Ratch : Management Discussion and Analysis Q2/2023

RATCH Group Public Company Limited

Management Discussion and Analysis

For the Three-month and Six-month Periods Ended 30 June, 2023

Management Discussion and Analysis

For the Three-month and Six-month Periods Ended 30 June, 2023

Abbreviation

The Company	RATCH Group Public Company Limited
The Group	RATCH Group Public Company Limited and its subsidiaries
PEA	Provincial Electricity Authority
EGAT	Electricity Generating Authority of Thailand
COD	Commercial Operation Date
EBITDA	Earnings before Interest, Tax, Depreciation and Amortization
FX	Foreign Exchange Rate
IPP	Independent Power Producer
PPA	Power Purchase Agreement
SPP	Small Power Producer

Projects/Companies

BAFS	Bangkok Aviation Fuel Services Public Company Limited, a direct associate in proportion of 15.53%
CS	Coc San Hydroelectric Power Plant, operated by Lao Cai Renewable Energy Stock Company, a wholly-owned indirect
	subsidiary
FRD	Asahan-1 Hydroelectric Power Plant, operated by Fareast Renewable Development Pte. Ltd., RHIS in proportion of 90%
LG1&2	Lincoln Gap 1&2 Wind Farm Project, operated by Lincoln Gap Wind Farm Pty Ltd., a wholly-owned indirect subsidiary
HKP	Hin Kong Combined-Cycle Power Plants, operated by Hin Kong Power Company Limited, a direct joint venture in
	proportion of 51%
HPC	Hongsa Thermal Power Plants, operated by Hongsa Power Company Limited, an indirect joint venture in proportion of 40%
NNEG	Nava Nakorn Power Plant, operated by Nava Nakorn Electricity Generating Company Limited, an indirect joint venture in
	proportion of 40%
NREI	NEXIF RATCH Energy Investments Pte. Ltd., an indirect joint venture company owned 49%
PNPC	Xe-PianXe-Namnoy Hydroelectric Power Plant, operated by Xe-PianXe-Namnoy Power Company Limited, a direct joint
	venture in proportion of 25%
RAC	RATCH-Australia Corporation Pty Ltd, a wholly-owned indirect subsidiary
RCO	RATCH Cogeneration Power Plant, operated by RATCH Cogeneration Company Limited, a wholly-owned subsidiary
RER	RATCH Energy Rayong Power Plant, operated by RATCH Energy Rayong Co., Ltd. (previous name : "Nexif RATCH Energy
	Rayong Co., Ltd"), a subsidiary
RG	Ratchaburi Power Plants, operated by Ratchaburi Electricity Generating Company Limited, a wholly-owned subsidiary
RHIS	RH International (Singapore) Corporation Pte Ltd, a wholly-owned indirect subsidiary
SCG	Sahacogen (Chonburi) Public Company Limited, a subsidiary in proportion of 51.67%
SP	Snapper Point Gas-Fired Power Plant, operated by Port Adelaide Energy Pty Ltd., a wholly-owned indirect subsidiary

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Management Discussion and Analysis

For the Three-month and Six-month Periods Ended 30 June, 2023

Executive Summary

Industry and Economic Situation

The Bank of Thailand (BOT) reported that the Thai economy in the 2 nd quarter of 2023 has improved slightly compared to the 1st quarter. The number of Thai and foreign tourists increased, leading to the expansion of the private sector's service and consumption. Private sector investments also showed improvement. The trend of the Thai economy in the second half of the year continues to recover steadily, and it is expected to expand by 4.2% , which is better than the first half that grew by 2.9%. This growth is mainly driven by the strong performance of the consumption sector, and a significant factor is the tourism sector. The Bank of Thailand forecasts the full-year economic growth for the year 2023 to be at 3.6%.

The inflation rate has decreased and stabilized within the target range, but there are still high risks. On August 2, 2 0 2 3 , the Monetary Policy Committee (MPC) decided to raise the policy interest rate by 0.25 percentage point, from 2.00% to 2.25% per annum. Further adjustments to the policy interest rate will be considered appropriately based on economic trends and inflation risks. The exchange rate of the Thai Baht against the USD is fluctuating, following the monetary policy directions of the Federal Reserve, the economic trends in China, and the political uncertainties in Thailand.

The global oil price situation during the period from March to June 2023 shows that the price of crude oil in the Dubai market was at the level of 77.45 USD per barrel. The Energy Policy and Planning Office (EPPO) forecasts the crude oil price for the year 2023 to be in the range of 81-87 USD per barrel. The energy consumption for the whole year is projected to grow by 2.8%, with a 0.4% increase in energy consumption during the first 4 months of the year 2023, following the economic expansion.

On July 26, 2023, the Energy Regulatory Commission (ERC) approved the adjustment of the Ft rate for the billing period of September to December 2023 to 66.89 Satang per unit, down from 91.19 Satang per unit in the billing period of May to August 2023. This decision takes into account the impact on electricity consumers and the financial stability limitations of the EGAT to ensure its sustainable operations and maintain fiscal discipline in loan repayment.

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Management Discussion and Analysis

For the Three-month and Six-month Periods Ended 30 June, 2023

Total Revenues

• In the 2nd quarter and 6M period 2 0 2 3, the total revenues were THB 13,133 million and THB 30,137 million, respectively. By excluding the Energy Payment (pass-through), the total revenue increased by 11.9% and 22.3% YoY, respectively, as the Company has consolidated the revenue of LG1&2, SP and CS due to the acquisition by RHIS in December 2022. In addition, the revenue from sale of RER has been consolidated due to status change from a joint venture to a subsidiary. However, the total revenue decreased by 0.6% QoQ due to the planned shutdown for maintenance of RG in June 2023 together with the decrease in revenue of RCO and SCG because of the decline in gas price.

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Management Discussion and Analysis

For the Three-month and Six-month Periods Ended 30 June, 2023

EBITDA

• In the 2nd quarter and 6M period of 2023, the EBITDA were THB 4,097 million and THB 7,798 million, respectively. The EBITDA increased by 2.9% and 11.8% YoY respectively as the Company has consolidated the EBITDA of LG1&2, SP and CS due to the acquisition by RHIS in December 2022. In addition, the EBITDA from RER has been consolidated due to status change from a joint venture to a subsidiary. Also, there were the increase in EBITDA of SCG, RCO and NNEG due to the rise in Ft from the previous year.
• The EBITDA increased by 10.7% QoQ because of the increase in EBITDA of RAC, which resulted from the increase in revenue from sales of Mount Emerald wind farm due to the increase in average wind speed.

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