RATCH: Annual Report 2005

Vision

To carry on the business of power generation with

a view to create satisfaction to customers and

generating optimum returns to shareholders, staff

members, and society through management based on

good corporate governance

Mission

The Company will increase investments in power

generating business and other related businesses by

taking the following into account:

Returns to shareholders, staff members, and society

Emphasis on using safe, environmentally friendly,

and state-of-the-art technology

Development and enhancement of staff members’

potential to ensure their readiness

Management based on good corporate governance

Ratchaburi Electricity Generating Holding

Public Company Limited

A n n u a l R e p o r t 2 0 0 5 4

Total Assets Net Profit

70,000

65,000

60,000

55,000

2005 2004 2005 2004

7,000

6,500

6,000

5,500

69,940.54 69,494.19

6,487.03

6,066.36

Million Baht Million Baht

F i n a n c i a l O v e r v i e w

Total Assets 69,940.54 69,494.19

Total Liabilities 38,451.17 41,026.18

Issued and Paid - up Share Capital 14,500.00 14,500.00

Shareholders’ Equity 31,489.37 28,468.01

Electricity Sales 44,034.96 39,714.03

Share of profit (loss) of subsidiaries and joint ventures 372.01 407.90

Other Income 429.86 294.50

Total Revenues 44,836.83 40,416.43

Cost of Sales 36,478.53 32,173.20

Selling and Administrative Expenses 993.31 495.22

Interest Expenses 1,208.88 1,224.68

Total Expenses 38,680.72 33,893.10

Income Tax 89.75 36.30

Net Profit 6,066.36 6,487.03

Financial Position 2005 2004

Operating Performance 2005 2004

Unit : Million Baht

Year Year

Ratchaburi Electricity Generating Holding Public Company Limited 5

F i n a n c i a l R a t i o s

Liquidity 2005 2004

Current Ratio (Times) 2.05 1.86

Quick Ratio (Times) 1.80 1.67

Cash Flow from Operation to Current Liabilities (Times) 0.96 0.72

Accounts Receivable Turnover (Times) 6.68 8.54

Average Collection Period (Days) 54 43

Accounts Payable Turnover (Times) 7.43 7.54

Average Payment Period (Days) 49 48

Profitability 2005 2004

Gross Profit to Net Sales (%) 17.16 18.99

Net Profit to Net Sales (%) 13.53 16.05

Return on Equity (%) 20.24 24.39

Efficiency 2005 2004

Return on Assets (%) 8.70 9.50

Return on Fixed Assets (%) 18.17 18.14

Assets Turnover (Times) 0.64 0.59

EBITDA (Million Baht) 10,343.52 10,433.79

EBITDA to Assets (%) 14.84 15.27

EBITDA to Fixed Assets (%) 21.43 20.86

Financial Policy 2005 2004

Debt to Equity (Times) 1.22 1.44

Debt Service Coverage Ratio (DSCR) (Times) 2.33 2.52

Per Share Data 2005 2004

Book Value Per Share (Baht) 21.72 19.63

Earnings Per Share (Baht) 4.18 4.47

A n n u a l R e p o r t 2 0 0 5 6

H i g h l i g h t s o f O p e r a t i o n i n 2 0 0 5

1. Increasing equity investment in Tri Energy Company Limited

On March 9, 2005, Ratchaburi Gas Company Limited, one of the Company’s subsidiaries, acquired another

12.50 percent equity of Tri Energy Company Limited from EME Trigen B.V. (ETG) in the total value of Baht 525.29

million. It increased the Company’s shareholding in Tri Energy Company Limited from 37.50 percent to 50 percent.

The Company’s installed capacity, according to shareholding added another 350 megawatts to its total production

capacity, now reaches 3,995 megawatts.

2. Joint venture in the Nam Ngum 2 Hydro Power Plant in Lao PDR

On November 3, 2005, the Company entered into the Shareholders Agreement with SouthEast Asia

Energy Limited to acquire 25 percent of its shares from the existing shareholder, Ch. Karnchang Public Company

Limited. The investment is to join in the 615-megawatt Nam Ngum 2 Hydro Power Plant in Lao People’s Democratic

Republic (Lao PDR) for a total value of Baht 2.125 billion. The project is being developed by SouthEast Asia Energy

Limited and expected to start its commercial operation in 2010. The Company will enjoy an increasing generation

capacity of 153.75 megawatts from this venture.

3. Reduction of interest expenses by debt refinancing of Ratchaburi Electricity Generating Company

Limited

In June 2005, Ratchaburi Electricity Generating Company Limited, a main subsidiary, restructured totalling

Baht 34.262 billion loan expecting to reduce its interest expenses. It refinanced long-term credit facilities of Baht

24.262 billion and debenture facilities of Baht 10 billion. The subsidiary issued 2 series of the amortized

unsubordinated debentures, bearing the name of the holders, secured and with the debenture holder representative

to the general public and institutional investors. The first series amounted Baht 7,000 million with a 3 year

repayment period and a fixed interest rate of 3.67 percent per annum, while the latter valued Baht 3,000 million

with a 5 year repayment period and a fixed interest rate of 3.67 percent per annum for the first and second year

and Minimum Lending Rate (MLR) minus 2 per annum throughout the remaining periods. The debt restructuring

lowered the interest expenses of its subsidiary during 2005-2015 amounting to Baht 2,347.93 million. In addition,

the new loan agreement has released certain conditions, making its financial management more efficient.

4. Study of renewable energy-based power plants

To be prepared for the government policy on Renewal Portfolio Standard (RPS), Ratchaburi Energy

Company Limited, one of the Company’s subsidiaries, conducted a feasibility study on renewable energy especially

wind and biomass. Up to date, the company is able to specify 3 appropriate locations to generate power from

the wind energy. In addition, it also studied how to process wastewater, from tapioca production and 95 percent

purified alcohol manufacturing, into biogas for using in power generation. Simultaneously, the biogas-fired power

plant technology has been researched.

Meanwhile, on January 17, 2006, Ratchaburi Energy Company Limited entered a Gas Sales Agreement

with PTTEP Siam Limited and PTTEP Public Company Limited. According to the agreement, PTTEP Siam Limited

will supply Flare Gas for 8 years to a 2-megawatt power plant developed by the subsidiary. The supplied Flare Gas

produced from the Pratu Tao-A remote location where situated in the S1 or Sirikit oil field in Sukhothai province,

operated by PTTEP Siam Limited. It expected that the gas-fired power plant will commence generation testing

in late 2006.


5. TRIS Rating upgrades Company Rating to AA-

On June 15, 2005, TRIS Rating upgrades the company rating of Ratchaburi Electricity Generating Holding

Public Company Limited (the Company) from “A+” to “AA-”. The rating reflects stable dividends from its wholly-

owned operating subsidiary, Ratchaburi Electricity Generating Company Limited, its moderately conservative

investment policy and the company’s strong position to participate in an upcoming new round bidding of

independent power producer.

6. TRIS Rating upgrades Company Rating of Ratchaburi Electricity Generating Company Limited to AA

On June 15, 2005, TRIS Rating Company Limited upgraded company rating of the Company’s subsidiary,

Ratchaburi Electricity Generating Company Limited, from “AA-” to “AA”. The rating reflected the company’s stable

cash flow from well-designed project structures, state-of-the-art power plants, the operator’s long experience in

the power sector and the company’s proven record of managing its power plant operations.

7. Corporate Governance Awards

In 2005, the Company was widely recognized for its corporate governance practices from various

institutions as follows:

• The SET Award 2005 in category of the Best Corporate Governance Report: The award, which was

organized by the Stock Exchange of Thailand (SET) in collaboration with the Money & Banking Magazine, lauded

the Company as an outstanding listed firm for complying with the principles of corporate governance as

determined by the SET.

• The Company was ranked among the top 10 of 93 listed companies which were assessed

outstanding in corporate governance practice, in particularly information disclosure to public. The announcement

was made in the Corporate Governance Report of Thai Listed Companies 2005, which organized by the SET,

the Securities and Exchange Commission and the Institute of Directors (IOD).

• The Company’s Board of Directors was bestowed the Board of the Year Award 2004/2005

from the IOD in an event co-organized with the SET, The Thai Chamber of Commerce, the Federation of Thai

Industries, the Thai Bankers Association and the Association of Listed Companies. The award was given on the basis

of the Board of Directors’ policy, its structure, practices, relationship between internal departments and the public,

preparation of meetings and the Board of Directors’ leadership.

8. Recognition as one of 250 Top Global Energy Company by Platts

In December 2005, Platts, the world’s leading energy information service provider, announced its

recognition of outstanding financial and industry performance of the company in the Top 250 Global Energy

Company Rankings. The raking measured companies’ financial performance on using 5 criteria: total asset,

income, profit, Earnings Per Share (EPS) and Return On Invested Capital (ROIC). The Company was ranked 218th in

250 top energy company and was one of the only 3 Thai energy firms awarded in Platts 250 Top Global Energy

Company Rankings.

A n n u a l R e p o r t 2 0 0 5 8

M e s s a g e f r o m t h e C h a i r m a n o f t h e B o a r d o f D i r e c t o r s

To Shareholders,

During the past year, Ratchaburi Electricity Generating Holding Public

Company Limited (the Company) was able to formidably achieve its targets set

earlier in its business plan. We increased our investment in a 700-megawatt

Combined Cycle Power Plant belonged to Tri Energy Company Limited (Tri Energy)

located in Ratchaburi Province. Our subsidiary, Ratchaburi Gas Company Limited,

which is a shareholder of Tri Energy, additionally bought 4,279,750 shares totalling

12.50 percent of Tri Energy’s total shares for Baht 525.29 million, raising our

shareholding ratio in Tri Energy from 37.50 percent to 50 percent and our

production capacity by another 350 megawatts. In 2005, Tri Energy paid an interim

dividend worth Baht 483.15 million to Ratchaburi Gas Company Limited.

In addition, we also invested in the 615-megawatt Nam Ngum 2 Hydro

Power Plant in Lao PDR where SouthEast Asia Energy Limited is a project

developer. In this regard, on November 3, 2005, the Company signed a Shareholder

Agreement to buy 25 percent of all SouthEast Asia Energy Limited’s ordinary

shares from Ch. Karnchang Public Company Limited for a total of Baht 43.75

million. The investment prompts the Company to share 153.75 megawatts

production capacity based on its investment ratio. The project is currently being

developed and expected to generate power in mid of 2010.

Aside from large projects, small value-added projects which benefit the

society are no less important to us. One of our subsidiaries, Ratchaburi Energy

Company Limited, paid a total of Baht 20.33 million for Siam Ethanol Exports

Company Limited’s shares. Siam Ethanol Exports Company Limited is a joint

venture business that the Company’s Group currently holds 15 percent of the

shares therein. An alcohol manufacturing plant is being constructed and expected

to complete in late 2006. In addition, we plan to study on how to turn biogas from

the alcohol manufacturing plant’s wastewater into fuel for power generation. We

have studied a possibility on how to capitalize on flare gas, a by-product from

crude oil production, to generate the power, where in January 2006, Ratchaburi

Energy Company Limited inked a Gas Sales Agreement with PTTEP Siam Limited

and PTT Exploration and Production Public Company Limited to use the flare gas

by-product in a 2-megawatt natural gas power generation project for a total

period of 8 years. The project is expected to initially start generating power in

2007.

We have at the same time paid a great deal of attention to our financial

management. In the past year, the Company and our main subsidiary, Ratchaburi

Electricity Generating Company Limited, tried to reduce financial costs in a

purpose to strengthen its financial position. On July 25, 2005, Ratchaburi Electricity


Generating Company Limited refinanced its total Baht 34.262 billion loan whereby Baht 24.262 billion was done

through a long-term credit loan and the remaining Baht 10 billion was secured in a form of non-subordinated

secured debentures with name certificate and debenture holder representative of which the principal would be

periodically paid back to both institutional investors and the general public. The debentures consisted of 2 series

of the Baht 7-billion 3-year debentures with a fixed interest rate of 3.67 percent per annum and the Baht 3-billion

5-year debentures with a fixed interest rate of 3.67 percent during the first 2 years and MLR minus 2 percent per

annum for the remaining term. The refinance prompted Ratchaburi Electricity Generating Company Limited’s

interest expenses from 2005-2015 to reduce by approximately Baht 2,347.93 million. This year alone, we managed

to save approximately Baht 196 million worth of interest expenses and are expected to save around Baht 437

million in 2006.

In addition, on December 29, 2005, Ratchaburi Electricity Generating Company Limited signed

a Contractual Service Agreement with General Electric International Operations Co., Inc. and GE Energy Parts Inc.

worth a total of US$ 451 million. The agreement, with a 22 years’ term, obliges the latter 2 to provide spare parts to

and repair the Ratchaburi Combined Cycle Power Plant starting from the signing date to the last operation date of

the gas turbine as stated in the Power Purchase Agreement (PPA) with EGAT Public Company Limited. Such an

agreement will help Ratchaburi Electricity Generating to efficiently manage its maintenance costs while enabling

the Combined Cycle Power Plant to maintain its power generation availability more effectively.

Last year, the Company continued to register a steady performance growth. Its total incomes rose 10.94

percent from 2004 to Baht 44,836.83 million. However, in 2005, its major subsidiary, Ratchaburi Electricity

Generating Company Limited, which operates and runs the Ratchaburi Power Plant, suspended an entire operation

of the Ratchaburi Power Plant for scheduled maintenance, prompting its repairing cost to rise. In addition, the

major subsidiary also restructured its total debts to reduce interest expenses within the same year. This led to an

increase of Baht 498.04 million worth of sales and administration expenses from the same period a year ago. As

a result, this year’s net profit fell 6.48 percent to remain at Baht 6,066.36 million as compared to 2004.

In 2005, several major incidents took place, one of which was a fire at the Flue Gas Desulfurization (FGD)

of the Unit 1 Thermal Power Plant on October 13, 2005. The fire broke out while the FGD remained idle as it was

subjected to a maintenance based on the Unit 1 Thermal Plant’s maintenance schedule. Our main subsidiary was

able to control the fire within a short time and no injury or death was reported. Following the incident, the

Company set up a working committee to find out what had caused the fire and to repair the damaged FGD. Based

on initial technical information at the place of incident and a series of simulation tests based on possible

circumstances, it can be initially assumed that the fire was a result of negligence and inexperience of maintenance

staff in the FGD. In addition, it was also the fault of the operator, who dismayingly failed to comply with the

principles of safety first in workplace consisting of electricity flares as determined by the major subsidiary.

However, the cause of the fire is being investigated by the Damnoen Saduak District police station. Meanwhile, an

insurance company already paid a full amount of compensation as we had taken out an all-risk insurance covering

entire the Power Plants and their equipment in the complex. The restoration of the damaged FGD is expected

to complete by August 2007, which means the Unit 1 Thermal Power Plant will be able to use only natural gas as

fuel to generate power during the restoration period. On the other hand, both the Unit 2 Thermal Power Plant and

the three Blocks of the Combined Cycle Power Plant are still fully functional as usual. As a result, financial impacts

from the fire are kept minimal.

A n n u a l R e p o r t 2 0 0 5 10

M r . C h e r d p o n g S i r i w i t

C h a i r m a n

Another significant incident during the past year was an appointment of the Regulator Board of

Commission to temporarily oversee the power business. The Regulator was set up to formulate rules and

regulations for the bidding of new power plants during 2011-2015 to accommodate increasing electricity

demands. On August 25, 2005, the Meeting of the National Energy Policy Office (NEPO) allowed EGAT Public

Company Limited to be entitled to 50 percent of the newly-expanded production capacity during 2011-2015 while

the remaining 50 percent would be opened for other Independent Power Producers (IPPs) to bid in the

construction of new power plants. If the new bidding round will be open for all IPP equally, we believe that we are

highly competitive against other local and international bidders. We have an advantage of project site at

the existing Ratchaburi Power Plant location, necessary common facilities and environment management system

to accommodate an additional production capacity of approximately 700 megawatts, the Environmental Impact

Assessment Report already approved by the Office of Environmental Policy and Planning since March 2005, and

our ability to secure the much-needed capital as well as our extensive experience in running a power plant.

2005 was also the year of pride as various institutions recognized our management and operation

especially in aspect of corporate governance, which has been the main staple of the Company’s corporate

management. In December, Platts, the world’s leading energy information service provider, named the Company as

the world’s 218th top energy company in its Top 250 Global Energy Company Rankings, which was considered on

the basis of their total assets, incomes, profit, Earnings Per Share (EPS) and Return On Invested Capital (ROIC). In

addition, we also received the SET Award 2005 under category of the Best Corporate Governance Report, the Board

of the Year Award 2004/2005 from the Institute Of Directors (IOD) while the Company’s corporate governance

practice was “Very Good” in the assessment of Corporate Governance Report of Thai Listed Companies 2005

announced by the Stock Exchange of Thailand (SET), the Securities and Exchange Commission and the IOD.

All the success mentioned above has been the result of commitment and dedication of the Company’s

Board of Directors, the management and all staff alike. On behalf of Ratchaburi Electricity Generating Holding

Public Company Limited, I would like to express my deep appreciation to each and everyone of you who

collaborated to let us meet our own goals. I would also like to thank shareholders and all relevant parties who

trusted us and were strongly confident in us, which made us even more committed to nurture the Company

further for the maximum benefit of all parties.


A n n u a l R e p o r t 2 0 0 5 12

B o a r d o f D i r e c t o r s

Mr. Cherdpong Siriwit - Chairman

- Independent Director

- Chairman, Human Resources and Remuneration

Committee

Age 59

Education/Training

- Master of Economics, Georgetown University, U.S.A.

- Bachelor of Economics (Hons.), Thammasat University

- National Defence College (Class 40)

- Politics and Governance in Democratic Systems for

Executive (Class 5), King Prajadhipok’s Institute

- The Civil Service Executive Development Program

(Class 13), The Civil Service Training Institute

- Certificate, Chairman, Director Accreditation Program,

and Finance for Non-finance Director Program, IOD

Working Experiences Current

- Permanent Secretary, Ministry of Energy

Other Current Position Related to the Company’s Business

- Chairman, PTT Public Company Limited

- Chairman, PTT Exploration and Production Public

Company Limited

- Chairman, Thai Oil Public Company Limited

- Director, Thaioil Power Company Limited

Previous

- Deputy Permanent Secretary, Ministry of Industry

- Chairman, Electricity Generating Authority of Thailand

(EGAT)

- Secretary-General, Thai Industrial Standards Institute

(TISI), Ministry of Industry

- Director-General, Department of Mineral Resources

(DMR), Ministry of Industry

- Director-General, Office of Industrial Economics

- Deputy Director-General, Office of Industrial Economics

- Secretary-General, Office of the Cane and Sugar

Board, Office of the Permanent Secretary


Mr. Viravat Chlayon - Independent Director

- Chairman, Risk Management Committee

- Member, Audit Committee

Age 66

Education/Training

- Bachelor of Engineering (Mechanical Engineering),

Chulalongkorn University

- Certificate, Psychological Operations Staff Course,

Applied Psychology Institute

- National Defence College (Class 35)

- Certificate, Advanced Management Program

(AMP), Harvard Business School, Harvard University,

U.S.A.

- Certificate, Director Accreditation Program, and

Finance for Non-Finance Director Program, IOD


- Director, Suan Lung Rama IX Foundation

- Board member, The Institute for the Promotion

of Teaching Science and Technology

Previous

- Governor, EGAT

- President-Mineral Business, EGAT

- Deputy Governor-Administration, EGAT

- Chairman, Electricity Generating Public Company

Limited

Mr. Pala Sookawesh Director

Age 65

Education/Training

- Honorary Doctorate Degree in Engineering,


- M.S. in Industrial Engineering (Operation Research),

Oregon State University, U.S.A.

- Bachelor of Engineering (Electrical Engineering)

(2nd Class Honor), Chulalongkorn University

- The Joint State: Private Sector Regular Course,

the National Defence College (Class 3)

- Certificate, Advanced Management Program (AMP),

Harvard Business School, Harvard University, U.S.A.

- Certificate, Director Accreditation Program, IOD


- Chairman, the Aromatics (Thailand) Public

Company Limited


- Chairman, Ratchaburi Power Company Limited

- Chairman, Tri Energy Company Limited

- Director, Thai Oil Public Company Limited

- Director, PTT Exploration and Production Public

Company Limited

- Advisor to EGAT Public Company Limited’s Board

of Directors

- Director, Energy Fund Administration Institute

(Public Organization)

Previous

- Governor, Petroleum Authority of Thailand (PTT)

- Executive Vice President, Oil Business, PTT

- Duputy Governor for Supply & Refinery Oil, PTT

- Duputy Governor for Natural Gas Operation, PTT

Mr. Suchart Thada-Thamrongvech - Independent Director

- Chairman, Audit Committee

- Member, Risk Management Committee

Age 53

Education/Training

- Ph.D., Economics, McMaster University, Canada

- M.Sc., Economics, The London School of Economics

and Political Science, United Kingdom

- Bachelor of Economics (Hons.), Thammasat

University

- Diploma in National Defence Course, The National

Defence College (Public and Private Program:

Class 1)

- Certificate, Director Certificate Program, Director

Accreditation Program, Finance for Non-Finance

Director Program, Audit Committee Program,

and Fostering a Board and Management Team,

IOD


- Eminent Advisor to the Prime Minister in the Field

of Economics

- Assoc. Prof. of Economics, Faculty of Economics,

Ramkhamhaeng University

- Director, Rice Policy Committee

- Director, Petroleum Committee

- Advisor to the Board of Investment

- Director, Securities and Exchange Commission

(SEC)

- Independent Director and Audit Committee,

Siam City Bank Public Company Limited

- Director, Council of the North Eastern University


- Independent Director and Audit Committee,

PTT Public Company Limited

Previous

- Policy Advisor of the Minister of Energy

- Advisor to the Minister of Commerce

- Director, Metropolitan Waterworks Authority

- Director, Bank for Agriculture and Agricultural

Cooperatives

- Director, Bangkok Metropolitan Bank Public

Company Limited

- Director, Provincial Waterworks Authority

- Vice Rector for International Affairs and Research,

Ramkhamhaeng University

A n n u a l R e p o r t 2 0 0 5 14

Mr. Sujarit Patchimnun Director

Age 60

Education/Training

- Master of Political Science, Thammasat University

- Bachelor of Political Science, Thammasat University

- Certificate, Director Accreditation Program, IOD


- Permanent Secretary, Ministry of Interior


- Director, EGAT Public Company Limited

- Director, Provincial Electricity Authority

Previous

- Director-General, Department of Provincial

Administration, Ministry of Interior

- Director-General, Community Development

Department, Ministry of Interior

- Governor of Chonburi Province

- Governor of Nonthaburi Province

- Governor of Nakornpanom Province

Mr. Viroj Klangboonkrong - Independent Director


- Member, Risk Management Committee

Age 61

Education/Training

- Master of Engineering, Asian Institute of Technology

- Master of Business Administration, Thammasat

University

- Bachelor of Engineering, Chulalongkorn University

- Certificate, Director Certificate Program, Director

Accreditation Program, Audit Committee, and

Finance for Non-Finance Director Program, IOD


- Director, Ratchaburi Electricity Generating Holding


Previous

- Director-General, Department of Energy Business,

Ministry of Energy

- Chief Engineers for Building and Public Safety

Control (Level 10), Public Works Department,

Ministry of Interior

- Chief Engineers for Gas and Fuel Safety Regulation

(Level 9), Public Works Department, Ministry of

Interior

- Director, Gas and Fuel Safety Regulation Division,

Public Works Department, Ministry of Interior

- Secretary, Public Works Department, Ministry

of Interior

Mr. Kraisi Karnasuta Director

Age 58

Education/Training

- Master of Engineering (Electrical Engineering),

University of Washington, U.S.A.

- Bachelor of Engineering (Electrical Engineering),


- Certificate, National Defence College (Class 43)

- Certificate, Advanced Management Program

(AMP), Harvard Business School, Harvard University,

U.S.A.

- Certificate, Director Certificate Program, IOD


- Director and Chief Executive Officer,

EGAT Public Company Limited


- Director, EGAT Public Company Limited

- Director, Ratchaburi Electricity Generating Company

Limited

Previous

- Deputy Governor-Policy and Planning, EGAT

- President, Electricity Generating Public Company

Limited

- President-Maintenance Business, EGAT

- Assistant Governor-Transmission System Operation,

EGAT

- Director-System Control and Operation Division,

EGAT


Mr. Kumphuy Jirararuensak - Director

- Member, Human Resources and Remuneration

Committee

Age 59

Education/Training

- Bachelor of Engineering (Electrical Engineering)




- President, Transmission Business, EGAT Public

Company Limited


- Chairman, Ratchaburi Energy Company Limited

Previous

- Senior Deputy Governor-Transmission System

Group, EGAT

- Deputy Governor-Transmission System Business,

EGAT

- Assistant Governor-Transmission System Operation,

EGAT

- Vice President-Generation Business1-Power Plant,

EGAT

- Director, Northeastern Region Operation Division,

EGAT

- Director, Transmission System Maintenance

Division, EGAT

Mr. Narong Sitasuwan Director

Age 57

Education/Training

- Master of Engineering (Mechanical and Aerospace

Engineering), Illinois Institute of Technology,

U.S.A.

- Bachelor of Engineering (Mechanical Engineering)


- Electralis 2001, Belgium

- Eighth International Training Program on Utility

Regulation & Strategy, University of Florida,

U.S.A.

- Positioning Utility Executives in Globalization

Era, U.S.A.



- President, Generation Business, EGAT Public Company Limited

Previous

- Senior Deputy Govornor-Generation Group, EGAT

- Director, Electricity Generating Public Company

Limited

- President-Maintenance Business, EGAT

- Vice President-Maintenance Business, EGAT

- Mechanical Maintenance Manager, EGAT

Mr. Chulasingh Vasantasingh Director

Age 55

Education/Training

- Master of Comparative Law (MCL.), University of

Illinois, U.S.A.

- Bachelor of Laws (LLB.) (Hons), Chulalongkorn

University

- Barrister-at-Law, the Institution of Legal Education

- Degree, National Defence College

- Certificate, Harvard Business School, U.S.A.



- Deputy Attorney General

- Director, Thai Bar Association

- Director, The property of Chulalongkorn University


- Director, PTT Exploration and Production Public

Company Limited

- Director and member of Executive Committee,

EGAT Public Company Limited

- Director and member of Procurement Committee,

Metropolitan Electricity Authority

Previous

- Inspector-General, Department of Inspector

General, Office of the Attorney General

- Director-General, Department of Legal Counsel,

Office of the Attorney General

- Director-General, Department of Litigation of

Attorney General, Office of the Attorney General

- Director-General, Department of International

Affairs, Office of the Attorney General

- Director, Eastern Water Resources Development

and Management Public Company Limited

- Director and member of Audit Committee, New

Bangkok International Airport Public Company

Limited

- Director, Mass Communication Organization of

Thailand

A n n u a l R e p o r t 2 0 0 5 16

Mr. Areepong Bhoocha-oom - Independent Director


- Member, Human Resources and Remuneration

Committee

Age 48

Education/Training

- Ph.D. Finance, University of Mississippi, U.S.A.

- Master of Business Administration (Finance),

Marshall University, U.S.A.

- Bachelor of International Management,

Boston University, U.S.A.



- Deputy Director-General, State Enterprise Policy

Office

- Director, Airports of Thailand Public Company

Limited


- Director, Ratchaburi Electricity Generating

Company Limited

Previous

- Director, Ratchaburi Energy Company Limited

- Director, Padaeng Industry Public Company

Limited

- Director, Krungthai Card Public Company Limited

- Director, Office of State Enterprise and Government

Securities, Ministry of Finance

Mr. Chanin Vongkusolkit Director

Age 53

Education/Training - Master of Business Administration (Finance),

St.Louis University, U.S.A.

- Bachelor in Economics, Thammasat University



- Director and Chief Executive Officer,

Banpu Public Company Limited

- Director, Federation of Thai Capital Market

Organizations

- Director, Listed Companies Association

- Director, The Erawan Group Public Company

Limited

- Director, Mitr Phol Sugar Corp., Ltd.


- Director, BLCP Power Limited

Previous

- Director, Tri Energy Company Limited

- Director, United Standard Terminal Public Company

Limited

- Director, United Securities Public Company Limited

Mr. Boonchoo Direksathapon - Director

- Managing Director

Age 60

Education/Training

- Bachelor Degree of Accounting (2nd Class Honor),


- Fellow Member of the Institute of Chartered

Accountants in England & Wales

- Diploma, National Defence College

- Diploma, The Senior Executive Program, SASIN

Graduate Institute of Business Administration,


- Diploma, The Finance for Senior Executives

Course and The Program for Management

Development (PMD), Harvard Business School,

Harvard University, U.S.A.

- Diploma, Fellow Member of Thai Institute of

Directors Association



- Chief Financial Officer, EGAT Public Company

Limited (Oct 1, 05-Jan 16, 06)

- Director and Member of Audit Committee,

Advanced Info Service Public Company Limited

- Director, SCB Asset Management Company

Limited


- Director, Ratchaburi Electricity Generating Company

Limited



- Director, Ratchaburi Power Company Limited

- Director, Siam Ethanol Exports Company Limited

Previous

- Chairman, Ratchaburi Alliances Company Limited

- Chairman, Ratchaburi Gas Company Limited

- Chairman, Ratch Udom Power Company Limited

- Acting Managing Director, Ratchaburi Electricity

Generating Company Limited

- Deputy Governor-Account and Finance, and

Acting Deputy Governor-Administration, EGAT


10 9 8 7 2 1 3 4 5 6

1. Mr. Boonchoo Direksathapon

2. Mr. Thawat Vimolsarawong

3. Ms. Vajana Angsukomutkul

4. Mr. Vatchara Noomahan

5. Mr. Thoedpan Indramaha

6. Mr. Peerawat Pumthong

7. Mrs. Arunee Rojanapenkul

8. Mr. Ni-run Wongchanglor

9. Mrs. Darunee Abhinoraseth

10. Mr. Prayut Thongsuwan

E x e c u t i v e O f f i c e r s

A n n u a l R e p o r t 2 0 0 5 18

Mr. Boonchoo Direksathapon Managing Director

Age 60

Education/Training

- Bachelor Degree of Accounting (2nd Class Honor),


- Fellow Member of the Institute of Chartered

Accountants in England & Wales

- Diploma, National Defence College

- Diploma, The Senior Executive Program, SASIN



- Diploma, The Finance for Senior Executives

Course and The Program for Management

Development (PMD), Harvard Business School,

Harvard University, U.S.A.

- Diploma, Fellow Member of Thai Institute of

Directors Association



- Managing Director, Ratchaburi Electricity

Generating Holding Public Company Limited

- Chief Financial Officer, EGAT Public Company

Limited (Oct 1, 05-Jan 16, 06)

- Director and Member of Audit Committee,

Advanced Info Service Public Company Limited

- Director, SCB Asset Management Company

Limited


- Director, Ratchaburi Electricity Generating

Company Limited



- Director, Ratchaburi Power Company Limited

- Director, Siam Ethanol Exports Company Limited

Previous


- Chairman, Ratchaburi Gas Company Limited

- Chairman, Ratch Udom Power Company Limited

- Acting Managing Director, Ratchaburi Electricity

Generating Company Limited

- Deputy Governor-Account and Finance and Acting

Deputy Governor-Administration, EGAT

Mr. Thawat Vimolsarawong Deputy Managing Director-Business Ventures

Age 56

Education/Training

- Bachelor of Engineering, Chulalongkorn University

- Certificate, Effective Leadership Management,

Strategic Resources International, U.S.A.

- Certificate, Strategic Asset Management, Power

Management Institute, U.S.A.

- Certificate, Global Leadership 2000, School of

Business and Economics, Institute of Research

and Business Development, U.S.A.

- Certificate, Global 2000 Strategic Management,

University of California, U.S.A.

- Certificate, Psychological Operations Staff Course,

Applied Psychology Institute

- Certificate, The Senior Executive Program, SASIN




- Deputy Managing Director-Business Ventures,

Ratchaburi Electricity Generating Holding Public

Company Limited


- Director and Managing Director,

Ratchaburi Energy Company Limited

- Executive Director, Ratchaburi Power Company

Limited

- Executive Director, SouthEast Asia Energy Limited

- Director, Chubu Ratchaburi Electric Services

Company Limited


Previous

- Director, Mechanical Maintenance Division, EGAT

- Manager, Maintenance Service Management

Division, EGAT

- Manager, Maintenance Service Management

Sub-division, EGAT

Ms. Vajana Angsukomutkul Deputy Managing Director-Accounting and

Finance

Age 59

Education/Training - Master of Business Administration (Executive),

SASIN Graduate Institute of Business Administration,


- Bachelor of Accountancy (2nd Class Honor),


- Certificate Program, Chief Financial Officer (CFO),

Federation of Accounting Professions


- Deputy Managing Director-Accounting and Finance,


Company Limited


- Director and Managing Director, Ratch Udom Power

Company Limited

- Director and Managing Director, Ratchaburi Gas

Company Limited

- Director and Managing Director, Ratchaburi Alliances

Company Limited

- Director, Tri Energy Public Company Limited

Previous

- Assistant Director, Controller Division, EGAT

- Chief, Account Finance and Budget Report and

Analysis Department, Controller Division, EGAT


Mr. Vatchara Noomahan Senior Director

Age 53

Education/Training

- Master Degree in Management, SASIN Graduate

Institute of Business Administration, Chulalongkorn

University

- Master Degree in Electrical Engineering,


- Bachelor Degree in Electrical Engineering, (the

Second Class Honors), Kasetsart University


- Senior Director, seconded to be the President

of Tri Energy Company Limited

Previous

- Senior Vice President Level 12, Banpu Public

Company Limited Group, seconded to be the

President of Tri Energy Company Limited

- Vice President Level 11, Banpu Public Company

Limited Group, seconded to be the Operations

Director of Tri Energy Company Limited

- Assistance Vice President of Business Development–

Power, Banpu Public Company Limited

- Chief of Operation Training Division–Training

Department, EGAT

- Shift Charge Engineer–North Bangkok Power

Plant, EGAT

- Unit Engineer–South Bangkok Power Plant, EGAT

Mr. Peerawat Pumthong Senior Director, Business Management Division

Age 47

Education/Training

- Master of Business Administration,

Monash University, Australia, Certificate of Merit

in International Business

- Master of Engineering, Asian Institute of Technology

(AIT)

- Bachelor of Engineering (2nd Class Honor),

Khonkaen University

- Certificate in ASEAN Executive Development

Program, Business School, Thammasat University

- Certificate in Electric Power Development from

Swedish Board of Investment and Technical

Support (BITS), Sweden


- Senior Director, Business Management Division,


Company Limited


- Acting Deputy Managing Director, Ratchaburi

Energy Company Limited

- Acting Deputy Managing Director, Ratchaburi

Energy Company Limited

- Advisor to the Senate Standing Committee on

Economics, Commerce and Industry

Previous

- Chief, Business Venture Group Portfolio Management

Division, EGAT

- Chief, Contract Negotiation and Management

Group, Domestic Power Purchase Division, EGAT

- Chief, Engineering and Project Implementation

Group, Business Venture Division, EGAT

Mr. Ni–run Wongchanglor Senior Director

Age 45

Education/Training

- Master of Management, Asian Institute of Management

(AIM), Philippines

- Bachelor of Arts - Accounting, Thammasat University


- Senior Director, seconded to be the Director of Finance

and Accounting of Tri Energy Company Limited


- Director, Finance and Accounting, Tri Energy Company

Limited

Previous

- Vice President level 11, Banpu Public Company Limited

Group, seconded to be the Director–Finance and

Accounting of Tri Energy Company Limited

- Senior Manager–Investment Division, Banpu Public

Company Limited

- Senior Manager–Finance Division, Banpu Public

Company Limited

- Manager–Finance Division, Banpu Public Company

Limited

- Assistance Finance Manager–Finance and Accounting

Division, Banpu Public Company Limited

- Senior Project Finance officer, The Industrial

Finance Corporation of Thailand (IFCT)

A n n u a l R e p o r t 2 0 0 5 20

Mrs. Arunee Rojanapenkul Director, Finance Division

Age 58

Education/Training

- Bachelor of Accountancy, Chulalongkorn

University

- Certificate Program, Chief Financial

Officer (CFO), Federation of Accounting

Professions

- Certificate, The Senior Executive Program,

SASIN Graduate Institute of Business

Administration, Chulalongkorn University

- Certificate, Advanced Mini MBA,


- Certificate, Mini MBA, Chulalongkorn

University


- Director, Finance Division, Ratchaburi

Electricity Generating Holding Public

Company Limited


- Director, Ratchaburi Gas Company Limited

Previous

- Director, Accounting Division of Ratchaburi


Company Limited

- Accountant Level 10, Chief-Financial

Analysis and Budgeting Group, Domestic

Power Purchase Division, EGAT

- Accountant Level 10, Chief-Financial

Analysis Group, Business Venture Division,

EGAT

- Assistant Chief, Accounting Department,

Accounting Division, EGAT

Mrs. Darunee Abhinoraseth Director, Accounting Division

Age 55

Education/Training

- Master of Business Administration

(Executive), SASIN Graduate Institute of

Business Administration, Chulalongkorn

University

- Bachelor of Accountancy (2nd Class Honor),





- Certificate, Certified Investment and

Securities Analysts (CISA) Level 1 (Academic

Year 2002), Securities Analysts Association

- Certificate Program, Chief Financial

Officer (CFO), Federation of Accounting

Professions


- Director, Accounting Division, Ratchaburi


Company Limited


- Director, Ratch Udom Power Company

Limited

Previous

- Director, Accounting Division of Ratchaburi


Company Limited

- Assistant Director, Portfolio Management

Division, EGAT

- Accountant Level 10, Portfolio Management

Division, EGAT

- Chief-General Accounting Department,

Accounting Division, EGAT

Mr. Prayut Thongsuwan Director, General Administration

Division

Age 47

Education/Training

- Master of Public and Private Management,

The National Institute of Development

Administration

- Bachelor of Political Sciences (Public

Administration), Thammasat University

- Certificate, Asean Executive Program,

General Electric International Operation

Company, Inc., U.S.A.




- Certificates of Advanced Mini MBA,



- Director, General Administration Division,

Ratchaburi Electricity Generating Holding


- Director, Ratchaburi Power Plant

Communication Center

Previous

- Chief-Procurement and General Services

Department, Demand Side Management

and Planning Division, EGAT

- Assistant Chief-Appliances Efficiency

Improvement Project, Demand Side

Implementation Division, EGAT

- Head-Personnel Section, Demand Side

Management Office, EGAT

Mr. Thoedpan Indramaha Director, Internal Audit Division

Age 50

Education/Training

- Bachelor of Accountancy, Chulalongkorn

University





- Director, Internal Audit Division, Ratchaburi


Company Limited

Previous

- Chief-Computer Audit Department, Internal

Audit Division, EGAT

- Assistant Chief-Computer Audit Department,

Internal Audit Division, EGAT

- Assistant Chief-Audit Department 4,

Internal Audit Division, EGAT

A n n u a l R e p o r t 2 0 0 5 22

1 Mr. Cherdpong Siriwit 5/, 11/ 12 707,500.00 12 1,250,000.00 1,957,500.00

2 Mr. Areepong Bhoocha-oom 7/, 8/, 11/ 12 638,000.00 12 1,000,000.00 1,638,000.00

3 Mr. Viroj Klangboonkrong 7/, 10/, 11/ 12 584,000.00 12 1,000,000.00 1,584,000.00

4 Mr. Sujarit Patchimnun 12 440,000.00 12 1,000,000.00 1,440,000.00

5 Mr. Pala Sookawesh 12 460,000.00 12 1,000,000.00 1,460,000.00

6 Mr. Suchart Thada-Thamrongvech 6/, 10/, 11/ 12 618,000.00 12 1,000,000.00 1,618,000.00

7 Mr. Viravat Chlayon 7/, 9/, 11/ 12 636,000.00 12 1,000,000.00 1,636,000.00

8 Mr. Kumphuy Jirararuensak 8/ 12 576,000.00 12 1,000,000.00 1,576,000.00

9 Mr. Narongsak Vichetpan 2/ 9 360,000.00 12 1,000,000.00 1,360,000.00

10 Mr. Apai Chandanachulaka 3/ - - 5 396,174.86 396,174.86

11 Mr. Chanin Vongkusolkit 12 450,000.00 12 1,000,000.00 1,450,000.00

12 Mr. Silchai Thirawat 3/ - - 9 715,846.99 715,846.99

13 Mr. Chulasingh Vasantasingh 12 460,000.00 6 527,322.40 987,322.40

14 Mr. Kraisi Karnasuta 12 460,000.00 2 166,666.67 626,666.67

15 Mr. Boonchoo Direksathapon 12 - 12 1,000,000.00 1,000,000.00

16 Mr. Narong Sitasuwan 1/ 3 120,000.00 - - 120,000.00

Total 6,509,500.00 13,056,010.92 19,565,510.92

Remuneration for the Company’s Directors and Executives

Monetary Remuneration

Significant Criteria

1. A director’s bonus was allocated in accordance with the period of holding office. In case of the director

holding two posts, the director shall receive a bonus from the major company (the company that allocates

a higher bonus payment) for the particular period.

2. A director who was an executive director did not receive a meeting allowance, but received the bonus as

a director.

3. The meeting allowance of Ratchaburi Electricity Generating Holding Public Company Limited consisted

of meeting allowance for the Board of Directors, the Audit Committee, the Human Resources and

Remuneration Committee, and the Risk Management Committee.

1) Ratchaburi Electricity Generating Holding Public Company Limited

1.1 Remuneration for the Board of Directors

Holding Holding

No. Names

Period Meeting Period of Bonus4/

Total

of 2005 Allowance 2004 Remuneration

(months) (months)

Unit : Baht


Notes : The Board of Directors consists of 13 members

1/ In the year 2005, one new director was appointed to the Board.

- Mr. Narong Sitasuwan was assigned on October 1, 2005 2/ In the year 2005, one director resigned from the Board.

- Mr. Narongsak Vichetpan resigned on October 1, 2005

3/ In the year 2004, there were two directors who resigned and retired from the Board.

4/ Bonus for the Board of Directors in 2004 were paid in April 2005 following the resolution of the Annual General Meeting of

Shareholders on April 20, 2005.

5/ Chairman of the Board of Directors and the Chairman of the Human Resources and Remuneration Committee

6/ Chairman of the Audit Committee

7/ Audit Committee

8/ Human Resources and Remuneration Committee

9/ Chairman of the Risk Management Committee

10/ Risk Management Committee

11/ Independent Director

1.2 Remuneration of the Company’s Executives

Remuneration Number of persons Amount

Salaries 10 27.395

Bonuses 10 12.614

Provident Fund 10 1.370

Total 41.379

Unit : Million Baht

2) Ratchaburi Electricity Generating Company Limited Unit : Million Baht

1/ The Board of Directors consisted of 9 members. During the year, there were directors vacating office and being reappointed to hold office on

various occasions.


2.1 Board of Directors

Meeting Allowance 12 1/ 2.890

Bonuses 10 7.250

Total 10.140

2.2 Executives

Salaries 5 11.866

Bonuses 5 5.055


Total 17.514

A n n u a l R e p o r t 2 0 0 5 24

4) Ratchaburi Gas Company Limited, Ratch Udom Power Company Limited, and Ratchaburi Alliance

Company Limited

The Directors and executives of these companies did not receive remuneration because they were

appointed from the executives of Ratchaburi Electricity Generating Holding Public Company Limited’s Group.

3) Ratchaburi Energy Company Limited

Unit : Million Baht


3.1 Board of Directors

Meeting Allowance 12 1/ 2.107

Bonuses 11 1.077

Total 3.184

3.2 Executives

Salaries 2 2/ 2.397

Bonuses 2 0.714


Total 3.231

1/ The Board of Directors consisted of 8 members. During the year, there were directors vacating office and being reappointed to hold office on

various occasions.

2/ This excluded two executives who were assigned by the Ratchaburi Electricity Generating Holding Public Company Limited

Ratchaburi Electricity Generating Holding Public Company Limited’s and the Grouped Companies’ Securities held by the Directors and the Executives of the Company as at December 31, 2005

The Abbreviations of Companies’s Names: (1) RATCH = Ratchaburi Electricity Generating Holding Public Company Limited (2) RG = Ratchburi Electricity Generating Company Limited (3) RE = Ratchaburi Energy Company Limited (4) RGAS = Ratchaburi Gas Company Limited. (5) RUPC = Ratch Udom Power Company Limited

(6) RA = Ratch Alliances Company Limited (7) TECO = Tri Energy Company Limited (8) RPCL = Ratchaburi Power Company Limited (9) Siam Ethanol = Siam Ethanol Exports Company Limited (10) CRESCO = Chubu Ratchaburi Electric Services Company Limited (11) SEAN = SouthEast Asia Energy Limited

Notes: 1 The numbers of RATCH shares held by the Directors and the Executives of RATCH have included those held by their spouse and their minor children (in accordance with the SEC regulation No. Sor jor 14/2540).

2 The numbers of the debentures and common shares of the Joint Ventures companies’s held by the Directors and the Executives of RATCH represent only the part that held by each Director and the Executive solely (in accordance with the Public Company Limited Act, Section 88 (2)).

3 The numbers of Ratchaburi Electricity Generating Company Limited debenture 1/2005 in this table represent the debenture holdings of each Director and Executive solely.

3.1 Ratchaburi Electricity Generating Company Limited debenture 1/2005 Series 1: 3 years , issued July 29, 2005, at the value of Baht 1,000 per unit

3.2 Ratchaburi Electricity Generating Company Limited debenture 1/2005 Series 2: 5 years, issued July 29, 2005, at the value of Baht 1,000 per unit

4 Mr. Narong Sitasuwan was assigned to be the Company’s Director in place of Mr. Narongsak Vichetpan, who resigned by his retirement from EGAT Public Company Limited, effective from October 1, 2005 onwards (by the resolution of the Board of Directors Meeting No. 11/2005 dated September 19, 2005).

5 Mr. Thawat Vimolsarawong was assigned to be the Deputy Managing Director-Business Ventures in place of Mr. Smarn Pongprapaphan who resigned by his retirement from RATCH on December 31, 2004 , effective from January 25, 2005 onwards (by the resolution of the Board of Directors Meeting No. 12/2004 dated

December 21, 2004).

6 The Shareholdings of the Directors and the Executives that resigned from his/her positon during the Year 2005 represent the number of securities held that person until the date of his/her retirement or resignation from the Company.

Unit : Share

1 Mr. Cherdpong Siriwit Chairman _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

2 Mr. Viroj Klangboonkrong Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

3 Mr. Sujarit Patchimnun Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

4 Mr. Pala Sookawesh Director _ _ _ _ _ _ _ 1 _ _ _ _ _ _ _

5 Mr. Suchart Thada-Thamrongvech Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

6 Mr. Kraisi Karnasuta Director 12,700 12,700 _ _ _ _ _ _ _ _ _ _ _ _ _

7 Mr. Viravat Chlayon Director 8,500 8,500 _ _ _ _ _ _ _ _ _ _ _ _ _

8 Mr. Kamphuy Jirararuensak Director 21,719 21,719 _ _ _ _ _ _ _ _ _ _ _ _ _

9 Mr. Narong Sitasuwan(4) Director _ 50,000 _ _ _ _ _ _ _ _ _ _ _ _ _

10 Mr. Areepong Bhoocha-oom Director 10,000 10,000 _ 1 _ _ 1 _ _ _ _ _ _ _ _

11 Mr. Chanin Vongkusolkit Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

12 Mr. Chulasingh Vasantasingh Director _ _ _ _ 2,000 _ _ _ _ _ _ _ _ _ _

13 Mr. Boonchoo Direksathapon Managing Director 69,576 69,576 _ 1 _ _ 1 1 1 1 _ _ _ _ _

14 Mr. Thawat Vimolsarawong(5) Deputy Managing Director -

Business Ventures _ 7,938 _ _ _ _ _ _ _ _ _ _ _ 1 1

15 Ms. Vajana Angsukomutkul Deputy Managing Director -

Accounting and Finance 180,000 1,000 -179,000 _ _ _ 1 1 1 1 _ _ _ _ _

16 Mr. Thoedpan Indramaha Division Director - Internal Audit 29,000 29,000 _ _ _ _ _ _ _ _ _ _ _ _ _

17 Mr. Peerawat Pumthong Senior Division Director -

Business Management _ _ _ _ _ _ _ 1 1 1 _ _ _ _ _

18 Mr. Prayut Thongsuwan Division Director -

General Admistration 7,300 _ (7,300) _ _ _ _ _ 1 1 _ _ _ 1 1

19 Mrs. Arunee Rojanapenkul Division Director - Finance _ _ _ _ _ _ _ _ 1 1 _ _ _ 1 1

20 Mrs. Darunee Abhinoraseth Division Director - Accounting 5,300 5,300 _ _ _ _ _ _ 1 1 _ _ _ _ _

21 Mr. Vatchara Noomahan Senior Division Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

22 Mr. Ni-run Wongchanglor Senior Division Director _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

The Shareholdings of the Directors and the Executives that resigned from his/her positon during the Year 2005(6)

1 Mr. Narongsak Vichetpan Director 50,749 50,749 _ _ _ _ _ _ _ _ _ _ _ _ _

RATCH Affiliated Companies Joint Ventures

Common Share(1) RG RE RGAS RUPC RA TECO RPCL Siam Ethanol CRESCO SEAN

Debenture Debenture

Name Position As at December 31 Increased/ Common 1/2005 1/2005 common common common common common common common common common

(Decreased) Share Series 1(3.1) Series 1(3.2) Share(2) Share(2) Share(2) Share(2) Share(2) Share(2) Share(2) Share(2) Share(2)

Year 2004 Year 2005 (Unit) (Unit)

A n n u a l R e p o r t 2 0 0 5 28

M a n a g e m e n t S t r u c t u r e

Board of Directors

At present, the Company’s Board of Directors consists of 13 members as follows;

No. Director’s Name Position

1. Mr. Cherdpong Siriwit - Chairman (Independent Director)

Second-term Director - Chairman of the Human Resources and Remuneration

Committee

2. Mr. Viravat Chlayon - Independent Director

Second-term Director - Chairman of the Risk Management Committee

- Audit Committee

3. Mr. Pala Sookawesh - Director

Second-term Director

4. Mr. Suchart Thada-Thamrongvech - Independent Director

Second-term Director - Chairman of the Audit Committee

- Risk Management Committee

5. Mr. Sujarit Patchimnun - Director

Second-term Director

6. Mr. Viroj Klangboonkrong - Independent Director

Second-term Director - Audit Committee

- Risk Management Committee

7. Mr. Kraisi Karnasuta - Director

First-term Director

8. Mr. Kumphuy Jirararuensak - Director

Second-term Director - Human Resources and Remuneration Committee

9. Mr. Narong Sitasuwan - Director

First-term Director

10. Mr. Chulasingh Vasantasingh - Director

First-term Director

11. Mr. Areepong Bhoocha-oom - Independent Director

Third-term Director - Audit Committee

- Human Resources and Remuneration Committee

12. Mr. Chanin Vongkusolkit - Director

First-term Director

13. Mr. Boonchoo Direksathapon - Director

Third-term Director - Managing Director

- Secretary to the Board of Directors


Directors are appointed by the Shareholders’ Meeting at the Annual General Meeting of Shareholders with

an exception to resigning directors whom the Board of Directors allowed to appoint new directors to replace

them according to the Company’s Articles of Association.

At every Annual General Meeting of Shareholders, one-third of all directors shall resign where those who

have been in the position for the longest period shall resign on rotation. Directors who leave on rotation may be

re-elected. Directors of the Company meanwhile remain in for no more than three consecutive terms and they

shall not exceed a full 72 years old. Chairman of the Board must be non-executive director and must not be

Managing Director. The Chairman must be elected by directors of the Board.

As a shareholder’s representative, the Board of Directors has a duty to manage all the Company’s

businesses, formulate and approve policies and operation plans as well as supervise the management’s operations

to ensure that they strictly comply with the policies under legal framework, the Articles of Association, resolutions

of the Shareholders’ Meeting, relevant rules and regulations, and business ethics that meet the Company’s

objectives in order to achieve the efficiency and effectiveness.

At present, the Managing Director is appointed as Secretary to the Board of Directors where the “Corporate

Secretary Department” has been set up to manage the Board of Directors’ meetings, its administration work and

coordination activities.

Independent Directors

Independent Director according to the definition in the Company’s Regulations regarding Board of

Directors means director who is not representing major shareholders, can work independently from major

shareholders, executives and related persons, is neither senior executive, nor staff or consultant receiving salary by

the Company, is not a member Executive Committee of the Company (at present, the Company still has no

Executive Committee), either holds no more than 0.5 percent of paid-up capital of the Company, its subsidiaries,

affiliates, joint venture companies or other relevant firms, can take care of all shareholders’ interests on an equal

basis and, finally, has no conflicts of interest with the Company and can attend the Board of Directors’ Meeting to

make important decisions. To nominate an Independent Director, the Company is to follow the nomination

procedures of directors and senior executive, details of which are in Page 32

Of the 13-members of the Board of Directors, five are independent directors based on the definition

described above. They are:

1. Mr. Cherdpong Siriwit

2. Mr. Suchart Thada-Thamrongvech

3. Mr. Viravat Chlayon

4. Mr. Viroj Klangboonkrong

5. Mr. Areepong Bhoocha-oom

Independent Directors must make decisions independently to ensure that all policies, operation plans and

day-to-day management are in line with the laws, objectives, regulations and resolutions of the Shareholders’

Meeting to ensure fair treatment of Shareholder’s interests.

A n n u a l R e p o r t 2 0 0 5 30

The Audit Committee

The entire Audit Committee of the Company consists of four independent directors appointed by the Board

of Directors with expertise, experiences and qualifications as determined by the Stock Exchange of Thailand (SET),

having the management executive act as the Secretary to the Committee. Details are as follows;

1. Mr. Suchart Thada-Thamrongvech Chairman

2. Mr. Viravat Chlayon Member

3. Mr. Viroj Klangboonkrong Member

4. Mr. Areepong Bhoocha-oom Member

5. Mr. Thoedpan Indramaha Director of the Internal Audit Division

acting as the Secretary to the Audit Committee

The Audit Committee performs its tasks as described in the Company’s Regulations already approved by

the Board of Directors whereby it is required to accurately and adequately audit the Company’s financial

statements, make sure that the Company has put an appropriate and effective internal control and internal

auditing system in place and review that the Company has complied with the laws governing Securities and

Exchange commission, the Stock Exchange of Thailand’s rules and regulations or legislations relating to the

Company’s business. When performing their duties, members of the Audit Committee are empowered to invite

directors, staffs or employees regardless of their positions to attend the meeting to clarify and answer any question

relating to the Committee’s duties and responsibilities. Other tasks include discussing with the Company’s expert

or consultant (if any) or hiring a third-party consultant or specialist from time to time at the Company’s costs.

The Audit Committee also has a duty to select, propose, appoint and recommend an auditor and the

auditor’s fee for the Company and its subsidiaries for the Board of Directors’ approval, which will then be proposed

to the Shareholders’ Meeting for further consideration. The same Audit Committee will also review the disclosure

of the Company’s information in case there is any connected transaction or if the transaction leads to a conflict

of interest. Finally, the Audit Committee is responsible for putting together the Audit Committee’s report to

be signed by Chairman of the Audit Committee and currently disclosed in the Company’s Annual Report, Page 80

The Audit Committee also has a significant role to audit the Internal Audit Division’s operation in several

matters. It is required to approve its scopes of operation, an annual auditing plan, budget and personnel where

approval will be made based mainly on their responsibilities. The Committee also reviews the appointment,

reshuffle or termination of Director of the Internal Audit Division as well as report results of the Internal Audit

Division’s operation and its status of independence.

In 2005, the Audit Committee convened four times in February, May, August, and November. All directors

attended the meetings.

The Human Resources and Remuneration Committee

The Human Resources and Remuneration Committee consists of three directors who are appointed by

the Board of Directors, having the management executive act as the Human Resources and Remuneration

Committee’s secretary. They are:

1. Mr. Cherdpong Siriwit Chairman

2. Mr. Kumphuy Jirararuensak Member


3. Mr. Areepong Bhoocha-oom Member

4. Ms. Vajana Angsukomutkul Deputy Managing Director-Accounting and Finance,

acting as Secretary to the Human Resources and

Remuneration Committee

The Human Resources and Remuneration Committee’s authority and duties are in accordance with the

Company’s Regulations already approved by the Board of Directors regarding management of human resources

and remuneration of the Board of Directors, the Committees and senior executives of the Group of Companies.

Its duties include formulating the Company’s vision on human resources strategies and development plans for

senior executives and ensuring that the Board of Directors of the Group is having the right and appropriate size

and components suitable for the organizational structure and adjusting them to accommodate changing

circumstances. The Human Resources and Remuneration Committee is also required to formulate clear and

appropriate policies, criteria, procedures and process of nominating, removing or terminating directors and senior

executives of the Group of Companies. The bottom line is the Group should have a team of senior executives with

appropriate competency and experiences to run its business successfully and smoothly; hence selecting and

nominating qualified persons as directors and senior executives of the Company’s Group.

Another task of the Human Resources and Remuneration Committee is to formulate a remuneration policy

and its payment strategies, which include salary, meeting fee, allowance, bonus or remuneration in other manners

to directors and senior executives of the Group before proposing them to the Board of Directors for further

approval. Consideration and approval meanwhile will be based on clear, appropriate and transparent criteria that

suit their responsibilities and scopes of work so that they can induce highly-qualified personnel to work with the

firm. The Human Resources and Remuneration Committee also formulate effective guidelines, procedures and

process to help assess the performances of the Board of Directors and other senior executives of the Group

vis-à-vis an annual goal set in its business plan. The goal is to review the management’s annual remunerations

by taking into consideration duties, responsibilities and related risks as well as added values of shareholders in the

long run.

When performing their job, members of the Human Resources and Remureration Committee are authorized

to discuss with the Company’s specialist or consultant (if any) or hire a third-party consultant or specialist from

time to time at the Company’s costs.

In 2005, the Human Resources and Remuneration Committee convened four times in February, March,

September and December, respectively. The meetings were attended by all directors.

The Risk Management Committee

The Risk Management Committee consists of three members who are appointed by the Board of Directors,

with the management executive act as the Secretary of the Committee. They are:

1. Mr. Viravat Chlayon Chairman

2. Mr. Suchart Thada-Thamrongvech Member

3. Mr. Viroj Klangboonkrong Member

4. Mr. Thoedpan Indramaha Director of the Internal Audit Division

acting as the Secretary of the Risk Management

Committee

A n n u a l R e p o r t 2 0 0 5 32

The Risk Management Committee performs its jobs as stated in the Company’s Regulations approved by

the Board of Directors. Its duties are to review the Company’s risk management policies and guidelines which

should cover major risks; namely, financial, investment, internal and external risk, before proposing them to the

Board of Directors for approval. The Committee is also required to formulate risk management strategies and

guidelines that must be in line with its risk management policies.

The Risk Management Committee is empowered to invite directors and/or operation staff to discuss, clarify

or answer questions relating to its duties and responsibilities. Members of the Committee are able to discuss with

the Company’s specialist or consultant (if any) or hire a third-party advisor or specialist, if necessary, at the

Company’s costs.

The Risk Management Committee has appointed a risk management working team as a mechanism to

supervise and monitor the operation. The team has a duty to pinpoint nature of the risks and risk factors, study and

analyze all internal and external risk factors which may affect the Company’s operation, and recommend

guidelines and arrange risk management report for the Risk Management Committee’s consideration.

In 2005, the Risk Management Committee convened twice in March and August where all directors

attended.

Authorized Director As Company’s Signatory

To maintain independence of the Company’s Independent Directors, the Company has stated in its

corporate certificate that the Company’s Directors, with an exception to its Independent Directors, who may sign

on behalf of the Company, are either Mr. Cherdpong Siriwit, Chairman, or Mr. Boonchoo Direksathapon, Managing

Director, who shall execute his name together with the Company’s seal; or two out of the seven directors of

Mr. Pala Sookawesh, Mr. Sujarit Patchimnun, Mr. Narong Sitasuwan, Mr. Kumphuy Jirararuensak, Mr. Chulasingh

Vasantasingh, Mr. Chanin Vongkusolkit and Mr. Kraisi Karnasuta, who shall jointly execute their names together

with the Company’s seal.

Nomination Procedures of Directors and Senior Executives

To ensure that the Company’s Group gets access to a team of competent and highly-experienced executives,

the Company has made it a mission of “The Human Resources and Remuneration Committee” to formulate a clear-

cut and transparent policy, criteria and process to manage human resources and remunerations for directors and

senior executives of the Group. The Human Resources and Remuneration Committee must also recruit the Group’s

directors and senior executives where it shall select them on the basis of their educational qualifications,

knowledge, skills and work experiences, which should be in line with their designated mission in a particular

position and benefit the Company’s overall operations.

In addition, to nominate the Company’s Director, consideration must also be made on the basis of

necessary qualifications and skills of a person to work together as a team. This will be based on a number of factors

ranging from age to specialized skills that complement the Company’s business as well as dedication and

commitment to devote time and effort as director. The ultimate goal is to ensure a strong Board of Directors that

can fulfill the Company’s need at a particular point in time.

The Human Resources and Remuneration Committee will propose its opinion to the Group’s Board of

Directors, who will consider and appoint the nominees as its directors and senior executives.


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S h a r e h o l d i n g S t r u c t u r e


A n n u a l R e p o r t 2 0 0 5 34

Shareholders No. of shares %

Total of top 10 major shareholders 1,067,247,389 73.60

Total shares 1,450,000,000 100.00

No. of shares %

Thai shareholders 1,324,577,749 91.35

Foreign shareholders 125,422,251 8.65

Total 1,450,000,000 100.00

Shares Categorized by Nationality

T o p 1 0 M a j o r S h a r e h o l d e r s

As of September 1, 2005, Ratchaburi Electricity Generating Holding Public Company Limited’s Top 10 Major Shareholders


(as at September 1, 2005)

No. Shareholders No. of Shares %

1. EGAT Public Company Limited 652,500,000 45.00

2. Banpu Public Company Limited Group 217,400,000 14.99

Banpu Power Company Limited 107,100,000

Banpu Public Company Limited 110,300,000

3. Social Security Office 53,558,500 3.70

Social Security Office 53,388,700

Social Security Office by Kasikorn Asset management Company Limited 169,800

4. Government Savings Bank 38,000,000 2.62

5. Chase Nominees Limited Group 26,725,190 1.84

Chase C.S. Central Nominees Limited 333,890

Chase Manhattan (Singapore) Nominees PTE Limited 6 14,470,600

Chase Nominees Limited 10,528,000

Chase Nominees Limited 1 87,400

Chase Nominees Limited 10 1,132,100

Chase Nominees Limited 46 173,200

6. American International Assurance Company Group 20,600,000 1.42

American International Assurance Company, Limited-AIA1 5,000,000

American International Assurance Company, Limited-AIA2 5,000,000

American International Assurance Company, Limited-AIA5B 5,000,000

American International Assurance Company, Limited-AIA5E 5,600000

7. Investors Bank and Trust Company 20,454,299 1.14

8. Employees’ Provident Fund of EGAT Public Company Limited and

Subsidiaries (Registered) 16,123,900 1.11

Employees’ Provident Fund of EGAT Public Company Limited and

Subsidiaries by Siam Commercial Bank Public Company Limited 0,796,800

Employees’ Provident Fund of EGAT Public Company Limited and

Subsidiaries by ING Funds (Thailand) Company Limited 5,327,100

9. HSBC Group 11,660,700 0.80

HSBC (Singapore) Nominees PTE LTD. 1,852,700

HSBC Bank PLC 24,000

HSBC Bank PLC A/C Gartmore Emerging Markets Opportunities Fund 753,700

HSBC Bank PLC-Clients General A/C 7,959,300

HSBC Investments Holdings (Bahamas) Limited 8,000

HSBC Securities Services (Luxembourg) S.A. 1,063,000

10. Government Pension Fund 10,224,800 0.71

Government Pension Fund 8,308,700

Government Pension Fund by Kasikorn Asset Management

Company Limited 1,916,100

Total of top 10 major shareholders 1,067,247,389 73.60

Total shares 1,450,000,000 100.00

Source: Thailand Securities Depository Company Limited Note: 1. EGAT Public Company Limited was registered on June 24, 2005, as a part of Electricity Generating Authority of Thailand’s privatization plan. It operates and co-invests with other parties in power and related businesses. EGAT Public Company Limited is a major shareholder of the Company that have 7 representatives in the Company’s 13-member Board of Directors . 2. Banpu Group is the group of Banpu Public Company Limited and its associated companies that engaged in core business on coal and electricity in Thailand and overseas. The Vongkusolkit family and their related companies are its major shareholders. Banpu Public Company Limited has its 1 representative in the Company’s 13-member Board of Directors. 3. Employees’ Provident Fund of EGAT Public Company Limited and Subsidiaries was registered and renamed from the earlier Employees’ Provident Fund of EGAT and Listed Subsidiaries on June 24, 2005, according to the privatization of EGAT Public Company Limited, formerly the Electricity Generating Authority of Thailand. The Fund’s Committee, which is responsible for formulating the fund management policy, comprises representatives from both employers and employees of EGAT Public Company Limited, Ratchaburi Electricity Generating Holding Public Company Limited, Ratchaburi Electricity Generating Company Limited, and Ratchaburi Energy Company Limited. 4. The Government Savings Bank is a legal entity and a state-owned enterprise operating as a financial institute guaranteed by the government. The Bank is under supervision of the Finance Ministry. Currently, the Bank is a lender of Ratchaburi Electricity Generating Company Limited, which is a subsidiary of the Company with Baht 2,447.5 million outstanding debt as of December 31, 2005.

T o p 1 0 M a j o r S h a r e h o l d e r s


Founded on March 7, 2000, the Company is currently registered with Baht 14,500 million paid-up capital.

Its business is to invest in subsidiaries and joint venture companies as a holding company. At present, the

Company owns 99.99 percent shares of its five subsidiaries; namely, Ratchaburi Electricity Generating Company

Limited, Ratchaburi Energy Company Limited, Ratchaburi Gas Company Limited, Ratch Udom Power Company

Limited and Ratchaburi Alliances Company Limited. On the other hand, Ratchaburi Gas Company Limited holds

50 percent of Tri Energy Company Limited’s shares, while Ratchaburi Energy Company Limited holds 15 percent

in Siam Ethanol Exports Company Limited, and Ratchaburi Alliances Company Limited holds 25 percent of

Ratchaburi Power Company Limited. The Company also holds 50 percent of Chubu Ratchaburi Electric

Services Company Limited’s shares and 25 percent of SouthEast Asia Energy Limited’s shares. However,

its major incomes come from dividends of its subsidiary; namely, Ratchaburi Electricity Generating Company

Limited and Ratchaburi Gas Company Limited.

The Company has formulated its strategies and business plans that correspond to its development

and expansion goals focusing on investment in the power and other related business where it provides

adequate financial support for investment and actively participating in the formulation and monitoring of the

operations of the companies it has invested.

Subsidiaries

1. Ratchaburi Electricity Generating Company Limited

The Company currently holds 99.99 percent of Ratchaburi Electricity Generating Company Limited’s

shares, the firm which was founded on March 20, 2000. At present, Ratchaburi Electricity Generating Company

Limited is registered with Baht 18,275 million paid-up capital. As its main business is to generate the electricity

power, its power plant is located in Ratchaburi Province on a 2,158-rai area, covering three districts of

Damnoen Saduak, Potharam and Muang, Ratchaburi Province.

The Ratchaburi Power Plant is equipped with modern, state-of-the-art production technology which

relies upon natural gas from the Yadana and Yetakun fields in Myanmar as its main fuel. There are two types

of power plants as follows.

1. Two units of Thermal Power Plant with a production capacity of 735 megawatts each or a total of

1,470 megawatts, using natural gas as primary fuel and bunker oil as secondary fuel.

2. Three blocks of Combined Cycle Power Plant with a production capacity of 725 megawatts each or

a total of 2,175 megawatts, using natural gas as its primary fuel and diesel as its secondary fuel.

At present, Ratchaburi Electricity Generating Company Limited is Thailand’s largest Independent Power

Producer with total installed capacity of 3,645 megawatts.

2. Ratchaburi Energy Company Limited

Founded on September 4, 2001, Ratchaburi Energy Company Limited is currently the Company’s

wholly-owned subsidiary who holds 99.99 percent of its shares. The firm is currently registered with Baht 190

million paid-up capital and its business is to invest in power-generating and other related business especially

those utilizing power from renewable energy which not only corresponds to the firm’s operation plan but also

the government’s Renewable Portfolio Standard (RPS) policy. The ultimate objective, however, is to create added

value to shareholders and the society in general.

N a t u r e o f B u s i n e s s


The Board of Directors of Ratchaburi Electricity Generating Holding Public Company Limited in its

No. 2/2549 Meeting on February 15, 2006, resolved to propose to the Shareholders’ Meeting of Ratchaburi

Energy Company Limited to reduce its registered capital by Baht 50 million from Baht 190 million to Baht 140

million. The reason behind this is because Ratchaburi Energy Company Limited’s main task at present is to study

and invest in renewable energy projects only, while EGAT Public Company Limited will solely operate a small

Hydro Power Plant project at the end of irrigational dams instead. As a result, the Board of Directors deemed

appropriate to restructure Ratchaburi Energy Company Limited’s into a paper company to reduce its

administration costs. The decision to reduce its registered capital by Baht 50 million has been made on the basis

of Ratchaburi Energy Company Limited’s financial status and capital requirement.

At present, Ratchaburi Energy Company Limited has been working on renewable power project as

follows:

1. Alcohol-manufacturing Plant

Ratchaburi Energy Company Limited has jointly invested in 15 percent of Siam Ethanol Exports

Company Limited’s shares since September 23, 2004, in a move to build an alcohol-manufacturing plant at

Bankai District of Rayong Province, with the production capacity of 30 million liters of alcohol annually.

At present, the plant and its infrastructure system are being constructed while the firm is busy procuring main

machinery used for producing ethanol. The plant is expected to start producing alcohol by the end of 2006.

2. The Power Generating from Flare Gas Project

Ratchaburi Energy Company Limited in collaboration with PTTEP Siam Limited embarked on

a feasibility study through a support of the Department of Mineral Fuels, the Ministry of Energy, in the power

generating from flare gas. On January 17, 2006, Ratchaburi Energy Company Limited signed the Gas Sales

Agreement with PTTEP Siam Limited and PTT Exploration and Production Public Company Limited to buy

flare gas, a by-production of crude oil production, from the Pratu Tao-A petroleum rig in the Sirikit oil field in

Sukhothai Province, for using as a fuel in the 2-megawatt power plant project. The project is located in on Kong

Sub district, Kong Krairat District, Sukhothai Province. Its progress is on stage of seeking power-generation

equipment, and the plant is expected to initially start generating power in 2007.

3. Ratchaburi Gas Company Limited

The Company holds 99.99 percent in Ratchaburi Gas Company Limited, which its registered capital

is currently at Baht 500 million. Ratchaburi Gas Company Limited itself holds a 50 percent of the total shares in

Tri Energy Company Limited, whose 700-megawatt production capacity accounts for 350 megawatts of the

Company’s equity capacity. Ratchaburi Gas Company Limited received an interim dividend in 2005 for a total

of Baht 483.15 million where Baht 106.12 million was received in October 2005 and the remaining Baht 377.03

million was received in December 2005.

4. Ratch Udom Power Company Limited

Founded on November 20, 2003, Ratch Udom Power Company Limited is currently registered with

Baht 420.90 million, where the Company currently holds 99.99 percent of its shares. The firm has an objective

to invest in power-generation business and currently holds 99.99 percent of Ratchaburi Alliances Company

Limited’s shares.

A n n u a l R e p o r t 2 0 0 5 38

5. Ratchaburi Alliances Company Limited

The objective of Ratchaburi Alliances Company Limited, which was founded on January 9, 2004, is to

invest in power-generating business. Currently registered with Baht 420.20 million capital, the firm hold 25

percent of Ratchaburi Power Company Limited’s shares, which is on the construction process of two

Combined Cycle Power Plants with a production capacity of 700 megawatts each or a total capacity of

1,400 megawatts. This accounts for 350 megawatts effective capacity to the Company. The new Combined Cycle

Power Plants are located in the same site of Ratchaburi Power Plant. The first Combined Cycle Power Plant is

scheduled to start commercial operation in March 2008 and the second in June 2008.

Joint Venture Companies

1. Tri Energy Company Limited

Tri Energy Company Limited’s business is to generate power where it has a 700-megawatt Combined-

Cycle Power Plant situated at Muang District, Ratchaburi Province. The plant, which utilizing natural gas as

primary fuel, started its commercial operation on July 1, 2000. Its power is sold to EGAT Public Company Limited

as part of the 20-year Power Purchase Agreement (PPA). Its shareholders consist of Texaco Thailand Energy

Company and Ratchaburi Gas Company Limited, who hold 50 percent of its shares each.

2. Ratchaburi Power Company Limited

An Independent Power Producer (IPP), Ratchaburi Power Company Limited’s business is to generate

electricity power where it has signed a 25 years Power Purchase Agreement with the EGAT Public Company

Limited. The firm has 2 Combined Cycle Power Plants, each of which has production capacity of 700

megawatts, making its production capacity to total 1,400 megawatts. Relying utilizing natural gas as primary

fuel, the plants are located in the compound of the Ratchaburi Power Plant. Its first plant is set to start its

commercial operation in March 2008 while its second unit is scheduled to commence its commercial operation

in June, 2008. Ratchaburi Power Company Limited’s shareholders consist of Union Energy Company Limited,

which holds 10 percent of its shares, Chubu Electric Power Company International B.V., which holds 15 percent,

Toyota Tsusho Corporation, which holds 10 percent shares, Hong Kong Electric International Power (Mauritius)

Limited, which holds 25 percent of its shares and PTT Public Company Limited and Ratchaburi Alliances

Company Limited, which holds 15 percent and 25 percent of its shares, respectively.

3. Siam Ethanol Exports Company Limited

Currently registered with Baht 300 million, Siam Ethanol Exports Company Limited has received

a license to set up an alcohol-producing plant for export. The plant, which is to be located in Rayong Province, has

a production capacity of 30 million liters of alcohol a year. The Shareholder of the company are Mr. Krittiponge

Phatcharapinyopong holds 21 percent, Mr. Suwan Lertpunyaroj holds 15 percent, Vewong Corporation holds 49

percent and Ratchaburi Energy Company Limited holds 15 percent of Siam Ethanol Exports Company Limited

shares, respectively.


4. Chubu Ratchaburi Electric Services Company Limited (“CRESCO”)

CRESCO’s main business is to operate and maintain power plants as a contractor. In December 2005,

it entered into an Operation and Maintenance Agreement with Ratchaburi Power Company Limited for a period

of 14 years. On December 6, 2005, it entered the Maintenance and Supply Spare part Agreement with Mitsubishi

Corporation (Onshore Contractor) and M.C. Machinery Inc. (Offshore Contractor) for a period of 14 years through

which the two companies will provide and maintain equipment in the power plant’s gas turbine.

5. SouthEast Asia Energy Limited (“SEAN”)

The Company acquired 25 percent of total common shares of SouthEast Asia Energy Limited on

November 3,2005, where SEAN will operate the Hydro Power Plant Project Nam Ngum2 in Lao People’s

Democratic Republic (Lao PDR), which has signed a 25 years Power Purchase Agreement with EGAT

Public Company Limited. The project has a total production capacity of 615 megawatts and is expected to start its

Initial Operation Date in 2010.

Income structure of the Company, its Subsidiaries, and Joint Ventures in 2005

Major incomes of the Company come from dividends generated by Ratchaburi Electricity Generating

Company Limited, which has a 25 year Power Purchase Agreement (PPA) with the EGAT Public Company Limited.

A basic income structure under Ratchaburi Power Plant’s PPA can be divided into 2 major parts as follows:

1. Availability Payment (AP)

The Availability Payment is set up to cover all investments, which include loans, loan interest,

shareholders’ returns and fixed operating expenses such as maintenance costs and administrative costs. In

general, the AP will depend on whether a power plant is ready to generate and transmit power as required by

the EGAT Public Company Limited regardless whether or not the EGAT Public Company Limited orders the plant

to start distributing the power.

2. Energy Payment (EP)

Ratchaburi Electricity Generating Company Limited will receive the EP as soon as it generates power

and transmits the power into the EGAT Public Company Limited’s transmission system. The EP consists of two

parts as follows:

1) Fuel Payment

2) Variable Operating and Maintenance Payment

Meanwhile, regarding an income structure of the joint venture business, which invests in a power-

generation business; namely, Tri Energy Company Limited, in which Ratchaburi Gas Company Limited holds

50 percent therein, the Company’s income can be divided into two parts – the AP and the EP, similar to

Ratchaburi Electricity Generating ’s basic income structure.

For incomes of Siam Ethanol Exports Company Limited, which Ratchaburi Energy holds 15 percent of

its shares and which has a production capacity of 30 million Liters of alcohol a year under the license to

produce alcohol for export, all incomes will come from the sale of 95 percent purified alcohol to overseas clients

where its sales price will be based on alcohol price in the world’s markets. Siam Ethanol Exports meanwhile

will be up and running for the first time in late 2006.

A n n u a l R e p o r t 2 0 0 5 40

2001 3,060 2,907 49.90 1,450 1,450 1.00 2002 4,729 4,492 48.40 2,175 1,450 1.50 2003 5,424 5,153 49.20 2,537 1,450 1.75 2004 6,487 6,162 47.06 2,900 1,450 2.00 2005 6,066 5,763 50.30 2,900 1,450 2.00 /1

* The Company has increased the shareholding in Tri Energy Company Limited from 37.5 percent to 50 percent, on March 9,2005.

** The 2005 income was included with the Baht 106 Million Compensation from the Combustion System improvement period.

The 2004 income was included with the Baht 81.75 Million Warranty Claim.

2004-2005 Income Structure of the Company

Company’s

Income

Types of Income By Shareholding 2005 2004

Ratio Million Baht % Million Baht %

Incomes from sales of power Ratchaburi Electricity Generating Company Limited 99.99

- AP 12,394.50 27.63 11,418.17 28.25

- EP 31,640.46 70.57 28,295.86 70.01

Service incomes Ratchaburi Electricity Generating Holding Public Company

Limited 28.06 0.06 29.53 0.07

Profit (loss) sharing in Tri Energy Company Limited 50.00 * 468.55 1.05 442.11 1.09

joint-venture businesses Ratchaburi Power Company Limited 25.00 (91.56 ) (0.20 ) (34.05 ) (0.08 )

Siam Ethanol Exports Company Limited 15.00 (0.93 ) - (0.16 ) -

Chubu Ratchaburi Electric Services Company Limited 50.00 (2.90 ) (0.01 ) - -

SouthEast Asia Energy Limited 25.00 (1.15 ) - - -

Interest incomes Ratchaburi Electricity Generating Holding Public Company

Limited 115.6 7 0.26 34.25 0.08

Ratchaburi Electricity Generating Company Limited 99.99 160.03 0.36 118.94 0.29

Ratchaburi Energy Company Limited 99.99 2.77 0.01 2.42 0.01

Ratchaburi Gas Company Limited 99.99 0.03 - - -

Ratch Udom Power Company Limited 99.99 0.01 - 0.28 0.01

Others Ratchaburi Electricity Generating Holding Public Company

Limited 3.74 0.01 0.12 -

Ratchaburi Electricity Generating Company Limited** 99.99 119.53 0.27 108.95 0.27

Ratchaburi Energy Company Limited 99.99 0.02 - 0.01 -

Total 44,836.83 100.00 40,416.43 100.00

Year Net profit of the Company 95% of its % of Dividend Amount of Number of Ratch Dividend per and its Subsidiaries Net Profit Payment Dividend Paid Shares Share (Baht) (Million Baht) (Million Baht) (Million Baht) (Million Shares)

Dividend Payment Policy

Ratchaburi Electricity Generating Company Limited has a policy to pay 100 percent of its net profits as dividend following the deduction of statutory reserves and other reserves after having complied with conditions in its loan agreements.

Ratchaburi Electricity Generating Holding Public Company Limited has a policy to pay at least 40 percent of its net profits as dividend following the deduction of statutory reserves and other reserves.

The following are dividends that the Company has paid to its shareholders:

/1 to be proposed to shareholders in the 2005 Annual General Meeting of Shareholders on April 20, 2006.

The Company has already paid an interim dividend for the first six months of 2005 (January-June 2005) to its

shareholders at Baht 1 per share on September 14, 2005.


Electricity Consumption Forecast in case of Moderate Economy Recovery Scenario

Year Megawatts

Increase

Megawatts %

T h e I n d u s t r y a n d C o m p e t i t i o n s

In 2005, the country’s electricity consumption rose in accordance with its economic growth rate. However,in the last quarter, the growth of electricity consumptions was lower than the estimated. At the same time, all Independent Power Producers (IPPs) had already drafted their development plans in a preparation to bid for the construction of new private power plants that scheduled to be opened to the public in 2006. Ratchaburi Electricity Generating Holding Public Company Limited, meanwhile, is competent in developing Ratchaburi Combined Cycle Power Plant, Block 4, where all infrastructure systems have been in placed. In addition, having completed its Environmental Impact Assessment Report, the Company went on to seek approval from an expert committee of the Natural Resources and Environment Plan and Policy Office, which granted its approval for the firm to expand its 725 megawatts Ratchaburi Combined Cycle Power Plant Block 4 on March 7,2005. Therefore, when new bidding process commence, the Company will be able to propose its project on a timely manner. Furthermore, the Company is now exploring a possibility to construct a new power plant at a new location.

The electricity business circumstances regarding electricity consumption, major economic conditions and important power policies in 2005 can be summarized as follows:

1. Electricity Consumption and the Power Development Plan As of October 31,2005, Thailand’s total installed electricity generating capacity was at 26,431 megawatts while the country’s electricity consumption was at 101,193 million units, which was 6 percent increased in average. Natural gas accounted for 71 percent of all fuels used in generating power, followed by 15 percent of coal/ lignite, 4 percent of hydropower and 6 percent of bunker oil. Whereas, approximately 4 percent of the electricity used in the country was purchased from overseas. The electricity consumption was at its peak on April 26, 2005 at 20,537 megawatts, or a 6.26-percent increase from the year before. Construction of new power plants in 2005 was related to the IPP power plants, Phase I, which was already approved by the government, including projects responsible by EGAT Public Company Limited scheduled to start their commercial operation during 2006-2010, as specified in the electricity consumption forecast report made by the Electricity Consumption Forecast Sub-Committee in January 2004 and the country’s Power Development Plan (PDP) 2004.

Electricity Consumption Report Prepared by the Electricity Consumption Forecast Sub-Committee in January 2004

2004 19,600 1,479 8.2 2005 21,143 1,543 7.9 2006 22,738 1,595 7.5 2007 24,344 1,606 7.1 2008 26,048 1,704 7.0 2009 27,852 1,804 6.9 2010 29,808 1,956 7.0 2011 31,844 2,036 6.8 2012 33,945 2,101 6.6 2013 36,173 2,228 6.6 2014 38,515 2,342 6.5 2015 40,978 2,463 6.4

Average Increase

2004-2008 - 1,585 7.5 2009-2013 - 2,025 6.8 2014-2015 - 2,403 6.4

A n n u a l R e p o r t 2 0 0 5 42

Thailand’s Power Development Plan (PDP 2004)

Production Peak Minimum Reserve Year Power Plants Capacity Demands Margin (Megawatts) (Megawatts) (%)

Installed Capacity up to December 2004 26,532.2

2005 Small IPPs 20.2 21,143 19.9 2006 - 22,238 13.7

2007 BLCP Power Company Limited Unit #1-2 2x673.25 23,844 15.3 SPPs 163.7 Gulf Power Generation Company Limited (additional) 700

2008 Songkhla’s Combined Cycle, Block 1 700 25,548 15.5 Gulf Power Generation Company Limited Block 1 700 Ratchaburi Power Company Limited, Block 1-2 2x700

2009 Southern Bangkok’s Combined Cycle, Block 3 700 27,352 15.9 Northern Bangkok’s Combined Cycle Block 1 700

2010 Purchase from Nam Theun 2 Project in Lao PDR 920 29,308 14.3 Bangpakong’s Combined Cycle, Block 5 700 Renewable energy Power Plant 175

2011 New power plant + RPS 2,940 31,344 14.4 Remove Kanom’s Thermal Power Plant, Unit #1 -75

2012 New power plant + RPS 2,205 33,445 15.3



2015 Remove Southern Bangkok’s Thermal Power Plant, Unit #1-2 2 x -200 40,478 14.2 New power plant + RPS 2,940 Installed capacity up to December 2004 26,352.20 MW. Total increasing capacity 21,455.40 MW. Power plants removed from the system -475.00 MW. Total capacity to 2015 47,332.60 MW.

Source: EGAT Public Company Limited’s PDP approved by the Cabinet on August 24, 2004 and is currently updated by the Power Business Supervision Committee

2. Summary of Major Economic Conditions

In 2005 witnessed a steady increase of oil prices from the previous year. Crude oil price rose from

an average of US$ 30 a barrel to US$ 50 a barrel. The Ministry of Energy had to allow diesel prices to float freely in

July 2005. This created a widespread impact, prompting the country’s 2005 economic growth to remain at 4.3

percent, which was lower than the estimated rate of 5 percent. (Source: The National Economic and Social

Development Board)

3. Significant Electricity Power Policies

3.1 The Ministry of Energy has initiated the Peak Cut Project to be started in 2006 with a target

to reduce electricity consumption by 500 megawatts, where diesel engines that already installed in large

factories will be used to generate reserved power in the project. This will reduce demands for new power plants

in the Power Development Plan by 500 megawatts.


3.2 On June 24, 2005, the Electricity Generating Authority of Thailand (EGAT) was registered as

a public company.

3.3 The Ministry of Energy postponed the bidding of the new IPP projects to late 2006. Initially,

the bidding of the RPS projects (power plants using renewable energy such as biomass, small Hydro Power Plant

and solar-based power plant) was separated from the bidding of the IPP Power Plants. It is expected that demand

for new power plants during 2011-2015 will fall from 13,230 megawatts to be around 10,000 megawatts.

The Ministry of Energy and EGAT Public Company Limited will prepare a new electricity consumption forecast

report in 2006.

3.4 On August 25, 2005, the National Energy Policy Commission approved EGAT Public Company

Limited to have 50 percent of new production capacity during 2011-2015 where EGAT Public Company Limited’s

4 newly approved power plants and the new power plants have to be bonded by the Power Purchase Agreement

(PPA) as an Independent Power Producer (IPP) and be complied with the IPP Grid Code.

3.5 On November 22, 2005, the Cabinet approved to appoint a 7 members of Regulator Committee

to supervise the power business, as proposed by the Ministry of Energy. The Regulator Committee was

appointed and became effective since December 1, 2005, where the term of its members will remain temporary

until the Electricity Industry Bill, B.E… comes into force.

Office of the Prime Ministry’s Regulation on the Electricity Regulatory Commission 2005 announced in

the Government Gazette on March 25, 2005 indicates that the regulator’s responsibility is to supervise service fees

charged by power producers, formulate measures that promote competitions and prevent monopoly, determine

methods and supervise construction of new power plants, ensure the operation of all existing power producer,

monitor the written standards and the safety of the power business, and help the National Energy Policy Commission

in power-related matters.

3.6 At present, the Regulator Committee has not officially determined the rules and regulations

on the bidding process. The rules and regulations, once formulated, will be proposed to the National Energy

Policy Commission for approval before seeking the Cabinet’s approval later.

3.7 The Energy Minister announced that the Ministry will give a full back-up to a renewable

energy-based project in 2006, for example, the use of NGV in lieu of diesel for public buses, and the use of non-

fossil fuel on power generating.

Competition in the power generation business will definitely become fiercer in the future

as demands for electricity will increase at a lower rate. In addition, more power will be increasingly purchased

from neighboring counties, which means that the amount of power from new power plants will become lower.

In addition, location of new power plants and fuel to be used in generation process will become two significant

factors to determine which bidders will be awarded the mandated. Therefore, the Company must be well prepared

for the foreseeable competition by taking into consideration its investment efficiency so that its shareholders

will be benefit at the most. In addition, the company has to consider the stability and efficiency of the country’s

electricity supply and the entire public interest.

A n n u a l R e p o r t 2 0 0 5 44

R i s k s f r o m B u s i n e s s O p e r a t i o n

The Company’s Board of Directors has agreed that when operating its business the Company may experience a variety of risk factors. To meet the international standards of risk management through good corporate governance, which will accordingly lead to customer satisfaction and preferable gains for shareholders and all stakeholders, the Company’s Board of Directors has set the philosophy and policy for risk management as follows:

Risk Management Philosophy

“The Company is confident and aware of the importance of effective risk management and control, which will enable the Company to run its business with stability, continuity, and an acceptable level of risk. It is used as management tool to enhance the Company’s succeedable opportunity as much as possible, while minimizing the possibility of failure and loss, and reduce the uncertainty in the Company’s overall performance. All these will assist the Company achieve all its objectives.”

Risk Management Policy

1. Promoting the culture of risk management to encourage understanding, conscience and responsibility concerning risk, control and the effect of risk on the Company in the process of administration and operations throughout the Company. 2. Having in place sufficient and accepted international standard process, framework and measures of Risk Management for indicating, assessing, ranking, managing, controlling, following up, reporting, evaluating and communicating the information of risks continuously, regularly and across the board in the Company. 3. Measuring the risk both in terms of quality, such as the Company’s reputation and image, and in terms of quantity, such as loss, revenue decrease, and expense increase based on the possibility that could happen and effect the Company. 4. Setting risk limit at level that the Company accepted to control the level of damage, and also identifying circumstances and risk degrees that are warning sign for the operators to manage risk under control level. 5. Setting written operational regulations for executives and employees to abide by in order to control the operational risk. 6. The Company’s Board of Directors has appointed the Risk Management Committee comprising three directors who are in charge of screening policy, setting strategies and risk management framework, controlling, following up, maintaining risk level, and effectively managing risks of the whole organization. The Risk Management Committee has to defined the Company’s risks into four categories as follows:

1. Financial risk is risk from the lack of liquidity and sufficiency and timeliness of available funds for investments. 2. Investment risk is risk from the investment in each project 3. Internal environment risk is risk from the operational mistake or insufficient reporting on the operational process. 4. External environment risk is the policy risk from stakeholders, individual investors, securities analysts and the community nearby the power plant

Financial Risk

1. Financial Liquidity In financial liquidity management, the Company has taken into account the sufficiency of funds for the investment in projects and the Company’s operation by preparing the financial plans, cash flow statement, and the estimation of dividend payment from its subsidiaries and joint ventures. The business operations have been monitored closely and the financial projection and plans have been reviewed on a regular basis in order to be


prepared for setting aside a fund when necessary. However, the Company has continuously monitored the money market and other financial tools, to minimize financial cost and risk from financial liquidity.

2. Interest Rate The interest rate of long-term loan of Ratchaburi Electricity Generating Company Limited is floating rate in accordance with MLR rate. According to the Power Purchase Agreement (PPA) entered with EGAT Public Company Limited the company receives compensation for fluctuation of the interest rate from EGAT Public Company Limited. Hence, there is no risk from interest rate volatility. In July 2005, Ratchaburi Electricity Generating Company Limited secured new loans and issued new debentures for total refinancing, thus reducing its interest burden. There is no risk from interest rate because the interest rate according to the new loans and debentures are lower than MLR rate. Details on this are published in the Notes to Consolidated Financial Statement item 8. The new loan agreement also contains certain relaxed conditions, providing greater flexibility for the company in financial management.

3. Exchange Rate Although all income, loans and most of the expenses of Ratchaburi Electricity Generating Company Limited are in Thai Baht, there is some risk from exchange rate fluctuation because the Company has to purchase equipment and spare parts from abroad. For the imported equipment and spare part, EGAT Public Company Limited has compensated for the exchange rate volatility under the PPA.

4. Inflation Rate The operation expense that is in Thai Baht currency under the PPA has already been compensated for the fluctuation occurring from the Thai Consumer Price Index (Thai CPI). However, there are some risks if the increase of operational expense, which is compensated for the fluctuation occurring from the Thai CPI, is higher than the inflation rate. For the expenses that are in foreign currencies, such as imported spare parts and equipment, if the prices rise higher than the Manufacturing Unit Value (MUV) announced by the World Bank, Ratchaburi Electricity Generating Company Limited will receive compensation on the price increase as stated in the PPA.

Investment Risk

1. The Analysis on Project Return The Company has a policy to invest in electricity generating business and related businesses, taking into account the return for shareholders, employees and the public. The Company has formulated operation strategies and the plan to increase productivity based on the policy set by the Company’s Board of Directors. The Company has conducted the feasibility of the investment and project development by taking consideration of risks associated thoroughly. The Company has sought consultancy services from experts specializing on technology, finance and law in its project appraisal. The sensitivity analysis has been conducted in order to ensure a satisfactory return that could add value to the Company in the future.

2. The Project Development with Predetermined Budget and Time Frame The Company has three projects under development as follows: • The construction of Combined Cycle Power Plant Project with 2x700 megawatts production capability in the area of Ratchaburi Power Plant. The project is operated by a joint-venture company, Ratchaburi Power Company Limited. • The construction of alcohol production plan with 30 million liters production capacity. The project is operated by a joint-venture company, Siam Ethanol Exports Company Limited. • The construction of a Hydro Power Plant – Nam Ngum 2 with 615 megawatts production capacity. The project investment is made through SouthEast Asia Energy Limited

A n n u a l R e p o r t 2 0 0 5 46

The three projects are posed to some risks that the project might not be completed on time. In case that the construction is not completed on time, the Company might have extra expenses. The Company has closely followed up the project’s progress on a regular basis. The representatives of the Company has been nominated as members of the Board of Directors to attend board meetings, monitoring the progress, and taking part in setting regulations and directions of the project effectively, in order to control the budget spending and carry on the construction plan. The Company has also reviewed on certain information of its joint-venture partners, such as financial information, while making sure that policies of the allied management are in line with the Company’s investment policy through a clear statement about the roles of each partner. This is the intention to create synergy among all partners.

3. The risk to Hydro-Power generating project from water level in dams in case of drought Climate which may affect water level in the dam of a Hydro Power Plant is considered a non-operational risk. In studying project feasibility, the Company also considered information about water level of the past 40 years. The information is used as in designing the dam and the Hydro Power Plant as well as in analysis for possible risk related to water level in the future.

The Risk of Internal Environment

1. Contracted Capacity and Contracted Operating Characteristics (COC) Ratchaburi Electricity Generating Company Limited is in charge of maintaining technical characteristics, such as Contracted Capacity and Contracted Operating Characteristics. The company is also liable to pay penalty if the level of Availability Payment (AP) reduces in case it could not maintain technical characteristics as agreed, and will take risk of machinery failure in maintaining technical characteristics because the machinery is deteriorated faster than scheduled. However, to minimize the risk from the reduction of revenue from the penalties deducted by the full AP, the PPA specifies certain limitation on the penalty. It states that if the fine is less than the minimum payment (0.5% of full annual AP), It is not subject to be paid and shall not exceed the maximum charge (2% of full annual AP).

2. Fuel Prices The changes of natural gas prices do not effect the revenue of Ratchaburi Electricity Generating Company Limited since the calculation of Energy Payment (EP) under the PPA is based on the actual prices of natural gas each month and the risk of fuel price fluctuation is passed through to EGAT Public Company Limited. However, the company must maintain the actual heat rate at the level lower or equivalent to the rate stated in Schedule 3 under the PPA.

3. The Heat Rate of the Facilities Ratchaburi Electricity Generating Company Limited receives fuel payment, which is a part of the Energy Payment, in accordance with the Heat Rate of the facilities (the rate of utilizing heat in producing one unit of energy) specified in the PPA. The company used the EP to pay for the fuel used in running electricity generating facilities. The Heat Rate specified in the PPA must include a margin to compensate the depreciation of machinery in the long run. The company still has certain risk in case that the actual Heat Rate is higher than the rate stated in the agreement. If the company could not maintain the Heat Rate at the agreed level, the company must be liable for the additional fuel payment.

4. Fuel Quality The quality of fuel is clearly specified in the Gas Sale Agreement (GSA). In case that PTT Public Company Limited supplies fuel with the quality lower than that specified in the GSA, Ratchaburi Electricity Generating Company Limited retains the right to refuse to accept the fuel, and PTT Public Company Limited is treated as being unable to supply the fuel. According to the PPA, the company will continue to receive AP. For this reason, the company has no risk in case that PTT Public Company Limited could not supply natural gas on schedule as it does not effect AP under the PPA.


5. Operational Cost For the AP specified in the PPA, the expenses in Thai Baht will be adjusted according to Thai CPI and the expenses in US dollars such as expenses on imported spare parts and equipment would be adjusted according to MUV Index and charged in relation to the exchange rates. EGAT Public Company Limited will take risk for extra expenses as specified in the PPA. Ratchaburi Electricity Generating Company Limited will hold the responsibility over the risk if the actual expenses are higher than Thai CPI and MUV Index. Nevertheless, for the expenses on imported spare parts, if the adjusted prices are higher than MUV Index, EGAT Public Company Limited will share the responsibility for extra expenses in the proportion stated in the contract. On December 29,2005, the company has entered a long-term Contractual Service Agreement (CSA) for its Combined Cycle Power Plants with General Electric International Operation Co., Inc. and GE Energy Parts, Inc. The USD 451 million agreement was effective since the signing date until the end of Gas-Turbine’s operation as stated in the PPA

6. The Operation and Maintenance of the Power Plant According to the Power Plant Operation and Maintenance Agreement (OMA), in which Ratchaburi Electricity Generating Company Limited has outsourced to EGAT Public Company Limited, the conditions about incentive and penalty have been appointed in order to control the EGAT Public Company Limited’s operation based on the consideration of key factors – AP and COC. If EGAT Public Company Limited’s operation causes the power plant to have less AP and COC, the company will receive fine as specified in the OMA. The fine may not cover lost in revenue due to the PPA. However, since EGAT Public Company Limited is specialized and experienced in the operation and maintenance of power plants in Thailand for more than 30 years, it is not likely that such incident will take place, except that there is any accident or machinery defect. In case of loss from an accident, the company has an insurance policy that covers all risks to machinery, property and people, including third party. For the fire incident at the Flue Gas Desulferization (FGD) of the Ratchaburi Thermal Power Plant’s Unit 1 during the Minor Inspection on October 13, 2005, the company successfully handled within one hour with no injury or death. After the incident, the company investigated the cause, recovered and estimated the damages incurred. Based on the findings and technical tests done by the company, the fire accident was allegedly caused by the lack of supervision and carelessness of contractors’ employees who carried out the maintenance of the FGD. However, the cause of the fire is being investigated by the Damnoen Saduak District police station. The company consequently set additional safety procedure to control any possible losses that may happen in the future. The additional safety procedure for contractors was announced on November 10, 2005 as follows: • Contractors must strictly follow safety procedure and security measures. • Supervision to ensure contractor strictly following loss control procedure is the responsibility of the person in charge. • The person in charge and head of the contractor must attend a briefing on loss control measures every time before they start working in the Power Plant. • Once the person in charge of the project, head of contractor and contractor sign on a document to acknowledge all the procedures, they accept and must strictly follow the procedure and measures set by the company .If they fail to comply with the procedures and measures, they will be subjected to the specified penalty. • To work in the Ratchaburi Power Plant, the company and the contractor must assess the risk related to the job, clearly set safety procedure and submit details to the Safety, Environment and Risk Management Department for consideration at least five working days before starting the job. • The person in charge of safety of the company, area caretaker, contractor and the Safety Unit must work closely with the Safety, Environment and Risk Management Department in safety monitoring at least once a week.

A n n u a l R e p o r t 2 0 0 5 48

Furthermore, the Ratchaburi Electricity Generating Company Limited has implemented the loss management system to ensure safety management within the electricity generating plant. A person who has to work within the Power Plant must strictly follow all the rules set by the plant. The contractor, especially, must confirm with the operational guidelines set as follows: • Before Starting the Work in the Power Plant - Contractors who will work in the power plant must attend an orientation and learn about the operation process, rules, regulations and guidelines relating to working in the Ratchaburi Power Plant power plant and practice guideline in case of emergency - The person in charge of the project must analyze and identify risks in the working area before preparing a safety plan. - The person in charge of the project must set a safety operation plan and prepare the secured equipment to prevent and handle emergency. - To bring any equipment and/or other stuff gadget into the Power Plant, a person must fill a form to clarify and identify them. • Working in the Power Plant - A person entering into the plant must receive a written permission from the employee in charge of operating the generator. After finish the work, the person must report to the employee in charge of operating the generator to cancel their right to perform a specific work. - In case that electricity is needed to complete the task, the person in charge of the project must inform the employee in charge of operating the generator or maintenance staff for ensuring the safety operation process. - The person in charge of the project must constantly supervise and inspect the contractor to ensure that the contractor fully complies with the company’s safety procedure. - Safety staff of EGAT Public Company Limited will regularly meet with the person in charge of the project on daily basis to monitor the maintenance progress and ensure that the operation is proceed as it was planned. • After Finishing the Work in the Power Plant - After the completion of the project, the person in charge must immediately inform the Safety, Environment and Risk Management Department - To bring any equipment or gadset out of the Power Plant area, the person must present the item list to the security staff at the security check point No. 1 for checking. - In case that the item list is not presented, the contractor must inform the person in charge of the project and fill the form which will be signed by the person in charge of the project and later submitted to the authorized person for permission.

For the fire incident at the Flue Gas Desulferization (FGD) unit of the Ratchaburi Thermal Power Plant Unit 1, Ratchaburi Electricity Generating Company Limited will be fully compensated by the insurance. The FGD unit repair and renovation will be completed in 18 months and will be able to operate again in August 2007.

In terms of the FGD unit renovation progress, the parts that was damaged beyond repair will be removed. The new equipment will be purchased and installed to replace the damaged one as follows: • Shaw Stone & Webster of the United States, which has expertise in FGD, was hired to prepare a master plan for the damaged equipment removal and finding FGD renovation contractor. The master plan completed on January 31, 2006. • EGAT Public Company Limited was hired as the renovation project manager and the main contractor for the damaged equipment removal and new FGD installation. EGAT Public Company Limited has started its work since February 6, 2006 to ensure that the renovation progress as scheduled in the master plan.


• Mitsubishi Corporation (Japan) was hired to supply the spare parts and handle engineering work for the FGD renovation project. Insurance consulting company has already agreed with the contract and cost. The contract was signed on February 6, 2006 in order that parts procurement is progressed as scheduled.

In addition to the aforementioned activities, there are other works involved, such as removal and installation of Gas Duct and stack repair.

Risks from External Environment

1. Dependence on EGAT Public Company Limited in its Operation According to the Company’s financial mobilization plan from private sector in 2000, EGAT Public Company Limited is a major shareholder of the Company. Ratchaburi Electricity Generating Company Limited has entered into PPA and related agreements which are 2 Assets Purchase Agreements, and the COC with EGAT Public Company Limited.The company has only one customer which is EGAT Public Company Limited and is not eligible to sell electricity to others. Therefore, the company business operation heavily depends on EGAT Public Company Limited.

2. The Risk from the Status Change of EGAT Public Company Limited after Privatization EGAT Public Company Limited’s status as a state enterprise under the government control is crucial to the operation of the company. EGAT Public Company Limited’s status and its ability to abide by the PPA are clearly stated in the agreement. As an organization under the government control, EGAT Public Company Limited has been privatized. According to the PPA, both parties agreed to cancel the clause on the definition of the Governmental Force Majeure and have done their best in seeking agreement from creditors in eliminating the clause. If the privatization results in the fact that EGAT Public Company Limited is no longer under the government control and cannot abide by the agreement, this will lead to Event of Default. In that case, Ratchaburi Electricity Generating Company Limited, thus, has the right to cancel the agreement as specified under the PPA and is eligible to receive the compensation. However, the resolution on April 7, 2003, required the government, by the Ministry of Finance, to hold no less than 75 percent in the new company which is a result of the privatization of a state enterprise operating basic infrastructure business. EGAT Public Company Limited therefore maintains its state enterprise status after the privatization.

3. Financial Status of EGAT Public Company Limited Ratchaburi Electricity Generating Company Limited’s income stability depends on the financial status of EGAT Public Company Limited. The company may have risk in case EGAT Public Company Limited is short of cash to pay the company under PPA after EGAT is transformed into a public company on June 24, 2005. The State Enterprise Corporatization Act B.E. 2543 results in the revocation of the Electricity Generating Authority of Thailand. The government shall not take responsibility in case EGAT Public Company Limited has financial liquidity problem. EGAT Public Company Limited’s financial status depends on the new power price structure.

4. The Risk from Future Restructuring of Electricity Industry According the Cabinet resolution on December 9, 2003, the Cabinet agreed in principle to restructure electricity industry into Enhanced Single Buyer (ESB) format to stabilize the country’s electricity system and increase management efficiency. EGAT Public Company Limited is assigned to be a main organization in charge of electricity generation and transmission. The Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA) are in charge of electricity distribution and retailing. The Regulator will be responsible for forecasting the demand for the electricity and the new power plants, formulating the regulation on electricity purchasing from the new power plants, setting electricity prices, and maintaining power plants’ service quality.

A n n u a l R e p o r t 2 0 0 5 50

The restructuring of the electricity industry may directly effect the future direction and the competition among electricity businesses. However, due to the pending of the electricity purchasing regulation, the entire electricity sector have to wait for the clear out announcement from the Electricity Regulatory Board. Early 2006, there were news in various newspapers about Electricity Regulatory Board’s resolution prohibiting any subsidiary of EGAT Public Company Limited to bid for the new power plants project from 2011-2015. The reasons were that , according to the Cabinet resolution, EGAT Public Company Limited was allocated 50 percent of the rights to construct new power plants while the remaining 50 percent would be offered to private sector, and that those companies participating in such bids might be against the Prime Minister Office’s Procurement Regulation. The fact that the company, as a part of EGAT Group, could not participate in new power business tender may directly affect shareholders and the benefits of the country and public. Such effects are as follows:

4.1) Effect on power generating cost: The Company is a large Independent Power Producer with ability to bid for new power plant project, easy access to electricity distribution system and natural gas pipeline, sufficient infrastructure and common facilities that support the new power plant construction, such as water treatment facilities; demineral water production; and switchyard; ability to finance new projects, and expertise in electricity generating business. These are key factors to reduce electricity generating cost due to economy of scale. The opportunity for the Company to bid for new power plant projects will enhance the reduction in production costs, leading to lower burden for all users. In addition, the Company has prepared Environment Impact Assessment Report from an expansion plan of the approximate 700 megawatt Ratchaburi Power Plant. The report was approved by the specialist committee of the Office of Environmental Policy and Planning by the meeting No.5/2005 held on March 7, 2005.

4.2) Effect on shareholders: Without the right to participate in bidding for the new power plant projects, the Company will have significant impact, which is a key indicator of the Company’s future growth. Considering that electricity generating is its core business and source of income and that the right to source the investment in new power plant project guarantees its business stability, the Company, as an independent public company which involves shareholders and investors like other private organizations, should be treated and given the similar rights as other private companies to independently compete in bidding for power plant construction. Prohibiting the Company from participating in such tender would negatively effect the Company’s shareholders and investors as well as reduce their benefits from expected future business growth under the current free market environment.

5 Political Risks

5.1) The Acquisition by Governance Aagency In case the Company is acquired by a government agency whether it is the acquisition of the power plant or through stock acquisition, the situation will be considered the Government Force Majeure. Under the PPA, Ratchaburi Electricity Generating Company Limited still receives the AP. If the acquisition process is longer than one year, EGAT Public Company Limited has the right to revoke the contract, but it has to pay the revocation fee equivalent to the remaining liability of the Company, retained earning, reserved funds and shareholders’ dividend.

5.2) Legislation Changes In case that the legislation changes effect the capital, revenue, or expenses of Ratchaburi Electricity Generating Company Limited, with the amount cost exceeding the specified number in the PPA. EGAT Public Company Limited and the company will discuss the adjustment of AP and the EP. If legislation changes affect the company’s ability to abide by the PPA, the situation will be considered as a Government Force Majeure. The company will continue to be entitled to receive AP payment.


The government has restructured the country’s power business by having EGAT Public Company Limited as

the sole electricity producer, buyer and system operator. Regulator was set up to responsible for the power business

and encouraging competition in new electricity generating plant construction for which EGAT Public Company

Limited and interested private sector are invited to bid. Given such environment, Ratchaburi Electricity Generating

Holding Public Company Limited has an opportunity to expand its electricity generating business to meet with the

higher future demand. The Company’s has an advantage over others because it has an unused plot of land near its

Ratchaburi Power Plant which is suitable for building a Combined Cycle Power Plant with a production capacity of

700 megawatts. Moreover, there is another available space. The available at Tri Energy Power Plant that can be used

for building another 700 megawatt plant. The Company will invest in electricity generating and related businesses by

considering returns to shareholders and the society, bases on the Good Corporate Governance practice and the safe,

modern and environmental-friendly technology that is trustful by surrounding communities.

According to the Company’s business plan, which has already been approved by the Company’s Board of

Directors, the Company’s investment policy is focusing on electricity generating and other relating business as

follows:

1. Acquiring stakes in large and small scale electricity generating business that already operated in

Thailand and overseas.

2. Acquiring stakes in electricity generating businesses that have long-term PPA within and outside

Thailand and will commence project construction in the near future for instance the Hydro Power Plant project in Lao PDR.

3. Acquiring a potential plot of land for the Company’s electricity generating plant project to sustain rising

demand

4. Co-investing with business partners to operate and provide maintenance service for the Combined-

Cycle Power Plant of Ratchaburi Power Company Limited, throughout the PPA period of 25 years

5. Conducting feasibility study on investment in renewable power businesses to support the government’s

alternative energy policy and strategy requiring new companies which will sell electricity to EGAT to build a power

plant that utilizes at least 5 percent of renewable power compared to its expected overall electricity sales volume.

The Company is particularly interested in focusing its investment in renewable power plant. Ratchaburi

Energy Company Limited was, therefore, assigned to study and develop renewable energy power projects. Details of

projects under development are as follows:

5.1 Wind Power Electricity Generating Project

Ratchaburi Energy Company Limited has studied the potency of wind power by measuring wind

power at 40 meter above ground for one year, enabling the Company to effectively plan a strategy and ways to study

wind energy in a more concrete way. The Company has found a proper place to locate windmills for electricity

generating activities under its pilot project. Various windmill technologies suitable for local condition have been

studied for its most effective and efficient settlement in the future.

F u t u r e P r o j e c t s

A n n u a l R e p o r t 2 0 0 5 52

5.2 Bio-gas Electricity Generating Project

In its efforts to find renewable energy resources for better environment, Ratchaburi Energy Company

Limited, has jointly worked with educational institutes in studying possibility of processing waste water from

industrial plants, such as cassava flour and alcohol production plants, to produce gas for power production. The

company is also studying technologies for generating electricity from bio-gas. The findings will be considered for its

bio-gas power plant project. The company plans to build an electricity generating plant powered by bio-gas obtained

from wastewater at Siam Ethanol Exports Company Limited, an alcohol producer in Rayong province, in which

Ratchaburi Energy Company Limited has joint investment.

5.3 Flare Gas Electricity Generating Project

To maximize natural resource utility, the company has used natural gas, a by-product from crude oil

production that are normally burned out, for power production. This effectively substitute imported fuel oil and

promote better environmental quality. Ratchaburi Energy Company Limited has conducted a feasibility study of such

project at a crude oil exploration sites in Sukhothai and Pitsanulok provinces in cooperation with oil producer. The

Company has a plan to build a 2-megawatt electricity generating plant as its pilot project within 2006.


Connected Transactions

Agreement Related Amount

Signing Date Companies (Million Baht)

Ratchaburi Electricity Generating Holding Public Company Limited

1. Provision of Management Service Agreement

1.1 Providing services related to internal audit, legal, secretariat of Jan 2, 2003 Ratchaburi Electricity 1.43

the Board of Directors, information technology and financial services Generating Co., Ltd.

• In 2005, management service income include: Jan 2, 2003 Ratchaburi Energy 0.18

Ratchaburi Electricity Generating Company Limited at Baht 1.43 Million Co., Ltd.

Ratchaburi Energy Company Limited at Baht 0.18 Million

• As of December 31, 2005, other accounts receivable

(management service receivable in December 2005)

was Baht 0.17 Million

1.2 Assigning 3 representatives to Tri Energy Company Limited Nov 14,2003 Tri Energy Co., Ltd. 18.58

as the Managing Director, the Division Director -Accounting and

Finance and the Department Manager-Administration and

Contract Management Manager

• In 2005, management service income was Baht 18.58 Million


(management service receivable for November and December

2005) was Baht 3.41 Million

1.3 Internal audit, secretariat of the Board of Directors, and legal services Dec 23, 2005 Siam Ethanol Exports 0.24

charged in lump sum at 20,000 Baht per month Co., Ltd.



(management service receivable for December 2005)

was Baht 0.02 Million

2. Public Relations Service Agreement for Ratchaburi Power Company Jun 1, 2004 Ratchaburi Power 9.12

Limited (RPCL): Ratchaburi Power Plant Communication Center was Co., Ltd.

set up under this agreement and expired on December 31, 2005. The

agreement will be automatically extended year by year unless any party

call for cancellation with 60 days notice before December 31 of the earlier

year. Service fee is charged at actual costs in the following proportion:

- From June 1, 2004 to Financial Close Date, RPCL paid 50 percent

of all charges

- From Financial Close to Commercial Operation Date, RPCL will pay in

proportion two-third of all charges

- After the Commercial Operation Date, RPCL will pay in portion according

to the production capacity of RPCL and Ratchaburi Power Plants


• As of December 31, 2005, other accounts receivable (management

service receivable for December 2005) was Baht 2.10 Million

3. Loan provided to Ratchaburi Power Company Limited Feb 27, 2004 Ratchaburi Power 649.56

Based on 25 percent equity, loan was provided within a limit of Baht 850 Co., Ltd.

Million which must be pay back within 3 years period. The loan is gradually

withdrawn depending on necessity. Loan terms and interest rates are set

T r a n s a c t i o n s w i t h R e l a t e d C o m p a n i e s

A n n u a l R e p o r t 2 0 0 5 54

to be the same as the bridging loans that RPCL has with the other financial

institutions. The annual interest rates for the 1st-7th agreement were 3.125

percent per year and the 8th agreement was 3.625 percent per year

• In 2005, interest income was Baht 16.20 Million

• In 2005, the withdrawn amount was Baht 242.75 Million

• As of December 31, 2005, the outstanding amount was

Baht 649.56* Million

* On March 1,2006, RPCL repaid total loan to the Company.

4. Loan provided to Ratchaburi Gas Company Limited Nov 14, 2003 Ratchaburi Gas 550.20

The Company issued promissory notes to Ratchaburi Gas Company Co., Ltd.

Limited. Interest rate charge was based on 1 year fixed deposit interest

rate for juristic persons of Siam Commercial Bank PCL plus 1 percent.

Details of the withdrawal and payment in 2005 are as follows

Balance as of December 31, 2004 492.80 Million Baht

Withdrawal on March 8, 2005 525.29 * Million Baht

Loan repayment in 2005 (467.89 ) Million Baht

Balance as of December 31, 2005 550.20 Million Baht

• In 2005, interest income was Baht 21.12 Million

• As of December 31, 2005, other accounts receivable (interests

receivable) was Baht 1.22 Million

* To pay for acquired additional 12.50 percent stock in Tri Energy Company Limited

5. EGAT Plc. requested the Company to hire Pricewaterhouse Coopers Jul 11, 2005 EGAT Plc. 5.88

ABAS Company Limited to review balance sheet, profit and loss

statement and interim cash flow statement for January 1, 2005 – June

23, 2005 for the preparation of EGAT’s consolidated financial statements.

EGAT Plc. paid for the expenses occurred.


(interim consolidated financial statement review expense)

was Baht 5.88 Million.

6. The Company hired Ratchaburi Energy Company Limited to conduct Sep 28, 2005 Ratchaburi Energy 1.55

a Feasibility Study on potential site for building new IPP Power Plant, Co., Ltd.

with the 6 months contract period.

• In 2005, expense was Baht 1.55 Million

• As of December 31, 2005, other accounts payable (accrued service

fee) was Baht 0.63 Million (including VAT)

Ratchaburi Electricity Generating Company Limited

7. Power Purchase Agreement – Ratchaburi Power Plant Oct 9, 2000 EGAT Plc. 44,034.96

Ratchaburi Electricity Generating Company Limited entered into a 25-year

Power Purchase Agreement with EGAT Plc.

• In 2005, electricity sales was Baht 44,034.96 Million

• As of December 31, 2005, connected transactions were as follows:

- Trade accounts receivable was Baht 6,536.32 Million

- Long term trade accounts receivable Baht 29.71 Million








8. The Asset Purchase Agreement of Combined Cycle Power Plant Oct 9, 2000 EGAT Plc. 5.72

Block 1-3

In 2004, Ratchaburi Electricity Generating Company Limited realized

Baht 81.75 Million (excluding VAT) income from Combined Cycle Power

Plant warranty claim from EGAT Plc.

• In 2005, realized additional income for VAT at Baht 5.72 Million

9. Fuel Oil Purchase EGAT Plc. 1,576.95

While heavy oil purchase agreement is in the process, EGAT Plc continued

to supply heavy oil to Ratchaburi Electricity Generating Company Limited

• In 2005, heavy oil expenses was Baht 1, 576.95 Million

• As of December 31, 2005, trade accounts payable was

Baht 67.10 Million

10. Station Service Power Purchase Agreement Nov 1, 2000 EGAT Plc. 147.73

Ratchaburi Electricity Generating Company Limited entered into with

EGAT Plc. a station service power supply agreement to be used as

power reserve, waste water treatment, water supply system and in

power plant area

• In 2005, total expenses were Baht 147.73 Million

• As of December 31, 2005, connected transaction details are as follows

- Accounts payable in November was Baht 22.28 Million

- Accrued expenses in December was Baht 20.38 Million

11. Operation and Maintenance Agreement Oct 26, 2000 EGAT Plc. 1,028.40

Ratchaburi Electricity Generating Company Limited hired EGAT Plc.

to operate and maintain Ratchaburi Power Plant, including general

maintenance and major overhaul, for 9 years period.

• In 2005, total expenses were Baht 1,028.40 Million

• As of December 31, 2005, connected transaction details are as follows;

- Accrued expenses were 72.15 Million Baht

- Accounts payable was 164.29 Million Baht

- Prepaid expenses were 9.45 Million Baht

12. Parts Management Agreement for Gas Turbine Aug 1, 2002 EGAT Plc. 12.75

Ratchaburi Electricity Generating Company Limited entered into a Parts

Management Agreement for Gas Turbine Model MS9001FA with EGAT Plc.

for 12 years period. Fees under this agreement are divided into two

parts; which are, monthly service fees of Baht 1.03 Million (excluding VAT),

and addition charge, based on the actual costs incurred.


• As of 31 December 2005, the connected transaction details are as

follows:

- Accounts payable was Baht 1.23 Million

- Accrued expenses (December 2005) were Baht 1.14 Million

A n n u a l R e p o r t 2 0 0 5 56




13. Environmental Quality Monitoring Service Agreement for Mar 30, 2005 EGAT Plc. 1.82

Ratchaburi Power Plant


to provide environment quality monitoring service


• As of December 2005, advanced payment was Baht 0.36 Million

14. Environment Quality Monitoring Service for Heavy Oil Supply System Oct 27, 2005 EGAT Plc. 0.20


to provide environment quality service for its heavy oil supply system

from July – December 2005

• As of December 31, 2005, advanced payment was Bahts 0.20 Million

15. Agreement for Producing GAS-GAS Heater for Flue Gas Desulferization Apr 25, 2005 EGAT Plc. 19.80

Plant at Ratchaburi Power Plant


to produce one set of GAS-GAS Heater for Flue Gas Desulferization Plant

for the Thermal Power Plant. The agreement ends in January 2006.


• As of December 31, 2005, accrued payment was Baht 2.12 Million

Ratchaburi Energy Company Limited

16. Provision of Management Service Agreement Dec 23, 2004 Siam Ethanol Exports 0.12

Ratchaburi Energy Company Limited provided accounting and finance Co., Ltd.

services to Siam Ethanol Exports Company Limited by charging

Baht 10,000 monthly fee.


• As of December 31, 2005, other accounts receivable (management

service receivable for December 2005) was Baht 0.01 Million


Relationship Between Parties Engaged in Connected Transactions are as follows:

1. The Company and Ratchaburi Electricity Generating Company Limited.

1.1 The Company is the major shareholder of Ratchaburi Electricity Generating Company Limited.

1.2 Some of the Company’s directors and executives are directors of Ratchaburi Electricity Generating

Company Limited.

2. The Company and Ratchaburi Energy Company Limited.

2.1 The Company is the major shareholder of Ratchaburi Energy Company Limited.

2.2 Some of the Company’s directors and executives are directors of Ratchaburi Energy Company Limited.

3. The Company and Ratchaburi Gas Company Limited.

3.1 The Company is the major shareholder of Ratchaburi Gas Company Limited.

3.2 Some of the Company’s executives are directors of Ratchaburi Gas Company Limited.

4. The Company and Tri Energy Company Limited.

4.1 Ratchaburi Gas Company Limited, which is a subsidiary of the Company, holds shares in Tri Energy

Company Limited.

4.2 Some of the Company’s directors and executives are directors of Tri Energy Company Limited.

5. The Company and Ratchaburi Power Company Limited.

5.1 Ratchaburi Alliances Company Limited, which is a subsidiary of the Company, holds shares in Ratchaburi

Power Company Limited.

5.2 Some of the Company’s directors and executives are directors of Ratchaburi Power Company Limited.

6. The Company and EGAT Public Company Limited.

6.1 EGAT Public Company Limited is the major shareholder of the Company.

6.2 Some of EGAT Public Company Limited’s directors and executives are directors of the Company.

7. The Company and Siam Ethanol Exports Company Limited.

7.1 Ratchaburi Energy Company Limited, which is a subsidiary of the Company, holds shares in Siam Ethanol

Exports Company Limited.

7.2 Some of the Company’s executives are directors of Siam Ethanol Exports Company Limited.

8. Ratchaburi Electricity Generating Company Limited and EGAT Public Company Limited.

8.1 Both have signed a 25 year long-term Power Purchase Agreement.

8.2 Some of EGAT Public Company Limited’s directors and executives are directors of Ratchaburi

Electricity Generating Company Limited.

9. Ratchaburi Energy Company Limited and Siam Ethanol Exports Company Limited.

9.1 Ratchaburi Energy Company Limited is the shareholder of Siam Ethanol Export Company Limited.

9.2 Some of Ratchaburi Energy’s directors are directors of Siam Ethanol Exports Company Limited.

A n n u a l R e p o r t 2 0 0 5 58

M a n a g e m e n t D i s c u s s i o n & A n a l y s i s

1. Business Operation

Ratchaburi Electricity Generating Holding Public Company Limited (The Company) and its subsidiaries’

operation and management policies for the year 2005 had been set to reflect their core business objective, to

expand its investment in power business to increase revenues and generating capacity of the Company. On

November 3, 2005 the Company signed the Shareholders Agreement and acquires for 25 percent share holding

stake of SouthEast Asia Energy Company Limited (“SEAN”), an operator of Hydro Power Plant project-Nam

Ngum 2 in Lao People’s Democratic Republic (“Lao PDR”) from CH. Karnchang Public Company Limited.

The Company had paid Baht 43.75 million to CH. Karnchang Public Company Limited on November 3,2005.

After that, SouthEast Asia Energy Company Limited expects to increase the registered capital to Baht 9,400

million. Therefore, the Company’s total investment will amount to Baht 2,350 million. The Hydro Power

Plant project-Nam Ngum 2, which holds a long-term Power Purchase Agreement (PPA) with EGAT Public

Company Limited, has the total generating capacity of 615 megawatts. The project will begin supplying

electricity power to Thailand in September 2010. Thus, the investment will increase another 153.75 megawatts

0of the Company’s total installed capacity to 4,498 megawatts.

Furthermore, September 29, 2005 the Company signed the Shareholders Agreement to joint investment

with Chubu Electric Power (Thailand) Company Limited (“CEPT”) to establish Chubu Ratchaburi Electric Services

Company Limited (“CRESCO”) with the registered capital of Baht 40 million, consisting of 400,000 shares, with par

value of 100 Baht per share. The company holds the shares in a proportion 50 percent of the total shares. CRESCO

will serve operation and maintenance for 1,400 megawatts gas-fired Combined Cycle Power Plant of Ratchaburi

Power Company Limited (“RPCL”).

On March 9, 2005 Ratchaburi Gas Company Limited (“Ratchaburi Gas”), the Company’s subsidiary,

acquired additional 12.5 percent of total shares of Tri Energy Company Limited (“Tri Energy”), or 4,279,750 shares

at the price of Baht 525.29 million. This transaction increased the shares proportion of Ratchaburi Gas in Tri

Energy from 37.5 percent to 50 percent and the total capacity of Tri Energy increased 87.50 megawatts from

262.50 megawatts to 350 megawatts.

On June 25,2005, Ratchaburi Electricity Generating Company Limited (the principal subsidiary)

refinanced the whole amount of principal outstanding loan Baht 34,262 million which comprised long term loan

and debenture in the amount of Baht 24,262 million and Baht 10,000 million respectively.

1.1 Operating Performances

Net profit in the year 2005 was Baht 6,066.36 million, or Baht 4.18 per share. This represents a decrease

of Baht 420.67 million or 6.48 percent from Baht 6,487.03 million in year 2004. Total income in the year 2005 was

Baht 44,836.83 million, increasing by Baht 4,420.40 million or 10.94 percent from the year 2004. Cost of sales and

expenses in the year 2005 were Baht 38,770.47 million, increasing by Baht 4,841.07 million or 12.48 percent from

the previous year.

1.2 Analysis of Income

Total revenues of the Company and its subsidiaries for the year 2005 were Baht 44,836.83 million,

increasing by Baht 4,420.40 million or 10.94 percent from Baht 40,416.43 million in the year 2004. The main

reasons of this were as follows:


1) The electricity sales of Ratchaburi Power Plant for the year 2005 was Baht 44,034.96 million,

increasing by Baht 4,320.93 million or 10.88 percent from the year 2004. The main reasons were as follows :

- Revenue received from the Availability Payment (AP) for the year 2005 was Baht 12,394.50

million, increased by Baht 976.33 million or 8.55 percent from Baht 11,418.17 million in the year

2004. The main reason was due to the fact that the availability payment rate in the year 2005 was

higher than that of in the year 2004 as specified in the Power Purchase Agreement (PPA).

- Revenue received from the Energy Payment (EP) for the year 2005 was Baht 31,640.46 million,

increasing by Baht 3,344.60 million or 11.82 percent from Baht 28,295.86 million in the year 2004.

This mainly was due to increase in energy generation, resulting in higher consumption and higher

prices of natural gas and fuel oil in 2005.

2) Interest income for the year 2005 was Baht 278.51 million, increased by Baht 122.62 million or

78.66 percent from Baht 155.89 million in the year 2004. This was mainly due to the increase in interest rate

during the year 2005 and higher liquidity of cash and cash equivalent.

3) The Company recorded share of profit of joint ventures for the year 2005 in the amount of Baht

372.01 million, decreasing by Baht 35.89 million or 8.80 percent from Baht 407.90 million in the year 2004. The

main reason were as follow:

- The Company recorded share of profit of Tri Energy for the year 2005 in the amount of Baht

468.55 million, increasing by Baht 26.44 million from Baht 442.11 million in the year 2004. The main

reason was that on March 9, 2005, Ratchaburi Gas increased the share proportion in Tri Energy from

37.5 percent to 50 percent.

In the year 2005, the Tri Energy recorded the loss on foreign exchange in the amount of Baht

345.61 million.

- The company recorded share of loss of Ratchaburi Power for the year 2005 in the amount of

Baht 91.56 million, increased by Baht 57.51 million or 1.69 times from Baht 34.05 million in the year

2004. The main reason was due to the Ratchaburi Power’s Power Plant project at Ratchaburi

province is under construction, resulting in the increasing of the administration expenses in the

amount of Baht 106.09 million. Additionally, Ratchaburi Power recorded loss on impairment of land

at Prachuapkhirikhan province in the amount of Baht 44.94 million and recorded loss on foreign

exchange in the amount of Baht 45.23 million while in the year 2004, recorded gain on foreign

exchange in the amount of Baht 9.96 million.

On March 12, 2004, Ratchaburi Alliances Company Limited, the Company’s subsidiary, acquired

25 percent of the total registered and paid up capital of Ratchaburi Power. Currently, Ratchaburi

Power’s Power Plant project is under processing for construction at Ratchaburi province and is

scheduled to commence its commercial operation date in March and June 2008.

1.3 Analysis of Cost of Sales and Expenses

Cost of sales and expenses in the year 2005 were Baht 38,770.47 million, increasing by Baht 4,841.07

million or 14.27 percent from Baht 33,929.40 million in the year 2004. The main reasons were as follows:

A n n u a l R e p o r t 2 0 0 5 60

1) Cost of sales of Ratchaburi Power Plant in the year 2005 was Baht 36,478.53 million, increasing

by Baht 4,305.33 million or 13.38 percent from Baht 32,173.20 million in year 2004. This was resulting from

- An increase in fuel cost amounted to Baht 3,363.03 million. This mainly was due to higher

consumption and higher prices of natural gas and fuel oil in 2005.

- The maintenance expenses for the year 2005 were Baht 1,282.53 million, increased by Baht

894.22 million or 2.30 times from Baht 388.31 million in the year 2004. The main reason was that the

number of the Combined Cycle and Thermal Power Plant shutdown in the year 2005 was more than

that of previous year, resulting in the increase in maintenance service expenses and spare parts

expenses to Baht 471.26 million. In addition, the equipment repairing expenses for finishing

repairing work were Baht 422.96 million higher than those of in the year 2004.

- The insurance expenses for the year 2005 were Baht 177.91 million, decreasing by Baht 47.23

million or 20.98 percent from Baht 225.14 million in year 2004. The main reason was that the

company received discount for the good claim bonus of the power plant’s insurance premium for

the year 2005.

2) The administration expenses for the year 2005 was Baht 961.01 million, increased by Baht

498.04 million or 1.08 times from Baht 462.97 million in the year 2004. The main reason was that on July 25, 2005,

the Principal Subsidiary refinanced the whole amount of principle outstandings loan and recorded the expenses

of this transaction, including the prepayment fee, in the amount of Baht 229.69 million and the written off

deferred financing fee of the previous loan as expense in the amount of Baht 236.52 million.

3) Income tax expenses for the year 2005 was Baht 89.75 million, increased by Baht 53.45 million

or 1.47 times from that of Baht 36.30 million in the year 2004. This was mainly due to the compensation of

combustion system improvement for Ratchaburi Power Plant in the amount of Baht 106 million received by the

Principal Subsidiary in the year 2005 and the increase in interest income from the previous year, which were

subject to income tax.

2. Analysis of Financial Status

2.1 Analysis of Assets

As at December 31, 2005, the Company and its subsidiaries had total assets of Baht 69,940.54

million, Baht 446.35 million or 0.64 percent increase from the year 2004. The classification is provided below:

1) The current assets totaled of Baht 18,300.22 million with an increase of Baht 1,704.74 million.

The main reasons were as follows:

- An increase in cash and cash equivalents in the amount of Baht 3,816.98 million.

- Short-term investments and long-term investments due within one year totaled to Baht

5,141.53 million with a decrease by Baht 2,497.72 million from the previous year.

- Inventories totaled to Baht 2,084.30 million with an increase of Baht 477.57 million from the

end of the previous year. The main reason was an increased of spare parts in transit of Combine

Cycle Power Plant in the amount of Baht 352.03 million.


2) The non current assets totaled of Baht 51,640.32 million decreased by Baht 1,258.39 million. The

main reasons for this were as follows:

- Long-term investments totaled to Baht 358.12 million, Baht 161.39 million decreased from the

previous year.

- Long –term loans to related parties increased in the amount of Baht 242.75 million from the

previous year. The main reason was, during year 2005, the Company had lent RPCL in the amount

of Baht 272.75 million. According to this, Ratchaburi Alliances Company Limited, the Company’s

subsidiary, acquired 25 percent of the share capital of RPCL on March12, 2004.

- Interests in joint ventures totaled to Baht 476.86 million as the result of net investments in

Tri Energy Company Limited and Siam Ethanol Exports Company Limited increased in the amount

of Baht 510.68 million and Baht 8.04 million respectively and loss sharing from RPCL in the amount

of Baht 91.56 million. Additionally, during the year 2005, the Company invested in CRESCO and SEAN

in the amount of Baht 7.10 million and Baht 42.60 million respectively.

- Net property, plant and equipment totaled to Baht 47,561.46 million with a decrease by Baht

1,409.16 million from previous year because of the depreciation of plant and equitment during

the year in the amount of Baht 2,640.55 million. In the other hand, during the year 2005 the

Company recorded the Hot Gas Parts and fuel oil handing system in the amount of Baht 733 million

and Baht 400 million respectively.

2.2 Analysis of Liabilities

As at 31 December, 2005, the Company and its subsidiaries had total liabilities of Baht 38,451.17

million, which was Baht 2,575.01 million or 6.28 percent decreased from the end of the previous year. Current

liabilities were Baht 8,943.22 million, increasing by Baht 35.49 million, compared with those as at the end of the

previous year. Long-term liabilities were Baht 29,507.95 million, decreasing by Baht 2,610.50 million in

comparison with those as at the end of 2004. The underlying factors were the repayment of long-term loans in

the amount of Baht 3,199.09 million.

2.3 Analysis of Shareholders’ Equity

As at December 31, 2005, the Company and its subsidiaries had total shareholders’ equity of Baht

31,489.37 million, Baht 3,021.36 million or 10.61 percent increased in comparison with that of the previous year.

The supporting factors were as follows:

1) Net profit in the year 2005 amounted to Baht 6,066.36 million.

2) Accordance to the Annual General Meeting of Shareholders on April 20, 2005, the Company’s

shareholders approved the appropriation of the Company’s profit for the dividend payment for the operating

results in the 2nd half year of 2004 in the amount of Baht 1,595 million (Baht 1.10 per share), which was paid on

May 16, 2005.

3) The Board of Directors of the Company held on August 15,2005 passed the resolutions to

approve the interim dividends payment for the operating results for the first six month period of 2005 in the

amount of Baht 1,450 million (Baht 1.00 per share), which was paid on September 14, 2005.

As at December 31, 2005, the Company had issued and paid-up share capital in the amount of Baht

14,500 million, with a premium on share capital of Baht 1,531.78 million, legal reserves of Baht 1,298.77 million,

and unappropriated retained earnings of Baht 14,158.82 million.

A n n u a l R e p o r t 2 0 0 5 62

2.4 Major Financial Ratios of the year 2005 and 2004.

3. Analysis of Cash Flows

The ending balance of cash and cash equivalents of the Company and its subsidiaries as at December

31, 2005 was Baht 4,388.09 million with an increase of Baht 3,816.98 million or 6.68 times, compared to the

previous year. The details were summarized below:

1) Net cash provided by operating activities increased in the amount of Baht 2,809.70 million from

year 2004. This was due to the changing in accounts receivable increased the cash flow in the amount of Baht

4,099.96 million resulting from a decrease of the changing in electricity trade receivable at the end of year. In

addition, the changing in account payable decreased the cash flow in the amount of baht 1,089.06 million

resulting from a decrease of fuel trade payable at the end of year.

2) Net cash provided by investing activities increased in the amount of Baht 1,729.62 million from

the year 2004, as a result of an increase in deposits at financial institution and short term investment in the

amount of Baht 2,137.41 million and dividend received from Tri Energy increasing in the amount of Baht 241.52

million. While in the year 2005, the Hot Gas Parts increased in the amount of Baht 666.27 million from the

previous year.

3) Net cash payments from financing activities increased from the previous year in the amount of

Baht 603.87 million. The main reasons were that payments on long-term loans and dividends paid to

shareholders increased in the amount of Baht 311.91 and Baht 292.92 million respectively.

Year 2005 Year 2004

1) Current Ratio (times) 2.05 1.86

2) Net Profit (%) 13.53 16.05

3) Return on Equity (%) 20.24 24.39

4) Return on Assets (%) 8.70 9.50

5) EBITDA (Million Baht) 10,344 10,434

6) EBITDA to Assets (%) 14.84 15.27

7) Debt to Equity (times) 1.22 1.44

8) Debt Service Coverage Ratio (times) 2.33 2.52

9) Book Value per Share (Baht) 21.72 19.63

10) Earning per Share (Baht) 4.18 4.47


G o o d C o r p o r a t e G o v e r n a n c e R e p o r t

1. Good Corporate Governance Policy

The Company’s Board of Directors is committed to directing the Company’s operation by strictly adhering

to good corporate governance principles in compliance with the Stock Exchange of Thailand’s Good Corporate

Governance guideline. The Board of Directors realizes the importance of the principles in ensuring that an

organization adopts efficient and transparent structure, system and process in its business operation, resulting in

higher competitiveness and long-term returns to the Company’s shareholders. The Company has clearly stated this

position in the Company’s vision and mission as well as recorded it in writing in the Board of Directors’

announcement dated January 14, 2003 as follows:

1) Ensuring all operations and management activities are complied with the Good Corporate Governance

principles where conflict of interest is carefully eliminated with integrity, good reasons, independence from all

influences and within ethical framework

2) Arranging for effective and sufficient financial and operational control, internal audit and risk

management

3) Promoting and supervising to ensure correctly, timely and transparently disclose information and

crucial information of the Company

4) Promoting equal treatment of all shareholders according to public company limited management

principles

5) Promoting and supervising to ensure that proper treatment and protection of rights of stakeholders

including customers, employees, business partners, shareholders, creditors, competitors, independent auditors,

governmental organizations and communities

Furthermore, the Company has established the “Good Corporate Governance Committee” to engage

in the Company management and to act as a mechanism for monitoring, supervising, improving and evaluating

works to achieve the Company’s vision, mission and policy mentioned above. The Committee comprises

executives from all business units within the group and is responsible for reviewing and considering related

rules, practices and guidelines, presenting results of the study and recommendations, and implementing

the recommended solutions.

The Company’s commitment to consistent application of good corporate governance principles

through the Company’s management and operation is evidenced in various awards as follows:

1) Thai Rating and Information Service Company Limited in September 2004 rated the Company’s

good corporate governance practice at 8.02 (“Very Good”). As a result, in 2005, the Company was given a 50

percent annual fee reduction privilege granted by the Stock Exchange of Thailand for the second consecutive

year. The Company, thus, paid only Baht 1,380,000 compared to Baht 2,760,000 earlier, and enjoyed greater

convenience in dealing with the Revenue Department and the Department of Business Development, Ministry

of Commerce.

2) On July 18, 2005, the Company won the Best Corporate Governance Report Award and became

one of the 11 winners of the SET Awards 2005 organized by the Stock Exchange of Thailand in cooperation

with Money and Banking Magazine. The award is presented to listed companies with outstanding practice

according to the 15 good corporate governance rules by the Stock Exchange of Thailand which consider

shareholders’ meeting invitations and reports, annual reports and the Form 56-1.

A n n u a l R e p o r t 2 0 0 5 64

3) In the Corporate Governance Report of Thai Listed Companies 2005 announcement by the Stock

Exchange of Thailand, the Securities and Exchange Commission of Thailand, and the Thai Institute of Directors

on November 3, 2005, the Company was ranked “Outstanding” and was in the top 10.

4) At the Board of the Year Award 2004/5 organized by the Thai Institute of Directors, the Stock

Exchange of Thailand, the Thai Chamber of Commerce, the Federation of Thai Industries, the Thai Bankers’

Association and the Listed Companies Association on November 28, 2005, the Company’s Board of Directors

won the “Outstanding Board of Directors of the Year” mention. The award comprises two categories - the

Excellent Board of Directors of the Year and Outstanding Board of Directors of the Year – each includes six

winners. Criteria for judging the winners are based on The Organization for Economic Cooperation and Development

(OECD) Good Corporate Governance Principles including the Board policy, Board Composition, Board Practices,

Board Relations, Board Meeting and Board Leadership.

2. Shareholders’ rights

The Company has a policy to maintain equal protection to interests and rights of all shareholders by

concentrating on enabling shareholders, who are regarded as the business owner, to receive information about

the Company’s operation and to participate in decision making process. The Company has arranged the

shareholders’ meetings in accordance with legal requirements and guidelines set by concerned authorities and

agencies. The Company has a duty and responsibility to ensure the meetings are transparent and fair as well as

are in recognition to the benefits of shareholders and stakeholders as follows:

• The Company delivered to the shareholders’ meeting invitations and information including

meeting agenda, meeting rules, proxy appointment for the shareholders to assign a representative to attend

the meeting and vote on their behalf, and the Board of Directors’ opinion on each agenda. The Company sent

the meeting invitation to the shareholders no less than 14 days prior to the meeting date. It also published

the invitation on the Company’s website in order that the shareholders could conveniently download all the

information and meeting agenda beforehand.

• In the shareholders’ meetings, the Company prepared appropriate and convenient venue where

the shareholders could register about two hours before the meeting time. The shareholders who could not

attend the meeting could assign other persons or the Company’s managing director or independent directors

to attend and vote on their behalf. The Company offered opportunities for the shareholders to ask questions

and request additional information or express their opinion openly and equally. The Company has ensured

there is a transparent vote tally system and that correct record of important opinions raised in the meeting

are included in the meeting report.

• For the Annual General meeting of Shareholders and dividend payment in the last year, the

Company arranged for the closing of the Company’s registration book twice. The Company’s registration book

was first closed for shareholders to receive the right to attend the shareholders’ meeting where the

shareholders shall consider and approve annual dividend payment. The second time was for maintaining

the shareholders’ right to choose whether they wish to maintain their shareholding status in order to receive

dividend after the shareholders’ meeting has resolution on annual dividend payment.

• The Company strictly operates business transparently to ensure shareholders’ confidence that they

will receive equitable and complete returns. Shareholding structure is not crossed. In approving connected

transactions and/or significant items, stakeholders are not allowed to vote.


• The Company has arranged for the shareholders to be treated well and equally and receive basic

rights including the right to receive share certificates and share transfer, the right to receive correct and clear

information, the right to attend meetings and vote on important transactions, the right to choose directors

to manage the Company, and the right to receive profit sharing from the Company which comes in the form

of dividend and/or other rights.

• To prevent exploitation of unpublished inside information, the Company made an announcement

(dated February 5, 2003) requiring its executives, employees and temporary staff to directly report any changes

in the RATCH portfolio of themselves, their spouses, and children who have not attained manhood to the

Company’s managing director within three working days after the changes happen.

3. Stakeholders’ rights

The Company gives importance to the rights of all stakeholders. It formulates the Company’s Code of

Ethics, and Code of Ethics for the Company’s executive and employees, providing clear and fair guidelines

for all groups of stakeholders. The Company’s executives and employees have acknowledged and strictly

respected the Code of Ethics which covers key practices based on scope of responsibility of all involved persons

and on fairness. The Company carefully considers the stakeholders’ legal rights to ensure all stakeholders are

treated equally and fairly. The Company’s treatment on its stakeholders are as follows:

Shareholders : The Company operates its business with transparency to ensure shareholders’ confidence

in equitable and complete. Shareholding structure is not crossed. In approving connected transactions and/

or crucial items, stakeholders are not allowed to vote. The Company considers continuous and sustainable growth

in order to offer the highest possible long-term value to the shareholders.

Employees : The Company equally and fairly treats its employees as well as offers appropriate benefits and

promotes learning and team spirit. Employee remuneration committee was set up to protect employees’ rights.

Business partners : The Company works with its business partners by adhering to fairness and good

relationship. The Company has ensured that systematic and proper procurement process is in place and complies

fully with the Company’s transparent, concise and efficient procurement procedure rules.

Competitors : The Company strictly follows competition rules and practices and not damages its relationship

with the competitors and their reputation.

Society and Community : The Company is committed to maintain and improve quality of life of people

living in the area surrounding its power plant. The Company has initiated and operated the “Ratchaburi Power

Plant’s community Development Project” to take good care of and address safety and quality of the environment.

The Company strictly follows related rules and practices.

4. Shareholders’ meetings

In 2005, the Company held the Annual General meeting of Shareholders on April 20, 2005. The

Company prepared and sent invitation letters and meeting document 14 days before the meeting date to every

shareholder whose name appeared in the Company’s registration book before the closing date. The Company

also published an announcement in Thai and English daily newspapers for three consecutive days and no

less than three days before the meeting date to ensure that shareholders had the opportunity to learn about

A n n u a l R e p o r t 2 0 0 5 66

the meeting schedule and agenda and had sufficient time to study and understand all information in advance.

At the beginning of the meeting, the chairman announced to the meeting names of the attending directors

and informed meeting and voting rules. For the appointment of directors, the Company gave complete profile

of prospective directors and allowed the shareholders to consider and vote for each of the nominated director

separately. Throughout the meeting, the Company gave shareholders opportunities to fully share their views

and expressed their opinions. The Company encouraged questions and recorded important opinions in the

meeting report. The report (completed version) was disseminated through the Company’s website within 14 days

after Annual General meeting of Shareholders and after the report was sent to the Stock Exchange of Thailand

in order that the shareholders can follow up and check the information.

5. Leadership and Vision

The Company’s directors, as the leader of the organization, play a key role in leading the Company to

success. The directors plan and formulate strategies and policy to increase organizational competitiveness,

which means the organizational growth, increasing long-term value to shareholders, and responsibility for all

stakeholders. With integrity and ethics, the Company’s directors are responsible for ensuring that the company

operation fully complies with the related laws and regulations, and shareholders’ meeting resolution, and

ensuring that the executives’ management and administration are in line with the Company’s goals and preset

framework for the maximum benefits of shareholders.

The Company’s directors are independent in decision making for the optimum benefits of the Company

and its shareholders. The directors play a vital role in formulating, approving, and reviewing vision, mission, key

policies, financial goals and budget, and strategic plans, monitoring operating performance of the management

to regularly keep track of business progress, ensuring sufficient internal control and regular monitoring, and

providing policy on appropriate risk management which is a very important and urgent policy that the Company

has to implement and materialize. The directors approved annual performance key index and evaluation criteria in

the beginning of the year and required performance report on quarterly basis for efficient monitoring, reviewing

and adjustment. By the end of the year, the index and criteria will be used for evaluating performance of the

management and the Board of Directors, which is linked to remuneration decision. The sub-committees including

the Audit Committee and Risk Management Committee also play vital role in supervising and monitoring the

management performance closely.

In addition to appraising the Company’s performance against the preset criteria, the Board of Directors has

implemented self assessment measures. Results were used in reviewing and improving their future work process.

This practice has been continued consistently since 2002.

To assist the newly appointed directors in their assignment, the Company provided them with a summary

of core business, the group’s structure, organizational structure, their operations, rules and regulations, key policies

and directors’ rules based on the requirements of the Stock Exchange of Thailand and the Securities and Exchange

Commission.


Mr. Cherdpong Siriwit P P P

Mr. Pala Sookawesh P

Mr. Viravat Chlayon P P

Mr. Suchart Thada-Thamrongvech P P P P

Mr. Sujarit Patchimnun P

Mr. Viroj Klangboonkrong P P P P

Mr. Kraisi Karnasuta P

Mr. Kumphuy Jirararuensak P

Mr. Narong Sitasuwan P

Mr. Chulasingh Vasantasingh P

Mr. Areepong Bhoocha-oom P

Mr. Chanin Vongkusolkit P

Mr. Boonchoo Direksathapon P

Courses

Directors Director Director Audit

Finance for Chairman Certificate Accreditation

Committee Non-finance

Program Program Director

Furthermore, to promote understanding of roles, duty and responsibility as well as necessary skills for

the directors to perform their job more efficiant as the directors of a listed company, the Company has a policy

to encourage the directors to participate in seminars arranged by related organizations, such as the Thai Institute

of Directors (IOD) and the Stock Exchange of Thailand. The directors who attended trainings and seminars

organized by IOD are as follows:

Operating a business based on full compliance with rules and regulations set by the government’s

supervising agencies is one of the Company’s crucial principles. In the Board of Directors meetings, the

management prepared information summary and presented to the Board of Directors for their acknowledgement

of such announcements, rules, regulations and memorandum, both newly written and amendment version

issued by the Securities and Exchange Commission and the Stock Exchange of Thailand.

The Company also sent related staff to attend training course for Board of Directors Secretary, as well as

other relevant courses, organized by the IOD. This is to improve their knowledge and understanding of their

responsibility which are crucial to support the Board of Directors’ operations.

A n n u a l R e p o r t 2 0 0 5 68

6. Conflict of interests

The Company’s Board of Directors and the management have prevented conflict of interests

considering carefulness, integrity, rationale, independence and business ethics for the Company’s benefits.

To maintain transparency and prevent insider trading, the Company’s Board of Directors have

implemented guidelines prohibiting directors, executives, employees, temporary staff, spouse and children who

have not attained manhood from using the Company’s internal information, which is important and yet not

disclosed to the public, for their own or others’ benefits.

The Audit Committee regularly presents to the Board its report on connected transactions.

The committee has thoroughly considered all the transactions and carefully prepared in compliance with

the Stock Exchange of Thailand’s rules and regulations which specifies that the transactions must be reported

and disclosed quarterly as well as stated in the annual report Page 54 and in the Form 56-1.

7. Business Ethics

The Board of Directors is responsible for arranging a system to ensure the Company operates in

accordance with applicable laws and relevant ethical practices. The Company has introduced Code of

Conduct as a guideline for the directors, executives and employees. They are, for example, business practice

guideline, responsibility toward shareholders, social and environmental responsibility, ethical practice

toward customers, ethical practice toward business partners, ethical practice toward the Company, ethical

practice for oneself, colleagues, supervisors and subordinates, and ethical practice toward society and politics.

The Company’s Code of Conduct includes Corporate Code of Conduct, Code of Ethics for Executives and

Code of Ethics for Employees. The code of ethics are based on the strong belief that sustainable and

successful business operations and leadership can be achieved not only through commitment to work,

technology development, efficient management and corporate good governance practice but also business

ethics, transparent and moral business operations, and responsibility for stakeholders, society and environment.

8. Balance of power of non-executive directors

The 13-member of Board of Directors comprises 12 non-executive directors (including five

Independent Directors) and one executive. The number of Independent Directors accounts for more than one

third of the entire Board. Chairman of the Board is an independent, non-executive director and is not the same

person as the Managing Director. Responsibilities of the Board members are clearly identified, ensuring that

the directors properly act as a representative of shareholders and there is sufficient balance of power.

To enhance the Board’s efficiency, the Company has set up three sub-committees to assist the Board in different

areas including the Audit Committee, the Human Resources and Remuneration Committee and the Risk

Management Committee, with details as published on page 30-32.

The Company highly gives importance to the Board of Directors’ ability to maintain independence in

making decision for maximum benefits of the Company and shareholders.

Every member of the Board of Directors strictly honors integrity and protects the Company’s

benefits, realizing they are representatives of the shareholders and responsible for leading and monitoring

the management operation.


To encourage non-executive directors to have their own meeting, the Board rules that non-executive

meeting shall be held at least once a year. In 2005, the Board organized a non-executive meeting in early January

2006. Agenda for the meeting includes directors’ self assessment and recommendations for increasing

the Board’s efficiency namely the Board of Directors’ meeting, management supervision, sub-committee

supervision, management’s report, business plan, internal control system and corporate performance assessment.

9. Aggregation or Segregation of Positions

The Chairman is an Independent Director, not the same person as the Managing Director, and has no

relations to the management. Although the Managing Director is the representative of the major shareholder

who holds 45 percent of the total stake, his responsibility in policy formulation and management are clearly

separated.

10. Remuneration of Directors and the Management

Remuneration for the directors is in line with industry practice and expected contribution from

the Directors. The Directors who are assigned to take extra responsibility, such as being appointed to sub-

committees, will receive additional remuneration.

Directors, who are also the Company’s executives, will receive remuneration in relations to both

corporate and the Board’s performance.

The Board of Directors’ remuneration is submitted to the shareholders’ meeting for approval on annual

basis.

Remuneration of the top management is in line with the policy and criteria set by the Board,

and depend on corporate and individual executive performance. The remuneration is considered and reviewed

by the Human Resources and Remuneration Committee based on the appraisal criteria set earlier. The Board will

finally approve the remuneration of the management.

As required by the Securities and Exchange Commission, the remuneration of the directors and management

is revealed on page 22-24.

11. Board of Directors’ meetings

The Company scheduled the Board of Director’s meeting on monthly basis throughout the year.

The meeting is organized on the third Monday of each month. Next meeting schedule was confirmed in each

meeting to ensure the Directors and management were informed of the schedule and were able to fix their

schedule in order to achieve effective meetings. There are some additional meetings depending on necessity.

Meeting agenda was clearly prepared. The Chairman and Managing Director, who also acted as

the Secretary to the Board, jointly discussed the meeting agenda, including regular operational monitoring

activity, to ensure the important activities were covered. However, the Directors might propose other meeting

agenda with 10-day advance notice. For urgent matters that may have direct or indirect impact on the Company,

the Directors were allowed to propose to the meeting for farther consideration or acknowledgement during

the Board of Directors’ meeting.

A n n u a l R e p o r t 2 0 0 5 70

The Company usually sent meeting invitations together with agenda and document to each of

the Director approximately seven days before the meeting date so that the Directors had sufficient time to

study them beforehand. During the meeting, the Chairman encouraged each Director to fully express their

opinion and consider each agenda carefully, as well as allowed sufficient time for the management to provide

significant information for the Directors to discuss on the matter. Directors could express their opinion openly

and freely. Every director honored his duty to attend every meeting. Top management and concerned

executives also attended the meeting to clarify or provide additional information on the matter, which

assisted the Directors in making decision and provlde the executives the opportunities to witness the Board

of Directors’ administration.

Each meeting lasted for 2-3 hours. The Company assigned the “Corporate secretary department”

to handle corporate secretariat works including meeting arrangement, document preparation for the Company’s

Board of Directors’ and subsidiaries’ meetings, the Company’s and subsidiaries’ shareholders’ meetings,

record, prepare and record of the Board’s and shareholders’ meetings for the Company and its subsidiaries,

provision of information for consideration, support, and facilitating and coordinating on any activities

and administrative works of the Board and the Company’s subsidiaries. The Board’s meeting report was

produced in writing, included complete important information, and was completed within 2-3 days after

the meeting. The concerned departments were informed of the Board’s resolution. The Company arranged

proper place for keeping the meeting reports, which can be checked, investigated and referred to at any time.

In 2005, the Board and sub-committees arranged meetings as follows:

• The Board held 14 regular and special meetings

• The Audit Committee held four meetings

• The Risk Management Committee held two meetings

• The Human Resources and Remuneration Committee held four meetings


Remarks: - The figure before / shows the number of meetings the director attended and the figure after / shows the number of meetings held while the director

was in office.

- Mr. Narongsak Vichetpan resigned from being the Company’s Director from October 1, 2005.

- Mr. Narong Sitasuwan was appointed as the Company’s Director on October 1, 2005.

Risk

Human

Name of Directors

Board Audit Management

Resources and

of Directors Committee Committee

Remuneration

Committee

Mr. Cherdpong Siriwit 12 / 14 4/4

Mr. Viravat Chlayon 14 / 14 4/4 2/2

Mr. Pala Sookawesh 12 / 14

Mr. Suchart Thada-Thamrongvech 11 / 14 4/4 2/2

Mr. Sujarit Patchimnun 10 / 14

Mr. Viroj Klangboonkrong 10 / 14 4/4 2/2

Mr. Kraisi Karnasuta 10 / 14

Mr. Kumphuy Jirararuensak 14 / 14 4/4

Mr. Narongsak Vichetpan 11 / 11

Mr. Narong Sitasuwan 3 / 3

Mr. Chulasingh Vasantasingh 12 / 14

Mr. Areepong Bhoocha-oom 12 / 14 4/4 4/4

Mr. Chanin Vongkusolkit 10 / 14

Mr. Boonchoo Direksathapon 14 / 14

The number of meetings that each director attended can be summarized as follows:

12. Sub-committees

The Board of Directors has set up various sub-committees, each of which comprises non-executive

members, to assist the Board in screening and reviewing various assignments to ensure accuracy and completion

before submitting to the Board for approval or certification.

The Sub-committees include

1) The Audit Committee

2) The Human Resources and Remuneration Committee

3) The Risk Management Committee

The responsibility of each sub-committee is explained on page 30-32. Each sub-committee regularly

reported to the Board.

A n n u a l R e p o r t 2 0 0 5 72

13. Internal Control and Internal Audit

The Company views that internal control both in management and operational levels is very important,

thus, clearly specifies scope of responsibility and authority of the management and employees in writing.

The Company provides for sufficient control on the Company’s assets and resources utilization and clearly

identifies scope of responsibility of every level of operational staff to create check and balance. Accurate,

systematic and timely financial reports are provided for the management and public disclosure.

The Company has the Internal Audit Department which is responsible for auditing all activities to

ensure that the Company’s operation is in accordance with the policies and guidelines set by the management,

achieves the goals and objectives, and ensuring the Company operates in compliance to the related laws and

regulations. To enable Internal Audit Department to operate with full independence, the Company arranges for

the unit to report directly to the Audit Committee.

14. Board of Directors’ Report

The Board of Directors is responsible for the consolidated financial statements of the Company and

its subsidiaries and financial information published in the annual report. The financial statements are made to

the generally accepted accounting standards in Thailand. The Company adopts proper accounting policy

and consistently adheres to it, uses thorough consideration and makes careful projection. The Company also

sufficiently discloses significant information in the financial statements.

The Board arranges for efficient internal control system, which provides reasonable assurance that

the accounting records are accurate, complete and sufficient to safeguard the Company’s assets, and to unveil

weaknesses to prevent fraud or any significant irregularities. The Audit Committee is responsible for the quality

of the financial statements and internal control system. The Audit Committee’s opinion on this matter is

published in the Audit Committee’s Report on page 80.

The Board views that the Company’s internal control is satisfactory and can create reasonable

assurance on the financial statement credibility of the Company’s and its subsidiaries as of December 31, 2005.

The Board has prepared a report on its responsibility on financial statements as published on page 81.

15. Investors’ relations

The Board of Directors realizes that the Company’s financial and non-financial related information

have impact on decision of investors and stakeholders. The Company, therefore, gives high importance to

the correct, completed, transparent and equal disclosure of significant information through mass media,

the Stock Exchange of Thailand, and the Company’s website. The Company regularly held meetings between

its management and analysts and investors to equally provide information and address their concerns.

The Company has assigned the “Investor Relations Department” to communicate and provide

information and news on the Company’s activities to institutional investors, shareholders, analysts, concerned

governmental organizations and general public. Investors can contact the department at Tel. (66) 2978 5086-7 or

at website: www.ratch.co.th or via e-mail address: [email protected].


In 2005, the Company provided information through following activities:

• Analysts meeting to announce quarterly operating performance, allowing opportunity for analysts

to meet with the Company’s management and ask questions. Meeting document was published on

the Company’s website.

• Analysts and individual investors’ visit to Ratchaburi Power Plant, offering opportunity for them

to learn about the Company’s modern electricity generating process and efficient environment management

system of the plant.

• Participation in the SET in the City 2005 jointly arranged by the Stock Exchange of Thailand and

Money and Banking magazine to provide information about the Company and answer questions from

investors and visitors.

• Preparation of Form 56-1 and annual report (Form 56-2) for publishing through Stock Exchange

of Thailand’s ELCID and on the Company’s website. Annual report are sent to shareholders and those who are

interested in the Company’s performance on annual basis.

With its commitment to sufficient information disclosure, the Company in July 2005 won the SET

Award 2005 for Best Corporate Governance Report from the Stock Exchange of Thailand. The award is presented

to a listed company which has outstanding corporate governance practices, and good information disclosure in

the Form 56-1, annual report, meeting invitation and meeting report required by the Stock Exchange of Thailand.

16. Human Resources Responsibility

The Company highly values human resources, which is a key factor enabling all operations to achieve

its goal. Based on its commitment to develop and maintain human resources in order to generate outstanding

performance and sustainable growth, the Company has formulated policy and continuously implemented

efficient human resources projects.

The Company arranges organizational structure to include a department dedicated to human resources

related work and gives high importance to recruiting qualified applicounts to join the team.

The Company promotes human resources development to enhance their knowledge and ability,

enable them to continuously create good work, and prepare them to be ready for business competition and

the Company’s business adaptation. In addition to on-the-job training and work rotation to enhance individual

employee’s skills and capability, the Company has provided internal and external trainings and supported

seminars within and outside the country to encourage employees to work better within their scope of

responsibility and with integrity and ethical practice. The Company creates and promotes unique organizational

culture that is embraced by the management and employees. The Company also supports employees’ career

path development through systematic career path development programs.

The Company also further improves performance appraisal method by involving both employees and

supervisors in setting clear goals that are in line with each unit’s work plan and corporate strategy. Such method

is used in appraising and considering rewards and benefits for the employees. The Company also joined

leading players in the industry in conducting a research on salary and benefit standard in the industry and

used the findings as a guideline in providing appropriate rewards and benefits that are attractive enough to

maintain qualified personnel that is in line with the Company’s performance.

A n n u a l R e p o r t 2 0 0 5 74

Environmental and Social Responsibilities

Environmental and social responsibilities are important in achieving sustainable success in

any business operation. Realizing this, the Company requires for all of its Power Plants to implement

sufficient environmental protection measures and to control possible environmental impact from its

electricity generating activities in compliance with the law. Development and contribution to enhancing

quality of life of people living in the nearby community shall be implemented simultaneously.

In the past year, the Ratchaburi Power Plant, operated by its major subsidiary Ratchaburi Electricity

Generating Company Limited, has strictly followed the prevention, correction and control of Environmental

Impact measures set in the Ratchaburi Power Plant Environmental Impact Assessment approved by the National

Environment Board on March 2, 1996. The safety measures have been specified for best control and to prevent

negative impact.

Environmental management

The Ratchaburi Power Plant has strictly followed the environmental impact reduction and

environmental quality monitoring plan and regularly prepared and provided the report on such matters to

the Office of the Natural Resources and Environmental Policy and Planning every six months. Significant

environmental management measures already implemented are as follows:

• Continuous Emission Monitoring Systems (CEMs): the system collected emission sample from

the end of stacks at Ratchaburi Power Plant every 15 minutes to measure and keep record of carbon

dioxide, nitrogen, sulfur dioxide, carbon monoxide and dust. In the past year, pollution at the Ratchaburi Power

Plant was under control according to the standards specified by the ministerial announcement of the Ministry

of Industry B.E. 2547 on contaminated substances emitted from electricity generating plants, transmission

and distribution, and the ministerial announcement of the Ministry of Science, Technology and Environment

(B.E. 2539).

• Air quality measurement: The Company has installed a measuring tool at the end of each

smokestack as well as implemented Ambient Air Quality Monitoring Systems (AAQMs) by installing four

permanent air quality monitoring stations in the community near the Power Plant for 24-hour monitoring of

sulfur dioxide, nitrogen dioxide, ozone and dust smaller than 10 micron, and dust levels. The monitoring

showed that the level of pollutants, especially sulfur dioxide and nitrogen dioxide in the air surrounding

the Power Plant was relatively low by the standards specified in the National Environment Board

announcements No. 10 (B.E. 2538), No. 21 (B.E 2544), and No. 24 (B.E. 2547).

• Waste water from the Power Plant: The analysis of waste water sample collected at the end of

the waste pipes which are approximately three kilometers from the water retention pond well No. 2 before

being released to the irrigation canal (Khlong Bang Pa) showed that water quality index successfully met

the Irrigation Department’s standards on waste water released to irrigation system, the control standards on

releasing waste water from industrial plant and industrial estates, and the Ministry of Science, Technology

and Environment announcement No. 23 (B.E. 2539).

• Surface water: the Ratchaburi Power Plant collected water sample from four locations – Mae Klong

River at Baan Tha Rab, and three areas in Khlong Bang Pa – before, after and at the Power Plant’s water release

area. The water sample was analyzed against the quality standard of surface water under the National

Environment Board announcement No. 8 (B.E. 2537). The analysis showed that the Dissolved Oxygen (DO)


and Biological Oxygen Demand (BOD) levels in four water samples varied in different seasons. As a result,

the Ratchaburi Power Plant has tightened its measures for monitoring surface water, especially for water in

Khlong Bang Pa. The plant installed water quality measurement tool before and after the Power Plant’s water

release point to continuously monitor water quality including PH, electricity conduction , temperature, DO and

BOD levels.

• Noise control: The Ratchaburi Power Plant regularly measured noise level at the plant and nearby

community four times a year. Noise measurement equipment were installed to keep track of noise level to find

an average in 24 hours for three consecutive days. Results showed that the noise level was below 70 decibel

A and the maximum noise was below 115 decibel A which are within the standard range specified in the National

Environment Board announcement No.15 (B.E. 2540).

Safety measure

To effectively prevent and reduce possible impact, the Ratchaburi Power Plant carefully formulated

safety measures including planning and sparing sufficient space between buildings and facilities in the Power

Plant area to prevent possible accident from spreading, and installing advanced safety equipment especially

the automatic fire prevention equipment in the entire area with risk of fire accident that may occur while

the electricity generators are operating.

Sub fire prevention systems include

- Fire alarm system is: smoke and heat detectors were installed in every building within the

Power Plant and interoperate with the automatic fire distinguishing system. When the devices detect smoke and

heat, they will immediately send signal to the fire alarm and control equipment. Once there is flame,

the detectors will activate the automatic fire distinguishers. Automatic water sprinklers were installed around

transformers. Once receiving fire alarm signal, the sprinklers will immediately spray water.

- Branch and hydrants were installed within and around the electricity generating buildings

and every 100 meters on roads around the buildings.

- Gas fire distinguisher is the automatic system interoperates with the fire alarm system. There

are three gas fire distinguishing systems as follows:

o Carbon dioxide is used in emergency for gas-fired turbine.

o The FM200 system, an environmentally friendly gas is used in the power room.

o Inert gas system used when fire breaks at the operation control unit. Foam system is installed

at every oil tank.

- Foam system is immediately activated when receiving signal from fire alarm system. It will

spray foam under oil tank to prevent fire from spreading. Sprinklers around gas tank will also spray water to cool

down the tanks, preventing tanks from deforming and prevent fire from spreading to the nearby oil tanks.

- Water pumps and water resources include two units as follows

o Unit 1: pumping water from raw water reservoir which has 1.6 million cubic meters of water.

This will be used for fire accident at the Combined Cycle Power Plant.

o Unit 2: pumping water from two 8,800 cubic meter water tanks. The Unit 2 will be used in

case of fire at the Thermal Power Plant. In case that either one of water pumping units does not work, another unit

can be replaced.

A n n u a l R e p o r t 2 0 0 5 76

In addition, the Ratchaburi Power Plant employs loss management system for its safety management

within the Power Plant. This includes rules for people working in the Power Plant and employees and practice

guidelines for contractors who will have to work in the Power Plant area. The Company regularly train and

remind its staff of safety rules before they start to work, including general safety measures, safety measures for

working on high-level places, safety measures for working in poor ventilated areas, rules on working on high

risk areas such as rules related to working with electricity system, and loading and unloading hydrogen, and

chlorine tank change.

In case an accident prevention equipment fails to perform and the accident expands, the Ratchaburi

Power Plant has already prepared systematic emergency plan to limit and minimize possible losses. The plan

also increases confidence in safety level among employees and communities surrounding the plant.

In its emergency plan, Ratchaburi Power Plant is prepared for emergency in four areas – the Thermal

Power Plant, Combined Cycled Power Plant, areas surrounding production buildings and warehouse. The

Ratchaburi Power Plant clearly assigns one person to take care of each area in case of emergency. Fire drill is held

regularly on yearly basis.

Social Responsibility

In addition to efficient environmental management, the Company realizes its duty to build and

maintain recognition from nearby community in which it operates. In the past year, the Company operated

two important social responsibility projects to meet with the requirement of the nearby community. The

projects are viewed as an act of social responsibility and transparency.

1. Ratchaburi Power Plant’s Community Development Project

Focusing on promoting quality of life of the people living in 72 villages in eight sub districts of three

districts near the Power Plant, the project, held in cooperation with the Population and Community Development

Association (PDA), has been operated continuously since 2003. The project encourages participation from locals.

Communities were encouraged to participate in the brain storming session to raise their concerns, needs and

requirement as well as find the best solutions for their own community development. The Ratchaburi Power

Plant’s Community Development Project was then formulated to address the local community requirements.

The project comprised seven major activities. Since then the project has significantly progressed and achieved

various milestones as follows:

• Ratchaburirom Public Park Project: against the goal to build eight parks, one for each district,

the project has already completed four parks in Paeng Puay, Sam Ruan, Don Sai, and Ban Rai Sub districts.

• Village bank and Revolving loan funds: as of June 2005, 17 out of the planned 24 village banks

have been established. There are 2,619 bank members and the total fund is Baht 6,896,552.

• Community development: The Company aims to promote skills development, enabling local

residents to generate higher income. Since the introduction of the project, 34 knowledge and skill training

sessions were held, 19 of which are related skills and knowledge for people in the agricultural sector while

the rest 15 trainings are non-agricultural and household industry.


• Khlong Bang Pa conservation: The Company focuses on coordinating with related organizations

in conducting Khlong Bang Pa survey to collect information about problems and to find the best possible

solutions. The Company has joined force with nearby community in creating and implementing various canal

conservation activities, such as campaigning for no trash in the canal, growing trees on both sides of the canal,

eliminating water hyacinth and improving the canal to support boat race tradition.

• Health and environment: the Company promoted organic vegetables and fruits growing,

environmental sanitation, garbage management in schools, clean house and community, and construction of

community garbage furnace.

• Learning community: the Company regularly organized knowledge and ability development

activities for project participants to ensure that the community is stronger and healthier in order to continue

the community development projects efficiently in the long run. Some of the activities are trainings, seminars

and workshop programs such as community master plan preparation and accounting skills.

• Social and political development: This project is held in recognition of elderly and young people,

as well as restoring local traditions. In the past year, the village administration body was established,

providing young people with an opportunity to learn about and understand the principles of democracy. Other

activities include youth camp for environmental protection, health promotion service, exercises for the elderly,

and various activities on religious days.

2. Ratchaburi Power Plant fact finding and measures to solve pollution and environmental problems

The project was initiated to satify the communities’s need to participate in monitoring the environment

policy of the Ratchaburi power plant in accordance with the Company’s intention to enable the power plant and

communities to live and grow together based on good understanding and recognition.

Muban Chombueng Rajabhat University in Ratchaburi province, is the project leader working

closely with specialists and academics from Chulalongkorn University and Mahidol University, as third-

party independent body, to study on economic and social as well as scientific and technology aspects.

The study covers 72 villages located within 5-kilometer range from the Power Plant and seven villages outside

this range. Objectives of the study are as follows:

• Collecting and studying secondary data on population, economy, problems on people living

near the power plant that may arise from the power plant activities

• Collecting and analyzing sample of air, soil, water, plants and thermal infrared imagery to find

the causes of problem and impact that communities are concerned with

• Studying the changes of types and numbers of insects around the Power Plant

• Discussing with the people in the local community and surveying their opinions about

pollution problems and the Ratchaburi Power Plant

• Analyzing the relationship between scientific rationale and belief or perception about

pollution of people living near the Power Plant

• Providing suggestions that are accepted by all parties

• Preparing future monitoring plan for the Power Plant operations

Key study process includes public participation and project information distribution, as well as technical

hearing on the study results among specialists. The project period is seven months, starting from October 2005,

and it is expected to complete in April 2006.

A n n u a l R e p o r t 2 0 0 5 78

F i n a n c i a l S t a t e m e n t s

A u d i t C o m m i t t e e ’ s R e p o r t

The Audit Committee of the Ratchaburi Electricity Generating Holding Public Company Limited

comprised of four members. Mr. Suchart Thada-Thamrongvech is the chairman of the Audit Committee.

Mr. Viravat Chlayon, Mr. Viroj Klangboonkrong, and Mr. Areepong Bhoocha-oom are committee members.

Mr. Thoedpan Indramaha, Director of the Internal Audit Division acts as the Committee’s secretary. The Audit

Committee members have the qualifications of independent directors as specified in the Company’s

regulation on Company Directors B.E. 2546. Under the regulation, the committee members must not be

nominees of the major shareholders in order to retain independence from major shareholders, executives

and related persons, and must not be neither senior executive nor staff or consultant receiving salary by the

Company. None of the committee members holds more than 0.5% of paid-up capital of the Company.

The Audit Committee has the responsibility as specified in the Company’s regulation on Audit

Committee B.E. 2543.

In 2005, the Audit Committee held four meetings. The management of the Company and

its subsidiaries and the auditors participated in the meetings to present relevant information, and obtain

opinions and suggestions that are useful to the management of the Company. The meeting resolutions

were reported to the Board of Directors of the Company and its subsidiaries for their acknowledgement.

Significant activities of the committee are as follows:

• Reviewing quarterly and annual financial statements of the Company and its subsidiaries

in cooperation with the auditor prior to presentation to the Board of Directors of each company. It is

confirmed that the financial statements of the Company and its subsidiaries comply with the generally

accepted accounting standards and with sufficient disclosure.

• Reviewing the reasonableness of transactions and disclosure of connected transactions.

It is found that most of the transactions are long-term agreement with EGAT Public Company Limited,

which is the major shareholder. The management reported progress and changes in these transactions

to the Audit Committee for acknowledgement every quarter.

• Reviewing the company’s compliance to securities and stock exchange and related

business laws and regulations.

• Reviewing performance and suggestions of the Internal Audit Division to conform to

the internal audit plan approved by the Audit Committee. The Committee viewed that the Company and

its subsidiaries have sufficient and appropriate internal control and transparent corporate governance with

no significant irregularities.

The Audit Committee agreed to propose the Board of Directors to hire Pricewaterhouse Coopers

ABAS Company Limited and appoint of Miss Nangnoi Chaorentaweesap (registration no. 3044) or

Mrs. Anothai Leekitwattana (registration no. 3442), or Mr. Prasan Chuapanich (Registration no. 3051) as

the auditors for the Company and its subsidiaries in 2006, for the third consecutive years. The audit fee

is total amount of Baht 1,771,000, which is the part of the Company at the amount of Baht 478,500.

The Board will submit it to the Shareholders’ Annual General Meeting for approval.

Mr. Suchart Thada-Thamrongvech

Chairman of the Audit Committee

A n n u a l R e p o r t 2 0 0 5 80

The Board of Directors is responsible for the consolidated financial statements and the company

financial statements of Ratchaburi Eleectricity Holding Public Company Limited including financial

information as appeared in this annual report. The financial statements were stated in accordance with

generally accepted accounting principles, applying the appropriate accounting policies and consistently

adhered with careful discretion and best estimation in the preparation. Besides, significant information was

disclosed sufficiently in the notes accompanying the financial statements for the benefit of shareholders

and investors in a transparent manner.

The Board of Directors has provided and maintained the appropriate and efficient internal control

system to reasonably ensure that the accounting data are accurate, complete, and sufficient to maintain

its assets and to prevent fraud and materially irregular operation.

In this regard, the Board of Directors has appointed the Audit Committee to review the accounting

policies, the quality of the financial reports, the internal control, and internal audit systems. The opinions

of the Audit Committee with regard to the matters, which appear in the Report of the Audit Committee,

are already shown in this annual report.

The consolidated financial statements and the company financial statement of the Company

have been audited by the Company’s Auditor, namely PricewaterhouseCoopers ABAS Limited. In auditing,

the Board of Directors provided all relevant information and documents to enable the Auditor to examine

and express his opinion in conformity with generally accepted auditing standards. The Auditor’s

opinion, which appears in the auditor’s report, is already shown in this annual report.

The Board of Directors is of the opinion that the overall internal control system of the Company

is satisfactory and can bring about reasonable confidence that the consolidated financial statements and

the company financial statements of the Company for the year ending December 31,2005are reliable

and prepared in conformity with generally accepted accounting principles and carried out accurately

in accordance with law and all relevant rules and regulations.

Mr.Cherdpong Siriwit Mr.Boonchoo Direksathapon

Chairman Director and Managing Dirctor

T h e B o a r d o f D i r c t o r s ’ R e p o r t o nI t s R e s p o n s i b i l i t y t o F i n a n c i a l R e p o r t


To the Shareholders of Ratchaburi Electricity Generating Holding Public Company Limited

I have audited the accompanying consolidated and company balance sheets as at 31 December 2005 and

2004, and the related consolidated and company statements of income, changes in shareholders’ equity, and

cash flows for the years then ended of Ratchaburi Electricity Generating Holding Public Company Limited

and its subsidiaries, and of Ratchaburi Electricity Generating Holding Public Company Limited, respectively.

The Company’s management is responsible for the correctness and completeness of information in these

financial statements. My responsibility is to express an opinion on these financial statements based on my

audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require

that I plan and perform the audits to obtain reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the overall financial

statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated and company financial statements referred to above present fairly, in all

material respects, the consolidated and company financial position as at 31 December 2005 and 2004, and

the consolidated and company results of operations, and cash flows for the years then ended of Ratchaburi

Electricity Generating Holding Public Company Limited and its subsidiaries, and of Ratchaburi Electricity

Generating Holding Public Company Limited, respectively, in accordance with generally accepted accounting

principles.

Nangnoi Charoenthaveesub

Certified Public Accountant

(Thailand) No. 3044

Pricewaterhouse Coopers ABAS Limited

Bangkok

10 February 2006

A u d i t o r ’ s R e p o r t

A n n u a l R e p o r t 2 0 0 5 82

B a l a n c e S h e e t s

As at 31 December 2005 and 2004

C o n s o l i d a t e d C o m p a n y

Notes 2005 2004 2005 2004

Baht Baht Baht Baht

ASSETS

Current Assets

Cash and cash equivalents 3 4,388,090,118 571,106,851 1,527,141,359 490,195,273

Short-term investments - held-to-maturity 4 4,849,496,812 2,681,816,163 3,650,000,000 2,611,846,674

Deposits at financial institutions used as collateral 4 - 20,125,936 - -

Short-term investments used as collateral 4

- Promissory notes and bills of exchange, net - 3,756,624,246 - -

Long-term investments due within one year 4

- Promissory notes 114,446,940 - - -

- Marketable securities - held-to-maturity 177,576,334 - - -

Long-term investments used as collateral

due within one year 4

- Promissory notes and bills of exchange - 1,119,510,416 - -

- Marketable securities - held-to-maturity - 61,169,791 - -

Trade receivable from a related party, net 18 6,536,324,588 6,645,083,792 - -

Advances to and other receivables from

related parties 18 21,432,700 100,255,043 12,796,651 4,140,123

Spare parts and supplies, net 5 2,084,298,915 1,606,726,712 - -

Other current assets 128,548,731 33,058,301 38,171,609 3,950,430

Total Current Assets 18,300,215,138 16,595,477,251 5,228,109,619 3,110,132,500

Non-Current Assets

Advance to a related party 18 - 400,000,000 - -

Long-term trade receivable from a related party 18 29,704,985 34,655,815 - -

Long-term investments 4

- Promissory notes and bills of exchange, net 276,644,969 - - -

- Marketable securities - held-to-maturity, net 81,480,273 - - -

Long-term investments used as collateral 4 - -

- Promissory notes and bills of exchange, net - 259,548,312 - -

- Marketable securities - held-to-maturity, net - 259,958,503 - -

Long-term loans to related parties 18 649,555,838 406,807,881 1,199,755,838 899,607,881

Investments in subsidiaries 6 - - 25,032,680,859 24,465,914,491

Interests in joint ventures 6 3,035,731,484 2,558,868,197 49,699,965 -

Property, plant and equipment, net 7,8 47,561,454,787 48,970,618,174 42,993,157 43,952,724

Other non-current assets 5,749,330 8,253,627 4,745,881 5,994,349

Total Non-Current Assets 51,640,321,666 52,898,710,509 26,329,875,700 25,415,469,445

Total Assets 69,940,536,804 69,494,187,760 31,557,985,319 28,525,601,945

The notes to the consolidated and company financial statements on pages 89 to 113 an integral part of these financial statements.


B a l a n c e S h e e t s

As at 31 December 2005 and 2004


Notes 2005 2004 2005 2004

Baht Baht Baht Baht

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Trade payable 4,896,779,093 4,644,404,729 - -

Trade payable to a related party 18 67,098,687 216,407,284 - -

Current portion of long-term loans, net 8

- Long-term loans from financial institutions 481,689,873 3,123,950,880 - -

- Debentures 2,330,229,831 - - -

Amounts due to related parties 18 187,791,528 32,784,663 627,341 -

Other payables 287,003,523 301,600,004 - -

Accrued expenses to a related party 18 95,784,839 38,239,368 - -

Other current liabilities

- Corporate income tax payable 25,761,655 18,542,610 - -

- Value added tax payable 183,690,881 175,867,069 861,404 399,015

- Unearned income 19 - 106,000,000 - -

- Dividends payable 10,710,442 11,143,322 10,710,442 11,143,322

- Others 376,680,505 238,793,960 56,420,543 46,050,767

Total Current Liabilities 8,943,220,857 8,907,733,889 68,619,730 57,593,104

Non-Current Liabilities

Long-term loans, net 8

- Long-term loans from financial institutions 23,013,545,951 32,118,445,030 - -

- Debentures 6,494,404,407 - - -

Total Non-Current Liabilities 29,507,950,358 32,118,445,030 - -

Total Liabilities 38,451,171,215 41,026,178,919 68,619,730 57,593,104

Shareholders’ Equity

Share capital 9

Authorised share capital 14,500,000,000 14,500,000,000 14,500,000,000 14,500,000,000

Issued and paid-up share capital 14,500,000,000 14,500,000,000 14,500,000,000 14,500,000,000

Premium on share capital 1,531,778,000 1,531,778,000 1,531,778,000 1,531,778,000

Retained earnings

Appropriated

- Legal reserve 10 1,298,771,531 995,371,531 1,298,771,531 995,371,531

Unappropriated 14,158,816,058 11,440,859,310 14,158,816,058 11,440,859,310

Total Shareholders’ Equity 31,489,365,589 28,468,008,841 31,489,365,589 28,468,008,841

Total Liabilities and Shareholders’ Equity 69,940,536,804 69,494,187,760 31,557,985,319 28,525,601,945


A n n u a l R e p o r t 2 0 0 5 84

S t a t e m e n t s o f I n c o m e

For the years ended 31 December 2005 and 2004


Notes 2005 2004 2005 2004

Baht Baht Baht Baht

Sales 18 44,034,963,981 39,714,032,943 - -

Cost of sales 18 (36,478,528,496 ) (32,173,197,383 ) - -

Gross profit 7,556,435,485 7,540,835,560 - -

Administrative expenses 18 (961,011,679 ) (462,969,477 ) (209,236,066 ) (207,881,617 )

Directors’ remuneration 14 (32,305,243 ) (32,250,273 ) (19,759,500 ) (19,310,124 )

Profit (loss) from sales 6,563,118,563 7,045,615,810 (228,995,566 ) (227,191,741 )

Other income 18

- Management service income 28,062,131 29,527,049 29,555,792 31,049,083

- Interest income 278,509,568 155,889,329 136,802,376 44,953,804

- Others 123,291,404 109,077,509 3,736,913 118,602

Operating profit (loss) 11 6,992,981,666 7,340,109,697 (58,900,485 ) (151,070,252 )

Share of profit of subsidiaries and joint ventures 6 372,010,431 407,901,835 6,125,257,233 6,639,486,874

Profit before interest and tax 7,364,992,097 7,748,011,532 6,066,356,748 6,488,416,622

Interest expenses 18 (1,208,882,850 ) (1,224,680,371 ) - (1,388,348 )

Corporate income tax (89,752,499 ) (36,302,887 ) - -

Net profit for the year 6,066,356,748 6,487,028,274 6,066,356,748 6,487,028,274

Basic earnings per share 12

Net profit for the year 4.18 4.47 4.18 4.47



Statements of Changes in Shareholders’ Equity


Issued and paid-up Premium on Legal reserve Retained earning Total Notes share capital share capital

Baht Baht Baht Baht Baht C o n s o l i d a t e d

C o m p a n y

Opening balance as at 1 January 2005 14,500,000,000 1,531,778,000 995,371,531 11,440,859,310 28,468,008,841

Legal reserve 10 - - 303,400,000 (303,400,000 ) -

Net profit for the year - - - 6,066,356,748 6,066,356,748

Dividends paid 13 - - - (3,045,000,000 ) (3,045,000,000 )

Closing balance as at 31 December 2005 14,500,000,000 1,531,778,000 1,298,771,531 14,158,816,058 31,489,365,589


Legal reserve 10 - - 324,400,000 (324,400,000 ) -


Dividends paid 13 - - - (2,755,000,000 ) (2,755,000,000 )

Closing balance as at 31 December 2004 14,500,000,000 1,531,778,000 995,371,531 11,440,859,310 28,468,008,841


Legal reserve 10 - - 303,400,000 (303,400,000 ) -


Dividends paid 13 - - - (3,045,000,000 ) (3,045,000,000 )

Closing balance as at 31 December 2005 14,500,000,000 1,531,778,000 1,298,771,531 14,158,816,058 31,489,365,589


Legal reserve 10 - - 324,400,000 (324,400,000 ) -


Dividends paid 13 - - - (2,755,000,000 ) (2,755,000,000 )

Closing balance as at 31 December 2004 14,500,000,000 1,531,778,000 995,371,531 11,440,859,310 28,468,008,841


A n

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a l R e p

o r t 2 0

0 5

86

S t a t e m e n t s o f C a s h F l o w s



Notes 2005 2004 2005 2004

Baht Baht Baht Baht

Cash flows from operating activities

Net profit for the year 6,066,356,748 6,487,028,274 6,066,356,748 6,487,028,274

Adjustments to reconcile net profit to net cash provided by

operations:

- Depreciation 7 2,640,549,605 2,584,714,824 26,126,551 24,047,740

- Allowance for obsolescence spare parts and supplies 5 61,419,106 47,971,101 - -

- Amortisation of deferred financing fee 8 276,560,912 53,096,703 - -

- Unrealised currency exchange (gains)/losses 98,248 (17,365,554 ) - -

- Share of profit of investments in subsidiaries and joint ventures 6 (372,010,431 ) (407,901,835 ) (6,125,257,233 ) (6,639,486,874 )

- Gain on disposals of property, plant and equipment (5,736,077 ) - (3,472,350 ) -

- Loss on write off of property, plant and equipment 376,119 - - -

- Others 2,519,857 2,679,988 - -

Cash flows before changes in operating assets and liabilities 8,670,134,087 8,750,223,501 (36,246,284 ) (128,410,860 )

Changes in operating assets and liabilities:

(excluding the effects of acquisition and disposal)

- Trade receivable from a related party 113,710,034 (3,986,245,614 ) - -

- Advances to and other receivables from related parties 78,822,343 (88,373,379 ) (8,656,528 ) (1,367,831 )

- Spare parts and supplies (538,991,309 ) (97,426,574 ) - -

- Other current assets and non-current assets (17,130,291 ) 2,008,788 (23,439,394 ) 7,391,143

- Trade payable and trade payable to a related party 103,065,767 1,192,131,042 - -

- Amounts due to related parties and other payables 60,135,999 31,484,969 627,341 (263,862 )

- Accrued expenses to a related party 57,545,471 (77,186,163 ) - -

- Other current liabilities 46,929,402 37,906,650 10,832,165 617,167

Net cash receipts from (payments in) operating activities 8,574,221,503 5,764,523,220 (56,882,700 ) (122,034,243 )

Cash flows from investing activities

Net cash payments of short-term investments (2,177,419,968 ) (2,404,076,844 ) (1,047,686,643 ) (2,334,313,357 )

Net cash receipts from deposits at financial institutions and

short-term investments used as collateral 3,772,965,936 2,913,973,149 - -

Cash receipts from redeems of long-term investments 782,142,880 - - -

Purchases of long-term investments used as collateral (127,826,100 ) (73,329,353 ) - -

Cash receipts from redeems of long-term investments

used as collateral 363,334,023 39,219,761 - -

Payment of short-term loan to a related party - - (35,000,000 ) (416,250,000 )

Receipt from short-term loan to a related party - - 35,000,000 416,250,000

Acquisition of interest in joint ventures 6 (579,035,400 ) (427,612,500 ) (53,750,000 ) -

Payments for additional call-up of shares of a subsidiary - - - (420,500,000 )

Payments for additional paid-up of shares of a joint venture 6 (8,970,000 ) - - -

Payment of long-term loan to a related party (242,747,957 ) (406,807,882 ) (768,033,357 ) (406,807,882 )

Receipts from long-term loans to a related party - - 467,885,400 225,400,000



S t a t e m e n t s o f C a s h F l o w s



Notes 2005 2004 2005 2004

Baht Baht Baht Baht

Cash flows from investing activities (continued)

Dividends received from a subsidiary and a joint venture 6 483,152,544 241,627,628 5,562,540,900 5,796,184,727

Payment for land deposit - (1,200,000 ) - -

Proceeds from disposal of property, plant and equipment 12,090,629 - 3,793,670 -

Purchases of property, plant and equipment (790,405,183 ) (124,129,620 ) (25,488,304 ) (12,405,452 )

Net cash receipts from (payments in) investing activities 1,487,281,404 (242,335,661 ) 4,139,261,666 2,847,558,036

Cash flows from financing activities

Receipt from short-term loan from a related party - - - 800,000,000

Repayment of short-term loan from a related party - - - (800,000,000 )

Payments of financing leases - (325,800 ) - -

Receipts from short-term loan 10,000,000,000 - - -

Repayment of short-term loan (10,000,000,000 ) - - -

Receipts from long-term loans 8 24,251,548,733 - - -

Repayments of long-term loans 8 (36,274,015,493 ) (2,887,177,884 ) - -

Receipts from issuance of debentures 8 9,990,000,000 - - -

Repayments of debentures 8 (1,166,620,000 ) - - -

Dividends paid to shareholders (3,045,432,880 ) (2,753,142,859 ) (3,045,432,880 ) (2,753,142,859 )

Net cash payments in financing activities (6,244,519,640 ) (5,640,646,543 ) (3,045,432,880 ) (2,753,142,859 )

Net increase (decrease) in cash and cash equivalents 3,816,983,267 (118,458,984 ) 1,036,946,086 (27,619,066 )

Beginning balance 571,106,851 689,565,835 490,195,273 517,814,339

Ending balance 4,388,090,118 571,106,851 1,527,141,359 490,195,273

Cash and cash equivalents are made up as follows:

- Cash on hand and deposits at financial institutions 403,822,540 159,939,413 177,613,364 139,130,287

- Short-term investments - maturity within three months 3,984,267,578 411,167,438 1,349,527,995 351,064,986

4,388,090,118 571,106,851 1,527,141,359 490,195,273

Non-cash transactions:

- Purchase of machinery and equipment which has not been

paid 80,176,136 283,290,560 - 450,000

- Transfer advance payments to property, plant and equipment - 79,530,600 - -

- Transfer advance to a related party to property, plant and

equipment 400,000,000 - - -

- Transfer of machinery and equipment to other receivable 33,664,430 - - -

Supplementary information for cash flows:

Interest paid 1,208,004,740 1,224,680,371 - 1,388,348

Tax paid 84,555,475 36,971,336 1,964,562 1,246,148


A n n u a l R e p o r t 2 0 0 5 88

1. General information

Ratchaburi Electricity Generating Holding Public Company Limited (the Company) is a public

company limited, incorporated and resident in Thailand. The address of its registered office is 19 SCB Park

Plaza, Tower 3 East, 20th Floor, Ratchadapisek Road, Jatujak, Jatujak, Bangkok, Thailand.

The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company

and its subsidiaries and joint ventures are referred to as the Group.

The principal business of the Group is to generate and sell electricity to EGAT Public Company

Limited (“EGAT”) (formerly Electricity Generating Authority of Thailand) and to invest in other companies,

whose objectives are equivalent or similar to the Company’s objective, which is the Power Plant business. As

at 31 December 2005, the Group employs 137 people. (2004: 140 people).

These consolidated and company financial statements have been approved by the management

on 10 February 2006.

2. Accounting policies

The principal accounting policies adopted in the preparation of these consolidated and company

financial statements are set out below.

2.1 Basis of preparation

The consolidated and company financial statements have been prepared in accordance with Thai

generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting

Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of

the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535.

The accounting principles applied may differ from generally accepted accounting principles

adopted in other countries and jurisdictions. The accompanying consolidated and company financial

statements are therefore not intended to present the financial position, results of operations and cash flows

in accordance with jurisdictions other than Thailand. Consequently, these consolidated and company

financial statements are only addressed to those who are informed about Thai generally accepted

accounting principles and practices.

The consolidated and company financial statements have been prepared under the historical cost

convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with Thai generally accepted accounting

principles requires management to make estimates and assumptions that affect the reported amounts of

assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements

and the amounts of revenues and expenses in the reported periods. Although these estimates are based on

management’s best knowledge of current events and actions, actual results may differ from those estimates.

An English version of the consolidated and company financial statements have been prepared

from the statutory consolidated and company financial statements that are in the Thai language. In the event

of a conflict or a difference in interpretation between the two languages, the Thai language statutory

consolidated and company financial statements shall prevail.

As a result of the Federation of Accounting Professions (FAP) approval of three new accounting

standards on 12 May 2005, the Group has adopted TAS 52, ‘Events After Balance Sheet Date’, TAS 53,

‘Provisions, Contingent Liabilities, and Contingent Assets’ and TAS 54, ‘Discontinuing Operations’ since the

second quarter of 2005. However, the adoption of the three new standards did not have an impact on the

consolidated and company financial statements presented.

N o t e s t o t h e C o n s o l i d a t e da n d C o m p a n y F i n a n c i a l S t a t e m e n t s



2.2 Group accounting - investments in subsidiaries, and interests in joint ventures

2.2.1 Investments in subsidiaries

Subsidiaries, which are those entities in which the Group has power to govern the financial

and operating policies, are consolidated. The existence and effect of potential voting rights that are presently

exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group

and are no longer consolidated from the date that control ceases. The purchase method of accounting is

used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of

the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly

attributable to the acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of

the identifiable net assets acquired is recorded as goodwill. Inter company transactions, balances and

unrealised gains (losses) on transactions between group companies are eliminated; unrealised losses are also

eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been

changed to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in subsidiaries are reported

using the equity method of accounting.

A list of the Group’s principal subsidiaries is shown in Note 6.

2.2.2 Interests in joint ventures

The Group’s interests in jointly controlled entities are accounted for by the equity method

of accounting in the consolidated and company financial statements. The Group recognises the portion of

gains or losses on the sale of assets by the Group to the joint venture that it is attributable to the other

venturers. The Group does not recognise its share of profits or losses from the joint venture that result from

the Group’s purchase of assets from the joint ventures until it resells the assets to an independent party.

However, if a loss on the transaction provides evidence of a reduction in the net realisable value of assets or

an impairment loss, the loss is recognised immediately.

A list of the Group’s principal joint ventures is shown in Note 6.

2.3 Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using Thai

Baht. The consolidated and company financial statements are presented in Thai Baht.

Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at

the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to

Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the

settlement of foreign currency transactions and from the translation of monetary assets and liabilities

denominated in foreign currencies, are recognised in the statement of income.

2.4 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash

flows statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, short-

term highly liquid investments with original maturity of three months or less.

2.5 Trade accounts receivable

Trade accounts receivable are carried at original invoice amount less allowance for doubtful

receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is

the difference between the carrying amount of the receivable and the amount expected to be collectible.

Bad debts are written off during the year in which they are identified.

2.6 Spare parts and supplies

Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated

based on the moving average basis. The spare parts are categorised as fuel, specific spare parts and common

spare parts. Specific spare parts are used for specific plant equipment in the power plant.

A n n u a l R e p o r t 2 0 0 5 90

Years

Power plant, substations and transmission system 25

Equipment for Gas Turbine power plant 5 - 25

Operating and maintenance equipment and Equipment for Wind power plant 5

Buildings and structures 5 and 20

Furniture, fixtures and office equipment 5

Vehicles 5

The allowance for specific spare parts is calculated using the straight-line method to write off the

balances of specific spare parts on hand at the year end over the remaining useful life of the power plant.

2.7 Investments

Investments other than investments in subsidiaries and interests in joint ventures are classified as

held-to-maturity. The classification is dependent on the purpose for which the investments were acquired.

Management determines the appropriate classification of its investments at the time of the purchase and re-

evaluates such designation on a regular basis. Investments with fixed maturity that the management has the

intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current

assets, except for maturities within 12 months from the balance sheet date, which are classified as current

assets.

Purchases and sales of investments are recognised on the trade date, which is the date that the

Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Held-to-

maturity investments are carried at amortised cost using the effective rate.

A test for impairment is carried out when there is a factor indicating that an investment might be

impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is

charged to the consolidated and company statements of income.

2.8 Intangible assets

2.8.1 Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the

Group’s share of the net identifiable assets of the acquired subsidiary/joint venture at the date of acquisition.

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of joint

ventures is included in interests in joint ventures. Goodwill is tested for impairment and carried at cost less

accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of

goodwill related to the entity sold.

2.8.2 Development expenditure

Development expenditure is recognised as an expense as incurred. Costs incurred on

development projects are recognised as intangible assets when it is probable that the project will be a

success considering its commercial and technological feasibility, and only if the cost can be measured

reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure

previously recognised as an expense is not recognised as an asset in a subsequent period. Development

expenditure that has been capitalised is amortised from the commencement of the commercial operation

on a straight-line basis over the period of its expected benefit.

2.9 Property, plant and equipment

Property, plant and equipment are initially recorded at cost. Plant and equipment are stated at

historical cost less accumulated depreciation.

Depreciation is calculated using the straight-line method to write off the cost of each asset, except

for land which is considered to have an indefinite life, to their residual values over their estimated useful lives

as follows:

Equipment for the Gas Turbine power plant will be depreciated when it is in use.


Where the carrying amount of an asset is greater than its estimated recoverable amount, it is

written down immediately to its recoverable amount.

Repair and maintenance expenses are charged to the income statement during the financial

period in which they are incurred. The cost of major renovations is included in the carrying amount of the

asset when it is probable that future economic benefits in excess of the originally assessed standard of

performance of the existing asset will flow to the Group. Major renovations are depreciated over the

remaining useful life of the related asset.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and

are included in operating profit.

2.10 Deferred income taxes and income taxes

The Group does not recognise income taxes payable or receivable in future periods in respect of

temporary differences arising from differences between the carrying amounts and tax base of assets and

liabilities in the consolidated or company financial statements.

Subsidiaries have certain promotional privileges from the Board of Investment, which include

exemption of income tax as described in Note 16. Income tax presented in the consolidated and company

statements of income relates to non - BOI promoted activities.

2.11 Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs

incurred. Borrowings are subsequently stated at amortised cost using the straight-line method, any

difference between proceeds (net of transaction costs) and the redemption value is recognised in the

statement of income over the period of the borrowings.

2.12 Employees’ benefits

The Group operates a provident fund that is a defined contribution plan, the assets of which are

held in a separate trust fund and managed by fund managers. The provident fund is funded by payments

from employees and by the relevant Group companies. Contributions to the provident fund are charged to

the consolidated and company statements of income in the year to which they relate. The Group does not

recognise liabilities in respect of employee benefit potentially payable under the Thai Labour Law.

2.13 Revenue recognition

A subsidiary has entered into a 25-year Power Purchase Agreement with EGAT Public Company

Limited (EGAT) whereby the subsidiary will deliver the Net Electrical Generation to EGAT. Revenue comprises

Availability Payments and Energy Payments. Availability Payments are recognised according to the terms set

out in the Power Purchase Agreement, as conditions are met essentially on a time basis of power plant

operation, net amount of sales taxes and discounts. Energy Payments are calculated based on electricity

delivered.

Service income is recognised on the performance of services.

Interest income is recognised on an accrual basis unless collectibility is in doubt.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Revenue from sales and service within the Group are eliminated in the consolidated financial

statements.

2.14 Dividends

Dividends are recorded in the consolidated and company financial statements in the period in

which they are approved by the Annual Shareholders’ meeting.

A n n u a l R e p o r t 2 0 0 5 92

Cash on hand 210,000 210,000 100,000 100,000

Deposits held at call with banks 403,612,540 159,729,413 177,513,364 139,030,287

Short-term investments - maturity within

three months 3,984,267,578 411,167,438 1,349,527,995 351,064,986

Cash and cash equivalents 4,388,090,118 571,106,851 1,527,141,359 490,195,273

Consolidated Company

31 December 31 December 31 December 31 December As at 2005 2004 2005 2004 Baht Baht Baht Baht

2.15 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result

of past events, it is probable that an outflow of resources will be required to settle the obligation, and a

reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the

reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

2.16 Segment reporting

The Group engages in the power plant business through its own operations and through

investments. Management considers its activities as an integrated and complementary line of business and

determines that the Group has only one major business segment. Moreover, in terms of operating locations

and market areas, the Group has only one geographical segment because it operates solely in Thailand.

2.17 Comparatives

The comparative figures have been adjusted to conform with changes in presentation in the

current year.

3 Cash and cash equivalents

As at 31 December 2005, deposits held at call with banks bear interest at the rate of 0.125%

to 2.50% per annum (2004: 0.25% to 1.50% per annum) and short-term investments-maturity within three

months bear interest at the rate of 1.875% to 4.08% per annum (2004: 1.60% to 1.72% per annum).

4 Deposits at financial institutions, short-term and long-term investments

As discussed in Note 8 to the consolidated and company financial statements, on 23 June 2005,

Ratchaburi Electricity Generating Company Limited, a subsidiary, had entered into the refinancing facilities

agreement. The new loan agreement does not require the subsidiary to pledge investments as collateral and

to maintain cash reserves for repayment of principal and interest. However, at the Board of Director’s

meeting of the subsidiary held on 11 July 2005, it has approved the policy to maintain cash reserves for

repayment of principal and interest in the next installment. As at 31 December 2005, such reserves

amounting Baht 940.06 million were included in non-collateral short-term investments and long-term

investments.

As at 31 December 2004, Ratchaburi Electricity Generating Company Limited, a subsidiary, had

deposits at financial institutions, short-term investments and long-term investments used as collateral

totalling Baht 4,455.86 million, and deposits at financial institutions, short-term investments and long-term

investments used as collateral which was cash reserve for repayment of principal and interest in the next

installment of Baht 1,021.08 million.



Held-to-maturity Held-to-maturity

As at 31 December 31 December 31 December 31 December 2005 2004 2005 2004 Baht Baht Baht Baht

Deposits at financial institutions - 20,125,936 - -

Short-term investments Time deposit receipts - - - - Promissory notes - 1,471,140,000 - - Bonds - - - - Bills of exchange, net - 2,285,484,246 - - Total short-term investments - 3,756,624,246 - -

Long-term investments due within one year - Promissory notes and bills of exchange - 1,119,510,416 - - - Marketable securities - 61,169,791 - - Total long-term investments within one year - 1,180,680,207 - -

Long-term investments, net - Promissory notes and bills of exchange, net - 259,548,312 - - - Marketable securities, net - 259,958,503 - - Total long-term investments, net 513,506,815 - -

Total deposits at financial institutions and investments used as collateral - 5,476,937,204 - -

4.1 Investments-non-collateral

As at 31 December 2005, short-term investments-non-collateral bear interest at the rate of 2.875% to 4.20% per annum and as long-term investments-non-collateral bear interest at the rate of 2.10% to 5.81% per annum.

4.2 Investments used as collateral

Short-term investments Time deposit receipts 4,096,000,000 - 3,650,000,000 - Promissory notes 300,000,000 - - - Bonds 453,496,812 - - - Bills of exchange, net - 2,681,816,163 - 2,611,846,674 Total short term investments 4,849,496,812 2,681,816,163 3,650,000,000 2,611,846,674

Long-term investments due within one year - Promissory notes and bills of exchange 114,446,940 - - - - Marketable securities 177,576,334 - - - Total long-term investments due within one year 292,023,274 - - -

Long-term investments, net - Promissory notes and bills of exchange, net 276,644,969 - - - - Marketable securities, net 81,480,273 - - - Total long-term investments, net 358,125,242 - - -

Total investments-non-collateral held to maturity 5,499,645,328 2,681,816,163 3,650,000,000 2,611,846,674


Held-to-maturity Held-to-maturity As at 31 December 31 December 31 December 31 December 2005 2004 2005 2004 Baht Baht Baht Baht

A n n u a l R e p o r t 2 0 0 5 94


Held-to-maturity Held-to-maturity

As at 31 December 31 December 31 December 31 December 2005 2004 2005 2004 Baht Baht Baht Baht (used as collateral)

- Within 1 year 290,305,920 1,179,667,412 - -

- Later than 1 year and not later than 5 years 361,323,700 511,162,380 - -

- Later than 5 years 1,341,120 3,808,360 - -

Total 652,970,740 1,694,638,152 - -

Add Premium/(Discount) (2,822,224 ) 5,548,870 - -

650,148,516 1,700,187,022 - -

Less Current portion (292,023,274 ) (1,180,680,207 ) - -

358,125,242 519,506,815 - -

5 Spare parts and supplies, net



Fuel 589,935,934 572,164,026 - -

Specific spare parts 1,231,879,704 1,077,680,386 - -

Common spare parts 1,194,883 1,194,883 - -

Spare parts in transit 370,678,601 3,658,518 - -

Total 2,193,689,122 1,654,697,813 - -

Less Allowance for obsolescence (109,390,207 ) (47,971,101 ) - -

Spare parts and supplies, net 2,084,298,915 1,606,726,712 - -

Allowance for obsolescence represents allowance against specific spare parts.

6 Investments in subsidiaries and interests in joint ventures

6.1 The Group’s principal subsidiaries and joint ventures are as follows:

Subsidiaries

Ratchaburi Electricity Generating Company Limited, a 99.99% owned subsidiary of the Company,

was incorporated as a limited company in Thailand to develop and operate the Ratchaburi Power Plant

comprising Thermal Generating Units and Combined Cycle Generating Units. The output is sold to EGAT

under a 25-year Power Purchase Agreement.

Ratchaburi Energy Company Limited, a 99.99% owned subsidiary of the Company, was

incorporated as a limited company in Thailand to develop and operate power plant including investing in

the power energy business.

Ratchaburi Gas Company Limited, a 99.99% owned subsidiary of the Company, was incorporated

as a limited company in Thailand to invest in the power energy business.

Ratch Udom Power Company Limited, a 99.99% owned subsidiary of the Company, was

incorporated as a limited company in Thailand to invest in the power energy business.

As at 31 December 2004, deposits at financial institutions used as collateral bear interest at the rate of 0.25% to 0.38% per annum, short-term investments used as collateral bear interest at the rate of 1.50% to 1.98% per annum and long-term investments used as collateral bear interest at the rate of 2.10% to 5.81% per annum.

The maturity of long-term investments is as follows:


The movements in investments in subsidiaries and interests in joint ventures can be analysed as

follows:


31 December 31 December 31 December 31 December As at 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000

Investments in subsidiaries - - 25,032,680 24,465,914

Interests in joint ventures 3,035,731 2,558,868 49,700 -

Total investments in subsidiaries

and interests in joint ventures 3,035,731 2,558,868 25,082,380 24,465,914

Ratchaburi Alliances Company Limited, a 99.99% owned subsidiary of Ratch Udom Power

Company Limited, was incorporated as a limited company in Thailand to invest in the power energy

business.

Joint ventures

Tri Energy Company Limited, a 50.00% owned joint venture of Ratchaburi Gas Company Limited,

was incorporated as a limited company in Thailand to generate electricity for sale solely to EGAT under a 20-

year Power Purchase Agreement.

Ratchaburi Power Company Limited, a 25.00% owned joint venture of Ratchaburi Alliances

Company Limited, was incorporated as a limited company in Thailand to develop the 1,400-Megawatt power

project, the location will be within the existing power plant complex of Ratchaburi Electricity Generating

Company Limited in Ratchaburi province.

Siam Ethanol Exports Company Limited, a 15.00% owned joint venture of Ratchaburi Energy

Company Limited, was incorporated as a limited company in Thailand to produce alcohol for export.

Chubu Ratchaburi Electric Services Company Limited, a 49.99% owned joint venture of the

Company, was incorporated as a limited company in Thailand to provide operation and maintenance

services for the gas-fired combined cycle power plant of Ratchaburi Power Company Limited.

SouthEast Asia Energy Limited, a 25.00% owned joint venture of the Company, was incorporated as

a limited company in Thailand to operate the hydro-electric power plant project (Nam Ngum 2) in the Laos

People’s Democratic Republic.

6.2 Investments in subsidiaries and interests in joint ventures are as follows:


Baht’000 Baht’000

For the year ended 31 December 2005

Opening book value 2,558,868 24,465,914

Acquisition of interests in joint ventures (Note 6.3) 579,035 53,750

Called for additional paid-up share of a joint venture 8,970 -

Share of profit of subsidiaries and joint ventures 372,010 6,125,257

Dividends received from a subsidiary and a joint venture (483,152) (5,562,541)

Closing book value 3,035,731 25,082,380

A n n u a l R e p o r t 2 0 0 5 96

Ratchaburi Electricity Generating Co., Ltd. Electricity generating 99.99 18,275,000 22,471,866 5,562,541

Ratchaburi Energy Co., Ltd. and its joint Electricity generating 99.99 190,000 142,081 -

venture Siam Ethanol Exports Co., Ltd. (not yet operating) and

investing in power

energy business

Ratchaburi Gas Co., Ltd. and its joint venture Investing in power 99.99 1,165,903 2,124,823 -

Tri Energy Co., Ltd. energy business

Ratch Udom Power Co., Ltd. and its subsidiary Investing in power 99.99 420,900 293,910 -

Ratchaburi Alliances Co., Ltd and its joint energy business

venture Ratchaburi Power Co.,Ltd.

20,051,803 25,032,680 5,562,541

Company 31 December 2005

Portion of Cost Equity Business Investment Method Method Dividends (%) Baht’000 Baht’000 Baht’000

Additional paid-up share of a joint venture

In February 2005, Siam Ethanol Exports Company Limited, a joint venture of the Group, called for

additional paid-up share of Baht 2 per share on a total 29.9 million shares, totalling Baht 59.8 million.

Ratchaburi Energy Company Limited, a wholly owned subsidiary of the Company, paid for the additional

paid-up share in the same proportion as its original investment amounting to Baht 8.97 million.

Dividends received from a subsidiary

During the year ended 31 December 2005, Ratchaburi Electricity Generating Company Limited, a

wholly owned subsidiary of the Company, approved the additional payment of dividends in the amount of

Baht 3,004.04 million in respect of 2004 performance and it also approved the payment of interim dividends

in the amount of Baht 2,558.50 million in respect of 2005 performance. The Company received dividends in

May and October 2005.

Dividends received from a joint venture

During the year ended 31 December 2005, Tri Energy Company Limited approved the payment of

dividends in the amount of Baht 483.15 million, which represented 50.00% of our proportion in such joint

venture. Ratchaburi Gas Company Limited received the dividends in the amount of Baht 106.12 million in

October 2005 and Baht 377.03 million in December 2005.

The principal subsidiaries and joint ventures, which are all incorporated in Thailand, are as follows:

Ratchaburi Electricity Generating Co., Ltd. Electricity generating 99.99 18,275,000 22,243,807 5,796,185

Ratchaburi Energy Co., Ltd. and its joint Electricity generating 99.99 190,000 158,657 -

venture Siam Ethanol Exports Co., Ltd. (not yet operating) and

investing in power

energy business

Ratchaburi Gas Co., Ltd. and its joint venture Investing in power 99.99 1,165,903 1,677,807 -

Tri Energy Co., Ltd. energy business

Ratch Udom Power Co., Ltd. and its subsidiary Investing in power 99.99 420,900 385,643 -

Ratchaburi Alliances Co., Ltd and its joint energy business

venture Ratchaburi Power Co.,Ltd.

20,051,803 24,465,914 5,796,185

Company 31 December 2004



The principal joint ventures, which are all incorporated in Thailand, are as follows:

6.3 Acquisition of interests in joint ventures

6.3.1 Tri Energy Company Limited

On 9 March 2005, Ratchaburi Gas Company Limited, a wholly owned subsidiary of the

Company, acquired an additional 12.50% of the share capital of Tri Energy Company Limited, according to a

Call Option Agreement dated 3 February 2005. The subsidiary notified its right to acquire additional share

capital on 10 February 2005. This results in the subsidiary’s interest in this joint venture increasing from

37.50% to 50.00%.

Net assets acquired in Tri Energy Company Limited and the resulting negative goodwill is as

follows:

Tri Energy Co., Ltd. Electricity generating 50.00 1,809,210 2,676,141 483,152

Ratchaburi Power Co., Ltd. Electricity generating 25.00 416,250 290,640 -

(development phase)

Siam Ethanol Exports Co., Ltd. Produce alcohol for export 15.00 20,333 19,250 -

(development phase)

Chubu Ratchaburi Electric Services Provide operation and 49.99 10,000 7,103 -

Company Limited maintenance services

(not yet operating)

SouthEast Asia Energy Limited Electricity generating 25.00 43,750 42,597 -

(development phase)

2,299,543 3,035,731 483,152

Consolidated 31 December 2005


Tri Energy Co., Ltd. Electricity generating 37.50 1,283,925 2,165,459 241,627

Ratchaburi Power Co., Ltd. Electricity generating 25.00 416,250 382,203 -

(development phase)

Siam Ethanol Exports Co., Ltd. Produce alcohol for export 15.00 11,362 11,206 -

(not yet operating)

1,711,537 2,558,868 241,627

Consolidated 31 December 2004


The net assets from the acquisition, as shown above, are stated at the fair value at the date

of acquisition. The consideration of Baht 525 million was settled in cash. The net fair value, which is presented

as a balance of Baht 760 million as at 9 March 2005, was applied as the fair value of the net identifiable assets

at the acquisition date. The resulting negative goodwill of Baht 235 million is recognised and amortisation is

made on a straight-line basis over the remaining term of the joint venture’s Power Purchase Agreement.

Million Baht

Property, plant and equipment, net 1,454

Other assets less liabilities (694 )

Fair value of net assets 760

Negative Goodwill (235 )

Total purchase consideration 525

A n n u a l R e p o r t 2 0 0 5 98

Million Baht

Property, plant and equipment, net 0.28

Other assets less liabilities 34.80

Fair value of net assets 35.08

Goodwill 8.67

Total purchase consideration 43.75

6.3.2 Chubu Ratchaburi Electric Services Company Limited

According to the Shareholders Agreement dated 29 September 2005, the Company agreed

to invest at the proportion of 50.00% of 400,000 common shares of Chubu Ratchaburi Electric Services

Company Limited, with par value of Baht 100 per share, totalling of Baht 20 million. On 17 October 2005, the

Company made the first payment in the portion of the Company’s investment, paid-up Baht 50 per share

amounting to Baht 10 million. Chubu Ratchaburi Electric Services Company Limited operates the operation

and maintenance services for the 1,400 MW gas-fired combined cycle power plant of Ratchaburi Power

Company Limited.

6.3.3 SouthEast Asia Energy Limited

On 3 November 2005, the Company has entered into the Shareholders Agreement and

acquire 25.00% of total common shares of SouthEast Asia Energy Limited from existing Shareholder (CH.

Karnchang Public Company Limited) for a total consideration of Baht 43.75 million, comprises of 2.5 million

shares with a par value of Baht 10 per share fully paid-up, amounting to Baht 25 million and 7.5 million shares

with a par value of Baht 10 per share and paid-up Baht 2.5 per share amounting to Baht 18.75 million.

SouthEast Asia Energy Limited will operate the hydro-electric power plant project (Nam Ngum 2) in the Laos

People’s Democratic Republic.

Net assets acquired in SouthEast Asia Energy Limited and the resulting goodwill is as

follows:

The net assets from the acquisition, as shown above, are stated at the fair value at the date

of acquisition. The consideration of Baht 43.75 million was settled in cash. The net fair value, which is

presented as a balance of Baht 35.08 million as at 3 November 2005, was applied as the fair value of the net

identifiable assets at the acquisition date. The resulting goodwill of Baht 8.67 will be amortised on a straight-

line basis for 25 years, according to the term of the joint venture’s PPA from the commencement of

commercial operations, currently expected to be the year 2013.


As at 31 December 2005, land, buildings, power plant and equipment of Ratchaburi Electricity Generating Company Limited, a subsidiary, amounting to Baht 47,370.90 million

(As at 31 December 2004: Baht 48,832.72 million) have been mortgaged and pledged as collateral in accordance with the long-term loans agreements (Note 8).

7 Property, plant and equipment, net

Power plants, substation & transmission system Equipment for Gas Buildings and operating & Turbine power plant Office and land maintenance which has not been Equipment and Construction in Land improvements equipment put in use vehicles progress Total Baht Baht Baht Baht Baht Baht Baht

At 31 December 2004

Cost 720,974,144 485,095,540 55,425,676,589 433,094,843 205,651,313 1,279,277 57,271,771,706

Less Accumulated

depreciation - (100,468,774 ) (8,087,706,539 ) - (112,978,219 ) - (8,301,153,532 )

Net book value 720,974,144 384,626,766 47,337,970,050 433,094,843 92,673,094 1,279,277 48,970,618,174

Year ended 31 December 2005

Opening net book value 720,974,144 384,626,766 47,337,970,050 433,094,843 92,673,094 1,279,277 48,970,618,174

Additions 2,617,720 - 3,169,738 776,971,724 40,555,582 47,266,555 870,581,319

Transfers (Note 18) 27,865,000 5,199,000 331,672,881 45,877,278 8,077,325 (17,491,484 ) 401,200,000

Disposal, net - - (40,033,028 ) - (362,073 ) - (40,395,101 )

Depreciation charge (Note 11) - (25,148,434 ) (2,573,325,460 ) - (42,075,711 ) - (2,640,549,605 )

Closing net book value 751,456,864 364,677,332 45,059,454,181 1,255,943,845 98,868,217 31,054,348 47,561,454,787

At 31 December 2005

Cost 751,456,864 490,294,540 55,709,771,745 1,255,943,845 225,328,880 31,054,348 58,463,850,222

Less Accumulated

depreciation - (125,617,208 ) (10,650,317,564 ) - (126,460,663 ) - (10,902,395,435 )

Net book value 751,456,864 364,677,332 45,059,454,181 1,255,943,845 98,868,217 31,054,348 47,561,454,787

Consolidated

A n

n u

a l R e p

o r t 2 0

0 5

100

8 Long-term loans, net

The long-term loans are Thai Baht loans as follows:



Equipment and vehicles Baht

At 31 December 2004

Cost 122,396,076

Less Accumulated depreciation (78,443,352)

Net book value 43,952,724

Year ended 31 December 2005

Opening net book value 43,952,724

Additions 25,488,304

Disposals, net (321,320)

Depreciation charge (Note 11) (26,126,551)

Closing net book value 42,993,157

At 31 December 2005

Cost 130,288,480

Less Accumulated depreciation (87,295,323)

Net book value 42,993,157

Current portion of long-term loans from

financial institutions and debentures


financial institutions 509,502,000 3,177,047,583 - -

Less Deferred financing fee amortised within one year (27,812,127 ) (53,096,703 ) - -


financial institutions, net 481,689,873 3,123,950,880 - -

Current portion of unsubordinated and

secured debentures 2,333,240,000 - - -

Less Deferred financing fee amortised within one year (3,010,169 ) - - -

Current portion of unsubordinated and

secured debentures, net 2,330,229,831 - - -

Long-term loans from financial institutions

Long-term loans from financial institutions 23,242,996,000 32,587,465,910 - -

Less Deferred financing fee amortised more than

one year (229,450,049 ) (469,020,880 ) - -

Long-term loans from financial institutions, net 23,013,545,951 32,118,445,030 - -

Unsubordinated and secured debentures 6,500,140,000 - - -

Less Deferred financing fee amortised more than

one year (5,735,593 ) - - -

Unsubordinated and secured debentures, net 6,494,404,407 - - -

Total long-term loans from financial institutions and

debentures 32,585,878,000 35,764,513,493 - -

Less Deferred financing fee (266,007,938 ) (522,117,583 ) - -

Total long-term loans from financial institutions

and debentures, net 32,319,870,062 35,242,395,910 - -

Company


The movements in the long-term loans can be analysed as follows:


Baht Baht

For the year ended 31 December 2005

Opening net book amount 35,242,395,910 -

Cash receipts from long-term loans 24,251,548,733 -

Cash receipts from issuance of debentures 9,990,000,000 -

Repayments of long-term loans (36,274,015,493 ) -

Repayments of debentures (1,166,620,000 ) -

Write off deferred financing fee for prepayment of existing

loans 236,524,195 -

Amortisation of deferred financing fee 40,036,717 -

Closing net book amount 32,319,870,062 -

Long-term loans at 31 December 2004 were secured liabilities under the Loan Agreement dated 9

October 2000 amended on 20 June 2002 and 27 June 2003. The long-term loans are secured over land,

buildings, power plant and equipment of a subsidiary. The subsidiary has to maintain cash reserves which are

provided from the proceeds of sales of electricity for the purpose of repayment of principal and interest in

the next installment (Note 4). In addition, the Power Purchase Agreement, the Asset Purchase Agreement,

the Major Maintenance Agreement, insurance policies and other related agreements with the lenders had

been assigned as collateral in accordance with the conditions under the Loan Agreement.

On 16 June 2005, the subsidiary entered into an underwriting agreement with four local financial

institutions. Under the agreement, these four financial institutions have jointly agreed to underwrite the

refinancing facilities totalling Baht 34,262 million, which comprised Tranche A long-term credit facilities of

Baht 24,262 million, debenture facilities of Baht 10,000 million and Tranche C short-term credit facilities of

Baht 10,000 million as temporary facilities before completion of debenture issuance to refinance the full

amount of existing loans.

On 23 June 2005, such subsidiary entered into a loan agreement with six local financial institutions

which comprised Tranche A long-term credit facilities of Baht 24,262 million and Tranche C short-term credit

facilities of Baht 10,000 million. On 25 July 2005, the subsidiary drew down the Tranche A and Tranche C

credit facilities totalling of Baht 34,262 million to repay the full amount of the existing loans. On that day the

subsidiary redeemed the mortgage and pledge as collateral of land, buildings, power plant and equipment

and investment in securities toward the existing loans, and mortgaged and pledged land, building, power

plant and equipment as collateral in accordance with the refinancing agreement and debentures.

According to the debt restructuring, the subsidiary paid the penalty charge on prepayment of

existing loans amounting to Baht 154.50 million, and write off deferred financing fee for prepayment of

existing loans amounting to Baht 236.52 million, which are recorded as administrative expenses in the third

quarter of 2005.

During 26 to 29 July 2005, the subsidiary issued and distributed the unsubordinated debentures,

bearing the name of the holders, secured, with the debenture holder representative and principal

installment repayments to the general public and institutional investors. The debenture comprised Tranche

B1 of Baht 7,000 million with a three-year repayment period and a fixed interest rate of 3.67% per annum

and Tranche B2 of Baht 3,000 million with a five-year repayment period and a fixed interest rate of 3.67% per

annum for the first and second year and Minimum Lending Rate (MLR) minus 2 per annum throughout the

remaining periods. The subsidiary used proceeds from issuing of debentures amounting to Baht 10,000

million to pay the full amount of Tranche C short-term credit facilities on 29 July 2005.

A n n u a l R e p o r t 2 0 0 5 102

Long-term credit facilities (Tranche A) are subject to the Minimum Lending Rate (MLR) minus

margins as follows:

The maturity of long-term loans can be analysed as follows:

Periods Interest Rate (%)

25 July 2005 - 24 July 2007 MLR - 2.5

25 July 2007 - 24 July 2009 MLR - 2.0

25 July 2009 - 24 July 2015 MLR - 1.5



- Within 1 year

Long-term loans from financial institutions 509,502,000 3,177,047,583 - -


- Later than 1 year and not later than 5 years



- Later than 5 years


32,585,878,000 35,764,513,493 - -

9 Share capital and premium on share capital

Number of

Ordinary Premium on

Shares shares share capital Total

Baht Baht Baht

As at 31 December 2003 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

Issue of shares - - - -

As at 31 December 2004 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

Issue of shares - - - -

As at 31 December 2005 1,450,000,000 14,500,000,000 1,531,778,000 16,031,778,000

As at 31 December 2005, the total authorised number of ordinary shares is 1,450,000,000 shares

(31 December 2004: 1,450,000,000 shares) with a par value of Baht 10 per share (31 December 2004: Baht 10

per share). All issued shares are fully paid.


11 Operating profit

The following expenditure items have been charged in arriving at operating profit:

12 Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the

weighted average number of ordinary shares in issue during the year.


2005 2004 2005 2004 Baht Baht Baht Baht

Fuel costs 31,481,542,696 28,118,503,895 - -

Depreciation on property, plant and equipment

(Note 7) 2,640,549,605 2,584,714,824 26,126,551 24,047,740

Service charges for operation and maintenance expenses 726,387,969 724,808,559 - -

Spare parts, repair and service charges for major

maintenance 1,282,525,399 388,324,627 - -

Insurance premium 177,907,099 225,144,954 - -

Staff costs 145,551,720 137,850,082 83,000,819 79,457,710

Amortisation of deferred financing fee 40,036,717 53,096,703 - -

Write off deferred financing fee for prepayment of

existing loans 236,524,195 - - -

Financing fee for new loans 55,911,191 - - -

Penalty charge on prepayment of existing loan 154,500,674 - - -


2005 2004 2005 2004

Net profit attributable to shareholders (Baht) 6,066,356,748 6,487,028,274 6,066,356,748 6,487,028,274

Weighted average number of ordinary shares in issue

(share) 1,450,000,000 1,450,000,000 1,450,000,000 1,450,000,000

Basic earnings per share (Baht) 4.18 4.47 4.18 4.47

10 Legal reserve


2005 2004 2005 2004 Baht Baht Baht Baht

Opening balance 995,371,531 670,971,531 995,371,531 670,971,531

Appropriation during the year 303,400,000 324,400,000 303,400,000 324,400,000

Closing balance 1,298,771,531 995,371,531 1,298,771,531 995,371,531

Under the Public Companies Act B.E. 2535, the Company is required to set aside as a statutory

reserve at least 5% of its net profit until the reserve is not less than 10% of the registered capital. The reserve

is non-distributable.

There are no dilutive potential ordinary shares in issue during the years presented.

A n n u a l R e p o r t 2 0 0 5 104

2005 2004

Baht Baht

BOI promoted activities 44,035,546,576 39,738,015,697

Non BOI promoted activities 278,978,176 205,173,166

44,314,524,752 39,943,188,863

13 Dividends

At the Board of Directors’ meeting held on 15 August 2005, it was approved the payment of an

interim dividends in respect of 2005 performance for 1,450 million shares of Baht 1.00 per share, totalling

Baht 1,450 million. These dividends were paid to the shareholders in September 2005.

At the Annual Shareholders’ meeting held on 20 April 2005, it was approved to pay dividends in

respect of 2004 performance as follows:

(a) Interim dividends for 1,450 million shares of Baht 0.90 per share, totalling Baht 1,305

million. These interim dividends were paid to shareholders in October 2004.

(b) Dividends for 1,450 million shares of Baht 1.10 per share, totalling Baht 1,595 million. These

dividends were paid to shareholders in May 2005.

At the Annual Shareholders’ meeting held on 12 April 2004, it was approved to pay an additional

dividends in respect of 2003 performance for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450

million. These dividends were paid to shareholders in May 2004.

14 Directors’ remuneration

Directors’ remuneration for the year ended 31 December 2005 in the consolidated and company

statements of income is Baht 32.30 million and Baht 19.76 million, respectively (2004: Baht 32.25 million and

Baht 19.31 million, respectively) comprises meeting fees and bonus. Expenses were approved at the

Company’s Annual Shareholders’ meeting.

15 Provident fund

The Group joined the contributory employees’ provident fund of EGAT Public Company Limited

(EGAT) for their employees. Membership of the fund is on a voluntary basis. The contributions comprise the

employees’ and the Group’s contribution at the same rate. The funds are managed by authorised fund

managers in accordance with the Provident Fund Act B.E. 2530.

16 Promotional privileges

Ratchaburi Electricity Generating Company Limited

On 22 November 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, received

promotional privileges from the Office of the Board of Investment for two promotional certificates

comprising Thermal Generating Power Plant and Combined Cycle Generating Power Plant. Under these

privileges, the subsidiary has received exemption from certain taxes and duties as detailed in the certificates,

including exemption from corporate income tax for a period of 8 years from the date of the first revenue

earned (31 October 2000 for the Thermal Generating Power Plant and 18 April 2002 for the Combined Cycle

Generating Power Plant). As a promoted entity, the subsidiary is required to comply with the terms and

conditions as specified in the promotional certificates.

The revenues for promoted and non-promoted business activities for the years ended 31 December

2005 and 2004 are as follows:


17 Financial instruments

Foreign Currency Risk

The Group has no significant foreign currency risk since the major business transactions of the

Group are carried out in Thai Baht. In respect of currency exchange risk, which mainly relates to the purchase

of spare parts and maintenance expenses in US Dollars, the Group manages its short-term exchange risk by

entering into forward exchange contracts, normally of a maturity of no more than 30 days. In addition, the

pricing formula contained in the PPA with EGAT allows for the inclusion of the exchange risk factor relating

to the purchase of spare parts and maintenance expenses. Trading for speculative purposes is prohibited. All

derivative transactions are subject to approval by the managing director of each company before execution.

Decisions on the level of risk undertaken are confined to the managing director of each company, which has

established limits by transaction type and by counter party.

Credit Risk

The Group has no significant concentrations of credit risk relating to its cash and investments. The

Group places its cash and investments with high quality institutions. The Group’s policy is designed to limit

exposure with any one institution and to invest its excess cash in low risk investment accounts. The Group

has not experienced any losses on such accounts.

The Group has no significant credit risk with any single counterparty or group counterparties as the

only customer of the Group is EGAT, by which the major shareholder is the Government.

Interest Rate Risk

Interest rate risk arises from the fluctuations in market interest rates, which may have a negative

effect on current and future operations of the Group. Management believes that exposure to interest rate

risk is minimal because the floating interest rate according to the condition in the long-term loans

agreements (Note 8) is included in the availability payment as specified in the Power Purchase Agreement

(Note 19). Therefore, the Group does not enter into a hedging agreement to protect against such risk.

18 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or

are controlled by, or are under common control with the Company, including holding companies,

subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning,

directly or indirectly, an interest in the voting power of the Company that gives them significant influence

over the enterprise, key management personnel, including directors and officers of the Company and close

members of the family of these individuals and companies associated with these individuals also constitute

related parties.

In considering each possible related party relationship, attention is directed to the substance of the

relationship, and not merely the legal form.

A major shareholder of the Company is EGAT Public Company Limited (EGAT) which holds 45% of

the Company’s total ordinary shares, and EGAT Employee’s Provident Fund, which holds about 1.11% of the

Company’s total ordinary shares. The Company’s remaining shares are widely held.

Information regarding the Company’s subsidiaries and joint ventures is shown in Note 6.

During the year, the Group has entered into a number of transactions with related parties; the terms

are agreed in the agreement and are in the ordinary course of business and according to normal trade

conditions. Purchases of fuel oil and electricity from EGAT are at market price.

Details of the agreements made with the related parties are shown in Note 19.

A n n u a l R e p o r t 2 0 0 5 106


For the years ended 31 December

2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000


For the years ended 31 December

2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000

The following material transactions were carried out with related parties:

(a) Sales, management service income, interest income and other income

Sales - EGAT Public Company Limited (Note 19) 44,034,964 39,714,033 - -

Management service income - Subsidiaries - - 1,614 1,522 - Joint ventures 28,062 29,527 27,942 29,527

Interest income - Subsidiaries - - 21,132 10,704 - Joint ventures 16,196 9,133 16,196 9,133

Other income - EGAT Public Company Limited 5,723 83,811 - -

Purchases of fuel oil - EGAT Public Company Limited 1,576,939 3,081,595 - -

Purchases of electricity - EGAT Public Company Limited 147,733 132,883 - -

Operation and major maintenance expenses - EGAT Public Company Limited (Note 19) 1,041,148 773,554 - -

Service expense - A subsidiary - - 1,551 -

Interest expense - A subsidiary - - - 1,275

Other income in the consolidated statement of income for the year ended 31 December 2004

included a claim for maintenance of machinery and equipment incurred during the warranty period which

can be claimed from EGAT amounting to Baht 81.75 million. The subsidiary received the payment in the third

quarter of 2005.

(b) Purchases of goods and services and interest expense

(c) Outstanding balances arising from sales/purchases of goods and services



Trade receivable from a related party, net

- EGAT Public Company Limited 6,536,325 6,645,084 - -

Trade receivable from a related party 6,536,325 6,649,958 - -

Less Allowance for doubtful account - (4,874) - -

Trade receivable from a related party, net 6,536,325 6,645,084 - -

Outstanding trade receivable from a related party as above has the credit term within 1 month.




Long-term trade receivable from a related party

- EGAT Public Company Limited 29,705 34,656 - -

Trade payable to a related party


Amounts due to related parties


- A subsidiary - - 627 -

Accrued expenses to a related party




Advances to and other receivables from related

parties

- EGAT Public Company Limited 15,894 96,621 5,885 -

- Subsidiaries - - 1,384 506

- Joint ventures 5,539 3,634 5,528 3,634

21,433 100,255 12,797 4,140

Advance to a related party

- EGAT Public Company Limited - 400,000 - -

Long-term loans to related parties

- A subsidiary - - 550,200 492,800

- A joint venture 649,556 406,808 649,556 406,808

649,556 406,808 1,199,756 899,608

(d) Amounts due from/to, advances and loans to related parties

A n n u a l R e p o r t 2 0 0 5 108

Advance to a related party for the fuel oil handling system amounting to Baht 400 million was

transferred to property, plant and equipment of a subsidiary in the first quarter of 2005 (Note 7).

A long-term loan to Ratchaburi Gas Company Limited, a subsidiary, amounting to Baht 550.20

million represents promissory note at call bearing interest at 12 months fixed deposit interest rate for juristic

persons of Siam Commercial Bank PLC. plus 1.00% per annum. During the year 2005 interest rate is 1.50% to

4.25% per annum (31 December 2004: Baht 492.80 million bearing interest at the rate of 1.50% per annum).

The Company classifies this as long-term loan as the subsidiary will repay this loan when it receives

dividends from its joint venture, Tri Energy Company Limited.

A long-term loan to Ratchaburi Power Company Limited, a joint venture, amounting to Baht 649.56

million is in the form of loan agreement; repayment is on the earlier of two years from the date that the joint

venture received such loans from the Company, or on the date that it gets approval of the loans from

financial institutions. The loan bears interest at the rate of 3.125% to 3.625% per annum (31 December 2004:

Baht 406.81 million bears interest at the rate of 3.125% per annum).

19 Significant agreements

Subsidiary

Power Purchase Agreement with a related party

On 9 October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into

a 25-year Power Purchase Agreement with EGAT whereby the subsidiary will deliver the Net Electrical

Generation from the Thermal Generating Units 1 and 2 and the Combined Cycle Generating Blocks 1, 2 and 3

to EGAT at the agreed condition. Under the Power Purchase Agreement (PPA), the subsidiary will receive

revenue from EGAT comprising of an Availability Payment (AP) and an Energy Payment (EP).

The Availability Payment (AP) covers repayment of principal and interest of loan, equity return for

shareholders, fixed expenses in operation and maintenance and selling and administrative expenses.

Expenses will be adjusted to cover the change of interest rate, Consumer Price Index and exchange rate.

The Energy Payment (EP) covers production costs comprising of fuel costs, variable costs in

operation and maintenance, which will be adjusted in accordance to the fuel costs, efficiency ratio and

Consumer Price Index.

Power Purchase Agreement

On 11 October 2005, EGAT Public Company Limited (EGAT) has notified to Ratchaburi Energy

Company Limited, a subsidiary, informing that EGAT will operate the small Hydro Power Plant Project, Pasak

Cholasid, and consider providing compensation only for the portion that can generate further benefit.

Consequently, the Power Purchase Agreement signed between a subsidiary and EGAT on 1 February 2005

must be implicitly cancelled. On 19 December 2005, the subsidiary sent the notification letter to EGAT

claiming compensation amounting to Baht 26.12 million. Currently, the exact amount of compensation has

not been confirmed.

Fuel Purchase Agreements


a 25-year Gas Sales Agreement with PTT Public Company Limited (PTT) whereby PTT will supply natural gas

to the subsidiary at an agreed quantity and price.

On 29 August 2002 and 30 September 2002, Ratchaburi Electricity Generating Company Limited, a

subsidiary, entered into a memorandum of understanding relating to the combustion system improvement

for Ratchaburi Power Plant with EGAT and PTT to improve the combustion system in order to match with gas

with heat rate at 803 - 858 BTU per Square Feet, which was different from the rate specified in the agreement

(730 - 800 BTU per Square Feet). In this regard, the subsidiary would receive compensation for damage to

equipment, fuel costs, etc. In 2004, the subsidiary received such compensation for combustion system

improvement amounting to Baht 106 million, which was recorded as unearned income in the consolidated

balance sheet as at 31 December 2004 because such improvements have not yet performed. A subsidiary


had completed the improvement of combustion system and recognised unearned income as other income

in the first quarter of 2005.

On 1 June 2004, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 3-

year Diesel Purchase Agreement with PTT Public Company Limited (PTT) whereby PTT will supply diesel to

the subsidiary at the agreed quantity and price.

Operation and Maintenance Agreement and Other Service Agreement from a related party


an Operation and Maintenance Agreement with EGAT for a period of approximately 9 years whereby EGAT

will operate and provide maintenance services including general maintenance and major overhaul for the

subsidiary. The general operation and maintenance charge is approximately Baht 633 million per annum,

adjusted by the Annual Consumer Price Index. In addition, there is an additional charge, which is based on

the actual costs incurred.

On 1 August 2002, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a

Parts Management Agreement for Gas Turbine Model MS9001FA with EGAT for a period of 12 years with an

original contract price of Baht 12 million per annum, adjusted by the annual Consumer Price Index. In

addition, there is an additional charge, based on the actual costs incurred.

Supply of Parts and Maintenance Services Agreement

On 26 September 2001, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered

into a Supply of Parts and Maintenance Services Agreement for the Combined Cycle Generating of

Ratchaburi Power Plant with the Consortium of General Electric International Operations Co., Inc. and GE

Energy Parts, Inc. for a period of 12 years with a total contract price of US Dollars 264 million. On 29

December 2005, the Supply of Parts and Maintenance Services Agreement was terminated and replaced by

the Contractual Service Agreement dated 29 December 2005.

Contractual Service Agreement

On 29 December 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered

into a Contractual Service Agreement for the Combined Cycle Generating of Ratchaburi Power Plant with the

Consortium of General Electric International Operations Co.,Inc. and GE Energy Parts, Inc. The agreement is

effective from the agreement date until the expiration of the operation of gas turbine followed the Power

Purchase Agreement with a total contract price of US Dollars 451 million. As at 31 December 2005, such

subsidiary has outstanding commitments amounting US Dollars 442 million.

Land Lease Agreement and Common Facility Agreement

On 7 June 2004 and 21 October 2005, Ratchaburi Electricity Generating Company Limited, a

subsidiary, entered into a land lease agreement with Ratchaburi Power Company Limited to let Ratchaburi

Power Company Limited lease an area of 143 rais and 2 rais, respectively, in the Ratchaburi Power Plant area

for a power plant project for a period of 25 years and 3 months commencing from Ratchaburi Power’s

commercial operation date. In addition, on 25 November 2005, Ratchaburi Electricity Generating Company

Limited, a subsidiary, entered into Common Facility Agreement with Ratchaburi Power Company Limited

whereby a subsidiary will provide certain facilities, utilities, services, right to use and access rights relating to

the construction, operation and maintenance of the facility to Ratchaburi Power Company Limited at the

agreed condition. This agreement is effective from the agreement’s date until the expiry of the land lease

agreement dated 7 June 2004.

Joint Ventures

Operation and Maintenance Agreement

On 14 December 2005, Chubu Ratchaburi Electric Services Company Limited, a joint venture,

entered into an Operation and Maintenance Agreement with Ratchaburi Power Company Limited for a

period of 14 years with an initial contract price of approximate to Baht 400.5 million per annum.

A n n u a l R e p o r t 2 0 0 5 110

Maintenance and Supply Sparepart Agreement

On 6 December 2005, Chubu Ratchaburi Electric Services Company Limited, a joint venture,

entered into the Maintenance and Supply Sparepart Agreement with Mitsubishi Corporation (Onshore

Contractor) for the approximate value of US Dollars 2.20 million and with M.C. Machinery, Inc. (Offshore

Contractor) for the approximate value of US Dollars 16.28 million coming the period of 14 years. Both

companies will provide supply and maintenance of parts for Gas Turbine.

20 Commitments and contingent liabilities

Company

Shareholders Agreement

On 29 September 2005, the Company and Chubu Electric Power (Thailand) Company Limited has

entered into a Shareholders Agreement to set up Chubu Ratchaburi Electric Services Company Limited

(CRESCO). The Company made the first payment of paid-up capital in October 2005 totalling amount of Baht

10 million. As of 31 December 2005, the Company has commitment to make payment for the unpaid shares

amounting to Baht 10 million. In addition, under this Shareholders Agreement, should Chubu Ratchaburi

Electric Services Company Limited (CRESCO) require additional funding exceed its registered capital, the

Company agreed to provide financial support in the form of shareholder loans or guarantees to Chubu

Ratchaburi Electric Services Company Limited (CRESCO) in proportion of the Company’s shareholding of

50.00%.

According to the Shareholders Agreement dated 3 November 2005 (Note 6.3.3), the Company

purchased 25.00% of total ordinary shares of SouthEast Asia Energy Limited from existing Shareholder (CH.

Karnchang Public Company Limited) for a total consideration of Baht 43.75 million. As of 31 December 2005,

the Company has commitment for the unpaid share capital amounting to Baht 56.25 million. SouthEast Asia

Energy Limited, a joint venture, has the registered capital of Baht 400 million, consisting of 40 million shares

with a par value of Baht 10 per share, 10 million shares are fully paid-up and 30 million shares are Baht 2.50

paid-up per share.

Guarantees

The Company has committed to guarantee to banks an amount of Baht 175 million to secure

certain obligations under the Power Purchase Agreement which Ratchaburi Power Company Limited, a joint

venture, has made with EGAT.

According to the Parent guarantee dated 27 December 2005, the Company, as a shareholder of

Chubu Ratchaburi Electric Services Company Limited, has provided the formance guarantee to Ratchaburi

Power Company Limited in respect of the service provided under the Operation and Maintenance

Agreement, in a proportion of 50.00% of total contract price of the Operation and Maintenance Agreement.

Sponsor Agreement

According to the Sponsor Agreement dated 14 December 2005, the Company has committed to

guarantee to the Lender of Ratchaburi Power Project to provide financial support for the construction of

power plant in a proportion of investment of 25.00% approximately US Dollars 53.5 million, under the terms

and condition of the Loan Agreement between Ratchaburi Power Company Limited, a jointly controlled

entity, and the Lender of the project.

Office rental Agreement

On 12 March 2004, the Company renewed the office building rental agreement with a local

company for a period of three years at a rental charge of Baht 8.1 million per annum. The Company paid the

deposit of Baht 2 million, which is presented under other non-current assets in the balance sheet as at 31

December 2005.


Subsidiaries


According to the Shareholders Agreement dated 23 September 2004, Ratchaburi Energy Company

Limited, a subsidiary, acquired 15.00% of the share capital of Siam Ethanol Exports Company Limited. As of 31

December 2005, the subsidiary has a commitment to make payment for the remaining unpaid share capital

amounting to Baht 24.67 million.

In addition, under the Shareholders Agreement, should the Siam Ethanol Exports Company

Limited require additional funding exceeding its registered capital, Ratchaburi Energy Company Limited, a

subsidiary, agrees to provide financial support in the form of shareholder loans or guarantees to Siam

Ethanol Exports Company Limited in proportion to Ratchaburi Energy Company Limited’s shareholding of

15.00%.

Letter of guarantee

As at 31 December 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, has a

letter of guarantee provided by a bank in respect of electricity usage amounting to Baht 61.44 million (31

December 2004: Baht 60.34 million) and has commitments under a letter of credit issued by a bank for the

purchase of machinery amounting to Baht 13.97 million (31 December 2004: Baht 18.20 million).

Pledge of share agreement

On 15 November 2005, the Board of Directors’ meeting of Ratchaburi Alliances Company Limited, a

subsidiary, approved to pledge all of share certificates of Ratchaburi Power Company Limited, a joint venture,

held by such subsidiary as collateral for loans from lenders of such joint venture.

Joint ventures


According to the Shareholders Agreement dated 27 February 2004, Ratchaburi Alliances Company

Limited, a subsidiary, agrees to increase the registered capital of Ratchaburi Power Company Limited and

subscribe for such new shares at a proportion of 25.00% up to the maximum aggregate amount of US

Dollars 52.5 million, which is equivalent to approximately Baht 2,100 million, or inject capital until the

completion of the project upon the prior approval of all shareholders.

Development fee

According to the Shareholder Agreement dated 27 February 2004, Ratchaburi Power Company

Limited, a joint venture, has committed to pay a development fee of US Dollars 2.5 million (represented

25.00% of our proportion) to the shareholders for services rendered in connection with the development of

the project. The development fee is due for repayment upon the joint venture obtains the credit facility

approval.

Power plant construction fee

As at 31 December 2005, Ratchaburi Power Company Limited, a joint venture, has capital

commitment relating to power plant construction contracts totalling Baht 6,587.28 million (represented

25.00% of our proportion). The construction has not yet started.

Power Plant Operation and Maintenance

Tri Energy Company Limited, a joint venture, expects to pay bonus to the operator according to the

Operation and Maintenance Agreement in the amount equal to the calculation of (i) 70% of the first US

Dollars one million by which the Net Gross Margin exceeds zero and (ii) 50% of any amount by which the Net

Gross Margin exceeds US Dollars one million. The bonus shall be calculated on an annual basis and payable

within 90 days after the balance sheet date.

A n n u a l R e p o r t 2 0 0 5 112

21 Post balance sheet events

Company

On 27 January 2006, the Company paid for additional paid-up capital of SouthEast Asia Energy

Company Limited, a joint venture for 7.5 million shares with a par value of Baht 10 per share and in the

amount of Baht 2.50 per share for a total amount of Baht 18.75 million.

Subsidiaries

On 4 January 2006, Board of Directors’ meeting of Ratch Udom Power Company Limited, a

subsidiary, approved for the loan funding in the form of promissory note not exceeding Baht 1,850 million

and it also approved such subsidiary to provide a loan of the same amount in the form of promissory note to

Ratchaburi Alliances Company Limited to use for the increment in the registered capital of Ratchaburi Power

Company Limited, a joint venture. The above principal can be drawn down in several times during 2006-

2008. The loan repayment shall be at call bearing interest rate at 12 months fixed deposit interest rate for

juristic persons of Siam Commercial Bank PLC. plus 1.00% per annum or at borrowing rate of the Company, in

case the Company has to obtain the loans from third party.

On 17 January 2006, Ratchaburi Energy Company Limited, a subsidiary, has entered into the Gas

Sales Agreement to purchase the by product from crude oil production from PTTEP Siam Company Limited

and PTT Exploration and Production Public Company Limited. The gas will be used for the power plant

project (capacity of 2 Megawatts) with the initial price at Baht 26.65 per 1 million B.T.U. for 8 years from the

commencement of commercial operations, currently expected to be the fourth quarter of 2006.

Joint Venture

On 17 January 2006, Chubu Ratchaburi Electric Services Company Limited, a joint venture, has

entered into an Operation and Maintenance Contract with EGAT Public Company Limited for a period of 25

years with approximate initial value of Baht 228.72 million per annum. This contract may terminate before

the above period ended, if the Operation and Maintenace Agreement between a joint venture and

Ratchaburi Power Company Limited has terminated.


Paid–up

Company Type of Business

Registered Registered Shareholding

Capital

Capital Equity (%)

(Million Baht) (Million Baht)

G e n e r a l I n f o r m a t i o n o f t h e C o m p a n y ’ s

S u b s i d i a r i e s a n d J o i n t V e n t u r e s

Ratchaburi Electricity Generating Holding Investing in power 14,500.00 14,500.00 -

Public Company Limited generating business

Registration Number 0107543000031

19 SCB Park Plaza, Tower 3 East, 20th Floor,

Ratchadapisek Road, Jatujak, Jatujak,

Bangkok 10900 Thailand

Tel. (66) 2978 5000

Fax. (66) 2937 9321

Subsidiaries

1. Ratchaburi Electricity Generating Electricity Generation 18,275.00 18,275.00 99.99

Company Limited

128 Moo 6, Phikhuntong, Muang District,

Ratchaburi 70000 Thailand

Tel. (66) 2978 5111-9, (66) 3236 5740 ext. 3210

Fax. (66) 2937 5110, (66) 3236 5740 ext. 3204

2. Ratchaburi Energy Company Limited Investing in renewable 190.00 190.00 99.99

19 SCB Park Plaza, Tower 3 East, 21th Floor, energy power

Ratchadapisek Road, Jatujak, Jatujak, generating business

Bangkok 10900 Thailand and holding stakes in

Tel. (66) 2978 5200 Siam Ethanol Exports

Fax. (66) 2937 9541 Company Limited

3. Ratchaburi Gas Company Limited Holding stakes in 500.00 500.00 99.99

19 SCB Park Plaza, Tower 3 East, 20th Floor, Tri Energy

Ratchadapisek Road, Jatujak, Jatujak, Company Limited


Tel. (66) 2978 5000

Fax. (66) 2937 9321

4. Ratch Udom Power Company Limited Holding stakes in 420.90 420.90 99.99

19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchaburi Alliances



Tel. (66) 2978 5000

Fax. (66) 2937 9321

5. Ratchaburi Alliances Company Limited Holding stakes in 420.20 420.20 99.99

19 SCB Park Plaza, Tower 3 East, 20th Floor, Ratchaburi Power



Tel. (66) 2978 5000

Fax. (66) 2937 9321

A n n u a l R e p o r t 2 0 0 5 114

Paid–up

Company Type of Business

Registered Registered Shareholding

Capital

Capital Equity (%)

(Million Baht) (Million Baht)

Joint Venture Companies

1. Tri Energy Company Limited Electricity Generation 3,423.80 3,423.80 50.00

1550 Thanaphum Tower, 16th Floor,

New Petchburi Road, Makkasan,

Ratchatavee, Bangkok 10320 Thailand

Tel. (66) 2207 0307-14

Fax. (66) 2207 0315-16

2. Ratchaburi Power Company Limited Electricity Generation 1,665.00 1,665.00 25.00

1828 Sukhumvit Road, Bang Chak,

Pra Khanong, Bangkok 10260 Thailand

Tel. (66) 2344 5111

Fax. (66) 2332 3882

3. Siam Ethanol Exports Company Limited Alcohol production 300.00 75.75 15.00

310 Charunsanitwong Road, Bang Yi Khan, for export

Bang Plad, Bangkok 10700 Thailand

Tel. (66) 2424 0515

Fax. (66) 2433 1336

4. SouthEast Asia Energy Company Limited Electricity Generation 400.00 175.00 25.00

587 Viriyathavorn Bldg, 20th Floor,

Sutthisarn Vinijchai Road, Din Daeng,

Din Daeng, Bangkok 10400 Thailand

Tel. (66) 2275 4873

Fax. (66) 2691 8307

5. Chubu Ratchaburi Electric Services Operation and 40.00 20.00 25.00

Company Limited Maintenance

128 Moo 6, Phikhuntong, Muang District,

Ratchaburi 70000 Thailand

Tel. (66) 2978 5111-9, (66) 3236 5740 ext. 3210

Fax. (66) 2937 5110, (66) 3236 5740 ext. 3204


S h a r e R e g i s t r a r

Thailand Securities Depository Company Limited

The Stock Exchange of Thailand Building

62 Ratchadapisek Road, Klong Toey, Bangkok 10110 Thailand

Tel. (66) 2229 2800, (66) 2654 5599

Fax. (66) 2359 1259

A u d i t o r

PricewaterhouseCoopers ABAS Limited

179/74-80 Bangkok City Tower, 15th Floor,

South Sathorn Road, Thoong Mahamek, Sathorn, Bangkok 10120 Thailand

Tel. (66) 2286 9999, (66) 2344 1000

Fax. (66) 2286 5050, (66) 2286 0500

Legal Advisor

Siam Niti Law Office Company Limited

SCB Park Plaza, West Tower 1, 12th Floor,

18 Ratchadapisek Road, Jatujak, Jatujak, Bangkok 10900 Thailand

Tel. (66) 2937 5000

Fax. (66) 2937 5001

Linklaters (Thailand) Limited

Capital Tower, All Seasons Place, 20th Floor,

87/1 Wireless Road, Bangkok 10330 Thailand

Tel. (66) 2305 8000

Fax. (66) 2305 8010

White & Case (Thailand) Limited

Gaysorn Plaza Building, 4th - 5th Floor,

999 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Thailand

Tel. (66) 2656 1721

Fax. (66) 2656 1733

Financial Advisor

SCB Securities Company Limited

130-132 Sindhorn Tower 3, 26th Floor,

Wireless Road, Pathumwan, Bangkok 10330 Thailand

Tel. (66) 2263 3500

Fax. (66) 2263 3801-2

R e f e r e n c e I n f o r m a t i o n

A n n u a l R e p o r t 2 0 0 5 116

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RATCH: Annual Report 2005

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