Opinion of the Independent Financial Advisor The Transaction of Entering into the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex Presented to the Shareholders and the Board of Directors of Central Pattana Public Company Limited Prepared by Kim Eng Securities (Thailand) Public Company Limited February 20, 2009 Disclaimer "The English translation of this document is prepared solely for reference for non-Thai shareholders of Central Pattana Public Company Limited. It should neither be relied upon as the definitive nor the official document of Central Pattana Public Company Limited. The Thai version is the official document and shall prevail in all respects in the event of any inconsistency with the English translation." No. IB 5/2009 February 20,2009 Subject Opinion of the Independent Financial Advisor on the Connected Transaction and the Asset Acquisition Transaction of Central Pattana Public Company Limited To The Board of Directors and the Shareholders of Central Pattana Public Company Limited Reference is made to the resolution of the meeting of the Board of Directors of Central Pattana Public Company Limited ("CPN") No.1/2009 held on February 20, 2009 that approves CPN to enter into the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex with Central International Development Company Limited ("CID") after CPN obtains an approval resolution to enter into such agreement from the Extraordinary Shareholders' Meeting No.1/2009 to be held on March 25, 2009. CID is regarded as a connected person of CPN by having a common major shareholder and some common directors. The Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex (the "New Sub-Lease Agreement") to be entered into between CPN and CID shall be effective from December 19, 2008 to December 18, 2028. The transaction that CPN will enter into the New Sub-Lease Agreement with CID is classified as a class-4 connected transaction regarding assets and services under the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies concerning the Connected Transactions, 2003 and the amendment as per the Notification of the Capital Market Supervisory Board Tor. Jor. 21/2008 Re: Connected Transaction Rules. The size of the transaction of entering into the New Sub-Lease Agreement with CID, when combined with the sizes of other connected transactions taking place during six months prior to the day a decision to enter into the New Sub-Lease Agreement is made, exceeds 3 % of the net tangible asset value of CPN that stands at Baht 14,315.24 million as per the latest audited consolidated financial statements as of December 31, 2008. Thus, CPN is required to seek for an approval resolution from the shareholders' meeting with the vote of at least three-fourths of the total number of votes of the shareholders or their proxies (if any) who attend the meeting and have the right to vote, excluding the connected shareholders who have conflict of interest. The size of the transaction of entering into the New Sub-Lease Agreement with CID, when combined with the sizes of other asset acquisition transactions taking place during six months prior to the day a decision to enter into the New Sub-Lease Agreement is made, is equal to 37.83 % (using the criterion of the total value of consideration paid, compared with the value of assets of CPN and its subsidiaries collectively), thus making the transaction of entering into the New Sub-Lease Agreement be classified as a class-2 transaction under the Notification of the Capital Market Supervisory Board Tor.Jor. 20/2008 regarding Disclosure of Information and Other Acts of Listed Companies concerning the Acquisition and Disposition of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies concerning the Acquisition and Disposition of Assets,2004. When there is a decision to enter into a class-2 transaction, CPN is required to serve a written notice of its decision to enter into a class-2 transaction on its shareholders within 21 days from the date of disclosure of information to the Stock Exchange of Thailand. However, given the size of the connected transaction requires an approval from the meeting of shareholders, CPN will ask for an approval to enter into the asset acquisition transaction on the date of March 25, 2009 that is the same as the date of shareholders' meeting in which CPN will ask for approval to enter into the connected transaction. In this regard, CPN appoints Kim Eng Securities (Thailand) Public Company Limited (the" Independent Financial Advisor") as an independent financial advisor to provide the opinion for the Board of Directors and the shareholders regarding fairness and reasonableness of these connected transaction and asset acquisition transaction. Kim Eng Securities (Thailand) Public Company Limited as the Independent Financial Advisor shall provide an opinion on the transaction in the following matters: 1. Type and Details of the Connected Transaction and the Asset Acquisition Transaction 2. Reasonableness and Benefits of Entering into the Connected Transaction and the Asset Acquisition Transaction 3. Fairness on Price of the Connected Transaction and the Asset Acquisition Transaction 4. Fairness on Conditions of the Connected Transaction and the Asset Acquisition Transaction 5. Opinion of the Independent Financial Advisor on the Resolution of the Shareholders' Meeting To provide an Independent Financial Advisor opinion, the Independent Financial Advisor made a study from the auditor's report, financial statements of CPN, annual disclosure form of CPN (Form 56-1), information and documents of CPN, interviews with the management of CPN, appraisal report of the Central Plaza Ladprao Project as prepared by two independent asset appraisers employed by the State Railway of Thailand (the "SRT"), appraisal report of the assets of the Central Plaza Ladprao Project that CPN will sub-lease from CID dated January 20, 2009 as prepared by Brooke Real Estate Co., Ltd. (the "Independent Asset Appraiser of CPN"), the 20-Year Agreement Granting the Right to Utilize the Shopping Center Located in the Area of Paholyothin Delta entered into between CID and the SRT that is effective from December 19, 2008 to December 18, 2028 (the "New Main Lease Agreement") and the draft of the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex (the "New Sub-Lease Agreement") to be later entered into between CPN and CID. In providing the Independent Financial Advisor opinion, the Independent Financial Advisor has taken into account and evaluated relevant industry-specific and macroeconomic factors as well. The opinion of the Independent Financial Advisor presented is based on the assumption that information and documents provided are true and correct, whereas the analysis is conducted based on the economic condition and the information at the time of the study. Should there be any future significant changes that may have material impact on this opinion,the Independent Financial Advisor may not be able to substantiate the impact of such significant changes on CPN and its shareholders. Besides, the Independent Financial Advisor provides its opinion on the transaction of entering into the New Sub-Lease Agreement only, and therefore, all other connected transactions and asset acquisition transactions incurred before this transaction are excluded from this opinion. 1. Executive Summary Central Pattana Public Company Limited ("CPN") as the sub-lessee will enter into the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex (the "New Sub-Lease Agreement") with Central International Development Company Limited ("CID") as the sub-lessor. The New Sub-Lease Agreement shall be effective from December 19, 2008 to December 18, 2028. The terms and conditions under the New Sub-Lease Agreement are developed with reference to those under the Agreement Granting the Right to Utilize the Shopping Center Located in the Area of Paholyothin Delta (the" New Main Lease Agreement") entered into between CID and the State Railway of Thailand (the "SRT"). The 20-year New Main Lease Agreement is effective from December 19, 2008 to December 18,2028. In accordance with the New Main Lease Agreement, within 120 days from the date CID and the SRT signed such agreement or within April 8, 2009, CID shall submit the certified copy of the New Sub-Lease Agreement between CID and each sub-lessee (including CPN, Central Plaza Hotel Plc. ("CENTEL") and Harng Central Department Store Limited ("HCDS")) to the SRT. Rather than directly entering into a long-term lease agreement with the SRT, CPN has to enter into a New Sub-Lease Agreement with CID. This is because CID is the holder of the first right to negotiate with the SRT in extending the land lease agreement in accordance with the former land lease agreement entered into between CID and the SRT that had already been expired in December 2008. In case CID does not exercise such first right, the SRT will open a new round of bidding to look for a new property developer to develop and operate the existing Central Plaza Ladprao Project. In accordance with the New Sub-Lease Agreement to be entered into between CPN and CID, the assets that CPN will sub-lease from CID for the purpose of running shopping complex and office building businesses include: The Assets of the Central Plaza Ladprao Project that CPN Will Sub-Lease from CID (the "Assets that CPN Will Sub-Lease from CID" or the "Sub-Leased Assets") 1) Land Some plots of land belonging to the Central Plaza Ladprao Project with the approximate area of 28 rais. The Sub-Leased Assets that are buildings are located on such plots of land. 2) Buildings Building Gross Leasable Area Net Leasable Area (Occupancy Rate) (%) (SQ.M.) (SQ.M.) As of December 31,2008 1) Shopping Complex 95,000 55,531* 97 % and Plaza 2) Office Building 23,000 17,719 97 % 3) Car Parking 90,000 - - * Note: The net leasable area of the Shopping Complex and Plaza includes the net leasable areas of both the theaters totaling 7,500 SQ.M. and the convention hall totaling 9,000 SQ.M. Source: Central Pattana Public Company Limited For the whole term of the New Sub-Lease Agreement from December 19, 2008 to December 18, 2028, CPN is obligated to make annual leasehold payment totaling Baht 16,178.32 million to CID. The schedule of making annual leasehold payment is as follows: Scheduled Annual Leasehold Payment to be Made by CPN to CID throughout the Term of the New Sub-Lease Agreement Period of Making Annual Leasehold Payment Period of Making Annual Leasehold Annual Leasehold (Millions of Baht) Annual Leasehold Payment Payment Payment (Millions of Baht) Date of Signing the New 638.26 December 2018 777.68 Sub-Lease Agreement (Including upfront payment of Baht 551.41 million) December 2009 460.31 December 2019 824.34 (Including upfront payment of Baht 368.24 million) December 2010 487.93 December 2020 873.81 (Including upfront payment of Baht 390.34 million) December 2011 517.20 December 2021 926.23 (Including upfront payment of Baht 413.76 million) December 2012 548.24 December 2022 981.81 (Including upfront payment of Baht 438.58 million) December 2013 581.13 December 2023 1,040.72 December 2014 616.00 December 2024 1,103.16 December 2015 652.96 December 2025 1,169.35 December 2016 692.14 December 2026 1,239.51 December 2017 733.66 December 2027 1,313.88 Note: After CPN makes annual leasehold payment to CID, CID will make annual leasehold payment to the SRT using the money it will collect from CPN and other sub-lessees including CENTEL and HCDS within 2 business days from the day next to the day it obtains money from lessees. Source: Central Pattana Public Company Limited It is of an opinion of the Independent Financial Advisor that the shareholders should approve the transaction that CPN will enter into the New Sub-Lease Agreement with CID, as the purpose for entering into this transaction is reasonable and beneficial while the price, terms and conditions are fair as explained below: Reasonableness and Benefits of the Transaction 1. Maintaining CPN's Major Source of Revenue Over the years, the Central Plaza Ladprao Shopping Complex is regarded as a flagship shopping complex of CPN as it is one of existing shopping complexes operated by CPN that has generated substantial amount of rental and services revenues for CPN each year. Revenue from the Central Plaza Ladprao Shopping Complex (including rental & services revenues and others) accounted for approximately 21 % on average of CPN's consolidated revenues excluding share of profits from investments accounted for using the equity method for the Years 2006, 2007 and 2008. Thus, entering into the New Sub-Lease Agreement with CID would help to maintain a major source of revenue for CPN. 2. A Less Risky Investment than Investing in a New Shopping Complex Project Entering into the New Sub-Lease Agreement with CID, thus allowing CPN to utilize the Sub-Leased Assets until December 2028, is a less risky investment than investing in a new shopping complex project. This is because entering into such sub-lease agreement allows CPN to invest in and operate a shopping complex with a good location, high customer traffic, strong track record as evidenced by its past high occupancy rate and strong future growth potential. 3. Allowing CPN to Maintain Its High Market Share and Its Leading Position in Thailand's Retail Property Business Entering into the New Sub-Lease Agreement, thus allowing CPN to operate the Central Plaza Ladprao Shopping Complex, allows it to maintain its high market share and leading position in Thailand's retail property business. This would help to sustain CPN's competitive advantages in Thailand's retail property business, its financial credibility as well as its negotiation and bargaining power in the matters regarding bidding and negotiation with authorized authorities for the purpose of developing and operating the retail property project. 4. Ability to Utilize and Create Value-Added for the Central Plaza Ladprao Shopping Complex With more than 20 years of experience in operating the Central Plaza Ladprao Shopping Complex as well as that gained from running other shopping complexes located in Bangkok and in other provinces in Thailand, CPN will be able to utilize and create value-added for the Central Plaza Ladprao Shopping Complex. Risk from Entering into the New Sub-Lease Agreement In entering into the New Sub-Lease Agreement, CPN may face some potential risks that management and shareholders should take into account. They are as follows: 1. Risk that Actual Rental and Services Revenues May Be Lower than Projected Entering into the New Sub-Lease Agreement with CID, CPN is obligated to make scheduled annual leasehold payment to CID throughout the new sub-lease term, fulfill its obligations under the New Sub-Lease Agreement and bear scheduled renovation and maintenance expenses in relation to the Sub-Leased Assets.Main source of cash flows to be used for making scheduled annual leasehold payment and paying renovation and maintenance expenses are from CPN's operating cash flows to be generated by rental and services revenues from operating the Central Plaza Ladprao Shopping Complex. Thus, CPN is exposed to the risk that actual operating revenue it will earn from running the Central Plaza Ladprao Shopping Complex may be lower than projected due to uncontrollable factors such as intensifying competition in the retail property business, economic slowdown and change in customer lifestyle, thus making actual rental and services revenue it will earn from the Central Plaza Ladprao Shopping Complex lower than projected. In case actual rental and services revenues from the Central Plaza Ladprao Shopping Complex are lower than projected whereas annual leasehold payment to be made to CID is already determined and fixed, CPN's ability to make annual leasehold payment and pay for required renovation and maintenance expenses may be adversely affected. Investment return from the Central Plaza Ladprao Shopping Complex may also be lower than projected. 2. Risk that the New Main Lease Agreement May Be Terminated by the SRT due to Fault or Negligence of CID or Other Sub-Lessees In entering into the New Sub-Lease Agreement with CID, CPN may be exposed to the risk that CID may breach conditions or requirements under the New Main Lease Agreement and/or other sub-lessees may breach conditions or requirements under the New Sub-Lease Agreement, both of which may result in termination of the New Main Lease Agreement by the SRT. Termination of the New Main Lease Agreement by the SRT results in automatic termination of the New Sub-Lease Agreement CID will enter into with each sub-lessee as well. However, in case the New Main Lease Agreement is terminated without fault or negligence of CPN, CPN shall not bear any costs or damages incurred. In case the New Main Lease Agreement is terminated due to fault or negligence of CID, CPN is allowed to sue and ask for compensation from CID. Fairness on Price In regard to fairness of the stream of annual leasehold payment CPN is obligated to make to CID, the Independent Financial Advisor will provide its opinion regarding: 1. Fairness and reasonableness of the methodology used to determine the stream of annual leasehold payment to be made by CPN to CID; 2. Fairness and reasonableness regarding the stream of annual leasehold payment to be made by CPN to CID 1. Reasonableness of the Methodology Used to Determine the Stream of Annual Leasehold Payment It is of the opinion of the Independent Financial Advisor that the cost plus Basis, the method used to determine the stream of annual leasehold payment to be made by CPN to CID is reasonable and applicable. This is because it takes into account the cost of acquiring leasehold right of the Central Plaza Ladprao Project as actually incurred by CID plus an appropriate profit margin. - The actual cost of acquiring the leasehold right of the Central Plaza Ladprao Project was fairly determined. Such cost consisting of annual leasehold payment to be made by CID to the SRT that is specified and fixed in the New Main Lease Agreement and leasehold right registration fee equal to 1% of the sum of annual leasehold payment to be made by CID to the SRT throughout the term of the New Main Lease Agreement is actually incurred expenditure. Annual leasehold payment to be made by CID to the SRT was determined based on the leasehold value of the Central Plaza Ladprao Project as appraised by two independent asset appraisers employed by the SRT. - A profit margin of approximately 5 % of the total cost of leasehold right acquisition is fair as it is the compensation for CID as: - CID plays an important role in initiating and negotiating with the SRT for extension of theMain Lease Agreement for the purpose of running the Central Plaza Ladprao Project; - CID is the holder of the first right to negotiate with the SRT for extending the Main Lease Agreement for the purpose of running the Central Plaza Ladprao Project; - CID as the lessee directly enters into the New Main Lease Agreement with the SRT as the lessor.Although responsibilities and obligations under the New Main Lease Agreement will be assigned to each sub- lessee via the New Sub-Lease Agreement each of them will enter into with CID, CID as the direct counter party to the SRT under the New Main Lease Agreement is still obligated to fully comply with the terms and conditions and fulfill its responsibilities under such agreement. In case any of the sub-lessee fails to comply with the terms and conditions under the New Sub-Lease Agreement, thus resulting in breach of terms and conditions under the New Main Lease Agreement, CID is obligated to bear all costs and damages incurred as a result of such non-compliance by sub-lessee and make required compensation to the SRT. - CID incurred some costs and expenses necessary for acquiring leasehold right of the CentralPlaza Ladprao Project such as legal, financial advisory and asset appraisal fee and etc. - Annual leasehold payment to be made by CPN to CID accounts for approximately 72 % of the sum of the cost of acquiring leasehold right of the Central Plaza Ladprao Project as actually incurred by CID and a profit margin of approximately 5 % of the cost of acquiring leasehold right. This is fair as (more)