Return Evaluation and Rationale of Project 1 Return Evaluation of Lomligor Project

In the Company’s return evaluation from the wind power plant of Lomligor Company Limited (LLG), the Independent Financial Advisor considers by using information from the interview with the Company’s and its subsidiaries’ management and the review of performa financial statements of the Company and its subsidiaries together with available public information. However, the opinions of the Independent Financial Advisor are based on the assumptions that the received information and material documents are completed and correct and also found on the economic situation and data incurred during the study period. If the above assumptions or factors have substantially changed, the Company may be affected by the changes and this would eventually affect the Independent Financial Advisor’s return evaluation of the Company and its shareholders’ decision.

In order to consider the project’s return and feasibility, the Independent Financial Advisor evaluated the value of wind power plant of Lomligor Company Limited (LLG) by incorporating Free Cash Flow to Project (FCFP) and applying the 3 project evaluation indication tools to consider the project’s feasibility and expected return from the investment as follow:

Evaluation Approach Definition

1. Net Present Value – “NPV” To find the present value of the project’s net cash flows which equal to the present value of the cash inflows subtracted by the present value of the cash outflows and using the weighted average cost of capital as the discount rate. After summing up the present value of the cash flows, the result is the Net Present Value (NPV). The approach is comparable to the Discounted Cash Flow Approach.

2. Internal Rate of Return – “IRR”

To find the return on investment of a project and it is the discount rate which makes the project’s NPV equal to “0”. In the other word, IRR is the rate of return that provides the invested money equal to the received money regarding time value of money. IRR can be categorized to Project IRR and Equity IRR.

3. Payback Period - "PB" To calculate the breakeven point of the project by having a measuring unit as the time of how long does it takes to regain the investment amount after the investment initiation by using the cumulative future cash inflows.

Calculation of Free Cash Flow to Project

The evaluation approach reflects the investment valuation of the Lomligor project by finding the net present value of the Lomligor project’s future cash flows. The Independent Financial Advisor considers the Company’s existing business by interviewing the Company’s and its subsidiaries’ management. The Lomligor project has details as follow:

Details Lomligor Project (Pak Phanang 2)

Agreement Number VSPP-PEA-006/2557

MOU Date 23 June 2014

Project Location Area in Ban Pueng Sub-district, Pak Phanang District, Nakhon Sri Thammarat

Province.

Nature of Business Production and distribution of electricity from wind energy.

Electricity Seller Lomligor Company Limited

Electricity Buyer Provincial Electricity Authority

Installed Capacity 10.0 MW

BOI Privilege During the BOI applying process

Amount sell under the contract

8.965 MW in accordance with the Power Purchase Agreement no. (VSPP-PEA) 006/2557 dated 23 June 2014 for 5 years from the COD date and automatically renewed every 5 years until 25 years in total.

Adder 3.50 baht for 10 years from the COD date by Provincial Electricity Authority

SCOD Within Quarter 2 of 2016 (The current power purchase agreement specifies that the

SCOD is by February 19, 2016 but the Company is requesting to postpone (2nd _time)

the SCOD to by February 19, 2017.

The investment budget of wind power plant construction with the capacity of 8.965 MW is not greater than 800,000,000 baht. The fund will be derived from the Company’s funding and the financial institution’s loans for the construction. The preliminary expenses are as follow:

Expected Investment unit : million baht

1 Wind Turbine equipment and system, Transportation and other equipment 500.0

2 Construction / Civil Work 230.0

3 Land and Land Improvement 50.0

4 Others 20.0

Nature of Business

LLG is a subsidiary of the Company and LLG has received the Power Purchase Agreement from wind energy of 8.965 MW (10.0 MW installed capacity) with the adder of 3.50 baht per kW-hour for 10 years from Provincial Electricity Authority. The location of LLG is Ban Pueng Sub-district, Pak Phanang District, Nakhon Sri Thammarat Province, which is the same area of the current project or the Pak Phanang 1 of IWIND.

Lomligor Project Location

The project is located on the land with the area of approximately 120 rais in Ban Pueng Sub-district, Pak Phanang District, Nakhon Sri Thammarat Province, and is nearby the Pak Phanang 1 Project of IWIND, the Company’s subsidiary. The details are as follow:

Location Map of Lomligor Project

Pak Phanang District, Nakhon Sri Thammarat Province

Gulf of Thailand

Pak Phanang 1 Project

Surrounding Area of Lomligor Project Land Area of approximately 120 rais

Electricity Load Forecast in Pak Phanang District, Nakhon Sri Thammarat Province

Considering the electricity load statistic during A.C. 2004 – 2014 in Pak Phanang District, Nakhon Sri Thammarat Province (detail of changes is in the below figure), the electricity load had an upward trend. Thus, the electricity load forecast model is built by using the data (Autocorrelation) via a statistic program in order to forecast the electricity load in the next 10 years and 20 years shown below. The forecast shows that within 10 years and 20 years, the electricity load in Pak Phanang District will increase to 70 MW and 100 MW, respectively.

Sources : Feasibility Study of Lomligor Project of IWIND in 2015

Overview of Wind Power Production Business

Thailand has increased alternative energy consumption continuously which is resulted from the alternative energy development policy that has the target to increase alternative energy usages in every part of society. Not only to reduce the fossil energy consumption, it also can reduce energy import from other countries because Thailand’s current alternative energy development are mainly from energy produced domestically including solar, wind, small hydro power, biomass, biogas, waste, and biofuel (ethanol and biodiesel). The alternative energy usages are described by heat rate of biofuel.

Sources : Feasibility Study of Lomligor Project of IWIND in 2015

In 2013, Thailand had the alternative energy usages of 8,232 thousand crude oil tons which increased from the previous year of 12.9% and accounted as 10.9% of carbon dioxide release of 25.25 million tons.

Sources : Feasibility Study of Lomligor Project of IWIND in 2015

Thailand is an energy importing country with the value of almost 1 trillion in the last 5 years and it affected the country development as well as the citizen that are affected directly from the electricity price increases. Energy Policy and Planning Office, Ministry of Energy (www.eppo.go.th) has foreseen the essential to acquire variety of energy resources especially alternative energy produced domestically and set the policy to develop alternative energy as a major energy resource of the country by having the Alternative Energy Development Plan for 15 years (B.E. 2511 – 2565). The objectives of the Alternative Energy Development Plan are as follow:

1. To capably develop renewable energy as one of the country major energy sources in sustainable replacing of fossil fuel and oil import for the future.

2. To strengthen the country energy security.

3. To create using renewable energy at community level as of integrated green community. 4. To support the domestic renewable energy technology production industry.

5. To research, develop and promote Thailand renewable energy technology for competitive capability in the international market.

The plan targets to increase the alternative energy usage portion to 25% of Thailand’s total energy consumption by 2022. The measures and guidance to promote alternative energy are as follow:

1. Set alternative energy as the national agenda

2. Government has policy to support alternative energy continuously.

2.1 Has adder measure for electricity buying price from renewable energy until 2011. 2.2 Has ESCO Fund measure to promote investment and risk protection

2.3 Has investment support measure to reduce initial investment in new renewable energy technologies including soft-loans for new renewable energy production.

2.4 Has BOI investment promotion measure for renewable energy investments and renewable energy related technology production investments.

3. Government provides infrastructure to support renewable energy expansion such as transmission/distribution system expansion.

4. Amend laws and regulations related to alternative energy such as Private Investment in State Undertaking Act, Urban Planning Act, etc.

According to Alternative Energy Strategic Plan that has the objective to secure renewable energy capacity of 13,927 MW within 2012 while currently the renewable energy capacity is 3,788 MW, the Department of Alternative Energy Development and Efficiency has set strategies to reach the objective as follow:

1. Renewable Portfolio Standard (“RPS”) of 5% with the capacity of 80 MW

2. Promote renewable energy via adder measure with the total capacity of 13,927 MW. Under the capacity of 13,927 MW, the target electricity productions by each type of renewable energy are as follow:

2.1 Biomass 4,800 MW 2.2 Wind 1,800 MW

2.3 Solar 3,000 MW (Feed in Tariff) 2.4 Hydro 324 MW

2.5 Waste 200 MW 2.6 Biogas 100 MW

Overview of Electricity Industry in Thailand

According to the Thailand Energy policy and the changes of economic situation together with the increasing electricity demand, Energy Policy and Planning Office (EPPO) is revising the draft Power Development Plan A.C. 2015 – 2036 (Draft PDP 2015 by the Ministry of Energy) with the following key issues:

1. Changes in Thailand economic situation, the Government’s transportation infrastructure investment plan, and the commencement of ASEAN Economic Community, AEC, in late 2015, which affect domestic energy consumption in Thailand.

2. Framework of Power Development Plan in Thailand A.C. 2015 – 2036 (PDP 2015) is to have the period align with the National Economic and Social Development Plan by NESDB and to prepare Energy Efficiency Development Plan (EEDP) and Alternative Energy Development Plan which have the period between A.C. 2015 – 2036 as PDP 2015 does.

3. Objective of PDP 2015

3.1 Security: the security of power supply, transmission system and distribution system in response to the demand of electricity 3.2 Economy: adjusting the electricity price to reflect the cost of energy more appropriately and ensuring an efficient energy consumption 3.3 Ecology: to reduce negative impacts on the environment and communities the new PDP aims to reduce carbon dioxide emissions per unit of electricity production by promoting electricity production from renewable energy and promote energy efficiency

Sources:Energy Policy and Planning Office (EPPO)

New electricity capacity during 2015 – 2036 (Draft PDP 2015) can be summarized as follow :

Electricity capacity as of December 2014 37,612 MW New electricity capacity during 2015 – 2036 57,467 MW

Retired capacity -24,669 MW

Total electricity capacity at the end of 2036 70,410 MW

Electricity capacity during 2015 – 2036 (Draft PDP 2015) categorized by types of power plant

Power Plant Type (unit MW) PDP 2010 Rev. 3 PDP 2015 Change

Alternative 9,481 12,205 +2,724

Cogeneration 6,476 4,052 -2,424

Combined Cycle (Gas) 25,451 17,478 -7,973

Clean Coal 4,400 7,365 +2,965

Nuclear 2,000 2,000 -

Gas and Diesel Turbine 750 1,250 +500

Imported 6,572 11,016 +4,444

Pumped Storage Hydropower 2,101 +2,101 Total 55,130 57,467 +2,337

Remark : Alternative energy including solar energy, wind energy, biomass energy, waste to energy, and etc.

It is clearly shown that PDP 2015 has a policy to promote renewable energy projects by increasing the proportion of renewable or alternative energy from 9,481 MW (17.2% of total electricity capacity) to 12,205 MW (21.24% of total electricity capacity)

Renewable Energy Buying Price of Feed in Tariff (FiT)

The Government has changed the promotion scheme for renewable energy from Adder System to Feed in Tariff System, which has details as follow:

Sources:Energy Policy and Planning Office (EPPO)

However, the change of buying electricity price from renewable energy to Feed in Tariff (FiT) above does not apply to LLG since the LLG is still in Adder scheme.

Structure of electricity tariff of Adder System in the LLG is as follow:

Sources:Energy Policy and Planning Office (EPPO)

Structure of electricity production from renewable energy can be summarized as follow:

If the production and distribution of electricity is greater than 10 MW, the electricity will be sold directly to Electricity Generation Authority of Thailand (EGAT) and if the production and distribution of electricity is less than 10 MW, the electricity will be sold directly to Provincial Electricity Authority or Metropolitan Electricity Authority.

Adder (new) (Baht/unit) 1 Biomass Installed capacity <= 1 MW 0.3 0.5 1 1 7 Installed capacity > 1 MW 0.3 0.3 1 1 7 2 Biogas Installed capacity <= 1 MW 0.3 0.5 1 1 7 Installed capacity > 1 MW 0.3 0.3 1 1 7 3 Municipal waste Digested or landfill 2.5 2.5 1 1 7 Thermal Process 2.5 3.5 1 1 7 4 Wind Installed capacity <= 50 kW 3.5 4.5 1.5 1.5 10 Installed capacity > 50 kW 3.5 3.5 1.5 1.5 10 5 Small hydro Installed capacity 50 kW - <200 kW 0.4 0.8 1 1 7 Installed capacity < 50 kW 0.8 1.5 1 1 7 6 Solar Energy 8 6.5 1.5 1.5 10

Remark : 1 For the renewable energy power producers in the area with the diesel oil power generation of PEA

2 Fully subsidize all adder cost from power sale to the grid, without the deduction of the power purchased from the utilities only for those rooftop systems of residences

Promotion Period (Year) Fuel/Technology Adder (old) (Baht/unit) Special Adder1 (Baht/unit)

Special Adder for 3 Southern Border Provinces (Baht/unit)

SWOT of the Project Strength

- Since the project is near sea shore, the project will have sufficient and consistent amount of wind throughout a year for electricity generation.

- The business can certainly sell electricity to a buyer and is monopoly.

- The project is located near the Pak Phanang 1 project, thus, it can be managed simply and reduce administrative expenses and spare part management costs.

- The project has a plan to have towers higher than the existing project. The Pak Phanang 1 project uses 100-meter towers while the project uses 120-meter towers. Thus, in theory, the project will gain better wind speed and more steady.

Weakness

- The project has higher tower construction cost compared to the existing project because its towers used are higher than the existing project which has the towers height of 100 meters but the project has the towers height of 120 meters.

Opportunity

- The Government supports through many policies such as giving Adder to wind power plants with the capacity of more than 50 kW to less than 10 MW at 3.5 baht per unit for 10 years and tax privilege from Board of Investment Commission Office (BOI).

- The variable tariff (Ft) increases continuously because of the increase of fossil fuel which is currently at 0.4961 baht (wholesale)

- Provincial Electricity Authority (PEA) has experiences to connect wind power plants with distribution system 33 kV in the surrounding area such as Hua Sai District, Nakhon Sri Thammarat Province or Sating Pra District, Songkla Province.

Threat

- The wind turbine farm project is located along the sea coast on the Gulf of Thailand side in Pak Phanang District, Nakhon Sri Thammarat Province. It is a large project with the investment of more than approximately 75 million baht per MW and requires high experienced staff to develop the wind power plant. Therefore, finding sufficient sources of fund and/or investing partners to develop the project are crucial to the project success and if any of those is fail, it may cause the project to delay.

- Since the area is a potential area along for the Gulf of Thailand coast. Presently, there are many private companies interested to invest and construct in the nearby area. All wind and other renewable energy can connect to limited distribution system according to the number of feeders specified by Provincial Electronic Authority which depends on electricity demand of local people and quality of PEA’s distribution systems in the area. Therefore, if there is a wind power plant project of competitors constructed before the project, the feeders of Provincial Electronic Authority may be reduced until it cannot connect to the distribution system in the future.

- Some of the project study areas which are near by the distribution station of Provincial Electronic Authority can support the project. Nonetheless, competitors may request for VSPP wind power plant before. Regarding the

IWIND’s study, presently, the feasible area of the project (project location) reduce to approximately 5 km. along the coast. If the project needs to expand its area to connect with PEA’s substations, there will be additional investment and the area expansion cost is approximately 2.5 million baht/km..

Wind Power

Project Location

The wind power plant project that the Company plans to invest by LLG, a subsidiary of IWIND which is the Company’s subsidiary, is called “Lomligor Project”. The project is located in Ban Pueng Sub-district, Pak Phanang District, Nakhon Sri Thammarat Province. The project is nearby the Pak Phanang 1 Project which is the wind power plant that the Company is starting the investment currently (Pak Phanang 1 is expected to start generating electricity in September 2015). The project location is close to a coast and has sufficient wind speed for power generation almost throughout a year from the Southwest wind current during May to October of every year and from the Northeast wind current during November to January of every year. Moreover, according to EGAT’s information, the location has wind speed approximately 5.0-6.0 meters / second (The actual average wind speed of the project site is 5.3 meters / second conducted by IWIND since 2011). The project chooses the turbine technology of Low Speed Wind Turbine Class IIIB which can start generating electricity when the wind has speed of 3 meters / second.

Figure shows the flows of Southwest Monsoon wind and Northeast Monsoon wind.

Southwest Monsoon wind is Southwest monsoon blows through Thailand between the mid of May to the mid of

October. It originates from a high air pressure area in southern hemisphere around Indian Ocean and it blows from its center as Southeast wind and changes to Southwest wind after passing the equator. The Monsoon will lead humidity mass from Indian Ocean to Thailand and resulting cloudy and raining in most of the country, especially, along the sea coast and mountain range which receive the wind directly will have higher amount of rain.

Northeast Monsoon wind is that after the effect from Southwest monsoon around the mid of November there is

Northeast Monsoon will blows through Thailand until the mid of January. The Monsoon originates from a high air pressure area in Northern hemisphere around Mongolia and China and it carries cold and dry air from the origin to Thailand. The Monsoon results to the clear sky, cold and dry weather in most of the country, especially in Northern and Northeastern parts of the country. In the Southern part, there will be rain particularly in its eastern part because the Monsoon will bring humidity from the Gulf of Thailand to the area. The beginning and the ending of the 2 Monsoons can be varied in each year.

Company Analysis for the Lomligor Project Analysis of Business Profile

Lomligor Company Limited (LLG) (previously named SCG Wind Energy Company Limited) is located in Pak Phanang District, Nakhon Sri Thammarat Province. It has the capacity of 10 MW by entering the Power Purchase Agreement (PPA) of 8.9650 MW with Provincial Electricity Authority (PEA) and receives the Adder of 3.5 baht per units for 10 years. The project has a Scheduled Commercial Operation Date (SCOD) according to the Power Purchase Agreement on February 19, 2015.

The revenue of the project will be in accordance of a standard power purchase agreement by calculating from