F/S OF EGCOMP 1998

Electricity Generating Public Company Limited and its subsidiaries Page 23 Notes to the financial statements and consolidated financial statements - December 31, 1998 continued The debenture information of the two subsidiaries is summarised as follows : Outstanding balance Interest rate Term of as at Dec. 31, 1998 (% per repayment Due date (Baht million) annum) (years) Rayong Electricity Generating Company Limited Debentures No.1 2,500 11.25% 5,7,10,12 Dec. 7, 2006 Debentures No.2 780 11.25% 1-12 Dec. 7, 2006 Khanom Electricity Generating Company Limited Debentures 6,946.7 11.5625% 15 June 14, 2011 The No. 1 debentures of Rayong Electricity Generating Company Limited are divided into 4 parts, being repayable in 5 years, 7 years, 10 years, and 12 years in 1999, 2001, 2004 and 2006, respectively. The No. 2 debentures are divided into 12 parts, being repayable in 1 - 12 years, in 1995 - 2006. The interest is payable semi-annually. The debentures of Khanom Electricity Generating Company Limited are secured debentures with the holders' names being registered, totalling 750,000 units of Baht 10,000 face value each, for a total of Baht 7,500 million. The total debentures were offered to the public and are repayable within 15 years from the date of issuance on June 14, 1996, at six monthly intervals to 2011. The interest rate is fixed at 11.5625% per annum and is payable semi-annually. Both subsidiaries are also required to maintain a reserve for repayment of principal and interest and to pledge a certain number of assets as collateral as mentioned in note 13. Electricity Generating Public Company Limited and its subsidiaries Page 24 Notes to the financial statements and consolidated financial statements - December 31, 1998 continued Share capital 15. The company only 1998 1997 (Baht) (Baht) Registered share capital : 530,000,000 ordinary shares of Baht 10 each 5,300,000,000 5,300,000,000 Issued and paid-up share capital: 522,709,200 ordinary shares of Baht 10 each (1997 : 521,233,800 ordiary shares of Baht 10 each) 5,227,092,000 5,212,338,000 Consolidation 1998 1997 (Baht) (Baht) Registered share capital : 530,000,000 ordinary shares of Baht 10 each 5,300,000,000 5,300,000,000 Issued and paid-up share capital: 522,709,200 ordinary shares of Baht 10 each (1997 : 521,233,800 ordiary shares of Baht 10 each) 5,227,092,000 5,212,338,000 During the year 1998, the company's employees exercised the rights to buy 1,475,400 ordinary shares at the price of Baht 30 per share. The company's paid-up share capital and premium on share capital increased by Baht 14,754,000 and Baht 29,508,000, respectively. As at December 31, 1998, the balance of outstanding share warrants is 7,290,800 units. Other expenses 16. Other expenses consist of the following : The company only 1998 1997 (Baht) (Baht) Losses from disposal of marketable securities - 379,785,824 Currency exchange losses (gains) - - - 379,785,824 Consolidation 1998 1997 (Baht) (Baht) Losses from disposal of marketable securities - 379,785,824 Currency exchange losses (gains) (3,231,544,438) 67,985,251 (3,231,544,438) 447,771,075 Electricity Generating Public Company Limited and its subsidiaries Page 25 Notes to the financial statements and consolidated financial statements - December 31, 1998 continued Extraordinary item 17. On July 2, 1997, the Ministry of Finance declared the adoption of an immediately effective managed floatation of the Thai Baht against foreign currencies. As a result, the two subsidiaries incurred the exchange loss of Baht 7,235 million for the year 1997 and this was presented as extraordinary item in the statement of loss in accordance with the announcement of the Institute of Certified Accountants and Auditors of Thailand, dated September 19, 1997. Legal reserve 18. Pursuant to the Public Limited Companies Act (B.E. 2535) 1992, the company must appropriate to a reserve fund from the annual net profit not less than five percent of the annual net profit until the reserve fund reaches an amount of not less than ten percent of the authorised capital. The company appropriated to the reserve from profit including the share of profits (losses) from subsidiaries and associates. Provident fund 19. The company and subsidiaries have provident funds for those employees who apply to join. The contributions comprise the employee's portion and the same amount from the company's contribution. The fund is managed by an authorised fund manager in accordance with the Provident Fund Act (B.E. 2530) 1987. Electricity Generating Public Company Limited and its subsidiaries Page 26 Notes to the financial statements and consolidated financial statements - December 31, 1998 continued Promotional privileges 20. The two subsidiaries have received promotional privileges from the Board of Investment under promotion certificates issued on June 15, 1995 and November 6, 1996 in respect of electricity generating. Under these privileges the subsidiaries have 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 commencement of earning revenue. As a promoted industry, the subsidiaries are required to comply with the terms and conditions as specified in the promotion certificates. Commitment and contingent liabilities 21. (a) As at December 31, 1998 the company had commitments under contracts for construction of Baht 218 million and had credit facilities to a subsidiary company as a short-term loan amounting to Baht 20 million. (b) As at December 31, 1998 the company had commitments under the Sponsor Support Agreement, which made for subsidiary and associated companies in respect of the following on behalf of the company : Currency Baht US Dollar Raw material purchase - 5,292,300 Performance bond 59,000,000 12,193,500 (c) As at December 31, 1998, the two subsidiaries did not enter into forward exchange contracts to cover the exchange risk relating to long-term loans of US Dollars 388.2 million. However, such exchange risk will be partially covered by "The First Amendment to Power Purchase Agreements" dated January 30, 1998 as described in note 3. Electricity Generating Public Company Limited and its subsidiaries Page 27 Notes to the financial statements and consolidated financial statements - December 31, 1998 continued Comparative figures 22. As a result of reclassifications of certain items in the 1998 financial statements, the comparative figures of 1997 in the financial statements have been amended accordingly. The Year 2000 issue (unaudited and not covered by the auditor's report) 23. 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. Although there are certain problems such as the late delivery of equipment for replacement and EGAT' s electricity system control center has asked to postpone the shutdown schedule as required by the Y2K testing plan. Nevertheless, these problems have been managed within the schedule plan. The next tasks are to continue with the remaining machines to change equipment and to perform integrated test, which no problem is anticipated. The contingency plan is in the process of completion. Auditor's report page 1.