NUAL FINANCIAL STATEMENTS 1999

Beginning balance 49,412,136 36,377,703 Acquisition 103,500,000 15,300,000 Shares of profit from subsidiaries (93,854,574) (4,852,777) Goodwill (Amortisation of goodwill) (2,587,231) 2,587,210 Ending balance 56,470,331 49,412,136 Company 1999 1998 Baht Baht Beginning balance - - Acquisition - - Shares of profit from subsidiaries - - Goodwill (Amortisation of goodwill) - - Ending balance - - 18 Share capital and premium on share capital Ordinary Share Number of Shares Premium Total shares Baht Baht Baht At 1 January 1998 521,233,800 5,212,338,000 8,496,676,000 13,709,014,000 Issue of shares 1,475,400 14,754,000 29,508,000 44,262,000 At 31 December 1998 522,709,200 5,227,092,000 8,526,184,000 13,753,276,000 Issue of shares 1,561,900 15,619,000 31,238,000 46,857,000 At 31 December 1999 524,271,100 5,242,711,000 8,557,422,000 13,800,133,000 The total authorised number of ordinary shares is 530,000,000 shares (1998: 530,000,000 shares) with a par value of Baht 10 per share (1998: Baht 10 per share). The amount of 524,271,100 shares are issued and fully paid up. Following the resolution of the Shareholders' Extraordinary Meeting no. 1/1995 on August 22, 1995, it approved the 5-year allocation plan of ten million warrants to the employees of EGCO and its subsidiaries under the Employee Stock Ownership Plan (ESOP) with a par value of Baht 10 per share. On April 19,1999, the Company received subscription of 1,561,900 additional shares. The paid-up share capital and premium on share capital totalling Baht 15,619,000 and Baht 31,238,000, respectively. The Company registered the increased share capital with the Ministry of Commerce on April 26,1999. 19 Legal reserve Consolidated 1999 1998 Baht Baht Beginning balance 102,643,398 19,792,680 Appropriation during the year 132,397,729 82,850,718 Ending balance 235,041,127 102,643,398 Company 1999 1998 Baht Baht Beginning balance 102,643,398 19,792,680 Appropriation during the year 132,397,729 82,850,718 Ending balance 235,041,127 102,643,398 20 Other income Consolidated 1999 1998 Baht Baht Dividends received income 93,261,457 960,000 Gains on sales of investments 43,133,461 82,587,555 Others 55,400,035 19,736,143 191,794,953 103,283,698 Company 1999 1998 Baht Baht , Dividends received income 93,093,457 960,000 Gains on sales of investments 43,133,461 82,587,555 Others 47,611,961 4,917,212 183,838,879 88,464,767 21 Cost of sales Cost of sales comprises main expenses such as repair and maintenance expenses, depreciation expenses, and insurance expenses. Major repair and maintenance expenses of power plants are recorded as expenses when they are incurred. The major repair and maintenance expenses for the years ended 31 December 1999 and 1998 amounted to Baht 331 million and Baht 1,039 million, respectively. 22 Net profit The following items have been charged in arriving at net profit : Consolidated 1999 1998 Baht Baht Depreciation on property, plant and Equipment (Note 13) 1,679,668,324 1,640,717,606 Staff costs 395,276,746 373,185,468 Impairment charged for development cost project(included in administrative expenses) 161,647,426 - Company 1999 1998 Baht Baht Depreciation on property, plant and equipment (Note 13) 42,227,835 11,299,899 Staff costs 85,104,880 76,183,377 Impairment charged for development cost project(included in administrative expenses) - - 23 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. Consolidated 1999 1998 Baht Baht Net profit attributable to shareholders 2,647,954,570 6,181,192,156 Weighted average number of ordinary Shares in issue 523,888,958 522,292,351 Basic earnings per share 5.05 11.83 Company 1999 1998 Baht Baht Net profit attributable to shareholders 2,647,954,570 6,181,192,156 Weighted average number of ordinary Shares in issue 523,888,958 522,282,351 Basic earnings per share 5.05 11.83 For the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The company has provided share warrants to the employees of the Group under the Employee Stock Ownership Plan (ESOP). The outstanding share warrants are assumed to have been exercised to purchase ordinary shares for the purpose of computing the dilution. For such calculation, no adjustment is made to net profit. Consolidated 1999 1998 Shares Shares Weighted average number of ordinary Shares in issue 523,888,958 522,292,351 Adjustments for share warrants 5,582,100 7,190,800 Weighted average number of ordinary Shares for diluted earnings per share 529,471,058 529,483,151 Diluted earnings per share 5.00 11.67 Company 1999 1998 Shares Shares Weighted average number of ordinary Shares in issue 523,888,958 522,292,351 Adjustments for share warrants 5,582,100 7,190,800 Weighted average number of ordinary Shares for diluted earnings per share 529,471,058 529,483,151 Diluted earnings per share 5.00 11.67 24 Dividends At the annual shareholders' meeting dated April 29, 1999, it was approved to pay dividends from operating result of 1998 amounting to Baht 1.27 per share, totalling Baht 663,967,684. The dividends were paid to the shareholders during the second quarter of 1999. 25 Provident fund The company has a provident fund 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 1987. 26 Promotional privileges Rayong Electricity Generating Company Limited and Khanom Electricity Generating Company Limited which are the company's subsidiaries have received promotional privileges from the Office of Board of Investment under promotion certificates issued on June 15, 1995 and November 6, 1996, respectively, in respect of electricity generating. Under these privileges the two 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 two subsidiaries are required to comply with the terms and conditions as specified in the promotion certificates. 27 Financial instruments The Group faced the significant financial risks such as risk from interest rate, risk from exchange rate, and risk from credit facilities which the Group has borrowed for operations and are required to repay with fixed and floating interest rate. The objectives in using financial instruments are to reduce the uncertaintly over future cash flows arising from movements in interest and exchange rates, and to manage the liquidity of the cash resources. Interest rate exposures are managed through interest rate swaps as mentioned in note 15. In respect of currency exchange risk which mainly results from the US Dollar loans of two subsidiries, it is minimised by adjusment of the exchange rate impact through the formulae for the calculations of sales of electricity charged to EGAT in each month as mentioned in note 4. Decisions on the level of risk undertaken are confined to the Management Committee which has established limits by transaction type and by counterparty. 28 Commitment and contingent liabilities (a) As at December 31, 1999 the company had commitment under the Sponsor Support Agreements, which were made for subsidiary and associates in respect of the following on behalf of the company: Currency Baht US Dollar Raw material purchase - 5,292,300 Performance bond 73,196,752 196,938 (b) As at 31 December 1999, the commitment from the outstanding capital expenditure of the Group amounted to Baht 355 million. (c) As at 31 December 1999, the two subsidiaries had not entered into forward exchange contracts to cover the exchange risk relating to long-term loans of US Dollars 366.09 million. However, such exchange risk is partially covered by "The First Amendment to Power Purchase Agreements" dated January 30,1998 as mentioned in note 4. (d) The two subsidiaries had entered into insurance agreements with two local insurers. These agreements are for the purpose of insurance on the power plants, a certain number of equipment, consequent loss, and third party liabilities, covering a period of 3 years commencing 1 January 1999. The premium for such insurance for the first year was paid at US Dollars 1,167,885 and for the next two years at the agreed amounts on the condition that there will be no claims occurred in such periods. (e) A subsidiary of the company also entered into spare parts repair service agreements with two suppliers, one of which is an affiliate. According to the agreements, the subsidiary has committed to have these suppliers repair a certain number of spare parts specified in the agreements. These agreements, totalling Baht 49 million and GBP 895,438, shall be effective for a period of 2 years commencing in the first quarter of 1999. 29 Acquisition In the third quarter of 1999, the company purchased 24,150,000 common shares of Egcom Tara Company Limited, at par value of Baht 10, totalling Baht 241 million. The acquired commom shares account for 70% of registered common shares of Egcom Tara Company Limited. Such company has not commenced its operation in the normal course of business. On December 31, 1999, the company had a commitment to pay share premium, amounting to Baht 157 million, of the acquired common shares according to the conditions stated in the Share Purchase Agreement dated July 22, 1999. 30 Year 2000 (unaudited) Being aware of the importance of the year 2000 problem which may affect business and power supply for socioeconomic activities. The Group set up the Year 2000 Problem Solving Steering Committee and the Year 2000 Problem Solving Working Group in May 1998 to handle the problem in accordance with the guidelines recommended by the British Standards Institution (BSI) and the National Electronics and Computer Technology Center (NECTEC). The solving problem project was completed since September 1999 to ensure that all systems can be effectively operated before, between and after the Year 2000. The total Y2K budget is approximately Baht 68 million (as of December 1999). The year 2000 problem has been solved on schedule with the cooperation from the management, employees, consultants and manufacturers. As of December 1999, the actual expenditure was approximately Baht 56 million. The contingency plan was developed by initiating action plans for any unexpected event arising from both internal and external factors. Manpower, reserved equipment and budget were also allocated for the effectiveness of the contingency plan. To date, the Group has not experienced any Y2K problems related to the Group's own systems or third parties. All systems are assured that will be Y2K compliance for the other critical date without any serious problem.