MD&A_6M10_E

1H10 1H09 %Changes EGCO Cogen 842 870 (3%) Roi-Et Green 76 67 13% Total Cost of Sales - SPP 918 937 (2%) * Administrative expenses and income taxes were Baht 19 million, an increase of Baht 4 million or 26% from a higher in EGCO Cogen's administrative expenses. * Finance costs were Baht 38 million, a decrease of Baht 7 million or 15% from EGCO Cogen's lower principal. * Share of profits from joint ventures before FX, GCC, NKCC, SCC, GYG and NED, totaled Baht 127 million, a decrease of Baht 36 million or 22% mainly from a decrease in SCC's electricity sales due to schedule outage as planned. 4) Overseas' share of profits from joint ventures before FX, Conal, NTPC and Quezon, was reported at Baht 829 million, an increase of Baht 662 million or 396% mainly from the elelctricity sales of NTPC due to achieving COD on April 30, 2010. 5) Other Business' total revenues were Baht 396 million, an increase of Baht 27 million or 7% and total expenses were Baht 287 million, an increase of Baht 33 million or 13%. The details are as follows: Total Revenues, Total Expenses and Share of Profits (Losses) from JVEs before FX of Other Business: Unit : Million Baht ESCO ET/4 Total 1H10 1H09 1H10 1H09 1H10 1H09 % Chg Total revenues 266 236 130 133 396 369 7% Total expenses 220 195 67 59 287 254 13% Profits bf Share of Profits (Losses) from JVEs 46 41 63 74 109 115 (5%) Share of Profits (Losses) from JVEs bf FX - - - - - - - Net Profit bf FX and MI 46 41 63 74 109 115 (5%) /4 ESCO purchased additional shares in ET in January 2010, increased the investment portion to 74.19%. * Service income from ESCO amounted to Baht 262 million, up by Baht 30 million or 13%, resulting mostly from higher maintenance service income and spare parts sale to overseas power plants. * Sales of water from ET were Baht 129 million, down by Baht 2 million or 2%. * Interest income and others amounted to Baht 5 million, down by Baht 1 million or 14% from a decrease in interest income. * Cost of services was Baht 189 million, an increase of Baht 29 million or 18% which was in accordance with the increase in service income. * Cost of water sales of ET was Baht 40 million, an increase of Baht 3 million or 7%. * Administrative expenses and income taxes totaled Baht 58 million, an increase of Baht 1 million or 2% as a result of higher tax payment of ET in the amount of Baht 5 million due to the end of BOI privilege on corporate tax exemption on February 2009. 4. Report and Analysis of Financial Position 4.1 Asset Analysis As at June 30, 2010, total assets of EGCO, its subsidiaries and interests in joint ventures amounted to Baht 64,991 million, an increase of Baht 2,072 million or 3% from December 31, 2009. The important details are as follows: 1) Cash and deposits at financial institutions, and short-term and long-term marketable securities were Baht 10,251 million or 16% of the total assets, up by Baht 2,328 million or 29%. This resulted mainly from dividends from joint ventures totaling Baht 2,114 million, cash receipts from operating activities of Baht 2,478 million and cash deposit at financial institutions of Baht 628 million. Meanwhile, the decreasing amount were from the dividend payment to shareholders totaling Baht 1,480 millon, the repayment of debenture and principal as well as interest payment totaling Baht 862 million and investment in joint ventures of Baht 381 million. 2) Short-term and long-term investments used as collateral were Baht 837 million or 1% of the total assets, down by Baht 110 million or 12% mainly from EGCO's redemption of short-term investment used as collateral. Meanwhile, KEGCO reserved cash for the purpose of repayment of principal and payment of interest. 3) Investment in subsidiaries and interests in joint ventures recorded under the equity method in the consolidated financial statements as at June 30, 2010 amounted to Baht 29,046 million or 45% of the total assets, up Baht 516 million or 2%. The major change can be defined as follows: 3.1) An increase in share of profit from investment according to the equity method amounting to Baht 3,541 million. 3.2) An increase in share capital of joint ventures totaling Baht 190 million. 3.3) The transfer of net liabilities to interests in a joint venture totaling Baht 151 million. 3.4) Dividends received from GEC, BLCP, Quezon and Conal by Baht 3,179 million. 3.5) Loss from translation adjustments totaling Baht 183 million. 3.6) A repayment from Lao Holding State Enterprise (LHSE) totaling Baht 4 million regarding the first investment in NTPC that EGCO paid for LHSE. For the company financial statements, the original cost was applied for recording the investment in subsidiaries and interests in joint ventures at the beginning; the book value as at June 30, 2010 was Baht 32,570 million, up by Baht 351 million due to the additional paid-up shares in NTPC and NED. 4) Property, plant and equipment (net) totaled Baht 14,079 million or 22% of the total assets, down by Baht 988 millon or 7%. The decline in PPE (net) was mainly from the decrease in the depreciation of EGCO and subsidiaries' assets totaling Baht 1,095 million and the reclassification of transfer capital spare parts out to spare parts and supplies at KEGCO and Rayong power plant totaling Baht 108 million. Meanwhile, there was a recording of capital spare parts as property, plant and equipment following the major maintenance at KEGCO and Rayong power plant in the amount of Baht 180 million and net purchase of property, plant and equipment totaling Baht 35 million. 5) Other assets were Baht 10,778 million or 17% of the total assets, up by Baht 326 million or 3% mainly from an increase of dividends receivable from joint ventures by Baht 1,065 million. Meanwhile, trade receivable from related parties and spare parts decreased by Baht 517 million and Baht 188 million, respectively. 4.2 Liability Analysis As at June 30, 2010, the EGCO Group's total liabilities were Baht 11,028 million, which was Baht 798 million or 7% lower than the amount as at December 31, 2009. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 10,166 million, or 92% of total liabilities, down Baht 550 million or 5%. This mainly came from the long-term loans repayment of EGCO Cogen and Roi-Et Green as well as the debenture repayment of KEGCO. The details are as follows: - USD loans in the amount of USD 14 million - Yen loans in the amount of Yen 616 million - Baht loans in the amount of Baht 8,507 million - Baht debentures in the amount of Baht 966 million Maturity of long-term loans and debentures as at June 30, 2010 Unit : Million Baht EGCO KEGCO EGCO Cogen Roi-Et Green Within 1 Year - 966 179 37 1-5 Years 4,000 - 793 152 > 5 Years 4,000 - - 39 Total 8,000 966 972 228 Long-term loans and debentures of subsidiaries are secured liabilities over land, buildings, power plants and equipments of subsidiaries. The subsidiaries have to maintain cash reserves as at June 30, 2010 totaling Baht 329 million for the purpose of payment of principal and interest due within one year. 2) Other liabilities amounted to Baht 862 million or 8% of total liabilities, representing a decrease of Baht 248 million or 22% which mostly resulted from the decrease in bonus payable of EGCO, Rayong power plant and subsidiaries. 4.3 Shareholders' Equity Analysis As at June 30, 2010, Shareholders' Equity amounted to Baht 53,963 million, which was Baht 2,870 million or 6% higher than the amount as at December 31, 2009. This was due mainly to the net profit in the consolidated financial statements that amounted to Baht 4,346 million while appropriated dividend totaling Baht 1,447 million was made. The analysis of the company's capital structure as at June 30, 2010 can be summarized as follows: Shareholders' equity was Baht 53,963 million or 83.03%. Liabilities were Baht 11,028 million or 16.97%. Important financial ratios were as follows: - Debt to equity ratio was 0.20 times, lower than 0.23 times at the end of 2009. - Book value per share was Baht 101.54, higher than Baht 96.06 at the end of 2009. 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, 2010, the ending balance of the cash and the cash equivalent was Baht 7,389 million, which was Baht 1,534 million higher than the amount as at December 31, 2009. The details of the sources and uses of funds are as follows: - Net cash received from operating activities totaled Baht 2,693 million. This was cash received from operating activities of Baht 2,478 million and cash payment for working capital of Baht 215 million. - Net cash received from investing activities was Baht 1,185 million mainly due to dividend received from joint ventures and Eastern Water Resources Development and Management Public Company Limited (East Water) totaling Baht 2,114 million and Baht 78 million, respectively. Meanwhile, investments in financial institutions totaling Baht 628 million and investment in subsidiaries and joint ventures totaling Baht 383 million were made. - Net cash payment for financing activities was Baht 2,344 million. This was mainly from the dividend payment to shareholders totaling Baht 1,480 million, the debentures repayment of KEGCO totaling Baht 444 million, the loan repayment of EGCO Cogen and Roi-Et Green that totaled Baht 97 million and interest payment of Baht 321 million. As at June 30, 2010, the analysis of the company's liquidity ratios were as follows: - Current ratio was 10.44 times, compared to 8.30 times in 2009. - Quick ratio was 5.64 times, compared to 4.35 times in 2009. Both ratios were higher than the ratios in 2009 mainly due to dividends received from joint ventures.