CENTRAL PATTANA PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX-MONTH PERIOD ENDED 30 JUNE Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 CASH FLOWS FROM OPERATING ACTIVITIES: Net income for period 201,999 198,384 201,999 198,384 Minority interests 13,652 (21,709) - - Interest expense 199,287 273,192 131,036 160,817 Income tax 104,566 26,014 96,692 18,456 Income before interest expense and tax 519,504 475,881 429,727 377,657 Adjustments to reconcile income before interest and tax to net cash from operating activities:- Depreciation and amortisation 231,149 218,366 94,158 95,837 Share of loss in subsidiaries - - 21,510 49,941 Gain from redemption of convertible bonds (56,185) - (56,185) - Gain from sale of investment in subsidiary (1,420) - (1,420) - Impairment charge and doubtful accounts 75,431 300,280 38,218 295,385 Loss (gain) on exchange 5,278 (299,224) 5,278 (299,224) Loss on cancellation of sale contracts 1,093 - - - Movement in operating working capital (Note 17) (88,996) (7,343) (2,767) 54,849 Cash in flow from operating activities before interest and tax 685,854 687,960 528,519 574,445 Interest expense paid (178,425) (269,849) (109,555) (156,935) Income tax paid (203,772) - (194,693) - Net cash from operating activities 303,657 418,111 224,271 417,510 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (140,740) (242,827) (15,579) (11,555) (Increase) decrease in advances and loans to related company (9,046) (12,859) (90,656) 149,518 Investment in subsidiaries - - (130,000) (419,870) Proceeds from sale of investment in subsidiary 4,050 - 4,050 - Investment in securities available-for-sale (225) - (225) - Dividend received - - 60,000 75,000 Net cash used in investing activities (145,961) (255,686) (172,410) (206,907) The accounting policies and notes to interim financial statements on pages 14 to 30 form an integral part of these interim financial statements CENTRAL PATTANA PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS , CONT' (UNAUDITED) FOR THE SIX-MONTH PERIOD ENDED 30 JUNE Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 CASH FLOWS FROM FINANCING ACTIVITIES: (Decrease) increase in loans from banks (165,220) (143,516) 5,355 (118,781) Redemption of convertible bond (49,599) - (49,599) - Decrease in advances and loans from related companies (155) (5,945) (24,302) (54,430) Dividend paid (100,000) - (100,000) - Net cash used in financing activities (314,974)) (149,461) (168,546) (173,211) Net (decrease) increase in cash and cash equivalents (157,278) 12,964 (116,685) 37,392 Cash and cash equivalents at beginning of period 627,309 789,811 515,770 636,181 Cash and cash equivalents at end of period 470,031 802,775 399,085 673,573 The accounting policies and notes to interim financial statements on pages 14 to 30 form an integral part of these interim financial statements. CENTRAL PATTANA PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED) 30 JUNE 1999 AND 1998 1 Principal accounting policies a) Basis of preparation of the interim financial statements The interim consolidated and company financial statements have been prepared in accordance with and comply with accounting principles generally accepted in Thailand and regulations of The Stock Exchange of Thailand. The company previously presented the interim financial statements for the three-month and six-month periods ended 30 June 1998 which did not include the consolidated and company statements of cash flows for the three-month and six-month periods ended 30 June 1998 because the presentation of these financial statements was not required by The Stock Exchange of Thailand at that time. The company has now prepared and presented these financial statements for comparative purpose with the financial statements for three-month and six-month periods ended 30 June 1999 which is complying with the regulations of The Stock Exchange of Thailand, relating to the preparation of financial statements effective in 1999. (more) Consolidation The interim consolidated financial statements include the interim financial statements for the three-month and six-month periods ended 30 June 1999 and 1998 of the company and its subsidiaries. The results of subsidiaries are accounted for from their effective date of acquisition. Subsidiaries Subsidiaries are those companies in which the Group holds, directly or indirectly, more than 50% of the voting shares and control is exercised over their management. b) Revenue recognition Rental income is recognised as income over the lease period. Service income is recognised when services have been rendered. Unearned rental and service income are recognised using straight-line method over the periods of lease. Revenue from foods and beverage sales is recognised upon delivery of goods to customers. c) Short-term investment Short-term investments comprise fixed deposits at banks, deposits at financial institution in form of promissory notes with maturity date within three-month or less, and investments in securities available-for-sale, both in listed common shares and debenture. Fixed deposits and deposits at financial institution are stated at face value. To comply with Thai Accounting Standards No.40, effective on 1 January 1999, investments in securities designated as available-for-sale are stated at fair value. Fair value of investment in listed common shares and debenture is calculated by reference at Stock Exchange of Thailand quoted selling prices and Bond Dealer Club's recent selling prices at the close of business on the balance sheet date, respectively. Unrealised gain or loss on investments in securities available-for-sale is presented as a component in shareholders' equity section. The company will recognise unrealised gain or loss as income or expense in the statement of income upon disposal of the investment. Prior to 1 January 1999, short-term investments in listed securities are valued at the lower of aggregate average cost or market. d) Allowance for doubtful accounts The Group's management estimates the allowance for doubtful accounts from the ending balance of accounts receivable. The estimate encompasses consideration of past collection experiences, customers' deposit and other factors such as, changes in the composition and volume of the receivable, the relationship of the allowance to the receivable and the local economic conditions. e) Inventories Inventories are stated at the lower of cost and net realisable value, cost being determined on either the first-in, first-out or the weighted average basis. f) Investments in subsidiaries Investments in subsidiaries are stated at fair value as of the acquisition date and adjusted by the share of results in subsidiaries under the equity method. In case where a subsidiary incurs a loss in excess of investment, the company will reduce the investment cost until it reached zero. In case the company is held responsible for subsidiary obligations, the negative investment in the subsidiary will be recorded as liability. g) Other investments Investments in related and other companies, representing the investments in which the Group holds, directly or indirectly, less than 50% of voting shares and has no significant influence in their management, are stated at cost or the carrying amount of the investment less provision for impairment in value. Deposit at financial institution is stated at face value. h) Property and equipment and depreciation Property and equipment comprise assets for lease and operating furniture fixture and equipment. Property and equipment, except land, are stated at cost less accumulated depreciation. Land is stated at cost. Depreciation is provided for all other fixed assets, except land, using the straight-line method over their estimated useful lives as follows: Leasehold right 25 - 30 years Buildings and improvement 25 - 30 years Furniture, fixtures and equipment 5 - 15 years Motor vehicles 5 years Expenditures for additions, renewals and betterment on fixed assets are capitalised. Repair and maintenance costs are recognised as expenses when incurred. i) Capitalisation of borrowing costs Borrowing costs are capitalised to the extent that the company has incurred borrowing costs on assets that require time to get them ready for sale or for their intended use, at which point capitalisation then ceases. j) Deferred income tax Deferred income tax is accounted for at the current tax rate in respect of temporary differences arising between profit as computed for taxation purpose and profit as stated in the financial statements to the extent that a liability or asset is expected to be payable or receivable in the foreseeable future. The principal temporary differences arise from allowance for doubtful accounts, accrued interests payable on bond, and provisions. k) Other assets Other assets mainly comprise guarantee for leasehold right, withholding tax at source, deferred income tax, pre-operating expenses, deferred expenses and refundable deposits. Guarantee for leasehold right, withholding tax at source and refundable deposits are stated at cost. Pre-operating expenses and deferred expenses are amortised using the straight-line method over periods of 5 to 15 years. l) Foreign currency transactions Transactions during the period denominated in foreign currencies are translated into Baht at the rates of exchange ruling on the transaction dates. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised as income or expense when incurred. Such balances are translated into Baht at the exchange rates ruling at that date unless hedged by forward foreign exchange contracts, in which case the contract rates specified in such forward foreign exchange contracts are used. m) Related companies Companies are considered to be related if one company has the ability to control the other company or exercise significant influence over the other company in making financial and operating decisions, or the director or shareholders of both companies are the same persons. n) Earnings per share Basic earnings per share is computed by dividing the net income for period by the weighted average number of paid-up ordinary shares outstanding during the period. Diluted earnings per share is computed on assumption that all outstanding Euro Convertible Bonds are converted to common share at the beginning of the period. Net income is adjusted by interest, related taxes and other related expenses of the bonds. o) Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and at banks and deposits with financial institutions with original maturity of 3 months or less. (more)