F/S Q3-1998 OF EGCO AND CONSOLIDATED (CORRECTED)

Electricity Generating Public Company Limited and its subsidiaries Notes to the financial statements and consolidated financial statements - September 30, 1998 continued 6.2 Investments in subsidiary, associated and other companies in the consolidated financial statements are as follows : Consolidation 1998 Investments Paid-up share % of Amount capital Interest (Baht'000) (Baht'000) Subsidiary companies P.T. BORNEO INDOBARA USD 1,000 52.50 15,860 Associated companies EGCO Mining Company Limited - - - AMATA EGCO Power Company Limited 1,350,000 29.70 400,950 Bangchak Power Company Limited 40,000 30.00 12,000 CM ESCO Company Limited 2,000 50.00 1,000 ESCO Wood Company Limited 20,000 45.00 9,000 Other companies Thai LNG Power Company Limited - 10.00 37,499 PMI International Company Limited - 10.00 300 Investment in the earnings fund managed by 502,000 Thai Farmers Asset Management Co.,Ltd. Investment in debentures of related parties - Total investments 978,609 P.T BORNEO INDOBARA , AMATA EGCO Power Company Limited and Bangchang Power Company Limited have not yet commenced their trading operations. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 12 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued 6.2 Investments in subsidiary, associated and other companies in the consolidated financial statements are as follows : Consolidation 1997 Investments Paid-up share % of Amount capital Interest (Baht'000) (Baht'000) Subsidiary companies P.T. BORNEO INDOBARA - - - Associated companies EGCO Mining Company Limited 50,000 40.00 43,800 AMATA EGCO Power Company Limited 572,500 29.70 209,403 Bangchak Power Company Limited 40,000 30.00 12,000 CM ESCO Company Limited 2,000 50.00 1,000 ESCO Wood Company Limited - - - Other companies Thai LNG Power Company Limited - 10.00 37,499 PMI International Company Limited - - - Investment in the earnings fund managed by - Thai Farmers Asset Management Co.,Ltd. Investment in debentures of related parties 18,027 Total investments 321,729 P.T BORNEO INDOBARA , AMATA EGCO Power Company Limited and Bangchang Power Company Limited have not yet commenced their trading operations. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 13 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Long-term loans 7. The long-term loans of subsidiaries are denominated in Thai Baht and US Dollar as follows : Consolidation 1998 1997 (Baht'000) (Baht'000) Long-term loans in US Dollars 15,704,413 15,209,272 Long-term loans in Thai Baht 5,214,411 5,546,081 20,918,824 20,755,353 Less: Current portion of long-term loans (1,184,276) (1,010,450) 19,734,548 19,744,903 The two subsidiaries entered into the interest rate swap agreements to convert a floating interest rate based on LIBOR plus a margin to a fixed interest rate of 8.0275% - 8.22% per annum for the loans of US Dollars 257 million. The loan of US Dollars 141 million bears fixed interest rate at 8.85% per annum. In addition a subsidiary entered into the currency and interest rate swap agreements to convert US Dollars loan of 92 million to Thai Baht currency at a fixed interest rate at 11% per annum. The Master Agreements have certain clauses which state that cash reserves have to be provided from the proceeds of sales of electricity for repayment of principal and payment of interest which are due within one year and other conditions as specified in the agreements. In addition, a reserve for exchange risk shall be provided as described in Note 5 to the financial statements. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 14 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Land, building and equipment of power plants which are specified in the agreements are mortgaged as collateral for long-term loans of the two subsidiaries and there are assignment agreements under these borrowing agreements. Debentures 8. Consolidation 1998 1997 (Baht'000) (Baht'000) Debentures 10,292,812 10,707,143 Less: Current portion of debentures (324,010) (287,005) 9,968,802 10,420,138 Debentures are borrowings of the two subsidiaries in Thai Baht bearing interest at 11.25% - 11.5625% per annum. Land, building and equipment of power plants which are specified in the agreements are mortgaged as collateral for the above debentures and there are assignment agreements under these borrowing agreements. Cost of goods sold 9. Cost of goods sold comprises main expenses ; repair and maintenance expenses, depreciation expenses, and insurance expenses. Major repair and maintenance expenses will be recorded as expenses when they incur. Commencing from the second quarter of 1998, a reserve for repair and maintenance based on the annual budget of major repair and maintenance expenses is included in the interim financial statements. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 15 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Currency exchange losses (gains) 10. Currency exchange losses (gains) mainly relate to the conversion of long-term loans in US Dollar to Thai Baht at the closing rate as follows : September 30, 1998 US Dollar 1 = Baht 39.4737 June 30, 1998 US Dollar 1 = Baht 42.5897 December 31, 1997 US Dollar 1 = Baht 47.5560 Share of profits from subsidiaries for the third quarter and nine-month period of 1998 includes gains on exchange of Baht 893 million and Baht 2,478 million respectively. Extraordinary item 11. On July 2, 1997, the Ministry of Finance declared the adoption of an immediately effective managed floatation of the Thai Baht against foreign currencies. Two subsidiaries recorded the exchange losses for the third quarter and the nine-month period ended September 30, 1997 of Baht 3,622 million as deferred exchange losses and presented the loss as a deduction from shareholders' equity which was not in compliance with generally accepted accounting principles. However, in the presentation of the financial statements for the year ended December 31, 1997, the two companies changed the method of accounting to write off the exchange losses in compliance with generally accepted accounting principles. The presentation of these exchange losses as an extraordinary item is in compliance with the announcement of the Institute of Certified Accountants and Auditors of Thailand no. 002/2540 - 2542 dated September 19, 1997. The financial statements and consolidated financial statements for the third quarter and the nine-month period ended September 30, 1997, therefore, have been restated to reflect proper accounting for the exchange losses. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 16 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued The restated net income and earnings per share for the third quarter and the nine-month period ended September 30, 1997 show a net loss and net loss per share of Baht 3,272.28 million and 2,024.63 million and Baht 6.23 and Baht 3.89 per share, respectively. The consolidated net loss and net loss per share show a similar result. Investments in subsidiaries as at September 30, 1997 in the balance sheet decrease by Baht 3,592.38 million and unappropriated retained earnings change to accumulated deficit of Baht 972.74 million. Commitment and contingent liabilities 12. (a) As at September 30, 1998 the company has commitments under contracts for construction of Baht 218 million. (b) As at September 30, 1998, the subsidiaries have not entered into forward exchange contracts to cover the exchange risk relating to long-term loans of US Dollars 398 million. However, such exchange risk will be covered by "The First Amendment to Power Purchase Agreement" as described in note 4. Comparative figures 13. As a result of reclassifications of certain items in the 1998 interim financial statements, the company figures of 1997 interim financial statements have been amended accordingly. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 17 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued The Year 2000 issue 14. The company submitted a plan to resolve the Year 2000 issue to the Stock Exchange of Thailand on July 29, 1998. The company has identified the systems which will be affected by the Year 2000 issue to be the production system and certain hardware of the general operating systems, which are required to be changed. The company estimated a total related cost amounting to Baht 64 million and it is anticipated that the plan will be completed by September, 1999. Furthermore, the company's business operation may be affected by any Year 2000 problems possibly affecting the companies which provide the systems for supply of raw material and the distribution of electricity. Auditors' report page 1 and 2.