Minutes of Shareholders' Annual General Meeting No.1/2004

Minutes of Shareholders' Annual General Meeting No. 1/2004 of Electricity Generating Public Company Limited The Meeting was convened at 10.30 a.m. on April 26, 2004 at the Sai Samphan Auditorium, Floor 9 of EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok. Two hundred and seventy-seven (277) shareholders, holding 328,314,890 shares or 62.36% of the total units of shares attended the Meeting in person and by proxy which constituted the quorum. Mr. Chalermchai Ratnarak, President, informed the shareholders that Mr.Sitthiporn Ratanopas, Chairman, could not attend the meeting due to his other engagement. Consequently, he proposed that Mr. Sommai Phasee, shareholder and independent director, be appointed to chair the Meeting. His proposal was unanimously approved by the shareholders. The Chairman then declared the Meeting open and introduced directors who attended the meeting to the shareholders as follows; 1. Mr. Aswin Kongsiri Independent Director, Executive Committee Chairman and Nominating and Remuneration Committee Member 2.Mr. Chaipat Sahasakul Independent Director Audit Committee Chairman 3.Mr. Charu-Udom Ruangsuwan Independent Director Audit Committee Member 4.Mr. Seri Chintanaseri Independent Director 5.Mr. Narong Sitasuwan Director Executive Committee Member 6.Mr. Peter Littlewood Director Executive Committee Member 7.Mr. Richard McIndoe Director Nominating and Remuneration Committee Member 8.Mr. James Richarde Truscott Director 9.Mr. Chalermchai Ratnarak Director and President 10.Mr. Michael Irl Nikkel Director and SEVP-New Business Ventures After that, Ms. Vasana Vongpromek, Secretary to the Board, informed the voting procedure for the shareholders and the shareholders' proxy as follows. 1. Present Shareholders: Shareholders were requested to show their hands if wanting to vote against or abstain their votes for each proposal. If there was no show of hands, it would be resolved that the shareholders agreed with the proposed resolution. 2. Proxy: Holders of proxy form 1 and 3 were requested to exercise their vote in the same manner as the present shareholders. On the other hand, holders of proxy form 2, which the shareholders had fixed their votes in advance, did not have to exercise their votes as the Company had already collected the votes from the proxy forms. However, in case the shareholders did not fix the votes or the votes were unclear, the proxy were requested to vote in the same manner as the present shareholders. In addition, all shareholders and proxy could split the number of shares to vote in favor of, against or in abstention for each agenda. The Chairman would declare to the Meeting the numbers of votes in favor, against and in abstention for each agenda item. The Chairman then proceeded the Meeting in accordance with the following notified items. Agenda 1 To Consider and Approve the Minutes of the Shareholders' Extraordinary General Meeting No. 1/2004 The Chairman proposed to the Meeting to consider and approve the minutes of the Shareholders' Extraordinary General Meeting No. 1/2004 held on February 23, 2004. RESOLUTION : Having considered the minutes of the Shareholders' Extraordinary General Meeting No. 1/2004 and concurred to be accurate, the Meeting with the majority of votes approved such minutes as proposed by the Chairman. (The numbers of voting shares were 330,231,219 in favor and none against with 90,900 shares in abstention.) Agenda 2 To Consider and Approve the Board of Directors' Annual Report for Year 2003 and to Acknowledge the Previous Payment of Interim Dividend The Chairman reported the Company's operating performance in the year 2003 to the Meeting which was summarized as follows: 1. Corporate Governance The Board of Directors continuously developed and fostered the efficient and effective governance system starting from holding orientation for new directors and preparing the directors' manual to inform directors of their roles and responsibilities as well as supporting directors to attend the relevant courses held by the Thai Institute of Directors Association (IOD). Directors' appraisal were also carried out both collectivelyand individually to identify strengths and weaknesses of the Board for governance efficiency enhancement. In addition, the Board Committees had proficiently carried out their duties. Thanks to the effort of the Audit Committee which efficiently reviewed the financial statements, the internal control and risk management, the financial reporting and disclosure were found to be accurate, materially complete and reliable. With the adherence to the good corporate governance practices, the Company was honored by outside agencies for its practices as follows. - Disclosure award 2003 from the Stock Exchange of Thailand for two years consecutively - Top utility in the emerging market in term of governance by Euromoney magazine, - Eighth Best Investor Relations in Thailand by FinanceAsia.Com website - Top five listed companies in the SET 50 in term of disclosure under the good corporate governance concept by Standard & Poor's 2. Change of the President The Board, with the support of the Nominating and Remuneration Committee, carried out the selection of the President to succeed Mr. Kraisi Karnasuta who resigned to take responsibilities as Deputy Governor of Electricity Generating Authority of Thailand (EGAT). As a result, Mr. Chalermchai Ratnarak, EGAT Senior Deputy Governor- Development Group, who was well versed in the power business with more than 30 years experience, was appointed the President. The Chairman then delegated Mr. Chalermchai Ratnarak, President, to present the corporate vision and goals including the company's operating performance during the previous year. The summary of the presentation was as follows. 1. Vision The Company aimed to be the leading Thai integrated electric power company with comprehensive energy service offerings in Thailand and in the ASEAN region and full commitment to environment protection and social development support. The Company focused on quality growth especially the investment in the power industry, its core business, by investing in the IPPs with promising returns that could generate income immediately or in the near future. In addition, the Company would efficiently manage its portfolio to maximize the Company value. 2. Corporate Goals The corporate goals embraced the following four areas. Investment The Company aimed at creating sustainable shareholders' value by strengthening its base in the domestic power business and expanding to the Asian Region taking into account strategic fit, risk manaegement and promising return of each project. Finance To bolster trust among investors and financial institutions which would lead to cost leadership, the Company would sharpen its financial competitiveness as well as foster the sustainable growth of the share price. Asset Management The Company aimed at increasing profitability of and adding value to the Group companies via shared asset management approach. In addition, the Company would develop and increase the efficiency of the operating power plants to maximize profit. Organization Development The Company aimed at enhancing the management and working practices to increase efficiency which included the human resource development, a key factor to raise the Company's competitiveness. 3. 2003 Operating Result The Company reported the consolidated net profit of Baht 5,993,941,433 or Baht 11.41 per share, up by Baht 3,035,462,856 or 103% from the previous year. Overall, the Company's major revenues were from Rayong Electricity Generating Co., Ltd. (REGCO), of which the tariff rate was higher than last year, and Khanom Electricity Generating Co., Ltd (KEGCO). Other major factors which led to this sharp increase were the realization of electricity sales from Nongkhae Cogeneration Co., Ltd. and Samutprakarn Cogeneration Co., Ltd. since November 2002, as well as the electricity sales from TLP Cogeneration Co., Ltd. and Roi-Et Green Co., Ltd. after the completion of their construction in January and May of this year respectively. In addition, the Company had paid the interim dividend from the operating result of the first half-year of 2003 at Baht 1.25 per share on September 22, 2003. 4. Shareholders' Relations The Company put priority in preserving the rights and benefits of the shareholders and other stakeholders which included employees, community and environment. The Company planned to hold the seminar to inform the shareholders regarding the company business as well as other activities which would be publicized later. After the presentation, Mr. Sakda Sreesangkom, the SEVP- Finance informed the Meeting that the Board of Director approved the amendment to items 17.2 and 17.3 of the Company's regulation on Accounting, Finance and Budget on B.E. 2544 to authorize the Board to approve the issuance of bills of exchange, the promissory notes and other instruments except debenture or other instruments of the same nature. Such approval was previously the authority of the shareholders. The amended version would read as follows. Article 17.2 The Board of Directors will endorse the issuance of the debenture or instruments of the same nature for the shareholders' approval. Article 17.3 The Board of Directors is authorized to approve the securing of fund by debt or debt instruments apart from debentures or instruments of the same nature and to approve the change in loan condition, approach or lenders such as the refinancing, swap , etc. This amendment was aimed at increasing flexibility in financial management as well as complying with the prescription in the Public Limited Company Act, the Securities and Stock Exchange Market Act, and other relevant notifications of the Securities Exchange Commission and the Stock Exchange of Thailand. The Chairman then delegated the Management to answer questions raised by shareholders with regard to the Company's operation. The summary was as follows. 1.Some directors were not remunerated bonus (page 41 of the annual report): The bonus payment as shown in the annual report was to remunerate directors for their performance in 2002. As such, directors who took office in 2003 would not be eligible for such remuneration. 2.Mr. Sommai resigned from being director on April 30, 2003 and took office again on the same date (page 41 of the annual report): Mr. Sommai, who was EGAT representative directors, resigned from his directorship in the shareholder's AGM dated April 30, 2003 after he vacated the office as EGAT Directors. However, the shareholders' meeting re-elected him as the independent director of the Company. After that, the Chairman proposed that the Meeting approved the Company's annual report for year 2003 and acknowledged the future plan including the interim dividend payment. RESOLUTION: Having considered the matter, the Meeting with the majority of votes approved the Company's annual report for year 2003 and acknowledged the future plan including the previous interim dividend payment as proposed by the Chairman. (The voting shares were 330,308,019 in favor and none against with 90,900 shares in abstention.) Agenda 3 To Consider and Approve the Balance Sheet, and Profit and Loss Statement as at December 31, 2003 The Chairman proposed that the Meeting approve the balance sheet and the profit and loss statement as at December 31, 2003 which had been reviewed by the Company's Audit Committee and audited and certified by the auditor. The financial statements were disclosed in the annual report submitted to all shareholders with the Notice of the Annual General Meeting. Summary was as follows. Balance Sheet: The total asset amounted to Baht 56,436,619,082 million, up by Baht 612,670,280 million or 1% compared with the end of last year. Profit and Loss Statement: The Company posted the consolidated income of Baht 15,730,669,558 with the expense of Baht 10,141,118,554. As a result, the Company appreciated the consolidated net profit of Baht 5,993,941,433, equivalent to Baht 11.41 per share. The Chairman then authorized the Management to answer shareholders' inquiries regarding the financial statements. The summary was as shown below. 1.Dividend receivable from subsidiaries and dividend payable: Due to the effort to schedule the dividend payment of the subsidiaries to suit their cash inflow an outflow for the benefits of Group's financial management, a portion of dividend payment from subsidiaries was delayed to be paid in 2004 and therefore caused dividend receivable in 2003. The dividend payable was because some shareholders did not collect the dividend payment from the Company. 2.Details of short-term investment: Short-term investment comprised investment in marketable securities and mutual fund. 3.Was Directors' remuneration as specified in the annual report approved by the shareholders?: The Directors' remuneration which amount to Baht 18.40 million was allocated in accordance with the resolution of the shareholders in the 2003 Annual General Meeting which comprised retainer fee and meeting allowance, bonus of Baht 11 million and remuneration for Board's standing committees which the shareholders delegated the Board to determine the remuneration to suit their liabilities and responsibilities. 4. Project's development cost write off : The Company had written off the development cost of Nam Theun II and Bo Nok Projects in 2003 due to the change in accounting policy. The Company had adopted the Thai Generally Accepted Accounting Principle (Thai GAAP) no. 51 re: "Intangible Asset" with the objective to increase the creditability of the financial statements. Since the previously capitalized development cost of Nam Theun II and Bo Nok project were not in line with the criteria and definition stipulated in the new account policy, such items were recognized as an expense when incurred. As the Company would strictly adhere to the Thai GAPP no. 51 in determining which development cost would be recognized as an intangible asset or as an expense, it should be reasonably trusted that there would be no more financial restatement due to this factor. 5.Change in accounting policy regarding specific spare parts: The Company had changed the accounting policy regarding the specific power plant spare parts from "being classified as inventory and charged to repair and maintenance expenses when issued from stocks" to "being classified as property, plant and equipment to be initially depreciated when issued on a straight line basis until the end of the estimated useful life". The new accounting policy was considered more suitable as the expenses incurred in each accounting period would better reflect the actual usage life of each specific spare part. In addition, the new policy was in line with the practice of EGAT. 6.Details of long term investment (page 65 of the 2003 annual report): Long term investment comprised investment in marketable securities such as debt and equity instruments and mutual fund, etc.; deposits at the bank, financial institutions and marketable securities to be used as collateral; and reserve for interest payment such as investment in US bonds. RESOLUTION : Having considered the matter, the Meeting with the majority of votes approved the 2003 balance sheet and the profit and loss statement as proposed by the Chairman. (The voting shares were 330,308,019 in favor and none against with 90,900 shares in abstention.) Agenda 4 To Consider and Approve the Appropriation of Net Profit and the Payment of Dividend The Chairman reported to the Meeting that the Company's 2003 operating results posted the net profit of Baht 5,993,941,433 or Baht 11.41 per share. If including the unappropriated accumulative profit brought forward of Baht 5,137,348,336, the total accumulative profit would amount to Baht 11,131,289,769(before the 2003 interim dividend payment). Considering the financial status as well as the investment plan which required the fund of Baht 3,000 million per year for the next 4 years, the Board of Director viewed that some cash should be reserved to fuel the Company's growth. As such, the Board proposed to pay dividend to the shareholders for the second half-year operation of 2003 at Baht 1.50 per share with the payment date on May 12, 2003. If including the interim dividend payment from 2003 first half-year operation, the total dividend was Baht 2.75 per share, higher than the 2002 dividend payment rate of Baht 2.50 per share. A shareholder thanked the Board of Directors and the Management for the rewarding performance of the Company which evidenced in the higher net profit and dividend payment rate than year 2002 and inquired about the policy that the dividend would be paid at approximately 40% of the net profit. The Management quoted that the Company's prospectus prescribed that dividend should be paid at approximately 40% of the net profit after tax if having no other necessary causes such as investment opportunity. Since the Company planed to invest for shareholders' growth, some cash had to be reserved for re-investment. However, the Board of Director set the policy that if EGCO could not re-invest the net profit to foster the Company's growth and increase the shareholders' value by 2004, the interim/special dividend should be paid at a higher rate. RESOLUTION : Having considered the matter, the Meeting approved the appropriation of the 2003 net profit and dividend payment as proposed by the Chairman with the majority of votes. (The voting shares were 330,305,019 in favor and none against with 90,900 shares in abstention.) Agenda 5 To Consider the Appointment of the Auditor and to Determine the Audit Fee The Chairman reported to the Meeting that since the term of the auditors expired as prescribed by law, the Board of Directors proposed to appoint Mr.Prasan Chuaphanich, Certified Public Accountant (Thailand) No.3051, Mr.Suchart Luengsuraswat, Certified Public Accountant (Thailand) No.2807 and Mr.Prasit Yuengsrikul, Certified Public Accountant (Thailand) No.4174 of PricewaterhouseCoopers ABAS Limited (PwC), as the Company's auditors with the audit fee of the company and the quarterly review fees of the financial statements of the subsidiary, associate and joint venture companies at not exceeding Baht 1,706,742 per year. The shareholders should also authorize the Board of Directors to consider and approve the alternate certified auditors of PwC in case of the absence of the above auditors and to approve the additional quarterly review fees of any subsidiaries, associate or joint venture companies, to be incorporated during the year for business expansion. The Chairman then invited Mr. Chaipat Sahasakul, Director and the Chairman of the Audit Committee, to elaborate more details on the appointment of the auditor. Mr. Chaipat Sahasakul clarified that the Company put priorities on the independence of the auditor to safeguard the benefits of the shareholders. In this regard, the Audit Committee set the principle to change the statutory auditor to conduct the audit and express opinions on the financial statements of the Company at every five years until there was any new requirement from the regulatory body. Considering the performance of PwC during the past year of which the professionalism, experience and good service was proven, the Audit Committee endorsed the appointment of PwC as the Company's auditor for the second year with the audit fee and the quarterly review fee of the financial statements of the subsidiary, associate and joint venture companies of THB 1,706,742. A shareholder expressed his opinion that the audit fee was higher than the other companies. This prompted the Management to clarify that since the Company was listed in the SET and had twelve subsidiaries, the financial statements of the subsidiaries had to be reviewed or audited by the auditor prior to the consolidation. As such, the Company had to account for such quarterly review fee on its own expenses. It should be noted that the audit fee for this year rose by 8% which was the average increase rate of the companies in the energy sector. RESOLUTION : Having considered the matter, the Meeting resolved with majority of votes that Mr.Prasan Chuaphanich, Certified Public Accountant (Thailand) No.3051, Mr.Suchart Luengsuraswat, Certified Public Accountant (Thailand) No.2807 and Mr.Prasit Yuengsrikul, Certified Public Accountant (Thailand) No.4174 of PricewaterhouseCoopers ABAS Limited be appointed the Company's auditors, with the audit fee not exceeding Baht 1,706,742 per year. The Meeting also authorized (more)