F/S Q3-1998 OF EGCO AND CONSOLIDATED (CORRECTED)

Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 8 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Depreciation is calculated on a straight-line basis over the expected useful economic lives of the assets concerned. The principal annual rates used for this purpose are : Years Power plant 15 and 20 Building and structure 20 Communication system 5 and 10 Transmission system 20 Operating and maintenance equipment 5 Office equipment 5 and 10 Furniture and fixtures 5 Computers and accessories 5 and 10 Vehicles 5 (e) Deferred expenses Pre-operating expenses, organisation expenses and other deferred charges are amortised under the straight-line method, over a period of 5 - 10 years. (f) Foreign currencies Trading transactions denominated in foreign currencies are translated into Thai Baht at the exchange rates ruling when the transactions were entered into. The balances of monetary assets and liabilities denominated in foreign currencies are translated into Thai Baht at the exchange rate ruling at the balance sheet date. Exchange gains or losses are included in the statements of income (loss) and consolidated statements of income (loss). Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 9 Notes to the financial statements and consolidated financial statements- September 30, 1998 continued (g) Earnings (loss) per share Earnings (loss) per share is calculated based on the weighted average number of shares issued during the period. Related party transactions 4. A summary of significant transactions with a related company is as follows : Consolidation 1998 1997 third quarter nine-month third quarter nine-month (Million Baht) (Million Baht) (Million Baht) (Million Baht) Transactions during the period Electricity revenues 2,061 6,867 1,869 5,614 Major maintenance service expenses 148 446 133 226 Account receivable-trade is due from Electricity Generating Authority of Thailand (EGAT), one of the major shareholder, being in respect of sales of electricity. The two subsidiaries entered into Power Purchase Agreements with the EGAT. The agreements shall be effective for periods of 15 and 20 years. According to the resolutions of the Cabinet's meetings dated February 15, 1994 and January 23, 1996 , the electricity revenues occurred from such agreements are calculated, based on Cost plus basis. There is a limitation of sale of power to third parties as specified in the agreements. These agreements have been pledged as collateral with the lenders under the Master Agreements. Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 10 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Under the Power Purchase Agreements, EGAT has to bear the natural gas cost until the subsidiaries enter into a natural gas purchase agreement with the Petroleum Authority of Thailand. Therefore, the calculation of revenues from the portion of energy sales of electricity does not include a calculation of the natural gas cost. On July 20, 1998 EGAT informed the subsidiaries to negotiate with the Petroleum Authority of Thailand in order to enter into a natural gas purchase agreement. However on August 10, 1998, the subsidiaries informed EGAT to continuously bear the natural gas cost and EGAT has agreed with the subsidiaries' request on August 25, 1998. Under the Power Purchase Agreements with EGAT, the subsidiaries are eligible to take into consideration the exchange rate effects to adjust the formulae for calculation of electericity power sold to EGAT in each month pertaining to The First Amendment to Power Purchase Agreement dated on January 30, 1998. The compensations for the exchange losses for the third quarter and the nine-month period ended September 30, 1998 were amounts of Baht 207.5 million and 772.5 million respectively. The two subsidiaries have entered into Major Maintenance Agreements with EGAT for the latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiaries' power plant. The compensation for such services is calculated based on Cost plus basis and will be adjusted annually according to Consumer Price Index as announced by the Price Index Division, Ministry of Commerce. The agreements can be extended for an additional period of six years. The agreements have been pledged as collateral with the lenders under the Master Agreements. Deposits used as collateral 5. Deposits at financial institutions used as collateral represent a reserve in US Dollars which is provided from the proceeds of sales of electricity. This is for the purpose of minimising the exchange rate risk in accordance with the Master Agreements (see Note 7). The subsidiaries have to provide a reserve until such account equals the lower of 25% of the aggregate outstanding unhedged long-term loan amounts or an amount of US Dollars 103 million. As at September 30, 1998 the reserve amounted to of US Dollars 71 million. Electricity Generating Public Company Limited and its subsidiaries Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Investments in subsidiaries, associated and other companies. 6. 6.1 Investments in subsidiary, associated and other companies in the company's financial statements are as follows : Type of business Subsidiary companies Rayong Electricity Generating Company Limited Electricity Generating Khanom Electricity Generating Company Limited Electricity Generating EGCO Engineering and Services Company Providing maintenance Limited services to power plants EGCO Joint Venture and Development Company Making investments in Limited electricity industry EGCO Mining Company Limited Mining industry Associated companies EGCO Mining Company Limited Mining industry Total investments in subsidiaries and associated companies Other companies Thai LNG Power Company Limited PMI International Company Limited Investment in the earnings fund managed by Thai Farmers Asset Management Company Limited Total investments in other companies Electricity Generating Public Company Limited and its subsidiaries Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Investments in subsidiaries, associated and other companies. 6. 6.1 Investments in subsidiary, associated and other companies in the company's financial statements are as follows : The company only 1998 Investments Paid-up share % of Cost Method Equity method capital Interest (Baht'000) (Baht'000) Subsidiary companies Rayong Electricity Generating Company Limited 4,700,000 99.99 4,700,000 4,237,976 Khanom Electricity Generating Company Limited 4,850,000 99.99 4,850,000 5,563,878 EGCO Engineering and Services Company 210,000 99.99 210,000 143,144 Limited EGCO Joint Venture and Development Company 447,720 99.99 447,720 433,681 Limited EGCO Mining Company Limited 150,500 69.99 100,400 92,815 Associated companies EGCO Mining Company Limited Total investments in subsidiaries and associated companies 10,308,120 10,471,494 Other companies Thai LNG Power Company Limited - 10.00 37,499 PMI International Company Limited - 10.00 300 Investment in the earnings fund managed by Thai Farmers Asset Management Company Limited 500,000 Total investments in other companies 537,799 Unaudited Reviewed Electricity Generating Public Company Limited and its subsidiaries Page 11 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued Investments in subsidiaries, associated and other companies. 6. 6.1 Investments in subsidiary, associated and other companies in the company's financial statements are as follows : The company only 1997 Investments Paid-up share % of Cost Method Equity method (Baht'000) Interest (Baht'000) (Baht'000) Subsidiary companies Rayong Electricity Generating Company Limited 4,700,000 99.99 4,700,000 3,726,524 Khanom Electricity Generating Company Limited 4,850,000 99.99 4,850,000 4,815,692 EGCO Engineering and Services Company 170,000 99.99 170,000 125,706 Limited EGCO Joint Venture and Development Company 252,070 99.99 252,070 236,625 Limited EGCO Mining Company Limited - - - - Associated companies EGCO Mining Company Limited 50,000 40.00 43,800 Total investments in subsidiaries and associated companies 10,015,870 8,904,547 Other companies Thai LNG Power Company Limited - 10.00 37,499 PMI International Company Limited - - - Investment in the earnings fund managed by Thai Farmers Asset Management Company Limited - Total investments in other companies 37,499 Electricity Generating Public Company Limited and its subsidiaries Notes to the financial statements and consolidated financial statements - September 30, 1998 continued 6.2 Investments in subsidiary, associated and other companies in the consolidated financial statements are as follows : Type of business Subsidiary companies P.T. BORNEO INDOBARA Mining industry Associated companies EGCO Mining Company Limited Mining industry AMATA EGCO Power Company Limited Electricity generating Bangchak Power Company Limited Electricity generating CM ESCO Company Limited ESCO Wood Company Limited Other companies Thai LNG Power Company Limited PMI International Company Limited Investment in the earnings fund managed by Thai Farmers Asset Management Co.,Ltd. Investment in debentures of related parties Total investments P.T BORNEO INDOBARA , AMATA EGCO Power Company Limited and Bangchang Power Company Limited have not yet commenced their trading operations. (More)