 10,260 - - -

In the first quarter 2006, the Company has received development fee under the Shareholders Agreement, from a joint venture amounting to Baht 101 million. This amount included in management service income from joint ventures.

(b) Purchases of goods and services

Purchases of fuel oil

- Electricity Generating Authority of Thailand 1,549,535 1,576,939 - -

Purchases of electricity


Operation and major maintenance expenses

- Electricity Generating Authority of Thailand (Note 20) 903,139 1,041,148 - -

Restoration expenses of Flue Gas Desulphurisation

- Electricity Generating Authority of Thailand (Note 20)

(The expense was compensated by the insurance

company) 294,000 - - -

Management service expense

- A subsidiary - - 359 1,551

Consolidated Company 2006 2005 2006 2005 For the years ended 31 December Bahtû000 Bahtû000 Bahtû000 Bahtû000


(c) Outstanding balances arising from sales/purchases of goods and services

Outstanding trade receivable from a related party as above has the credit term within 1 month.

(d) Amounts due from/to, advances and loans to related parties

Trade receivable from a related party

- Electricity Generating Authority of Thailand 8,644,763 6,536,325 - -

Long-term trade receivable from a related party


Trade payable to a related party


Amounts due to related parties

- Electricity Generating Authority of Thailand 21,962 187,792 268 -

- A subsidiary - - 976 627

- A joint venture 2,250 - 2,250 -

24,212 187,792 3,494 627

Unearned revenue and accrued

expenses to related parties


- A joint venture 1,416 - - -

35,039 95,785 - -

Consolidated Company 31 December 31 December 31 December 31 December As at 2006 2005 2006 2005 Bahtû000 Bahtû000 Bahtû000 Bahtû000

Advances to and other receivables from related parties

- Electricity Generating Authority of Thailand 17,414 15,894 - 5,885

- Subsidiaries - - 294 167

- Joint ventures 8,738 5,539 8,738 5,528

26,152 21,433 9,032 11,580

Long-term loans to related parties

- Subsidiaries - - 504,031 550,200

- A joint venture - 649,556 - 649,556

- 649,556 504,031 1,199,756

Long-term receivable from related parties

- Subsidiaries - - 3,969 1,217

Consolidated Company 31 December 31 December 31 December 31 December As at 2006 2005 2006 2005 Bahtû000 Bahtû000 Bahtû000 Bahtû000

115A n n u a l R e p o r t 2 0 0 6

A long-term loan to Ratchaburi Gas Company Limited, a subsidiary, amounting to Baht 360.20 million is promissory note at call bearing interest at the rate of 12 months fixed deposit interest rate for juristic persons of a commercial bank plus 1 per annum. During the year 2006, interest rates are 4.25% to 6.00% per annum. (As at 31 December 2005: Baht 550.20 million bearing interest at the rate of 4.25% per annum). The Company classifies this loan and interest receivable as a long-term loan and other non-current assets, respectively because the subsidiary will repay loan and interest when it receives dividends from its joint venture, Tri Energy Company Limited.

A long-term loan to Ratch Udom Power Company Limited, a subsidiary, amounting to Baht 143.83 million is promissory note at call bearing interest at the rate of 12 months fixed deposit interest rate for juristic persons of a commercial bank plus 1 per annum. During the year 2006, interest rates are 4.75% to 6.00% per annum (As at 31 December 2005: Nil). The Company classifies this loan and interest receivable as a long-term loan and other non-current assets, respectively because Ratch Udom Power Company Limited, a subsidiary, will repay loan and interest when it receives the loan and interest settlement from Ratchaburi Alliances Company Limited.

20. Significant agreements, Commitments and contingent liabilities Company and Subsidiaries

Power Purchase Agreement with a related party

On 9 October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 25-year Power Purchase Agreement with EGAT whereby the subsidiary will deliver the Net Electrical Generation from the Thermal Generating Units 1 and 2 and the Combined Cycle Generating Blocks 1, 2 and 3 to EGAT at the agreed condition. Under the Power Purchase Agreement (PPA), the subsidiary will receive revenue from EGAT comprising of an Availability Payment (AP) and an Energy Payment (EP).

The Availability Payment (AP) covers repayment of principal and interest of loan, equity return for shareholders, fixed expenses in operation and maintenance and administrative expenses. Expenses will be adjusted to cover the change of interest rate, Consumer Price Index and exchange rate.

The Energy Payment (EP) covers production costs comprising of fuel costs, variable costs in operation and maintenance, which will be adjusted in accordance to the fuel costs, efficiency ratio and Consumer Price Index.

Power Purchase Agreement

On 11 September 2006, Ratchaburi Energy Company Limited, a subsidiary, entered into the Power Purchase Agreement (capacity of 2 Megawatts) with Electricity Generating Authority of Thailand (EGAT) effective for one year. If any parties would like to extend this period, the extension must be notified to the other party at least 30 days before the contract period is due and this contract will be extended for another one year.

On 11 October 2005, Electricity Generating Authority of Thailand (EGAT) has notified to Ratchaburi Energy Company Limited, a subsidiary, informing that EGAT will operate the small Hydro Power Plant Project, Pasak Cholasid, and consider providing compensation only for the portion that can generate further benefit. Consequently, the Power Purchase Agreement signed between a subsidiary and EGAT on 1 February 2005 must be implicitly cancelled. On 19 December 2005, the subsidiary sent the notification letter to EGAT claiming compensation amounting to Baht 26.12 million. As at 31 December 2006, the exact amount of compensation has not been confirmed yet.

Fuel Purchase Agreements

On 27 October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 25-year Gas Sales Agreement with PTT Public Company Limited (PTT) whereby PTT will supply natural gas to the subsidiary at an agreed quantity and price.


On 1 June 2004, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 3-year Diesel

Purchase Agreement with PTT Public Company Limited (PTT) whereby PTT will supply diesel to the subsidiary at the

agreed quantity and price.

Gas Sales Agreement

On 17 January 2006, Ratchaburi Energy Company Limited, a subsidiary, entered into the Gas Sales Agreement

to purchase a byproduct from crude oil production with PTTEP Siam Company Limited and PTT Exploration and

Production Public Company Limited to use flare gas in a power plant project (capacity of 2 Megawatts) with the

initial price at Baht 26.65 per 1 million B.T.U. for eight years from the commencement of commercial operations,

currently expected to be the second quarter of 2007.

Operation and Maintenance Agreement and Other Service Agreement from a related party

On 26 October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into an

Operation and Maintenance Agreement with EGAT for a period of approximately 9 years whereby EGAT will operate

and provide maintenance services including general maintenance and major overhaul for the subsidiary. The

original operation and maintenance charge is approximately Baht 633 million per annum, adjusted by the Annual

Consumer Price Index. In addition, there is an additional charge, which is based on the actual costs incurred.

On 1 August 2002, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a Parts

Management Agreement for Gas Turbine Model MS9001FA with EGAT for a period of 12 years with an original

contract price of Baht 12 million per annum, adjusted by the annual Consumer Price Index. In addition, there is an

additional charge, based on the actual costs incurred.

Supply of Parts and Maintenance Services Agreement

On 26 September 2001, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a

Supply of Parts and Maintenance Services Agreement for the Combined Cycle Generating of Ratchaburi Power Plant

with the Consortium of General Electric International Operations Co., Inc. and GE Energy Parts, Inc. for a period of 12

years with a total contract price of US Dollars 264 million. On 29 December 2005, the Supply of Parts and

Maintenance Services Agreement was terminated and replaced by the Contractual Service Agreement dated 29

December 2005.

Contractual Service Agreement

On 29 December 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a

Contractual Service Agreement for the Combined Cycle Generating of Ratchaburi Power Plant with the Consortium

of General Electric International Operations Co.,Inc. and GE Energy Parts, Inc. The agreement is effective from the

agreement date until the expiration of the operation of gas turbine of the Power Purchase Agreement in year 2027

with a total contract price of US Dollars 429 million. As at 31 December 2006, such subsidiary has outstanding

commitments amounting US Dollars 393 million

Flue Gas Desulfurisation (FGD) of Thermal Generating Unit 1 restoration contracts

On 7 February 2006, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a FGD

Main Procurement Works contracts with Mitsubishi Corporation. The total contract value is Japanese Yen 2,417

million. As at 31 December 2006, such subsidiary has commitments under this contract of approximately Japanese

Yen 517 million.

On 27 June 2006, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a FGD#1

Restoration Contract with EGAT. The total contract value is Baht 420 million. As at 31 December 2006, such subsidiary

has commitments under this contract of approximately Baht 126 million.

117A n n u a l R e p o r t 2 0 0 6

Agreement to acquire machinery and equipment and Agreement to acquire electrical equipment, construction, installation and testing

As at 31 December 2006, Ratchburi Energy Company Limited, a subsidiary, has outstanding commitment amounting to US Dollars 560,000 from acquiring machinery and equipment and amounting to Baht 8.4 million from acquiring electrical equipment, construction, installation and testing for PTO – An associated gas power plant project which is in the construction phase.

Land Lease Agreement and Common Facility Agreement

On 7 June 2004 and 21 October 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a land lease agreement with Ratchaburi Power Company Limited to let Ratchaburi Power Company Limited lease an area of 143 rais and 2 rais, respectively, in the Ratchaburi Power Plant area for a power plant project for a period of 25 years and 3 months commencing from Ratchaburi Power’s commercial operation date. In addition, on 25 November 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into Common Facility Agreement with Ratchaburi Power Company Limited whereby a subsidiary will provide certain facilities, utilities, services, right to use and access rights relating to the construction, operation and maintenance of the facility to Ratchaburi Power Company Limited at the agreed condition. This agreement is effective from the agreement’s date until the expiry of the land lease agreement dated 7 June 2004.

Financial Support Agreements

According to the Sponsor Agreement dated 14 December 2005, the Company has committed to guarantee to the Lender of Ratchaburi Power Project to provide financial support for the construction of power plant in a proportion of investment of 25.00% approximately US Dollars 53.5 million, under the terms and condition of the Loan Agreement between Ratchaburi Power Company Limited, a jointly controlled entity, and the Lender of the project.

According to the Shareholders Agreement dated 27 February 2004, Ratchaburi Alliances Company Limited, a subsidiary, agrees to increase the registered capital of Ratchaburi Power Company Limited and subscribe for such new shares at a proportion of 25.00% up to the maximum aggregate amount of US Dollars 52.5 million, which is equivalent to approximately Baht 2,100 million, or inject capital until the completion of the project upon the prior approval of all shareholders.

On 26 May 2006, the Company, other shareholders and three local financial institutions entered into an Equity Contribution Agreement with SouthEast Asia Energy Co., Ltd., a joint venture, and Nam Ngum 2 Power Co., Ltd., whereby the Company was obliged to pay capital to the joint venture amounting to Baht 2,202.25 million (represent 25% of investment proportion) for the operation of the Hydro Power Plant Project - Nam Ngum 2 in Lao People’s Democratic Republic. Furthermore, the Company and other shareholders also entered into an Equity Subordinate Agreement to guarantee that the Company and other shareholders will not claim for any liabilities or receipt money from the joint venture and Nam Ngum 2 Power Co., Ltd. until the commitments mentioned in the agreement are fully complied.

On 29 September 2005, the Company and Chubu Electric Power (Thailand) Company Limited has entered into a Shareholders Agreement to set up Chubu Ratchaburi Electric Services Company Limited. The Company made the first payment of paid-up capital in October 2005 totalling amount of Baht 10 million. As of 31 December 2006, the Company has commitment to make payment for the unpaid shares amounting to Baht 10 million. In addition, under this Shareholders Agreement, should the Chubu Ratchaburi Electric Services Company Limited require additional funding exceed its registered capital, the Company agreed to provide financial support in the form of shareholder loans or guarantees to Chubu Ratchaburi Electric Services Company Limited in proportion of the Company’s shareholding of 50.00%.


According to the Shareholders Agreement dated 23 September 2004, Ratchaburi Energy Company Limited, a subsidiary, acquired 15.00% of the share capital of Siam Ethanol Exports Company Limited. As of 31 December 2006, the subsidiary has a commitment to make payment for the remaining unpaid share capital amounting to Baht 11.21 million.

In addition, under the Shareholders Agreement, should the Siam Ethanol Exports Company Limited require additional funding exceeding its registered capital, Ratchaburi Energy Company Limited, a subsidiary, agrees to provide financial support in the form of shareholder loans or guarantees to Siam Ethanol Exports Company Limited in proportion to Ratchaburi Energy Company Limited’s shareholding of 15.00%.

MOU-Power Purchase Agreement from Hydro Power Plant Project, Nam Ngum 3

On 18 December 2006, the Company, MDX Lao Company Limited and Marubeni Corporation Company Limited have entered into a MOU on Power Purchase Agreement from Hydro Power Plant Project, Nam Ngum3 located in Laos People’s Democratic Republic with Electricity Generating Authority of Thailand for a period of 27 years. It will be ready for commercial operation approximate in 2013, with a total capacity of 440 megawatts and a total project cost of US Dollars 708 million. Currently, it is in the negotiation of shareholders agreement with the above companies.

Guarantees

The Company has committed to guarantee to banks an amount of Baht 175 million to secure certain obligations under the Power Purchase Agreement which Ratchaburi Power Company Limited, a joint venture, has made with EGAT.

According to the guarantee agreement dated 27 December 2005, the Company, as a shareholder of Chubu Ratchaburi Electric Services Company Limited, has provided the performance guarantee to Ratchaburi Power Company Limited in respect of the service provided under the Operation and Maintenance Agreement, in a proportion of 50.00% of total contract price of the Operation and Maintenance Agreement per annum.

Letter of guarantee

As at 31 December 2006, Ratchaburi Electricity Generating Company Limited, a subsidiary, has a letter of guarantee provided by a bank in respect of electricity usage amounting to Baht 54.74 million (31 December 2005: Baht 61.44 million) and has no commitment under a letter of credit issued by a bank for the purchase of machinery (31 December 2005: Baht 13.97 million).

Pledge of share agreement

On 15 November 2005, the Board of Directors’ meeting of Ratchaburi Alliances Company Limited, a subsidiary, approved to pledge all of share certificates of Ratchaburi Power Company Limited, a joint venture, held by such subsidiary as collateral for loans from lenders of such joint venture.

Significant capital commitment of the Joint ventures

As at 31 December 2006, Ratchaburi Power Company Limited, a joint venture, has capital commitment relating to power plant construction contracts and supply contracts totalling Baht 5,087.07 million (represented 25.00% of our proportion). The construction is in process.

As at 31 December 2006, SouthEast Asia Energy Company Limited, a joint venture, has capital commitments relating to power plant construction contracts, totalling Baht 2,675.3 million and US Dollars 34.9 million (represented 25% of investment proportion), which is in construction phase.

119A n n u a l R e p o r t 2 0 0 6

Registration No. : 0107543000031

Location : 19 SCB Park Plaza, Tower 3 East, 20th Floor,

Ratchadapisek Road, Jatujak, Jatujak ,Bangkok 10900,

Thailand

Tel. (66) 2978 5000

Fax. (66) 2937 9321

Website : www.ratch.co.th

Core business : Investing in power generating companies


Paid up capital : Baht 14,500 million

Shares registrar : Thailand Securities Depository Company Limited

Stock Exchange of Thailand Building

62 Ratchadapisek Road, Klong Toey, Bangkok 10110, Thailand

Tel. (66) 2229 2800

Fax. (66) 2359 1259

Auditor : PriceWaterhouseCoopers ABAS Co., Ltd.

179/74-80 Bangkok City Tower, 15th Floor,

South Sathorn Road, Thoong Mahamek, Sathorn,

Bangkok 10120, Thailand

Tel. (66) 2286 9999, (66) 2344 1000

Fax. (66) 2286 5050, (66) 2286 0500

Legal Advisor : Siam Niti Law Office Company Limited

SCB Park Plaza, West Tower 1, 12th Fl

18 Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10330,

Thailand

Tel. (66) 2937 5000

Fax. (66) 2937 5001


RATCH2006

General Information

General Information




















Documents

RATCH: Annual Report 2006