CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS Q2/2000

AUDITOR'S REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS To the Shareholders and the Board of Directors of Siam Makro Public Company Limited I have reviewed the accompanying consolidated and company balance sheets of Siam Makro Public Company Limited as at 30 June 2000, and the related consolidated and company statements of income for the three-month and six-month periods ended 30 June 2000 and 1999, the related consolidated and company statements of changes in shareholders' equity, retained earnings and cash flows for the six-month period ended 30 June 2000 and 1999. These financial statements are the responsibility of the Company's management. My responsibility is to issue a report on these financial statements based on my review. I conducted my review in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit, and, accordingly, I do not express an audit opinion. Based on my review, nothing has come to my attention that causes me to believe that the consolidated and company financial statements referred to above are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. As explained in Note 1 to the interim consolidated and company financial statements, in the third quarter ended 30 September 1999, the Group has changed its accounting policy in respect of capitalisation of certain intangible assets including Deferred development rights and Pre-operating and start-up expenses. The Group has accounted for this change retrospectively. Accordingly, the interim consolidated and company financial statements for the three-month and six-month periods ended 30 June 1999 have been restated. I have audited the consolidated and company financial statements for the year ended 31 December 1999 of Siam Makro Public Company Limited in accordance with generally accepted auditing standards and expressed an unqualified opinion on those statements in my report dated 28 January 2000. The consolidated and company balance sheets as at 31 December 1999, presented for comparative purpose, are components of the audited financial statements which I have audited and issued a report thereon as stated above, and I have not performed any other auditing procedures subsequent to the date of that report. PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 26 July 2000 Siam Makro Public Company Limited Balance Sheets As at 30 June 2000 and 31 December 1999 Consolidated Company Notes Unaudited Audited Unaudited Audited 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 ASSETS Current Assets Cash on hand and at banks 2,167,652 3,102,405 2,079,503 3,016,733 Short-term investments 1,134,153 892,000 1,101,390 870,000 Trade accounts receivable, net 4,811 4,055 109 424 Amounts due from subsidiaries and affiliated companies 7 682 121 9,959 161,239 Short-term loans to subsidiaries 7 - - 163,000 86,200 Inventories, net 2,337,741 2,771,159 2,131,848 2,565,046 Other current assets VAT receivable 16,585 22,452 - - Purchase discount receivable 128,408 159,549 107,000 138,000 Prepayment 26,173 4,990 21,274 2,229 Other 37,857 26,255 35,356 23,430 Total Current Assets 5,854,062 6,982,986 5,649,439 6,863,301 Non-Current Assets Investments in subsidiaries 7 - - 1,825,790 1,542,948 Loan to a subsidiary 7 - - 1,111,400 1,126,400 Property, plant and equipment, net 5 9,154,150 8,979,058 5,850,093 5,782,222 Deposits 7 40,056 39,095 291,608 291,291 Total Non-Current Assets 9,194,206 9,018,153 9,078,891 8,742,861 Total Assets 15,048,268 16,001,139 14,728,330 15,606,162 Director Director The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Balance Sheets As at 30 June 2000 and 31 December 1999 Consolidated Company Notes Unaudited Audited Unaudited Audited 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Trade accounts payable 5,948,261 6,940,169 5,696,847 6,677,559 Amounts due to subsidiaries and affiliated companies 7 61,636 77,897 90,925 72,937 Other current liabilities Non-trade accounts payable 189,658 328,337 170,330 291,927 Current tax liabilities 195,597 295,017 166,429 248,103 Accrued expenses 250,345 205,882 222,814 182,016 VAT payable 91,004 36,998 90,095 36,998 Other current liabilities 78,100 81,845 72,566 75,377 Total Current Liabilities 6,814,601 7,966,145 6,510,006 7,584,917 Non-Current Liabilities Provision for retirement indemnity 198,771 177,657 183,801 164,259 Other liabilities 373 351 - - Total Non-Current Liabilities 199,144 178,008 183,801 164,259 Total Liabilities 7,013,745 8,144,153 6,693,807 7,749,176 Shareholders' Equity Share capital 6 Authorised share capital 2,400,000 2,400,000 2,400,000 2,400,000 Issued and paid-up share capital 2,400,000 2,400,000 2,400,000 2,400,000 Premium on share capital 3,290,152 3,290,152 3,290,152 3,290,152 Retained earnings Appropriated Legal reserve 192,500 192,500 192,500 192,500 Unappropriated 2,151,871 1,974,334 2,151,871 1,974,334 Total Shareholders' Equity 8,034,523 7,856,986 8,034,523 7,856,986 Total Liabilities and Shareholders' Equity 15,048,268 16,001,139 14,728,330 15,606,162 The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Income For the three-month period ended 30 June 2000 and 1999 Consolidated Company Notes Unaudited Unaudited 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Revenues Sales 9,222,369 8,348,796 8,728,656 7,901,891 Other operating income Interest income 15,198 25,451 31,671 43,299 Services income 154,552 133,104 155,914 130,580 Other 69,968 48,193 70,684 53,286 Total Revenues 9,462,087 8,555,544 8,986,925 8,129,056 Expenses Cost of sales 8,388,977 7,611,770 8,007,075 7,257,028 Selling and administrative expenses 733,533 658,981 697,110 641,837 Impairment charge relating to property 3 - 164,909 - - Directors' remuneration 1,020 360 1,020 360 Total Expenses 9,123,530 8,436,020 8,705,205 7,899,225 Operating profit 338,557 119,524 281,720 229,831 Income tax (87,066) (85,722) (70,880) (70,569) Profit from ordinary activities 251,491 33,802 210,840 159,262 Share of profit (loss) from subsidiaries, net of income tax - - 40,651 (125,460) Net profit for the period 251,491 33,802 251,491 33,802 Basic earnings per share (Baht) 4 Net profit before impairment charge relating to property 1.05 0.83 1.05 0.83 Net profit for the period 1.05 0.14 1.05 0.14 The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Income For the six-month period ended 30 June 2000 and 1999 Consolidated Company Notes Unaudited Unaudited 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Revenues Sales 17,989,793 15,950,209 17,002,287 15,104,313 Other operating income Interest income 28,979 57,137 62,473 93,300 Services income 325,768 241,941 321,665 234,299 Other 132,444 95,448 141,674 111,954 Total Revenues 18,476,984 16,344,735 17,528,099 15,543,866 Expenses Cost of sales 16,344,853 14,568,729 15,579,870 13,892,208 Selling and administrative expenses 1,448,522 1,282,794 1,380,990 1,257,207 Impairment charge relating to property 3 - 164,909 - - Interest expenses - 5,306 - 5,306 Directors' remuneration 1,664 720 1,664 720 Total Expenses 17,795,039 16,022,458 16,962,524 15,155,441 Operating profit 681,945 322,277 565,575 388,425 Income tax (204,408) (148,780) (170,880) (118,569) Profit from ordinary activities 477,537 173,497 394,695 269,856 Share of profit (loss) from subsidiaries, net of income tax - - 82,842 (96,359) Net profit for the period 477,537 173,497 477,537 173,497 Basic earnings per share (Baht) 4 Net profit before impairment charge relating to property 1.99 1.41 1.99 1.41 Net profit for the period 1.99 0.72 1.99 0.72 The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Changes in Shareholders' Equity For the six-month period ended 30 June 2000 and 1999 Consolidated Company Notes Unaudited Unaudited 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Share Capital Common share Beginning balance 2,400,000 2,400,000 2,400,000 2,400,000 Increase during the period - - - - Decrease during the period - - - - Ending balance 2,400,000 2,400,000 2,400,000 2,400,000 Premium on Share Capital Beginning balance 3,290,152 3,290,152 3,290,152 3,290,152 Increase during the period - - - - Decrease during the period - - - - Ending balance 3,290,152 3,290,152 3,290,152 3,290,152 Unappropriated retained earnings: Beginning balance - as previously reported 1,974,334 1,825,576 1,974,334 1,825,576 - adjustment resulting from change in accounting policy with respect to the capitalisation of deferred development right and pre-opening and start-up expenses 10 - (189,752) - (189,752) - as restated 1,974,334 1,635,824 1,974,334 1,635,824 Dividend paid 9 (300,000) (204,000) (300,000) (204,000) Net profit for the period 477,537 173,497 477,537 173,497 Unappropriated retained earnings at end of the period 2,151,871 1,605,321 2,151,871 1,605,321 Appropriated retained earnings: Legal reserve Beginning balance 192,500 163,947 192,500 163,947 Increase during the period - - - - Decrease during the period - - - - Appropriated retained earnings at end of the period 192,500 163,947 192,500 163,947 Total shareholders' equity 8,034,523 7,459,420 8,034,523 7,459,420 The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Retained Earnings For the six-month period ended 30 June 2000 and 1999 Consolidated Company Notes Unaudited Unaudited 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Unappropriated retained earnings: Beginning balance - as previously reported 1,974,334 1,825,576 1,974,334 1,825,576 - adjustment resulting from change in accounting policy with respect to the capitalisation of deferred development right and pre-opening and start-up expenses 10 - (189,752) - (189,752) - as restated 1,974,334 1,635,824 1,974,334 1,635,824 Dividend paid 9 (300,000) (204,000) (300,000) (204,000) Net profit for the period 477,537 173,497 477,537 173,497 Unappropriated retained earnings at end of the period 2,151,871 1,605,321 2,151,871 1,605,321 Appropriated retained earnings: Legal reserve 192,500 163,947 192,500 163,947 Retained earnings at the end of the period 2,344,371 1,769,268 2,344,371 1,769,268 The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Cash Flows For the six-month period ended 30 June 2000 and 1999 Consolidated Company Unaudited Unaudited Notes 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Cash flows from operating activities: Net profit 477,537 173,497 477,537 173,497 Adjustments for: Depreciation 362,698 353,074 311,979 309,714 Impairment charge relating to property - 164,909 - - Gain on disposal of equipment (1,020) (1,727) (1,022) (1,727) Share of profit(loss) from subsidiaries, net of income tax - - (82,842) 96,359 Allowance for doubtful accounts- accounts receivable, other (4,735) 50 (4,735) - Provision for obsolete and shrinkage inventories 25,299 (2,831) 20,523 (1,476) Provision for warranty claim 22 6 - - Provision for retirement indemnity 21,113 15,041 19,542 12,529 Amortization of deferred hedging cost - 2,939 - 2,939 Provision for fixed assets written off (9,802) 300 (9,802) - Changes in operating assets and liabilities: Trade accounts receivable (756) 5,200 314 3,405 Amounts due from subsidiaries and affiliated companies (561) 185 151,280 7,552 Inventories 408,119 203,833 412,676 168,728 VAT receivable 5,867 10,519 - - Purchase discount receivable 31,141 (978) 31,000 (2,873) Prepayment (21,182) (18,380) (19,045) (15,948) Other current assets (6,867) (4,219) (7,191) (1,400) Trade accounts payable (991,908) (502,613) (980,712) (483,052) Amounts due to subsidiaries and affiliated companies (16,261) (50,302) 17,988 (28,469) Non-trade accounts payable (138,679) (172,381) (121,597) (170,241) Current tax liabilities (99,420) (102,113) (81,674) (85,633) Accrued expenses 44,462 (15,081) 40,798 (20,053) VAT payable 54,006 12,988 53,097 12,988 Other current liabilities (3,744) 23,215 (2,811) 22,218 Cash flows (used in) from operating activities 135,329 95,131 225,303 (943) The notes to the interim consolidated and company financial statements on pages 10 to 19 are an integral part of these interim financial statements. Siam Makro Public Company Limited Statements of Cash Flows (Continued) For the six-month period ended 30 June 2000 and 1999 Consolidated Company Unaudited Unaudited Notes 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Baht'000 Baht'000 Baht'000 Baht'000 (Restated) (Restated) Cash flows from investing activities: Acquisition of property, plant and equipment (528,439) (269,851) (370,499) (240,252) Proceeds from disposals of equipment 1,471 8,768 1,473 8,768 Investment in subsidiaries - - (200,000) - Net repayments from (loans made to) subsidiaries - - (61,800) 65,800 Deposits paid (961) (27,663) (317) (26,881) Net cash used in investing activities (527,929) (288,746) (631,143) (192,565) Cash flows from financing activities: Payment on forward exchange contract payable - (72,886) - (72,886) Dividend paid 9 (300,000) (204,000) (300,000) (204,000) Payment on long-term loan from bank - (553,350) - (553,350) Deferred hedging cost - (2,939) - (2,939) (more)