ONSOLIDATED FINANCIAL STATEMENTS QUARTER 1/1999

The consolidation 1999 1998 (Baht'000) (Baht'000) Cash flows from investing activities : Acquisitions of property, plant and equipment (127,326) (120,804) Proceeds from disposal equipment (30,685) 34,858 Loans to subsidiary companies - - Deferred development rights 2,756 2,748 Pre-opening and start-up expenses (12,104) (8,954) Deposits (26,835) (2,056) Net cash used in investing activities (194,194) (94,208) Cash flows from financing activities : Forward exchange contract payable (72,886) - Long-term loan from bank (553,350) - Deferred hedging cost (2,939) (8,248) Net cash used in financing activities (629,175) (8,248) The notes to the financial statements on pages 8 to 20 form an integral part of these financial statements. Auditor's report page 1. Unaudited Reviewed Siam Makro Public Company Limited Page 7 Statements of cash flows and consolidated statements of cash flows for the three-month periods ended 31 March 1999 and 1998 The company only 1999 1998 (Baht'000) (Baht'000) Net decrease in cash and cash equivalents (1,160,198) (108,907) Cash and cash equivalents, beginning of period 3,508,056 2,369,516 Cash and cash equivalents, end of period 2,347,858 2,260,609 Cash and cash equivalents : Cash in hand and at banks 2,007,858 903,609 Short-term investments 340,000 1,357,000 2,347,858 2,260,609 Supplemental disclosure of cash flows information cash paid during the period Interest expenses 3,757 7,169 Income tax 108,976 - The consolidation 1999 1998 (Baht'000) (Baht'000) Net decrease in cash and cash equivalents (1,180,138) (89,786) Cash and cash equivalents, beginning of period 3,624,026 2,430,024 Cash and cash equivalents, end of period 2,443,888 2,340,238 Cash and cash equivalents : Cash in hand and at banks 2,082,888 983,238 Short-term investments 361,000 1,357,000 2,443,888 2,340,238 Supplemental disclosure of cash flows information cash paid during the period Interest expenses 3,757 7,169 Income tax 129,608 - The notes to the financial statements on pages 8 to 20 form an integral part of these financial statements . Auditor's report page 1. Unaudited Reviewed Siam Makro Public Company Limited Page 8 Notes to the financial statements and consolidated financial statements 31 March 1999 Accounting policies 1. A summary of the significant accounting policies of the company, which have been applied consistently, is set out below : Basis of preparation The financial statements are prepared in accordance with and comply with accounting principles generally accepted in Thailand. Basis for consolidation 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. 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 agreement 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. 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. Unaudited Reviewed Siam Makro Public Company Limited Page 9 Notes to the financial statements and consolidated financial statements 31 March 1999 continued Inventories Inventories are stated at the lower of cost or net realisable value. Cost is determined on the latest purchase price which is approximate to cost determined on a first-in first- out basis. Net realisable value is the price at which inventories can be sold in the normal course of business after allowing for the costs of realisation. Provision is made where necessary for obsolete, slow-moving and shrinkage inventories. Foreign currencies Trading transactions denominated in foreign currencies are translated into Thai Baht at the exchange rates ruling when the transactions are entered into. Monetary assets and liabilities denominated in foreign currencies are translated into Thai Baht at the exchange rates ruling at the balance sheet date and the forward contracted rate. Exchange gains or losses arising from the application of forward contracted rate are deferred and amortised by the straight-line method over the period of forward contracted rate agreements. Exchange gains or losses arising from the application of exchange rates at the balance sheet date are included in the statement of income. Investment Investment in companies in which Siam Makro Public Company Limited holds more than 20% of the share capital and over which the company exercises significant influence are accounted for under the equity method. The investment is initially recorded at cost. The carrying amount of the investment is increased or decreased to recognise the company's share of the profits or losses of the investee after the date of acquisition and to take account of any dividends received. Deferred development rights Deferred development rights represent certain costs of development that the subsidiary companies acquired from Siam Makro Public Company Limited. These costs are capitalised and are being amortised over 5 years from the date of acquisition by the subsidiary companies. Provision for retirement benefits Provision for retirement benefits is made for employees whose length of service exceeds 3 years and is normally payable on termination of service. The calculation is based on the latest basic salary multiplied by the years of each employee's service as set out in the company's retirement benefits plan. Unaudited Reviewed Siam Makro Public Company Limited Page 10 Notes to the financial statements and consolidated financial statements 31 March 1999 continued Provision for warranty claim Provision for warranty claim represents the estimated liabilities due under warranties given on products and services of a subsidiary company. This provision is calculated based on claim history and management 's expectation of future claim. Short-term investments 2. As at 31 March 1999, short-term investments comprise fixed deposits bearing interest at rates between 5.00% - 6.00% per annum. Accounts receivable trade, net 3. The company only The consolidation (Baht'000) (Baht'000) (Baht'000) (Baht'000) Accounts receivable - trade 2,330 2,577 4,719 3,430 Less: Allowance for doubtful Account - - (50) - Accounts receivable - trade, net 2,330 2,577 4,669 3,430 As at 31 March 1999, the outstanding accounts receivable balance aged longer than 3 months are as follows : The company only The consolidation (Baht'000) (Baht'000) Accounts receivable aged longer than 3 months 2,330 2,398 Related parties transactions (More)