Consolidated F/S EGCOMP 1997

REPORT OF THE AUDITORS TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS ELECTRICITY GENERATING PUBLIC COMPANY LIMITED We report that we have examined the consolidated balance sheet as at December 31, 1997 and 1996, and the related consolidated statements of profit and loss and retained earnings, cash flows and changes in shareholders+ equity for each year then ended respectively of Electricity Generating Public Company Limited and subsidiaries, and we have examined the balance sheet as at December 31, 1997 and 1996 and the related statements of profit and loss and retained earnings, cash flows and changes in shareholders equity presented by the equity based method for each year then ended respectively of Electricity Generating Public Company Limited. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We have issued the report on a review of the financial statements for the quarter and nine- month period ended September 30, 1997, which was dated October 30, 1997, with the exception of the effects on such interim financial statements which arose from recording a loss on translation of assets and liabilities in foreign currencies upon the introduction of the managed float exchange system as a deferred loss and presented as a deduction from shareholders+ equity, which is not in accordance with generally accepted accounting principles as mentioned in Note 3.7.2 to the financial statements. However, in the presentation of financial statements for the year ended December 31, 1997, referred to in the first paragraph, the Company has changed the method of accounting for such loss from being deferred to being recognized as expense in the profit and loss statement in order to be in accordance with generally accepted accounting principles. The adjustments have been made for the related transactions in the quarter and nine-month period ended September 30, 1997 under this change of method as mentioned in Note 3.7.3 to the financial statements. - 2 - In our opinion, the consolidated financial statements and the financial statements by the equity-based method, referred to in the first paragraph present fairly the financial position as at December 31, 1997 and 1996, and the results of operations, the cash flows and the changes in shareholders+ equity for each year then ended respectively of Electricity Generating Public Company Limited and subsidiaries, and of Electricity Generating Public Company Limited only, in conformity with generally accepted accounting principles applied on a consistent basis. Without qualifying our opinion, we draw attention to Note 1 to the financial statements. The country+s unstable economy has significantly affected, and may continue to affect the operations of the Company. However, two subsidiary companies are eligible to take the effects from the exchange rate to adjust the formula to calculate electricity capacity payment. Toemsakdi Krishnamra BANGKOK Certified Public Accountant February 24, 1998 DELOITTE TOUCHE TOHMATSU JAIYOS ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES BALANCE SHEET AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 ASSETS CURRENT ASSETS Cash in hand and at banks 67,902,340 66,222,256 28,107,620 62,566,227 Deposits at banks used as collateral (Note 6) 58,539,337 3,788,046 - Short-term investments (Note 3.2) Deposits at financial institutions 1,485,980,914 3,447,669,168 1,009,170,498 2,700,322,447 Deposits at financial institutions used as collateral (Note 6) 3,397,408,672 2,974,517,929 - - Fixed deposit at banks 1,665,346,428 - 1,627,625,000 - Fixed deposit at banks used as collateral 1,744,031,735 - - - Marketable securities and others(Notes3.2 and 7) 263,202,301 1,222,361,572 263,202,301 1,222,361,572 Trade accounts and notes receivable (Note 8) 963,329,667 1,307,952,121 - - Advances to related parties (Note 9) 3,847,857 - 5,439,557 1,615,702 Spare parts and supplies (Notes 3.3 and 10) 1,846,728,096 1,602,957,540 - - Other current assets Other receivables 340,085,098 150,474,631 216,900,765 - Others 214,849,162 106,689,693 90,845,916 58,926,936 Total Current Assets 12,051,251,607 10,882,632,956 3,241,291,657 4,045,792,884 ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES BALANCE SHEET AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 ASSETS (CONTINUED) Long term deposits at financial institutions used as collateral (Note 6) 2,547,824,444 737,613,177 - - INVESTMENTS AND LOANS (Notes 3.4 and 12.1) Related companies 247,262,884 123,663,632 5,580,532,251 11,419,529,102 Others (Note 12.2) 46,509,530 37,499,995 37,957,495 37,499,995 PROPERTY, PLANT AND EQUIPMENT- NET 29,806,260,013 31,122,921,850 487,302,566 365,005,870 (Notes 3.5 and 13) OTHER ASSETS (Notes 3.6 and 14) Organization expenses and management fee 303,690,877 340,135,727 - 20,142 Fund arrangement fee 446,413,530 503,962,892 - - Deposits 5,299,391 5,146,891 4,719,299 4,659,299 Others 136,999,827 101,352,956 6,512,811 5,872,977 TOTAL ASSETS BAHT 45,591,512,103 43,854,930,076 9,358,316,079 15,878,380,269 Notes to the consolidated and the equity based financial statements form an integral part of these consolidated and equity based financial statements (MR. SOMBOON MANENAVA) (MR. WORAWIT KHAMKANIST) CHAIRMAN MANAGING DIRECTOR ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES BALANCE SHEET AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 LIABILITIES AND SHAREHOLDERS+ EQUITY CURRENT LIABILITIES Trade accounts and notes payable 289,139,310 196,594,824 - - Payables to related companies (Note 11) - - - 4,001,043 Current portion of long-term liability 1,576,905,660 1,046,848,532 - - Other current liabilities Accrued interest 169,224,559 126,756,758 - - Accrued dividend 14,870,091 5,833,735 14,870,091 5,833,735 Retentions 11,368,728 2,161,651 11,368,728 2,161,651 Value added tax payables 190,233,543 124,864,723 - - Others 276,700,675 179,062,645 15,293,349 63,498,287 Total Current Liabilities 2,528,442,566 1,682,122,868 41,532,168 75,494,716 LONG-TERM LIABILITIES (Note 15) 23,500,939,200 15,833,088,700 - - DEBENTURES (Note 16) 10,208,968,723 10,536,830,000 - - TOTAL LIABILITIES 36,238,350,489 28,052,041,568 41,532,168 75,494,716 MINORITY INTEREST 36,377,703 2,955 - - ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES BALANCE SHEET AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 LIABILITIES AND SHAREHOLDERS+ EQUITY (CONTINUED) SHAREHOLDERS+ EQUITY SHARE CAPITAL (Note 17) Registered capital 530,000,000 ordinary shares of Baht 10.00 each 5,300,000,000 5,300,000,000 5,300,000,000 5,300,000,000 Issued and paid-up capital 520,000,000 ordinary shares of Baht 10.00 each, fully paid 5,200,000,000 5,200,000,000 5,200,000,000 5,200,000,000 WARRANTS 12,338,000 - 12,338,000 - PREMIUM ON SHARE CAPITAL 8,496,676,000 8,472,000,000 8,496,676,000 8,472,000,000 RETAINED EARNINGS (DEFICIT) Appropriated Statutory reserve (Note 18) 19,792,680 19,792,680 19,792,680 19,792,680 Unappropriated (Deficit) (4,412,022,769) 2,111,092,873 (4,412,022,769) 2,111,092,873 TOTAL SHAREHOLDERS+ EQUITY 9,316,783,911 15,802,885,553 9,316,783,911 15,802,885,553 TOTAL LIABILITIES AND SHAREHOLDERS+ EQUITY BAHT 45,591,512,103 43,854,930,076 9,358,316,079 15,878,380,269 Notes to the consolidated and the equity based financial statements form an integral part of these consolidated and equity based financial statements (MR. SOMBOON MANENAVA) (MR. WORAWIT KHAMKANIST) CHAIRMAN MANAGING DIRECTOR ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF PROFIT AND LOSS AND RETAINED EARNINGS AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 REVENUES Sales (Note 20) 7,677,108,082 5,986,809,966 - - Equity in undistributed net profit (loss) of subsidiary companies - - (5,407,826,667) 1,328,979,579 Services income 31,517,101 - - - Other income Interest income 1,004,773,011 911,439,022 347,673,707 519,856,699 Dividend 92,760,721 19,078,359 92,760,721 19,078,359 Others 61,196,812 15,744,391 45,824,476 12,566,024 Total Revenues 8,867,355,727 6,933,071,738 (4,921,567,763) 1,880,480,661 EXPENSES Cost of sales (Note 21) 2,942,051,044 2,250,097,908 - - Cost of services 48,226,628 82,378 - - Selling and administrative expenses 462,651,874 439,279,921 156,453,592 212,956,387 Interest expenses 3,181,068,138 2,314,977,644 - - Directors+ remuneration 17,938,731 13,293,500 6,102,000 5,484,000 Other expenses Loss on disposal of marketable securities, debentures and investment units 379,785,824 - 379,785,824 - Loss on exchange 67,985,251 145,315,081 - - Total Expenses 7,099,707,490 5,163,046,432 542,341,416 218,440,387 ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF PROFIT AND LOSS AND RETAINED EARNINGS (CONTINUED) AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 Profit (loss) before income tax 1,767,648,237 1,770,025,306 (5,463,909,179) 1,662,040,274 Income tax (Note 22) - 219,047,016 - 111,061,879 Net profit (loss) before minority interest and extraordinary item 1,767,648,237 1,550,978,290 (5,463,909,179) 1,550,978,395 Minority interest in net loss of subsidiary companies (3,525,304) (105) - - Net profit (loss) before extraordinary item 1,771,173,541 1,550,978,395 (5,463,909,179) 1,550,978,395 EXTRAORDINARY ITEM Loss on the application of the managed float exchange system (Notes 3.7 and 23) (7,235,082,720) - - - NET PROFIT (LOSS) BAHT (5,463,909,179) 1,550,978,395 (5,463,909,179) 1,550,978,395 RETAINED EARNINGS BROUGHT FORWARD 2,111,092,873 1,018,541,787 2,111,092,873 1,018,541,787 NET PROFIT (LOSS) (5,463,909,179) 1,550,978,395 (5,463,909,179) 1,550,978,395 LESS APPROPRIATION FOR THE PRIOR YEAR Dividends paid (1,040,000,000) (440,000,000) (1,040,000,000) (440,000,000) Statutory reserve - (11,099,941) - (11,099,941) Directors remuneration of the Company and subsidiary companies (19,206,463) (7,327,368) (19,206,463) (7,327,368) RETAINED EARNINGS (DEFICIT) CARRIED FORWARD BAHT (4,412,022,769) 2,111,092,873 (4,412,022,769) 2,111,092,873 NET PROFIT (LOSS) PER SHARE (Note 3.8) Profit (loss) before extraordinary item BAHT 3.40 3.12 (10.49) 3.12 Extraordinary item BAHT (13.89) - - - Net profit (loss) BAHT (10.49) 3.12 (10.49) 3.12 Notes to the consolidated and the equity based financial statements form an integral part of these consolidated and equity based financial statements. ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF CASH FLOWS AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES Net Profit (loss) before extraordinary items 1,771,173,541 1,550,978,395 (5,463,909,179) 1,550,978,395 Add (less) Adjustment to reconcile net profit to net cash flows: Equity in undistributed net (profit) loss of subsidiary companies - - 5,407,826,667 (1,328,979,579) Depreciation 1,622,312,792 1,240,682,828 8,556,310 7,516,940 Amortization of deferred expenses 113,673,711 90,396,345 1,694,625 1,664,726 Provision of the decline in value of security (Reverse) (41,106,202) 54,191,610 (41,106,202) 54,191,610 Provision for obsolete stock 8,119,034 48,912,286 - - Loss (gain) on exchange (1,539,600) 140,291,921 - - Loss from written off fixed assets 568,746 - 19,601 - Loss from disposal of marketable securities, debentures and investment units 379,785,824 - 379,785,824 - Loss on disposal of fixed assets - 122,548 - 23,733 Income from operations before changes in operating assets and liabilities 3,852,987,846 3,125,575,933 292,867,646 285,395,825 Operating assets (increase) decrease Fixed deposits at banks used as collateral (54,727,856) (1,151,223) - - Deposits at financial institutions used as collateral (422,890,743) (15,985,982) - - Less Extraordinary item Realized gain on the application of the managed float exchange system 207,119,417 - - - Unrealized loss(gain) on the application of the managed float exchange system 610,927,278 Deposits at financial institutions used as collateral-net 395,155,952 (15,985,982) - - ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF CASH FLOWS (CONTINUED) AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 Trade accounts and notes receivable 344,622,454 (618,809,109) - - Receivables from related companies (3,847,857) - (3,823,855) 14,481,978 Spare parts and supplies (251,889,590) (801,140,727) - - Fixed deposit at banks used as collateral (1,744,055,170) - - - Long-term deposits at financial institutions used as collateral (1,810,211,267) (1,583,497,031) - - Less Extraordinary item gain on the application of the managed float exchange system 994,527,641 - - - Long-term deposits at financial institutions used as collateral-net (815,683,626) (1,583,497,031) - - Other receivables (189,610,467) (150,474,631) (216,900,765) 227,302 Other current assets (108,159,469) (29,312,148) (31,918,980) (4,735,507) Organization expenses and management fee - (71,914,243) - 54,834 Fund arrangement fee - (301,731,732) - - Deposits - - (60,000) (608,700) Other assets (55,478,869) (28,146,666) (2,314,317) 962,141 Operating liabilities increase (decrease) Accounts payable 92,544,486 164,229,747 - - Payables to related companies - - (4,001,043) 4,001,043 Accrued interest 42,467,801 58,375,209 - - Retentions 9,207,077 554,643 9,207,077 2,161,651 Value added tax payable 65,368,820 58,996,117 - - Other current liabilities 97,638,029 87,329,599 (48,204,938) 31,345,571 Directors remuneration (19,206,463) (7,327,368) (19,206,463) (7,327,368) Net cash provided by (used in) operating activities 1,657,333,098 (114,429,612) (24,355,638) 325,958,770 ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF CASH FLOWS (CONTINUED) AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 CASH FLOWS FROM INVESTING ACTIVITIES Cash received from sales of fixed assets - 15,049 - 5,049 Fixed deposits at banks (increase) (38,346,428) - (625,000) - Marketable securities and others (increase) decrease 620,479,649 (1,215,176,862) 620,479,649 (1,215,176,862) Investments in subsidiary/ associated and other companies (increase) decrease (123,599,253) (119,442,382) 343,506,463 (4,375,084,193) Investments and loans - others (increase) (9,009,535) (18,749,997) (457,500) (18,749,997) Increase in property, plant and equipment (increase) (306,219,701) (16,746,704,110) (130,872,607) (70,253,115) Proceed from sales of investment to related companies - - 87,663,720 - Net cash provided by (used in) investing activities 143,304,732 (18,100,058,302) 919,694,725 (5,679,259,118) CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term loans 8,163,980,940 6,138,736,450 - - Less Extraordinary items Realized loss on the application of the managed float exchange system (198,604,246) - - - Unrealized loss on the application of the managed float exchange system (8,849,052,810) - - - Cash disbursement(repayment) - long term loans (883,676,116) 6,138,736,450 - - Increase (decrease) in debentures (292,394,989) 7,351,494,132 - - Minority interest increase (decrease) 36,374,748 (117) - - Increase in warrants 37,014,000 - 37,014,000 - ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF CASH FLOWS (CONTINUED) AS AT DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 Cash received from capital increase - 6,024,000,000 - 6,024,000,000 Dividends paid (1,030,963,643) (434,166,265) (1,030,963,643) (434,166,265) Net cash provided by financing activities (2,133,646,000) 19,080,064,200 (993,949,643) 5,589,833,735 Net increase (decrease) in cash and cash equivalents (333,008,170) 865,576,286 (98,610,556) 236,533,387 Cash and cash equivalents as at January 1 3,513,891,424 2,648,315,138 2,762,888,674 2,526,355,287 Cash and cash equivalents as at December 31 BAHT 3,180,883,254 3,513,891,424 2,664,278,118 2,762,888,674 Notes to the consolidated and the equity based financial statements form an integral part of these consolidated and equity based financial statements ELECTRICITY GENERATING PUBLIC COMPANY LIMITED AND SUBSIDIARY COMPANIES STATEMENT OF CHANGES IN SHAREHOLDERS+ EQUITY FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY+S ONLY ON EQUITY BASED 1997 1996 1997 1996 SHARE CAPITAL Ordinary shares Brought forward 5,200,000,000 4,400,000,000 5,200,000,000 4,400,000,000 Increase in the period - 800,000,000 - 800,000,000 Carried forward 5,200,000,000 5,200,000,000 5,200,000,000 5,200,000,000 WARRANTS Brought forward - - - - Increase in the period 12,338,000 - 12,338,000 - Carried forward 12,338,000 - 12,338,000 - PREMIUM ON SHARE CAPITAL Brought forward 8,472,000,000 3,248,000,000 8,472,000,000 3,248,000,000 Increase in the period 24,676,000 5,224,000,000 24,676,000 5,224,000,000 Carried forward 8,496,676,000 8,472,000,000 8,496,676,000 8,472,000,000 RETAINED EARNINGS Appropriated Statutory reserve Brought forward 19,792,680 8,692,739 19,792,680 8,692,739 Increase in the period - 11,099,941 - 11,099,941 Carried forward 19,792,680 19,792,680 19,792,680 19,792,680 Unappropriated Brought forward 2,111,092,872 1,018,541,786 2,111,092,872 1,018,541,786 Increase in the period (6,523,115,641) 1,092,551,087 (6,523,115,641) 1,092,551,087 Carried forward (4,412,022,769) 2,111,092,873 (4,412,022,769) 2,111,092,873 TOTAL SHAREHOLDERS+ EQUITY BAHT 9,316,783,911 15,802,885,553 9,316,783,911 15,802,885,553 Notes to the consolidated and the equity based financial statements form an integral part of these consolidated and equity based financial statements.