anagement Discussion and Analysis for 3 Month 2006

claim by Baht 14 million and interest income of GEC which amounted to Baht 3 million, whilst the other income of Roi-Et Green was up by Baht 4 million. - Share of profit of associates and joint ventures was from AEP totaling Baht 38 million, an increase of Baht 22 million as compared to the same period of 2005 due to a gain on foreign exchange rate and increased electricity sales from EGAT and industrial users. - Cost of Sales of SPP Group were reported at Baht 1,169 million, an increase of Baht 238 million or 26% as compared to the same period of 2005. This was substantially driven by an increase in cost of sales of GEC amounting to Baht 172 million owing to higher fuel costs as well as an increase at TLP Cogen amounting to Baht 62 million from higher fuel costs. There was an increase at Roi-Et Green's cost of sales by Baht 3 million due to higher price and greater amount of rice husk used as fuel. Cost of Sales - SPP Group: Unit : Million Baht 1Q2006 1Q2005 %Changes GEC 711 539 32% TLP Cogen 363 301 21% APBP 65 64 2% Roi-Et Green 30 27 10% Total Cost of Sales - SPP Group 1,169 931 26% - Administrative expenses and income taxes were Baht 105 million, up by Baht 47 million or 81% as compared to the first quarter of 2005, coming substantially from GEC's higher administrative expenses of Baht 42 million, reported at Baht 94 million from Board of Directors and employees' bonus and Khaeng Khoi 2's commitment fee. - Interest expenses were Baht 144 million, an increase of Baht 66 million or 86%, driven by an increase in GEC's interest expenses amounting to Baht 68 million due to an unwind cost of Interest Rate Swap Agreement and loan drawdown for administrative expenses for Khaeng Khoi 2 Project. TLP Cogen and Roi-Et Green's interest expenses were down by Baht 2 million and Baht 1 million, espectively, owing to lower principal amounts. 4) Overseas Group refers to Conal and NTPC, of which their revenues were Baht 195 million, a decrease of Baht 4 million or 2% compared to the same period of 2005. The expenses were Baht 96 million, an increase of Baht 23 million or 31% compared to the same period of 2005, owing to the following reasons: Total Revenues and expenses of Overseas Group: Unit : Million Baht Conal NTPC Total Q1'06 Q1'05 Q1'06 Q1'05 Q1'06 Q1'05 % Chg Revenues 195 199 0.42 - 195 199 (2%) Expenses 91 73 5 - 96 73 31% - Sales of electricity of the Overseas Group were Baht 180 million, a decrease of Baht 8 million or 4% compared to the same period of last year. This resulted from the contractual transfer of the 40 MW of NMPC's Power Plant to NPC in February 2006. - Interest income and others amounted to Baht 15 million, an increase of Baht 4 million or 33% as compared to the first quarter of 2005, mainly due to an increase of Conal's interest income and other income. - Cost of Sales were Baht 11 million, a decrease of Baht 27 million or 71% due to the transfering of NMPC. - Administrative expenses and income taxes were Baht 64 million, an increase of Baht 46 million or 245%. The change to the proportionate consolidation method for the accounting of NTPC led to a recognition of expenses in the amount of Baht 5 million for this quarter and Conal incurred expenses of Baht 59 million, up Baht 41 million mainly owing to a defered income tax incurred in the first quarter of 2005. - Interest expenses were Baht 20 million, up by Baht 5 million or 29%. 5) Other Business Group includes two subsidiaries, ESCO and ET. Total revenues were Baht 336 million, an increase by Baht 110 million or 49% as compared to the same period of 2005 and total expenses totaled Baht 234 million, an increase of Baht 81 million or 53%. The details are as follows; Total Revenues and Expenses of Other Business Group: Unit : Million Baht ESCO EGCOM TARA Total Q1'06 Q1'05 Q1'06 Q1'05 Q1'06 Q1'05 % Chg Revenues 290 184 46 42 336 226 49% Expenses 220 137 15 16 234 153 53% - Service income from ESCO amounted to Baht 285 million, up by Baht 104 million or 57%, resulting mostly from an increase of operation and maintenance (O&M) services and selling spare parts to Elgali 2 Power Plant in Sudan. - Sales of water from a subsidiary, ET, were Baht 45 million, up by Baht 4 million, or 9%, thanks to an increase of water tariff under the Water Purchase Agreement. - Interest income and others amounted to Baht 4 million, an increase by Baht 2 million or 54%, mainly from ESCO's other revenues. - ESCO's share of profit of associates and joint ventures totaled Baht 1.48 million, an increase of Baht 1.40 million, mainly from Amata Power-Esco Service Co.,Ltd (AMESCO). - Cost of Services were Baht 187 million, an increase of Baht 77 million or 70%, resulting from an increase in the costs of ESCO's operation and maintenance (O&M) services to customers which was consistent with its increased revenues. - Cost of water sales of ET was Baht 14 million, up Baht 0.44 million or 3.39% mainly from an increase of operating and maintenance service costs. - Administrative expenses and income taxes totaled Baht 33 million, an increase of Baht 4 million or 15% compared to the same period of 2005, mostly from an increase in ESCO's income tax, up Baht 5 million due to an increase in revenues. - Interest expenses were Baht 1 million, a decrease of Baht 0.81 million or 48% compared to the first quarter of 2005, owing to lower principal amount of EGCOM TARA's debt. 4. Report and Analysis of Financial Position 4.1 Asset Analysis As at March 31, 2006, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to Baht 66,780 million, an increase of Baht 5,530 million or 9% from December 31, 2005. The important details are as follows: 1) Cash and deposits at financial institutions, and short term and long term marketable securities were Baht 12,940 million or 19% of the total assets, up Baht 527 million or 4%. This was categorized by an increase of Baht 391 million in cash and cash equivalent, Baht 16 million in deposits at financial institutions and short-term marketable securities and Baht 120 million in long-term investments in marketable securities. 2) Short-term and long-term investments used as collateral were Baht 7,163 million or 11% of the total assets, up Baht 2,688 million or 60%. This increase mainly came from cash reserved for the purpose of repayment of principal and payment of interest of REGCO and KEGCO. 3) Investment in subsidiaries, associates and interests in joint ventures amounted to Baht 443 million or 1% of the total assets, up by Baht 40 million or 10%. This increase is mainly a result of the recognition of the share of profit of AEP. 4) Property, plant and equipment (net) totaled Baht 37,237 million or 56% of the total assets. They were up Baht 2,488 million or 7% due to an increase in property, plant and equipment related to GEC and NTPC's construction of Baht 2,754 million and Baht 347 million, respectively; as well as the recording of capital spare parts as property, plant and equipment following the major maintenance of KEGCO, REGCO and TLP Cogen in the amount of Baht 101 million, Baht 22 million and Baht 41 million, respectively. Meanwhile, a decrease in property, plant and equipment was from depreciation of EGCO and subsidiaries' assets totaling Baht 636 million and the reclassification of unutilised capital spare parts from property, plant and equipment to inventories of REGCO, KEGCO and TLP Cogen amounting to Baht 37 million, Baht 59 million and Baht 35 million, respectively. 5) Other assets were Baht 8,998 million or 13% of the total assets, a drop by Baht 212 million or 2% mainly from a decrease of trade accounts receivable from related companies in the amount of Baht 622 million. Meanwhile, unearned income was up by Baht 166 million and other current assets were up by Baht 196 million. 4.2 Liability Analysis As at March 31, 2006, the company's total liabilities were Baht 32,377 million, up Baht 3,241 million or 11% as a result of additional loan drawdown. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 27,105 million, or 84% of total liabilities, up Baht 3,619 million or 15%. The details are as follows: - USD loans in the amount of USD 380 million - Yen loans in the amount of Yen 1,034 million - Filipino Peso loans in the amount of Peso 72 million - Baht loans in the amount of Baht 7,763 million - Baht debentures in the amount of Baht 4,927 million- In the first three-months of 2006, there was additional loan drawdown that totaled Baht 4,730 million for the construction of GEC, NTPC and APBP, whereas there was principal repayment of Baht 412 million. 2) Other liabilities amounted to Baht 5,273 million or 16% of total liabilities, mostly resulting from account payable - contruction amounting to Baht 1,315 million, bank overdrafts and short-term loans of Baht 104 million, trade accounts payable of Baht 913 million, interest payable of Baht 408 million, value added tax payable and income tax payable of Baht 713 million, and others of Baht 1,820 million. 4.3 Shareholders' Equity Analysis As at March 31, 2006, Shareholders' Equity amounted to Baht 34,403 million, which was Baht 2,288 million higher than the amount as at December 31, 2005. This was due mainly to the profits from operation of the first quarter of 2006. The analysis of the company's capital structure as at March 31, 2006 is summarized as follows: Shareholders' equity was Baht 34,403 million or 51.52%. Liabilities were Baht 32,377 million or 48.48%. Important financial ratios were as follows: - Debt to equity ratio was 0.94 times, higher than 0.91 times at the end of last year. - Book value per share was Baht 63.13, higher than Baht 58.96 at the end of last year. 5. 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 March 31, 2006, the ending balance of the cash and the cash equivalent was Baht 9,211 million, up by Baht 391 million from the end of 2005. The details of the sources and uses of funds are as follows: -Net cash received from operating activities totaled Baht 92 million. Most of this was cash from operating activities that amounted to Baht 2,327 million whereas cash paid for working capital decreased by Baht 2,236 million. -Net cash payment for investing activities was Baht 4,023 million. There was Cash payment for the investment in power plant construction that amounted to Baht 3,626 million at GEC, Baht 320 million at NTPC and Baht 52 million at APBP. The cash inflow was from dividends of EASTW, KTSF and the other open-ended funds which amounted to Baht 31 million, Baht 65 million and Baht 5 million, respectively. - Net cash received from financing activities was Baht 4,333 million, mainly owing to loan drawdown of GEC in the amount of Baht 4,439 million, NTPC in the amount of Baht 254 million and APBP in the amount of Baht 38 million whilst the loan repayment from TLP Cogen, Roi-Et Green, APBP and GEC totaled Baht 412 million.