Central Pattana Public Company Limited Management's Discussion and Analysis Consolidated Financial Results:2Q08 and 1H08 Overall Performance Central Pattana Public Company Limited ("CPN") reported 2Q08 consolidated net profit of 519.4 MB, up 19.3% y-o-y. Operating profit grew 8.9% y-o-y to 740.6 MB supported by an increase in total revenue. Consolidated total revenue registered 2,132.0 MB, up 10.6% y-o-y,mainly due to rental rates hike achieved at all properties and higher serviceincome after an adjustment of common-area, air-conditioning and maintenance ("CAM charge") rate inJanuary 2008. On a q-o-q basis, total revenue marginally increased 2.0%, mainly from rental rate increases in addition to openings of new food centers - Food Park - at CentralPlaza Pinklao and CentralPlaza Ratchada-Rama 3 in March and April 2008, respectively. However,2Q08 consolidated net profit declined 15.9% whilst operating profit dropped 9.7%.This was primarily due to increased marketing and promotion expenses. On a half-year basis, consolidated net profit showed an increase of 33.6% y-o-y to 1,136.7 MB whilst total revenue grew 12.1% y-o-y to 4,222.7 MB. The solid 1H08 financial performance was largely a result of steady sentiment improvement since 4Q07 despite a setback in late 2Q08 on inflationary pressure. In the light of easing energy prices and unwinding political tension, challenges for 2H08 remain on continued momentum of economic recovery and gaining consumer confidence. As for operational performance, total leasable area remained at 713,055 sqm with average occupancy rate of 95% for retail space and 94% for office space. Effective rental rate for retail space continued its upward momentum to an average of 1,274 Bt/sqm/mth,representing an increase of 5.4% y-o-y and 1.5% q-o-q. Table 1: Consolidated Results Summary Consolidated Result 2Q07 1Q08 2Q08 YoY%Chg QoQ%Chg 1H07 1H08 YoY%Chg (Bt mil) Rental & service income and F & B sales 1,927.4 2,090.7 2,132.0 10.6% 2.0% 3,765.5 4,222.7 12.1% Operating profit 680.3 819.9 740.6 8.9% (9.7%) 1,311.9 1,560.5 18.9% Net profit 435.3 617.4 519.3 19.3% (15.9%) 851.1 1,136.7 33.6% EPS (Bt) 0.20 0.28 0.24 19.3% (15.9%) 0.39 0.52 33.6% Operational Performance Summary As of June 30, 2008 total leasable area stood at 713,055 sqm (relatively flat y-o-y and q-o-q),which includes 562,478 sqm of retail space, 144,204 sqm of office space and 6,373 sqm of residential space. The leasable area mentioned above excludes that of CentralPlaza Rama 2 and CentralPlaza Ratchada-Rama 3, totaling 133,241 sqm, as the two properties were transferred to CPN retail Growth Property Fund ("CPNRF") that CPN acts as the property manager. In 2Q08, average occupancy rate of retail malls remained relatively unchanged at 95% from 2Q07 and 1Q08. Occupancy rates of CentralPlaza Ramindra and CentralPlaza Rattanathibet improved from 90% and 95% in 2Q07 to 99% and 98% in this quarter,respectively, after a completion of their enhancement projects in December 2006. Occupancy rate of CentralWorld stood at 91% in 2Q08,rose slightly from the previous quarter upon openings of new food and beverage outlets and retail fashion shops. The occupancy rate is expected to reach 95% in 4Q08 after the opening of new anchor - Center Point - in October 2008. Effective rental rate of retail space climbed to an average 1,274 Bt/sqm/mth, up 5.4% y-o-y and 1.5% q-o-q, reflecting increases in rental rates at all properties. This rental rate has taken into account a special rental discount given to groups of tenants at CentralWorld during its initial stage. Occupancy rate for office space averaged 94%, compared to 91% and 95% in 2Q07 and 1Q08, respectively. Occupancy rate of Ladprao's office increased from 95% in 1Q08 to 99% in this quarter while that of CentralWorld's office temporary dropped from 97% in 1Q08 to 94% in this quarter during the fitting out of new tenants. Table 2: Operation Statistics Retail Malls Net Leaseable Occupancy Rate (%) Area (Sqm.) 2Q07 1Q08 2Q08 Ladprao 55,562 100% 99% 99% Ramindra 17,716 90% 98% 99% Pinklao 54,832 92% 91% 91% Pattaya 15,227 100% 100% 100% Ratchada-Rama3 18,192 100% 100% 100% Chiangmai 76,410 98% 99% 99% Bangna 57,392 99% 99% 98% Rama2 5,937 100% 100% 100% Rattanathibet 77,131 95% 99% 98% CentralWorld 184,079 90% 90% 91% Total 562,478 95% 95% 95% Offices Net Leaseable Occupancy Rate (%) Area (Sqm.) 2Q07 1Q08 2Q08 Ladprao 17,719 97% 95% 99% Pinklao A 22,560 92% 94% 94% Pinklao B/1 11,335 65% 85% 84% Bangna 9,796 98% 100% 100% CentralWorld 82,794 93% 97% 94% Total 144,204 91% 95% 94% Note:/1 Pinklao B completed its conversion of apartment building into office building in 1Q 2006. Financial Performance Summary Total Revenue In 2Q08 consolidated revenue from rental & service and food & beverage grew 10.6% y-o-y to 2,132.0 MB. Rental & service income showed an increase of 9.9% y-o-y to 2,009.1 MB,attributed to a) higher contribution from CentralWorld,b) continuous increases in rental rates at all properties,c) higher service income after adjustment of common area,air-conditioning and maintenance ("CAM charge") rate in January 2008, and d) stronger occupancy at CentralPlaza Ramindra and CentralPlaza Rattanathibet as previously mentioned.Food and beverage sales soared 24.5% y-o-y, mainly driven by the openings of new food centers at CentralPlaza Pinklao and CentralPlaza Ratchada-Rama 3 in March and April 2008,respectively. Similarly on a q-o-q basis, revenue from rental & service and food & beverage increased 2.0% supported by higher food and beverage income, which grew 26.4% q-o-q following the openings of new food centers. Rental & service income was marginally up 0.8% q-o-q, in the light of rental increases at almost all properties. Total Cost Total cost of rental & service and food & beverage includes utilities, depreciation and amortization of rented properties, on-site personnel, repair & maintenance,and property tax.In 2Q08 total cost of rental & service and food & beverage amounted to 1,179.1 MB, up 4.4% y-o-y and 2.2% q-o-q. This increase was mainly due to higher food and beverage cost,which was up 32.8% y-o-y and 29.4% q-o-q from the openings of the new food centers. Total Operating and Administration Expenses Total operating and administration expenses include expenses on personnel, marketing and promotion, office supplies, professional fees, depreciation and amortization of office equipments. In 2Q08, total operating and administration expenses were 392.1 MB, up 30.0% y-o-y, reflected a significant increase in advertising and promotion expenses,mainly at CentralWorld,and higher personnel expenses from an increase in number of employees to support business expansion. On a q-o-q basis, advertising and promotion expenses were up 152.8% on lower base in 1Q08 as marketing activity was ceased during the mourning period for the loss of the Princess. The remaining of the 1Q08 marketing budget was then utilized in 2Q08 to retain visitor traffic and boost consumer demand during economy slowdown in May and June 2008.This led to a 37.4% q-o-q increase in operating and administration expenses in 2Q08. As for 1H08, total advertising and promotion expenses amounted to 211.7 MB,representing 4.7% of total revenue. Net Profit 2Q08 consolidated net profit was registered at 519.4 MB, climbed 19.3% y-o-y, as a result of higher net profit contribution from all properties.Compared to the previous quarter, net profit declined 15.9%,reflecting increased marketing and promotion expenses and higher effective tax rate as a 25% tax privilege applied for the first 300 MB of earnings was booked in 1Q08. Table 3: Financial Ratios Key Financial Ratios 2Q07 1Q08 2Q08 YoY Chg QoQ Chg Liquidity ratio Current ratio (times) 1.9 0.9 0.4 (1.4) (0.5) Quick ratio (times) 1.7 0.8 0.2 (1.4) (0.5) Cash generate from operation 1.1 0.5 0.8 (0.3) 0.3 ratio(times) Days account receivable (days) 19.8 16.2 12.4 (7.4) (3.8) Profitability ratio Gross profit margin (%) 41.4% 44.8% 44.7% 3.3% (0.1%) Operating profit margin (%) 31.0% 36.9% 32.6% 1.7% (4.3%) Net profit margin (%) 20.6% 27.3% 22.5% 1.8% (4.9%) Return on equity (%) 13.8% 18.5% 15.3% 1.5% (3.2%) Efficiency ratio Return on assets (%) 5.0% 6.6% 5.6% 0.6% (1.1%) Return on fixed assets (%) 6.6% 8.5% 6.9% 0.2% (1.6%) Assets turnover (times) 0.2 0.2 0.2 0.0 (0.1) Financial policy ratio Obligation Recovery Service/1 (times) 0.4 0.6 1.0 0.6 0.5 Net debt to equity (times) 0.6 0.6 0.8 0.2 0.2 Interest coverage/1 (times) 7.2 6.2 9.6 2.4 3.4 Note:/1 Cash generated from operation excludes cash payment of endorsed promissory notes. Financial Position as at June 30, 2008 Assets As at June 30, 2008, consolidated total assets were 37,430.2 MB, relatively unchanged from the position as at the end of FY2007. This mainly reflected a decrease in cash and cash equivalents and current investments of 2,484.5 MB, or a 62.4% decrease from FY2007 year-end, from land acquisition and construction payment of combined projects.Property and equipment increased by 2,396.0 MB, up 8.3% from the end of FY2007, on new land acquisition in Chiangmai Province (north of Thailand) and construction in progress of under- developing projects. Liabilities Consolidated total liabilities stood at 23,288.2 MB, declined by 1.2% from that of the end of FY2007. During 1H08, CPN issued a total of 800 MB in new short-term loan (300 MB at 3.30% pa and 500 MB at 3.45% pa) and repaid 540.2 MB of borrowings. As at June 30,2008, interest-bearing debts stood at 12,304.7 MB, increased by 2.2% from FY2007 year-end and representing 52.8% of total liabilities. Shareholders' Equity Consolidated total shareholders' equity was registered at 14,142.0 MB with total retained earnings of 9,258.2 MB, increased by 537.6 MB from that of FY2007. The increase was mainly attributed to 1H08 net profit and gains from realizing negative goodwill as gains to retain earnings as a result of a change in accounting policy* deducting dividend payment of 718.9 MB (0.33 Baht/share). *(see Note 15 to the interim financial statements for the three-month and six-month period ended June 30, 2008) Table 4: Financial Position Balance Sheet (Bt mil) FY07 1Q08 2Q08 %Chg From FY07 QoQ % Chg Total Assets 37,204.6 37,119.2 37,430.2 0.6% 0.8% Total Liabilities 23,565.3 22,768.1 23,288.2 (1.2%) 2.3% Interest-Bearing Debts 8,061.9 11,789.8 12,304.7 52.6% 4.4% Shareholder's Equity 13,639.3 14,351.1 14,142.0 3.7% (1.5%) Retained earnings 8,720.6 9,457.7 9,258.2 6.2% (2.1%) Capital Structure Net interest-bearing debt to equity ratio stood at 0.8 times, up from 0.6 times at the end of FY2007. The increase was a result of a reduction of cash and cash equivalent and current investment mainly for land acquisition and construction payment of under-developing projects. As at June 30, 2008, interest-bearing debts comprised of 71% fixed and 29% floating interest rate. Interest expense for 2Q08 amounted to 122.0 MB, compared to 153.5 MB and 126.8 MB in 2Q07 and 1Q08, respectively. Weighted average cost of debt stood at 5.1% pa,slightly declined from 5.5% pa in FY2007 and 5.2% pa in 1Q08. Total CAPEX in 1H08 amounted to 3,452 MB out of the FY2008 budget of 8,600 MB. Sources of fund mainly comprises of operating cash flows, cash proceeded from lease/sublease of assets to CPN Retail Growth Property Fund (expected in 4Q08 and subject to market environment), and debt financing. Change in Accounting Policy With the implementation of revised Thai Accounting Standard No.43 (TAS No.43) "Business Combinations", starting from January 1, 2008, the accounting for any excess of acquirer's interest in the net fair value of the acquiree's identifiable assets,liabilities and contingent liabilities over cost has been changed from the previous "negative goodwill" to realized profit or loss. The effect of the change in accounting policy on Consolidated Balance Sheet as at June 30,2008 is highlighted as followings. Consolidated Balance Sheet as at June 30, 2008 a) A decrease of 112.6 MB in Negative goodwill with a corresponding increase in the Unappropriated retained earnings. b) An increase of 98.5 MB in Intangible assets with a corresponding increase in the Unappropriated retained earnings. Noted that the change had no effect on the Company's Balance Sheet. (see Note 15 to the interim financial statements for the three-month and six-month period ended June 30, 2008)