GLOW SPP PUBLIC COMPANY LIMITED

Transcription

1 CreditNews Announcement No. 299 Date of Announcement: 23 December 2004 GLOW SPP PUBLIC COMPANY LIMITED Company Rating: Affirmed at A- Issue Ratings: COCO#1: Bt2,200 million guaranteed debentures due 2005 Affirmed at A- GLOW089A: Bt6,500 million guaranteed debentures due 2008 Affirmed at A- GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Affirmed at A- GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A- Rating Outlook: Stable RATIONALE TRIS Rating affirms the company rating of Glow SPP PLC 1 and the ratings of its debentures at A-, taking into consideration GLOW SPP s prospective acquisition of Glow Co., Ltd. GLOW SPP plans to acquire 100% of Glow s shares from Tractebel Electricity & Gas International ( Tractebel EGI ) 2, which is also the parent of GLOW SPP. This acquisition will be funded partly by debt, partly by equity and partly by internal cash. The ratings reflect the company s stable cash flow from long-term Power Purchase Agreements (PPAs); the diversification of its fuel types; the dividend contribution expected from two projects under Glow whereby the additional debt incurred for the acquisition will be within its current debt service ability; and the experienced management team put in place by its parent, Tractebel EGI. The ratings also incorporate power plant operation risk and uncertainty about the planned deregulation of the power industry. GLOW SPP group, consisting of Glow SPP 2 Co., Ltd. 3 and Glow SPP 3 Co., Ltd., 4 is the largest small power producer (SPP) in Thailand. Using cogeneration technology, GLOW SPP supplies electricity, steam and treated water to manufacturers in the Map Ta Phut Industrial Estate and sells electricity to the Electricity Generating Authority of Thailand (EGAT). GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, currently have total generating capacity of 814 megawatts (MW) of electricity, 770 tons per hour (t/h) of steam, 2,000 cubic meters per hour (cu.m/h) of clarified water and 660 cu.m/h of demineralized water. According to the GLOW SPP group s reorganization plan, GLOW SPP plans to purchase 100% of Glow s shares from Tractebel EGI, for approximately Bt7,500 million. Funding for this purchase will be sourced from internal cash, equity and additional borrowing. After the acquisition, the power generating business of Tractebel EGI in Thailand will be solely monitored through GLOW SPP, whose portfolio will include another two completed electricity generating projects (Glow IPP Co., Ltd.-- an independent power producer 95% owned by Glow, and Glow SPP1 Co., Ltd.-- an SPP wholly owned by Glow) with totaling 860 MW designed capacity. Consequently, GLOW SPP group will have total generating capacity of 1,674 MW of electricity, 900 t/h of steam, 2,000 cu.m/h of clarified water and 810 cu.m/h of demineralized water. Besides the initial investment, both projects are unlikely to incur any additional burden to GLOW SPP in the future as they are financed under the project finance scheme. On the other hand, GLOW SPP can expect dividend contributions from both projects under the conditions of their project financing agreements Previously The Cogeneration PLC (COCO); name changed in May 2003 Previously Tractebel S.A.; structure changed in 2004 Previously MTP Cogeneration Co., Ltd. (MTP); name changed in May 2003 Previously Thai Cogeneration Co., Ltd. (TCC) ; name changed in May /12/2004 1

2 The additional debt required to fund this acquisition will be structured, taking into consideration GLOW SPP s current debt service ability, and the repayment will be made from cash in excess of its existing debt service obligations. The stability of the company s cash flow is expected to continue strong, even after the acquisition, as a result of 21 to 25 years PPAs with EGAT, and contracts ranging from three to 17 years with individual industrial clients. The PPAs are designed to cover fixed costs, including investment costs, through capacity payments and variable costs, such as fuel and maintenance costs, through energy payments. Capacity payments partly mitigate the foreign exchange rate risk by adjusting the contract rate to reflect the current exchange rate. GLOW SPP and its subsidiary, GLOW SPP2, had long-term maintenance contracts with major equipment suppliers to ensure plant performance and stability. However, these long-term maintenance contracts were terminated and new long-term maintenance contracts were awarded to Wood Group, effective 1 January Its coal-fired plant alleviates fuel procurement risks by reducing the company s dependency on gas. The volume of gas the company consumes shrank from 100% of total fuel to 80%-90% after the coal-fired plant became fully operational in Furthermore, long-term gas and coal supply contracts alleviate the risk of fuel shortages. As of June 2004, Tractebel EGI owned 99% of GLOW SPP. Tractebel EGI, the international energy division of SUEZ, offers global solutions in energy and services in North America, the southern cone of Latin America, Asia and the Middle East. Tractebel EGI has a strong presence in its markets with a total power capacity (in operation, under construction or under development) of nearly 26,000 MW. In the LNG business, Tractebel EGI has a vaporization capacity of 27.8 million cubic meters (cu.m) of natural gas per day and owns or has secured long-term shipping capacity of 766,100 cu.m of LNG. In 2003, Tractebel EGI sold nearly 81.4 million MWh of power, billion cu.m of gas, and more than 29 million tons of steam to industrial and residential customers worldwide. In 2003, Tractebel EGI booked a turnover of EUR4,491 million. In 2003, GLOW SPP s operating performance was satisfactory. The company was able to maintain its equivalent availability factor (EAF) at 95%. Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 British Thermal Units per kilowatt hour equivalent (BTU/kWh eq), improving from 9,169 BTU/kWh eq in However, its operating income as a percentage of sales decreased from 34.1% in 2002 to 29.5% in 2003 mainly due to refinancing expenses in the second half of This ratio declined further, to 28.5% in the first half of 2004, as a result of rising gas and coal prices. The new power industry model, namely the Enhanced Single Buyer or ESB system, has been adopted following a cabinet resolution on 9 December The ESB model is expected to have less impact on existing PPAs than the previous power pool system because EGAT continues to be the single power purchaser buying from all power producers. However, the details of this model, its impact on existing players, and EGAT s role in the electricity generation business remain to be seen. RATING OUTLOOK The stable outlook reflects GLOW SPP s reliable cash flow from its long-term PPAs with EGAT and industrial customers. The company is expected to continue to achieve its operational performance targets while maintaining an acceptable financial position. INDUSTRY For several decades, Thailand s electricity sector has been dominated by three stateowned enterprises involved in the generation, transmission and distribution of power. Electricity Generating Authority of Thailand (EGAT) has dominated electricity generation 27/12/2004 2

3 and transmission, while the Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA) have been responsible for distribution. MEA and PEA are obligated to purchase the energy they need from EGAT. Privatization of the power sector began in the electricity generating sector by encouraging private companies to produce and sell electricity to EGAT. The small power producer (SPP) scheme was introduced in 1992, followed by the independent power producer (IPP) scheme in Both IPPs and SPPs have 20- to 25-year PPAs with EGAT. The PPAs are well designed to mitigate the market risk of the operators, leaving mainly operating risk to be managed. Private producers under the IPP scheme are obligated to sell all electricity output to EGAT, while the private power producers under the SPP scheme can sell electricity either to EGAT or to industrial users. In addition, EGAT sold two of its power plants to Electricity Generating PLC (EGCO) in 1995 and 1996, and then sold the Ratchaburi power plant to Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) in As of September 2004, Thailand had combined installed capacity of 25,969 megawatts (MW). EGAT had 59.1% of the total, followed by EGAT affiliates and IPPs (30.8%), SPPs (7.6%) and power imported from Laos and Malaysia (2.5%). EGAT s share of power generation capacity has decreased from 100% before 1995 to 82% in 1999 and 59% at the end of September Electricity generation from private producers sharply increased by 2,870 MW (17%) in 2000 when the first two IPPs, Tri Energy Co., Ltd. (TECO), Independent Power (Thailand) Co., Ltd., and the first two units of the Ratchaburi power plant began commercial operations. Electricity generation from private producers increased by another 2,175 MW in 2002 from RATCHGEN s three combined cycle blocks. The role of SPPs has not changed much in recent years. According to Energy Policy and Planning Office (EPPO), as of June 2004, EGAT had signed contracts with 79 SPP projects. Total installed capacity of all SPPs increased marginally from 3,448 MW in December 2001 to 3,619 MW in December 2003 and to 3,878 MW in June As of September 2004 generating capacity purchased from SPPs accounted for 7.6% of EGAT s total installed capacity. Major SPPs are GLOW SPP Group, National Power Supply Co., Ltd. and Siam Power Generation Co., Ltd. The combined capacity of the large SPPs equaled 34% of total SPP capacity. Major groups that participate in SPPs include the Tractebel EGI, Soon Hua Seng, H.E.I. Thailand (Rayong) Ltd., Gulf Electric and EGCO. Despite the short period after the economy crisis, electricity demand in Thailand has been strong over the past several decades. According to the latest demand forecast for power (January 2004), under a moderate economic growth scenario, electricity consumption will expand at an average rate of 7.1% from 2002 to 2006, 7.0% from 2007 to 2011 and 6.5% from 2012 to The power pool system, which was designed to promote competition in electricity supply, was officially cancelled by a cabinet resolution on 9 September The new power industry model, namely the Enhanced Single Buyer or ESB system, was implemented under a cabinet resolution on 9 December The ESB model is expected to have less impact on existing PPAs than the power pool system because EGAT continues to be the single power purchaser buying from all power producers. However, the details of this model, its impact on existing players, and EGAT s role in the electricity generation business remain to be seen. GROUP S REORGANIZATION PLAN Under the reorganization plan, GLOW SPP PLC will acquire 100% of Glow Co., Ltd. by the end of As a result, GLOW SPP will become Tractebel EGI s sole investment arm in the electricity generating business in Thailand. All companies under GLOW SPP and Glow shall be referred as the Group thereafter. Glow, currently 100% owned by Tractebel EGI, is a holding company set up in March 1997 to manage Glow IPP Co., Ltd. (740 MW IPP), Glow SPP1 Co., Ltd. (120 MW SPP), and Glow Demin Water Co., Ltd. (GDW, 80 27/12/2004 3

4 cu.m/h demineralized water operator). GDW, due to the small scale of its operation, has provided minimal contributions to Glow and is not expected to significantly impact the Group s credit profile. The shareholding structure before and after the reorganization is shown in Chart 1(a) and Chart 1(b), below. Chart 1(a) GLOW SPP s Current Shareholding Structure Chart 1(b) GLOW SPP s Shareholding Structure after Reorganization According to the Group s reorganization plan, 100% of the shares of Glow will be valued based on the book value of Glow, which is estimated at approximately Bt7,500 million. GLOW SPP will source the necessary funds through the combination of internal cash, equity and additional debt up to Bt5,000 million. Both GLOW IPP and GLOW SPP1 were financed under the project finance scheme that will secure and reserve all required funds for their operations, maintenance and debt services. Hence, GLOW SPP is unlikely to incur any additional burden in the future. In return for the investment, GLOW SPP can expect to receive dividend payouts from both companies upon the satisfaction of the project finance conditions. GLOW SPP1 has already generated dividends of Bt300 million in 2002 and Bt50 million in Due to the time constraint, the additional debt of up to Bt5,000 million may be bridge-financed by the shareholder loan and will be replaced from the money market accordingly. In any case, the structure of new debt will schedule the repayment from cash in excess of GLOW SPP s existing debt service obligations, i.e. taking into consideration the available cash flow in year 2006, when the amount of existing scheduled debt service is low, and year 2011 or afterward, which all existing debts have matured and have been fully 27/12/2004 4

5 redeemed. Hence, the company s debt service, including the additional borrowing, will be within its ability to service In relation to the financial assessment of GLOW SPP going forward, since GLOW IPP and GLOW SPP1 are under project finance, TRIS Rating will continue to evaluate GLOW SPP s financial position with the consolidation of GLOW SPP2 s and GLOW SPP3 s performance. GLOW IPP and GLOW SPP1 will be treated as a project investment that will provide dividend contributions to GLOW SPP. GLOW IPP, located in Chonburi Industrial Estate (CIE), Chonburi, was established as an IPP in March 1997 as an equal partnership between Tractebel S.A. (changed to Tractebel EGI followingly) and Hemaraj Land and Development PLC (HEMRAJ). HEMRAJ gradually diluted its stake to Tractebel EGI, and is left with a 5% holding, as required by EPPO. The company was named Bowin Power Co., Ltd. before being changed to GLOW IPP in May The commercial operation commenced in January 2003 with designed capacity of 740 MW of electricity. The generator is a combined cycle using ABB Alstom Power, Switzerland (Alstom) technology, and consumes natural gas or diesel oil as fuel. The electricity output is solely supplied to EGAT under a 25-year PPA with 713 MW contracted capacity. All gas consumption is supplied by PTT PLC (PTT) under a 25-year Gas Sales Agreement (GSA) with a minimum offtake obligation guaranteed by EGAT. GLOW SPP1, located in Eastern Industrial Estate (EIE), Rayong, was established in December 1994 as Industrial Power Co., Ltd., whose name was changed in May The first unit s commercial operation began in February 1998, operating combined cycle cogeneration under the SPP program, with total capacity of 120 MW of electricity, 130 tons per hour (t/h) of steam and 70 cubic meters per hour (cu.m/h) of demineralized water. 110 MW of the electricity output is sold to EGAT under a 23-year PPA; the rest is supplied to industrial users and so is steam output. GLOW SPP1 also has a 21-year GSA with PTT to supply 22.4 million cubic feet per day (cu.f/day) of natural gas. The offtake obligation is take-or-pay for a minimum of 85% of the committed volume. BUSINESS In 1993, GLOW SPP PLC was established by Banpu PLC, Nordic Power Invest (NPI), and Imatran Voima Holding. As of April 2000, Sithe Pacific Holdings Ltd. (Sithe) was its biggest shareholder, with a 34.45% stake, and Banpu held 32.85%. Through a combination of private acquisitions and tender offers, Tractebel EGI acquired GLOW SPP shares and currently holds almost 100% of GLOW SPP. GLOW SPP was delisted from the Stock Exchange of Thailand in August GLOW SPP, the largest SPP in Thailand, produces electricity, steam and treated water using cogeneration technology to supply large-scale industries in Map Ta Phut Industrial Estate and to sell electricity to EGAT. GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, have total generating capacity of 814 MW of electricity, 770 t/h of steam, 2,010 cu.m/h of clarified water and 660 cu.m/h of demineralized water. After the reorganization, which is expected be completed by the end of 2004, GLOW SPP s electricity capacity will double to 1,674 MW. Steam will increase to 900 t/h, clarified water will remain 2,010 cu.m/h and demineralized water will increase to 810 cu.m/h. Table No. 1: Product Capacity of GLOW SPP Group Plants Power (MW) Steam (t/h) Clarified Water (cu.m/h) Demin. Water (cu.m/h) GLOW SPP GLOW SPP GLOW SPP , Sub total , GLOW IPP 740 GLOW SPP /12/2004 5

6 Glow Demin Water 80 Grand total 1, , As GLOW SPP s and Glow s major shareholder, Tractebel EGI has provided both companies with well-experienced management teams. Tractebel EGI is one of the business divisions of SUEZ, an international industrial and services Group that provides businesses, public authorities and individuals with innovative solutions in energy and the environment. Tractebel EGI offers global solutions in energy and services in North America, the southern cone of Latin America, Asia and the Middle East. It develops, builds and operates energy facilities both in electricity and gas, including LNG. It transports and distributes natural gas and LNG in several countries outside Europe. Tractebel EGI is also active as a trader around its assets and as a marketer in electricity and gas, and offers energy related services to industrial and commercial userscustomers. Tractebel EGI has a strong presence in its markets with a total power capacity (in operation, under construction or under development) of nearly 26,000 MW. In the LNG business, Tractebel EGI has a vaporization capacity of 27.8 million cu.m of natural gas per day and owns or has secured long-term shipping capacity of 766,100 cu.m of LNG. In 2003, Tractebel EGI sold nearly 81.4 million MWh of power, billion cu.m of gas, and more than 29 million tons of steam to industrial and residential customers worldwide. In 2003, Tractebel EGI booked a turnover of EUR4,491 million. Tractebel EGI s assets in Thailand are its major investment in Asia Pacific, representing 70% of its investment in the region. Tractebel EGI s power plant investment in Thailand is currently monitored through GLOW SPP and Glow which, after the reorganization, will be solely managed by GLOW SPP. Tractebel EGI adds value to its Thai subsidiaries through its facilities, human resources, operational expertise and experience, and financial expertise. GLOW SPP s projects were initiated in three phases. Under Phase I, GLOW SPP3 has operated a utility plant since July Phase II, which is a combined cycle gas-fired cogeneration plant handled by GLOW SPP, was completed in October Phase III consists of 514 MW of combined cycle gas-fired and coal-fired cogeneration plants operated by GLOW SPP2 and GLOW SPP3. Using hybrid cogeneration technology enables the company to use coal, a lower cost fuel supply, to increase efficiency, thereby reducing 100% reliance on natural gas. Phase III consists of several units that began operations during December 1997 and March GLOW SPP1, operating a combined cycle cogeneration in Eastern Industrial Estate, Rayong, has a synergy with GLOW SPP group on production and customer service. GLOW SPP1 has a transmission line connecting with GLOW SPP3 to secure its electricity supply and reliability. The company uses a commercially proven cogeneration technology, which can generate power at a satisfactory level of efficiency. The cogeneration system meets the various needs of the Group s SPP clients, which are power, steam and treated water. In addition, the integration of its power system improves reliability, thereby benefiting all industrial customers. To ensure the availability of maintenance service and spare parts, GLOW SPP and its subsidiary, GLOW SPP2, have had long-term maintenance contracts with their major equipment suppliers which would also strengthen plant performance and stability. However, these long-term maintenance contracts were terminated and new long-term maintenance contracts were awarded to Wood Group, commencing on 1 January GLOW SPP3 has a long-term contract with Foster Wheeler to maintain the circulating fluidized bed boiler that is a key component of its coal-fired generator. GLOW IPP, whose operation commenced in January 2003, has a 3-year warranty from Alstom on the plan performance, as a condition of EPC contract. Routine inspections and other required maintenance will be done either by an experienced in-house team or through individual out- 27/12/2004 6

7 source contracts with Tractebel EGI s support on the advisory basis or technical assistance, if necessary. GLOW SPP Group has six PPAs with EGAT. Two PPAs supply 180 MW of power over a 21-year period. Another two are for 180 MW over 25 years. The last two PPAs are to deliver 120 MW of power over 25 years. In addition, GLOW SPP1 and GLOW IPP have four PPAs with EGAT to supply 110 MW and 713 MW of power for a period of 23 years and 25 years, respectively. Revenue from PPAs principally consists of monthly capacity payments (CP) and energy payments (EP). The capacity payment is based on the actual kilowatts each plant furnishes, multiplied by the capacity charge. The capacity charges are designed to cover the investment costs of the power plants and are formulated to compensate the company for foreign exchange fluctuation by indexing capacity charges to the actual US dollar/baht exchange rate. Energy payments primarily cover the variable cost of production and maintenance, and are based on the actual kilowatt-hours each plant delivers, multiplied by the energy charge. Consequently, income is subject to the performance of the plants. EGAT must pay at least 80% of full energy payments specified in the contracts, although the actual energy use might be less than 80%. As of June 2004, the Group s SPP operators supplied 350 MW of electricity to 30 industrial plants in the Map Ta Phut and EIE area. There are 40 purchase contracts between the Group and industrial customers, which include electricity, steam and treated water, covering periods of between three and 17 years. Payment terms are similar to the PPAs with EGAT. However, the price structure for industrial customers refers to the PEA s tariff structure which the capacity charge is derived from demand charge. The energy charge is a large portion that mirrors the investment cost, cost of fuel, operations and maintenance. Thus, electricity income from industrial customer depends on load factor which is historically stable and often in excess of 80%. A fuel transfer payment (Ft) applied to only industrial customer, Bt/kWh/month, was designed to offset the company s exposure to fuel price fluctuations, however, the effectiveness of this payment is questionable. The adjustment of Ft is also subject to government policy changes and raises concerns over the potential for a wide gap between the company s actual costs and structured compensation. Many of the Group s industrial customers are petrochemical producers including The Aromatics (Thailand) PLC, Vinythai PLC, Thasco Chemical Co., Ltd., Thai Olefins PLC, Bayer Co., Ltd. and Asia Silicon Monomer Co., Ltd. Fuel accounted for approximately 85% of total costs of sales in After its coalfired plant started operations in 2000, the company s dependency on gas was reduced from 100% of fuel costs to around 80%-90%. GLOW SPP and GLOW SPP2 signed two 21-year Gas Sale Agreements (GSAs) with PTT. Minimum offtake provisions of the gas supply contracts are 85% of 66 million cubic foot per day (MMFCD) and 85% of 60 MMFCD. The price structure includes a monthly PTT selling price and pipe fee. The coal-fired power plant consumes an estimated 1,000,000 tons of coal per annum with 70,000 tons of stock reserve. GLOW SPP3 has a coal supply contract with Banpu Minerals Co., Ltd. that obliges GLOW SPP3 to buy at least 660,000 tons per annum. The coal supply contract is for 15 years, ending in 2014, with the price indexed to the Japanese Power Utility Benchmark Price (JBP Price). However, the JBP Price has not been announced since GLOW SPP has been in negotiations to establish a new coal reference price with Banpu and EGAT. This raises a concern over the compensation for the company s coal cost in the future. In 2003, GLOW SPP s operating performance was satisfactory. The company was able to maintain its EAF, at 95%. In the first quarter of 2004, its EAF decreased to 92% because the power plant of GLOW SPP3 had scheduled outages totaling 17 days in this period. However, its EAF improved to 97% in the second quarter of Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 BTU/kWh eq, improving from 9,169 BTU/kWh eq in /12/2004 7

8 In its first year of operation, GLOW IPP recorded EAF of 79% in 2003 due to almost two months of scheduled outages in the second quarter. Total outages in 2003 were 72 days. However, its performance has significantly improved in the first half of 2004, with only eight days of total outages and EAF of 93%. GLOW SPP1 had 37 days of total outages and EAF of 89% in 2003 as there was a forced outage in the last quarter. GLOW SPP1 s EAF rebounded to 99.6% in the first half of 2004 with only five days of outages. GLOW SPP has expansion plans to increase its capacity by around 75 MW of electricity and 140 t/h of steam in order to serve the increasing demand of industrial users in the Map Ta Phut area, following an upturn in the petrochemicals industry. The construction of a new power plant s first phase is scheduled to be completed in February Total investment cost is approximately US$75 million, which will be funded by internal cash flow. FINANCE In 2003, 80% of the company s total revenues came from electricity generation, 18% from steam, 2% from water products and other income. EGAT accounts for around 45% of GLOW SPP s revenue from electricity, with industrial customers accounting for the remainder. The long-term power purchase agreements with EGAT and industrial users provide GLOW SPP with stable cash flow. GLOW SPP s sales slightly increased from Bt14,136 million in 2002 to Bt14,811 million in 2003, primarily as a result of higher production volume to meet increased demand from industrial users in the Map Ta Phut area, following an upturn in the petrochemicals industry. The percentage of electricity sales to industrial customers increased to 35% in 2003 from 33% in This growth was in line with the company s business strategy to be a highly reliable power producer and to expand its industrial customer base. The company s operating income as a percentage of sales declined from 34.1% in 2002 to 29.5% in 2003 mainly due to refinancing expenses in the second half of This ratio declined further to 28.5%, in the first half of 2004 as a result of rising gas and coal prices. The company s earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage improved significantly from 3.5 times in 2002 to 4.4 times in 2003 and to 7.8 times in the first half of 2004 as the company s debt outstanding dropped from Bt18,942 million in 2002 to Bt14,747 million in June 2004 and the lower interest expenses achieved from the refinanced debt in the second half of This also improved the funds from operations (FFO) to total debt ratio, which rose from 18.7% in 2002 to 21.5% in 2003 and 12.9% in the first half of The capital structure has also improved, as GLOW SPP s total debt to capitalization ratio declined from 55.3% in December 2002 to 49.1% in December 2003 and 47.5% in June According to the Group s reorganization plan, the level of indebtedness of GLOW SPP will be increased by another Bt5,000 million approximately at the year end Since the company will structure the repayment schedule to periods during which it has sufficient flexibility, the financial performance is expected to remain in an acceptable range. In return, GLOW IPP and GLOW SPP1 will provide the dividend to GLOW SPP upon the fulfillment of the covenants set under their project financings. The increasing interest expenses incurred on the additional debt should, therefore, be able to be serviced, considering the company s existing ability. 27/12/2004 8

9 Financial Statistics and Key Financial Ratios* Unit: Bt million Year ended Jun 04 Dec 03 Dec 02 Dec 01 Jun 00 Sales 7,577 14,811 14,136 13,171 5,841 Gross interest expenses 280 1,016 1,417 1, Net income from operations 1,170 1,728 1, Funds from operations (FFO) 1,903 3,463 3,540 2,614 1,091 Capital expenditures Total assets 33,437 34,820 36,453 37,521 36,734 Total debt 14,747 16,130 18,942 21,762 21,835 Shareholders equity 16,331 16,742 15,331 13,210 12,666 Operating income before depre. and amort. as % of sales Pretax return on permanent capital (%) 4.5** ** Earnings before interest, tax, depre. and amort (EBITDA) interest coverage (times) FFO/total debt (%) 12.9** ** Total debt/capitalization (%) * Consolidated financial statements ** For six-month performance ending June 2000/2004 (non-annualized) Plant Performance Statistics of GLOW SPP Unit 1H/2004 1H/ (Target) (Actual) Net output* MWhe ( 000) 3,384 3,438 6,951 6,804 6,073 Plant heat rate** BTU/kWh eq 9,748 9,187 9,098 9,169 9,345 Dependable capacity MW Planned outage days Unscheduled outage days * Net output of power and steam ** Average heat rate of power and steam 27/12/2004 9