anagement Discussion and Analysis Quarter 3

Corporation (NMPC)'s depreciation caused by a lower forecasted electricity production and the transfer of NMPC's 58 MW to NPC. * Administration expenses and other expenses were Baht 202 million, an increase of Baht 57 million or 39%. * Interest expenses were Baht 55 million, a decrease of Baht 10 million or 16% owing to lower principal amount. 5) The Other Business Group's expenses were Baht 289 million, an increase of Baht 93 million or 48%, owing to the following reasons: * Service costs were Baht 177 million, an increase of Baht 83 million or 88%, resulting from an increase of ESCO's operation and maintenance (O&M) services to customers which was consistent with its revenue. * Cost of water sales of EGCOM Tara was Baht 41 million, a decrease of Baht 1 million or 3% mainly from a decrease of operating and maintenance service costs. * Administration expenses and other expenses were Baht 62 million, an increase of Baht 16 million or 35%, mostly from ESCO's expenses which was in line with an increase of ESCO revenue * Interest expenses were Baht 8 million, a decrease of Baht 4 million or 35%, resulting from the lower principal amount as well as the lower interest rate at EGCOM Tara. 3. Report and Analysis of Financial Position 3.1 Asset Analysis As at September 30, 2004, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to Baht 56,210 million, a decrease of Baht 227 million or 0.40% from December 31, 2003. The important details are as follows: 1) Cash, deposit at banks and financial institutions, and short term and long term marketable securities were Baht 6,444 million or 11% of the total assets, down Baht 1,371 million or 18%. This was categorized by a decrease of Baht 1,347 million in deposits at banks and financial instruments and short-term marketable securities, a decrease of Baht 650 million in long-term investments in marketable securities and others resulted from additional investment in GEC and shareholder loans to GEC and NTPC as well as a diminishing market value of marketable securities; whereas the cash and cash equivalent were up by Baht 626 million. 2) Short-term and long-term investments used as collateral were Baht 10,290 million or 18% of the total assets, up Baht 337 million or 3%, with the cash reserve of debt repayment partially in US Dollars in the amount of USD 30 million. In quarter 3 of 2004, KEGCO obtained lenders' approval to release the FX reserved account. 3) Investment in subsidiaries and associates and interests in joint ventures amounted to Baht 368 million or 1% of the total assets, down by Baht 1 million or 0.39%. This mainly resulted from the recognition of investment write-down in Nam Theun 2 owing to the new accounting policy which amounted to Baht 24 million, whereas the share of profit of AEP and AMESCO amounted to Baht 19 million and Baht 3 million accordingly. 4) Property, plant and equipment (net) totaled Baht 29,730 million or 53% of total assets. They were down Baht 1,813 million or 6% due to the depreciation of EGCO and subsidiaries' assets totaling Baht 1,806 million, the reclassification of unutilised capital spare parts from property, plant and equipment to inventories of KEGCO and REGCO, amounting to Baht 268 million and Baht 96 million, GEC's impairment of its power plant of Baht 11 million whereas the translation adjustment up Baht 39 million. An increase in property, plant and equipment was substantially from REGCO and KEGCO's capital spare parts of Baht 38 million and Baht 91 million, respectively. Moreover, an increase of Baht 83 million was from the construction of GEC and others Baht 117 million. 5) Other assets were Baht 9,377 million or 17% of the total assets, up Baht 2,622 million or 39% mainly from accounts receivable from related companies, up Baht 1,079 million, an increase of Spare Parts and Supplies by Baht 720 million, shareholder loans to GEC amounting to Baht 242 million and NTPC amounting to Baht 493 million. The other current asset was up by Baht 122 million. 3.2 Liability Analysis As at September 30, 2004, the company's total liabilities were Baht 27,851 million, down Baht 1,884 million or 6% as a result of the loans and debentures repayment at EGCO, REGCO and KEGCO. The total liabilities consisted of the following: 1) Long-term loans and debentures totaled Baht 25,847 million, or 93% of total liabilities, down Baht 2,065 million or 7%. The details are as follows: - USD loans in the amount of USD 353 million - Yen loans in the amount of Yen 1,163 million - Philippine Peso loans in the amount of Peso 96 million - Baht loans in the amount of Baht 3,544 million - Debentures in the amount of Baht 7,163 million In the first nine-month of 2004, the amount of loans denominated in Baht, USD, and Peso, including debenture decreased by Baht 2,124 million as compared to 2003 mostly from principal repayment by EGCO, REGCO, KEGCO, APBP, TLP Cogen, Conal, EGCOM TARA and GEC's loan refinancing. On the other hand, the amount of loans denominated in Yen were up Baht 54 million, which was due to the loan drawdown for the construction of Roi-Et Green. 2) Other liabilities amounted to Baht 2,005 million or 7% of total liabilities, mostly resulted from interest payable of Baht 573 million, bank overdrafts and short-term loans of Baht 340 million, trade accounts payable of Baht 335 million, value added tax payable and income tax payable of Baht 246 million and others of Baht 511 million. 3.3 Shareholders' Equity Analysis As at September 30, 2004, Shareholders' Equity (excluding treasury stock) amounted to Baht 28,358 million, which was Baht 1,657 million higher than the amount as at December 31, 2003. This was due mainly to the profits from operation during the first nine-month of 2004, partially offset by a decrease of the unrealized gain on investments in marketable securities, East Water Resources Development and Management Public Co.,Ltd., totaling Baht 849 million following an increase of registered share capital that led to a fall in its share price in the stock market. The analysis of the company's capital structure as at September 30, 2004 is summarized as follows: Shareholders' equity was Baht 28,358 million or 50.45%. Liabilities were Baht 27,851 million or 49.55%. Important financial ratios were as follows; - Debt to equity ratio was 0.98 times, lower than 1.11 times at the end of last year. - Book value per share was Baht 52.16, higher than Baht 49.21 at the end of last year. 4 Report and Analysis of Cash Flow Position Cash Flow Statement shows the change in cash flows from operating activities, investing activities, and financing activities at the end of the accounting period, and indicates the ending balance of the cash and the cash equivalents. As at September 30, 2004, the ending balance of the cash and the cash equivalent was Baht 2,357 million, down by Baht 626 million from the end of 2003. The details of the sources and uses of funds are as follows; -Net cash received from operating activities totaled Baht 4,431 million. Most of the changes were due to cash from operating activities amounted to Baht 6,009 million, dropped by Baht 1,067 million as comparing to 2003 whereas trade accounts receivable and trade receivable from a related party increased by Baht 1,144 million and spare parts and supply increased by Baht 485 million. -Net cash received from investing activities was Baht 355 million. Baht 1,375 million was from the net sale of short-term financial investments whereas the dividends from Krung Thai Dividend Selected Flexible Portfolio Fund (KTSF) and East Water Resources Development and Management Public Co., Ltd were Baht 334 million and Baht 40 million, respectively. The shareholder loans to GEC and NTPC were Baht 242 million and Baht 479 million, respectively. The net purchase of property, plant and equipment was Baht 273 million and long-term investment was Baht 198 million. The investment in a subsidiary of a joint venture was increased by Baht 159 million from GEC's purchasing GPG's shares from MEC Laguna Power B.V. - Net cash payment for financing activities was Baht 4,165 million, mainly owing to long-term loan and debenture repayment by EGCO, REGCO, KEGCO, TLP Cogen, Roi-Et Green, APBP and GEC in the amount of Baht 2,768 million and dividend payment to shareholders amounted to Baht 1,548 million while the loan drawdown from TLP Cogen and Roi-Et Green increased by Baht 116 million.