NTERIM F/S AND CONSOLIDATED F/S OF Q2/1998

Unaudited Reviewed Siam Makro Public Company Limited Page 17 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued The consolidation 1998 1997 (Baht'000) (Baht'000) Property, plant and equipment, at cost Land 3,572,980 3,394,895 Buildings 3,446,388 2,876,080 Leasehold rights and leasehold improvement 470,696 198,091 Store equipment 2,535,955 2,146,065 Office equipment and furniture and fixtures 610,646 504,275 Motor vehicles 61,541 59,202 Construction in progress 78,435 127,304 10,776,641 9,305,912 Less: Accumulated depreciation (2,064,233) (1,477,179) Property, plant and equipment, net 8,712,408 7,828,733 The consolidation 1998 1997 Second Period of Second Period of quarter six months quarter six months (Baht'000) (Baht'000) (Baht'000) (Baht'000) Depreciation and amortisation 163,217 333,849 146,317 281,581 Depreciation and amortisation are charged to the statements of income and consolidated statements of income. Unaudited Reviewed Siam Makro Public Company Limited Page 18 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Deferred development rights, net 10. The balance is shown net of accumulated amortisation as follows : The consolidation 1998 1997 (Baht'000) (Baht'000) Accumulated amortisation 15,095 4,001 Pre-opening and start-up expenses, net 11. The balance is shown net of accumulated amortisation as follows : The company only The consolidation 1998 1997 1998 1997 (Baht'000) (Baht'000) (Baht'000) (Baht'000) Accumulated amortisation 258,249 201,216 260,579 201,218 Loans from bank 12. 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. Unaudited Reviewed Siam Makro Public Company Limited Page 19 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Share capital 13. 1998 1997 (Baht'000) (Baht'000) Authorized share capital : 240,000,000 shares of Baht 10 each 2,400,000 2,400,000 Issued and paid up share capital : 240,000,000 shares of Baht 10 each 2,400,000 2,400,000 Dividends 14. At the annual shareholders' meeting dated April 24,1998, it was unanimously resolved that dividends for the year ended December 31, 1997 be paid at Baht 0.85 per share totalling to Baht 204 million. These dividends were already paid in this quarter. Earnings per share 15. Earnings per share is calculated based on the weighted average number of shares in issue during the period. Unaudited Reviewed Siam Makro Public Company Limited Page 20 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Contingent liabilities and commitment 16. (a) Bank guarantees As at June 30, 1998, the banks have given guarantees on behalf of the company and its subsidiaries as follows: The company only The consolidation (Baht'000) (Baht'000) Electricity 33,731 35,058 Sales of liquor and cigarettes 2,090 2,120 Others 480 2,180 36,301 39,358 (b) Letter of awareness As at June 30, 1998, the company has issued letters of awareness to a bank for a bank overdraft facility of subsidiary companies amounting to Baht 70 million. (c) Lease agreement The company has entered into several land lease agreements with a subsidiary company, several building area lease agreements and service 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 : Unaudited Reviewed Siam Makro Public Company Limited Page 21 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued The company only The consolidation (Baht'000) (Baht'000) Due within 1 year 276,188 39,203 Due after 1 year but within 5 years 310,388 131,791 Due after 5 years 514,574 650,705 1,101,150 821,699 (d) Capital expenditure commitment As at June 30, 1998, the company and its subsidiaries have capital expenditure commitments in respect of construction contracts and the fixed assets acquisition as follows : The company only The consolidation (Baht'000) (Baht'000) Capital expenditure commitments 104,064 106,249 Financial instruments 17. The company's policy on risk management of liabilities in foreign currencies is to use financial instruments purchased in financial markets. For hedging purposes, the company has entered into forward exchange contracts to cover loan and purchase commitments in foreign currencies. As at June 30, 1998, deferred loss on exchange rate arising under these contracts amounted to Baht 4 million. Unaudited Reviewed Siam Makro Public Company Limited Page 22 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Bank facilities 18. As at June 30, 1998, the company has the following unutilised credit facilities available with local banks and foreign banks : The company only The consolidation Currencies Amount Amount (Unit : Million) (Unit : Million) Local banks - Bank overdrafts facilities Baht 95 135 - Loans facilities Baht 175 175 - Letter of credit facilities Baht 165 200 - Letter of guarantee facilities Baht 15 27 Foreign banks - Loans facilities USD 35 35 The loan facilities from foreign banks are available through January 24, 2001. Unaudited Reviewed Siam Makro Public Company Limited Page 23 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Segmental information by business activity 19. The consolidation The consolidation for the second quarter ended June 30, 1998 for the period of six months ended June 30, 1998 Wholesale and Service Land Rental Elimination Total Wholesale and Service Land Rental Elimination Total Retail Business Business Business Retail Business Business Business (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) Sales and service income - Unaffiliated customers 7,521 205 - - 7,726 15,228 391 - - 15,619 - Intercompany - - 68 (68) - - - 137 (137) - 7,521 205 68 (68) 7,726 15,228 391 137 (137) 15,619 Gross profit 601 40 - - 641 1,250 73 - - 1,323 Other income 203 388 Selling and administrative expenses (625) (1,273) Interest expenses (8) (18) Directors' remuneration (1) (1) Income tax (70) (141) Net income before share of loss from an associated company 140 278 Share of loss from an associated company - - Net income 140 278 Property, plant and equipment, net book value as at June 30, 1998 - 5,527 395 2,790 - 8,712 Other assets 4,758 Total assets as at June 30, 1998 13,470 Unaudited Reviewed Siam Makro Public Company Limited Page 24 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued Segmental information by business activity The consolidation The consolidation for the second quarter ended June 30, 1997 for the period of six months ended June 30, 1997 Wholesale and Service Land Rental Elimination Total Wholesale and Service Land Rental Elimination Total Retail Business Business Business Retail Business Business Business (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) Sales and service income - Unaffiliated customers 7,663 146 - - 7,809 15,130 235 - - 15,365 - Intercompany - - 64 (64) - 240 - 122 (362) - 7,663 146 64 (64) 7,809 15,370 235 122 (362) 15,365 Gross profit 654 31 - - 685 1,410 48 - - 1,458 Other income 156 303 Selling and administrative expenses (565) (1,174) Interest expenses (7) (14) Directors' remuneration (1) (1) Income tax (82) (191) Net income before share of loss from an associated company 186 381 Share of loss from an associated company (2) (8) Net income 184 373 Property, plant and equipment, net book value as at June 30, 1997 5,047 172 2,610 - 7,829 Other assets 4,471 Total assets as at June 30, 1997 12,300 Unaudited Reviewed Siam Makro Public Company Limited Page 25 Notes to the financial statements and consolidated financial statements - June 30, 1998 continued The company and its subsidiary companies operate 3 major businesses as follows : - Cash and carry wholesale business of merchandise and retail business of office supplies. - Automotive service centers, automated car wash and gas stations - Land investment and property leasing Sales to unaffiliated customers , subsidiaries and affiliated companies are presented at market price. However, the transfer prices for intercompany sales are established by agreements between the company and its subsidiary companies which represent net book value due to a business reorganisation in the first quarter of 1997. 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 figure 20. As a result of reclassifications of certain items of the interim financial statements ended June 30, 1998, the comparative figures and the interim financial statements ended March 31, 1998 have been amended accordingly. Auditors' report page 1.