Central Pattana Public Company Limited FINANCIAL STATEMENTS 31 DECEMBER 1999 AUDITOR'S REPORT To the Shareholders of Central Pattana Public Company Limited I have audited the accompanying consolidated and company balance sheet of Central Pattana Public Company Limited as at 31 December 1999, and the related consolidated and company statement of income, of changes in shareholders' equity, of retained earnings, and of cash flows for the year then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated and company financial statements for the year ended 31 December 1998 of Central Pattana Public Company Limited, presented herewith for comparative purpose, were audited by another independent auditor whose report dated 12 February 1999, expressed an unqualified opinion on those financial statements. As explained in Note 25 to the financial statements, the Company has restated the financial statements for the year ended 31 December 1998 for comparative purpose to reflect the result of cumulative effects from the change in its accounting policy on pre-operating expenses to comply with the new accounting framework and prior year adjustment. I have examined the adjustments described in Note 25 to the financial statements, and in my opinion, such adjustments are appropriate and have been properly applied to restate the 1998 consolidated and company financial statements. I conducted my audit in accordance with generally accepted auditing standards in Thailand. 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 in the first paragraph present fairly, in all material respects, the financial position of Central Pattana Public Company Limited as at 31 December 1999, and the results of its operations, changes in shareholders' equity and its cash flows for the year then ended in accordance with generally accepted accounting principles in Thailand. I draw attention to Note 32 to the financial statements which is marked "unaudited". Information regarding the Year 2000 issues as presented in this note has not been subjected to auditing procedures, and, accordingly, I express no opinion on it. SOONTORN DENTHAM Certified Public Accountant (Thailand) No. 3340 PricewaterhouseCoopers ABAS Limited Bangkok 22 February 2000 Central Pattana Public Company Limited Balance Sheets As at 31 December Consolidated Company Notes 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) ASSETS Current Assets Cash on hand and at banks 3 221,123,627 88,742,763 106,546,491 29,514,625 Short-term investments 4 713,764,158 551,004,234 699,431,458 498,693,309 Trade accounts receivable, net 5 164,742,858 234,606,964 82,303,085 152,559,830 Short-term loans and advances to related parties 6 9,017,180 9,009,847 64,658,829 25,271,108 Other account receivable 7 449,092,605 - 449,092,605 - Other current assets 8 145,807,553 143,416,243 34,775,358 39,304,764 Total Current Assets 1,703,547,981 1,026,780,051 1,436,807,826 745,343,636 Non-Current Assets Unbilled completed work - 8,952,972 - - Loans to related parties 9 38,839,833 118,839,833 744,894,683 673,010,101 Investments in subsidiaries 10 - - 2,938,316,111 2,833,162,998 Long-term investments 11 189,280,455 189,280,455 120,315,016 120,315,016 Deferred tax assets 12 207,613,511 64,949,760 207,613,511 64,949,760 Property and equipment, net 13 9,624,428,369 9,855,142,163 3,343,469,997 3,498,337,259 Other assets 14 542,390,722 555,813,275 174,846,031 205,866,070 Total Non-Current Assets 10,602,552,890 10,792,978,458 7,529,455,349 7,395,641,204 Total Assets 12,306,100,871 11,819,758,509 8,966,263,175 8,140,984,840 Central Pattana Public Company Limited Balance Sheets As at 31 December Consolidated Company Notes 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Bank overdrafts and loans from Financial institutions 56,428,885 220,048,700 11,033,977 196,725,638 Trade accounts payable 3,121,386 27,033,440 3,542,462 6,439,490 Current portion of long-term Borrowings 15 262,239,950 2,194,609,006 246,139,183 772,915,000 Short-term loans and advance from Directors and related parties 4,991,017 4,466,971 42,286,373 16,654,947 Current tax liabilities 275,081,275 178,157,508 268,778,410 172,517,294 Other current liabilities 16 471,323,895 466,201,876 205,728,813 213,595,408 Total Current Liabilities 1,073,186,408 3,090,517,501 777,509,218 1,378,847,777 Non-Current Liabilities Long-term borrowings 15 2,244,656,479 - 1,216,036,479 - Euro convertible bonds 17 1,697,689,661 1,681,121,166 1,697,689,661 1,681,121,166 Unearned rental and service income 2,379,754,335 2,431,975,866 1,344,838,856 1,437,966,249 Deposits received from customer 666,458,586 642,651,994 464,063,772 450,458,054 Guarantee for leasehold right 96,941,215 128,748,799 4,413,843 510,692 Total Non-Current Liabilities 7,085,500,276 4,884,497,825 4,727,042,611 3,570,056,161 Total Liabilities 8,158,686,684 7,975,015,326 5,504,551,829 4,948,903,938 Shareholders' Equity Share capital 18 Authorised share capital 1,210,000,000 1,210,000,000 1,210,000,000 1,210,000,000 Issued and paid-up share capital 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 Unrealised gain (loss) of investment in securities-available-for-sale 4 (2,355,944) - (2,355,944) - Negative goodwill 2.4 112,594,465 112,594,465 112,594,465 112,594,465 Retained earnings Appropriated Legal reserve 19 121,000,000 121,000,000 121,000,000 121,000,000 Unappropriated 1,045,472,825 773,486,437 1,045,472,825 773,486,437 Minority interest 685,702,841 652,662,281 - - Total Shareholders' Equity 4,147,414,187 3,844,743,183 3,461,711,346 3,192,080,902 Total Liabilities and Shareholders' Equity 12,306,100,871 11,819,758,509 8,966,263,175 8,140,984,840 Central Pattana Public Company Limited Statements of Income For the year ended 31 December Consolidated Company Notes 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) Revenues Rental and service income 2,158,341,869 1,961,340,876 1,364,627,520 1,234,953,983 Food and beverage sales 407,999,640 295,472,463 - - Interest income 45,447,937 183,230,361 72,761,583 238,614,084 Gain from redemption of convertible Bonds 56,185,049 264,604,261 56,185,049 264,604,261 Gain on foreign exchange - 598,218,217 - 598,218,217 Other operating income 20 109,712,125 120,006,373 89,135,309 88,854,274 Total revenues 2,777,686,620 3,422,872,551 1,582,709,461 2,425,244,819 Expenses Cost of rental and service 1,020,509,674 977,856,826 465,902,682 447,091,831 Cost of food and beverage sales 300,153,293 223,420,073 - - Cost of condominium leasehold right 21 1,044,503 - - - Administrative expenses 331,696,102 342,997,628 188,325,682 180,396,177 Doubtful debt on loan to related company 80,000,000 59,912,481 80,000,000 52,255,242 Provision for loss of property under 30,000,000 258,077,393 - 241,057,200 development Loss on impairment in value of investments - 166,334,944 - 166,334,944 Loss on sale of investments - 151,879,224 - 151,879,224 Loss on foreign exchange 35,901,597 - 35,901,597 - Directors' remuneration 14,475,814 9,669,230 14,475,814 9,669,230 Interest expenses 22 381,100,522 592,169,980 260,987,261 371,613,185 Total expenses 2,194,881,505 2,782,317,779 1,045,593,036 1,620,297,033 Operating profit 23 582,805,115 640,554,772 537,116,425 804,947,786 Share of profit/(loss) of subsidiaries - - 4,454,543 (135,055,662) Profit before tax 582,805,115 640,554,772 541,570,968 669,892,124 Income tax (183,786,396) (330,972,429) (169,584,580) (319,038,562) Profit before minority interest 399,018,719 309,582,343 371,986,388 350,853,562 Share of (profit)/loss in subsidiaries to minority interest (27,032,331) 41,271,219 - - Net profit for the year 371,986,388 350,853,562 371,986,388 350,853,562 Central Pattana Public Company Limited Statements of Income (Cont'd) For the year ended 31 December Consolidated Company Notes 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) Basic earnings per share 24 Profit before minority interest 3.99 3.10 3.72 3.51 Share of (profit)/loss in subsidiaries to minority interest (0.27) 0.41 - - Net profit for the year 3.72 3.51 3.72 3.51 Diluted earnings per share 24 Profit before minority interest 3.99 0.77 3.72 1.15 Share of (profit) /loss in subsidiaries to minority interest (0.27) 0.38 - - Net profit for the year 3.72 1.15 3.72 1.15 Central Pattana Public Company Limited Statements of Changes in Shareholders' equity For the years ended 31 December Consolidated Company Notes 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) Share Capital 18 Beginning balance 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Increase during the year - - - - Decrease during the year - - - - Ending balance 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Premium on Share Capital Beginning balance 1,185,000,000 1,185,000,000 1,185,000,000 1,185,000,000 Increase during the year - - - - Decrease during the year - - - - Ending balance 1,185,000,000 1,185,000,000 1,185,000,000 1,185,000,000 Negative goodwill 2.4 Beginning balance 112,594,465 112,594,465 112,594,465 112,594,465 Increase during the year - - - - Decrease during the year - - - - Ending balance 112,594,465 112,594,465 112,594,465 112,594,465 Unrealised gain (loss) of investment in securities-available-for-sale 4 Beginning balance - (18,750,000) - (18,750,000) Increase during the year (2,355,944) - (2,355,944) - Decrease during the year - 18,750,000 - 18,750,000 Ending balance (2,355,944) - (2,355,944) - Retained Earnings Appropriated retained earnings Legal reserve 19 Beginning balance 121,000,000 97,342,762 121,000,000 97,342,762 Increase during the year - 23,657,238 - 23,657,238 Decrease during the year - - - - Ending balance 121,000,000 121,000,000 121,000,000 121,000,000 Unappropriated retained earnings Beginning balance, as previously reported 838,997,735 504,539,593 838,997,735 504,539,593 Prior year adjustments 25 (65,511,298) (58,249,480) (65,511,298) (58,249,480) Beginning balance, as restated 773,486,437 446,290,113 773,486,437 446,290,113 Increase during the year 371,986,388 350,853,562 371,986,388 350,853,562 Decrease during the year 26 (100,000,000) (23,657,238) (100,000,000) (23,657,238) Ending balance 1,045,472,825 773,486,437 1,045,472,825 773,486,437 Total 3,461,711,346 3,192,080,902 3,461,711,346 3,192,080,902 Central Pattana Public Company Limited Statements of Retained Earnings For the years ended 31 December Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) Unappropriated retained earnings: Beginning balance - As previously reported 838,997,735 504,539,593 838,997,735 504,539,593 - Prior year adjustments 25 (65,511,298) (58,249,480) (65,511,298) (58,249,480) - As restated 773,486,437 446,290,113 773,486,437 446,290,113 Less: Appropriation - Legal reserve 19 - (23,657,238) - (23,657,238) - Dividend 26 (100,000,000) - (100,000,000) - Net profit for the year 371,986,388 350,853,562 371,986,388 350,853,562 Unappropriated retained earnings at end of the year 1,045,472,825 773,486,437 1,045,472,825 773,486,437 Appropriated retained earnings at end of the year Legal reserve 121,000,000 121,000,000 121,000,000 121,000,000 Retained earnings at end of the year 1,166,472,825 894,486,437 1,166,472,825 894,486,437 Central Pattana Public Company Limited Statements of Cash Flows For the year ended 31 December Consolidated Company Note 1999 1998 1999 1998 Baht Baht Baht Baht (Restated) (Restated) Cash flows from operating activities 27 544,469,355 897,982,110 216,215,573 814,677,734 Cash flows from investing activities Increase in short-term investment (276,717,700) - (263,000,000) - Increase in negotiable certificate of deposit - (1,900,536) - (1,900,536) Purchases of short-term investments (1,025,100) - (1,025,100) - Disposals of short-term investments 434,118 1,255,168 434,118 1,255,168 Loans made to related companies (7,333) - (210,562,000) (64,306,000) Loans payments from related companies - - 19,289,209 1,149,798,560 Share increase in subsidiaries - - (235,552,500) (1,408,369,396) Disposal of subsidiary, net of cash receipt 3,822,371 - 76,050,000 - Dividend received - - 60,000,000 94,993,350 Purchases of property and equipment (251,408,954) (354,632,253) (25,944,389) (37,492,258) Decrease in other assets - 14,269,186 - 1,628,024 Net cash (payments) in investing activities (524,902,598) (341,008,435) (580,310,662) (264,393,088) Cash flows from financing activities Purchases of convertible bonds (48,598,616) (256,510,367) (48,598,616) (256,510,367) Proceeds from long-term borrowings 1,500,000,000 - 1,500,000,000 - Payments on long-term borrowings (1,351,332,392) (441,593,277) (996,430,999) (376,410,000) Loan from related companies 524,046 (21,372,306) 25,631,426 (37,774,890) Dividends paid to the shareholders (100,000,000) - (100,000,000) - Net cash receipts/(payments) from financing activities 593,038 (719,475,950) 380,601,811 (670,695,257) Net increase /(decrease) in cash and cash equivalents 20,159,795 (162,502,275) 16,506,722 (120,410,611) Beginning balance 627,309,397 789,811,672 515,770,334 636,180,945 Ending balance 647,469,192 627,309,397 532,277,056 515,770,334 Cash and cash equivalents : Cash on hand and at banks 221,123,627 88,742,763 106,546,491 29,514,625 Fixed deposits less or equal to 3 months 330,345,565 409,879,705 329,730,565 377,599,869 Promissory notes with financial institution less or equal to 3 months 96,000,000 128,686,929 96,000,000 108,655,840 647,469,192 627,309,397 532,277,056 515,770,334 Central Pattana Public Company Limited Notes to the Consolidated and Company Financial Statements For the year ended 31 December 1999 and 1998 1 General Information Central Pattana Public Company (the Company) is a public limited company, which is incorporated and domiciled in Thailand. The address of its registered office is as follows: 1693 Phaholyothin Road, Lardyao, Chatuchak, Bangkok 10900. The Company is listed on the Stock Exchange of Thailand. The principal business operations of the Company and its subsidiaries (the Group) are summarised as follows: (1) Construction of shopping center building, condominium and shophouse for rent (2) Provision of utility services in shopping center. (3) Produce, sales of food and beverage and import of food, biscuits and beverage 2 Significant Accounting Policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 2.1 Basis for preparation The consolidated and company financial statements are prepared in accordance with and comply with generally accepted accounting principles in Thailand. The consolidated and company financial statements are prepared under the historical cost convention as modified by the revaluation of certain marketable securities. 2.2 Consolidation Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made for minority interests in the consolidated balance sheet and consolidated income statement. A listing of the Group's principal subsidiaries is set out in Note 10 to the financial statements. 2.3 Investments in subsidiaries Investments in subsidiary undertakings are accounted for in the non-consolidated financial statements by the equity method of accounting. These are undertakings over which the Company has over 50% of the voting rights, and over which the Company exercises control. Provisions are recorded for impairment in value. Equity accounting involves recognising in the income statement the Company's share of the subsidiaries' profit or loss for the year. The Company's interest in the subsidiary is carried in the balance sheet at an amount that reflects its share of the net assets of the subsidiary and includes goodwill on the acquisition. 2.4 Negative goodwill Negative goodwill represents the excess of the fair value in land over the cost of an acquisition of the Group's share of the net assets of the acquired subsidiary undertaking at the date of acquisition. Negative goodwill on acquisition is reported in the balance sheet under shareholders' equity. 2.5 Foreign currencies Foreign currency transactions in Group companies are accounted for at the exchange rates prevailing at the date of the transactions. 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 in the income statement. Such balances are translated at year-end exchange rates unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Exchange gains and losses and hedging costs arising on contracts entered into as hedges of specific revenue or expense transactions and of anticipated future transactions are deferred until the date of such transactions at which time they are included in the determination of such revenue and expenses. All other exchange gains and losses relating to hedge transactions are recognised in the income statement in the same period as the exchange differences on the items covered by the hedge transactions. Costs on such contracts are amortised over the life of the hedge contract. Gains and losses on contracts which are no longer designated as hedges are included in the income statement. 2.6 Trade receivables Trade receivables are carried at anticipated realisable value. 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. Bad debts are written off during the year in which they are identified. 2.7 Short-term investments (more)