CENTRAL PATTANA PUBLIC COMPANY LIMITED AND SUBSIDIARIES FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND REPORT OF CERTIFIED PUBLIC ACCOUNTANT EXPRESSED IN Thai Baht REPORT OF CERTIFIED PUBLIC ACCOUNTANT Translation of a report originally issued in Thailand To the Shareholders of Central Pattana Public Company Limited I have audited the balance sheet of Central Pattana Public Company Limited and the consolidated balance sheet of Central Pattana Public Company Limited and subsidiaries as at December 31, 1998, and the related statements of income, changes in shareholders equity, retained earnings and cash flows and the consolidated statements of income, changes in shareholders equity, retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Companys management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of Central Pattana Public Company Limited and the consolidated financial statements of Central Pattana Public Company Limited and subsidiaries for the year ended December 31, 1997, which are presented for comparative purposes, were audited by Mr. Paitoon Taveebhol, the auditor of my office. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit 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 audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Central Pattana Public Company Limited and of Central Pattana Public Company Limited and subsidiaries as at December 31, 1998 and 1997, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. - 2 - Without qualifying my opinion, I draw attention to Note 1 to the financial statements. The accompanying financial statements and consolidated financial statements for the years ended December 31, 1998 and 1997, include the effects of the economic crisis to the extent they are known and can be estimated. The financial positions and operations of the Company and subsidiaries have been affected significantly, and will continue to be affected for the foreseeable future, by the countrys unstable economy and currency volatility in the Asia Pacific region. Furthermore, as discussed in Note 13 to the financial statements, as of December 31, 1998, the subsidiaries have cost of project development - shopping center totalling approximately Baht 2,313 million. The management of the subsidiaries have temporarily suspended the above construction project development and provided the allowance for loss of recoverable amount totalling approximately Baht 258 million. The management of the subsidiaries decision to continue the construction depends on the future economic situation and the subsidiaries ability to obtain additional funds. As a result, there are significant uncertainties that may affect future financial position and operations, the recoverability of the Companys and subsidiaries assets (including the above construction project development - shopping center) and the ability of the Company and subsidiaries to maintain or pay their debts as they mature. The ultimate effect, which may be material, of these uncertainties on the stated amounts of assets and liabilities at the balance sheet date cannot presently be determined, and accordingly the financial statements and the consolidated financial statements do not include any adjustments that might result from these uncertainties. Related effects will be reported in the financial statements as they become known and estimable. METHEE RATANASRIMETHA C.P.A. (THAILAND) Registration No. 3425 Bangkok February 12, 1999 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in Thailand. CENTRAL PATTANA PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS DECEMBER 31, 1998 AND 1997 A S S E T S In Baht Consolidated For the Company 1998 1997 1998 1997 CURRENT ASSETS Cash on hand and in banks 88,742,763 56,598,453 29,514,625 18,081,639 Short-term investments Fixed deposits 409,879,705 140,000,000 377,599,869 140,000,000 Promissory notes and bills of exchange 128,686,929 593,213,219 108,655,840 478,099,306 Listed securities - Net (Note 10) 12,437,600 18,541,400 12,437,600 18,541,400 Total Short-term Investments 551,004,234 751,754,619 498,693,309 636,640,706 Accounts receivable - trade (Note 6) Related companies - Net (Note 4) 86,482,536 106,376,640 73,351,065 125,932,186 Other - Net 157,134,275 166,625,013 79,208,765 85,084,984 Total Accounts Receivable - trade 243,616,811 273,001,653 152,559,830 211,017,170 Short-term loans to related companies (Note 4) - - 25,271,108 16,959,441 Other current assets 143,416,243 105,732,306 39,304,764 29,284,114 Total Current Assets 1,026,780,051 1,187,087,031 745,343,636 911,983,070 UNBILLED INCOME - Net (Note 7) 8,952,972 94,439,962 - - LOANS TO RELATED COMPANIES - Net (Note 4) 118,839,833 162,739,322 673,010,101 1,810,713,819 INVESTMENTS IN SHARES Subsidiary companies (Equity Method) (Notes 4 and 8) - - 2,898,674,296 1,956,810,354 Related companies - Net (Cost Method) (Notes 4 and 9) 142,463,083 430,296,727 73,497,644 361,331,288 Investment in listed security - Net (Note 10) - 1,000,000 - 1,000,000 Total Investments in Shares 142,463,083 431,296,727 2,972,171,940 2,319,141,642 CONDOMINIUM AND SHOPHOUSE FOR RENT - Net (Note 11) 187,520,850 73,560,324 - - - 2 - A S S E T S (Continued) In Baht Consolidated For the Company 1998 1997 1998 1997 ASSETS FOR LEASE - At Cost and Appraised Value (net of accumulated depreciation and amortization) (Notes 12, 15 and 19) 7,461,477,504 7,673,427,634 3,458,185,791 3,592,228,551 COST OF PROJECT DEVELOPMENT - Net (Notes 13 and 19) 1,927,716,899 2,001,165,060 - - FURNITURE AND OFFICE EQUIPMENT - At Cost (net of accumulated depreciation) 150,965,508 155,531,930 40,151,468 52,237,431 OTHER ASSETS Deferred income tax (Note 5) 64,949,760 172,624,594 64,949,760 172,624,594 Cost of project development - net of allowance for loss of recoverable amount of Baht 114,450 Thousand in 1998 (Notes 13 and 19) 127,461,402 239,422,240 - - Negotiable certificate of deposit 46,817,372 44,916,836 46,817,372 44,916,836 Refundable income tax 91,354,651 76,350,621 56,138,625 64,006,041 Guarantee for leasehold rights (Notes 12 and 19) 406,790,854 409,877,354 108,216,551 111,303,051 Deferred underwriting fee of common shares and convertible bonds - net 24,871,208 40,404,563 24,871,208 40,404,563 Deferred expenses and other - net 108,530,087 168,348,834 16,639,686 9,687,727 Total Other Assets 870,775,334 1,151,945,042 317,633,202 442,942,812 TOTAL ASSETS 11,895,492,034 12,931,193,032 8,206,496,138 9,129,247,325 See accompanying Notes to Financial Statements. (With Mr. Methee Ratanasrimethas report dated February 12, 1999) CENTRAL PATTANA PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS DECEMBER 31, 1998 AND 1997 LIABILITIES AND SHAREHOLDERS EQUITY In Baht Consolidated For the Company 1998 1997 1998 1997 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions (Note 14) 220,048,700 454,076,920 196,725,638 409,568,873 Accounts payable - trade Related companies (Note 4) 27,033,441 91,386 6,439,491 1,896,855 Other 65,823,749 45,892,033 27,643,753 18,357,669 Total Accounts Payable - trade 92,857,190 45,983,419 34,083,244 20,254,524 Current portion of long-term loans (Notes 12 and 15) 2,194,609,006 747,101,282 772,915,000 190,224,000 Short-term loans from related companies and director (Note 4) 2,636,000 6,060,541 16,654,947 54,429,838 Payable to contractors 39,183,522 68,253,486 824,781 1,295,037 Other current liabilities Income tax payable 178,157,508 6,735,045 172,517,294 - Accrued interest 85,921,859 104,963,863 84,987,047 100,425,531 Retention money 76,717,920 93,543,412 3,457,163 24,147,908 Other 198,554,825 189,089,996 96,682,663 69,666,182 Total Other Current Liabilities 539,352,112 394,332,316 357,644,167 194,239,621 Total Current Liabilities 3,088,686,530 1,715,807,964 1,378,847,777 870,011,893 LOANS FROM RELATED COMPANIES AND DIRECTOR (Note 4) 1,830,971 19,778,736 - - LONG-TERM LOANS - Net of current portion (Notes 12 and 15) - 1,702,915,000 - 772,915,000 EURO CONVERTIBLE BONDS (Note 16) 1,681,121,166 2,627,511,272 1,681,121,166 2,627,511,272 CUSTOMERS DEPOSITS 642,651,994 634,640,316 450,458,054 444,647,756 GUARANTEE FOR LEASEHOLD RIGHTS (Note 19) 128,748,799 220,039,020 510,692 4,558,683 UNEARNED RENTAL AND SERVICE INCOME - Net 2,431,975,866 2,375,191,104 1,437,966,249 1,526,214,841 Total Liabilities 7,975,015,326 9,295,883,412 4,948,903,938 6,245,859,445 - 2 - LIABILITIES AND SHAREHOLDERS EQUITY (Continued) In Baht Consolidated For the Company 1998 1997 1998 1997 MINORITY INTEREST IN SUBSIDIARIES 662,884,508 751,921,740 - - SHAREHOLDERS EQUITY Share capital - common share Baht 10 par value Authorized 121,000,000 shares (Note 16) Issued and fully paid-up 100,000,000 shares 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Premium on share capital 1,185,000,000 1,185,000,000 1,185,000,000 1,185,000,000 Revaluation increment in land (Note 12) 112,594,465 115,255,525 112,594,465 115,255,525 Unrealized loss from investment in listed security (Note 10) - ( 18,750,000) - ( 18,750,000) Retained earnings Appropriated for reserve fund (Note 17) 121,000,000 97,342,762 121,000,000 97,342,762 Unappropriated 838,997,735 504,539,593 838,997,735 504,539,593 Total Shareholders Equity 3,257,592,200 2,883,387,880 3,257,592,200 2,883,387,880 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 11,895,492,034 12,931,193,032 8,206,496,138 9,129,247,325 See accompanying Notes to Financial Statements. (With Mr. Methee Ratanasrimethas report dated February 12, 1999) CENTRAL PATTANA PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 In Baht Consolidated For the Company 1998 1997 1998 1997 REVENUES (Note 4) Rental and service income 1,961,340,876 1,748,878,883 1,234,953,983 1,303,336,330 Food and beverage income 295,472,463 253,876,104 - - Sale of condominium leasehold rights - 1,298,693 - - Interest income 173,567,850 336,848,423 238,614,084 330,491,475 Other income Management fee 7,473,776 47,163,781 35,535,418 82,466,554 Other 112,532,597 142,898,435 53,318,856 67,574,826 Total Revenues 2,550,387,562 2,530,964,319 1,562,422,341 1,783,869,185 COSTS AND EXPENSES Cost of rental and service (Note 4) 977,856,826 796,953,550 447,091,831 423,629,356 Cost of food and beverage (Note 4) 223,420,073 188,220,074 - - Cost of condominium leasehold rights - 1,238,763 - - Equity in net loss (income) of subsidiaries - - 127,793,844 ( 42,412) Operating and administrative expenses (Note 4) 327,359,656 289,123,395 180,396,177 266,484,313 Loss on declining in value of investments 166,334,944 10,347,193 166,334,944 10,347,193 Loss on sale of investments 151,879,224 4,661,230 151,879,224 4,661,230 Doubtful accounts (Notes 4 and 6) 59,912,481 - 52,255,242 - Interest expense 592,169,980 524,681,296 371,613,185 362,960,762 Directors remuneration 9,669,230 10,529,727 9,669,230 10,529,727 Total Costs and Expenses 2,508,602,414 1,825,755,228 1,507,033,677 1,078,570,169 Income from operations 41,785,148 705,209,091 55,388,664 705,299,016 Loss of recoverable amount of cost of project development (Notes 13 and 19) ( 258,077,393) - ( 241,057,200) - Gain on redemption of convertible bonds (Note 16) 264,604,261 5,013,035 264,604,261 5,013,035 Income before tax 48,312,016 710,222,126 78,935,725 710,312,051 Income tax (Notes 5 and 22) ( 151,506,964) ( 245,632,255) ( 139,573,097) ( 221,792,373) (More)