Explanation of the 2009 operation result compare to 2008

- Translation - No. TTW/046/10 8 February 2010 Subject Explanation of the 2009 operating result compare to 2008 operating resule To The President The Stock Exchange of Thailand The operating results of Thai Tap Water Supply Public Company Limited ("the Company") and its subsidiaries for the year ended 31 December 2009 and 2008 are Baht 1,593.6 million and Baht 1,358.4 million respectively, which represent an increase of 17.3% from 2008. The Company hereby clarifies the significant changes as follows: 1. The consolidated tap water sales increased by Baht 424.5 million or representing an increase of 11.9% from 2008 because a. The revenue from selling tap water of the Company increased by Baht 290.7 million or 12.3% because 1) Sales volume of the Company increased 1.2 million cubic meters or 1.1% 2) Selling price increase from the previous year 3) In August 2009, the Company acquired the operation rights of treated water and waste water management at Bangpa-In Industrial Estate at the price of 1,400 million Baht. Therefore, the Company has the tap water sale in Bangpa-in Industrial Estate of Baht 54.2 million or representing sale volume of 2.4 million cubic meters. b. The increase in revenue from selling tap water of Pathum Thani Water Company Limited ("PTW") by Baht 133.8 million or 11.0%, which comes from the increase in sales volume of 1.9 million cubic meters or 1.7% from 2008, and the increase in selling price. 2. Revenue from services increase by Baht 18.6 million or 51.7% from 2008, because of the increase in revenue from waste water treatment service in Bangpa-In Industrial Estate of 1.8 million cubic meters, amount of Baht 12.5 million (2009 : the Company acquired the right to operate tap water and waste water treatment plant in Bangpa-in Industrial Estate in August 2009) 3. The Cost of sales and services increase by Baht 21.6 million or 1.8%from the previous year because of the increase in the cost to operate tap water and waste water treatment plant in Bangpa-in Industrial Estate, amount of Baht 12.6 million and increase in sale volume of tap water. 4. Selling and administration expense increase by Baht 27.6 million or 21.7% because the increase of advertising and public relation expense, and marketing expense amount of Baht 14.6 million, employee expenses of Baht 2.2 million. In addition, the Company estimated 2009 directors' bonus of Baht 7.7 million. 5. Amortization of rights to produce and sell treated water and waste water increase Baht 9.7 million, or 100% from 2008 because in August 2009, the Company acquired the rights to operate and manage treated water and waste water at Bangpa-In Industrial Estate for the period of 30 years at the price of Baht 1,400 million. Such rights will be amortized by unit of production method over the useful life period. 6. Financial expense decrease by Baht 61.7 million, or 8.5%. The major causes of the decrease in financial expense are a. In May 2008, the Company repaid short-term loans of Baht 3,000 million in full. Such short-term loans carried interest rate of MLR. b. In February 2009, the Company issued debentures Baht 7,000 million with maturity date of 3 years, 5 years and 7 years, with average interest rate in 2009 at 4.53% p.a. to repay long-term loans of Baht 5,839.8 million with carrying interest rate of MLR-1%. c. In 2009, the average interest rate of PTW's long-term loans decrease from 2008. In 2009, average MLR is 6% p.a. (2008: 7% p.a.) The major causes of the increase in financial expense are a. The prepayment of long-term loans in b) above, the Company has to pay the prepayment fee of Baht 116.8 million b. The Company borrowed the long-term loan of Baht 1,072 million from financial institution to acquire the rights to operate and manage treated water and waste water at Bangpa-In Industrial Estate, with carrying the interest rate of MLR-2.0% 7. The corporate income tax increase by Baht 185.8 million, or 8,713.8% because PTW received the notice of a change to its net operating loss carry forward from the Area Revenue Office. Based on the assessment made by the Area Revenue Office, PTW has obligation to pay corporate income tax from 1 January 2009 onwards. To reduce the risk of future loss, PTW recorded such corporate income tax. Please be informed accordingly. Yours Faithfully, (Somkiat Pattamamongkolchai) Accounting and Finance Director