Central Pattana Public Company Limited Management's Discussion and Analysis Consolidated Financial Results : Q1/2006 OVERALL PERFORMANCE Central Pattana Plc., reported consolidated net profit in Q1/2006 of 457.0 MB,an increase of 92.1 MB.,or 25.2% from Q1/2005. This came mainly from the increase of rental income from The Offices at CentralWorld which currently has a sales progress of more than 90% of leasable area and from the new expanded leasable area of Central Town Rattanathibet which was completed in September 2005. Moreover, the Company also received property management fee income from CPNRF and profit sharing from investment in CPNRF. In the light of the substantial difference between Q1/2006 and Q1/2005 due to the financial lease of building and utility system of Central Plaza Rama 2 and Rama 3 to CPNRF in August 2005, the performance of Central Plaza Rama 2 and Rama 3 were partially transferred out to CPNRF which was the main contribution to the changes in the Company's performance when comparing this years result to last year. For comparative purpose, additional analysis has been prepared to see what the Company's performance would have been if Central Plaza Rama 2 and Rama3 performance and other items associated with the financial lease were excluded in calculation in Q1/2006 as well as Q1/2005. In Q1/2006,The Company has continuously renovated and expanded CentralWorld Plaza to modernize and to increase its salable area. This project will be relaunched in 2 phases, however most of the area will be opened within the first half of this year. Although the Company has invested in a large capital expenditure,net interest bearing debt to equity ratio was only 0.4 times,much lower than the Company's policy of 1 time. This was due to the Company's financing source, which came mainly from cash proceeds from properties lease to CPNRF since last year and from cash flow from operation in this quarter. Revenues In Q1/2006,total rental & service and food & beverage revenues were 1,594.4 MB.,an increase of 25.2 MB. or 1.6% from Q1/2005, even though some revenues of Central Plaza Rama 2 and Rama 3 were partially transferred out to CPNRF. The reasons that total revenue still increased were due to three distinct sources. Firstly, the Offices at CentralWorld experienced a strong take up rate increasing its occupancy rate from 25% in Q1/2005 to 82% in Q1/2006 and from higher rental rate per sq.m. in new contracts. Secondly, Central Town Rattanathibet was relaunched in September 2005 with greater leasable area which contributed to higher revenue. Lastly, all other existing projects attained higher revenue due to increases in rental rates and higher revenue from common area promotions. For comparative purpose, excluding the revenue of Central Plaza Rama 2 and Rama 3 in Q1/2006 as well as Q1/2005, total rental & service and food & beverage revenues of the Company's other properties would have increased 15.8% from Q1/2005. Other income in Q1/2006 was 132.8 MB.,an increase of 53.7 MB. or 67.8% from Q1/2005. This was mainly due to property management fee income from CPNRF of 35.2 MB.and realized income of operating lease of land of Central Plaza Rama 2 and Rama 3 to CPNRF of 14.5 MB. In addition, the investment in CPNRF has contributed a profit sharing of 67.2 MB. to the Company in Q1/2006. Cost and Operating & Administrative expenses In Q1/2006, cost of rental & service and food & beverage were 860.3 MB., a slight increase of 6.9 MB. or 0.8% from Q1/2005. This was due to a portion of cost and depreciation of Central Plaza Rama 2 and Rama 3 being transferred to CPNRF. Excluding cost of Central Plaza Rama 2 and Rama 3 in Q1/2006 as well as Q1/2005 for comparative purpose, cost of rental & service and food & beverage of the Company's other properties in this quarter would have increased 8.0% from the same quarter of last year as a result of higher operating costs at The Offices at CentralWorld and from new salable area of Central Town Rattanathibet and from higher cost of electricity due to higher electricity usage and higher electricity rate (Bt/unit). Operating and administrative expenses in Q1/2006 was 211.2 MB., a slight increase of 2.3 MB., or 1.1% from the same period of last year. The result was due to partial expense of Central Plaza Rama 2 and Rama 3 being transferred to CPNRF. Excluding operating and administrative expenses of Central Plaza Rama 2 and Rama 3 in Q1/2006 as well as Q1/2005 for comparative purpose, these expenses of the Company's other properties would have increased 7.9% Y-o-Y. due to higher people cost and higher advertising & promotion expenses. Many promotional campaigns were launched this quarter including events such as Central Plaza Summer 2006 : A Passage to Dubai and a Fashion Show on the Beach as a part of the Pattaya Music Festival. Financial Position as at March 31, 2006 Assets As at March 31, 2006, the consolidated assets were 32,940.8 MB., a decrease of 435.5 MB, or 1.3% from December 31, 2005. The decrease mainly came from the payment of construction and renovation for Central World Plaza, Central Town Rattanathibet and Central Pinklao Office Tower B (completed and opened in March 2006 and sales progress is now more than 60%) and also from depreciation of property and equipment. Liabilities As at March 31, 2006, the consolidated liabilities were 20,697.6 MB, a decrease of 889.6 MB.,or 4.1% from December 31, 2005 due to the payment to contractor of 521.3 MB., loan repayment of 242.5 MB.and repayment of matured promissory note for land purchase of 170.0 MB. However, some liabilities that increased came from deposits received and guarantees for leasehold right from new tenants of Central World Plaza of 97.1 MB and 116.9 MB respectively. Shareholders' Equity Shareholders' equity as at March 31, 2006 was 12,243.2 MB, an increase of 454.1 MB., or 3.9% from December 31, 2005 due to net profit for the period. Financial Ratio Analysis Profitability In Q1/2006 gross profit margin was 46.0%, a slight increase from the same period of last year at 45.6%. This came from revenue and cost of Central Plaza Rama 2 and Rama 3 being partially transferred to CPNRF according to the properties leased contract. Excluding revenue and cost of Central Plaza Rama 2 and Rama 3 in Q1/2006 as well as Q1/2005 for comparative purpose,the gross profit margin of the Company's other properties of Q1/2006 would have been 49.7% which would be higher than Q1/2005 by 3.6%. The main reasons being higher rental income from The Offices at CentralWorld and new salable area of Central Town Rattanathibet and also from the rest of the Company's projects due to increases in rental rates and higher rental income from common area usage. Net profit margin in Q1/2006 was 26.1%, a substantial increase from 22.1% in Q1/2005 of 4.0%. This was due to an increase of other income in this quarter such as property management fee income from CPNRF of 35.2 MB., realized income of operating lease of land of Central Plaza Rama 2 and Rama 3 to CPNRF of 14.5 MB. and profit sharing of investment in CPNRF of 67.2 MB. Return on equity (ROE) in Q1/2006 was 15.7%, a decrease from 16.5% in Q1/2005 of 0.8%. This is due to an increase in shareholders' equity from higher retained earnings from the gain on the lease transaction with CPNRF in August 2005. Financial Policy In Q1/2006, interest coverage ratio was 4.9 times, an increase from 3.8 times at Q1/2005. This was due to an increase in cash from operation resulted from higher rental income especially from The Offices at CentralWorld and new salable area of Central Town Rattanathibet as well as deposits received and guarantees for leasehold right from new tenants of Central World Plaza. Net interest bearing debt to equity ratio decreased from 0.8 times in Q1/2005 to 0.4 times in this quarter. This mainly came from cash proceeds from financial lease and operating lease with CPNRF, repayment of debt in Rama 2 and Rama 3 and an increase in shareholders' equity since August 2005. As at March 31, 2006, interest bearing debt comprised of 89% fixed and 11% floating interest rate with weighted average interest rate at 5.2% p.a. Key Ratio Q1/2006 Q1/2005 LIQUIDITY RATIO Current Assets/Current Liabilities (Times) 1.6 0.6 Accounts Receivable Turnover (Days) 7 6 PROFITABILITY RATIO Gross Profit Margin (%) 46.0% 45.6% Net Profit Margin (%) 26.1% 22.1% Return on Equity (%) 15.7% 16.5% EFFICIENCY RATIO Return on Assets (%) 5.5% 5.4% FINANCIAL POLICY RATIO Net Interest Bearing Debt to Equity (Times) 0.4 0.8 Interest Coverage (Times) 4.9 3.8