NANCIAL STATEMENTS SECOND QUARTER 2000

Net cash receipts from (payments in) investing activities (1,983,759) (185,706) 359,458 976,962 Consolidated Company 30 June 30 June 30 June 30 June 2000 1999 2000 1999 (Restated) (Restated) Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from financing activities Issue of ordianary shares 3,780 46,857 3,780 46,857 Repayment of long-term loans and debentures (753,166) (730,506) - - Payment of dividend (1,048,542) (619,910) (1,048,542) (619,910) Net cash payments in financing activities (1,797,928) (1,303,559) (1,044,762) (573,053) Net increase (decrease) in cash and cash equivalents (1,229,195) 487,195 (848,666) 369,363 Cash and cash equivalents, beginning balance 8,343,517 2,462,000 7,534,950 2,141,726 Cash and cash equivalents, ending balance 7,114,322 2,949,195 6,686,284 2,511,089 Cash and cash equivalents are made up as follows : Cash on hand and at banks 2,452,716 932,467 2,354,771 783,377 Short-term investments 4,661,606 2,016,728 4,331,513 1,727,712 7,114,322 2,949,195 6,686,284 2,511,089 Supplementary information for cash flows : Interest paid 1,506,039 1,446,040 200,000 - Tax paid - 22,900 - 22,900 1 Accounting policies The interim consolidated and company financial statements are prepared in accordance with the accounting principles generally accepted in Thailand. However, the primary statements (i.e. balance sheets, statements of income, changes in shareholders' equity and cash flows) are presented in the full format as prescribed by the Ministerial Regulation No. 7 (B.E. 2539) in accordance with the Securities and Exchange Commission's and the Stock Exchange of Thailand's requirements, rather than in the condensed format as required by Thai Accounting Standard No. 41, "Interim Financial Reporting". The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 1999. The Group has implemented the following new Thai Accounting Standards, effective on 1 January 2000, in these interim financial statements: TAS 41 Interim Financial Reporting TAS 44 Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 45 Accounting for Investment in Associates TAS 46 Financial Reporting for Interest in Joint Venture TAS 47 Related Party Disclosures The comparatives have been adjusted or extended to take into account the requirements of those newly effective standards. Goodwill represents the excess of the cost of acquisitions over the fair value of the Group's share of the net assets of acquired subsidiary undertaking and a joint venture at the date of acquisition. Goodwill on acquisition is reported in the consolidated balance sheets as goodwill. Goodwill arising on acquisitions of the Group is amortised using the straight line method over the period of 20 years. Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim report only if it would be also appropriate to recognise or defer such costs at the end of the financial year. These interim financial statements should be read in conjunction with the 1999 annual financial statements. 2 Changes in accounting policies (a) In the fourth quarter of 1999, in accordance with the Interpretation number 4 of the Institute of the Certified Accountants and Auditors of Thailand, dated 20 January 2000, the Group reviewed its accounting policy in respect of capitalisation of deferred pre-operating expenses and other deferred expenses. As a result of this review, the Group has changed its accounting policy to expense such cost as incurred. (b) Commencing on 1 January 2000, in accordance with the Thai Accounting Standard No. 41, "Interim Financial Reporting", the Group reviewed its accounting policy in respect of major repair and maintenance expenses in the interim financial statements. As a result of this review, major repair and maintenance expenses are recorded as and when incurred in the interim financial statements. Prior to this, major repair and maintenance expenses were included in the interim financial statements based on the annual budget of major repair and maintenance, and this was in accordance with the regulation dated 3 February 1998 issued by the Stock Exchange of Thailand. 2 Changes in accounting policies (continued) The Group, therefore, accounted for the changes in accounting policy in 2(a) retrospectively by adjusting to the opening retained earnings as at 1 January 1999. The comparative statements of income for the three-month and six-month periods ended 30 June 1999 and the comparative statements of changes in shareholders' equity and cash flows for the six-month period ended 30 June 2000 have been restated accordingly for the changes in both 2(a) and 2(b). The retrospective adjustments in the two subsidiries and the effect of these changes to the net profit and earnings per share included in the consolidated and company financial statements for the three-month and six-month periods ended 30 June 1999 are as follows : 30 June 1999 Three-month Six-month period period Baht'000 Baht'000 (a) write-offs of deferred pre-operating expenses and other deferred 27,846 55,396 expenses (b) reversal of accrued major repair and maintenance expenses 73,593 50,522 Net profit increase 101,439 105,918 Earnings per share increase (Baht) 0.19 0.20 3 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 period (2000: 524,397,100 shares; 1999: 522,742,500 shares). 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). 4 Investments used as collateral As at 30 June 2000, the reserves mainly of the two subsidiaries of the Company, Rayong Electricity Generating Company Limited (REGCO) and Khanom Electricity Generating Company Limited (KEGCO), which are for the purposes of repayment of loan principal and interest due within one year, amounted to Baht 3,515 million (31 December 1999: Baht 3,329 million). The remaining balances mainly represent Holding accounts of both subsidiaries and Borrower's accounts of KEGCO, totalling Baht 2,286 million as at 30 June 2000 (31 December 1999: Baht 2,570 million), which must be maintained in accordance with the loan agreements of the same subsidiaries. Investments are made up of deposits at banks, financial institutions and marketable securities. 4 Investments used as collateral (continued) The movements in short-term and long-term investments in marketable securities used as collateral can be analysed as follows : Investments in marketable securities Consolidated 30 June 2000 For the six-month period ended Short-term Long-term Baht'000 Baht'000 ? Held to maturity, at cost - beginning balance as at 1 January 2000 - - - addition - 50,007 - ending balance - 50,007 ? Available for sale - beginning balance as at 1 January 2000 - - - transferred from deposits at banks and financial institutions 441,473 1,410,873 - unrealised currency exchange losses on transferring from deposits at banks and financial institutions (200) (641) - unrealised gains on investments in marketable securities - available for sale 765 2,421 - at fair value 442,038 1,412,653 Total investments in marketable securities used as collateral 442,038 1,462,660 Gain or losses on revaluation of investments which are classified as available for sale are charged to shareholders' equity and recognised as income or expenses in the statement of income when such investments are sold. 5 Investments in subsidiaries, joint venture, associates, and other long-term investments Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 (Restated) (Restated) Baht'000 Baht'000 Baht'000 Baht'000 Investments in subsidiaries - - 12,795,433 12,788,857 Investments in joint venture - - 1,050,000 - Investments in associates 474,841 480,850 - - 474,841 480,850 13,845,433 12,788,857 Other long-term investments 475,293 227,981 475,293 227,981 Total investments 950,134 708,831 14,320,726 13,016,838 5 Investments in subsidiaries, joint venture, associates, and other long-term investments (continued) The principal subsidiaries, which are all incorporated in Thailand, except EGCO International (B.V.I) which is incorporated in the British Virgin Islands, are as follows; Company 30 June 2000 31 December 1999 Business Ownership Cost Equity Cost Equity interest method method method method (%) Baht'000 Baht'000 Baht'000 Baht'000 Rayong Electricity Generating Co., Ltd. Electricity generating 99.99 4,700,000 6,013,968 4,700,000 6,518,272 Khanom Electricity Generating Co., Ltd. Electricity generating 99.99 4,850,000 5,774,019 4,850,000 5,547,372 EGCO Engineering and Services Co., Ltd. and its subsidiary and Power plant associates maintenance services 99.99 310,000 218,445 210,000 80,692 - Subsidiary - AGRO Energy Co., Ltd. Trading / delivery services of natural scrap - Associates - Amata Power-Esco Service Power plant operation Co., Ltd. - ESCO Wood Co., Ltd. Power plant equipment EGCO Joint Venture and maintenance 99.99 447,720 506,054 447,720 510,444 Development Co., Ltd. and its associate - AMATA EGCO Power Co., Electricity generating Ltd. EGCO Mining Co., Ltd. Mining and other 70.00 124,800 11,389 124,800 15,975 energy Egcom Tara Co., Ltd. Tap water business 70.00 289,800 271,445 241,500 116,102 EGCO Green Energy Co.,Ltd Investing in biomass 74.00 74 74 - - fueled electric generating plant EGCO International (B.V.I.) Investing in power energy 100.00 39 39 - - 10,722,433 12,795,433 10,574,020 12,788,857 The principal joint venture, which is incorporated in Thailand, is as follows; Company 30 June 31 December 2000 1999 Business Ownership Cost Equity Cost Equity interest method method method method (%) Baht'000 Baht'000 Baht'000 Baht'000 Gulf Electric Public Co., Ltd. Electricity generating 50.00 1,050,000 1,050,000 - - 1,050,000 1,050,000 - - The financial statements for the three-month and six-month periods ended 30 June 2000 of Gulf Electric Public Company Limited have been reviewed by its auditor. 5 Investments in subsidiaries, joint venture, associates, and other long-term investments (continued) The principal associates, which are all incorporated in Thailand, are as follows: Consolidated as at 30 June 2000 Business Paid-up Portion of Cost method Equity method Dividend share capital Investment Baht'000 Baht'000 Baht'000 Baht'000 (%) Amata Power-Esco Power plant operation 2,000 50.00 1,000 730 - Service Co., Ltd. AGRO Energy Co., Ltd. Trading / delivery 500 99.99 500 500 - services of natural scrap AMATA EGCO Power Electricity generating 1,350,000 29.70 400,950 473,611 - Co., Ltd. 402,450 474,841 Consolidated as at 31 December 1999 Business Paid-up Portion of Cost method Equity method Dividend share capital Investment Baht'000 Baht'000 Baht'000 Baht'000 (%) AMATA EGCO Power Electricity generating 1,350,000 29.70 400,950 477,804 - Co., Ltd. Amata Power-Esco Power plant operation 2,000 50.00 1,000 2,546 - Service Co., Ltd. ESCO Wood Co., Ltd. Power plant equipment 20,000 45.00 9,000 - - Co., Ltd. maintenance AGRO Energy Co., Ltd. Trading / delivery 500 99.99 500 500 - services of natural scrap 411,450 480,850 The investment in AGRO Energy Company Limited was accounted for under the equity method but not consolidated in the consolidated financial statements as at December 31, 1999 because this subsidiary had not commenced its trading operation and its financial statements were immaterial. 5 Investments in subsidiaries, associates, and other long-term investments (continued) Other long-term investments comprise: as at 30 June 2000 Consolidated Company Available for sale Other investments Available for sale Other investments Baht'000 Baht'000 Baht'000 Baht'000 Debt securities - - - - Equity securities 177,027 37,800 177,027 37,800 Add: Adjustment for changes in fair value 928 - 928 - 177,955 37,800 177,955 37,800 Advance payment in Nam Theun project (Note 15 (c)) 259,538 259,538 Total other long-term investments 475,293 475,293 as at 31 December 1999 Consolidated Company Available for sale Other investments Available for sale Other investments Baht'000 Baht'000 Baht'000 Baht'000 Debt securities - - - - Equity securities 189,189 37,800 189,189 37,800 Add: Adjustment for changes in fair value 992 - 992 - 190,181 37,800 190,181 37,800 Total other long-term investments 227,981 227,981 6 Capital expenditures and commitments Consolidated Company For the six-month periods ended 30 June 30 June 2000 2000 Baht'000 Baht'000 Property, plants, and equipment, net Opening net book amount 27,271,455 998,016 Acquisition of joint venture (note 11(a)) 1,763,407 - Additions 228,941 783 Disposals (362) - Depreciation (846,206) (31,299) Closing net book amount 28,417,235 967,500 As at 30 June 2000, land, buildings and equipment of power plants of REGCO and KEGCO, which are specified in the Master Agreements, of Egcom Tara Company Limited, and of the joint venture are mortgaged and pledged as collateral for short-term and long-term loans and debentures. Capital commitments of the Group as at 30 June 2000 amounted to Baht 224 million (31 December 1999: Baht 355 million). 7 Other aseets As at 30 June 2000, other assets in the consolidated financial statements include project expenditure paid on behalf of a subsidiary of the joint venture and deferred development costs of the two subsidiaries of the joint venture, amounting to Baht 127 million and Baht 259 million, respectively. The project expenditure of Baht 127 million will be reimbursed from its subsidiary. However, this has not been finalised between the joint venture and the another major shareholder of the subsidiary, and the amount collectible is thus still uncertain. 8 Long-term loans The long-term loans are loans in US Dollar and Thai Baht of the subsidiaries of the Company and a subsidiary of a joint venture as follows; Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Long-term loans in US Dollar 17,254,625 15,974,961 - - Long-term loans in Thai Baht 2,398,250 2,491,750 - - 19,652,875 18,466,711 - - Less: Current portion of long-term loans (1,693,003) (1,447,976) - - Long-term loans, net 17,959,872 17,018,735 - - Long-term loans of subidiaries of the Company mainly comprise loans of Rayong Electricity Generating Company Limited and Khanom Electricity Generating Company Limited. 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 for repayments of principal and interest due within one year, and other conditions as described in the agreements. Also, a reserve for minimising the exchange risk shall be provided. In addition, the Power Purchase Agreements, the Asset Purchase Agreements, the Major Maintenance Agreements, insurance policies and other related agreements with the lenders have been assigned as collateral in accordance with the conditions under the Master Agreements. The loan information of a subsidiary of a joint venture is summarised as follows: Outstanding balance Term of Total facilities as at 30 June 2000 repayment Interest rate million million years % per annum USD 79 63.5 12 LIBOR plus a certain margin Land, buildings, machineries and equipments of the Project were mortgaged and cash at banks and financial institution were pledged as collateral. 9 Debentures The debentures are debentures in Thai Baht of the Company and the two subsidiaries of the Company as follows : Consolidated Company (more)