ONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 1999

Inventories (487,091,229) 281,491,224 VAT receivable - - Purchase discount receivable (47,873,567) (42,771,433) Prepayment 2,824,208 2,110,045 Other current assets 8,695,669 18,878,613 Trade accounts payable 1,160,904,618 286,577,065 Amounts due to subsidiaries and affiliated companies 17,039,814 (16,108,753) Non-trade accounts payable (51,098,821) 81,082,886 Current tax liabilities 53,975,896 111,883,370 Accrued expenses 21,639,401 8,909,015 VAT payable (41,634,993) 51,574,179 Other current liabilities 33,719,952 (10,173,039) Net cash generated from operations 1,906,686,856 2,269,598,121 The notes to the consolidated and company financial statements on pages 9 to 20 form an integral part of these financial statements. Siam Makro Public Company Limited Consolidated and Company Statements of Cash Flows For the years ended 31 December 1999 and 1998 Consolidated 1999 1998 Baht Baht (Restated) Cash flows from investing activities : Acquisition of property, plant and equipment (989,609,038) (928,355,137) Proceed from disposals of equipment 18,391,538 33,857,136 Acquisition of subsidiaries - - Loans made to subsidiaries - - Deposits (6,754,530) 20,354,280 Net cash payments to investing activities (977,972,030) (874,143,721) Cash flows from financing activities : Payment of short term loans - (506,700,000) Dividends paid to shareholders (204,000,000) (204,000,000) Forward exchange contract payable (72,978,000) 72,978,000 Proceeds (Payment) on long-term loan from bank (553,350,000) 553,350,000 Deferred hedging cost (2,939,000) (17,680,863) Net cash payment to financing activities (833,267,000) (102,052,863) Net increase in cash and cash equivalents 370,378,310 1,194,002,480 Cash and cash equivalents, beginning balance 3,624,026,299 2,430,023,819 Cash and cash equivalents, ending balance 3,994,404,609 3,624,026,299 Cash and cash equivalents : Cash on hand and at banks 3,102,404,609 3,444,026,299 Short-term investments 892,000,000 180,000,000 3,994,404,609 3,624,026,299 Supplementary information for cash flows : Interest paid 5,311,193 34,801,337 Income tax paid 238,630,334 97,788,327 Company 1999 1998 Baht Baht (Retstated) Cash flows from investing activities : Acquisition of property, plant and equipment (838,978,194) (896,026,697) Proceed from disposals of equipment 18,391,538 24,173,492 Acquisition of subsidiaries - (480,000,000) Loans made to subsidiaries 128,900,000 301,700,000 Deposits (3,055,640) 21,147,075 Net cash payments to investing activities (694,742,296) (1,029,006,130) Cash flows from financing activities : Payment of short term loans - (506,700,000) Dividends paid to shareholders (204,000,000) (204,000,000) Forward exchange contract payable (72,978,000) 72,978,000 Proceeds (Payment) on long-term loan from bank (553,350,000) 553,350,000 Deferred hedging cost (2,939,000) (17,680,863) Net cash payment to financing activities (833,267,000) (102,052,863) Net increase in cash and cash equivalents 378,677,560 1,138,539,128 Cash and cash equivalents, beginning balance 3,508,055,361 2,369,516,233 Cash and cash equivalents, ending balance 3,886,732,921 3,508,055,361 Cash and cash equivalents : Cash on hand and at banks 3,016,732,921 3,328,055,361 Short-term investments 870,000,000 180,000,000 3,886,732,921 3,508,055,361 Supplementary information for cash flows : Interest paid 5,307,181 34,801,003 Income tax paid 197,389,002 79,554,686 The notes to the consolidated and company financial statements on pages 9 to 20 form an integral part of these financial statements. Siam Makro Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 1999 and 1998 1 Significant Accounting Policies The principle accounting policies adopted in the preparation of these consolidated and company financial statements which have been applied consistently, are set out below: 1.1 Basis for preparation The consolidated and company financial statements are prepared in accordance with and comply with accounting principles generally accepted in Thailand. The consolidated and company financial statements are prepared under the historical cost convention as modified by the revaluation of certain property, plant and equipment. 1.2 Consolidation Subsidiary undertakings which are those companies in which the Group, directly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated. Subsidiaries are consolidated from the date on which effective control's transferred to the Group. Significant intercompany transactions and balances have been eliminated in the consolidated financial statements. Where necessary accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. The minority interest is immaterial and not, therefore, shown separately in the consolidated financial statements. 1.3 Investment in subsidiaries Investment in subsidiary undertakings are accounted for in the Company financial statements by the equity method of accounting. These undertakings are over which the Company has over 50% of the voting rights, and over which the Company exercise control. Provisions are recorded for impairment in value. Equity method of accounting involves recognising in the income statements the Company's share of the subsidiaries' profit or loss for the year. The Company's interest in the subsidiary is carried in the balance sheet an amount that reflects its share of the net assets of the subsidiaries. 1.4 Foreign currencies Foreign currency transactions in the Group are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statements. Such balances are translated at year- end exchange rates unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. 1.5 Trade accounts receivable Trade accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. 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. 1.6 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. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts , allowances or rebates. Net realisable value is the estimate of the selling price of selling in the ordinary course of business, less the costs of completion and selling expenses. Provision is made where necessary for obsolete, slow-moving and shrinkage inventories. 1.7 Property, plant and equipment All property, plant and equipment is initially recorded at cost, and is stated at cost less subsequent depreciation. Property held for sale or under future development is initially recorded at cost and subsequently shown at appraised value, based on valuations by external independent valuers. Depreciation is calculated on the straight-line method to write off the cost of each asset except for land as it is deemed to have an indefinite life , or the revalued amounts, to their residual values over their estimated useful life which range from 5 - 20 years. Leasehold rights are amortised by the straight-line method over the period of agreements, which range from 6 - 27 years. Where the carrying amount of an assets is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any cost of disposal. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. 1.8 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. 1.9 Provident fund and provision for retirement indemnity The Group operates a provident fund, being a defined contribution plan, the asset for which are held in a separate trustee- administered fund. The provident fund is funded by payments from employees and by the relevant Group companies. The Group's contributions to the provident fund are charged to the income statements in the years to which they related. Provision for retirement indemnity 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 Group companies' retirement indemnity plan. 1.10 Provision for warranty claim Provision for warranty claim represents the estimated liabilities due under warranties given on products and services of a subsidiary. This provision is calculated based on claim history and management 's expectation of future claim. 1.11 Revenue recognition Sales are recognised upon delivery of products and customer acceptance, if any, or performance of services , net of discounts. For consolidated financial statements , inter-group sales are eliminated. Services income earned by the Group are recognised on an accrual basis in accordance with the substance of the relevant agreement. 1.12 Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. In 1999, the Group implemented following new Thai Accounting Standards namely: TAS 32 - Property, Plant and Equipment TAS 35 - Presentation of Financial Statements TAS 36 - Impairment of Assets TAS 37 - Revenue Recognition TAS 38 - Earnings per Share TAS 39 - Net Profit or Loss for the Period, Fundamental Errors and Accounting Changes There are no changes in accounting policy resulting from the adoption of the above standards in these financial statements, as the Group was already following the recognition and measurement principles in these standards, except for the adoption of TAS 36 - Impairment of Assets as explained in Note 8. 2 Change in accounting policy In the third quarter ended 30 September 1999, in accordance with the recent developments in International Accounting Standards and Thai Generally Accepted Accounting Principles, the Company reviewed its accounting policy in respect of capitalisation of certain intangible assets including Deferred development rights and Pre-opening and start up expenses. As a result of this review, the Company changed its accounting policy to expense such costs as incurred. The Company therefore accounted for the change in accounting policy retrospectively by adjustments to the opening balance of retained earnings as at 1 January 1999 and 1998. The effect of the change reduced previously reported balances included in the consolidated balance sheets and company's balance sheets as at 1 January 1999 and 1998 as follows : 1 January 1999 Consolidated Company Baht Baht Deferred development rights 35,161,766 - Pre-opening and start-up expenses 154,590,905 139,969,477 Investment in subsidiaries - 49,783,194 Opening retained earnings 189,752,671 189,752,671 1 January 1998 Consolidated Company Baht Baht Deferred development rights 46,272,472 - Pre-opening and start-up expenses 189,729,267 174,650,292 Investment in subsidiaries - 61,351,447 Opening retained earnings 236,001,739 236,001,739 In addition, the effect of the change resulted in increase of net profit and earnings per share of 1999 and 1998 as follows : Consolidated and Company 1999 1998 Baht Baht Increase in net profit 46,423,745 46,249,068 Increase in earnings per share 0.19 0.19 3 Cash on hand and at banks Consolidated 1999 1998 Baht Baht Cash on hand 325,614,609 285,255,503 Deposits held at call with banks 2,776,790,000 3,158,770,796 3,102,404,609 3,444,026,299 Company 1999 1998 Baht Baht Cash on hand 315,459,921 276,924,346 Deposits held at call with banks 2,701,273,000 3,051,131,015 3,016,732,921 3,328,055,361 4 Short-term investments As at 31 December 1999 and 1998, short-term investments comprise fixed deposits and bills of exchange bearing interest at rates 1.00-3.00% per annum. (1998 : 6.00 - 8.00 % per annum) 5 Trade accounts receivable, net Consolidated 1999 1998 Baht Baht Trade accounts receivable 4,105,263 9,065,581 Less : Allowance for doubtful accounts (50,155) - Trade accounts receivable, net 4,055,108 9,065,581 Company 1999 1998 Baht Baht Trade accounts receivable 423,674 4,353,136 Less : Allowance for doubtful accounts - - Trade accounts receivable, net 423,674 4,353,136 As at 31 December 1999, the outstanding accounts receivable balance aged longer than 3 months are as follows : Consolidated Company Baht Baht Trade accounts receivable aged longer than 3 months 344,735 276,609 6 Inventories, net Inventories are made up as follows: Consolidated 1999 1998 Baht Baht Finished goods 2,940,782,069 2,421,718,953 Goods in transit 2,552,473 5,706,595 2,943,334,542 2,427,425,548 Less : Allowance for obsolete and shrinkage inventories (172,175,350) (155,255,839) Inventories, net 2,771,159,192 2,272,169,709 Company 1999 1998 Baht Baht Finished goods 2,705,234,975 2,214,989,624 Goods in transit 2,552,473 5,706,595 2,707,787,448 2,220,696,219 Less : Allowance for obsolete and shrinkage inventories (142,741,070) (126,065,341) Inventories, net 2,565,046,378 2,094,630,878 7 Investments in subsidiaries Investments in subsidiaries are accounted for under the equity method. Investments comprise: Consolidated 1999 1998 Baht Baht Makro Properties Limited - - Makro Auto Care Company Limited - - Makro Office Centre Company Limited - - - - Company 1999 1998 Baht Baht Makro Properties Limited 1,191,239,784 1,216,161,352 Makro Auto Care Company Limited 205,869,527 200,230,843 Makro Office Centre Company Limited 145,838,339 134,106,199 1,542,947,650 1,550,498,394 All subsidiary undertakings are incoporated in Thailand. Business activity % ownership interest 1999 1998 Makro Properties Limited - Land investment & 99.99 99.99 property leasing Makro Auto Care - Automotive service 99.99 99.99 Company Limited centers, automated car wash and gas stations Makro Office Centre - Retail business of office 99.99 99.99 Company Limited supplies, office equipment, office furniture and business service center The Company has an ultimate control over the financial and operating policies of such investments. Therefore, they are considered as subsidiaries and are consolidated in the consolidated financial statements. All holdings are in the ordinary share capital of the undertakings concerned and are unchanged from 1998. Issued and paid up share capital, and dividends for the years of subsidiaries are : Issued & paid up Share capital 1999 1998 Baht Baht Makro Properties Limited 700,000,000 700,000,000 Makro Auto Care Company Limited 300,000,000 300,000,000 Makro Office Centre Company Limited 200,000,000 200,000,000 Dividends 1999 1998 Baht Baht Makro Properties Limited - - Makro Auto Care Company Limited - - Makro Office Centre Company Limited - - 8 Property, plant and equipment, net Consolidated Land & Equipments & buildings vehicle Baht Baht At 31 December 1998 Cost or appriased value 7,513,411,574 3,258,298,261 Less : Accumulated depreciation (612,491,131) (1,769,345,918) Provision for the disposal of obsolete and lost equipments - (38,456,229) Provision for impairment relating to property - - Net book amount 6,900,920,443 1,450,496,114 Year ended 31 December 1999 Opening net book amount 6,900,920,443 1,450,496,114 Additions (transfer) 737,584,802 435,280,168 Disposal - (11,751,004) Provision for the disposal of obsolete and lost equipments - 4,609,174 Impairment charge (164,908,861) - Depreciation charge (202,001,079) (498,900,898) Closing net book amount 7,271,595,305 1,379,733,554 At 31 December 1999 Cost or appraised value 8,250,996,376 3,659,619,375 Less : Accumulated depreciation (814,492,210) (2,246,038,766) Provision for the disposal of obsolete and lost equipments - (33,847,055) Provision for impairment relating to property (164,908,861) - Net book amount 7,271,595,305 1,379,733,554 Consolidated struction in progress Total Baht Baht At 31 December 1998 Cost or appriased value 510,985,374 11,282,695,209 Less : Accumulated depreciation - (2,381,837,049) Provision for the disposal of obsolete and lost equipments - (38,456,229) Provision for impairment relating to property - - Net book amount 510,985,374 8,862,401,931 Year ended 31 December 1999 Opening net book amount 510,985,374 8,862,401,931 Additions (transfer) (183,255,932) 989,609,038 Disposal - (11,751,004) Provision for the disposal of obsolete and lost equipments - 4,609,174 Impairment charge - (164,908,861) Depreciation charge - (700,901,977) Closing net book amount 327,729,442 8,979,058,301 At 31 December 1999 Cost or appraised value 327,729,442 12,238,345,193 Less : Accumulated depreciation - (3,060,530,976) Provision for the disposal of obsolete and lost equipments - (33,847,055) Provision for impairment relating to property - (164,908,861) Net book amount 327,729,442 8,979,058,301 Property plant and equipment include property held for sale or future development amounting to Baht 143,663,688 net of the impairment provision. In the second quarter ended 30 June 1999, a subsidiary recognised a provision for impairment of a property of Baht 164.9 million. Subsequent to the original purchase of this site, the Group has now determined that the site will not be used for purpose for which it was originally acquired. It was therefore identified the asset as being an asset held for sale or future development and was provided for impairment to carry the site at appraised value assessed by an independent valuer on the basis of market prices for comparable sites in that location including other relevant factors. Company Land & Equipments & buildings vehicle Baht Baht At 31 December 1998 Cost or appraised value 4,506,442,874 2,882,791,798 Less : Accumulated depreciation (599,183,578) (1,675,010,034) Provision for the disposal of obsolete and lost equipments - (34,705,002) Provision for impairment relating to property - - Net book amount 3,907,259,296 1,173,076,762 Year ended 31 December 1999 Opening net book amount 3,907,259,296 1,173,076,762 Additions (Transfer) 703,922,134 338,661,588 Disposal - (11,751,004) Provision for the disposal of obsolete and lost equipments - 4,609,174 (more)