Short-term investments comprise fixed deposits at banks, deposits at financial institutions in form of promissory notes with maturity date within three-month period or less and investments in marketable securities available for sale, both in listed common shares and debenture. Fixed deposits and deposits at financial institution are stated at face value. Marketable equity and debt securities which are classified as available-for-sale securities are carried at fair values. Fair value of marketable equity securities and debenture is calculated by reference to Stock Exchange quoted buying prices and Bond Dealer Club's recent buying prices at the close of business on the balance sheet date, respectively. Increases/decreases in the carrying amount are credited/charged against unrealised gains/losses on investment in available-for-sale securities in the shareholders' equity. Investments in non-marketable equity securities which are classified as 'general investment' are carried at cost less impairment charge. A test for impairment is carried out when there is a factor indicating that such investment might be impaired. If the carrying value of the investment is less than its recoverable amount, impairment loss is charged to the income statement. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement. When disposing of part of the Group's holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined from the weighted average carrying amount of the total holding 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. 2.8 Inventories Inventories are stated at the lower of cost or net realisable value. Cost is determined by the weighted average and first-in, first-out method. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Provision is made where necessary for obsolete, slow-moving and defective inventories. 2.9 Intangible assets Expenditure on acquired patents, trademarks and licences is capitalised and amortised using the straight-line method over their useful lives, generally over 4-10 years over the period of permission. Intangible assets are not revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment where it is considered necessary. 2.10 Property and equipment Property and equipment comprise assets for lease and operating furniture fixtures and equipment. Land is recorded at cost. All other property and equipment is stated at historical cost less depreciation. Depreciation is calculated on the straight-line basis to write off the cost of each asset except for land, as it is deemed to have an indefinite life, to their residual values over their estimated useful life as follows: Leasehold right 25-30 years (over the period of lease) Buildings and improvement 25-30 years Furniture, fixtures and equipment 5-15 years Motor vehicles 5 years Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. Borrowing costs to finance the construction of property, plant and equipment are capitalised, during the period of time that is required to complete and prepare the property for its intended use, as part of cost of the asset. The borrowing costs include interest on bank overdrafts and short-term and long-term borrowings. Capitalisation of borrowing costs will be suspended during extended periods in which active development is interrupted. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Group's outstanding borrowing during the year. Where funds are borrowed specifically for the acquisition, construction or production of property, plant and equipment, the amount of borrowing costs eligible for capitalisation on that asset is determined as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. Expenditures for addition, renewal and betterment, which result in a substantial increase in an asset's current replacement value, are capitalised. Repair and maintenance costs are recognised as an expense when incurred. Costs associated with the maintenance of existing computer software programmes and for modifications for the Year 2000 are expensed as incurred. 2.11 Accounting for leases Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance charge is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts is depreciated over the useful life of the asset. Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.12 Deferred income taxes The Group has adopted International Accounting Standard IAS 12 (revised) on accounting for income taxes as there is currently no Thai Accounting Standard on this subject. Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred income tax. The principal temporary differences of the Group arise from provision for redemption of convertible bond, provision for impairment in value of investments, allowance for doubtful accounts, accrued interests payable on bond, and other provisions. 2.13 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. 2.14 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 the straight-line method over the period of lease. Revenue from foods and beverage sales is recognised upon delivery of goods to customers. For consolidation financial statements, inter-group sales are eliminated. Other revenues earned by the Group are recognised on the following bases: * Interest income - as it accrues unless collectibility is in doubt. * Dividend income - when the shareholder's right to receive payment is established. 2.15 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. 2.16 Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. In particular, the comparatives have been adjusted or extended to take into account the requirements of the following revised or new accounting standards which the Group implemented. In 1999, the Group implemented the new Thai Accounting Standards, namely: TAS 32 - Property, Plant and Equipment TAS 33 - Borrowing Costs TAS 35 - Presentation of Financial Statements TAS 36 - Impairment of Assets TAS 37 - Revenue Recognition TAS 38 - Earnings Per Share TAS 39 - Net Profit or Loss for the Period, Fundamental Errors and Accounting Changes TAS 40 - Accounting for Investments in Debt and Equity Securities There are no changes in accounting policy resulting from the adoption of the above standards in these financial statements, as the Group was already following the recognition and measurement principles in those standards, except for Thai Accounting Standard No. 40 - Accounting for Investments in Debt and Equity Securities which reclassifies investments into new classifications as described in Note 2.7. The standard requires such change to be made prospectively and no retroactive adjustment is required. 3 Cash on Hand and at Banks Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Cash on hand 2,712 2,540 548 403 Deposits held at call and current accounts with banks 218,412 86,203 105,999 29,112 221,124 88,743 106,547 29,515 The weighted average effective interest rate of deposits at call with bank was 2 % per annum (1998: 5% per annum). 4 Short-Term Investments Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Fixed deposits 585,101 409,880 583,730 377,600 Promissory Notes 117,962 128,687 105,000 108,656 703,063 538,567 688,730 486,256 Investment in marketable securities - 12,437 - 12,437 Securities available-for-sale, net Debt securities (due within 1 year) 9,918 - 9,918 - Equity security 3,139 - 3,139 - Less : Provision for changes in value of investments (2,356) - (2,356) - 10,701 12,437 10,701 12,437 713,764 551,004 699,431 498,693 Securities available-for-sale Opening net book amount 12,438 - 12,438 - Additions 1,025 - 1,025 - Disposals (406) - (406) - Changes in value of investments (2,356) - (2,356) - Closing net book amount 10,701 - 10,701 - 5 Trade Accounts Receivable, net Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Trade accounts receivable Gross trade accounts receivable -Related companies 40,345 77,473 31,025 73,352 -Others 129,199 172,774 53,247 87,564 Less Allowance for doubtful accounts (4,801) (15,640) (1,969) (8,356) Trade accounts receivable, net 164,743 234,607 82,303 152,560 5 Trade Accounts Receivable, net (continued) Outstanding trade accounts receivable greater than three months as at 31 December can be analysed as follows: Consolidated 1999 Consolidated 1998 Related Related Companies Others Total Companies Others Total Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 3 - 6 months 1,565 17,055 18,620 12,483 29,291 41,774 6 - 12 months 2,582 3,283 5,865 5,159 24,991 30,150 Over 12 months 10,487 14,051 24,538 24,900 41,773 66,673 14,634 34,389 49,023 42,542 96,055 138,597 Less Allowance for doubtful accounts (4,801) (15,640) 44,222 122,957 Deposit from customers 7,089 94,962 102,051 13,343 105,755 119,098 Company 1999 Company 1998 Related Related Companies Others Total Companies Others Total Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 3 - 6 months 673 10,171 10,844 14,123 9,352 23,475 6 - 12 months 2,167 1,264 3,431 9,663 11,993 21,656 Over 12 months 9,061 4,111 13,172 22,560 19,042 41,602 11,901 15,546 27,447 46,346 40,387 86,733 Less Allowance for doubtful accounts (1,969) (8,356) 25,478 78,377 Deposit from customers 7,089 69,557 76,646 13,343 71,668 85,011 6 Short-term Loans and Advances to Related Parties Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Loans to subsidiaries Central Food Avenue Co., Ltd. - - - 7,515 Food Novelties Co., Ltd, - - - 5,751 Coffee Partners Co., Ltd. - - 64,659 12,005 - - 64,659 25,271 Advances to related companies 9,017 9,010 - - 9,017 9,010 64,659 25,271 Loans to subsidiaries are unsecured and denominated in Thai Baht. The loans are repayable on demand and carry interest at fixed deposit rate, except loan to Coffee Partners Co., Ltd. which carry interest at Minimum Loan Rate. 7 Other Account Receivable Other account receivable represents amount due from an overseas financial institution resulting from a suspension of their delivery of cash amounting to USD 30 million, in accordance with forward foreign exchange contracts, which was converted into Baht at the exchange rate as at 27 September 1999 which was the due date of forward contracts, net of cash denominated in Thai Baht amount which the company have to deliver for the exchange at an average exchange rate per contracts of Baht 25.8 to USD 1. However, the financial institution denied the delivery of USD on the due date and informed that this was a temporary suspension pending for the result of negotiation with the company relating to the default of forward foreign exchange contracts amounting to Baht 590 million between the financial institution and one of the company's related companies which the company hold 15% of shares. The company is currently negotiating with the financial institution. Therefore, there is uncertainty as to the recoverable amount. 8 Other Current Assets Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Other accounts receivable 60,901 62,570 6,740 6,742 Accrued income 34,336 24,574 20,063 17,482 Inventories 29,496 19,341 - - Prepaid expenses 9,518 21,510 4,031 7,067 Accrued interest income 3,313 7,444 3,212 6,776 Advance payments 3,272 4,013 729 1,238 Others 4,972 3,964 - - 145,808 143,416 34,775 39,305 9 Loans to Related Parties Consolidated Company 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 Subsidiaries Central Pattana Chiang Mai Co., Ltd. - - 241,048 211,535 Central Pattana Khon Kaen Co., Ltd. - - 188,085 194,108 Lang Suan Realty Co., Ltd. - - 165,724 86,130 Central Pattana KoRaj Co., Ltd. - - 59,408 56,824 Focus Holding Co., Ltd. - - 35,385 5,573 Food Novelties Co., Ltd. - - 16,405 - - - 706,055 554,170 Related company Siam Retail Development Co., Ltd. 162,739 162,739 162,739 162,739 Less: Allowance for doubtful accounts (123,899) (43,899) (123,899) (43,899) 38,840 118,840 38,840 118,840 Total 38,840 118,840 744,895 673,010 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 31 December 1999, the Group holds investment in ordinary shares representing 15% of total shares outstanding of Siam Retail Development Co., Ltd., (SRDC) which 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 investment in the related company could be recovered in full. As at 31 December 1998, SRDC' s current assets fell short of its current liabilities by Baht 1,856 million and its shareholders' equity had a deficiency of Baht 1,245 million. 10 Investments in Subsidiaries Company 1999 1998 Baht'000 Baht'000 (Restated) Opening net book amount, as previously stated 2,898,674 1,956,810 Prior year adjustments (Note 25) (65,511) (58,250) Opening net book amount, as restated 2,833,163 1,898,560 Share of results 4,455 (135,056) Increase share in subsidiaries 235,552 1,164,659 Disposals investment (74,854) - Dividend received (60,000) (95,000) Closing net book amount 2,938,316 2,833,163 Paid up Percentage Principal share of activities capital Holding 1999 1998 1999 1998 Million Baht Million Baht % % Central Pattana Chiangmai Co., Ltd. (1) and (4) 1,000.0 1,000.0 100.0 100.0 Focus Holding Co., Ltd. (1) 800.0 800.0 100.0 100.0 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 25.5 100.0 100.0 Coffee Partners Co., Ltd. (5) 80.0 40.5 - 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 10 Investments in Subsidiaries (continued) Company Investment at cost Investment at equity Method Method 1999 1998 1999 1998 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) Central Pattana Chiangmai Co., Ltd. 1,000,000 1,000,000 917,476 956,444 Focus Holding Co., Ltd. 800,000 800,000 692,098 694,468 Lang Suan Realty Co., Ltd. 150,000 150,000 64,829 111,807 Central Pattana Ko Raj Co., Ltd. 199,999 199,999 68,042 70,652 Central Realty Service Co., Ltd. 1,000 1,000 43,737 74,284 Central Food Avenue Co., Ltd. 1,000 1,000 14,591 13,804 Food Novelties Co., Ltd. 25,000 25,000 14,064 16,532 Coffee Partners Co., Ltd. - 40,500 - 12,550 Central Pattana Khon Kaen Co., Ltd. 203,149 203,149 143,577 139,494 Namsap Pattana Co., Ltd. 524,934 324,926 563,957 326,394 Central Pattana Nine Square Co., Ltd. 241,200 241,200 238,451 238,956 Central Pattana Chonburi Co., Ltd. 189,084 189,084 177,494 177,778 Total 3,335,366 3,175,858 2,938,316 2,833,163 All holdings are in the ordinary share capital of the undertaking concerned and are unchanged from 1998, except for the increase in share capital of Namsap Pattana Co., Ltd. and Coffee Partners Co., Ltd. In addition, the company disposed investment 91% of share capital of Coffee Partners Co., Ltd. (after disposal of investment 9% to third parties) to Lang Suan Realty Co., Ltd., another subsidiary. Therefore, Coffee Partners Co., Ltd. is still considered as a subsidiary under the equity method and its financial statements are consolidated in the consolidated financial statements. 11 Long-Term Investments Consolidated Company 1999 1998 1999 1998 Baht '000 Baht '000 Baht '000 Baht '000 Opening net book amount 189,280 477,114 120,315 408,149 Disposals - (120,738) - (120,738) Changes in fair value of investments - (167,096) - (167,096) Closing net book amount 189,280 189,280 120,315 120,315 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% 68,965 68,965 - - 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 Investment, at cost 308,558 308,558 239,593 239,593 Less: Provision for impairment in value (167,095) (167,095) (167,095) (167,095) 141,463 141,463 72,498 72,498 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 (more)