negotiating with the financial institution. Therefore, there is uncertainty as to the recoverable amount. 7 Other current assets Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Other accounts receivable 60,578 44,243 6,924 1,847 Accrued income 31,629 33,544 14,478 14,326 Inventories 23,766 12,649 - - Prepaid expenses 33,277 23,981 6,400 15,332 Advance payments 4,431 4,696 487 882 Others 1,527 10,058 1,333 12,846 155,208 129,171 29,622 45,233 8 Loans to related companies Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Subsidiaries Central Pattana Chiang Mai Co., Ltd. - - 218,049 747,003 Central Pattana Khon Kaen Co., Ltd. - - 184,099 205,830 Lang Suan Realty Co., Ltd. - - 162,005 68,429 Central Pattana KoRaj Co., Ltd. - - 59,137 55,700 Focus Holding Co., Ltd. - - 29,570 396,029 Food Novelties Co., Ltd. - - 16,408 50,776 - - 669,268 1,523,767 Related company Siam Retail Development Co., Ltd. 162,739 182,041 162,739 182,041 Less: Allowance for doubtful accounts (123,899) (43,899) (123,899) (43,899) 38,840 138,142 38,840 138,142 Total 38,840 138,142 708,108 1,661,909 Loans to subsidiaries and related companies are unsecured and denominated in Thai Baht, except loan to Central Pattana Khon Kaen Co., Ltd. which is secured by plots of land owned by the subsidiary with net book value of Baht 380 million. The loans are repayable on demand and carry interest at the parent company's borrowing rate. Loans to related company represent subordinated shareholders' loans at the Group's shareholding proportion. As of 30 September 1999, the Group holds investment in ordinary shares representing 15% of total shares outstanding of Siam Retail Development Co., Ltd., (SRDC). As at 31 December 1998, SRDC' s current assets fell short of its current liabilities of Baht 1,856 million and its shareholders' equity had a deficiency of Baht 1,245 million. The company is in the process of restructuring its debts with the lenders. The management believes that the net carrying values, after provision, of loan to and related investment in the related company could be recovered in full. 9 Investment in subsidiaries Percentage Paid-up of share capital Holding Principal 1999 1998 1999 1998 activities Million Baht Million Baht % % Central Pattana Chiangmai Co., Ltd. (1) and (4) 1,000.0 475.0 100.0 100.0 Focus Holding Co., Ltd. (1) 800.0 400.0 100.0 100.0 Lang Suan Realty Co., Ltd. (3) 150.0 150.0 100.0 100.0 Central Pattana Ko Raj Co., Ltd. (1) 200.0 200.0 100.0 100.0 Central Realty Co., Ltd. (2) 1.0 1.0 100.0 100.0 Central Food Avenue Co., Ltd. (4) 1.0 1.0 100.0 100.0 Food Novelties Co., Ltd. (5) 25.0 1.0 100.0 100.0 Coffee Partners Co., Ltd. (5) 80.0 1.0 - 100.0 Central Pattana Khon Kaen Co., Ltd. (1) 260.0 260.0 78.1 78.1 Namsap Pattana Co., Ltd. (1) 300.0 100.0 60.5 50.0 Central Pattana Nine Square Co., Ltd. (1) 402.0 402.0 60.0 60.0 Central Pattana Chonburi Co., Ltd. (1) 315.1 315.1 60.0 60.0 (1) Construction of shopping center buildings for rent (2) Utility services in shopping center (3) Construction of condominium and shophouse for rent (4) Sales of food and beverage (5) Produce sales and import of food, biscuits and beverage Company Investment Investment at cost at equity Method Method 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Central Pattana Chiangmai Co., Ltd. 1,000,000 475,000 919,859 436,351 Focus Holding Co., Ltd. 800,000 400,000 692,241 369,295 Lang Suan Realty Co., Ltd. 150,000 150,000 82,196 115,399 Central Pattana Ko Raj Co., Ltd. 199,999 199,999 68,321 71,557 Central Realty Service Co., Ltd. 1,000 1,000 40,530 78,607 Central Food Avenue Co., Ltd. 1,000 1,000 13,984 9,961 Food Novelties Co., Ltd. 25,000 1,000 20,251 - Coffee Partners Co., Ltd. - 1,000 - - Central Pattana Khon Kaen Co., Ltd. 203,149 203,149 142,370 191,208 Namsap Pattana Co., Ltd. 524,934 324,926 578,936 363,752 Central Pattana Nine Square Co., Ltd. 241,200 241,200 238,565 241,373 Central Pattana Chonburi Co., Ltd. 189,084 189,084 187,501 188,391 Total 3,335,366 2,187,358 2,984,754 2,065,894 10 Other investments 1999 Consolidated Company Holding 1999 1998 1999 1998 % Baht'000 Baht'000 Baht'000 Baht'000 Investments in related companies Rachada Nonsee Department Store Co., Ltd. 23% 68,966 68,966 - - Bangna Central Property Co., Ltd. 20% 107,946 107,946 107,946 107,946 Siam Retail Development Co., Ltd. 15% 66,250 66,250 66,250 66,250 Ayudhaya Agrocity Co., Ltd. 12% 50,397 50,397 50,397 50,397 Square Ritz Plaza Co., Ltd. 12% 15,000 15,000 15,000 15,000 Jewelry Realty Co., Ltd. - - 117,869 - 117,869 Jewelry Holding Co., Ltd. - - 2,869 - 2,869 Investment, at cost 308,559 429,297 239,593 360,331 Less: Provision for impairment in value (167,096) (262,635) (167,096) (262,635) 141,463 166,662 72,497 97,696 Investment in marketable securities - non current Investment at cost - 19,750 - 19,750 Less: Unrealised loss - (18,750) - (18,750) - 1,000 - 1,000 Investment in other company Bangkok Club Co., Ltd. 0.1% 1,000 1,000 1,000 1,000 Deposit at financial institution 46,817 46,817 46,817 46,817 Total other investments 189,280 215,479 120,314 146,513 Although the investments in Rachada Nonsee Department Store Co., Ltd. represent 23% interest in the total registered share capital of the Group has no significant influence in the company's financial and operating policy decisions. Therefore, the Group do not account for investment in Rachada Nonsee Department Store Co., Ltd. as an associate under equity method. Deposit at financial institution of Bht 46.8 million (1998 : Bht 46.8 million) was promissory notes at a commercial bank, which are matured in September 2001. 11 Property and equipment The balances included subsidiaries' development costs of 5 shopping center development projects, located both in Bangkok and up-country, which were temporarily suspended. The management decision to continue the construction of the remaining projects depends on the future economic situation and the ability to obtain additional funds. The total costs of these projects, which are still temporarily suspended, and related allowance for decline in value as of 30 September 1999 are amounting to Baht 1,890 million and 257 million, respectively. The management believes that, at present, the assets could be recovered at values not less than their net carrying values. 12 Other assets Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Guarantee for leasehold right 9,653 28,755 1,267 8,890 Withholding tax deducted at source 103,755 85,187 56,136 56,139 Deferred income tax 205,215 93,015 205,215 93,015 Deferred expense 404,476 407,689 105,902 108,988 Other sundry assets 105,303 247,264 21,960 28,298 828,402 861,910 390,480 295,330 13 Other current liabilities Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Accrued interest expense 59,085 115,303 58,801 114,707 Accrued expenses 134,093 90,196 71,838 43,008 Other accounts payable 126,597 77,700 27,671 29,495 Retention payable 63,661 85,707 3,174 4,530 Others 51,852 85,886 11,177 18,242 435,288 454,792 172,661 209,982 14 Share capital Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Authorised and registered 121,000,000 ordinary shares of Bht 10 each 1,210,000 1,210,000 1,210,000 1,210,000 Issued and fully paid-up 100,000,000 ordinary shares of Bht 10 each 1,000,000 1,000,000 1,000,000 1,000,000 15 Surplus on revaluation from land Surplus on revaluation from land arising on acquisition of shares in a subsidiary represents the excess of the company's interest in the fair value ascribed to the identifiable assets (i.e. land) over the purchase consideration of share in the subsidiary. 16 Other income For the three-month period ended 30 September Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Management fee (750) 157 10,817 7,590 Other income 19,554 37,165 8,293 18,115 18,804 37,322 19,110 25,705 For the nine-month period ended 30 September Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Management fee 1,623 6,090 22,920 29,250 Other income 85,997 86,301 43,170 41,051 87,620 92,391 66,090 70,301 17 Cost of condominium leasehold right During the period from January to March 1999, 2 sale contracts of condominium units previously sold with total contract sum of Baht 7.1 million, were cancelled. Sales and cost of sales of the cancelled units, which were fully recognised in previous years, was Baht 7.1 million and Baht 6.0 million, respectively. The net loss from cancellation of Baht 1.09 million was adjusted to cost of sales in the consolidated statement of income of the nine-month period ended 30 September 1999. 18 Movement in operating working capital For the three-month period ended 30 September Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Decrease in trade accounts receivable 33,874 25,527 22,742 12,918 Decrease in unbilled completed work - 15,740 - - (Increase) in other account receivable (449,093) - (449,093) - (Increase) decrease in other current assets (15,869) 5,260 (1,638) 9,655 (Increase) in other assets (15,660) (18,812) (4,854) (7,162) Increase (decrease) in trade accounts payable 80 (359) (206) 508 Increase in other current liabilities 12,975 518 892 106,836 Increase in unearned rental income 58,310 38,126 1,951 - Increase (decrease) in deposit from customers 19,587 (19,010) 4,672 (15,168) (Decrease) increase in guarantee for leasehold right (7,078) 597 - - (Decrease) increase in deferred income tax (12,690) 25,196 (10,601) (83,583) Net (decrease) increase in operating working capital (375,564) 72,783 (436,135) 24,004 For the nine-month period ended 30 September Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Decrease in trade accounts receivable 54,811 4,850 45,378 42,871 Decrease in unbilled completed work 4,208 24,076 - - (Increase) in other account receivable (449,093) - (449,093) - (Increase) decrease in other current assets (11,792) (25,339) 9,683 (20,194) (Increase) decrease in other assets (14,663) 29,878 6,080 7,967 (Decrease) increase in trade accounts payable (24,634) 5,432 (3,555) 1,646 (Decrease) in other current liabilities 3,350 (112,920) (4,602) 96,576 Increase in unearned rental income 106,918 226,345 439 5,644 Increase (decrease) in deposit from customers 13,053 (17,083) 8,249 (12,920) (Decrease) increase in guarantee for leasehold right (34,417) (79,609) 3,903 (3,748) (Decrease) increase in deferred income tax (12,690) 111,757 (10,601) 4,574 Net (decrease) increase in operating working capital (364,949) 167,387 (394,119) 122,416 19 Related party transactions The Group enters into transactions with related companies in the normal course of business. Significant transactions for the three-month and nine-month periods ended 30 September can be summarised as follows: Consolidated For the For the three-month nine-month period ended period ended 30 September 30 September 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Rental and service income 63,332 61,715 192,061 198,371 Interest income 2,260 9,600 7,732 91,783 Management income 1,790 976 4,163 6,583 Other income 2,825 1,012 7,827 4,804 Rental charges and other expenses 7,231 541 20,576 12,411 Company For the For the three-month nine-month period ended period ended 30 September 30 September 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Subsidiaries Rental and service income 22,188 22,810 65,091 66,102 Interest income 7,752 31,049 31,303 149,775 Management income 8,811 6,403 21,481 25,172 Other income 1,579 1,818 4,719 4,745 Rental charges and other expenses 681 910 2,438 7,357 Other related companies Rental and service income 36,091 34,686 111,344 111,558 Interest income 1,555 6,444 4,447 19,302 Management income 1,790 2,005 3,979 4,572 Other income 2,254 999 6,691 3,645 Rental charges and other expenses 6,549 2,137 20,095 5,968 Rental and service income are charged at market price. Management and consultant fees are charged at negotiated prices which were higher than actual cost. Loans to and loans from subsidiaries and associates carry interest at the bank's lending rate, except for the wholly-owned subsidiaries which carry interest at fixed deposit rate. 20 Commitments At 30 September 1999, the Group has commitments in respect of further development costs to complete property development projects in progress of Bht 124.25 million (1998: Baht 164.9 million). The company issued debentures and entered into a loan agreement with financial institutions for secured loans amounting to Baht 1,500 million. The debentures and loans carry interests at the rates based on the average minimum lending rate less 0.375% per annum and 10.125% per annum, respectively. The debentures and loans are matured within 5 years with the repayment of principals and interest every three-month period. However, as at 30 September 1999, the company has not drawndown loan amounting to Baht 550 million. The company mortgages one of its projects comprised a shopping center, office building and car park with net book values of Baht 1,700 million as the collateral of debentures and loans. A subsidiary has entered into a Baht 1,000 million long-term loan agreement and a loan agreement by issuing promissory note with the line of Baht 300 million with a local bank. The loans are guaranteed by the company and a related company and secured by transferring a land leasehold right and mortgaged of the subsidiary's existing construction, with net book values of Baht 174.3 million and/ or the future construction thereon. However, as at 30 September 1999, the subsidiary has not drawndown the loans. 21 Contingent liability The company and subsidiaries have contingent liabilities for letter of guarantee issued by banks in favor of a state enterprise for the consumption of electricity totaling of Baht 65.9 million (1998: Baht 56.0 million). 22 Pending lawsuits on Land In 1998, a subsidiary filed a case with the court against a local company for breach of land lease agreement amounting to Baht 444 million. The defendant filed a counter-claim with the court against the subsidiary for the payment of land rental and damage amounting to Baht 1,249 million (consist rental fee of approximately Baht 349 million and claim loss for breach the agreement of approximately Baht 900 million). These cases are under the courts consideration and the ultimate outcome cannot be determined at present. 23 Subsidiaries Subsidiaries included in the interim consolidated financial statements are as follows: Effective interest Held by the Group 1999 1998 Percent Percent Central Realty Service Co., Ltd. 100.0 100.0 Central Food Avenue Co., Ltd. 100.0 100.0 Central Pattana Chiang Mai Co., Ltd. 100.0 100.0 Central Pattana Ko Raj Co., Ltd. 100.0 100.0 Focus Holding Co., Ltd. 100.0 100.0 Lang Suan Realty Co., Ltd. 100.0 100.0 Food Novelties Co., Ltd. 100.0 100.0 Coffee Partners Co., Ltd. 90.0 100.0 Central Pattana Khon Kaen Co., Ltd. 78.1 78.1 Namsap Pattana Co., Ltd. 60.5 60.5 Numsup Pattana Realty Service Co., Ltd. 60.5 60.5 Central Pattana Chonburi Co., Ltd. 60.0 60.0 Central Pattana Nine Square Co., Ltd. 60.0 60.0 24 Reclassifications Certain reclassifications have been made to the presentation of the 1998 interim consolidated and company financial statements for comparative purpose. 25 The year 2000 issue The Company has modified the computer system to solve the year 2000 problems beginning in February 1998. The remidiation project was completed in June 1999 with the total cost of Baht 5 million, which mainly was providing the new personal computers and equipment. The Company, however, still faces risks that other companies with whom the Company does business may be unsuccessful in their computer remediation plan within the time. As a result, there are uncertainties that might affect the Company's operations. The ultimate outcome of this matter cannot presently be determined. CENTRAL PATTANA PUBLIC COMPANY LIMITED INTERIM FINANCIAL STATEMENTS (UNAUDITED) 30 SEPTEMBER 1999