NTERIM F/S AND CONSOLIDATED F/S OF Q3/1998
06 November 1998
Siam Makro Public Company Limited Page 17
Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
The consolidation
1998 1997
(Baht'000) (Baht'000)
Property, plant and equipment, at cost
Land 3,572,980 3,575,076
Buildings 3,452,487 3,108,671
Leasehold rights and leasehold improvement 470,684 234,032
Store equipment 2,546,762 2,268,025
Office equipment and furniture and fixtures 620,600 552,275
Motor vehicles 56,351 59,732
Construction in progress 163,950 80,009
10,883,814 9,877,820
Less: Accumulated depreciation (2,227,361) (1,630,301)
Property, plant and equipment, net 8,656,453 8,247,519
The consolidation
1998 1997
Third Period of Third Period of
quarter nine months quarter nine months
(Baht'000) (Baht'000) (Baht'000) (Baht'000)
Depreciation and amortisation 165,345 499,194 154,254 435,835
Depreciation and amortisation of leasehold rights are charged to the statements of income and
consolidated statements of income.
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Deferred development rights, net
9. The balance is shown net of accumulated amortisation as follows :
The consolidation
1998 1997
(Baht'000) (Baht'000)
Accumulated amortisation 17,912 6,810
Pre-opening and start-up expenses, net
10. 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 273,458 216,103 277,036 216,268
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 January 2001. 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.
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Share capital
12. 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
13. 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 the second quarter of this year.
Earnings per share
14. Earnings per share is calculated based on the weighted average number of shares in
issue during the period.
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Contingent liabilities and commitment
15.
(a) Bank guarantees
As at September 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 38,867 40,246
Sales of liquor and cigarettes 5,951 5,981
Others 480 2,680
45,298 48,907
(b) Letter of awareness
As at September 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 :
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
The company only The consolidation
(Baht'000) (Baht'000)
Due within 1 year 275,014 44,312
Due after 1 year but within 5 years 267,636 131,676
Due after 5 years 510,395 641,950
1,053,045 817,938
(d) Capital expenditure commitment
As at September 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 347,006 359,868
Financial instruments
16. 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 September 30, 1998, deferred loss on exchange rate arising under these
contracts amounted to Baht 9 million.
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Bank facilities
17. As at September 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 100 100
- Letter of credit facilities Baht 227 267
- Letter of guarantee facilities Baht 7 17
Foreign banks
- Loans facilities USD 35 35
The loan facilities from foreign banks are available through January 25, 2001.
Siam Makro Public Company Limited
Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Segmental information by business activity
18. The consolidation
for the third quarter ended September 30, 1998
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 7,239 199 - - 7,438
- Intercompany - - 69 (69) -
7,239 199 69 (69) 7,438
Gross profit 597 34 - - 631
Other income 187
Selling and administrative expenses (663)
Interest expenses (10)
Directors' remuneration -
Income tax (55)
Net income 90
Property, plant and equipment, net book
value as at September 30, 1998
Other assets
Total assets as at September 30, 1998
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Segmental information by business activity
18. The consolidation
for the period of nine months ended September 30, 1998
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 22,467 590 - - 23,057
- Intercompany - 1 205 (206) -
22,467 591 205 (206) 23,057
Gross profit 1,847 108 - - 1,955
Other income 575
Selling and administrative expenses (1,936)
Interest expenses (28)
Directors' remuneration (1)
Income tax (197)
Net income 368
Property, plant and equipment, net book
value as at September 30, 1998 5,479 387 2,790 - 8,656
Other assets 4,889
Total assets as at September 30, 1998 13,545
Siam Makro Public Company Limited
Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Segmental information by business activity
The consolidation
for the third quarter ended September 30, 1997
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 8,401 157 - - 8,558
- Intercompany - - - - -
8,401 157 - - 8,558
Gross profit 678 30 - - 708
Other income 166
Selling and administrative expenses (631)
Interest expenses (8)
Directors' remuneration -
Income tax (74)
Net income before share of loss from
an associated company 161
Share of loss from an associated company (7)
Net income 154
Property, plant and equipment, net book
value as at September 30, 1997
Other assets
Total assets as at September 30, 1997
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
Segmental information by business activity
The consolidation
for the period of nine months ended September 30, 1997
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 23,497 426 - - 23,923
- Intercompany 231 - - (231) -
23,728 426 - (231) 23,923
Gross profit 2,079 87 - - 2,166
Other income 468
Selling and administrative expenses (1,805)
Interest expenses (22)
Directors' remuneration (1)
Income tax (264)
Net income before share of loss from
an associated company 542
Share of loss from an associated company (15)
Net income 527
Property, plant and equipment, net book
value as at September 30, 1997 5,183 275 2,790 - 8,248
Other assets 5,558
Total assets as at September 30, 1997 13,806
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Notes to the financial statements and consolidated financial statements
- September 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.
Year 2000 issue
19. Siam Makro Public Company Limited and its subsidiaries have commenced their plan
to replace and upgrade all major computer systems since the end of 1997. This aims to
increase the efficiency and ability to cope with business growth. As at September 30, 1998,
the upgrades for the finance and accounting systems have already been completed and will be
tested for year 2000 compliance in the first quarter of 1999. The company is now in the
process of upgrading the Makro business systems in respect of purchasing, selling, goods
receiving and inventory management. All developments of computer systems in the company
and also the subsidiaries are expected to be completed and ready for year 2000 compliance
testing within 1999. The total capital expenditure budget is estimated at Baht 120 million out of
which Baht 29 million has been capitalized to fixed assets.
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Notes to the financial statements and consolidated financial statements
- September 30, 1998 continued
The company and its subsidiaries expect that such upgrades should remove any year
2000 problems as the new equipment and applications are year 2000 compliance, as certified
by the suppliers. In addition, the company and its subsidiaries are proactively addressing the
issue in respect of other companies with whom the company and its subsidiaries are doing
business with in order to ensure year 2000 compliance. The company is in the process of
gathering information regarding the readiness for year 2000 of such companies. The
information will be used for preparing an assessment of the impact to the company and its
subsidiaries and also for developing a plan to minimize the business risks that may arise in
respect of transactions with such companies.
Comparative figure
20. As a result of reclassifications of certain items of the interim financial statements ended
September 30, 1998, the comparative figures have been amended accordingly.
Auditors' report page 1.