COMP FINANCIAL STATEMENTS FOR Q3-1999 (REVISED)

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 69.99 Egcom Tara Company Limited 70.00 - 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 - September 30, 1999 continued Egcom Tara Company Limited has been acquired during the third quarter of 1999. It has not yet commenced trading operations. 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 - September 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 plants 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 numberof 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 - September 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 has been effective since January 1, 1999. According to this standard, the retroactive adjustment is not required. Statements 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 Third Third quarter Nine-month quarter Nine-month (Million Baht) (Million Baht) (Million Baht) (Million Baht) Transactions during the period Sales 2,183 6,455 2,061 6,867 Maintenance service expenses 65 194 148 446 The company only 1999 1998 (Million Baht) (Million Baht) Balance as at September 30, Investment in mutual fund and debentures of subsidiaries 278 110 Unaudited Reviewed Electricity Generating Public Company Limited Page 11 Notes to the interim company financial statements and consolidated financial statements - September 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 MasterAgreements. 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, 1998, over the periods of the PPAs. The compensation amounts for the third quarters ended September 30,1999 and 1998 totalled Baht 193 million and Baht 208 million and for the nine-month periods ended on the same date totalled Baht 520 million and Baht 774 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 - September 30, 1999 continued The two subsidiaries have entered into Major Maintenance Agreements with EGAT forthe latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiaries' power plants. The compensation forsuch 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. Short-term investments 6. As at September 30,1999, a subsidiary pledged fixed deposits as security in respect of a performance bond amounting to 30 million. Deposits at banks and financial institutions used as collateral 7. 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 9 and 10, 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 September 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 4,856 million and 4,489 million, respectively. The remaining balances of Baht 2,730 million and Baht 2,633 million as at September 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 September 30, 1999, the reserve was fully complied with the above. Unaudited Reviewed Electricity Generating Public Company Limited Page 13 Notes to the interim company financial statements and consolidated financial statements - September 30, 1999 continued Investments in and loans to subsidiaries, associates and others. 8. 8.1 Investments in and loans to subsidiaries, associates and others for the company's financial statements are as follows: Type of business Paid-up share % of capital Interest (Baht'000) Subsidiaries Rayong Electricity Generating Company Limited Electricity Generating 4,700,000 99.99 Khanom Electricity Generating Company Limited Electricity Generating 4,850,000 99.99 EGCO Engineering and Provide maintenance Services Company service to power plants 210,000 99.99 Limited EGCO Joint Venture and Make business investment Development Company in electricity industry 447,720 99.99 Limited EGCO Mining Company Mining industry 176,000 69.99 Limited Egcom Tara Company Water treatment plant 345,000 70.00 Limited Associates AMATA EGCO Power Electricity Generating 1,350,000 29.70 Company Limited Bangchak Power Company Electricity Generating 40,000 30.00 Limited AMATA POWER ESCO Providing services to 2,000 50.00 Service Company power plants Limited (formerly named as CM ESCO) ESCO Wood Company Provide maintenance 20,000 45.00 Limited service to power plants Total investments in subsidiaries and associates Others Thai LNG Power Company Limited 10.00 PMI International Company Limited 10.00 Investment in Open-End Fixed Income Fund Investment in REGCO Loan Fund (1) Total investments in others Loan to a subsidiary The company only 1999 Cost method Equity method (Baht'000) (Baht'000) Subsidiaries Rayong Electricity Generating Company Limited 4,700,000 5,958,903 Khanom Electricity Generating Company Limited 4,850,000 5,396,411 EGCO Engineering and Services Company Limited 210,000 107,143 EGCO Joint Venture and Development Company Limited 447,720 20,636 EGCO Mining Company Limited 124,800 103,275 Egcom Tara Company Limited 241,500 241,500 Associates AMATA EGCO Power Company Limited 400,950 379,197 Bangchak Power Company Limited 12,000 12,121 AMATA POWER ESCO Service Company Limited 1,000 23,949 (formerly named as CM ESCO) ESCO Wood Company Limited 9,000 - Total investments in subsidiaries and associates 10,996,970 12,243,135 Others Thai LNG Power Company Limited 37,500 PMI International Company Limited 300 Investment in Open-End Fixed Income Fund 600,000 Investment in REGCO Loan Fund (1) 200,000 Total investments in others 837,800 Loan to a subsidiary 25,200 1998 Cost method Equity method (Baht'000) (Baht'000) Subsidiaries Rayong Electricity Generating Company Limited 4,700,000 4,237,976 Khanom Electricity Generating Company Limited 4,850,000 5,563,877 EGCO Engineering and Services Company Limited 210,000 143,144 EGCO Joint Venture and Development Company Limited 447,720 433,681 EGCO Mining Company Limited 100,400 92,815 Egcom Tara Company Limited - - Associates AMATA EGCO Power Company Limited 400,950 - Bangchak Power Company Limited 12,000 - AMATA POWER ESCO Service Company Limited 1,000 - (formerly named as CM ESCO) ESCO Wood Company Limited 9,000 - Total investments in subsidiaries and associates 10,731,070 10,471,493 Others Thai LNG Power Company Limited 37,500 PMI International Company Limited 300 Investment in Open-End Fixed Income Fund 500,000 Investment in REGCO Loan Fund (1) - Total investments in others 537,800 Loan to a subsidiary - The financial statements for the third quarter and the nine-month period ended September 30,1999 include shares of net losses totalling Baht 82.84 million and Baht 80.50 million,respectively, from the four associates (the third quarter and the nine-month period ended September 30, 1998 : nil). The financial statements for such periods of these associates have not been reviewed by these companies' auditors. During the third quarter of 1999, the company acquired 24,150,000 common shares of Egcom Tara Company Limited, being equivalent to 70% of total common shares. Since this subsidiary has not commenced its normal operation, such investment is accounted for underthe cost method in the company's financial statements. Unaudited Reviewed Electricity Generating Public Company Limited Page 14 Notes to the interim company financial statements and consolidated financial statements - September 30, 1999 continued 8.2 Investments in and loan to associates and others in the consolidated financial statements are as follows: Type of business Paid-up share % of capital holding (Baht'000) Associates AMATA EGCO Power Company Electricity Generating 1,350,000 29.70 Limited Bangchak Power Company Electricity Generating 40,000 30.00 Limited AMATA POWER ESCO Service Providing services to 2,000 50.00 Co., Ltd. power plants (formerly named as CM ESCO) ESCO Wood Company Limited Provide maintenance 20,000 45.00 service to power plants Total investments in associates Others Thai LNG Power Company Limited - 10.00 PMI International Company Limited - 10.00 Investment in Open-End Fixed Income Fund Total investments in others Loan to an associate Consolidation 1999 Cost method Equity method (Baht'000) (Baht'000) Associates AMATA EGCO Power Company Limited 400,950 379,197 Bangchak Power Company Limited 12,000 12,121 AMATA POWER ESCO Service Co., Ltd. 1,000 23,949 (formerly named as CM ESCO) ESCO Wood Company Limited 9,000 - Total investments in associates 422,950 415,267 Others Thai LNG Power Company Limited 37,500 PMI International Company Limited 300 Investment in Open-End Fixed Income Fund 637,000 Total investments in others 674,800 Loan to an associate 32,490 1998 Cost method Equity method (Baht'000) (Baht'000) Associates AMATA EGCO Power Company Limited 400,950 400,950 Bangchak Power Company Limited 12,000 12,000 AMATA POWER ESCO Service Co., Ltd. 1,000 1,000 (formerly named as CM ESCO) ESCO Wood Company Limited 9,000 9,000 Total investments in associates 422,950 422,950 Others Thai LNG Power Company Limited 37,500 PMI International Company Limited 300 Investment in Open-End Fixed Income Fund 502,000 Total investments in others 539,800 Loan to an associate - The financial statements for the third quarter and the nine-month period ended September 30, 1999 include shares of net losses totalling Baht 82.84 million and Baht 80.50 million, respectively, from the four associates (the third quarter and the nine-month period ended September 30, 1998 : nil). The financial statements for such periods of these associates have not been reviewed by these companies' auditors. Unaudited Reviewed Electricity Generating Public Company Limited Page 15 Notes to the interim company financial statements and consolidated financial statements - September 30, 1999 continued Long-term loans 9. The long-term loans are loans in US Dollars and Thai Baht of the two subsidiaries as follows : Consolidation 1999 1998 (Baht'000) (Baht'000) Long-term loans in US dollars 17,733,683 18,025,573 Long-term loans in Thai Baht 2,627,000 2,893,250 20,360,683 20,918,823 Less: Current portion of long-term loans (1,370,138) (1,184,275) 18,990,545 19,734,548 The long-term loans of Rayong Electricity Generating Company Limited are the loans under the Master Agreement, Credit Agreement and Institutional Loan Agreement,each dated November 30, 1994 and the long-term loans of Khanom Electricity Generating Company Limited are the loans under the Master Agreement and Bank Credit Agreement, each dated September 3, 1996. The loan information of the two subsidiaries is summarised as follows : Outstanding balance Term of Total facilities as at September 30, 1999 repayment Interest rate (million) (million) (years) (% per annum) Loans of Rayong Electricity Generating Company Limited USD 93 60.5 10 LIBOR plus a certain margin USD 48 31.2 10 LIBOR plus a certain margin USD 141 140.3 15 Fixed at 8.85% Baht 3,550 2,627.0 12 MLR minus a certain margin Unaudited Reviewed Electricity Generating Public Company Limited Page 16 Notes to the interim company financial statements and consolidated financial statements - September 30, 1999 continued Outstanding balance Term of Total facilities as at September 30, 1999 repayment Interest rate (million) (million) (years) (% per annum) Loans of Khanom Electricity Generating Company Limited USD 100 88 12 LIBOR plus a certain margin USD 165 145 12 LIBOR plus a certain margin Baht 225 (not yet be drawdown) 15 MLR minus a certain margin Rayong Electricity Generating Company Limited entered into an interest rate swap agreement to convert a floating interest rate based on LIBOR plus a certain margin, to fixed interest rates of 8.12% and 8.22% per annum for 2 tranches of loan amounts of US Dollars 93 million and 48 million, respectively. The agreement is effective from November 30, 1994 to December 7, 2004. On September 30,1999, the lenders of the Thai Baht loans have transferred the right to receive the loans repayment amounting to Baht 1,517 million to the Mutual Fund, namely REGCO Loan Fund (1). On the same date the Mutual Fund has settled the loans of Baht 1,517 million due by the subsidiary. The loan bears interest at 8% per annum. The repayment schedule for principal and interest is semi-annually. In addition, the subsidiary has entered into an interest rate swap agreement to convert the floating interest rate to a fixed rate of 8% per annum for the remaining Thai Baht loan of Baht 1,110 million. The repayment schedules for principal and interest are semi-annually and monthly basis respectively. On May 9, 1996, Khanom Electricity Generating Company Limited entered into an interest rate swap agreement to convert a floating interest rate based on LIBOR plus a certain margin to a fixed interest rate of 8.0275% per annum for the loan amount of US Dollars 165 million. In addition, there is a currency and interest rate swap agreement to convert the loan amount of US Dollars 100 million with a floating interest rate to Thai Baht currency at a fixed interest rate of 11% per annum. As a result, the balance of this loan as at September 30, 1999, amounting to US Dollars 88 million, equals to Baht 2,220 million. These agreements are effective from June 19, 1996 to June 14, 2008. Unaudited Reviewed Electricity Generating Public Company Limited Page 17 Notes to the interim company financial statements and consolidated financial statements - September 30, 1999 continued The Master Agreements of both subsidiaries have certain clauses which state that cash reserves are to be provided from the proceeds of sales of electricity (more)