NANCIAL STATEMENTS FOR THIRD QUARTER

Consolidated Company For the nine-month period ended 30 September 30 September 2000 2000 Baht'000 Baht'000 Property, plants and equipment, net Opening net book amount 27,271,455 998,016 Acquisition of joint ventures (notes 11(a) and 11 (b) ) 4,534,015 - Additions 355,000 7,304 Disposals (723) (146) Depreciation (1,333,656) (51,850) Closing net book amount 30,826,091 953,324 As at 30 September 2000, land, buildings and equipment of power plants are mortgaged as collateral for short-term and long-term loans, and debentures. Capital commitments of the Group as at 30 September 2000 amounted to Baht 149 million (31 December 1999: Baht 355 million). 7 Other assets As at 30 September 2000, other assets in the consolidated financial statements include deferred development costs of the two subsidiaries of Gulf and project expenditure paid on behalf of a subsidiary of joint venture - Gulf, amounting to Baht 245 million and Baht 134 million, respectively. The project expenditure of Baht 134 million will be reimbursed from its subsidiary. However, this has not yet been finalised between Gulf 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 Dollars, Philippines Peso, and Thai Baht of the company's subsidiaries and joint ventures and the subsidiaries of joint ventures as follows: Consolidated Company 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Long-term loans in US Dollar 20,684,742 15,974,961 - - Long-term loans in Philippines Peso 157,974 - - - Long-term loans in Thai Baht 2,430,250 2,491,750 - - 23,272,966 18,466,711 Less: Current portion of - - long-term loans (2,183,226) (1,447,976) - - Long-term loans, net 21,089,740 17,018,735 - - Long-term loans of the subsidiaries of the company Long-term loans of subsidiaries of the company mainly comprise loans of REGCO and KEGCO. 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. Long-term loans of joint ventures and subsidiaries of joint ventures The loan of joint ventures and subsidiaries of joint ventures are as follows: Outstanding balance Term of Joint ventures as at 30 September 2000 Repayment Interest rate Million Years % per annum Gulf US Dollars 30.3 12 - LIBOR plus a certain margin Conal US Dollars 53.44 and Installment up to - LIBOR plus a certain for US Philippines Peso 169.12 2002, 2008 and Dollars loans and 11% for 2009 Philippines Peso loans Land, buildings, machinery and equipment of the subsidiaries of joint ventures were mortgaged and cash at banks and financial institutions were pledged as collateral. 9 Debentures The debentures are debentures in Thai Baht of the company and its two subsidiaries as follows: Consolidated Company 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Debentures 13,716,907 13,860,478 5,000,000 5,000,000 Less: Current portion of debentures (917,281) (390,660) (542,650) - 12,799,626 13,469,818 4,457,350 5,000,000 The company is required to comply with the conditions set out in the agreement. REGCO and KEGCO are also required to maintain a reserve for repayment of principal and interest due within one year and to pledge the relevant agreements as collateral as mentioned in note 4 and 8. 10 Share capital and premium on share capital For the nine-month period ended Number of Ordinary Share 30 September 2000 shares shares premium Total Baht'000 Baht'000 Baht'000 Opening balance 524,271,100 5,242,711 8,557,422 13,800,133 Issue of shares 126,000 1,260 2,520 3,780 Ending balance 524,397,100 5,243,971 8,559,942 13,803,913 The Group's employees exercised the rights to buy 126,000 ordinary shares at the price of Baht 30 per share in April 2000. As at 30 September 2000, all issued shares were fully paid. 11 Acquisitions (a) On 1 July 2000, EGCO Energy International (Denmark) Limited Aps was incorporated in Denmark, with a registered share capital of 1,330 shares at DKK 100 each. The normal course of its business is to invest in power energy business. All shares were initially subscribed by EGCO International (B.V.I) Limited. On 30 August 2000, EGCO Energy International (Denmark) Limited Aps acquired 40% of the share capital of Conal Holdings Corporation, which is a holding company of the power business and was incorporated in the Philippines, according to the Share Purchase Agreement dated 24 April 2000. The consideration of US Dollars 24 million was settled in cash in August 2000. The net book value, amounting to Baht 710.73 million, of the company as at 25 September 2000 was applied as the fair value of the net identifiable assets at the date of acquisition. The resulting goodwill of Baht 292 million will be amortised on a straight line basis over the period of 16 years. The consolidated financial statements of Conal Holdings Corporation for the one-month period ended 25 September 2000 have been included in a proportioned accounting basis. 11 Acquisitions (continued) Details of acquisition of net assets in the company's consolidated financial statements and the resulting goodwill are as follows: Baht' 000 Property, plant and equipment, net (note 6) 2,770,608 Borrowings (note 8) (2,357,286) Other assets less liabilities 738,995 Minority interest (441,587) Book value of net assets 710,730 Goodwill 291,737 Total purchase consideration 1,002,467 (b) On 20 June 2000, the company acquired 50% of the share capital of Gulf, which is an electricity generating company and incorporated in Thailand, according to the Share Sale and Purchase Agreement dated 31 May 2000. The consideration of Baht 1,050 million was settled in cash in June 2000. The net book value, amounting to Baht 796.26 million, of the company as at 30 June 2000 was applied as the fair value of the net identifiable assets at the date of acquisition. The resulting goodwill of Baht 253.74 million will be amortised on a straight line basis over the period of 20 years. Details of acquisition of net assets in the company's consolidated financial statements and the resulting goodwill are as follows: Baht' 000 Property, plant and equipment, net (note 6) 1,763,407 Borrowings (note 8) (1,246,360) Other assets less liabilities 350,148 Minority interest (70,939) Book value of net assets 796,256 Goodwill 253,744 Total purchase consideration 1,050,000 Included in the net assets acquired represents other assets of Baht 379 million (note 7). The Group is currently reviewing this cost whether it is a qualified intangible assets. The resolution of this would affect the amount of goodwill. During this quarter, Gulf Electric Public Company Limited issued 10 million shares at par value of Baht 10 which were priced at Baht 10. The company purchased all new shares to existing shareholders at the same proportion as original investments. (c) In the third quarter of 1999, the company acquired 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. Such company has not commenced its operation in the normal course of business. The consideration of Baht 398 million was fully settled in the previous quarter. The resulting goodwill of Baht 157 million will be amortised on a straight line basis over the useful life. 12 Disposal According to the Share Sale and Purchase Agreement of EGCO Engineering and Services Company Limited (ESCO), a subsidiary of the company, entered into on 1 June 2000, the investment in ESCO Wood Company Limited (ESCO Wood) was sold at the value of Baht 1. The net book value of the investment in ESCO Wood was nil under the equity method at the date of disposal. In addition, ESCO Wood repaid part of its indebtedness, amounting to Baht 13 million, to ESCO and agreed to enter into the Loan Agreement with ESCO in respect of the payment of the remainder, amounting to Baht 26 million, of such principal indebtedness. The provision for doubtful account, which had been fully provided for these loans totalling Baht 39 million, was reversed and accordingly resulted in a gain from such reversal for the amount of Baht 39 million. However, as a result of such agreement, the Group has also committed to ESCO Wood to extend the period of the service contracts between the two subsidiaries (REGCO and KEGCO) and ESCO Wood. The term of repayment of the loan previously mentioned is also subject to the contract revenues, from which ESCO Wood receives under the service contracts, and other conditions as specified in the agreement. 13 Related party transactions The company is significantly influenced by the Electricity Generating Authority of Thailand and CLP Power Projects (Thailand) Limited who are the major shareholders of the company. The remaining company's shares are widely held. Related party means the company's shareholders, subsidiaries, joint venture, and associates, including the related parties of its subsidiaries, joint ventures, and associates. The information of the company's subsidiaries, joint venture, and associates is stated in note 5. 13 Related party transactions (continued) The following material transactions were carried out with related parties: a) Sales of electricity Consolidated For the three-month and 30 September 30 September nine-month periods ended 2000 1999 Three-month Nine- month Three-month Nine- month period period period period Baht'000 Baht'000 Baht'000 Baht'000 Sales of electricity of the two subsidiaries of the company (REGCO and KEGCO) - Electricity Generating Authority of Thailand 2,259,464 6,891,945 2,182,356 6,455,160 Sales of electricity of a subsidiary of joint venture - Gulf - Electricity Generating Authority of Thailand 171,553 153,936 - - The sales of electricity of REGCO and KEGCO are calculated based on a "Cost plus basis" which complies with the resolutions of the Cabinet's meetings dated 15 February 1994 and 23 January 1996, respectively. Such sales of electricity include the compensation amounts from the exchange rate effects approximately Baht 260 million and Baht 668 million for the three-month and nine-month periods ended 30 September 2000, respectively (for the three-month and nine-month periods ended 30 September 1999: Baht 193 million and Baht 521 million). b) Major maintenance expenses Consolidated 30 September For the three-month and 30 September 1999 nine-month periods ended 2000 (restated) Three-month Nine-month Three-month Nine-month period period period period Bath'000 Bath'000 Bath'000 Bath'000 Major maintenance expenses - Electricity Generating Authority of Thailand 160,494 252,461 83,933 218,183 The major maintenance expenses are calculated based on "Cost plus basis". 13 Related party transactions (continued) c) Outstanding balances arising from sales of electricity Consolidated Company As at 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Trade account receivable - Electricity Generating Authority 1,632,669 1,434,571 - - of Thailand Outstanding trade account receivable as at 30 September 2000 and 31 December1999 can be analysed as follows: Up to 3 months 1,612,884 1,422,773 - - 3 - 6 months 6,012 6,516 - - 6 - 12 months 16,920 96 - - Over 12 months 3,494 5,186 - - 1,639,310 1,434,571 Less : Allowance for doubtful - - accounts (6,641) - - - 1,632,669 1,434,571 - - d) Loans to subsidiaries and an associate Consolidated Company As at 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Subsidiaries EGCO Engineering and Services Co., Ltd. - - - 50,000 EGCO Joint Venture and Development Co., Ltd. - - 25,200 25,200 Associate Amata-Egco Power Co., Ltd. 32,490 32,490 - - 32,490 32,490 25,200 75,200 These loans were normally given on commercial terms and conditions. The repayments of principal and interest of the loan to Amata-Egco Power Company Limited are restricted until the fulfillment of cash reserves and other conditions required in accordance with the loan agreement with the financial institutions. 13 Related party transactions (continued) e) Investments in debentures issued by a subsidiary and the company's debentures held by subsidiaries Consolidated Company As at 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 Investment in debentures - Khanom Electricity Generating Co., Ltd. - - 73,815 76,153 The company's debentures held by - Rayong Electricity Generating - - 50,000 50,000 Co., Ltd. - Khanom Electricity Generating - - 250,000 250,000 Co., Ltd. 14 Dividend At the annual shareholders' meeting on 28 April 2000, it was approved to declare a dividend for 524,271,100 shares of Baht 2 each, totalling Baht 1,048 million. Dividend was paid to the shareholders during the period. 15 Commitments and contingencies Sponsor Support Agreements and Guarantees (a) As at 30 September 2000 the company had commitments under the Sponsor Support Agreements, which were made in respect of loans of associates and performance bond of subsidiaries on behalf of the company totalling Baht 534 million and Baht 59 million, respectively. (b) As a credible, high-quality company, the company is committed to administering its obligations in compliance with good corporate governance. It has, accordingly, set up a reserve fund of 25% of total obligations to its subsidiaries and associates, thus reducing the risk of default and providing extra return in the form of interest income and increased financial stability. As at 30 September 2000, the reserve fund balance amounted to Baht 131.50 million (31 December 1999: Baht 141.50 million). (c) As at 30 September 2000, the joint venture - Gulf had commitment in respect of uncalled portion of investments in its two subsidiaries, totalling Baht 18.75 million. 15 Commitments and contingencies (continued) Foreign currency and interest rate swap contracts (d) As at 30 September 2000, the two subsidiaries of the company, a subsidiary of joint venture - Gulf, and the three subsidiaries of joint venture - Conal had not entered into forward exchange contracts to cover the exchange risk relating to long-term loans of US Dollars 437.34 million. However, such exchange risk of the two subsidiaries of the company is substantially covered by "The First Amendment to Power Purchase Agreements" dated 30 January 1998. Therefore, the remaining foreign currency long-term loans amounting to US Dollars 83.74 million of joint ventures and their subsidiaries had been unhedged by any instruments or agreement of the same purpose. (e) A subsidiary of joint venture - Conal had entered into an interest rate swap agreement with a bank to hedge its floating rate exposure on the loan (as mentioned in note 8). Such subsidiary committed to pay a fixed rate of 7.5% and receives a floating rate of US LIBOR plus 1.625% on a quarterly basis simultaneous with interest payments on the loan. As at 25 September 2000, the outstanding amount on the interest rate swap agreement amounted to US Dollar 6.4 million. Significant Power Purchase Agreements by the Joint ventures The two subsidiaries of joint venture - Gulf have the following significant agreements: (f) The Power Purchase Agreement with the Electricity Generating Authority of Thailand (EGAT). According to the agreement, the subsidiary must start to sell the electricity to EGAT within May 1998, which sales quantity and electricity rate must be complied with the agreement. The agreement was effective for a period of 21 years, and this subsidiary had to pledge bank guarantee as collateral for the cancellation at amount of Baht 163.1 million. Such guarantee has been received when maturity. (g) A subsidiary also entered into Gas Purchase Agreement with the Petroleum Authority of Thailand. The agreement was effective for a period of 16 years commencing from 20 March 1998, which was the trading date. The sales quantity and its price must be complied with the agreement, which can be extended for a period of 5 years commencing from the maturity date upon the conditions specified in the agreement. (h) During the year 1997, a subsidiary had entered into sales/purchase agreement for electricity supply with the Electricity Generating Authority of Thailand. Under the related purchase agreement, the subsidiary had to provide collateral of Baht 367 million in the form of bank guarantee as security against the early cancellation of the agreement. The collateral is to be returned to the subsidiary upon termination of the agreement. However, as at 30 September 2000, such subsidiary has not commenced its normal business operation and is waiting for approval to proceed the project after the public hearing with regard to its environmental impact. The management believe that construction will be able to continue. In addition, if the project is to be cancelled, the aforesaid subsidiary is able to claim compensation for losses arising from the cancellation through no fault of that subsidiary from the Electricity Generating Authority of Thailand. 15 Commitments and contingencies (continued) Significant Power Purchase Agreements by the Joint ventures (continued) The three subsidiaries of joint venture - Conal have the following significant agreements: (i) Under a Fast-Track Build, Operate and Transfer (BOT) project agreement with National Power Corporation (NPC), a subsidiary has constructed, installed and currently operates two bunker diesel power stations in Mindanao. NPC supplies all fuel necessary to generate electricity, with all electricity generated purchased by NPC at a price calculated based on the formula provided in the agreements. The power stations are being operated for a period of 10 years and 12 years commencing from 1994 to 2003 and 2005, respectively. Upon expiration of the specified periods, such subsidiary shall transfer to NPC all its rights, title and interest in the power stations without compensation. (j) Under separate Energy Conversion Agreements (ECAs) with NPC, the other two subsidiaries have constructed a 100 and 50 megawatt bunker diesel power plants under a Build-Own-Operate (BOO) scheme. NPC supplies all fuel necessary to generate electricity, with all electricity purchased by NPC at a price calculated based on the formula provided in the agreements. The two subsidiaries shall, directly or indirectly, own the power plants and shall operate and manage the power plants for a period of 18 years. Upon expiration of the 18-year co-operation period, the ECAs may be renewed upon the sole option of NPC. The covering agreements also contain certain provisions with respect to NPC's payment to the three subsidiaries (subject to certain conditions) of the total remaining amounts of the capacity fees until the end of the co-operation period, in the event of amendment, modification or repeal of any Philippines laws or any government regulations that will materially reduce, prejudice or otherwise adversely affect these subsidiaries' interest in the project or the power plant/station, and/or these subsidiaries' economic return on their investments. Service and Purchase Agreements (more)