anagement Discussion and Analysis for 9 Month

the same period of last year of Baht 289 million or 9%, according to the following reasons: - Cost of Sales were Baht 3,049 million, an increase of Baht 262 million or 9%, substantially driven by an increase at GEC amounting to Baht 139 million owing to maintenance expenses as well as an increase at TLP Cogen amounting to Baht 55 million from higher fuel costs and maintenance expenses. An increase at APBP amounting to Baht 42 million was due to higher maintenace expenses. Moreover, Roi-Et Green's cost of sales increased by Baht 26 million due to higher cost of rice husk used as fuel. Cost of Sales - SPP: Unit : Million Baht 9M2005 9M2004 %Changes GEC 1,813 1,674 8% TLP Cogen 960 904 6% APBP 195 153 27% Roi-Et Green 82 56 47% - Administrative expenses were Baht 233 million, an increase of Baht 3 million or 1%, coming substantially from GEC which incurred expenses totaling Baht 212 million or up by Baht 27 million whilst APBP experienced an increase of Baht 3 million and Roi-et Green was up by Baht 2 million. TLP Cogen showed lower administrative expenses by Baht 28 million because a refinancing fee was incurred in the first nine months of 2004. - Interest expenses were Baht 241 million, an increase of Baht 24 million or 11%, driven by an increase in TLP Cogen's interest expenses amounting to Baht 17 million because of higher loan amount to cover the refinancing fee plus a higher interest rate from swapping floating rate to fixed rate. GEC's interest expenses increased by Baht 5 million due to loan drawdown for power plant construction. GEC and TLP Cogen's interest expenses were Baht 139 million and Baht 82 million, respectively. 4) The Overseas Group's expenses were Baht 697 million, an increase of Baht 334 million or 92% compared to the same period of 2004, owing to the following reasons: - Cost of Sales were Baht 161 million, an increase of Baht 34 million or 26%, in line with an increase of revenues. - Administrative expenses and income tax were Baht 484 million, an increase of Baht 303 million or 167%. This came from the change to the proportionate consolidation method for the accounting of NTPC which led to a recognition of expenses in the amount of Baht 344 million, mainly from the write-off of the development expense of Baht 280 million. - Interest expenses were Baht 52 million, a decrease of Baht 3 million or 5% owing to lower principal amount of debt. 5) The Other Business Group's expenses were Baht 376 million, an increase of Baht 94 million or 33%, owing to the following reasons: - Service costs were Baht 274 million, an increase of Baht 97 million or 55%, 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 41 million, a decrease of Baht 0.35 million or 1% mainly from a decrease of operating and maintenance service costs. - Administrative expenses and income tax were Baht 57 million, an increase of Baht 0.19 million or 0.3%, mostly from ESCO's income tax expenses that amounted to Baht 19 million, which was in line with an increase of ESCO's net profit; whereas, the administrative expense shrank by Baht 19 million as there was Agro-Energy Co.,Ltd.'s write-off of bad debt in 2004. - Interest expenses were Baht 5 million, a decrease of Baht 3 million or 41%, resulting from the lower principal amount of ET's debt. 4. Report and Analysis of Financial Position 4.1 Asset Analysis As at September 30, 2005, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to Baht 58,699 million, an increase of Baht 3,632 million or 7% 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 6,997 million or 12% of the total assets, down Baht 343 million or 5%. This came from a decrease of Baht 1,606 million in deposits at financial institutions and short-term marketable securities whilst cash and cash equivalent increased by Baht 1,209 million, and long-term investments in marketable securities was up Baht 54 million. 2) Short-term and long-term investments used as collateral were Baht 9,615 million or 16% of the total assets, up Baht 2,195 million or 30%. 3) Investment in subsidiaries and associates and interests in joint ventures amounted to Baht 414 million or 1% of the total assets, up by Baht 16 million or 4%. This increase is mainly a result of the recognition of the share of profit of AEP. 4) Property, plant and equipment (net) totaled Baht 32,378 million or 55% of the total assets. They were up Baht 1,095 million or 4% due to an increase in property, plant and equipment related to GEC and NTPC's construction of Baht 1,501 million and Baht 1,023 million, respectively; as well as 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 222 million and Baht 28 million, respectively.The translation adjustment of overseas assets increased by Baht 60 million as well. However, a decrease in property, plant and equipment was from depreciation of EGCO and subsidiaries' assets totaling Baht 1,842 million, the reclassification of unutilised capital spare parts from property, plant and equipment to inventories of TLP Cogen, REGCO and KEGCO amounting to Baht 23 million, Baht 15 million and Baht 14 million, respectively. 5) Other assets were Baht 9,295 million or 16% of the total assets, up Baht 669 million or 8% mainly from amounts due and trade receivable from related companies that were up Baht 433 million, other assets that were up by Baht 653 million, and spare parts and supplies up by Baht 139 million while long-term loans to related parties down by Baht 497 million following NTPC's shareholder loan repayment for the whole amount; goodwill was down by Baht 59 million. 4.2 Liability Analysis As at September 30, 2005, the company's total liabilities were Baht 27,627 million, up Baht 1,664 million or 6% driven by increasing long- term loan drawdown from financial institutions. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 24,916 million, or 90% of total liabilities, up Baht 983 million or 4%. The details are as follows: - USD loans in the amount of USD 312 million - Yen loans in the amount of Yen 1,066 million - Filipino Peso loans in the amount of Peso 79 million - Baht loans in the amount of Baht 6,528 million - Baht debentures in the amount of Baht 5,304 million In the first nine months of 2005, the amount of loans increased by Baht 2,309 million due to the loan drawdown for the construction of GEC and NTPC and principal repayment of long-term loans and debentures by subsidiaries totaled Baht 1,847 million. 2) Other liabilities amounted to Baht 2,712 million or 10% of total liabilities, mostly from bank overdrafts and short-term loans from financial institutions of Baht 109 million, trade payables of Baht 495 million, construction payables of Baht 180 million, interest payable of Baht 455 million, value added tax payable and income tax payable of Baht 256 million, and others of Baht 1,217 million. 4.3 Shareholders' Equity Analysis As at September 30, 2005, Shareholders' Equity amounted to Baht 31,072 million, which was Baht 1,969 million higher than the amount as at December 31, 2004. This was due mainly to the profits from operation of the first nine months of 2005. The analysis of the company's capital structure as at September 30,2005 is summarized as follows: - Shareholders' equity was Baht 31,072 million or 52.93%. - Liabilities were Baht 27,627 million or 47.07%. Important financial ratios were as follows: - Debt to equity ratio was 0.89 times, equaled to the end of last year. - Book value per share was Baht 57.03, higher than Baht 53.55 at the end of last year. 5. Report and Analysis of Cash Flows 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, 2005, the ending balance of the cash and the cash equivalent was Baht 3,060 million, up by Baht 1,209 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 2,279 million. Most of this was cash from operating activities that amounted to Baht 5,876 million and cash received from working capital decrease of Baht 3,597 million. -Net cash received from investing activities was Baht 30 million. Cash received from deposits at financial institutions increased by Baht 1,640 million. Cash received from shareholder's loan repayment from NTPC was Baht 971 million and AEP Baht 32 million. In addition, cash inflows were from dividends of EASTW, KTSF and the other open-end funds, which amounted to Baht 92 million, Baht 124 million and Baht 17 million, respectively, whereas the cash outflows were from the investment in GEC and NTPC's power plant construction amounting to Baht 1,165 million and Baht 1,152 million - Net cash payment for financing activities was Baht 1,098 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 1,847 million, plus dividend payment to shareholders that amounted to Baht 1,669 million; while there was debt drawdown at GEC in the amount of Baht 1,096 million and NTPC Baht 1,214 million and cash received from selling treasury stock of Baht 100 million.