INTERIM F/S AND CONSOLIDATED F/S OF Q3/1998

Auditors' report to the shareholders of Siam Makro Public Company Limited We have performed a review of the balance sheets of Siam Makro Public Company Limited as at September 30, 1998 and 1997, and the related statements of income, retained earnings and statements of change in shareholders' equity for the third quarter and the period of nine months then ended, and the consolidated balance sheets of Siam Makro Public Company Limited and its subsidiaries as at September 30, 1998 and 1997, and the related consolidated statements of income, retained earnings and consolidated statements of change in shareholders' equity for the third quarter and the period of nine months then ended, in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements and the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the aforementioned financial statements and consolidated financial statements for them to be in conformity with generally accepted accounting principles. PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers Audit and Business Advisory Services Ltd. October 26, 1998 Siam Makro Public Company Limited Balance sheets and consolidated balance sheets as at September 30, 1998 and 1997 The company only The consolidation Notes 1998 1997 1998 1997 (Baht'000) (Baht'000) (Baht'000) (Baht'000) ASSETS Current assets Cash in hand and at banks 1,953,572 1,685,459 2,053,777 1,888,261 Short-term investments 3 Fixed deposits 190,000 134,340 190,000 151,499 Other 50,000 270,000 50,000 290,000 Accounts receivable-trade 4 4,155 - 6,026 - Amounts due from and loans to subsidiary and affiliated companies 5 444,132 1,061,562 7,741 27,764 Inventories, net 6 1,948,412 2,310,486 2,138,556 2,586,099 Other current assets VAT receivable - - 37,228 43,987 Purchase discount receivable 81,894 195,940 88,571 200,196 Other 78,399 90,646 86,111 112,461 Total current assets 4,750,564 5,748,433 4,658,010 5,300,267 Loans to a subsidiary company 5 1,178,400 1,178,400 - - Investments in subsidiary and associated companies 7 1,572,350 1,065,512 - 2,902 Property, plant and equipment, net 8 5,355,807 5,045,303 8,656,453 8,247,519 Other assets Deferred development rights, net 9 - - 37,979 48,913 Pre-opening and start-up expenses, net 10 146,367 167,353 161,366 176,617 Deposits 5 288,088 269,679 32,180 29,815 TOTAL ASSETS 13,291,576 13,474,680 13,545,988 13,806,033 The notes on pages 7 to 26 form an integral part of the financial statements and consolidated financial statements. 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Unaudited Reviewed Page 2 The company only The consolidation Notes 1998 1997 1998 1997 (Baht'000) (Baht'000) (Baht'000) (Baht'000) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Loans from bank - 506,700 - 506,700 Accounts payable-trade 4,390,117 5,031,524 4,600,054 5,287,983 Amounts due to subsidiary and affiliated companies 5 58,827 50,121 28,826 42,732 Other current liabilities VAT payable 87,301 3,296 87,301 - Accounts payable - other 98,945 142,704 107,297 142,703 Accrued income tax 150,458 64,028 182,667 81,246 Accrued expenses 154,354 115,442 176,272 140,615 Other 46,583 48,288 49,240 88,686 Total current liabilities 4,986,585 5,962,103 5,231,657 6,290,665 Long-term loan from bank 11 621,900 - 621,900 - Other liabilities Provision for retirement benefits 136,151 107,968 144,071 110,759 Other - - 1,420 - TOTAL LIABILITIES 5,744,636 6,070,071 5,999,048 6,401,424 Shareholders' equity Share capital 12 2,400,000 2,400,000 2,400,000 2,400,000 Share premium 3,290,152 3,290,152 3,290,152 3,290,152 Legal reserve 138,910 113,627 138,910 113,627 Retained earnings 1,717,878 1,600,830 1,717,878 1,600,830 TOTAL SHAREHOLDERS' EQUITY 7,546,940 7,404,609 7,546,940 7,404,609 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 13,291,576 13,474,680 13,545,988 13,806,033 Director . Director . Date October 26, 1998 Unaudited Reviewed Siam Makro Public Company Limited Page 3 Statements of income for the third quarter and the period of nine months ended September 30, 1998 and 1997 The company only Notes 1998 1997 Third Period of Third Period of quarter nine months quarter nine months (Baht'000) (Baht'000) (Baht'000) (Baht'000) REVENUES Sales 7,060,554 21,906,131 8,186,846 23,322,594 Other income Interest income 69,320 241,841 72,853 196,615 Service income 112,254 321,870 90,869 272,591 Other 38,493 114,464 29,946 82,391 TOTAL REVENUES 7,280,621 22,584,306 8,380,514 23,874,191 EXPENSES Cost of sales 6,495,857 20,160,465 7,533,557 21,301,127 Selling and administrative expenses 653,004 1,901,708 629,044 1,849,190 Interest expenses 9,891 27,510 7,941 22,042 Directors' remuneration 360 1,080 360 1,080 TOTAL EXPENSES 7,159,112 22,090,763 8,170,902 23,173,439 Net income before tax 121,509 493,543 209,612 700,752 Income tax (41,679) (156,179) (58,921) (226,282) Net income before share of profit from subsidiary and associated companies 79,830 337,364 150,691 474,470 Share of profit from subsidiary and associated companies 10,572 30,646 3,673 52,871 NET INCOME FOR THE PERIOD 90,402 368,010 154,364 527,341 STATEMENTS OF RETAINED EARNINGS Retained earnings brought forward 1,627,476 1,553,868 1,446,466 1,385,489 Net income for the period 90,402 368,010 154,364 527,341 Dividends 13 - (204,000) - (312,000) Retained earnings carried forward 1,717,878 1,717,878 1,600,830 1,600,830 EARNINGS PER SHARE (BAHT) 14 Net income 0.38 1.53 0.64 2.20 The notes on pages 7 to 26 form an integral part of the financial statements and consolidated financial statements. 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Unaudited Reviewed Siam Makro Public Company Limited Page 4 Consolidated statements of income for the third quarter and the period of nine months ended September 30, 1998 and 1997 The consolidation Notes 1998 1997 Third Period of Third Period of quarter nine months quarter nine months (Baht'000) (Baht'000) (Baht'000) (Baht'000) REVENUES Sales 7,437,784 23,057,174 8,557,536 23,923,030 Other income Interest income 48,236 170,015 41,227 130,177 Service income 118,031 334,002 87,777 272,591 Other 20,963 71,079 36,602 66,068 TOTAL REVENUES 7,625,014 23,632,270 8,723,142 24,391,866 EXPENSES Cost of sales 6,806,474 21,102,514 7,849,665 21,756,931 Selling and administrative expenses 662,451 1,936,048 630,735 1,805,033 Interest expenses 9,891 27,510 7,940 22,208 Directors' remuneration 360 1,080 360 1,080 TOTAL EXPENSES 7,479,176 23,067,152 8,488,700 23,585,252 Net income before tax 145,838 565,118 234,442 806,614 Income tax (55,436) (197,108) (73,578) (264,308) Net income before share of loss from an associated company 90,402 368,010 160,864 542,306 Share of loss from an associated company - - (6,500) (14,965) NET INCOME FOR THE PERIOD 90,402 368,010 154,364 527,341 STATEMENTS OF RETAINED EARNINGS Retained earnings brought forward 1,627,476 1,553,868 1,446,466 1,385,489 Net income for the period 90,402 368,010 154,364 527,341 Dividends 13 - (204,000) - (312,000) Retained earnings carried forward 1,717,878 1,717,878 1,600,830 1,600,830 EARNINGS PER SHARE (BAHT) 14 Net income 0.38 1.53 0.64 2.20 The notes on pages 7 to 26 form an integral part of the financial statements and consolidated financial statements. 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Unaudited Reviewed Siam Makro Public Company Limited Page 5 Statements of change in shareholders' equity for the third quarter and the period of nine months ended September 30, 1998 and 1997 The company only 1998 1997 Third Period of Third Period of quarter nine months quarter nine months (Baht'000) (Baht'000) (Baht'000) (Baht'000) SHARE CAPITAL Common shares Brought forward 2,400,000 2,400,000 2,400,000 2,400,000 Increase during the period - - - - Carried forward 2,400,000 2,400,000 2,400,000 2,400,000 SHARE PREMIUM Brought forward 3,290,152 3,290,152 3,290,152 3,290,152 Increase during the period - - - - Carried forward 3,290,152 3,290,152 3,290,152 3,290,152 RETAINED EARNINGS Appropriated Legal reserve Brought forward 138,910 138,910 113,627 113,627 Increase during the period - - - - Carried forward 138,910 138,910 113,627 113,627 Unappropriated Brought forward 1,627,476 1,553,868 1,446,466 1,385,489 Increase during the period 90,402 368,010 154,364 527,341 Decrease during the period - (204,000) - (312,000) Carried forward 1,717,878 1,717,878 1,600,830 1,600,830 Shareholders' equity 7,546,940 7,546,940 7,404,609 7,404,609 The notes on pages 7 to 26 form an integral part of the financial statements and consolidated financial statements. 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Unaudited Reviewed Siam Makro Public Company Limited Page 6 Consolidated statements of change in shareholders' equity for the third quarter and the period of nine months ended September 30, 1998 and 1997 The consolidation 1998 1997 Third Period of Third Period of quarter nine months quarter nine months (Baht'000) (Baht'000) (Baht'000) (Baht'000) SHARE CAPITAL Common shares Brought forward 2,400,000 2,400,000 2,400,000 2,400,000 Increase during the period - - - - Carried forward 2,400,000 2,400,000 2,400,000 2,400,000 SHARE PREMIUM Brought forward 3,290,152 3,290,152 3,290,152 3,290,152 Increase during the period - - - - Carried forward 3,290,152 3,290,152 3,290,152 3,290,152 RETAINED EARNINGS Appropriated Legal reserve Brought forward 138,910 138,910 113,627 113,627 Increase during the period - - - - Carried forward 138,910 138,910 113,627 113,627 Unappropriated Brought forward 1,627,476 1,553,868 1,446,466 1,385,489 Increase during the period 90,402 368,010 154,364 527,341 Decrease during the period - (204,000) - (312,000) Carried forward 1,717,878 1,717,878 1,600,830 1,600,830 Shareholders' equity 7,546,940 7,546,940 7,404,609 7,404,609 The notes on pages 7 to 26 form an integral part of the financial statements and consolidated financial statements. Auditors' report page 1. Unaudited Reviewed Siam Makro Public Company Limited Page 7 Notes to the financial statements and consolidated financial statements - September 30, 1998 Basis for consolidation 1. The consolidated financial statements include the financial statements of Siam Makro Public Company Limited and its subsidiaries as follows : % of interest Makro Properties Limited 99.99 Makro Auto Care Company Limited 99.99 Makro Office Centre Company Limited 99.99 Significant intercompany transactions have been eliminated in the consolidated financial statements. The minority interest is immaterial and not, therefore, shown separately in the consolidated financial statements. Principal accounting policies 2. A summary of the significant accounting policies of the company, which have been applied consistently, is set out below. (a) Depreciation and amortisation Depreciation is calculated so as to write off the cost of the assets on a straight-line basis over the expected useful economic lives of the assets which range from 5 - 20 years. Leasehold rights are deferred and amortised by the straight-line method over the period of agreements which range from 6 - 26 years. Pre-opening and start-up expenses are deferred and amortised by the straight-line method over a period of 5 years. Unaudited Reviewed Siam Makro Public Company Limited Page 8 Notes to the financial statements and consolidated financial statements - September 30, 1998 continued (b) Allowance for doubtful account Allowance for doubtful account is provided according to the estimated losses that may be incurred in the collections from accounts receivable. The estimated losses are determined by the collection experience and the current status of accounts receivable. (More)