Central Pattana Public Company Limited Management's Discussion and Analysis Consolidated Financial Results : Quarter 2/2005 OVERALL PERFORMANCE Central Pattana Plc., reported consolidated net profit in the second quarter of 2005 (Q2/05) of 374.2 MB., an increase of 65.2 MB., or 21.1% from Q2/04. This was mainly came from rental income from The Offices at Centralworld, higher rental income from common area and increase in rental rate of existing shopping centers. During this quarter, the company has launched grand opening of Central World Plaza under the theme"The New Landmark of the World" and invited all 81 contestants from Miss Universe pageant 2005 to join its fashion show which is the hi-light of this event as a world class shopping center. This was a factor as investor has shown the interest of this project. Moreover, the company has also invested to improve its existing projects for better image and increase more salable area as well as continuously seek opportunities to invest in new projects. At the same time, net interest bearing debt to equity ratio in Q2/05 was 0.9x which was still lower than the company's policy at 1x. The company paid dividend of Baht 0.25 per share from the performance of 2004, totalling 544.7 MB., which was 40% of net income on May 25, 2005. Revenues Rental & service and food & beverage income for Q2/05 were 1,659.2 MB.,an increase Y-O-Y of 205.4 MB. or 14.1%. This was due to an increase in rental revenue from The Offices at Centralworld and increase in rental rate of existing projects and higher rental income from common area which was driven by continuous promotion activities. In Q2/05, other income was 63.8 MB., a decrease Y-O-Y of 16.8 MB., or 20.8% mainly came from gain on lease back of long-term lease in Q2/04. Cost and Administrative expenses In Q2/05, Cost of rental and service and food and beverage was 894.9 MB.,an increase of 119.4 MB.,or 15.4% Y-O-Y. These were mainly came from operating costs and depreciation of The Offices at Centralworld and Central Park Rama2, and land lease fee of Central World project. Selling and administration expenses in Q2/05 was 241.4 MB., an increase of 54.4 MB., or 29.1% from the same period of last year. This was mainly came from higher advertising and promotion expenses due to more activities in all shopping centers such as the 10th anniversary of Pinklao celebration and the grand launch of Central World project. Financial Position as at June 30, 2005 * Assets As at June 30, 2005, the consolidated assets were 28,006.6 MB., increased from the end of Q1/05 by 836.8 MB., or 3.1%, mainly came from the increase in property and equipment from the construction and renovation of Central World Plaza, Central Town Center Rattanathibet and purchase of land plot for new project. * Liabilities As at June 30,2005, the consolidated liabilities were 18,743.7 MB., increased from March 31,2005 by 668.5 MB., or 3.7% due to the issuance of 2-year unsecured bonds in April 2005 amounted to 1,000 MB. to finance the construction and renovation of Central World project, Central Town Center Rattanathibet and the development for new project. Furthermore, the company received up-front lease payment from sublease part of Central World project as well as deposit received from new tenants of The Offices at Centralworld, Central World Plaza, and Central Town Center Rattanathibet. * Shareholders' Equity Shareholders' equity as at June 30,2005 was 9,262.8 MB., higher than March 31, 2005 by 168.3 MB.,or 1.9%,came from net income of Q2/05 amounted to 374.2 MB.,and increase in minority interest from investment in subsidiaries of minority shareholder amounted to 359.9 MB. While this was decreased by 544.7 MB. from dividend payment. In addition, convertible preferred shareholder has exercised the right to convert 178,571,000 shares to common share, with conversion ratio of 1 convertible preferred share into 1 common share as defined in agreement. The total number of common shares after capital increase was 2,178,816,000 shares from 2,000,245,000 shares that was effective from May 10, 2005 onward. However, this transaction has not affected the issued and paid-up share capital amount Financial Ratio Analysis * Profitability In Q2/05 Gross profit margin was 46.1%,slightly decreased from the same period of last year, despite this quarter despite this quarter there was contribution from The Offices at Centralworld. This is because revenue in this quarter was not covered its costs, especially depreciation. However, this ratio will be improved in the later part of the year due to its higher occupancy rate. While Net profit margin and Return on equity (ROE) in Q2/05 were 21.6% and 17.3% respectively, increased Y-O-Y from 20.0% and 15.9% respectively. This was due to higher operating profit resulted by higher rental income as mentioned above. * Financial Policy Interest coverage ratio was 2.4x, decreased Y-O-Y from 4.0x. This was due to cash flow from operation decreased from the same period of last year mainly came from payment of the other current liabilities. Net interest bearing debt to equity ratio was increased from 0.8x in Q2/04 to 0.9x in Q2/05 due to increase in long term loan to support business expansion,especially the issuance of 2-year unsecured bonds in April 2005 amounted to 1,000 MB. As at June 30, 2005, interest bearing debt was comprised of 89% fixed and 11% floating interest rate. Key Ratio Q2/2005 Q2/2004 LIQUIDITY RATIO Current Assets/ Current Liabilities (Times) 0.7 1.2 Accounts Receivable Turnover (Days) 7 7 PROFITABILITY RATIO Gross Profit Margin (%) 46.1% 46.7% Net Profit Margin (%) 21.6% 20.0% Return on Equity (%) 17.3% 15.9% EFFICIENCY RATIO Return on Assets (%) 5.3% 4.7% FINANCIAL POLICY RATIO Net Interest Bearing Debt to Equity (Times) 0.9 0.8 Interest Coverage (Times) 2.4 4.0