Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 1 Accounting Policies The interim consolidated and company financial statements are prepared in accordance with the accounting principles generally accepted in Thailand. However, the primary statements i.e. balance sheets, statements of income, changes in shareholders' equity, retained earnings and cash flows are presented in the full format as prescribed by the Ministerial Regulation No. 7 (B.E. 2539) in accordance with the Securities and Exchange Commission's and the Stock Exchange of Thailand's requirements, rather than in the condensed format as required by Thai Accounting Standard No. 41, "Interim Financial Reporting." The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 1999. The Group has implemented the following new Thai Accounting Standards, effective 1 January 2000, in these interim financial statements: TAS 43 - Business Combinations TAS 44 - Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 45 - Accounting for Investment in Associates TAS 47 - Related Party Disclosures The comparatives, if any, have been adjusted or extended to take into account the requirements of those newly effective standards. Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim report only if it would be also appropriate to anticipate or defer such costs at the end of the financial year Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 30%. These interim financial statements should be read in conjunction with the 1999 annual financial statements. Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 2 Segment Information Financial information by business segments - Group For the three-month period ended Rental and Food and 31 March 2000 Services Beverage Consolidated Baht' 000 Baht' 000 Baht' 000 Revenues 581,013 108,046 689,059 Segment result 319,429 25,102 344,531 For the three-month period ended Rental and Food and 31 March 1999 Services Beverage Consolidated Baht' 000 Baht' 000 Baht' 000 Revenues 533,010 87,699 620,709 Segment result 284,203 21,951 306,154 3 Significant Unusual Items Charged to Operating Profit The following items of unusual nature have been charged to the operating profit during the interim period. Consolidated Company For the three-month period ended 2000 1999 2000 1999 31 March Baht' 000 Baht' 000 Baht' 000 Baht' 000 Impairment charge from property under development - 30,000 - - Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 4 Earnings Per Share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period (2000: 100,000,000 shares; 1999: 100,000,000 shares). For the calculation of the diluted earnings per share, the net profit adjusted for the interest expense of convertible bond of Baht 25,478,695 (1999: Baht 30,120,575) and the weighted average number of shares assuming conversion of all dilutive potential ordinary shares is 108,905,750 shares (1999: 108,905,750 shares). Since loan converted resulted in diluted earnings per share for the three-month periods ended 31 March 2000 and 1999 are higher than basic earnings per share. Therefore, basic earnings per share is presented as diluted earnings per share in the statement of income. 5 Prior year adjustment The Company has restated the consolidated and company statement of income, changes in shareholders' equity, retained earnings and cash flows for the three-month period ended 31 March 1999 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 adjustments relating to the correction of errors in the capitalisation of interest expenses as cost of assets. 6 Trade Accounts Receivable Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Trade accounts receivable -Related companies 21,874 29,707 25,065 24,791 -Others 112,012 112,100 43,797 48,972 133,886 141,807 68,862 73,763 Less Allowance for doubtful accounts (3,359) (4,801) (1,111) (1,969) 130,527 137,006 67,751 71,794 Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 6 Trade Accounts Receivable (continued) Outstanding trade accounts receivable greater than three months can be analysed as follows: Consolidated Consolidated as at 31 March 2000 as at 31 December 1999 Related Others Total Related Others Total Companies Companies Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 3 - 6 months 1,552 12,656 14,208 1,565 17,055 18,620 6 - 12 months 1,874 9,243 11,117 2,582 3,283 5,865 Over 12 months 7,804 13,391 21,195 10,487 14,051 24,538 11,230 35,290 46,520 14,634 34,389 49,023 Deposit from customers 609 73,991 74,600 7,089 94,962 102,051 Company Company as at 31 March 2000 as at 31 December 1999 Related Others Total Related Others Total Companies Companies Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 3 - 6 months 1,164 3,807 4,971 673 10,171 10,844 6 - 12 months 1,217 6,863 8,080 2,167 1,264 3,431 Over 12 months 5,320 3,851 9,171 9,061 4,111 13,172 7,701 14,521 22,222 11,901 15,546 27,447 Deposit from customers 609 50,037 50,646 7,089 69,557 76,646 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. 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 regarding the delivery exchange rate and incurred damage costs. The Company's management is of the opinion that the outcome of negotiation could be finalised with in the 2nd quarter of 2000. Since the ultimate outcome of the negotiation could not be concluded at present, there is uncertainty as to the recoverable amount. Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 8 Other Current Assets Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Accrued income 78,272 62,073 43,676 30,572 Other accounts receivable 58,979 60,901 6,784 6,740 Inventories 22,903 29,496 - - Advance payments 13,433 8,243 952 729 Prepaid expenses 12,107 9,518 3,748 4,031 Accrued interest income 4,792 3,313 4,711 3,212 190,486 173,544 59,871 45,284 9 Capital Commitment For the three-month Consolidated Company Period ended Property Property Property Property 31 March 2000 and under and under equipment development Total equipment development Total Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Baht'000 Opening net book amount 7,379,047 2,245,381 9,624,428 3,343,470 - 3,343,470 Addition 18,737 57,975 76,712 4,681 - 4,681 Disposal (497) - (497) (15) - (15) Depreciation (116,111) - (116,111) (44,529) - (44,529) Closing net book amount 7,281,176 2,303,356 9,584,532 3,303,607 - 3,303,607 Long-term bank borrowings are secured by the Group' s properties with book values of Baht 2,507 million. The Group's project under development comprises total 6 projects. However, the balances included 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 project loss as of 31 March 2000 are amounting to Baht 1,909 million and 257 million, respectively (As at 31 December 1999: Baht 1,904 million and Baht 257 million). Commitment as at 31 March 2000 The Group has commitments in respect of further development costs to complete property development projects in progress of Bht 259.6 million (as at 31 December 1999: Baht 118.2 million). Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 10 Other Assets Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Guarantee for leasehold right 402,933 403,704 104,358 105,130 Withholding tax deducted at source 102,317 107,715 56,140 56,140 Deferred expenses from issue Euro convertible bond 8,118 12,290 8,118 12,290 Deposit and intangible assets 27,007 18,682 4,550 1,286 540,375 542,391 173,166 174,846 11 Other Current Liabilities Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Accrued expenses 116,864 134,619 97,000 65,865 Other accounts payable 108,066 128,253 34,051 40,881 Accrued interest expenses 97,233 85,178 62,681 84,677 Retention payable 61,756 61,697 2,915 2,932 Contractor payable 37,507 34,614 1,759 1,125 Others 29,944 26,963 11,522 10,249 451,370 471,324 209,928 205,729 12 Borrowings Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Financial institution borrowings 1,527,970 1,594,720 528,536 549,999 Bonds issued to financial institutions 1,774,175 912,176 1,774,175 912,176 Total 3,302,145 2,506,896 2,302,711 1,462,175 Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 12 Borrowings (Cont'd) Maturity of long-term borrowing are as follows: Consolidated Company 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Due within 1 year or less 253,004 262,240 253,004 246,139 During 1-2 years 452,059 474,063 281,244 274,063 During 2-5 years 2,597,082 1,770,593 1,768,463 941,973 3,049,141 2,244,656 2,049,707 1,216,036 3,302,145 2,506,896 2,302,711 1,462,175 The movements in the borrowings can be analysed as follows: For the three-month period ended 31 March 2000 Consolidated Company Baht' 000 Baht' 000 Opening amount 2,506,896 1,462,175 Bond (debt equity) issued -due within 3 years 900,000 900,000 Repayment of borrowings (104,751) (59,464) Closing amount 3,302,145 2,302,711 The company mortgaged 2 plots of land and buildings of the Company and subsidiaries as a collateral of long- term loans as mentioned in Note 9 to the financial statements. Newly issued bonds to financial institutions during the 3 month period ending 31 March 2000 amounting to Baht 900 million are unsecured. 13 Dividends Per Share At the Annual General Meeting on 28 March 2000, a dividend in respect of the year 1999 of Baht 1.25 per share amounting to a total of Baht 125 million was approved. Dividends were paid to the shareholders on 27 April 2000. 14 Contingencies As of 31 March 2000, the Company and subsidiaries have contingent liabilities in respect of letter of guarantees issued by the banks in favor of a state enterprise for the consumption of electricity totaling of Baht 65.9 million (As at 31 December 1999: Baht 65.9million). Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 15 Cash Flows from Operating Activities Reconciliation of net profit to cash flows from operating activities for the three month period ended 31 March: Consolidated Company 2000 1999 2000 1999 (Restated) (Restated) Baht' 000 Baht' 000 Baht' 000 Baht' 000 Net profit 127,096 105,077 127,096 105,077 Interest expense 89,506 103,624 67,996 66,432 Income tax 56,224 59,297 45,814 55,677 Minority interest 10,335 7,320 - - Net profit before interest and tax 283,161 275,318 240,906 227,186 Adjustments for: Depreciation and amortisation 121,613 116,300 46,120 48,754 Allowance for doubtful debts - (1,203) - (422) Provision for loss on project under development - 30,000 - - Recognise unearned rental and service income (39,546) (38,894) (19,912) (20,354) Loss on cancellation of sale contract - 1,093 - - Loss on foreign exchange - Loans - 4,501 - 4,501 - Bond 11,390 38,443 11,390 38,443 Share of (profit)/loss of subsidiaries - - (19,655) 25,775 Gain from valuation of marketable securities - (1,246) - (1,246) Gain on disposal of investments - (1,420) - (1,420) Gain from redemption of Euro convertible bonds - (56,185) - (56,185) Changes in operating assets and liabilities: - Trade accounts receivable 6,479 14,142 4,042 6,798 - Other current assets (16,942) (30,871) (14,587) (11,785) - Unbilled completed work - 4,208 - - - Deferred income tax (12,630) (16,911) (11,034) (10,340) - Other assets (4,024) 10,621 (256) 11,930 - Trade accounts payable (136) (23,423) 182 (3,430) - Other current liabilities (32,009) (20,267) (8,124) (9,697) - Unearned rental income 6,769 (10,491) (6,931) (6,601) - Deposit from customers 21,007 (1,336) 6,278 6,794 - Guarantee for leasehold (6,074) 331 - - Cash generated from operations before interest and income tax 339,058 292,710 228,419 248,701 Interest expense paid (55,445) (51,547) (33,666) (13,420) Income tax paid (109,362) - (106,243) - Net cash generated from operations 174,251 241,163 88,510 235,281 Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 16 Related Party Transactions The following material transactions were carried out with related parties: a) Rental, services and management income For the three month period ended Consolidated Company 31 March 2000 1999 2000 1999 Baht' 000 Baht' 000 Baht' 000 Baht' 000 Rental and service income Subsidiaries Central Realty Service Co.,Ltd. - - 11,300 12,110 Central Food Avenue Co.,Ltd. - - 8,742 9,230 Other subsidiaries - - 1,827 1,451 - - 21,869 22,791 Related companies Central Department Store Group 18,273 14,865 11,067 8,722 Fast Food Group 12,184 11,833 7,566 7,149 Central Plaza Hotel Group 2,475 2,544 2,475 2,544 Retail Group and others 29,805 34,186 17,171 17,986 62,737 63,428 38,279 36,401 62,737 63,428 60,148 59,192 Management fee Subsidiaries Central Realty Service Co.,Ltd. - - 7,173 6,802 Central Pattana Rama 3 Co.,Ltd. (Formally "Namsap Pattana Co.,Ltd".) - - 2,609 324 Other subsidiaries - - 8 1,236 - - 9,790 8,362 Related companies Bangna Central Property Co.,Ltd. 1,169 1,130 1,050 1,130 Others 45 45 45 45 1,214 1,175 1,095 1,175 1,214 1,175 10,885 9,537 Rental and service incomes are charged at market price. Management and consultant fees are charged at negotiated prices. Central Pattana Public Company Limited Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the Three-Month Period Ended 31 March 2000 and 1999 Related companies are the companies which have common directors, which could be summarised by Group as follws: Central Department Store Group comprises. Central Department Store Company Limited (more)