anagement Discussion and Analysis for 6 Month

expenses were Baht 54 million and Baht 95 million, respectively. 4) The Overseas Group's expenses were Baht 203 million, a decrease of Baht 15 million or 7% compared to the same period of 2004, owing to the following reasons: - Cost of Sales were Baht 94 million, an increase of Baht 10 million or 12%, in line with an increase of revenues. - Administrative expenses and income tax were Baht 76 million, a decrease of Baht 24 million or 24% due to CONAL's deferred income tax adjustment of 2004. - Interest expenses were Baht 33 million, a decrease of Baht 2 million or 5% owing to lower principal amount. 5) The Other Business Group's expenses were Baht 264 million, an increase of Baht 63 million or 31%, owing to the following reasons: - Service costs were Baht 189 million, an increase of Baht 59 million or 46%, resulting from an increase of ESCO's operation and maintenance (O&M) services to customers which was consistent with its increased revenue. - Cost of water sales of ET was Baht 27 million, a decrease of Baht 1 million or 2% mainly from a decrease of operating and maintenance service costs. - Administrative expenses and income tax were Baht 44 million, an increase of Baht 6 million or 16%, mostly from ESCO's income tax expenses that amounted to Baht 18 million, which was in line with an increase of ESCO's net profit; whereas,the administrative expense shrank by Baht 11 million as there was Agro-Energy Co.,Ltd.'s write-off of bad debt in 2004. - Interest expenses were Baht 3 million, a decrease of Baht 2 million or 40%, resulting from the lower principal amount of ET. 4. Report and Analysis of Financial Position 4.1 Asset Analysis As at June 30, 2005, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to Baht 56,950 million, an increase of Baht 1,884 million or 3% from December 31, 2004. The important details are as follows: 1) Cash and deposits at financial institutions, and short term and long term marketable securities were Baht 10,543 million or 19% of the total assets, up Baht 3,203 million or 44%. This came from an increase of Baht 4,313 million in cash and cash equivalent, a decrease of Baht 1,079 million in deposits at financial institutions and short-term marketable securities and Baht 31 million in long-term investments in marketable securities. 2) Short-term and long-term investments used as collateral were Baht 5,298 million or 9% of the total assets, down Baht 2,122 million or 29% after REGCO obtained lenders' approval in the first quarter to reduce the Foreign Exchange Reserve Account (FEXRA) to USD 1.5 million and to release Debt Service Reserve Account (DSRA) amounting to USD 13.2 million by pledging a Bank Guarantee. 3) Investment in subsidiaries and associates and interests in joint ventures amounted to Baht 417 million or 1% of the total assets, up by Baht 19 million or 5%. This increase is mainly a result of the recognition of the share of profit of AEP. 4) Property, plant and equipment (net) totaled Baht 31,723 million or 56% of the total assets. They were up Baht 440 million or 1% due to an increase in property,plant and equipment related to GEC's construction of Baht 1,372 million and the recording of capital spare parts as property, plant and equipment following the major maintenance of REGCO and TLP Cogen in the amount of Baht 169 million and Baht 28 million, respectively. The translation adjustment of overseas assets increased by Baht 65 million as well. However, a decrease in property, plant and equipment was from depreciation of EGCO and subsidiaries' assets totaling Baht 1,214 million, the reclassification of unutilised capital spare parts from property, plant and equipment to inventories of TLP Cogen and REGCO amounting to Baht 23 million and Baht 15 million, respectively. 5) Other assets were Baht 8,970 million or 16% of the total assets, up Baht 344 million or 4% mainly from amounts due and trade receivable from related companies that were up Baht 337 million, other assets that were up by Baht 410 million,and spare parts and supplies up by Baht 155 million while long-term loans to related parties down by Baht 514 million following NTPC's shareholder loan repayment for the whole amount; goodwill was down by Baht 43 million. 4.2 Liability Analysis As at June 30, 2005, the company's total liabilities were Baht 26,134 million, up Baht 171 million or 1% as a result of the increase in interest payable and construction payable. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 23,775 million, or 91% of total liabilities, down Baht 158 million or 1%. The details are as follows: - USD loans in the amount of USD 296 million - Yen loans in the amount of Yen 1,115 million - Philippines Peso loans in the amount of Peso 83 million - Baht loans in the amount of Baht 5,928 million - Baht debentures in the amount of Baht 5,304 million In the first six months of 2005, the amount of loans denominated in Baht increased by Baht 538 million due to the loan drawdown for the construction of GEC whereas the amount of loans denominated in USD and Yen decreased by Baht 438 million, mostly from principal repayment by REGCO, KEGCO, and Roi-Et green. Baht debentures were down by Baht 253 million following KEGCO's repayment. 2) Other liabilities amounted to Baht 2,359 million or 9% of total liabilities, mostly from bank overdrafts and short-term loans from financial institutions of Baht 214 million, trade payables of Baht 522 million, construction payables of Baht 258 million, interest payable of Baht 180 million, value added tax payable and income tax payable of Baht 379 million, and others of Baht 806 million. 4.3 Shareholders' Equity Analysis As at June 30, 2005, Shareholders' Equity amounted to Baht 30,816 million, which was Baht 1,713 million higher than the amount as at December 31, 2004. This was due mainly to the profits from operation of the first six months of 2005. The analysis of the company's capital structure as at June 30, 2005 is summarized as follows: Shareholders' equity was Baht 30,816 million or 54.11%. Liabilities were Baht 26,134 million or 45.89%. Important financial ratios were as follows: - Debt to equity ratio was 0.85 times, lower than 0.89 times at the end of last year. - Book value per share was Baht 56.63, higher than Baht 53.55 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 June 30, 2005, the ending balance of the cash and the cash equivalent was Baht 6,164 million, up by Baht 4,313 million from the end of 2004. The details of the sources and uses of funds are as follows: -Net cash received from operating activities totaled Baht 4,959 million. Most of this was cash from operating activities that amounted to Baht 4,095 million and cash received from working capital increase by Baht 864 million. -Net cash received from investing activities was Baht 754 million. Cash received from deposits at financial institutions increased by Baht 1,035 million. Cash received from shareholder's loan repayment from NTPC was Baht 971 million. In addition, cash inflows were from dividends of EASTW, KTSF and the other open-ended funds, which amounted to Baht 61 million, Baht 91 million and Baht 20 million, respectively. Whereas the cash outflow was from the investment in GEC's power plant construction amounting to Baht 965 million - Net cash payment for financing activities was Baht 1,400 million, mainly owing to loan and debenture repayment from REGCO, KEGCO, ET, TLP Cogen, Roi-Et Green, APBP, GEC and Conal, which amounted to Baht 1,586 million, plus dividend payment to shareholders that amounted to Baht 881 million; while, there were debt drawdown of GEC in the amount of Baht 983 million and cash received from selling treasury stock of Baht 100 million.