CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 1999

AUDITOR'S REPORT To the Shareholders of Siam Makro Public Company Limited I have audited the accompanying consolidated and company balance sheets of Siam Makro Public Company Limited as at 31 December 1999 and 1998, and the related consolidated and company statements of income, of retained earnings, of changes in shareholders' equity, and of cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the company as at 31 December 1999 and 1998, and the results of its operations, changes in shareholders' equity and its cash flows for the years then ended in accordance with generally accepted accounting principles. As explained in note 2, 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 has changed its accounting policy to expense such costs as incurred. The Company therefore has accounted for the change in accounting policy retrospectively by adjustments to the opening balance of retained earnings as at 1 January 1999 and 1998. I draw attention to Note 18 which is marked "Unaudited". Information regarding the Year 2000 issue as presented in this note has not been subjected to auditing procedures, and accordingly, I express no opinion on it. PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 28 January 2000 The accompanying financial statements are not intended to present the financial position, results of operations, changes in shareholders' equity and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices utilised in Thailand to audit such financial statements may differ from those generally accepted in countries and jurisdictions other than Thailand. Siam Makro Public Company Limited Consolidated and Company Balance Sheets As at 31 December 1999 and 1998 Consolidated Notes 1999 1998 Baht Baht (Restated) ASSETS Current Assets Cash on hand and at banks 3 3,102,404,609 3,444,026,299 Short-term investments 4 892,000,000 180,000,000 Trade accounts receivable, net 5 4,055,108 9,065,581 Amounts due from subsidiaries and affiliated companies 14 121,490 817,269 Short-term loans to subsidiaries 14 - - Inventories, net 6 2,771,159,192 2,272,169,709 Other current assets VAT receivable 22,451,507 32,046,520 Purchase discount receivable 159,548,871 104,166,964 Prepayment 4,990,222 7,275,199 Other 26,255,071 31,213,662 Total Current Assets 6,982,986,070 6,080,781,203 Non-Current Assets Investments in subsidiaries 7 - - Loans to a subsidiary 14 - - Property, plant and equipment, net 8 8,979,058,301 8,862,401,931 Deposits 14 39,094,446 32,339,916 Total Non-Current Assets 9,018,152,747 8,894,741,847 Total Assets 16,001,138,817 14,975,523,050 Company Notes 1999 1998 Baht Baht (Restated) ASSETS Current Assets Cash on hand and at banks 3 3,016,732,921 3,328,055,361 Short-term investments 4 870,000,000 180,000,000 Trade accounts receivable, net 5 423,674 4,353,136 Amounts due from subsidiaries and affiliated companies 14 161,239,232 167,113,138 Short-term loans to subsidiaries 14 86,200,000 163,100,000 Inventories, net 6 2,565,046,378 2,094,630,878 Other current assets VAT receivable - - Purchase discount receivable 138,000,000 90,126,433 Prepayment 2,228,777 5,052,985 Other 23,429,827 28,731,232 Total Current Assets 6,863,300,809 6,061,163,163 Non-Current Assets Investments in subsidiaries 7 1,542,947,650 1,550,498,394 Loans to a subsidiary 14 1,126,400,000 1,178,400,000 Property, plant and equipment, net 8 5,782,222,487 5,569,727,898 Deposits 14 291,290,911 288,235,271 Total Non-Current Assets 8,742,861,048 8,586,861,563 Total Assets 15,606,161,857 14,648,024,726 Director Director The notes to the consolidated and company financial statements on pages 9 to 20 form an integral part of these financial statements. Consolidated Notes 1999 1998 Baht Baht (Restated) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Trade accounts payable 6,940,168,732 5,749,637,963 Amounts due to subsidiaries and affiliated companies 14 77,896,853 59,804,661 Non-trade accounts payable 328,336,744 361,284,120 Current tax liabilities 295,017,130 235,368,471 Accrued expenses 205,882,303 178,421,842 VAT payable 36,998,404 78,633,397 Forward exchange contract payable - 72,978,000 Other current liabilities 81,844,493 44,735,619 Total current liabilities 7,966,144,659 6,780,864,073 Non-Current Liabilities Long term loan from bank - 553,350,000 Other liabilities Provision for retirement indemnity 177,657,555 151,046,926 Other liabilities 350,759 339,093 Total Non-Current liabilities 178,008,314 704,736,019 Total Liabilities 8,144,152,973 7,485,600,092 Shareholders' Equity Share capital 9 Authorised share capital 2,400,000,000 2,400,000,000 Issued and paid-up share capital 2,400,000,000 2,400,000,000 Premium on share capital 3,290,152,068 3,290,152,068 Retained earnings Appropriated Legal reserve 10 192,500,365 163,947,221 Unappropriated 1,974,333,411 1,635,823,669 Total Shareholders' Equity 7,856,985,844 7,489,922,958 Total Liabilities and Shareholders' Equity 16,001,138,817 14,975,523,050 Company Notes 1999 1998 Baht Baht (Restated) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Trade accounts payable 6,677,559,168 5,516,654,550 Amounts due to subsidiaries and affiliated companies 14 72,936,966 55,897,152 Non-trade accounts payable 291,927,242 343,026,063 Current tax liabilities 248,103,035 194,127,139 Accrued expenses 182,015,902 160,376,501 VAT payable 36,998,404 78,633,397 Forward exchange contract payable - 72,978,000 Other current liabilities 75,376,485 41,656,533 Total current liabilities 7,584,917,202 6,463,349,335 Non-Current Liabilities Long term loan from bank - 553,350,000 Other liabilities Provision for retirement indemnity 164,258,811 141,402,433 Other liabilities - - Total Non-Current liabilities 164,258,811 694,752,433 Total Liabilities 7,749,176,013 7,158,101,768 Shareholders' Equity Share capital 9 Authorised share capital 2,400,000,000 2,400,000,000 Issued and paid-up share capital 2,400,000,000 2,400,000,000 Premium on share capital 3,290,152,068 3,290,152,068 Retained earnings Appropriated Legal reserve 10 192,500,365 163,947,221 Unappropriated 1,974,333,411 1,635,823,669 Total Shareholders' Equity 7,856,985,844 7,489,922,958 Total Liabilities and Shareholders' Equity 15,606,161,857 14,648,024,726 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 Income For the years ended 31 December 1999 and 1998 Consolidated Notes 1999 1998 Baht Baht (Restated) Revenues Sales 34,493,283,746 30,775,732,363 Other operating income Interest Income 86,711,785 210,150,701 Services Income 564,936,763 456,167,676 Other 222,742,882 130,286,264 Total revenues 35,367,675,176 31,572,337,004 Expenses Cost of sales 31,578,741,765 28,162,889,448 Selling and administrative expenses 2,720,386,726 2,562,375,354 Impairment charge relating to property 8 164,908,861 - Interest expenses 5,311,193 38,136,240 Directors' remuneration 1,440,000 1,440,000 Total expenses 34,470,788,545 30,764,841,042 Profit before tax 896,886,631 807,495,962 Income tax (325,823,745) (260,500,829) Profit from ordinary activities 571,062,886 546,995,133 Group profit - - Net profit for the year 571,062,886 546,995,133 Basic earnings per share 11 Net profit before impairment charge relating to property 3.07 2.28 Net profit for the year 2.38 2.28 Company Notes 1999 1998 Baht Baht (Restated) Revenues Sales 32,706,598,888 29,223,955,761 Other operating income Interest Income 158,322,684 302,127,093 Services Income 550,516,837 444,015,163 Other 251,018,507 174,476,519 Total revenues 33,666,456,916 30,144,574,536 Expenses Cost of sales 30,175,604,286 26,898,183,340 Selling and administrative expenses 2,639,662,627 2,524,876,060 Impairment charge relating to property 8 - - Interest expenses 5,307,181 38,135,905 Directors' remuneration 1,440,000 1,440,000 Total expenses 32,822,014,094 29,462,635,305 Profit before tax 844,442,822 681,939,231 Income tax (265,829,190) (205,089,000) Profit from ordinary activities 578,613,632 476,850,231 Group profit (7,550,746) 70,144,902 Net profit for the year 571,062,886 546,995,133 Basic earnings per share 11 Net profit before impairment charge relating to property 3.07 2.28 Net profit for the year 2.38 2.28 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 Retained Earnings For the years ended 31 December 1999 and 1998 Consolidated Notes 1999 1998 Baht Baht (Restated) Unappropriated retained earnings Beginning balance - as previously reported 1,825,576,340 1,553,867,578 - adjustment resulting from change in accounting policy with respect to the capitalization of deferred development right and pre-opening and start-up expenses 2 (189,752,671) (236,001,739) - as restated 1,635,823,669 1,317,865,839 Less : Appropriation Legal reserve 10 (28,553,144) (25,037,303) Dividends 12 (204,000,000) (204,000,000) Net profit for the year 571,062,886 546,995,133 Unappropriated retained earnings at the end of the year 1,974,333,411 1,635,823,669 Appropriated retained earnings: Legal reserve 192,500,365 163,947,221 Appropriated retained earnings: at the end of the year 192,500,365 163,947,221 Retained earnings at the end of the year 2,166,833,776 1,799,770,890 Company Notes 1999 1998 Baht Baht (Restated) Unappropriated retained earnings Beginning balance - as previously reported 1,825,576,340 1,553,867,578 - adjustment resulting from change in accounting policy with respect to the capitalization of deferred development right and pre-opening and start-up expenses 2 (189,752,671) (236,001,739) - as restated 1,635,823,669 1,317,865,839 Less : Appropriation Legal reserve 10 (28,553,144) (25,037,303) Dividends 12 (204,000,000) (204,000,000) Net profit for the year 571,062,886 546,995,133 Unappropriated retained earnings at the end of the year 1,974,333,411 1,635,823,669 Appropriated retained earnings: Legal reserve 192,500,365 163,947,221 Appropriated retained earnings: at the end of the year 192,500,365 163,947,221 Retained earnings at the end of the year 2,166,833,776 1,799,770,890 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 Changes in Shareholders' Equity For the years ended 31 December 1999 and 1998 Consolidated Notes 1999 1998 Baht Baht (Restated) Share Captial Common share Beginning balance 2,400,000,000 2,400,000,000 Increase during the year - - Ending balance 2,400,000,000 2,400,000,000 Premium on Share Capital Beginning balance 3,290,152,068 3,290,152,068 Increase during the year - - Ending balance 3,290,152,068 3,290,152,068 Unappropriated retained earnings: Beginning balance - as previously reported 1,825,576,340 1,553,867,578 - adjustment resulting from change in accounting policy with respect to the capitalization of deferred development right and pre-opening and start-up expenses 2 (189,752,671) (236,001,739) - as restated 1,635,823,669 1,317,865,839 Less: Appropriation - Legal reserve 10 (28,553,144) (25,037,303) - Dividends 12 (204,000,000) (204,000,000) Net profit for the year 571,062,886 546,995,133 Unappropriated retained earnings at end of the year 1,974,333,411 1,635,823,669 Appropriated retained earnings: Legal reserve 10 Beginning balance 163,947,221 138,909,918 Increase during the year 28,553,144 25,037,303 Appropriated retained earnings at end of the year 192,500,365 163,947,221 Total shareholders' equity 7,856,985,844 7,489,922,958 Company Notes 1999 1998 Baht Baht (Restated) Share Captial Common share Beginning balance 2,400,000,000 2,400,000,000 Increase during the year - - Ending balance 2,400,000,000 2,400,000,000 Premium on Share Capital Beginning balance 3,290,152,068 3,290,152,068 Increase during the year - - Ending balance 3,290,152,068 3,290,152,068 Unappropriated retained earnings: Beginning balance - as previously reported 1,825,576,340 1,553,867,578 - adjustment resulting from change in accounting policy with respect to the capitalization of deferred development right and pre-opening and start-up expenses 2 (189,752,671) (236,001,739) - as restated 1,635,823,669 1,317,865,839 Less: Appropriation - Legal reserve 10 (28,553,144) (25,037,303) - Dividends 12 (204,000,000) (204,000,000) Net profit for the year 571,062,886 546,995,133 Unappropriated retained earnings at end of the year 1,974,333,411 1,635,823,669 Appropriated retained earnings: Legal reserve 10 Beginning balance 163,947,221 138,909,918 Increase during the year 28,553,144 25,037,303 Appropriated retained earnings at end of the year 192,500,365 163,947,221 Total shareholders' equity 7,856,985,844 7,489,922,958 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 operating activities : Net profit 571,062,886 546,995,133 Adjustments for : Depreciation 700,901,977 668,094,869 Provision for loss on disposal of equipment (4,609,174) 7,454,739 Impairment charge relating to property 164,908,861 - Gain on disposal of equipment (6,640,534) (20,080,243) Share of loss (profit) from subsidiaries - - Allowance for doubtful - accounts receivable other (3,044,109) 11,628,966 Provision for obsolete and shrinkage inventories 16,919,511 37,015,629 Provision for warranty claim 11,666 (173,689) Provision for retirement indemnity 26,610,629 32,406,701 Amortisation of deferred hedging cost 2,939,000 17,680,863 Changes in operating assets and liabilities : Trade accounts receivable 5,010,473 2,563,385 Amounts due from subsidiaries and affiliated companies 695,779 4,715,808 Inventories (515,908,994) 323,562,330 VAT receivable 9,595,013 (8,453,464) Purchase discount receivable (55,381,907) (55,027,114) Prepayment 2,284,977 2,680,164 Other current assets 8,002,700 29,372,001 Trade accounts payable 1,190,530,769 332,270,325 Amounts due to subsidiaries and affiliated companies 18,092,192 (7,332,984) Non-trade accounts payable (32,947,376) 34,373,921 Current tax liabilities 59,648,659 134,891,060 Accrued expenses 27,460,461 7,067,576 VAT payable (41,634,993) 78,633,397 Other current liabilities 37,108,874 (10,140,309) Net cash generated from operations 2,181,617,340 2,170,199,064 Company 1999 1998 Baht Baht (Restated) Cash flows from operating activities : Net profit 571,062,886 546,995,133 Adjustments for : Depreciation 619,341,775 595,476,052 Provision for loss on disposal of equipment (4,609,174) 3,703,512 Impairment charge relating to property - - Gain on disposal of equipment (6,640,534) (13,484,523) Share of loss (profit) from subsidiaries 7,550,744 (70,144,902) Allowance for doubtful - accounts receivable other (3,394,264) 8,128,965 Provision for obsolete and shrinkage Inventories 16,675,729 22,808,197 Provision for warranty claim - - Provision for retirement indemnity 22,856,378 26,960,145 Amortisation of deferred hedging cost 2,939,000 17,680,863 Changes in operating assets and liabilities : Trade accounts receivable 3,929,462 3,775,829 Amounts due from subsidiaries and affiliated companies 5,873,906 354,245,678 (more)