Central Pattana Public Company Limited Management Discussion and Analysis of the company performance and financial position for the year 2002 FINANCIAL RESULTS OVERALL PERFORMANCE The net income for year 2002 was 948 MB, increased by 51% ,which mainly due to higher rental and service income and gain from debt restructuring (extraordinary item)of Central Playland Co., Ltd.,, a 80% subsidiary, despite expenses significantly increased because of the expenses of grand opening of the Central Plaza Rama2, loss on impairment of asset and additional value added tax for the year 1997-2000. The Company opened Central Plaza Rama 2 and acquired World Trade Center Bangkok on December 5 and 23 ,2003, respectively. Furthermore, TRIS Rating Co., Ltd. has upgraded the Company rating from "BBB+" to "A-". Revenues Total revenues for the year 2002 amounted to 3,856 MB., increased by 755 MB or 24% from the year 2001. It is mainly due to higher occupancy rate and rental rate of shopping centers and office buildings especially rental rate from revenue sharing contracts, the consolidation of Bangna and the opening of Central Plaza Rama 2 and new retail zone at 6-7th floor of Central City Bangna. Moreover, all shopping centers have been continuously improved and developed such as the opening of Junction X at Central Plaza Pinklao, the opening of SFX Cinema at Central Plaza Ladprao and the opening of Major Cineplex at Central Plaza Ratchada Rama 3 and Central City Bangna. Cost of sales and Administrative expenses Cost of sales Cost of sales for the year 2002 was 1,720 MB., higher than the year 2001 by 23%. It is mainly due to the consolidation of Bangna, the opening of Central Plaza Rama 2 and increase in a number of utility units consumed as a result of higher occupancy rate. Administrative expenses Administrative expenses of this year was 592 MB., 41% higher the year 2001 mainly due to advertising and other expenses for the opening of Central Plaza Rama 2, salary of new staffs for Rama 2 and financial advisory fee of capital increase. Financial Position Assets As at December 31, 2002, the company's total assets amounted of 21,373 MB, increased from December 31, 2001 by 6,630 MB. or 45%. Major items are cost of World Trade Center Bangkok, Central Plaza Rama 2 and construction cost of Chiangmai Phase 2B. Liabilities As at December 31, 2002, the company's total liabilities amounted to 15,334 MB., increased from December 31,2001 by 4,820 MB. or 46% due to an issuance of short-term bill of exchange to pay for World Trade Center Bangkok and Construction of Central Plaza Rama 2. The Company plan to launch 2 property funds for Bangna and World Trade Center Bangkok to refinance those short-term bill of exchange in the first quarter of 2003 Shareholders' Equity Shareholders' Equity was higher from December 31, 2001 by 1,809 MB. due to capital increase of 1,000 MB. by right issue and increase in net profit from operation. *On January 2, 2003, the Company registered the change in par value from 10 Baht to 5 Baht per share (par split) Ratio Analysis As at December 31,2002 the company's liquidity was still strong. Cash and cash equivalent amounted of 1,274 MB. Net interest bearing debt to equity ratio was at 1 time, increased from 0.7 time in December 31,2001 come from an issuance of short term bill of exchange for acquisition of World Trade Center Bangkok. Return on Equity (ROE) for this quarter was 15.7%, higher than 14.8% of the same quarter of prior year. Key ratio Dec. 31,02 Dec. 31,01 Profitability ratio Gross profit margin (%) 52.3 52.6 Net profit margin (%) 24.6 20.3 Return on Equity (%) 15.7 14.8 Efficiency ratio Return on Assets (%) 4.4 4.2 Financial Policy Interest coverage (times) 5.0 4.5 Net interest bearing debt to equity (times) 1.0 0.7