INTERIM F/S AND CONSOLIDATED F/S OF Q2/1998

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 June 30, 1998 and 1997, and the related statements of income, retained earnings and statements of change in shareholders' equity for the second quarter and the period of six months then ended, and the consolidated balance sheets of Siam Makro Public Company Limited and its subsidiaries as at June 30, 1998 and 1997, and the related consolidated statements of income, retained earnings and consolidated statements of change in shareholders' equity for the second quarter and the period of six 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 (THAILAND) CO., LTD. July 24, 1998 Siam Makro Public Company Limited Balance sheets and consolidated balance sheets as at June 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 3 1,377,911 1,037,507 1,463,859 1,329,445 Short-term investments 4 Bill of exchange 340,000 - 340,000 - Other 160,000 230,000 160,000 241,000 Accounts receivable-trade 5 3,817 1,524 5,639 1,862 Amounts due from and loans to related parties 6 474,613 978,185 6,791 27,571 Inventories, net 7 2,166,676 2,092,912 2,365,132 2,321,950 Other current assets VAT receivable - 24,863 41,705 59,855 Purchase discount receivable 52,500 57,590 59,531 61,429 Advance payment on land - - - 90,000 Other 43,486 57,177 64,161 75,632 Total current assets 4,619,003 4,479,758 4,506,818 4,208,744 Loans to a subsidiary company 6 1,178,400 1,178,400 - - Investments in subsidiary and associated companies 8 1,561,778 1,061,839 - 9,402 Property, plant and equipment, net 9 5,396,609 4,937,795 8,712,408 7,828,733 Other assets Deferred development rights, net 10 - - 40,797 51,722 Pre-opening and start-up expenses, net 11 158,140 167,493 174,629 171,781 Deposits 6 291,806 270,214 35,530 30,112 TOTAL ASSETS 13,205,736 12,095,499 13,470,182 12,300,494 The notes on pages 7 to 25 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 12 506,700 396,900 506,700 396,900 Accounts payable-trade 4,598,979 3,789,407 4,789,123 3,954,995 Current portion of long-term loans - 16,663 - 16,663 Amounts due to related parties 6 59,368 77,217 59,926 64,781 Other current liabilities VAT payable 58,776 - 58,776 - Accounts payable - other 81,713 132,514 95,058 143,465 Accrued income tax 111,451 167,757 138,623 191,126 Accrued expenses 161,082 125,230 184,465 132,840 Other 40,300 39,646 42,326 42,482 Total current liabilities 5,618,369 4,745,334 5,874,997 4,943,252 Other liabilities Provision for retirement benefits 130,829 99,920 137,541 106,997 Other - - 1,106 - TOTAL LIABILITIES 5,749,198 4,845,254 6,013,644 5,050,249 Shareholders' equity Share capital 13 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 1,627,476 1,446,466 1,627,476 1,446,466 TOTAL SHAREHOLDERS' EQUITY 7,456,538 7,250,245 7,456,538 7,250,245 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 13,205,736 12,095,499 13,470,182 12,300,494 Director . Director . Date July 24, 1998 Unaudited Reviewed Siam Makro Public Company Limited Page 3 Statements of income for the second quarter and the period of six months ended June 30, 1998 and 1997 The company only Notes 1998 1997 Second Period of Second Period of quarter six months quarter six months (Baht'000) (Baht'000) (Baht'000) (Baht'000) REVENUES Sales 7,343,010 14,845,577 7,489,686 15,135,748 Other income Interest income 88,407 172,521 53,367 123,762 Service income 116,695 209,616 102,896 181,722 Other 33,282 75,971 26,875 52,445 TOTAL REVENUES 7,581,394 15,303,685 7,672,824 15,493,677 EXPENSES Cost of sales 6,775,952 13,664,608 6,868,727 13,767,570 Selling and administrative expenses 617,893 1,248,704 574,726 1,220,146 Interest expenses 8,539 17,618 6,941 14,101 Directors' remuneration 360 720 360 720 TOTAL EXPENSES 7,402,744 14,931,650 7,450,754 15,002,537 Net income before tax 178,650 372,035 222,070 491,140 Income tax (57,000) (114,500) (69,508) (167,361) Net income before share of profit from subsidiary and associated companies 121,650 257,535 152,562 323,779 Share of profit from subsidiary and associated companies 17,975 20,073 31,905 49,198 NET INCOME FOR THE PERIOD 139,625 277,608 184,467 372,977 STATEMENTS OF RETAINED EARNINGS Retained earnings brought forward 1,691,851 1,553,868 1,573,999 1,385,489 Net income for the period 139,625 277,608 184,467 372,977 Dividends 14 (204,000) (204,000) (312,000) (312,000) Retained earnings carried forward 1,627,476 1,627,476 1,446,466 1,446,466 EARNINGS PER SHARE (BAHT) 15 Net income 0.58 1.16 0.77 1.55 The notes on pages 7 to 25 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 second quarter and the period of six months ended June 30, 1998 and 1997 The consolidation Notes 1998 1997 Second Period of Second Period of quarter six months quarter six months (Baht'000) (Baht'000) (Baht'000) (Baht'000) REVENUES Sales 7,725,519 15,619,389 7,808,972 15,365,494 Other income Interest income 63,046 121,779 38,178 88,950 Service income 120,339 215,972 105,304 184,814 Other 20,083 50,115 12,057 29,466 TOTAL REVENUES 7,928,987 16,007,255 7,964,511 15,668,724 EXPENSES Cost of sales 7,085,012 14,296,041 7,123,951 13,907,266 Selling and administrative expenses 624,860 1,273,596 565,092 1,174,298 Interest expenses 8,384 17,618 6,941 14,268 Directors' remuneration 360 720 360 720 TOTAL EXPENSES 7,718,616 15,587,975 7,696,344 15,096,552 Net income before tax 210,371 419,280 268,167 572,172 Income tax (70,746) (141,672) (82,000) (190,730) Net income before share of loss from an associated company 139,625 277,608 186,167 381,442 Share of loss from an associated company - - (1,700) (8,465) NET INCOME FOR THE PERIOD 139,625 277,608 184,467 372,977 STATEMENTS OF RETAINED EARNINGS Retained earnings brought forward 1,691,851 1,553,868 1,573,999 1,385,489 Net income for the period 139,625 277,608 184,467 372,977 Dividends 14 (204,000) (204,000) (312,000) (312,000) Retained earnings carried forward 1,627,476 1,627,476 1,446,466 1,446,466 EARNINGS PER SHARE (BAHT) 15 Net income 0.58 1.16 0.77 1.55 The notes on pages 7 to 25 form an integral part of the financial statements and consolidated financial statements. 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Unaudited Unaudited Reviewed Reviewed Siam Makro Public Company Limited Page 5 Statements of change in shareholders' equity for the second quarter and the period of six months ended June 30, 1998 and 1997 The company only 1998 1997 Second Period of Second Period of quarter six months quarter six 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 1,691,851 1,553,868 1,573,999 1,385,489 Increase during the period 139,625 277,608 184,467 372,977 Decrease during the period (204,000) (204,000) (312,000) (312,000) Carried forward 1,627,476 1,627,476 1,446,466 1,446,466 Shareholders' equity 7,456,538 7,456,538 7,250,245 7,250,245 The notes on pages 7 to 25 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 second quarter and the period of six months ended June 30, 1998 and 1997 The consolidation 1998 1997 Second Period of Second Period of quarter six months quarter six 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 1,691,851 1,553,868 1,573,999 1,385,489 Increase during the period 139,625 277,608 184,467 372,977 Decrease during the period (204,000) (204,000) (312,000) (312,000) Carried forward 1,627,476 1,627,476 1,446,466 1,446,466 Shareholders' equity 7,456,538 7,456,538 7,250,245 7,250,245 The notes on pages 7 to 25 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 - June 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. (More)