Central Pattana Public Company Limited Analysis of the company performance and financial position for Quarter 2/2004 OVERALL PERFORMANCE Q2/2004 Central Pattana Public Company Limited reported total rental & service and food & beverage revenues for the second quarter of the year 2004 amounted to 1,453.8 MB. increased by 11.8% Y-O-Y mainly due to revenue of Central Town Center Rattanathibet, acquired in December 2003, and increase in rental rate of existing projects. Moreover, The Company had managed operating cost effectively, so Gross Profit Margin of this quarter was 46.7% better than 45.6% of Q2/2003. However there were higher expenses from issuance of unsecured bond, higher interest expense from higher debt financing to expand business and higher corporate income tax from adjustment of corporate income tax of 2003. As a result, net income of Q2/2004 was 308.9 MB., decreased by 1.4 MB. Y-O-Y or 0.5%. Although The Company has continuously expanded its business especially construction of Central World Tower, expected to be completed in October 2004, and renovation of Central World Plaza, net interest bearing debt to equity ratio of this quarter was only 0.8 times, still less than company's policy of 1 time. On May 20, 2004 The Company was paid dividend from net income of 2003 at Baht 1.1 per share, total amount of 479.3 MB., or 40% of net income. Revenues Total rental & service and food & beverage revenues of Q2/2004 amounted to 1,453.8 MB., increased by 153.7 MB. Y-O-Y or 11.8% due to revenue of Central Town Center Rattanathibet, acquired in December 2003, increase in rental rate and higher rental income from percentage to tenant's sales contract ( consignment income ) and rental income from common area ( promotion income ). Cost of goods sold and Administrative expenses Cost of goods sold of Q2/2004 was 775.4 MB., higher by 67.5 MB. Y-O-Y or 9.5%. This is due to operating cost of new project, Central Town Center Rattanathibet, repair & maintenance cost of Central World Plaza and higher operating cost such as electricity cost and cost of promotion activities. Gross Profit Margin of this quarter was 46.7% better than 45.6% of the same quarter of last year due to increase of total revenues as mentioned above, especially consignment income and promotion income, and decrease in repair & maintenance cost. Administrative expenses of Q2/2004 amounted to 187.7 MB., higher by 30.8 MB. Y-O-Y or 19.3% resulted from expenses of new project, construction permission fee of Central Town Center Rattanathibet, Central World Plaza and Central World Tower and cost of unsecured bond issuance. Financial Position as at June 30, 2004 Assets As at June 30, 2004, the consolidated assets were 26,252.5 MB., increased from December 31, 2003 by 2,702.6 MB. or 11.5% mainly came from increase in cash and cash equivalents from issuance of unsecured bond amounted to 2,500 MB. in March 2004 and investment in Central World Tower, Central World Plaza and Central Park in Central Plaza Rama2. Liabilities As at June 30, 2004, the consolidated liabilities were 18,192.6 MB., increased from December 31, 2003 by 2,598.3 MB. or 16.7% due to issuance of senior unsecured bond, which comprised of 1,000 MB. of 5-year bond and 1,500 MB. of 7-year bond, to finance a renovation of Central World Plaza and construction of Central World Tower. Furthermore, The Company had also drawn down Project Financing loan of Central Airport Plaza Chiangmai Phase 2B amounted to 400 MB. in March 2004 and issued Bill of Exchange amounted to 84.6 MB. in April 2004. Shareholders' Equity Shareholders' equity as at June 30, 2004 was 8,059.9 MB., higher than December 31, 2003 by 104.3 MB. or 1.3% came from net income of Q1&Q2/2004 amounted to 649.6 MB. while dividend was paid from net income for the year 2003 at Baht 1.1 per share, total amounted 479.3 MB., on May 20, 2004. The Company had decreased its par value (par split) from Baht 5 per share to Baht 1 per share. The number of shares was increased from 435,763,200 shares to 2,178,816,000 shares, which was effective since May 17, 2004. However this transaction had not affected to amount of issued and paid-up share capital. Financial Ratio Analysis Profitability Gross Profit Margin of Q2/2004 was 46.7% higher from 45.6% of the same period of last year that reflected more efficiency of Company's performance, both revenue generating nd cost management. Net Profit Margin of Q2/2004 was 20.0% declined from 22.8% Y-O-Y due to cost of unsecured bond issuance, construction permission fee, higher interest expense and an adjustment of corporate income tax of 2003 which resulted in higher corporate income tax. Return on Equity (ROE) of Q2/2004 was 15.3% decreased from 19.9% Y-O-Y. This is due to higher equity balance from capital increasing in the third quarter of last year. Cash flow from operation also decreased 37.6% Y-O-Y mainly came from advance payment to contractor for construction of Central World Tower and lower rental deposit and upfront payment of long-term lease agreement from Chiangmai Phase 2B which was opened in April last year. Liquidity and Financial Policy Interest coverage ratio of Q2/2004 was decreased from 8.7 times of last year to 4.0 times due to higher interest expense from issuance of unsecured bond and drawn down of project financing loan of Central Airport Plaza Chiangmai Phase 2B. However, net interest bearing debt to equity ratio was lower from 1.1 times in last year to 0.8 times in Q2/2004 due to capital increase during 2003 in order to maintain this ratio not more than its policy of 1 time. Key Ratio 30 June 2003 30 June 2004 LIQUIDITY RATIO Current Assets/Current Liabilities ( Times) 0.8 1.2 Accounts receivable turnover (Days) 9 7 PROFITABILITY RATIO Gross Profit Margin (%) 45.6% 46.7% Net Profit Margin (%) 22.8% 20.0% Return on Equity (%) 19.9% 15.3% EFFICIENCY RATIO Return on Assets (%) 5.3% 4.7% FINANCIAL POLICY RATIO Net interest bearing debt to equity (Times) 1.1 0.8 Interest coverage (Times) 8.7 4.0