TERIM FINANCIAL Q2-99 (CORRECTED THE NOTE 7.2)

Consolidation 1998 second quarter six-month (Baht'000) (Baht'000) Cash flows from operating activities : Net income (loss) for the period (307,608) 3,473,887 Adjustments to reconcile net income (loss) to net cash Unrealised losses (gains) on exchange rate 1,052,297 (1,558,955) Depreciation and amortisation 436,764 868,309 Gains from disposal of marketable securities (40,849) (79,586) Increase in LCM provision 14,598 14,598 Dividend received from other companies - (960) Shares of losses (profits) from subsidiary and associated companies - - Cash flows before changes in working capital 1,155,202 2,717,293 Changes in working capital : Deposits at banks and financial institutions used as collateral (249,684) (1,204,283) Account receivable - trade 450,590 (739,882) Advance and loans to associated companies (8,181) (5,783) Spare parts and supplies 20,783 (155,771) Other current assets (47,607) (10,541) Other assets (487) (544) Accounts payable - trade (2,375) (219,970) Other current liabilities (556,938) 164,196 Net cash provided by (used in) operating activities 761,303 544,715 The notes to the financial statements on pages 7 to 22 form an integral part of these statements. Auditor's report page 1 Unaudited Reviewed Electricity Generating Public Company Limited Page 6 Company and consolidated statements of cash flows for the second quarters and the six-month periods ended June 30, 1999 and 1998 continued The company only 1999 second quarter six-month (Baht'000) (Baht'000) Cash flows from investing activities : Purchase of property, plant and equipment (133,662) (171,547) Investments in marketable securities 18,802 132,490 Long-term investments - - Investments in and loans to subsidiaries, associates and others - (100,000) Dividend received from other companies 3,686 90,113 Dividend received from subsidiaries 1,057,506 1,057,506 Net cash provided by (used in) investing activities 946,332 1,008,562 Cash flows from financing activities : Increase in share capital 43,857 46,857 Repayment of long-term loans and debentures - - Dividend (619,901) (619,910) Minority interest - - Net cash provided by (used in) financing activities (576,044) (573,053) Net change in cash and cash equivalents 397,742 369,363 Cash and cash equivalents, beginning of period 2,113,347 2,141,726 Cash and cash equivalents, end of period 2,511,089 2,511,089 Cash and cash equivalents are made up as follows : Cash in hand and at banks 783,377 783,377 Short-term investments 1,727,712 1,727,712 2,511,089 2,511,089 Additional information : Interest paid - - Income tax paid 13,152 22,900 The company only 1998 second quarter six-month (Baht'000) (Baht'000) Cash flows from investing activities : Purchase of property, plant and equipment (45,318) (121,283) Investments in marketable securities 93,523 315,356 Long-term investments - - Investments in and loans to subsidiaries, associates and others (89,000) (172,500) Dividend received from other companies - 960 Dividend received from subsidiaries - - Net cash provided by (used in) investing activities (40,795) 22,533 Cash flows from financing activities : Increase in share capital 41,463 44,262 Repayment of long-term loans and debentures - - Dividend (25) 23 Minority interest - - Net cash provided by (used in) financing activities 41,438 44,285 Net change in cash and cash equivalents 43,752 184,825 Cash and cash equivalents, beginning of period 2,805,976 2,664,903 Cash and cash equivalents, end of period 2,849,728 2,849,728 Cash and cash equivalents are made up as follows : Cash in hand and at banks 33,035 33,035 Short-term investments 2,816,693 2,816,693 2,849,728 2,849,728 Additional information : Interest paid - - Income tax paid - - Consolidation 1999 second quarter six-month (Baht'000) (Baht'000) Cash flows from investing activities : Purchase of property, plant and equipment (151,625) (231,481) Investments in marketable securities 17,993 132,490 Long-term investments - (30,000) Investments in and loans to subsidiaries, associates and others (2,676) (112,367) Dividend received from other companies 3,686 90,113 Dividend received from subsidiaries - - Net cash provided by (used in) investing activities (132,622) (151,245) Cash flows from financing activities : Increase in share capital 43,857 46,857 Repayment of long-term loans and debentures (739,665) (730,506) Dividend (619,901) (619,910) Minority interest (1,682) (2,531) Net cash provided by (used in) financing activities (1,317,391) (1,306,090) Net change in cash and cash equivalents 288,150 487,195 Cash and cash equivalents, beginning of period 2,661,045 2,462,000 Cash and cash equivalents, end of period 2,949,195 2,949,195 Cash and cash equivalents are made up as follows : Cash in hand and at banks 732,467 732,467 Short-term investments 2,216,728 2,216,728 2,949,195 2,949,195 Additional information : Interest paid 1,373,312 1,446,040 Income tax paid 13,152 22,900 Consolidation 1998 second quarter six-month (Baht'000) (Baht'000) Cash flows from investing activities : Purchase of property, plant and equipment (65,314) (171,547) Investments in marketable securities 91,034 315,356 Long-term investments - - Investments in and loans to subsidiaries, associates and others (172,645) (281,947) Dividend received from other companies - 960 Dividend received from subsidiaries - - Net cash provided by (used in) investing activities (146,925) (137,178) Cash flows from financing activities : Increase in share capital 135,563 226,962 Repayment of long-term loans and debentures (665,503) (749,772) Dividend - - Minority interest (406) (3,384) Net cash provided by (used in) financing activities (530,346) (526,194) Net change in cash and cash equivalents 84,032 (118,657) Cash and cash equivalents, beginning of period 3,002,728 3,205,417 Cash and cash equivalents, end of period 3,086,760 3,086,760 Cash and cash equivalents are made up as follows : Cash in hand and at banks 42,850 42,850 Short-term investments 3,043,910 3,043,910 3,086,760 3,086,760 Additional information : Interest paid 1,591,305 1,701,216 Income tax paid - - The notes to the financial statements on pages 7 to 22 form an integral part of these statements. Auditor's report page 1 Unaudited Reviewed Electricity Generating Public Company Limited Page 7 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 Basis of preparation of the interim financial statements 1. The financial statements on pages 2 to 6 and the notes to the financial statements and the consolidated financial statements are unaudited and have been prepared from the accounting records of the company and its subsidiaries. In the opinion of Management, these interim financial statements present fairly the financial position and the results of its operations and changes in shareholders' equity of the company and its subsidiaries in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the financial statements and the consolidated financial statements for the year ended December 31, 1998. Principal accounting policies 2. A summary of significant accounting policies of the company and its subsidiaries, which have been applied consistently, is set out below. Basis of preparation The financial statements and the consolidated financial statements are prepared in accordance with and comply with accounting principles generally accepted in Thailand. Basis of consolidation The consolidated financial statements include the financial statements of the following subsidiaries : Percentage of holding 1999 1998 Rayong Electricity Generating Company Limited 99.99 99.99 Khanom Electricity Generating Company Limited 99.99 99.99 EGCO Engineering & Service Company Limited 99.99 99.99 EGCO Joint Ventures & Development 99.99 99.99 Company Limited EGCO Mining Company Limited 69.99 66.70 Intercompany transactions have been eliminated in the consolidated financial statements. Unaudited Reviewed Electricity Generating Public Company Limited Page 8 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 continued Investments in marketable securities Investments in marketable securities, which are available for sale, are stated at fair market value. Gains or losses on revaluation of the securities are charged directly to shareholders' equity and recognised as income or expense in the statements of income (loss) when such securities are sold. Fair market value is determined at the closing price of the Stock Exchange of Thailand at the balance sheet date. In the absence of such prices, fair value, which is derived from the net present value discounted at an appropriate rate of return, is applied instead. Spare parts and supplies Spare parts and supplies are stated at cost less provision for obsolete stock. Cost is calculated based on the moving average basis. The inventories are categorised as specific spare parts, which are used for specific plant equipment, and common spare parts which are for general use. The provision for specific spare parts is calculated by dividing the balances of specific spare parts and supplies on hand at the year end by the number of years remaining under the Power Purchase Agreements with the Electricity Generating Authority of Thailand. The provision for common spare parts is generally provided, based on an aging analysis. Investments in subsidiaries, associates and others Investments in subsidiaries and associates are accounted for under the equity method. Investments in others are accounted for under the cost method. Unaudited Reviewed Electricity Generating Public Company Limited Page 9 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 continued Depreciation Property, plant and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the expected useful economic lives of the assets concerned as follows : Years Power plant 15 and 20 Buildings and structures 20 Transmission system 20 Operating and maintenance equipment 5 and 10 Office equipment, furniture and computers 5 Vehicles 5 Deferred expenses Pre-operating expenses, organisation expenses and other deferred charges are amortised, based on a straight-line method, over a period of 5 - 10 years. Foreign currencies Trading transactions denominated in foreign currencies are translated into Thai Baht at the exchange rates ruling when the transactions were entered into. Monetary assets and liabilities denominated in foreign currencies are translated into Thai Baht at the exchange rates ruling at the balance sheet date. Exchange gains or losses are included in the statements of income (loss) and the consolidated statements of income (loss). Earnings (loss) per share Earnings (loss) per share is calculated, based on the weighted average number of shares issued during the period. Unaudited Reviewed Electricity Generating Public Company Limited Page 10 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 continued Change in accounting policy 3. The company has changed its accounting policy in respect of investment in marketable securities, from the lower of aggregate cost or market value to fair market value commencing from January 1, 1999. This practice complies with the accounting standard No. 40, which is effective from January 1, 1999. According to this standard, the retroactive adjustment is not required. Statement of cash flows 4. Cash and cash equivalents consist of cash in hand and at banks and deposits at banks and financial institutions which maturities are within 3 months. Related party transactions 5. A summary of significant transactions with related companies is as follows : Consolidation 1999 1998 second second quarter six-month quarter six-month (Baht'000)(Baht'000)(Baht'000)(Baht'000) Transactions during the period Sales 2,120 4,273 2,270 4,806 Maintenance service expenses 65 129 207 298 The company only 1999 1998 (Baht'000)(Baht'000) Balance as at June 30, Investment in debentures of a subsidiary 79 112 Unaudited Reviewed Electricity Generating Public Company Limited Page 11 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 continued Account receivable - trade is due from the Electricity Generating Authority of Thailand (EGAT), one of the major shareholders of the company, being in respect of sales of electricity. The two subsidiaries have entered into the Power Purchase Agreements (PPAs) with EGAT. The agreements are effective for periods of 15 and 20 years. According to the resolutions of the Cabinet's meetings dated February 15, 1994 and January 23, 1996, the electricity revenues from such agreements are calculated based on 'Cost plus basis'. There is a limitation of sales of electricity to third parties as specified in the agreements. These agreements have been pledged as collateral with the lenders under the Master Agreements. Under the PPAs with EGAT, the subsidiaries are eligible to take into consideration the exchange rate effects to adjust the formulae for the calculation of revenues from the portion of capacity payment charged to EGAT each month, pertaining to The First Amendment to Power Purchase Agreements, dated January 30, 1999, over the period of the PPAs. The compensation amounts for the second quarters ended June 30, 1999 and 1998 totalled Baht 159 million and Baht 221 million and for the six-month periods ended on the same date totalled Baht 328 million and Baht 565 million, respectively. Under the PPAs, EGAT has to bear the natural gas cost until the subsidiaries enter into a natural gas purchase agreement with the Petroleum Authority of Thailand. Therefore, the calculation of revenues from the portion of energy payment does not include a calculation of the natural gas cost. On July 20, 1998, EGAT informed the subsidiaries that they should negotiate with the Petroleum Authority of Thailand in order to enter into a natural gas purchase agreement. However, on August 10, 1998, the subsidiaries requested EGAT to continuously bear the natural gas cost and EGAT agreed with these requests on August 25, 1998. Unaudited Reviewed Electricity Generating Public Company Limited Page 12 Notes to the interim company financial statements and consolidated financial statements - June 30, 1999 continued The two subsidiaries have entered into Major Maintenance Agreements with EGAT for the latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiaries' power plants. The compensation for such services is calculated based on 'Cost plus basis' and is adjusted annually according to the Consumer Price Index. The agreements are effective for a period of six years, commencing on October 3, 1994 and May 14, 1996, and can be extended for an additional period of six years. These agreements have been pledged as collateral with the lenders under the Master Agreements. Deposits at banks and financial institutions used as collateral 6. Deposits at banks and financial institutions used as collateral of the two subsidiaries are mainly cash reserves to be maintained under the loan agreements referred to in notes 8 and 9, for the purpose of repayment of principal and interest due within one year and a reserve to minimise the exchange risk. These cash reserves are provided from the proceeds of sales of electricity. As at June 30, 1999 and 1998, the cash reserves, which are for the purpose of repayment of principal and interest due within one year, amounted to Baht 3,753 million and 3,343 million, respectively. The remaining balances of Baht 1,905 million and Baht 2,346 million as at June 30, 1999 and 1998, mainly represent Holding accounts of both subsidiaries and Borrower's accounts of Khanom Electricity Generating Company Limited, which must be maintained in accordance with the loan agreements. The cash reserve for minimising the exchange risk represents deposits in US Dollar. The two subsidiaries have to provide this reserve until such account equals the lower of 25% of the aggregate outstanding unhedged US Dollar loans or an amount of US Dollars 103 million. As at June 30, 1999, the reserve is fully complied with the above. Unaudited Reviewed (more)