UDITED YEAR ENDED F/S AND CONSOLIDATED F/S

23 February 1998
Siam Makro Public Company Limited Page 14 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued The consolidation 1997 1996 (Baht) (Baht) Property, plant and equipment, at cost Land 3,575,216,795 3,183,622,424 Buildings 3,230,098,370 2,702,251,168 Leasehold rights and leasehold improvement 245,875,008 182,610,408 Store equipment 2,396,584,067 2,174,365,534 Office equipment and furniture and fixtures 595,235,883 534,650,054 Motor vehicles 61,378,097 33,609,893 Construction in progress 286,793,640 104,842,197 10,391,181,860 8,915,951,678 Less: Accumulated depreciation (1,736,807,509) (1,380,781,724) Property, plant and equipment, net 8,654,374,351 7,535,169,954 Depreciation for the year amounting to Baht 548,504,210 is charged to the consolidated statement of income (1996 : Baht 443,994,179). Deferred development rights, net 9. The balance is shown net of accumulated amortisation as follows : The consolidation 1997 1996 (Baht) (Baht) Accumulated amortisation 9,618,991 - Siam Makro Public Company Limited Page 15 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued Pre-opening and start-up expenses, net 10. The balance is shown net of accumulated amortisation as follows : The company only The consolidation 1997 1996 1997 1996 (Baht) (Baht) (Baht) (Baht) Accumulated amortisation 228,104,118 178,844,177 228,811,181 178,924,903 Loans from bank 11. These represent loans from a foreign bank, equivalent to USD 15 million. The loans bear interest at the Singapore Inter Bank Offer rate plus 0.425% and will be due for repayment in August 1998. The company is required to comply with the terms and conditions as specified in the loan agreement. There is a forward exchange contract to cover this loan. Share capital 12. 1997 1996 (Baht) (Baht) Authorized share capital : 240,000,000 shares of Baht 10 each 2,400,000,000 2,400,000,000 Issued and paid up share capital : 240,000,000 shares of Baht 10 each 2,400,000,000 2,400,000,000 Siam Makro Public Company Limited Page 16 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued Legal reserve 13. Under the provision of the Limited Public Company Act, the company is required to allocate part of the annual net profit as reserve fund in an amount not less than 5% of net profit until the reserve fund is 10% of share capital. This reserve is not available for distribution. Dividends 14. At the annual shareholders' meeting dated April 23,1997, it was unanimously resolved that dividends for the year ended December 31, 1996 be paid at Baht 1.30 per share totalling Baht 312 million. These dividends were paid in the second quarter of this year. Earnings per share 15. Earnings per share is calculated based on the weighted average number of shares in issue during the year. Contingent liabilities and commitment 16. (a) Bank guarantees As at December 31, 1997, the banks have given guarantees on behalf of the company and its subsidiaries as follows : The company only The consolidation (Baht) (Baht) Electricity 30,838,300 31,282,000 Sales of liquor and cigarettes 1,869,000 1,899,000 Others 480,000 2,180,000 33,187,300 35,361,000 Siam Makro Public Company Limited Page 17 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued Contingent liabilities and commitment (b) Letter of awareness As at December 31, 1997, the company has issued letters of awareness to a bank for a bank overdraft facility of subsidiary companies amounting to Baht 70 million and for a loan from bank of an associated company amounting to Baht 30 million respectively. (c) Lease agreement The company has entered into several land lease agreements with a subsidiary company and several building area lease agreements with external lessors. In addition, the subsidiary companies have also entered into building area lease agreements with external lessors. The future payments to which the company and its subsidiaries are committed under these agreements are as follows : The company only The consolidation (Baht) (Baht) Due within 1 year 267,173,796 48,449,796 Due after 1 year but within 5 years 237,911,590 94,684,840 Due after 5 years 277,007,983 360,066,363 782,093,369 503,200,999 (d) Capital expenditure commitment As at December 31, 1997, the company and its subsidiaries have capital expenditure commitments in respect of construction contracts and the purchase of fixed assets as follows: The company only The consolidation (Baht) (Baht) Capital expenditure commitments 88,545,786 97,077,738 Siam Makro Public Company Limited Page 18 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued (e) Purchases commitment As at December 31, 1997, the company is committed for purchases of import products with the domestic purchase agents amounting to Baht 18.3 million. Financial instruments 17. The company's policy on risk management of liabilities in foreign currencies is to use financial instruments purchased in the financial markets. For hedging purposes, the company has entered into forward exchange contracts to cover loan and purchase commitment in foreign currencies. As at December 31, 1997, deferred hedging cost arising under these contracts amounted to Baht 20.6 million. Siam Makro Public Company Limited Page 19 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued Segmental information by business activity 18. The consolidation Wholesale and Service Land Rental Elimination Total Retail Business Business Business (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) Sales and service income - Unaffiliated customers 31,512 582 - - 32,094 - Intercompany 229 - 254 (483) - 31,741 582 254 (483) 32,094 Gross profit 2,603 115 - - 2,718 Other income 644 Selling and administrative expenses (2,503) Interest expenses (31) Directors' remuneration (1) Income tax (303) Net income 524 Share of loss from an associated company (18) Net income 506 Property, plant and equipment, net book value as at December 31, 1997 5,461 403 2,790 - 8,654 Other assets 5,524 Total assets as at December 31, 1997 14,178 Siam Makro Public Company Limited Page 20 Notes to the financial statements and consolidated financial statements - December 31, 1997 continued The company and its subsidiary companies operate 3 major businesses as follows : - Wholesale business of merchandise and retail business of office supplies. - Automotive service centers and gas stations - Land lease business Sales to unaffiliated customers are presented at market price. The transfers price for intercompany sales are established by agreement between the company and its subsidiary companies. Property, plant and equipment of each business are for its own operations. Other assets mainly comprise cash in hand and at banks, inventories, amounts due from and loans to affiliated companies. Comparative figures 19. As a result of reclassifications of certain items of financial statements ended December 31, 1997, the comparative figures have been amended accordingly. Auditors' report page 1.