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CLOSE TEAMWORK LEADS� TO EVER GREATER SUCCESS


Message

from the Chairman>> The year 2005 was an eventful one for the Thai economy that was unfavorably affected by several factors. Particularly, during the first half of the year, the Thai economy grew at a slower pace due to soaring oil prices, drought, tsunami after effects, avian flu and political instability in the three southern provinces. These negative factors combined led to a higher cost of living and inflation, which eventually triggered a pause in overall consumption and investment in various sectors. However, the Thai economy picked up during the second half of the year thanks to an increase in exports and the alleviation of most of the aforementioned problems. Consequently, the economy was able to recuperate and the country enjoyed reasonable growth at around 4.5%. Despite all this, the retail sector overall performed relatively well in 2005, growing by about 7%. The growth was largely accounted for by the expansion of retail outlets, coupled with effective selling strategies and services in keeping with the trend towards lower consumer purchasing power. As such, the retail sector enjoyed steady growth and encountered relatively minimal economic impact compared to other business sectors. Amidst all this, it was the Company’s pleasure to see the launch of its first new branch in seven years, located at Central Town Center, Rattanathibet Road. This, coupled with the consequences of the initiative taken in 2003 to re-launch Robinson with a new image and the adoption of a new merchandising strategy, enabled the Company to achieve sales growth of over 11% year-on-year in 2005. Meanwhile, the Company continued to focus on renovations and modernization of existing stores across the country to create a more colorful and lively shopping ambiance. This was further complemented by a drive to build unique lifestyle stores in keeping with the evolving demands of the new generation. In terms of marketing strategies, the Company implemented promotional campaigns designed to accentuate relations with niche target customers. This involved enhancing value added services to customers, rather than simply discounting. Those strategies could help the Company to employ its budget efficiently. In addition, the Company launched a new Robinson Visa credit card in January 2006 to provide both convenience and purchasing power to customers. Since the Company holds that manpower is the key to its success, personnel development has also been ongoing. Particular emphasis is placed on product knowledge and selling techniques in order to ensure service excellence is delivered to all customers and that our slogan “Robinson...Your Life Vitalizer” is consistently embraced. All the above efforts enabled the Company to prevail amidst considerable economic uncertainty and to yield a satisfactory result in 2005. This resulted in financial strength, placing the Company in a strong position to further expand and develop more new branches in the coming years. Also importantly, the Company was able to repay the full debt under its rehabilitation earlier than prescribed. This led to the Central Bankruptcy Court’s order to cancel the Company’s rehabilitation on 6 February 2006. The Company firmly believes that its success stems from the wholehearted cooperation of its staff and their uncompromising dedication to every task. On behalf of the Board of Directors, I would like to express my warm thanks to shareholders, customers, staff, business partners, creditors, other involved parties, and the general public for all of your continuous kind support.

Mr. Sudhitham Chirathivat Chairman


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General Information>> Robinson Department Store Public Company Limited, registration number 010753600412 (previous number Bor Mor Jor 115) operates department stores under the name “Robinson�. The company currently has 19 branches around the country, comprising 10 branches in Bangkok and 9 provincial branches. The Company has a registered capital of Baht 11,106,661,330 (1,110,661,133 common shares) with fully paid-up shares worth Baht 11,106,611,330 (1,110,661,133 common shares) at Baht 10 par value. Head Office Address Central Administration Office Share Registrar Klongtoey, Bangkok 10110 Note Registrar Note Representative Auditor Plan Administrator

2 Silom Road, Suriyawong, Bangrak, Bangkok 10500 Tel. 0-2266-3340-50 Fax. 0-2236-5533 139 Ratchadapisek Road, Dindaeng, Dindaeng, Bangkok 10400 Tel. 0-2245-4811 Fax. 0-2247-5325 Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, th th 4 & 7 Floor, Ratchadapisek Road, Klongtoey, Tel. 0-2229-2800 Fax. 0-2359-1262-3 BFIT Securities Pcl. th th 540 Mercury Tower, 14 and 18 Floor, Ploenchit Road, Lumpini, Patumwon, Bangkok 10120 Tel. 0-2264-8555, 0-2658-5888 Fax. 0-2658-5999 Bangkok First Investment & Trust Pcl. nd Bangkok Insurance Tower, 22 Floor, South Sathorn Road, Sathorn, Bangkok 10120 Tel. 0-2677-4330 Fax. 0-2677-4331 KPMG Phoomchai Audit Co., Ltd. nd 22 Floor, Empire Tower, 195 South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. 0-2677-2000 Fax. 0-2677-2222 Auditor: Mr. Winid Silamongkol Certified Accountant Registration Number: 3378 Robinson Planner Co., Ltd. 139 Ratchadapisek Road, Dindaeng, Dindaeng, Bangkok 10400 Tel. 0-2248-8391 Fax. 0-2248-2651

015


Location Robinson Department Store Pcl.,

2 Silom Road, Suriyawong, Bangrak, Bangkok 10500

Silom Branch

Tel. 0-2266-3340-50 Fax. 0-2236-5533

Robinson Department Store Pcl.,

139 Ratchadapisek Road, Dindaeng, Dindaeng, Bangkok 10400

Ratchadapisek Branch

Tel. 0-2248-2626-35, 0-2247-5300-9 Fax. 0-2642-2047

Robinson Department Store Pcl.,

259 Sukhumvit Road, Klongtoey-Nue, Wattana, Bangkok 10500

Sukhumvit Branch

Tel. 0-2651-1533-42, 0-2252-5122 Fax. 0-2651-1500

Robinson Department Store Pcl.,

1522 Charoenkrung Road, Bangrak, Wattana, Bangkok, 10500

Bangrak Branch

Tel. 0-2238-0052-61, 0-2267-3781-86 Fax. 0-2235-2467

Robinson Department Store Pcl.,

110/5 Moo 9, Petchkasem Road, Bangwa, Phasricharoen,

Bangkae Branch

Bangkok, 10160

Tel. 0-2455-0143-45 Fax. 0-2454-8350

Robinson Department Store Pcl.,

904/1 Moo 6, Srinakarin Road, Nhong Bon, Pravej,

Srinakarin Branch

Bangkok, 10260

Tel. 0-2721-8990-9 Fax. 0-2721-9066

Robinson Department Store Pcl.,

161 Moo 2, Phaholyotin Road, Prachatipat, Thanyaburi,

Rangsit Branch

Patumtani 12130

Tel. 0-2958-0800-39 Fax. 0-2958-0899

Robinson Department Store Pcl.,

5/7 Moo 7, Ram Indhra Road, Kannayao, Kannayao,

Ram Indhra Branch

Bangkok 10230

Tel. 0-2947-5320-62 Fax. 0-2947-5400

Robinson Department Store Pcl.,

99 Ladya Road, Somdejchaopraya, Klongsam, Bangkok 10230

Ladya Branch

Tel. 0-2437-0111, 0-2437-0104-5 Fax. 0-2439-4296

Robinson Department Store Pcl.,

68/100 Moo 8 Ratanathibet Road, Bangkraso, Amphoe Muang,

Ratanathibet Branch

Nontaburi 11100

Tel. 0-2525-4420-29 Fax. 0-2526-9774

Robinson Department Store Pcl.,

90/1 Sukhumvit Road, Sriracha, Chonburi 20110

Sriracha Branch

Tel. 0-3877-1001-10 Fax. 0-3877-0999

CR Udonthani (Thailand) Co., Ltd.

277/2 Phajak Road, Makkaeng, Amphoe Muang,

Udonthani 41000

Tel. 0-4224-2777 Fax. 0-4224-8780

CR Phuket (Thailand) Co., Ltd.

36 Dilhok-U-Thit 1 Road, Taladyai, Amphoe Muang,

Phuket, 83000

Tel. 0-7625-6500-12 Fax. 0-7622-3304

CR Nakorn Sri Thammarat (Thailand) Co., Ltd.

89/201 Pattanakankukwang Road, Klang, Amphoe Muang,

Nakorn Sri Thammarat 80000

Tel. 0-7531-8012-20 Fax. 0-7531-8010

CR Had Yai (Thailand) Co., Ltd.

9 Thammanoonvithi Road, Hadyai, Hadyai, Songkhla 90110

Tel. 0-7422-0150 Fax. 0-7422-0157

CR Chiang Mai (Thailand) Co., Ltd.

2 Mahidol Road, Haiya, Amphoe Muang, Chiang Mai 50100

Tel. 0-5320-3640-59 Fax. 0-5328-3129

CR Ubon Ratchathani (Thailand) Co., Ltd.

221 Chayangkoon Road, Naimuang, Amphoe Muang,

Ubon Ratchathani 34000

Tel. 0-4524-1887, 0-4524-2866 Fax. 0-4524-1268

CR Ratchaburi (Thailand) Co., Ltd.

265 Sri Suriyawong Road, Namuang, Amphoe Muang,

Ratchaburi 70000

Tel. 0-3231-0831 Fax. 0-3231-0866

CR Chantaburi (Thailand) Co., Ltd.

22/107 Moo 7 Chantanimitr, Amphoe Muang, Chantaburi 22000

Tel. 0-3934-0348-57 Fax. 0-3930-3114

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Financial Highlights>> Profit and Loss Statement

Consolidated

2005

2004

2003

Revenue from Sales

9,817

8,835

7,765

Total Revenue

10,955

9,941

8,817

Cost of Sales

7,642

6,900

6,053

Selling and Administrative Expenses

2,430

2,252

2,183

Net Profit (Loss)

851

717

515

Balance Sheet

Consolidated

2005

Cash and Cash Equivalent

1,030

1,624

1,365

Current Assets

1,905

2,390

2,098

Total Assets

6,910

7,355

7,286

Current Liabilities

2,763

2,794

2,252

Total Liabilities

3,593

4,873

5,516

11,107

11,107

11,107

(1,618)

1,157

364

Issued and paid-up share capital

Retained Earnings (deficit)

2004

2003

Minority interests

165

181

186

Total Shareholders’ Equity

3,318

2,482

1,770

Key Financial Ratios

2005

Liquidity Ratio

(time)

Average Collection Period

Consolidated 2004

2003

0.69

0.86

0.93

(days)

7.78

7.07

6.47

Average Selling Period

(days)

25.75

26.33

29.88

Average Payment Period

(days)

81.12

77.19

83.09

Gross Profit Margin

(%)

22.16

21.90

22.05

Net Profit Margin

(%)

7.77

7.21

5.84

Return on Equity

(%)

29.35

33.72

31.06

Return on Assets

(%)

11.93

9.79

6.84

Debt to Equity Ratio

(time)

1.08

1.96

3.12

Book Value Per Share

Baht

2.99

2.23

1.59

Basic Earning Per Share

Baht

0.77

0.65

0.46

017


Management Discussion and Analysis>> Financial Status and Operational Results 2005 Sales and Other Revenue The Company and its subsidiaries generated an increase in sales of Baht 981.99 million, or 11.11%, year-on-year in 2005, with an increase in gross profit of Baht 240.32 million, or 12.42%. The increase in sales was attributable to an achievement of re-merchandising in order to offering variety in assortment and modern product which meet the customer’s need, including continuous theme promotions tailored to the lifestyles of target customers, which was best fit to the overall competitive situation in the retail sector. In addition, the company and its subsidiaries recorded a gain in earnings from investment in affiliated companies in 2005 of Baht 101.56 million, a slight increase from 2004 which reflected the fact that it was the first year in which a certain company became eligible to pay full corporate income tax following the expiration of its tax loss carry forward period. Cost of Sales Cost of sales of the Company and its subsidiaries in 2005 was in proportion to sales, at 77.84%, low than 78.10% recorded the previous year, resulted in an increase in gross profit margin from 21.90% in 2004, to 22.16% in 2005. The improvement was attributable to the consecutive implementation of an efficient merchandising policy and inventory management, including proper sale promotions throughout the year. Selling and Administrative Expenses The Company and its subsidiaries efficiently controlled its selling and administrative expenses, resulted in a modest increase of Baht 178.20 million, or 7.91%, this was much lower than the increase in sales and gross profit. Expenses increased due to higher expenditure on advertising and public relations utilizing a wide range of media channels, the expenses of new branch opening in 2005, together with annual salary increase for employees. Net Profit and Interest In 2005, the Company and its subsidiaries incurred the loan interest expenses of Baht 2.48 million to certain local financial institution. This was in accordance with restructuring agreements arranged between subsidiary and financial institutions which included a stipulation for the repurchase of Notes under the Voluntary Debt Refinancing Program. These interest expenses presonted...as net cash flow derived from holding notes and cost of acquiring. The Company preceded the Final Redemption of the remaining Notes on 19 December 2005. Net Profit after interest, tax, and minority interest, for the Company and its subsidiaries in 2005, amounted to Baht 851.22 million, an increase of Baht 134.45 million, or 18.76%, from the net profit of Baht 716.77 million recorded in 2004.

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Assets In 2005, the Company recorded a 594-million-baht drop in cash- and cash equivalents. This was as a result of early redemption of notes in December 2005. In terms of inventories which shown in the balance sheet, the figure was presented only credit inventory, excluding consignment inventory (payment when sold) for which the company bears no responsibility for it, the average selling time in 2005 was 110 days. Consignment payment was accounted for 78% of the total cost of sales. The Company and its subsidiaries recorded an increase in return on assets to 11.93% in 2005, from 9.79% in 2004. The increase was accounted for by aforementioned improvements in performance. Liabilities and Shareholder Equity As at year-end 2005, the financial liabilities of the Company and its subsidiaries stood at Baht 950 million, representing a substantial improvement from Baht 2,516.71 million at year-end 2004. These figures represent 0.29 and 1.01 times shareholder equity for 2004 and 2005 respectively. This sharp reduction is accounted for by the Company’s continuous repayment of principal and interest on its notes. At present, the Company’s financial liability is only long-term loan from local financial institution which facilitated partly for the company’s final redemption. Also in 2005, the Company has made an adjustment to the shareholders’ equity by transferring share premium arising from capital reduction in 2002 from the retained earning to set off against the balance of share discount, which resulted in retained loss as at December 31, 2005. This adjustment is to comply with the requirements of the circular issued by the office of the SEC dated November 16, 2005. Audit Fee The Company and its subsidiaries have paid audit fees to: • The Company’s auditor for the year ended 31 December 2005 of Baht 6,403,423.45. • There were no fees paid to the audit’s company or person who related to auditor’s company for the year ended December 31, 2005. Non-audit fee None

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Nature of Business>> History and Major Developments 1979 1992 1995

1996

1997

1998 2000

2001

2002

2003

2004

020

Robinson Department Store opened its first branch at Victory Monument. Robinson became the first department store company listed on The Stock Exchange of Thailand on 3 January 1992. The Central Retail Corporation group joined Robinson as a major shareholder and was jointly established CR Thailand Co., Ltd. in order to develop provincial department stores under the “Robinson” brand. Later, The result was its total 20 branches. Robinson integrated its supermarket business with Central Group and formed a joint venture with Royal Ahold Co., Ltd., a Netherlands based supermarket operator. The resulting company, CRC Ahold Co., Ltd., began operating supermarkets under the “Tops Supermarket” brand. In December 1996 and May 1998, the Company sold its shares to Royal Ahold Co., Ltd. The Company was approved for the asset transfer transaction to Power Buy Co., Ltd., and CRC Sport Co., Ltd., respectively. Also, the Company granted right to those companies to utilize space in each branch in order to operate electrical appliance stores and sport accessories stores. The Company received income from those companies as income sharing on percentage of sales or fixed charge per square meter. In April 1998, the Company purchased 40% shareholdings in both companies. The Company announced a debt moratorium as a result of the depreciation of the Baht following the sudden flotation of the currency on 2 July 1997 On 2 May 2000, the Central Bankruptcy Court ordered rehabilitation of the Company as well as appointed Robinson Planner Co., Ltd as a Planner and as a Plan Administrator on 20 December 2000. The Company also decided to close its Don Muang branch due to unacceptable of return on investment. The Company closed its Victory Monument branch since lease agreement had terminated and it was considered not feasibie to renew the lease agreement with new investment cost which generated an unacceptable of return on investment. This left the Company with a total of 18 branches. Of these 9 branches were in Bangkok and 9 in provincial locations. The Company also issued Notes to the unsecured financial creditors with a total value of Baht 4,766.7 million for principal and interest. The Company successfully implemented major steps set forth in its Rehabilitation Plan i.e. increasing its capital from Baht 1,480.8 million to Baht 14,808.8 million, proceeding the debt-to-equity conversion, proceeding a 25% capital reduction capital, and forgiveness of remaining debt. This achievement prompted the Stock Exchange of Thailand to consider approving resumption of trade in the Company’s ordinary shares in Commerce sector, effective 26 November 2002. In March, the Company waived the right to purchase new issuance shares from capital increase of CRC Sports Co., Ltd at its proportion. As a result, the Company’s shareholding in CRC Sports was reduced to 29.19%. In May, the Company re-launched its campaign to promote a new image using the concept of “Robinson...Your Life Vitalizer”. In December, the Company gained Court approval for an amendment of its Rehabilitation Plan to facilitate the repurchase of Notes under the VDRP. In January, Robinson SPV Co., Ltd., (SPV) signed a loan agreement with two financial institutions to secure funding for repurchase of Notes under the VDRP. The long-term loan was for up to Baht 2,700 million. At year-end 2004, the Company repurchased 15,899,277 units of Notes under the VDPR program, equal to 77.04% of total outstanding Notes. In addition, on 22 March, the Creditors’ Meeting ordered by the Court, passed a resolution to elect three new directors representing unsecured financial creditors to replace resigning directors. On 8 December 2004, the Company acquired the remaining balance of shares from its local partner in CR Ratchaburi (Thailand) Co., Ltd., thereby increasing its shareholding from 49.99% to 99.99%. The acquisition stemmed from the need to improve management flexibility.


2005

The Company continued to run its “Robinson...Your Life Revitalizer” campaign in its retail businesses with the aim of generating continuous sales growth. The Company also launched one new branch, at Rattanathibet, while continuously renovating and modernizing its existing stores across the country to create a more colourful and lively ambiance. In addition, product selections with variety of assortment were readjusted to tie in with Robinson’s target customer groups and reflect its new image. On 19 December 2005, the Company has proceeded the early redemption on remaining notes which resulted in the completion of the Company’s rehabilitation plan.

The Company’s major changes and developments in 2005 are as follows: 20 January

15 June

29 September 15 December

19 December

20 December

The Company and two other joint ventures established R.S.T. Sky Bridge Co., Ltd.(RST) to construct and manage the BTS link that connecting the building of Robinson Sukhumvit branch and the other 2 buildings of joint ventures with the Bangkok Mass Transit System (BTS). RST was established with a registered capital of Baht 42,000,000 (420,000 shares at par value of Baht 100 per share). The Company has owned a 33% shareholding of the total registered capital. In November 2005, RST increased in its registered capital up to Baht 46,995,000 The Company launched its 19th branch at Central Town Center on Ratanathibet Road. The Company sealed a rental and service contract with Central Pattana Ratanathibet Co., Ltd. The new branch was opened in order to dominate much market share and serving ever increasing consumer demand, especially in areas that represent high potential market. Robinson Ratanathibet initially opened its 2nd floor only on 15 June before becoming fully operational from 25 August. It was the grand opening of Robinson Ratanathibet, the 19th branch, covering 12,000 sqm. of space with an investment cost of approximately Baht 150 million. The Company has signed a loan agreement with a certain local financial institution to acquire funds to redeem outstanding notes before their maturity date. The three-year, long-term loan was for Baht 950 million with interest referred to the Minimum Lending Rate (MLR). The Company proceeded early redemption of 12,482,366 outstanding notes. Total repayment, including principal, interest and bonus payment, was amounted at Baht 1,618,741,127.22. The source of fund included both loan from aforementioned local financial institution and the Company’s cash from operation. Subsequently, Note Representative agreed to release collateral and terminated conditional assignment agreements which tied with notes. Robinson Planner Co., Ltd. as Plan Administrator petitioned the Central Bankruptcy Court for a court order to cancel the Company’s rehabilitation, as the rehabilitation had been successfully completed within the prescribed 5-year period. On 6 February 2006, the Central Bankruptcy Court issued an order to cancel the Company’s rehabilitation as requested. As a result, the Company resumed its normal corporate status.

Business Goal As a leading retail operator, we strive to be the most preferred department store with widest market coverage in Thailand, offering merchandises to best fit our customer lifestyle with innovative store format and services.

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Structure of the Company and its subsidiaries>>

022


The Company and its subsidiaries>>

Name

Robinson Department Store Pcl.

Paid-up Capital (Baht)

Nature of Business

11,106,611,000

Retail, including department stores in Bangkok

and upcountry areas, under “Robinson” brand.

Bangkok branches include: Silom, Ratchadaphisek,

Sukhumvit, Bangrak, Bang Khae, Srinakarin,

Fashion Island, Rangsit, Ladya and Sriracha.

CR (Thailand) Co., Ltd.

501,000,000

Holding company to jointly invest in department

store business under the “Robinson” brand in

eight provinces.

CR Ratchaburi (Thailand) Co., Ltd.

102,500,000

Operating a department store in Ratchaburi.

CR Chiang Mai (Thailand) Co., Ltd.

220,000,000

Operating a department store in Chiang Mai

CR Hadyai (Thailand) Co., Ltd.

202,000,000

Operating a department store in Hadyai

CR Udonthani (Thailand) Co., Ltd.

225,000,000

Operating a department store in Udonthani

CR Ubon Ratchathani (Thailand) Co., Ltd.

71,000,000

Operating a department store in Ubon Rachathani

CR Chantaburi (Thailand) Co., Ltd.

130,000,000

Operating a department store in Chantaburi

CR Nakorn Sri Thammarat (Thailand) Co., Ltd.

280,000,000

Operating a department store in Nakorn Sri Thamma-

177,000,000

Operating a department store in Phuket

rat CR Phuket (Thailand) Co., Ltd. Robinson Anusawaree Co., Ltd.

8,000,000

Dormant company

Sapanmai Sappasinka Co., Ltd.

20,000,000

Dormant company

Robinson Rajdamri Co., Ltd.

46,000,000

Dormant company

Robinson Nakarin Co., Ltd.

105,000,000

Dormant company

Robinson Sukhumvit Co., Ltd.

100,000,000

Offer space rental within store

Robinson Ratchada

75,000,000

Offer space rental within store

Kruerkaew Co., Ltd.

40,000,000

Offer warehouse space for rent

Kruerpetch Co., Ltd.

11,250,000

Invest in businesses

50,000

Invest in businesses

R-Trading (L) BHD Robinson S.P.V. Co., Ltd.

1,000,000

Repurchase Notes under VDRP

Power Buy Co., Ltd.

560,000,000

Operate specialty stores: Electrical Appliances

CRC Sport Co., Ltd.

370,000,000

Operate specialty stores: Sports Accessories

Siam Retail Development Co., Ltd.

500,000,000 Owner and management of Fashion Island shopping

Square Ritz Plaza Co., Ltd.

125,000,000

RD Pattana Co., Ltd. D C R Co., Ltd. R.S.T. Sky bridge Co., Ltd.

3,000,000 428,200,000 46,995,000

} complex (Ramindra)

Land development Business investment Build and manage the sky train connection to department store

023


Income Strucure>>

Type of Income/Company

% of

shareholding

2005

Million Baht

%

2004

Million Baht

%

2003

Million Baht

%

Net Sales

Robinson Department Store Pcl.

6,150.21

56.14

5,296.26

53.27

4,641.50

52.64

Subsidiaries

3,666.77

33.47

3,538.74

35.60

3,123.17

35.42

1,052.74

11.94

- CR Ratchaburi

99.99

- CR Chiang Mai

89.99

- CR Hadyai

76.00

- CR Udonthani

76.00

- CR Ubon Ratchathani

74.99

- CR Chantaburi

64.99

- CR Nakorn Sri Thammarat

49.99

- CR Phuket

49.99

Other business

1,138.44

10.39

1,106.42

11.13

Total Income

10,955.42

100.00

9,941.42

100.00

8,817.41 100.00

Income Strucure From Sales>>

Categories of Products

1. Types of product

2005

Income (%) 2004

2003

- Softline

85.21

84.81

83.32

- Hardline

14.27

14.54

16.12

- Others

0.52

0.67

0.56

2. Payment

- Cash

62.58

65.33

68.04

- Credit card

37.42

34.67

31.96

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Product Lines>> Robinson Department Store Public Company Limited’s current products can be divided into two main categories: 1. Soft Line products reflecting modern preferences and fashion trends, with the main categories as follows: • Clothes for men and women, comprising men’s wear, women’s wear, jeans, and underwear departments. • Cosmetics and accessories, comprising cosmetics, decorative items, and accessories departments. • Leather goods, comprising handbags, shoes, and suitcase departments. • General products for children, comprising children’s wear, children’s consumer products, and toy departments. This line emphasizes on brand names, quality, variety and fashion. The nature of trendy products has rapid change and customer’s decision depends on the trend. 2. Hard Line products comprising: • Home furnishings • Automobile accessories & equipment • Toys, gifts and gift shops These lines emphasize on quality, utilization, variety, feature, and trend. Customers base their purchase decisions on feature, utilization and price.

Only @ Robinson Products To offer both categories in which differ from other competitors and to increase variety of assortment, the Company has developed the differentiate products itself including selection of new and interesting products which are only available at Robinson, namely “Only@Robinson”. This type of products is consisting of: - Private Label Products, comprising products developed by the Company and marketed under a variety of specially created brands. Care is taken to only select product areas that meet with customers’ demand at reasonable price, while concentrating on competitive pricing, good quality and modern style and making the ranges available in all 19 branches of Robinson Department Store. Such products include: • Kitchenware and bedroom items under the “R*Home” brand. • Women’s fashions and women’s wear e.g. FOF (Freedom of Fashion), Chee, 3-9-0 (Three-Nine-O). • Shoes & ladies’ bags e.g. FOF, G-Chic, Jazzy. • Men’s clothing and accessories e.g. Pacific Union, Snap, True Blue, Beyond Basic and Otoko. • Children’s products e.g. Cheeze Boy&Girl, Cheeze Shoes, Abloom, Young Bum, Tomato, Bunny & Duck. - Exclusive brand products where the Company contracts with a range of Thai and foreign brand owners and manufacturers to make products exclusively available at Robinson. Implementing a strategy based on differentiation, only fashionable items are selected for sale. The products are then positioned in branches where customer demand for such products and purchasing power is most conducive. These products include: • Imported women’s fashions and women’s wear e.g. Allure, Centro Moda, Vertical Club, I.E., Ying & Yang • Ladies’ foot wear e.g. Sue, Anna Dolly, Baragus • Men’s products e.g. FX Creation

- One-price products, including Just 25 and Just 52. All items retail for Baht 25 or Baht 52. Ranges include products for teenagers and recent graduates embarking on their careers as well as consumer products such as accessories, cosmetics, stationery, gifts, and etc.

025


Shareholding Structure>> Top 10 shareholders as at 31 December 2005

No. Shareholder Name

No. of Shares

%

1. C.R.G. SERVICE CO.,LTD.

311,645,488

28.06

2. CENTRAL RETAIL CORPORATION LTD.

286,162,660

25.77

3. GOLDMAN SACHS & CO

64,865,550

5.84

4. BANK OF NEW YORK (NOMINEES) LIMITED

54,373,096

4.90

5. STATE STREET BANK AND TRUST COMPANY FOR SWITZERLAND,

38,921,494

3.50

6. THAI NVDR CO.,LTD.

30,566,950

2.75

7. NORBAX INC.,18

23,870,000

2.15

8. CREDIT SUISSE SINGAPORE TRUST ACCOUNT CLIENTS

22,748,909

2.05

9. PICTET & CIE

22,559,100

2.03

10. CREDIT INDUSTRIEL ET COMMERCIAL SINGAPORE BRANCH

16,771,969

1.51

The Ultimate Shareholder of the Company is Central Retail Group, comprising of Central Retail Corporation Ltd. and C.R.G. Service Co., Ltd. Together, these parties jointly hold in aggregate 53.83% of the Company’s total outstanding shares.

Dividend Policy Under the Rehabilitation Plan, where Notes remain outstanding, the Company shall not pay any dividend, except in the event that it is expressly permitted to pay dividends, unless and until the Company has fully repaid its Notes or until it makes available new funds for the repayment of all of its outstanding Notes, in accordance with conditions prescribed in the Rehabilitation Plan and approved by the directors of the Plan Administrator. Following the success of the Company’s Rehabilitation Plan and the Central Bankruptcy Court’s order to cancel the Plan effective 6 February 2006, the Company has resumed to normal corporate status. This being the case, approval of dividend payment must be by the resolution of the Company’s Board of Directors and shareholders. However, considering the Company’s reported loss of Baht 1,618 million in 2005, no dividend will be payable. The Company’s dividend payout policy will be proposed to shareholders during the annual ordinary general meeting 2006 for approval by the Company’s Board of Directors.

026


Board of Director>> Mr. Sudhitham Chirathivat Director (Authorized Director)

Mr. Tos Chirathivat

Director (Authorized Director)

Mr. Preecha Ekkunagul Director / President (Authorized Director)

Mrs. Narttaya Chirathivat

Director / SVP-Merchandising (Authorized Director)

027


Mr. Pandit Mongkolkul Director (Authorized Director)

Mr. Pracha Phatayakorn Director (Authorized Director)

Mr. Vitaya Chavananand

(Director & Independent Director)

Mr. Vasit Taepaisitphong

(Director & Independent Director)

028


Information of Board of Director and Executive Committee Name :

Mr. Sudhitham Chirathivat - Director

(Authorized Director)

Education :

Bachelor Degree in Electrical Engineering,

Age (years) :

Experiences :

58

University of Maryland (College Park), USA

MBA (Operations Research) Lona University, New York, USA

Director Certification Program, Thai Institute of Directors Association Defense College Graduated - 4313 (Wor Por Ror Or - 4313) 1981 - 1992 Vice President, Store Planning & Operations,

Marketing and Merchandising, Central Department Stores Co.,Ltd.

1990 - 2002 President & Chief Executive Officer, Central Pattana Pcl.

Present Executive Committee - Retail and Real Estate, Central Group of Companies

Chairman, Earth Care Co., Ltd.

Executive Director, The Vintage Club Co.,Ltd.

Director, TT&T Pcl.

No. of share holding :

-

Name :

Mr. Tos Chirathivat - Director

Relationship among management :

Uncle of Mr. Tos Chirathivat

(Authorized Director)

Education :

BA Wesleyan University, CT, USA

Age (years) :

Experiences :

No.of share holding :

Relationship among management :

Name :

41

MBA (Finance) Columbia University, NY, USA

1996 - 2001 Chief Operational Officer, Central Retail Corporation Co.,Ltd.

2002 - Present Chief Executive Officer, Central Retail Corporation Co.,Ltd. -

Nephew of Mr. Sudhitham Chirathivat and Mrs. Narttaya Chirathivat Mr. Preecha Ekkunagul - Director / President

(Authorized Director)

Education :

Bachelor Degree in Chemical Engineering, Chulalongkorn University

Age (years) :

48

Master Degree (Industrial and Management), Asia Institute of Technology Director Accreditation Program, Thai Institute of Directors Association

Experiences :

1995 - 2000 Managing Director, BigC Supercenter Pcl.

2003 - Present President, Robinson Department Store Pcl.

No. of share holding :

Relationship among management :

Name :

2000 - 2003 President, CRC Power Retail Co.,Ltd. and B2S Co.,Ltd. -

Mrs. Narttaya Chirathivat - Director / SVP-Merchandising

(Authorized Director)

Education :

Bachelor Degree (Economic), University of Hartford, CT,US

Age (years) :

Experiences :

No. of share holding :

Relationship among management :

42

MBA University of Hartford Paris, France

1995 - Present SVP-Merchandising, Robinson Department Store Pcl. -

Aunt of Mr. Tos Chirathivat

029


Name :

Mr. Pandit Mongkolkul - Director

(Authorized Director)

Education :

Bachelor Degree (Accounting), Chulalongkorn University

Age (years) :

42

MBA (Finance and International Business),

Sasin Graduate Institute of Business Administration

Experiences :

1992 - Present Financial and Investment Director,

1993 - Present Director, Earth Care Co.,Ltd.

No. of share holding :

Relationship among management : Name :

Hang Central Department Store Co.,Ltd.

1996 - Present Director, Robinson Department Store Co.,Ltd. 2000 - Present Director, Robinson Planner Co.,Ltd.

2004 - Present Chairman of the Executive Board, Dhanamitr Factoring Pcl. 2006 - President Director, Malee Sampran Pcl. -

Mr. Pracha Phatayakorn - Director

(Authorized Director)

Education :

Bachelor Degree (Accounting), Chulalongkorn University

Age (years) :

42

MBA (Finance and International Business),

Sasin Graduate Institute of Business Administration

Experiences :

2000 - Present Director, Robinson Planner Co.,Ltd.

Relationship among management :

-

No. of share holding :

Name :

-

Mr. Vitaya Chavananand - Director and Independent Director

Age (years) :

48

MBA, Webster University, USA.

Education :

Experiences :

No. of share holding :

Relationship among management : Name :

Age (years) : Education :

Bachelor Degree (Political Science-Finance), Chulalongkorn University 1986 - Present Deputy Marketing Director, Wijitpan Construction Co.,Ltd. Mr. Vasit Taepaisitphong - Director and Independent Director 43

Bachelor Degree (Accounting), Chulalongkorn University MBA, University of Texas at Arlington, USA

Experiences :

1988 - Present Director and Senior General Manager, Betagrow Group of Companies

Relationship among management :

-

No. of share holding :

Name :

-

Mr. Paul Millar - SVP Operations

Age (years) :

45

Strathclyde Business School, UK

Education :

Experiences :

No.of share holding :

Relationship among management :

030

Master M.A. (Hons) Glasgow, University UK. M.S.C. Marketing 1998 - Present SVP Operations, Robinson Department Store Pcl. -


Name :

Mr. Gerard McGurk - VP Commercial Operations

Education :

HND in Business Practices and Business Computer Practices,

Age (years) :

39

Dundee College of Commerce

Experiences :

No.of share holding :

Relationship among management :

Name :

5’0’ Grades-3’H’Level, Lawside RC Academy

1998 - 2000 District Manager, Robinson Department Store Pcl.

2000 - 2002 Managing Director, Planet Sports China Limited and TS Lifestyle Thailand Limited

2003 - Present VP Commercial Operations, Robinson Department Store Pcl. -

Mr. Sukitti Kittipassorn - VP Operation Systems and Support

Age(years) :

49

MBA, Thammasat University

Education :

Experiences :

No. of share holding :

Relationship among management : Name :

Bachelor Degree (Pharmacology), Mahidol University 1996 - Present VP Operation Systems and Support, Robinson Department Store Pcl. Miss Usara Yongpiyakul - VP Marketing

Age (years) :

40

MBA (Business Communication), Bentley College Boston, USA.

Education : Experiences :

No. of share holding :

Relationship among management : Name :

Bachelor Degree (Marketing Management), ABAC

1998 - 2000 Senior Marketing Manager, Krungsri-GE Bank Card, GE Capital Thailand 2000 - 2003 Customer (Non-Auto) Insurance Product Leader, GE Capital Thailand 2003 - Present VP Marketing, Robinson Department Store Pcl. Miss Sirinij Chokchairittikul - VP Merchandising

Age (years) :

30

MA (Communication) International Program, 1st Honor (Golden Medal), Bangkok University

Education :

Bachelor Degree (Communication Arts), Bangkok University

Experiences :

2000 - 2002 Regional Store Manager, Marks & Spencer

Robinson Department Store Pcl.

2002 - 2005 General Manager-Merchandise Ready to wear (Credit-Differentiate), 2005 - Present VP - Merchandising, Robinson Department Store Pcl.

No. of share holding :

-

Name :

Mr. Parivat Sopasit - VP Finance and Administration

Relationship among management :

-

Age (years) :

47

Experiences :

1995-2001 Accounting and System Manager, Siam Gardian Glass Co.,Ltd.

Education :

No. of share holding :

Relationship among management :

Bachelor Degree (Accounting), Chulalongkorn University

2001-2003 Accounting Director, CRC Power Retail Co.,Ltd.

2003-Present VP Finance and Administration, Robinson Department Store Pcl. -

031


Organization Structure>>

032


Management>> Effective 2 May 2000, the Company began operating under its Rehabilitation Plan. Henceforth, the Company’s operation were managed by a plan Administrator’s Committee with the President holding administrative authority from the plan Administrator for day business. The Company also have Executive Committee, comprising 8 members, responsible for proposing and implementing policies and strategies and closely monitoring of the Company’s operations.

The Board of Directors of Plan Administrator: Robinson Planner Co., Ltd., established in pursuance of the Rehabilitation Plan of Robinson Department Store Pcl., as ordered by the Central Bankruptcy court on 2 May 2003. Robinson Planner Co., Ltd. was both the Planner and the Plan Administrator. Robinson Planner’s Board of Directors comprises:

1. 2. 3. 4. 5. 6.

Mr. Prasert Patradilok Mr. Thawatchai Vorawandthanachai Mr. Vatcharin Lerdsuvankul Mr. Piya Nguiakaramahawongse Mr. Pandit Mongkolkul Mr. Pracha Pathayakorn

However, after the Central Bankruptcy Court ordered to cancel the Company’s Rehabilitation Plan on 6 February 2006, administrative authority has been returned to the Company’s Board of Directors. Currently, the Company’s management structure comprises 2 set of committee i.e. the Board of Directors and the Executives Committee.

The Board of Directors comprises:

1. 2. 3. 4. 5. 6. 7. 8.

Mr. Sudhitham Chirathivat Director Mr. Tos Chirathivat Director Mr. Preecha Ekkunagul Director Ms. Narttaya Chirathivat Director Mr. Pandit Mongkolkul Director Mr. Pracha Pathayakorn Director Mr. Vitaya Chavananand Director and independent committee Mr. Vasit Taepaisitphong Director and independent committee

The authorized directors of the Company signage are Mr. Sudhitham Chirathivat, Mr. Tos Chirathivat, Mr. Preecha Ekkunagul, Mr. Pandit Mongkolkul, Ms. Narttaya Chirathivat, Mr. Pracha Phathayakorn. Any two of these six directors are authorized to jointly sign on behalf of the Company with the Company’s seal affix.

033


Scope of Work and Authority of the Board of Directors 1. Carry out activities in accordance with the governing laws, objectives and the articles of association of the Company and the resolutions of Shareholders’ Meetings. 2. Honestly perform the functions of Directors, protect the Company and maximise any benefits to the Company. 3. Directors are obliged not to operate the same business and not to compete with the Company, either in their own interest or the interest of others, except in such cases where notice is given to the Shareholders’ Meeting prior to the Director’s election to the Board. 4. Notify the Company without delay in the following cases: 4.1 Wherever there is some direct or indirect benefit/loss to a Director from any contract the Company enters into during a prescribed accounting period, the concerned Director must disclose full information pertaining to the contract, including the parties to the contract and the benefit/loss to the Director. 4.2 Directors who hold shares or bonds in the Company or its subsidiaries are obliged to specify any increase or decrease in the number of shares held during each prescribed accounting period. 5. Prepare reports on the financial status of the Company

The administrative authority of the Company currently rests with the Plan Administrator which has authorized Executive Committee of the Company to conduct the Company’s general business dealings.

The Board of Executive Officers 1. Mr. Preecha Ekkunagul 2. Mrs. Narttaya Chirathivat 3. Mr. Paul Millar 4. Miss Sirinij Chokchairittikul 5. Mr. Gerard Mcgurk 6. Mr. Sukitti Kittipassorn 7. Miss Usara Yongpiyakul 8. Mr. Parivat Sopasit

President SVP-Merchandising SVP-Operations VP- Merchandising VP-Commercial Operations VP-Operation Systems and Support VP-Marketing VP-Finance and Administration

Scope of Authority and Duties of the Executive

1. Carry out activities of the Company in accordance with the authority given by the Board and/or Plan Administrator. 2. Carry out the Company’s business operations with due care. 3. Honestly perform their duties, at all times protecting and maximizing the benefits to the Company.

034


Nomination of Directors and Executives of Robinson Department Store PCL Structure of the Board of Directors and appointment/dismissal procedures Structure: The Board of Directors comprises at least five directors, of which at least half must domiciled in Thailand. Appointment Procedure: Directors must be appointed in the general shareholders’ meeting in accordance with the following rules and processes: 1. 2. 3.

Voting will be cast by majority, with one vote assigned to each share. Each shareholder shall cast their votes to one nominee. The nominee who receives the highest vote and runners-up will be elected as Directors equal to the number of vacant Director positions. In case there is a tie between nominees, the Chairman will add one vote to one nominee to reach a final resolution.

In case a Director position becomes vacant before term completion, the Board of Directors must select a person qualified as a replacement at the next Board meeting, except in the event that the term of the director has less than two months to run. In this case, the replacement Director will only serve for the remaining period of the Director they replace. Resolution approving a replacement Director requires three-quarters of the votes of the remaining Directors. The exact number of Directors is not specified in the Articles of Association of the Company. As such, it depends on the resolution of a General Shareholders’ Meeting. The Company’s Articles of Association specify that each Shareholder has one vote for one share and that cumulative voting is not applicable.

Remuneration for Directors and Management Monetary Remuneration Remuneration for Directors in 2005 comprised monthly payments and car allowance for 2 Directors amounting to Baht 480,000. Details are as follows;

1. Mr. Pandit Mongkolkul 2. Mr. Pracha Pathayakorn

Total Remuneration Baht 240,000 Total Remuneration Baht 240,000

Remuneration for Management, including the Company’s President, Senior Vice-President, Senior VicePresident and Board members acting in management will be paid monthly salary, bonus, provident fund and other remuneration (e.g. car allowance). Total remuneration of nine executives in 2005 was Baht 30,705,090. Non-Monetary Remuneration There was no non-monetary remuneration in 2005. Since the Company was still under rehabilitation in 2005, no Remuneration Committee was established. However, the Company’s remuneration packages are reasonable compared to those of peer executives in similar industries. This parity is observed with a view to maintaining the good quality of the Company’s executives and ensuring that they are highly skilled in business matters.

035


Corporate Governance

Corporate Governance>> 1. Corporate Governance Policy The Company, with the administrative authority vested in it by the Plan Administrator, realizes the importance of “good governance”, as per Stock Exchange of Thailand policy. The Company’s Executives and the Plan Administrator have duly studied appropriate procedures to implement “good governance” principles. In this connection, in 2005 the Company established an internal audit function to monitor and audit the Company’s operations in accordance with internal auditing rules and regulations. This entity subsequently developed internal control provisions. In addition, the Company has established an Investor Relations section to distribute appropriate information to shareholders, analysts, and other stakeholders. However, the Company and the Plan Administrator still managed to ensure strict compliance with good governance principles under the following framework: • Prudent administration in accordance with the Company’s Rehabilitation Plan to achieve good performance, in line with enhancing long-term value and preventing any defaults that might cause loss to the Shareholders. • Operate with transparency and timely disclosure of correct information to all shareholders equally, especially on issues regarding acquisition/transferral of assets in related businesses, as regulated by the SET. • Operate with high concern for risks and establish preventive measures and contingency plans to prevent damage or loss to the Company. • Strict compliance with regulations imposed by regulatory agencies, including the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC).

2. Shareholders’ Meetings and Rights The Company did not hold a Shareholders’ Meeting in 2005, because the rights of Shareholders, except the right to receive dividends, fell upon the Plan Administrator. However, the Company still reported its performance and progress with implementation of the Rehabilitation Plan to Shareholders via the Stock Exchange of Thailand’s electronic channels. In addition, the Company’s annual report was sent to all Shareholders. However, after the Central Bankruptcy court cancelled the Company’s Rehabilitation Plan on 6 February 2006, the rights and duties of Shareholders have been resumed.  As such, a General Shareholders Meeting of the Company will now be held within April 2006.

3. Shareholders’ Rights In addition to its Shareholders, the Company realises the importance of all groups of stakeholders, including executives, employees, customers, business partners, competitors, creditors, the community, the government sector, and other concerned parties.  The Company realises that the support of all of these stakeholders’ is necessary for the long-term success of the Company.

4. Leadership and Vision The Board of Directors of the Plan Administrator comprises three representatives each from three debtors and three creditors.  They share a common role to agree the vision, mission, strategy, goals, business plan, and annual budget proposed by the Company’s xecutives.  It is also their role to supervise the executives assigned by the Plan Administrator to operate the Company, in accordance with the specified terms and conditions set forth in the Rehabilitation Plan.  The overriding purpose is to maximize the value of the business in accordance with the terms, conditions and objectives of the Plan. However, this authority is assigned only for normal business operations. In extraordinary cases beyond this scope, the Company’s management shall seek prior approval from the Plan Administrator.

036


5. Conflicts of Interest The Company’s policy is to follow Stock Exchange of Thailand regulations pertaining to prevention of conflicts of interest, including cases of connected transactions such as acquisition/transferral of assets which require application of ‘Arm’s Length’ rules when determining prices and conditions. Moreover, the Company supervises the use of inside information by prescribing that new executives must report their holdings and transactions involving the Company’s securities, pursuant to Section 59 of The Securities and Exchange Act B.E. 2535. The Company also clearly specifies the responsibilities of its Executives and organizational units, including prohibiting executives and/or any persons who have inside information from disclosing such information to any non-concerned persons or outsiders, except for disclosures to the Stock Exchange of Thailand. Any violations shall be subject to disciplinary action according to the Company’s regulations.

6. Business Ethics The Company clarifies and spreads awareness of business ethics among new executives and staff through orientation courses. Particular emphasis is placed on penalties for violations of ethical conduct. In addition, the Company is preparing a booklet about business ethics for approval by the Company’s Board of Directors and eventual distribution to all staff to be used as a guideline.

7. Balance of Power of Non-Executive Directors/Aggregation and Segregation of Positions During 2005, the authority of the Board of Directors rested with the Plan Administrator, comprising three representatives from the debtors and three representatives from the creditors. In accordance with bankruptcy law, the Plan Administrator Committee has duties and responsibilities to conduct the Company’s business as set forth in the Rehabilitation Plan. In practice, power to conduct day-to-day business is given to the Management, while the Plan Administrator performs the role of monitoring management performance on a “checks and balances” basis. The purpose of the Rehabilitation Plan is to ensure that Creditors and Shareholders receive their dues as specified in the Plan. In managing the Company, the Plan Administrator continually safeguards the interests of all stakeholders by closely monitoring and governing the Company’s operations. However, after termination of the Company’s Rehabilitation Plan on 6 February 2006, all management power is returned to the Company’s Board of Directors, members of which are to be elected and appointed by the Shareholders at the Annual Shareholders’ Meeting to be held within April 2006. The Board of Directors currently comprises eight directors, including two independent directors who, in accordance with SET rules, account for 25% of all Board members.

8. Board of Director’s Meeting The Company has not held a Board of Director’s meeting owing to the transfer of power of the Board of Directors to the Plan Administrator.

9. Subcommittee The Plan Administrator Committee has not yet established a subcommittee to assist in supervising the Company’s operations. However, the Company has established an Audit Committee and a list of members of the committee will be presented in the Annual Shareholder’s Meeting in April 2006. A remuneration subcommittee has also not been established. However, the Company has procedures to consider appropriate remuneration based on average rates in similar industries.

10. Controlling Systems and Internal Auditing In 2005, the Company reviewed the duties and authorities of each function with emphasis on accentuating work efficiency by speeding up processes in ways that can be clearly controlled and audited. This was piloted in front office functions at 19 branches in 2005. Regarding internal auditing, the Company established a new “Internal Audit and System” function in 2005. The duty of this new function is to perform operational audits to ensure compliance with the Company’s policy, applicable laws, and regulations of relevant parties, notably the Revenue Department and the Securities and Exchange Commission. The main focus is to audit the work systems and review and make recommendations on the following issues: prevention of access to confidential information of stakeholders; security and access to confidential information, and; limiting access to different levels of information to corresponding levels of authorised users.

037


11. Risk Management The Company established preventive measures to avoid or reduce three major risks, as follows: (1) Measures relating to prevention/reduction of risks associated with merchandising management The Company implements strict compliance inventory management by integrating state-of-the-art data warehouse and supply chain systems with product management with a view to precisely meeting customer demand. This is implemented through regular checking of items and counting of stock, including following-up inventory aging and timely distribution to prevent obsolete or deteriorated quality stock. (2) Prevention of loss or damage to assets Loss and damage prevention measures have been established for which Loss Prevention Officers are responsible. Such measures include: integration of fire alarm and fire extinguishing equipment; contingency plans for bomb-threats, riots and blackouts; installation of CCTV to prevent theft of assets, and; arrangement of contingency plans. Given its contingency measures and insurance policies covering unexpected losses due to property damage or business interruption, the Company‘s is confident that it can remain operational. (3) Security measures The Company has established a committee to be responsible for hygiene, safety and the work environment in all 19 of its branches. The objective of the committee is to ensure that the Company’s employees can work effectively in an environment that is conducive to safety and good health. In addition, the Company supports and closely monitors safety measures specified by the Occupational Safety and Health Inspection Division, Department of Labour Protection and Welfare, Ministry of Labour and Social Welfare. The Company also cooperates with external parties that have earned accreditation from relevant State entities authorising them to assess the Company’s safety practices. The overriding aim here is to ensure that staff can work effectively, grounded in a safe and healthy environment. Other security measures include strengthening the positive perception among customers, traders and society of the Company’s safety policies.

12. Board of Director’s Report The Board of Directors of the Plan Administrator, the Board of Directors of the Company and Executives of the Company are responsible for the consolidated financial statements of the Company and its subsidiaries and all information appearing in the Annual Report. The Board of Directors of the Plan Administrator and the Company’s Board of Directors have agreed that the financial report for 2005 of the Company and its subsidiaries, as inspected and revised in conjunction with the Company’s auditors, sufficiently discloses the Company’s financial status and performance in an accurate and trustworthy manner, as per the applicable accounting standards.

13. Investor Relations The Company realizes the importance of disclosure of accurate, complete, transparent, equitable and timely information, including its financial reports and other business information which may impact the Company’s stock price, so as to help investors and related parties reach informed investment decisions. The information is disseminated as per the SET’s rules and regulations via the SET’s official communication channels. The Company is currently compiling information to be disseminated via its investor relations web page which can be viewed at www.robinson.co.th The Company’s Investor Relations Unit is not yet a separate entity. The Company’s Financial Management and Investor Relations Division is assigned responsibility for investor relations duties, including communicating information to institutional investors, shareholders, stock analysts, members of the press and the general public. In addition, the Company periodically stages non-selling roadshows presented to the Company’s executives, investors, international analysts and securities companies, while also hosting press conferences. For more information please contact Tel. 0-2248-2626 ext. 732, 733 or email: rbsfnc@robinson.co.th

038


Market and Competition Environment>> Retail business overview The Thai economy continued to grow in 2005 at 4.5%, which was lower than the 6.1% growth recorded in 2004. Similarly, the overall retail sector reflected the lower economic growth rate, seeing its growth rate fall from 18.6% in 2004 to 7%* in 2005 (approximate figure of the Bank of Thailand). As people remained uncertain about the country’s economic stability, this led to more prudence in their spending. However, the modern trade in 2005 continued to grow by 14%, largely due mainly to the launch of new outlets of discount stores/super centres, supermarkets, and specialty stores, while department stores segment recorded steady sales growth of 6%. For the overall retail sector during the year 2004 and 2005, discount stores/super centres and supermarkets has adjusted their expansion strategies as a result of the new City Plan Law, which is now playing a major role in slowing down the expansion of large-scale modern retail outlets. This will also lead to the development of smaller retails or shopping complexes in local communities around the country.

Competitive Environment In 2005, the Company still faced a direct competition from the other two department store chains as in 2004. In this year there was two new expansion in department store segment, namely Robinson and Siam Paragon. The former launched its 20th branch in the mid-2005 at Rattanathibet road, aimed at customers with high purchasing power in the districts of Nagam Wong Wan, Rattanathibet, Bang Bua Thong and Nonthaburi. Competing department store chain already operate one store covering this area. Nevertheless, since the new branch is designed as a neighborhood mall which residents in nearby areas can easily access with their most convenience, and the mall contains over 200 various retail outlets, including restaurants, home décor, electrical appliance and IT shops plus a bowling alley and cinemas, the store boasts high potential to generate strong revenues for the Company. At year-end 2005, a new large-scale department store with high investment-Siam Paragon-was officially launched. It is located at the heart of Bangkok amidst a modern fashion shopping street. Siam Paragon’s target groups comprise middle to high-end consumers. Since Robinson Silom and Sukhumvit branches are located relatively close to Siam Paragon, the launch of such a large-scale department store naturally impacted the Company’s sales. Nevertheless, the impact was only in a short period during their grand-launch, and with a certain department. In addition to the increase of market shares by opening new branches, department stores have also keep renovated their existing stores, whether major renovations for full-scale update or minor renovations with key departments, so as to create a new store ambience and thereby retain the loyalty of customers. Competition among department stores still tends to concentrate on product presentation, quality, variety and promotional campaigns structured in line with customer lifestyles and focusing on activities that cultivate good relationships with customers and retain their loyalty. Discount stores are indirect competitors of the Company who use pricing strategies as the main driver of business. This is because their product ranges are daily use items with low emphasis on fashion, brand name or product differentiation and the strategy is played out via various forms of discounts. Previously discount stores are clearly persisting with their strategy, as can be seen by the launches of several new branches with minimum floor areas of 10,000 sq.m. Currently discount stores are expanding into smaller format, close-knit communities throughout Bangkok, suburban areas and neighbouring provinces where large-scale stores cannot be constructed due to the restrictions imposed by the City Plan Law. As such, it directly impacts convenience stores and supermarkets.

039


In view of location, the Company currently operates 10 branches in Bangkok and 9 branches in provincial areas. This puts the Company in direct competition with two other chains of department stores, namely Central and The Mall, with a combined total of 24 branches throughout Bangkok. Direct competition in provincial branches is less than in Bangkok branches as competitors only have four provincial branches-located in Chiang Mai, Had Yai, Phuket and Nakhon Ratchasima, in which the Company only operates in these three locations, namely Chiang Mai, Had Yai and Phuket, and there still be differentiations in terms of location and target customers. Nevertheless, competition in provincial areas also comes from smaller local brand department stores as well as such indirect competitors as discount stores/supercenters which offer certain products in the same categories as are available in department stores, but not brand name products, so that they can be offered at lower prices. In 2005 discount stores/supercenters have mushroomed in 2005, including in Nakhon Srithammarat, where the Company currently operates a branch. Hence, the Company has to implement a careful strategy to maintain its customer base, including continuous product differentiation program, brand name products selection as well as promotional campaigns focusing on theme rather than prices, so as to avoid price-cutting and ensure that Robinson’s new image marks it apart from the competition. With consumers still concerns about the economic situation, they are tending towards more prudence in their spending. At the same time, consumers have also developed a more rapid response to fashions and lifestyle developments, thanks to their easy access to a variety of media channels, and hence new products with variety and fashion trend that offer value-for-money are strongly sought to meet customer demand. Also, payment by credit card and personal credit continues to proliferate as customers are seeking for more convenience of payments. Apart from the merchandises offered in the stores, service excellence is also another key success factor for the business.

040


Risk Factors>> Risks associated with the competitive retail environment During 2005, Thailand’s economy encountered relatively hard times stemming from both internal and external factors. This was mainly caused by the aftermatch of tsunami, soaring petrol prices, rising interest rates and inflation. The higher cost of living, coupled with declining confidence in the economic outlook, resulted in more prudence in consumer spending. In addition, the launch of a new City Plan Law which produced a direct impact on expansion of large-scale retailers that offers grocery products, also incurred an indirect impact to department store expansions. This is due to the fact that it has become more difficult to develop new shopping complexes, thus increase in retail spaces will be at a slower pace. It is noted that shopping complexes-commercial centres that provide a variety of products and services-have become major locations for department store expansion. Regarding department store expansion, two new outlets were opened in Bangkok and its suburbs in 2005 -Robinson Rattanathibet and Siam Paragon. Since Robinson Silom and Sukhumvit branches are located relatively close to Siam Paragon, the launch of such a large-scale department store with high investment naturally impacted the sales at these competing stores. Nevertheless, the impact only extended to certain departments in the stores and the duration of the impact was quite short. Meanwhile, since the Company is pursuing different target customers and the consumers are likely to shopping at convenient location and transportation, the incidence of direct competition was limited to the initial period after the official opening. The Company also managed to offset the impact of new department store competitors by incorporating leading edge IT into its promotional campaigns, so making them more efficient, while being differentiate in terms of products, prices and service quality at its convenient-to-access branches. The Company’s competitive strategy includes a policy of avoiding price competition by differentiating its products and services. This can be achieved by selecting and developing clearly differentiated brand name products that are more fashionable and stylish, so as to be consistent with the lifestyles of target customers and thereby attract them in greater numbers. Moreover, instead of rushing into a discounting strategy, the Company implements more marketing activities and product recommendations, thru themed promotions. This enables the Company to grow its sales volumes while maintaining a satisfactory gross profit margin with good corporate image and its market positioning.

Risks associated with dependency on suppliers As a reflection of its emphasis on variety and differentiation and in accordance with its strategy of minimising bulk dependency on specific suppliers, the Company has diversified its supplier base to over 2,300 suppliers. Nevertheless, the Company does purchase products from one largest supplier where their brand names are very popular with customers. This supplier accounted for 15.07% of the Company’s total sales in 2005, and the Company is also their major distributor, both in Bangkok and provincial locations. As a business partner, the Company cooperates with suppliers on a continuous basis in arranging promotional campaigns, merchandising management and distribution (supply chain management), so as to ensure that product availability is always sufficient to meet consumer demand while also minimising surpluses.

041


Risks associated with leasehold dependency The Company owns the land and buildings of 2 of its branches and owns leasehold rights on land and/or buildings, and long-term lease contract to its other 17 branches. This condition reflects the necessity of locating stores in high potential areas where land and buildings are not normally sold by the owners but are leased out. In some cases, the cost of acquiring the land and building would be so costly that it is not a viable proposition, whereas leases make financial sense. The remaining terms of the Company’s lease properties range from 6 to 22 years. Certain agreements include provisions for automatic renewal of the leases and these conditions are reinforced by smooth compliance with the lease agreements by both parties. As such, the Company expects to have a smooth negotiation with the landlord for the renewals of its lease agreements as their expiry dates approach.

Risks associated with business rehabilitation There is no risks associated with business rehabilitation since the Central Bankruptcy Court issued a court order on 6 February 2006 to cancel the Company’s rehabilitation, in light of the Company’s successful completion of the Plan within December 2005. As a result, the Company has resumed its normal corporate status.

Risks associated with interest rates and foreign exchange As of 2005, the Company incurred Baht 950 million, 3-year-term loan, funded by a local financial institution to provide facility to repay its outstanding Notes before their due date. The interest is referred to the minimum lending rate (MLR) of that institution. Principal repayments with respective interest will be made every month, in accordance with the Company’s cash flow. The Company also has revolving short-term loans where the interest rate is referred to the money market rate at the time the funds are withdrawn. Despite the fact that interest rates are expected to continue rising in 2006, the total amount of loans has dropped significantly. As such, the change in interest rate is not expected to be significant to impact the Company’s business. The Company also incurs foreign exchange risks arising from imported merchandise as normal business transactions thru its letter of credit facility. Nevertheless, given a relatively low portion of imported merchandises compared to total sales, and with the Company’s policy to hedge its foreign exchange risks against potentially fluctuations in the money market, the exchange risk involved is minimal.

042


Internal Controls>> During 2005, the Company’s business was conducted in accordance with the Rehabilitation Plan as supervised by Robinson Planner Ltd. The Plan Administrator has closely monitored the operations of the Company and its subsidiaries, especially with regard to the Company’s cash flow, with a view to ensuring that no payments are made beyond the ordinary course of business. In addition, the Company has established an internal audit function to review its compliance with internal controls. It has also engaged an external auditor to audit its systems and day-to-day operations of certain key units in order to ensure optimum accuracy and efficiency. In 2006, the Company resumed its normal corporate status. Pursuant to this development, the internal control systems regulating the organisation, the operating environment, risk management, management control systems, IT systems, and the monitoring system on the Board of Directors, will be monitored and evaluated by the audit committee, members of which are elected from the Company’s Shareholder’s Meeting. As for the opinion of the Company’s Auditor, the Auditor has stated that there was no serious weakness/error in the Company’s internal controls in its audited report and financial statement for 2005. Regarding risk management, the Company has investigated and fully considered the risk factors to which it is exposed and will continue to do so. The Company also analyses the consequences of risks actually occurring and devises measures and business plans to mitigate such impact, as earlier stated in this report. Regarding control and monitoring systems, the Company clearly regulates authority of approval according to different levels in order to keep requisition expenses in line with the budget approved by the Plan Administrator. Regulations, operating processes and auditing are all clearly defined so as to enable accurate evaluation and detect areas of deficiency requiring improvement.

Supervision and Inside Information>> The Company has clearly determined the duties and responsibilities of all employees in the form of specific job descriptions and has trained all employees to clearly understand their duties and the Company’s regulations. However, some duties may involve employees in receiving inside information which they may pass to the public without the Company’s authorisation. Therefore, with the aid of its computer systems, the Company limits access to important internal information, especially including financial information, to high-level executives. The Company will disclose classified information to concerned parties at the appropriate time only, and within the bounds of relevant regulations of the Stock Exchange of Thailand and applicable laws. The Company also regulates employee disclosure of confidential information so that, in the event of an unauthorised breach of its regulations pertaining to disclosure of confidential or financial information, the concerned employee(s) may be investigated and penalised in accordance with the Company’s regulations.

043


Inter-Company Transactions>> The Company enters various transactions with its subsidiaries, joint-venture companies and other related companies. Certain assets, liabilities, income, costs and expenses of the Company and its subsidiaries also involve inter-company transactions. These businesses are related through sharing the same shareholders and/or directors, as disclosed in Note 4 of the Company’s financial statement. Details of major transactions during the year ended 31 December 2005 can be summarised as follows:

Details of Major Transactions

Income Rentals and services

Robinson Sukhumvit Co., Ltd. CR Hadyai (Thailand) Co., Ltd. CR Udonthani (Thailand) Co., Ltd. CR Phuket (Thailand) Co., Ltd. CR Nakorn Sri Thammarat (Thailand) Co., Ltd. CR Chiang Mai (Thailand) Co., Ltd. CR Ubon Ratchathani (Thailand) Co., Ltd. CR Ratchaburi (Thailand) Co., Ltd. CR Chantaburi (Thailand) Co., Ltd. Power Buy Co., Ltd.

Inter-company value 31 December 2005

Joint Director

Joint shareholders

Main Shareholders

Relationship with the Company Joint-ventures

Related Company

Subsidiaries

Subject

(Million Baht)

425.75

X X X X X X X X X X X

CRC Sport Co., Ltd. B2S Co., Ltd.

X X X X X

CRC Power Retail Co., Ltd. Office Club (Thailand) Co., Ltd. Group of Central Food Retail Co., Ltd. Central Department Co., Ltd. Central Retail Corporation Co., Ltd.

X

CDS Restaurant Co., Ltd.

X X X

Central Watson Co., Ltd. Group of Central Restaurant Group Co., Ltd. (Auntie Anne’s, Pizza Hut, Mister Donut, KFC)

X X X X X X X X X

6.93

Financial Services CR Hadyai (Thailand) Co., Ltd. CR Udonthani (Thailand) Co., Ltd. CR Chiang Mai (Thailand) Co., Ltd. CR Ubon Ratchathani (Thailand) Co., Ltd. CR Ratchaburi (Thailand) Co., Ltd. CR Chantaburi (Thailand) Co., Ltd. Power Buy Co., Ltd.

044

X X X X X X X

X


CRC Sport Co., Ltd.

CRC Power Retail Co., Ltd.

Kruerkaew Co., Ltd. RD Pattana Co., Ltd. CR Hadyai (Thailand) Co., Ltd. CR Udonthani (Thailand) Co., Ltd. CR Phuket (Thailand) Co., Ltd. CR Nakorn Sri Thammarat (Thailand) Co., Ltd. CR Chiang Mai (Thailand) Co., Ltd. CR Ubon Ratchathani (Thailand) Co., Ltd. CR Ratchaburi (Thailand) Co., Ltd. CR Chantaburi (Thailand) Co., Ltd.

Interests

Robinson Anusawaree Co., Ltd. Robinson Ratchada Co., Ltd. Robinson Sukhumvit Co., Ltd. Robinson Nakarin Co., Ltd. Kruerpetch Co., Ltd. Robinson S.P.V Co., Ltd. CR (Thailand) Co., Ltd. CR Hadyai (Thailand) Co., Ltd. CR Udonthani (Thailand) Co., Ltd. CR Phuket (Thailand) Co., Ltd. CR Nakorn Sri Thammarat (Thailand) Co., Ltd. CR Chiang Mai (Thailand) Co., Ltd. CR Ubon Ratchathani (Thailand) Co., Ltd. CR Ratchaburi (Thailand) Co., Ltd. CR Chantaburi (Thailand) Co., Ltd.

Expenses Purchases of merchandise

Central Trading Co., Ltd. Central Garment Factory Co., Ltd. Cetrac International Ltd. Textral Textile Co., Ltd. Earth Care Co., Ltd. Central Department Co., Ltd.

Inter-company value 31 December 2005

Joint Director

X X X

B2S Co., Ltd.

Robinson Sukhumvit Co., Ltd.

Joint shareholders

X

Group of Central Food Retail Co., Ltd.

Management fees

Main Shareholders

Relationship with the Company Joint-ventures

Related Company

Subsidiaries

Subject

(Million Baht)

X X X X

98.64

X X X X X X X X X X X

704.18

X X X X X X X X X X X X X X X

646.86 X X X X X X

X

X

045


Rentals/Services

Central Pattana Group Pcl.

X X

Tiang Chirathivat Co., Ltd.

Management fees

Central Retail Corporation Co., Ltd.

X

Central Department Co., Ltd.

Interest Expense

Robinson Rajdamri Co., Ltd. Robinson Sukhumvit Co., Ltd. Kruerkaew Co., Ltd. RD Pattana Co., Ltd. Central Retail Corporation Co., Ltd. CR (Thailand) Co., Ltd. CR Phuket (Thailand) Co., Ltd. Group of Central Food Retail Group Co., Ltd.

X

31 December 2005 (Million Baht)

X X X X

28.93

45.76

260.71

X X X X X

X

X X X

Financial support via subsidiaries

X

3,166.37 CR Hadyai (Thailand) Co., Ltd. CR Udonthani (Thailand) Co., Ltd. CR Phuket (Thailand) Co., Ltd. CR Nakorn Sri Thammarat (Thailand) Co., Ltd. CR Chiang Mai (Thailand) Co., Ltd. CR Ubon Ratchathani (Thailand) Co., Ltd. CR Ratchaburi (Thailand) Co., Ltd. CR Chantaburi (Thailand) Co., Ltd.

046

Inter-company value

Joint Director

Joint shareholders

Main Shareholders

Relationship with the Company Joint-ventures

Related Company

Subsidiaries

Subject

X X X X X X X X


Necessary Inter-company Transactions>> Merchandise purchases: The Company purchases popular brand products from relevant suppliers and acts as sole distributor of those products. The same merchandising policy is followed with other suppliers. Prices are negotiated with a view to achieving the highest gross profit margin. Such products must be currently available in the market andcompetitive with similar products offered by other department stores. Rental and service income: Specialty stores are run by affiliated companies and other companies that are expert in specialty merchandising of specific products that are popular among the Company’s target customers. Specialty stores are also specially designed in unique, modern styles in accordance with the Company’s concepts. Compensation is based either on a percentage of sales or a fixed rate. Income from financial services: This source of income is derived from affiliates who use the Company’s secure room to store their cash receipts during the day. The service is a general service to be offered by other department stores in order to facilitate their tenants. The service fee charged to those related parties are at the same rates charged to other tenants and/or business partners Management fee income: Collected from the Company’s affiliates and subsidiaries for department store management, merchandising, marketing and use of the Robinson brand. The rate is based on a percentage of sales and/or other income, as per each joint venture agreement. Management fee expenses: Paid to related company for accounting and financial management services. The service provider is of specialised management expertise, so as to enable the Company to efficiently and effectively minimise related costs. Lending and borrowing to and from subsidiaries: Centralisation of the merchandising system involves making inter-company loans thru the current account system. Inter-company loan costs are referred to interest rates charged by local financial institutions, plus 1% to 1.5% interest margin per annum.

Measures and procedures for approval of inter-company transactions The Company and its subsidiaries act in compliance with the Stock Exchange of Thailand’s notice regarding measures, methods and disclosure of inter-company transactions of the listed company and under governance of the Plan Administrator.

Future policy and trends for inter-company transactions The Company and its subsidiaries will continue their inter-company transactions which are a necessary part of department store operation. Such transactions will be conducted in compliance with the Stock Exchange of Thailand rules and regulations. The pricing policy for inter-company transactions is as follows: 1. The Company and its subsidiaries have a policy that the agreed price of sales and services offered to related companies must not be less than the original price. 2. The Company and its subsidiaries have a policy to calculate inter-transaction loan costs referred to interest rates offered by domestic financial institutions, plus 1.0% to 1.5% interest margin per annum. 3. The Company and its subsidiaries have a policy to base rental and service fees on percentages of total sales or on fixed rates per square metre, as indicated by prevailing market rates.

047


Robinson Department Store

Public Company Limited and its Subsidiaries Annual financial statements and Audit report of Certified Public Accountant For the years ended 31 December 2005 and 2004


Audit report of Certified Public Accountant>> To the shareholders of Robinson Department Store Public Company Limited I have audited the accompanying consolidated balance sheets of Robinson Department Store Public Company Limited and its subsidiaries as at 31 December 2005 and 2004, and the consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years then ended. I have also audited the balance sheets of Robinson Department Store Public Company Limited as at 31 December 2005 and 2004, and the related statements of income, changes in shareholders’ equity and cash flows for each of the years then ended. The management of the Company is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audits to obtain reasonable assurance as to 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 consolidated financial positions of Robinson Department Store Public Company Limited and its subsidiaries as at 31 December 2005 and 2004, and the consolidated results of their operations and cash flows for each of the years then ended, and the separate financial positions of Robinson Department Store Public Company Limited and the results of its operations and its cash flows for each of the years then ended in accordance with generally accepted accounting principles.

(Winid Silamongkol) Certified Public Accountant Registration number 3378 KPMG Phoomchai Audit Ltd. Bangkok 27 February 2006

050


Robinson Department Store Public Company Limited and its Subsidiaries Balance sheets As at 31 December 2005 and 2004

Assets

Note

Consolidated

2005

2004

Current assets

Cash and cash equivalents

Trade accounts receivable, net

Short-term loans and advances to subsidiaries

The Company

2005

2004

(in Baht)

6

1,030,216,786

1,623,997,947

113,589,557

453,359,191

5, 7

220,282,598

204,175,745

181,656,944

158,542,109

5

-

-

1,566,169,350

2,011,104,760

Inventories, net

8

604,539,739

488,493,946

406,903,299

312,053,006

Other current assets

9

49,836,414

73,190,146

33,786,220

54,276,493

Total current assets

1,904,875,537

2,389,857,784

2,302,105,370

2,989,335,559

Non-current assets

10, 18

546,802,656

445,393,457

1,658,031,954

Investments accounted for using the equity method

1,623,446,528

General investments accounted for

using the cost method

11

-

-

-

-

Long-term loans to related parties

5

-

-

61,223,493

61,223,493

Property, plant and equipment, net

12, 18

1,767,598,131

1,786,719,649

1,055,395,341

988,452,241

Leasehold rights, net

13

2,053,918,962

2,198,700,720

1,349,956,051

1,482,059,930

Goodwill, net

14

60,030,543

61,583,774

-

Other non-current assets

15, 18

577,182,910

472,514,029

369,768,837

269,709,355

Total non-current assets

5,005,533,202

4,964,911,629

4,494,375,676

4,424,891,547

Total assets

6,910,408,739

7,354,769,413

6,796,481,046

-

7,414,227,106

The accompanying notes are an integral part of these financial statements.

051


Robinson Department Store Public Company Limited and its Subsidiaries Balance sheets As at 31 December 2005 and 2004

and Shareholders’ equity

Liabilities

Note

Trade accounts payable

5, 17

Current portion of long-term loan

2004

18

Short - term loans and

The Company

2005

2004

(in Baht)

1,842,059,039

1,602,089,682

1,072,411,890

880,360,349

from financial institution

2005

Current liabilities

Consolidated

317,360,000

-

317,360,000

-

18,992,348

26,926,852

906,846,886

721,667,012

-

584,292,602

443,483,251

465,297,959

292,499,959 4,807,421,261

advances from related parties

5, 18

Current portion of amortising notes

18, 23

Other current liabilities

19

Total current liabilities

2,762,703,989

2,794,166,797

2,761,916,735

18

632,640,000

1,795,044,911

632,640,000

-

5, 18

-

-

113,300,000

Non-current liabilities Long-term loan from financial institutions

-

960,512,384 2,674,048,569

Long-term loan from subsidiary

113,300,000

Other liabilities from excess of losses over costs of investments in subsidiaries

accounted for using the equity method

10

-

Unearned lease income

-

81,588,537

65,309,959

5, 20

154,296,327

261,866,738

52,487,167

122,470,057

Other non-current liabilities

21

43,040,521

22,102,466

1,996,460

4,658,405

Total non-current liabilities

829,976,848

2,079,014,115

882,012,164

305,738,421

Total liabilities

3,592,680,837

4,873,180,912

3,643,928,899

5,113,159,682

Shareholders’ equity

Share capital

Authorised share capital

22, 23

11,106,611,330

11,106,611,330

11,106,611,330

11,106,611,330

Issued and paid-up share capital

22, 23

11,106,611,330

11,106,611,330

11,106,611,330

11,106,611,330

Share discount, net

22, 23

(7,217,474,659) (10,919,678,429) (7,217,474,659) (10,919,678,429)

Fair value and revaluation reserve

Retained earnings (deficit)

Appropriated for legal reserve

785,206,636

860,948,677

785,206,636 96,215,000

860,948,677

25

96,215,000

96,215,000

96,215,000

23

(1,618,006,160)

1,156,970,846

(1,618,006,160)

1,156,970,846

Unappropriated retained

25

earnings (deficit) Total equity of the Company’s

shareholders

3,152,552,147

2,301,067,424

3,152,552,147

Minority interests

165,175,755

180,521,077

Total shareholders’ equity

3,317,727,902

2,481,588,501

3,152,552,147

6,910,408,739 7,354,769,413

6,796,481,046

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of these financial statements.

052

-

7,414,227,106

2,301,067,424 2,301,067,424


Robinson Department Store Public Company Limited and its Subsidiaries Statements of income For the years ended 31 December 2005 and 2004

Note

Consolidated

2005

2004

Revenues

The Company

2005

2004

(in Baht)

Revenue from sale of goods

5

9,816,982,615

8,834,996,677

6,150,207,105

5,296,257,302

Rental and service income

5

671,788,394

639,072,522

412,612,190

384,026,818

Interest income

5, 26

19,338,112

10,811,163

451,580,707

435,823,682

Other income

27

345,750,901

355,439,423

354,817,316

337,112,554

Share of profits from investments

accounted for using the equity method

10

101,557,407

101,104,201

103,247,976

108,558,297 6,561,778,653

Total revenues

10,955,417,429

9,941,423,98)

7,472,465,294

Expenses

Cost of sale of goods

5

7,641,775,272

6,900,104,108

4,783,335,931

4,135,543,657

5, 28

2,430,245,393

2,252,047,333

1,768,017,967

1,621,424,312

10

-

-

65,479,902

82,257,635 5,839,225,604

Selling and administrative expenses

Share of losses from investments

accounted for using the equity method

Total expenses

10,072,020,665

9,152,151,441

6,616,833,800

Profit before interest

883,396,764

789,272,545

855,631,494

722,553,049

5, 30

2,480,492

3,194,618

4,408,811

5,782,339

31

15,246,367

34,102,895

-

and income tax expenses

Interest expense

Income tax expense

Profit after tax

865,669,905

751,975,032

851,222,683

Net profit of minority interest

(14,447,222)

(35,204,322)

-

Net profit

851,222,683

716,770,710

851,222,683

716,770,710)

0.77

0.65

0.77

0.65

716,770,710 -

Basic earnings per share

32

The accompanying notes are an integral part of these financial statements.

053


054 Share

Adjustment as at 1 January 2005

Depreciation and amortisation

Net profit

33

Dividend

Balance at 31 December 2005

25

23

transferred from revaluation reserve

Balance at 31 December 2004

Dividend

33

Net profit

25

transferred from revaluation reserve

Depreciation and amortisation

Balance at 1 January 2004

Note

-

-

-

(10,919,678,429)

11,106,611,330

-

-

-

-

(7,217,474,659)

-

-

-

3,702,203,770

11,106,611,330 (10,919,678,429)

-

-

-

11,106,611,330

discount, net

share capital

paid-up

Issued and

For the years ended 31 December 2005 and 2004

Retained earnings (deficit)

of the Company’s

Minority

Total equity

785,206,636

-

-

(75,742,041)

-

860,948,677

-

-

(76,101,488)

937,050,165

96,215,000

96,215,000

-

-

-

-

96,215,000

-

-

-

equity

shareholders’

Total

3,152,552,147

-

851,222,683

262,040

-

2,301,067,424

-

716,770,710

26,566

1,584,270,148

165,175,755

(29,559,234)

14,447,222

(233,310)

-

180,521,077

(40,439,517)

35,204,322

-

185,756,272

3,317,727,902

(29,559,234)

865,669,905

28,730

-

2,481,588,501

(40,439,517)

751,975,032

26,566

1,770,026,420

The accompanying notes are an integral part of these financial statements.

(1,618,006,160)

-

851,222,683

76,004,081

(3,702,203,770)

1,156,970,846

-

716,770,710

76,128,054

364,072,082

(in Baht)

reserve Legal reserve Unappropriated shareholders interest

revaluation

Fair value and

Consolidated

Statements of changes in shareholders’ equity

Robinson Department Store Public Company Limited and its Subsidiaries


055

Balance at 1 January 2004

Depreciation and amortisation

share capital

paid-up

discount, net

Share

Issued and

Balance at 31 December 2005

Net profit

25

23

transferred from revaluation reserve

Depreciation and amortisation

Adjustment as at 1 January 2005

Balance at 31 December 2004

25

Net profit

transferred from revaluation reserve

11,106,611,330

-

-

-

11,106,611,330

-

-

11,106,611,330

(7,217,474,659)

-

-

3,702,203,770

(10,919,678,429)

-

-

(10,919,678,429)

The Company

reserve

785,206,636

-

(75,742,041)

-

Unappropriated

shareholders

the Company’s

96,215,000

-

-

-

96,215,000

-

-

96,215,000

(1,618,006,160)

851,222,683

76,004,081

(3,702,203,770)

1,156,970,846

716,770,710

76,128,054

364,072,082

3,152,552,147

851,222,683

262,040

-

2,301,067,424

716,770,710

26,566

1,584,270,148

The accompanying notes are an integral part of these financial statements.

860,948,677

-

(76,101,488)

937,050,165

Legal reserve

Retained earnings (deficit)

Total equity of

(in Baht)

revaluation

Fair value and

Note

For the years ended 31 December 2005 and 2004

Statements of changes in shareholders’ equity

Robinson Department Store Public Company Limited and its Subsidiaries


Robinson Department Store Public Company Limited and its Subsidiaries Statements of cash flows For the years ended 31 December 2005 and 2004

Consolidated

2005

2004

The Company

(in Baht)

716,770,710

851,222,683

Cash flows from operating activities

2005

2004

Depreciation and amortisation

532,573,056

503,696,352

364,902,979

362,431,984

Interest income

(19,338,112)

(10,811,163)

(451,580,706)

(435,823,682)

Interest expense

2,480,492

3,194,618

4,408,811

5,782,339

Bad debts and provision for doubtful accounts

1,938,214

40,631,023

301,862

36,455,943

Reversal of allowance for doubtful accounts

(935,730)

(33,519,996)

(686,397)

(26,748,730)

Provision for shortage and damage inventory

2,595,574

7,624,356

353,558

5,323,221

Gain on disposal of equipment

(1,829,284)

(1,099,025)

(1,638,164)

Net profit of minority interest

14,447,222

35,204,322

-

Share of profits from investments (101,557,407)

(101,104,201)

Net profit 851,222,683

Adjustments for

accounted for using the equity method

716,770,710

(765,118) -

(103,247,976)

(108,558,297)

Share of losses from investments

accounted for using the equity method

-

-

65,479,902

82,257,635

Loss from discontinuity of subsidiary

-

-

1,303,565

-

Earned lease income

(69,982,890)

(69,982,890)

Reversal of liability under debt

restructuring agreement of subsidiaries

Income tax expense

Profit provided by operating activities before

changes in operating assets and liabilities

(107,570,411)

(106,359,381)

-

(7,809,190)

-

-

15,246,367

34,102,895

-

-

1,189,272,664

1,080,521,320

660,837,227

(20,588,731)

(64,339,002)

(22,730,300)

(42,298,885)

(118,641,367)

24,626,450

(95,203,851)

27,731,290

567,143,115

Changes in operating assets and liabilities

Trade accounts receivable

Inventories

Other current assets

27,010,066

(7,428,633)

20,490,273

(11,645,907)

Other non-current assets

(61,723,378)

37,308,085

(73,196,537)

37,050,165

Trade accounts payable

239,969,357

245,555,157

192,051,541

160,090,252

Other current liabilities

2,357,711

115,475,636

15,071,635

64,983,834

Other non-current liabilities

(3,061,945)

(3,692,145)

(2,661,945)

(2,661,945)

Income taxes paid

(73,066,061)

(71,743,317)

(29,695,429)

(25,630,856)

Net cash provided by operating activities

1,181,528,316

1,356,283,551

664,962,614

774,761,063

The accompanying notes are an integral part of these financial statements.

056


Robinson Department Store Public Company Limited and its Subsidiaries Statements of cash flows For the years ended 31 December 2005 and 2004

Consolidated

2005

2004

Cash flows from investing activities

Interest received

Dividend received

Decrease in short-term loans

and advances to subsidiaries

Purchase of equipment

Sale of equipment

The Company

(in Baht)

2005

19,338,112

10,811,163

3,821,968

-

-

-

-

-

2004

1,443,167 91,400,000

852,360,430

89,782,407

(304,288,858)

(118,928,518)

(346,189,965)

(144,541,303)

9,251,267

1,714,668

9,017,306

1,262,892

Proceed from discontinuity of subsidiary

-

-

58,753,419

-

Net cash outflow on acquisition of subsidiary

-

-

-

(51,250,000)

Net cash provided by (used in)

investing activities

Cash flows from financing activities

Interest paid

(87,647,989)

(25,630,856)

(1,782,055)

-

Dividends paid

(29,559,234)

(40,439,517)

-

-

Increase (decrease) in short-term (7,934,504)

9,461,920

(56,292,254)

(92,740,852)

loans and advances from subsidiaries

(132,015,472)

619,664,265

13,709,948

Increase (decrease) in long-term loan from financial institutions

(317,600,586)

(845,044,911)

1,795,044,911

950,000,000

-

Repayment of liability under guarantee agreement of subsidiary

-

(159,193,373)

-

-

-

(2,030,485,136)

-

-

Repurchase of amortising notes

Repayment of amortising notes

Repayment of liability under debt restructuring agreements of subsidiaries

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

(487,522,253) -

(434,875,780) (26,288,874)

(2,516,322,204) -

(546,372,280) -

(1,457,708,891)

(912,406,705)

(1,624,396,513)

(639,113,132)

(593,781,161)

311,861,374

(339,769,634)

149,357,879

1,623,997,947

1,312,136,573

453,359,191

304,001,312

1,030,216,786

1,623,997,947

13,589,557

453,359,191

Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

The accompanying notes are an integral part of these financial statements.

057


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Note

Contents

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

General information Basis of preparation of financial statements Results of operations Significant accounting policies Related party transactions and balances Cash and cash equivalents Trade accounts receivable, net Inventories, net Other current assets Investments accounted for using the equity method General investments accounted for using the cost method Property, plant and equipment, net Leasehold rights, net Goodwill, net Other non-current assets Liabilities under debt restructuring agreement of subsidiaries Trade accounts payable Interest-bearing liabilities Other current liabilities Unearned lease income Other non-current liabilities Share capital Rehabilitation plan The Voluntary Debt Refinance Program Reserves Interest income Other income Selling and administrative expense Provident fund Interest expense Income tax expense Earnings per share Dividends Financial instruments Commitments Reclassification of accounts

058


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the directors on 27 February 2006

1

General information

Robinson Department Store Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office at 2 Silom Road, Suriyawong, Bangrak, Bangkok, Thailand.

The Company was listed on the Stock Exchange of Thailand in 1992

The principal activities of the Company and its subsidiaries are operation of a chain of department stores under brand of “Robinson”. The Company has also jointly invested with groups of business partners (Indirect subsidiaries) outside Bangkok through a holding company, CR (Thailand) Co., Ltd. engaging in the operation of department stores.

The Group employs 2,578 employees as of 31 December 2005 (2004: 2,511). The employee costs of the Group for the year ended 31 December 2005 amounted to Baht 564.3 million (2004: Baht 524.3 million).

2

Basis of preparation of financial statements

The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language.

The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions and with generally accepted accounting principles in Thailand.

In 2005, the Group adopted the following new TAS which are relevant to its operations:

TAS 52 Events after the Balance Sheet Date

TAS 53 Provisions, Contingent Liabilities and Contingent Assets

TAS 54 Discontinuing Operations

The adoption of these new TAS has no material effect on the financial statements.

The financial statements are presented in Thai Baht and prepared on the historical cost basis except for the following assets and liabilities which are stated at fair value: certain property, plant and equipment and leasehold rights.

The preparation of financial statements in conformity with TAS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which from the basis of making the judgements about carrying a mounts of assets and liabilities that are not readily apparent from other sources.

059


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interests in associates. Details of the Company’s subsidiaries are as follows:

Direct subsidiaries

Country of

Ownership interest

Type of business

incorporation

2005

2004

Robinson Anusawaree Co., Ltd.

Dormant Company

Thailand

99.91%

99.91%

Robinson Rajdamri Co., Ltd.

Dormant Company

Thailand

-

99.35%

Robinson Ratchada Co., Ltd.

Dormant Company

Thailand

99.80%

99.80%

Robinson Nakarin Co., Ltd.

Dormant Company

Thailand

99.86%

99.86%

Robinson Sukhumvit Co., Ltd.

Dormant Company

Thailand

99.99%

99.99%

Sapanmai Department Store Co., Ltd.

Dormant Company

Thailand

74.50%

74.50%

Kruerpetch Co., Ltd.

Investing Company

Thailand

99.99%

99.99%

Kruerkaew Co., Ltd.

Dormant Company

Thailand

99.99%

99.99%

CR (Thailand) Co., Ltd.

Investing Company

Thailand

99.99%

99.99%

R-Trading (L) BHD.

Investing Company

Malaysia

99.92%

99.92%

RD Pattana Co., Ltd.

Real Estate

Thailand

99.98%

99.98%

Robinson S.P.V. Co., Ltd.

Investing Company

Thailand

99.99%

99.99%

CR Rajchaburi (Thailand) Co., Ltd.

Department Store

Thailand

50.00%

50.00%

Indirect subsidiaries

CR Udorn Thani (Thailand) Co., Ltd.

Department Store

Thailand

76.00%

76.00%

CR Phuket (Thailand) Co., Ltd.

Department Store

Thailand

49.99%

49.99%

CR Nakhon Sri Thammarat (Thailand) Co., Ltd.

Department Store

Thailand

49.99%

49.99%

CR Had Yai (Thailand) Co., Ltd.

Department Store

Thailand

76.00%

76.00%

CR Chiang Mai (Thailand) Co., Ltd.

Department Store

Thailand

89.99%

89.99%

CR Ubon Ratchathani (Thailand) Co., Ltd.

Department Store

Thailand

74.99%

74.99%

CR Chantaburi (Thailand) Co., Ltd.

Department Store

Thailand

64.99%

64.99%

CR Rajchaburi (Thailand) Co., Ltd.

Department Store

Thailand

49.99%

49.99%

Significant intra-group transactions between the Company and its subsidiaries are eliminated on consolidation.

060


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

3

Results of operations

The Company and subsidiaries have been affected by adverse business condition in the past which resulted in the Company entering into a debt restructuring process and a rehabilitation plan (Note 23). The Company has successfully complied with conditions outlined in the rehabilitation plan. As at 31 December 2005 and 2004, the Company had outstanding loan receivable net of provision for loss from investments in subsidiaries accounted for using the equity method of approximately Baht 1,566.2 million and Baht 2,011.1 million, respectively, for the Company’s financial statements. The financial statements reflect management’s current assessments of the impact to date of the business situation on the financial position of the Company and its subsidiaries.

4

Significant accounting policies

(a)

Basis of consolidation

Subsidiaries

Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Associates

Associates are those companies in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

(b)

Foreign currencies

Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of income.

(c)

Cash and cash equivalent

Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

061


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

(d)

Trade and other accounts receivable

Trade and other accounts receivable (including balances with related parties) are stated at their invoice value less allowance for doubtful accounts.

The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(e)

Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost formula and comprises all costs of purchase at invoice value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

(f)

Investments

Investments in subsidiaries and associates

Investments in subsidiaries and associated in the separate financial statements of the Company are accounted for using the equity method.

Investments in equity securities

Equity securities which are not marketable are stated at cost less impairment losses.

(g)

Property, plant and equipment

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (if any) except for land, leasehold improvement and building system equipment which are stated at their revalued amounts. The revalued amount is the fair value determined on the basis of the property’s existing use at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Revalued assets

Revaluations are performed by independent professional valuers with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at the balance sheet date.

062


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Any increase in value, on revaluation is credited to the revaluation reserve unless it offsets a previous decrease in value recognised in the statement of income. A decrease in value is recognised in the statement of income to the extent it exceeds an increase previously recognised in the revaluation reserve. Upon disposal, any related revaluation surplus is transferred directly from the revaluation reserve to retained earnings and is not taken into account in calculating the gain or loss on disposal.

Depreciation

Depreciation is charged to the statement of income on a sum-of-the-year digits basis (except property, plant and equipment which were acquired before 2001 are depreciated on a straight-line basis) over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Leasehold improvements Buildings and construction Buildings and construction improvements Information system equipment Building system equipment Furniture, fixtures and office equipment Vehicles

20 20 5-20 5-10 5-10 5 5

years years years years years years years

No depreciation is provided on freehold land or assets under construction.

(h)

Intangible assets

Goodwill

Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired. Negative goodwill in a business combination represents the excess of the fair value of the Group’s share of the identifiable net assets acquired over the cost of acquisition.

Goodwill and negative goodwill are stated at cost less accumulated amortisation and impairment losses. Goodwill and negative goodwill arising on acquisition of shares in subsidiaries and associates in the Company’s separate financial statements are included in investments.

The gain or loss on disposal of an entity includes the unamortised balance of goodwill relating to the entity disposed of.

Other intangible assets

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.

063


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Amortisation

Amortisation is charged to the statement of income on a straight-line basis from the date that intangible assets are available for use over the estimated useful lives of the assets. Goodwill negative goodwill and other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Leasehold rights Goodwill

(i)

Impairment

The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.

Calculation of recoverable amount

The recoverable amount is the greater of the assets’ net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. However, an impairment loss in respect of goodwill is not reversed.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(j)

Interest-bearing liabilities

Interest-bearing liabilities are recognised initially at cost.

(k)

Trade and other accounts payable

Trade and other accounts payable (including balances with related parties) are stated at cost.

064

Over the lease periods 20 and 27 years


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

(l)

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

(m)

Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

Sale of goods and services rendered

Revenue is recognised in the statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods.

tion

As soon as the outcome of a contract for the rendering of services can be estimated reliably, revenue associated with the contract is recognized in the income statement in proportion to the stage of comple-

Rental income

Rental income is recognised in the statement of income on a straight-line basis over the term of the lease.

Interest and dividend income

Interest income is recognised in the statement of income as it accrues. Dividend income is recognised in the statement of income on the date the Group’s rights to receive payments.

(n)

Expenses

of the contract. When the outcome of the contract cannot be estimated reliably, revenue is recognized only to the extent of the expenses recognized that are recoverable.

Operating leases

Payments made under operating leases are recognised in the statement of income over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made.

Finance costs

Interest expenses and similar costs are charged to the statement of income in the period in which they are incurred.

(o)

Income tax

Income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

065


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

5

Related party transactions and balances

Related parties are those parties linked to Group and the Company by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.

The pricing policies for particular types of transactions are explained further below:

Pricing polices

Sale of goods and services rendered

Market prices should not be lower than the cost of goods and/or services.

Interest income

Interest rates of certain local financial institutions plus 1.0% per annum to 1.5% per annum.

Rental and service fees

Certain percentages of sales with a reference to the related market prices or fixed amount.

Management fees

Certain percentages of sales or fixed amount.

Transactions for the years ended 31 December 2005 and 2004 with related parties are summarised as follows:

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Revenue Revenue from sale of goods

-

-

70,959

58,452

Rental and service charges

396,503

327,268

289,774

232,681

6,879

4,124

102,950

100,107

-

447,759

434,381

Management fee income Interest income

-

Expenses Interest expenses Management fee expense

066

1,435

1,637

2,861

5,686

45,756

8,530

45,756

8,530


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Balances as at 31 December 2005 and 2004 with related parties are as follows:

Trade accounts receivable Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Robinson Sukhumvit Co., Ltd.

-

-

326

326

Kruerkaew Co., Ltd.

-

-

321

321

RD Pattana Co. ,Ltd.

-

-

267

267

CR Udorn Thani (Thailand) Co., Ltd.

-

-

4,382

2,605

CR Phuket (Thailand) Co., Ltd.

-

-

3,629

2,658

CR Nakorn Sri Thammarat

(Thailand) Co., Ltd.

-

-

3,568

2,593

CR Had Yai (Thailand) Co. ,Ltd.

-

-

4,549

3,315

CR Chiang Mai (Thailand) Co., Ltd.

-

-

5,747

3,359

CR Ubon Ratchathani (Thailand) Co., Ltd.

-

-

1,687

1,054

CR Rajchaburi (Thailand) Co., Ltd.

-

-

3,160

2,118

CR Chantaburi (Thailand) Co., Ltd.

-

-

2,899

1,691

Power Buy Co., Ltd.

14,087

7,917

11,476

6,390

CRC Sport Co. Ltd.

6,313

5,338

4,127

3,352

B2S Co., Ltd.

7,770

4,570

6,271

3,390

Central Food Retail Co., Ltd.

15,151

20,920

9,639

16,449

Others

12,598

7,391

11,138

5,892

Total

55,919

46,136

73,186

55,780

Loans and advances to related parties Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Short-term

Robinson Anusawaree Co., Ltd.

-

-

75,279

69,724

Robinson Ratchada Co., Ltd.

-

-

45,607

41,709

Robinson Nakarin Co., Ltd.

-

-

221,423

203,477

Kruerpetch Co., Ltd.

-

-

409,544

206,742

Robinson S.P.V. Co., Ltd.

-

-

1,061

109,383

Robinson Sukhumvit Co., Ltd.

-

-

10,583

5,893

CR (Thailand) Co., Ltd.

-

-

4,959,079

5,490,026

CR Phuket (Thailand) Co., Ltd.

-

-

-

224

Total

-

-

5,722,576

6,127,178

Less provision for loss from investments in

subsidiaries recorded by the equity method (Note 10) -

-

(4,156,407)

(4,116,073)

-

1,566,169

2,011,105

-

067


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

Long-term

Robinson Nakarin Co., Ltd.

Siam Retail Development Co., Ltd.

Rangsit Plaza Co., Ltd.

Total

Less Allowance for doubtful accounts

-

-

Total

-

-

Movements during the years on loans and advances to related parties are as follows:

-

-

61,223

61,223

324,882

324,882

324,882

324,882

19,687

19,687

19,687

19,687

344,569

344,569

405,792

405,792

(344,569)

(344,569)

(344,569)

(344,569)

61,223

61,223

1,627,392

2,072,328

Consolidated

2004

2005

2004

The Company

2005

(in thousand Baht)

2004

Short-term

At 1 January

-

-

6,127,178

5,782,580

Increase

-

-

15,206,554

13,506,630

Decrease

-

-

(15,611,156)

(13,162,032)

At 31 December

-

-

5,722,576

6,127,178

Long-term

At 1 January

405,792

405,792

Increase

Decrease -

At 31 December

Trade accounts payable

344,569

344,569

-

-

-

-

-

-

344,569

344,569

405,792

Consolidated

2005

2004

- 405,792

The Company

2005

(in thousand Baht)

2004

Central Trading Co., Ltd.

53,653

50,195

35,730

31,280

Central Garment Factory Co., Ltd.

33,795

30,247

19,721

17,405

Cetrac International Co., Ltd.

35,755

33,405

19,409

18,410

Central Department Store Co., Ltd.

Others

Total

068

4,036

5,240

3,837

4,891

12,435

10,130

10,845

8,837

139,674

129,217

89,542

80,823


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Short-term loans and advances from related parties

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Short-term

Robinson Rajdamri Co., Ltd.

-

-

-

59,079

Kruerkaew Co., Ltd.

-

-

5,552

9,597

Robinson Sukhumvit Co., Ltd.

-

-

11,775

9,509

RD Pattana Co., Ltd.

-

-

R - Trading (L) BHD.

-

-

Central Retail Corporation Co., Ltd.

Others

3,477

18,992

26,927

Loan-term

Robinson Sukhumvit Co., Ltd.

Total

Movements during the years on loans and advances from related parties are as follows:

15,515

870,063

4,963

201

10,831

4,464

6,154

906,847

960,512

16,096

-

-

18,992

2005

26,927

5,909

880,093

Consolidated

-

2004

113,300

113,300

1,020,147

1,073,812

The Company

2005

(in thousand Baht)

2004

Short-term

At 1 January

26,927

17,465

960,512

1,047,471

Increase

80,812

11,408

100,132

102,008

Decrease

(88,747)

(1,946)

(153,797)

(188,967)

At 31 December

18,992

26,927

906,847

960,512

Long-term

At 1 January

-

-

113,300

113,300

Increase

-

-

-

-

Decrease -

-

-

-

At 31 December

-

-

113,300

113,300

Unearned lease income

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

Central Food Retail Co., Ltd.

76,234

174,712

52,487

2004

122,470

069


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

6

Cash and cash equivalents

Consolidated The Company 2005 2004 2005 2004 (in thousand Baht)

Cash at bank and on hand

Cash at bank - saving account

Short-term investment in fixed deposits

7

Trade accounts receivable, net

Total

55,393

90,113

57,344

56,352

973,701

1,512,769

55,123

395,891

1,123

21,116

1,123

1,116

1,030,217

1,623,998

113,590

453,359

Consolidated The Company Note 2005 2004 2005 2004 (in thousand Baht)

Trade accounts receivable

from related parties

Trade accounts receivable

5

55,919

46,136

73,186

55,780

from other parties

175,409

168,083

111,665

106,340

Less allowance for doubtful accounts

(11,046)

220,282

(10,043)

204,176

(3,194)

181,657

(3,578)

158,542

Within credit terms

170,974

147,269

143,462

120,179

Overdue: 48,438

43,778

37,504

31,639

640

12,361

627

6,138

Net

Less than 3 months 3-6 months

6-12 months

404

987

51

594

Over 12 months

10,872

9,824

3,207

3,570

Less allowance for doubtful accounts

(3,194)

(3,578)

The normal credit term granted by the Group is 30 - 60 days

8

Inventories, net

231,328

Net

214,219

184,851

(11,046)

(10,043)

220,282

204,176

162,120

181,657

158,542

Consolidated The Company 2005 2004 2005 2004 (in thousand Baht)

Merchandise - at cost

Less allowance for shortage, damage,

070

obsolete and slow-moving inventories

Net

644,901

526,260

431,379

336,175

(40,361)

(37,766)

(24,476)

(24,122)

604,540

488,494

406,903

312,053


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

9

Other current assets Consolidated

2005

2004

The Company

2005

(in thousand Baht)

Accrued income

2004

-

18,501

-

16,150

Prepaid expenses

19,311

19,037

13,809

13,796

Advances payment

12,657

11,114

8,552

6,541

Others

17,868

24,538

11,425

17,789

Total

49,836

73,190

33,786

54,276

10

Investments accounted for using the equity method Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Net book value at 1 January

445,393

344,263

(2,557,936)

(2,544,113)

Share of profits from investments

101,557

101,104

103,248

108,558

Share of losses from investments

equal its interest in investments

-

-

(65,480)

(82,257)

Acquisition

-

-

-

51,250

Disposal of subsidiary

-

-

(60,057)

-

Dividend income

-

-

-

(91,400)

Others

(147)

26

261

26

Net book value at 31 December

546,803

445,393

(2,579,964)

(2,557,936)

Disclosed as: Consolidated

2005

2004

The Company

2005

(in thousand Baht)

Investments accounted for using

the equity method

Other liabilities from excess of

losses over costs of investments in subsidiaries

1,658,032

2004

546,803

445,393

1,623,447

-

-

(81,589)

(65,310)

-

-

(4,156,407)

(4,116,073)

546,803

445,393

(2,579,964)

(2,557,936)

Provision of short-term loans and advances to related parties Net

071


072

Siam Retail Development Co., Ltd

Square Ritz Plaza Co., Ltd.

D C R Co., Ltd.

Less allowance for impairment

Net

20.86

24.00

24.00

20.86

24.00

24.00

40.00

40.00

Power Buy Co., Ltd.

29.19

CRC Sports, Co., Ltd.

29.19

Associates

1,983,200

-

1,983,200

428,200

125,000

500,000

560,000

370,000

1,983,200

-

1,983,200

428,200

125,000

500,000

560,000

370,000

571,323

-

571,323

89,323

30,000

120,000

224,000

108,000

571,323

-

571,323

89,323

30,000

120,000

224,000

108,000

546,803

(74,636)

621,439

34,584

29,858

10,194

435,078

111,725

445,393

(74,636)

520,029

34,584

29,858

10,194

350,423

94,970

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Dividend 2005 2004

Investments accounted for using the equity method as at 31 December 2005 and 2004, and dividend income from the investments during the years ended on those dates, are as follows:

Consolidated Ownership interest Paid-up capital Cost method Equity method 2005 2004 2005 2004 2005 2004 2005 2004 % (in thousand Baht)

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries


073

Robinson Sukhumvit Co., Ltd.

Sapanmai Department Store Co., Ltd.

Kruerkaew Co., Ltd.

Robinson S.P.V. Co., Ltd.

R-Trading (L) BHD.

Associates

CRC Sports Co., Ltd.

Power Buy Co., Ltd.

Siam Retail Development Co., Ltd.

Square Ritz Plaza Co., Ltd

D C R Co., Ltd.

Less allowance for impairment

Net

Total

20.86

24.00

24.00

40.00

29.19

99.92

99.99

99.99

74.50

99.99

20.86

24.00

24.00

40.00

29.19

99.92

99.99

99.99

74.50

99.99

99.35

-

Robinson Rajdamri Co., Ltd.

50.00

CR Rajchaburi (Thailand) Co., Ltd.

50.00

Subsidiaries

2,246,750

1,983,200

-

1,983,200

428,200

125,000

500,000

560,000

370,000

263,550

50

1,000

40,000

20,000

100,000

-

102,500

2,292,750

1,983,200

-

1,983,200

428,200

125,000

500,000

560,000

370,000

309,550

50

1,000

40,000

20,000

100,000

46,000

102,500

778,523

571,323

-

571,323

89,323

30,000

120,000

224,000

108,000

207,200

50

1,000

40,000

14,900

100,000

-

51,250

824,224

571,323

-

571,323

89,323

30,000

120,000

224,000

108,000

252,901

50

1,000

40,000

14,900

100,000

45,701

51,250

1,658,032

546,803

(74,636)

621,439

34,584

29,858

10,194

435,078

111,725

1,111,229

884,676

3,387

54,807

15,237

103,928

-

49,194

1,623,447

445,393

(74,636)

520,029

34,584

29,858

10,194

350,423

94,970

1,178,054

884,149

3,576

58,044

16,106

105,217

59,870

51,092

The Company Ownership interest Paid-up capital Cost method Equity method 2005 2004 2005 2004 2005 2004 2005 2004 % (in thousand Baht)

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

91,400

-

-

-

-

-

-

-

-

91,400

-

-

-

-

-

91,400

-

Dividend 2005 2004


074

Provision for loss from investments in subsidiaries exceeding investment value as at 31 December 2005 and 2004 are as follows:

Total

Total investments net of loss from

investments in subsidiaries

exceeding investment value

The Company has pledged shares of subsidiaries and associated companies with net book value as at 31 December 2004 of approximately Baht 1,623.4 million as disclosed in Note 18.

99.80

703,250

75,000

703,250

75,000

3,000

702,953

74,850

3,000

702,953

74,850

3,000

501,000

(2,579,964)

(4,237,996)

(30,849)

(1,755)

(3,851,029)

(2,557,936)

(4,181,383)

(22,870)

(2,918)

(3,840,186)

(121,408)

-

-

-

-

-

-

-

-

-

-

-

99.80

3,000

501,000

(137,092)

-

Robinson Ratchada Co., Ltd.

99.98

501,000

11,250

(124,053)

99.98

501,000

11,250

(141,767)

-

RD Pattana Co., Ltd.

99.99

11,250

104,853

-

99.99

11,250

104,853

(69,948)

CR (Thailand) Co., Ltd.

99.99

105,000

(75,504)

99.99

105,000

8,000

Kruerpetch Co., Ltd.

99.86

8,000

99.86

8,000

Robinson Nakarin Co.,Ltd.

8,000

99.91

Robinson Anusawaree Co., Ltd.

99.91

Subsidiaries

Dividend 2005 2004

The Company Ownership interest Paid-up capital Cost method Equity method 2005 2004 2005 2004 2005 2004 2005 2004 % (in thousand Baht)

Provision for loss from investments in subsidiaries accounted for using the equity method

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries


075

Ownership interest 2005 2004 %

Ownership interest 2005 2004 %

Samakeesan (Dokya) Co., Ltd. 4.15 4.15 Rangsit Plaza Co., Ltd. 6.56 6.56 Siam Family Mart Co., Ltd. 2.50 2.50 Less allowance for impairment Net

Samakeesan (Dokya) Co., Ltd. 4.15 4.15 Rangsit Plaza Co., Ltd. 6.56 6.56 Wattanawana Co., Ltd. 19.58 19.58 Siam Family Mart Co., Ltd. 2.50 2.50 Less allowance for impairment Net

170,000 400,000 800,000 1,370,000 - 1,370,000

Paid-up capital 2005 2004

170,000 400,000 800,000 1,370,000 - 1,370,000

170,000 400,000 600,000 800,000 1,970,000 - 1,970,000

Paid-up capital 2005 2004

170,000 400,000 600,000 800,000 1,970,000 - 1,970,000

12,713 26,250 117,500 20,000 176,463 (176,463) -

12,713 26,250 20,000 58,963 (58,963) -

12,713 26,250 20,000 58,963 (58,963) -

The Company Investments value 2005 2004 (in thousand Baht)

12,713 26,250 117,500 20,000 176,463 (176,463) -

Consolidated Investments value 2005 2004 (in thousand Baht)

- - - - - - -

Dividend 2004

- - - - - -

- - - - - -

Dividend 2005 2004

- - - - - - -

2005

General investments accounted for using the cost method as at 31 December 2005 and 2004 and dividend income from the investments during the years ended on those dates, are as follows:

General investments accounted for using the cost method

11

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries


076

Property, plant and equipment, net

Cost/valuation At 1 January 2004 Additions Transfer, net Disposals At 31 December 2004 Additions Transfer, net Disposals At 31 December 2005

Accumulated depreciation At 1 January 2004 Depreciation charges for the year Disposals At 31 December 2004 Depreciation charges for the year Disposals At 31 December 2005

Net book value At 31 December 2004 At 31 December 2005

47,294 (30) 618,679

- - - 220,120 172,706

49,391 (21) 571,415

- - -

366,896 366,896

522,045

791,570 - - (35) 791,535 - - (150) 791,385

-

366,896 - - - 366,896 - - - 366,896

669,715 742,988

89,413 (428) 583,146

67,437 - 494,161

426,724

1,126,818 11,594 25,464 - 1,163,876 61,373 102,532 (1,647) 1,326,134

59,776 65,142

26,287 (10,654) 238,985

23,351 (1,357) 223,352

201,358

270,799 14,134 1,900 (3,705) 283,128 31,619 1,020 (11,640) 304,127

314,988 256,702

126,283 (4,398) 862,978

109,813 (108,906) 741,093

740,186

1,123,745 17,684 23,570 (108,918) 1,056,081 36,663 36,093 (9,157) 1,119,680

(in thousand Baht)

Consolidated Building, constructions Information Building and system system improvement equipment equipment

Leasehold Land improvement

12

134,911 102,287

66,691 (144,527) 1,555,169

97,011 (36,296) 1,633,005

1,572,290

1,741,331 29,078 35,613 (38,106) 1,767,916 16,297 18,108 (144,865) 1,657,456

Furniture, fixtures and office equipment

1,454 1,693

922 (2,648) 15,020

1,207 (289) 16,746

15,828

18,419 69 - (288) 18,200 1,161 - (2,648) 16,713

18,860 59,184

- - -

- - -

-

29,856 75,551 (86,547) - 18,860 201,555 (161,231) - 59,184

Transportation Under equipment construction

1,786,720 1,767,598

356,890 (162,685) 3,873,977

348,210 (146,869) 3,679,772

3,478,431

5,469,434 148,110 (151,052) 5,466,492 348,668 (3,478) (170,107) 5,641,575

Total

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries


077

(in thousand Baht)

240,000 240,000

179,602 135,948

231,153 338,051

47,252 50,626

182,070 161,370

Net book value At 31 December 2004 At 31 December 2005

171,802 18,729 (89) 190,442 19,271 (10,559) 199,154

102,814 23,146 - 125,960 43,432 (428) 168,964

521,520 69,686 (108,871) 482,335 76,273 (4,347) 554,261

507,934 45,415 (20) 553,329 43,534 (30) 596,833

Accumulated depreciation At 1 January 2004 Depreciation charge for the year Disposals At 31 December 2004 Depreciation charge for the year Disposals At 31 December 2005

- - - - - - -

746,409 11,544 15,324 (108,872) 664,405 26,026 34,306 (9,106) 715,631

Cost/valuation At 1 January 2004 240,000 732,966 328,057 224,665 Additions - - 9,859 11,662 Transfer, net - - 19,197 1,503 Disposals - (35) - (136) At 31 December 2004 240,000 732,931 357,113 237,694 Additions - - 54,411 22,598 Transfers, net - - 97,138 1,020 Disposals - (150) (1,647) (11,532) At 31 December 2005 240,000 732,781 507,015 249,780

The Company Building, constructions Information Building Leasehold and system system Land improvement improvement equipment equipment

For the years ended 31 December 2005 and 2004

Notes to the financial statements

Robinson Department Store Public Company Limited and its Subsidiaries

93,208 70,642

1,122,650 69,796 (27,988) 1,164,458 46,753 (144,012) 1,067,199

1,239,483 21,370 25,237 (28,424) 1,257,666 9,189 15,306 (144,320) 1,137,841

Furniture, fixtures and office equipment

977 1,434

10,116 856 (257) 10,715 704 (2,620) 8,799

11,949 - - (257) 11,692 1,161 - (2,620) 10,233

14,190 57,324

- - - - - - -

10,957 64,494 (61,261) - 14,190 194,382 (151,248) - 57,324

Transportation Under equipment construction

988,452 1,055,395

2,436,836 227,628 (137,225) 2,527,239 229,967 (161,996) 2,595,210

3,534,486 118,929 (137,724) 3,515,691 307,767 (3,478) (169,375) 3,650,605

Total


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

In September 1995, the Company and its subsidiaries appraised certain plots of land and certain leasehold rights to market prices by an independent appraiser. The excess of revalued amounts over costs of approximately Baht 540.6 million and Baht 1,464.5 million, respectively, have been presented as ìFair value and revaluation reserveî under Shareholdersí Equity in the balance sheets.

In June 1999, the Company and its subsidiaries reappraised every parcel of land, by an independent appraiser, including all land stated at appraisal value mentioned in the above paragraph. As a result of the revaluation, the fair value and revaluation reserve presented under the shareholders’equity was reduced by Baht 355 million. For the revaluation of other plots of land (stated at cost since these had never been appraised), the revalued amount was lower than cost by Baht 52 million, which was charged to selling and administrative expenses.

The Company and subsidiaries have mortgaged and pledged property, plant and equipment with net book value as at 31 December 2005 and 2004 of approximately Baht 405.9 million and Baht 291.6 million, respectively, as disclosed in Note 18.

13

Leasehold rights, net

Consolidated The Company (in thousand Baht)

Valuation

At 1 January 2004

4,479,979

3,241,902

At 31 December 2004

4,479,979

3,241,902

Addition

At 31 December 2005

Accumulated amortisation

At 1 January 2004

Amortisation charge for the year

At 31 December 2004

Amortisation charge for the year

At 31 December 2005

Net book value

25,000

-

4,504,979

3,241,902

2,111,496

1,627,738

169,782

132,104

2,281,278

1,759,842

169,782

132,104

2,451,060

1,891,946

At 31 December 2004

2,198,701

1,482,060

At 31 December 2005

2,053,919

1,349,956

In September 1995, the Company and its subsidiaries appraised certain plots of and certain leasehold rights to market prices by an independent appraiser as disclosed in Note 12.

In December 1999, the Company and its subsidiaries reappraised each leasehold rights, by an independent appraiser using methodologies including Sales Comparison Approach (Market Approach), Discounted Cash flow Analysis and Income Capitalisation Approach, including leasehold rights stated at appraisal value mentioned in the above paragraph. As a result of the revaluation, the fair value and revaluation reserve presented under the shareholdersí equity was reduced by Baht 248.9 million.

078


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

For the revaluation of other leasehold rights (stated at cost since these had never been appraised), the revalued amount was lower than cost by Baht 3,406.9 million, which was charged to selling and administrative expenses.

14

Goodwill, net

The Company and subsidiaries have various leasehold agreements covering land and buildings for their department stores. The leasehold agreements are for the periods ranging from 20 to 30 years.

Goodwill

Negative goodwill (in thousand Baht)

Total

418

Cost

At 1 January 2004

27,500

(27,082)

Addition

51,250

-

51,250

At 31 December 2004

78,750

(27,082)

51,668

At 31 December 2005

78,750

(27,082)

51,668

Accumulated amortisation

At 1 January 2004

8,326

(18,055)

(9,729)

Amortisation charge for the year

1,167

(1,354)

(187)

At 31 December 2004

9,493

(19,409)

(9,916)

Amortisation charge for the year

2,907

(1,354)

1,553

At 31 December 2005

12,400

(20,763)

(8,363)

Net book value

At 31 December 2004

69,257

(7,673)

61,584

At 31 December 2005

66,350

(6,319)

60,031

15

Other non-current assets

Consolidated

2005

The Company

2004

2005

222,931

137,222

206,927

120,986

Guarantees and deposits

63,763

62,482

60,849

60,888

Receivable from the Revenue Department

44,128

40,780

25,663

24,673

140,913

140,913

-

-

6,014

7,530

-

-

99,434

83,587

76,330

63,162

577,183

472,514

369,769

269,709

(in thousand Baht) Restricted cash at bank

Land not used in operations, at cost Unused fixed assets, net Others Total

2004

079


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

16

Liabilities under debt restructuring agreements of subsidiaries

On 11 March 2002, CR (Thailand) Co., Ltd. (CRT), a subsidiary, signed a debt restructuring agreement with a local financial institution for overdrafts and related accrued interest expense of CRT and certain subsidiaries totalling approximately Baht 75.5 million. Under the terms of the debt restructuring agreement, CRT’s and the subsidiaries’ overdrafts and related accrued interest expense would be settled as follows:

a)

Principal and accrued interest expense amounting to approximately Baht 29.4 million would be paid by the Company according to the terms, conditions and period specified in the Company’s rehabilitation plan (Note 23).

b)

Principal debts owed by CRT and other subsidiaries amounting to approximately Baht 19.3 million had grace period for five (5) years. CRT agreed to repay principal in equal quarterly installments within 5 years with the first installment of principal commencing in June 2007 and to pay the first installment of interest on contract signing date. Interest expense on restructured principal is payable in monthly installments at MLR commencing in March 2002.

Under the terms of such debt restructuring agreement, liabilities of CRT and other subsidiaries which consisted of a portion of overdrafts and related accrued interest expense, were waived on the date that the debt restructuring agreement was effective. CRT and the subsidiaries recorded the amount waived as gain on debt restructuring totalling approximately Baht 36.4 million.

On 19 March 2002, CRT signed another debt restructuring agreement with a local financial institution for the restructuring of outstanding debt of another subsidiary, which has been liable in respect of overdrafts and related accrued interest expense amounting to approximately Baht 18.5 million. Significant terms of such debt restructuring agreement are as follows:

a)

Principal and accrued interest expense of approximately Baht 7.2 million would be paid by the Company in accordance with the terms, conditions and period specified in the Company’s rehabilitation plan (Note 23).

b)

The rights to claim partial outstanding debt amounting to approximately Baht 11.3 million owed by such subsidiary was assigned by the financial institution to CRT and CRT agreed to pay approximately Baht 5 million to the financial institution as consideration for such claim assignment. Such consideration was paid by CRT on the contract signing date.

CRT also entered into a loan agreement with such financial institution to borrow from the financial institution the amount of Baht 4.7 million for the payment of said amount of consideration. The principal under the loan agreement had grace period of five (5) years. CRT agreed to repay the principal in equal quarterly installments within five (5) years, commencing in June 2007. The first installment of interest was paid in March 2002. The interest rate under the loan agreement is MLR which shall be calculated from March 2002 onwards. CRT and the subsidiary recorded the difference between the future payment amount according to the debt restructuring agreements and the book value of the subsidiary’s overdrafts and related accrued interest expense at the contractual date, amounting to approximately Baht 10.1 million, as gain on debt restructuring.

080


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

CRT is required to comply with certain conditions and restrictions stipulated in the agreements mentioned above such as not directly or indirectly creating new loans or obligation with creditors or any other parties including asset guarantee, pledge, and mortgage, unless otherwise relating to the Company’s rehabilitation plan.

During the year 2004, CRT and other subsidiaries made fully repayments to the said financial institution.

17

Trade accounts payable

Consolidated

Note

2005

5

The Company

2004

2005

139,674

129,217

89,542

80,823

(in thousand Baht)

2004

Trade accounts payable to

related parties

Trade accounts payable to

other parties

1,702,385

1,472,873

982,870

799,537

Total

1,842,059

1,602,090

1,072,412

880,360

18

Interest-bearing liabilities

Note

Consolidated

2005

2004

2005

(in thousand Baht)

Current

Current portion of long-term loans

from financial institution - secured

Short-term loans from related

parties - unsecured

Current portion of amortising notes

The Company

2004

317,360

-

317,360

-

5

18,992

26,927

906,847

960,512

- partially secured

-

721,667

336,352

748,594

1,224,207

Non-current

Long-term loans from financial

institutions - secured

632,640

1,795,045

632,640

-

Long-term loans from 5

-

113,300

113,300

subsidiary - unsecured

-

-

2,674,049 3,634,561

632,640

1,795,045

745,940

113,300

Total

968,992

2,543,639

1,970,147

3,747,861

081


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

The period to maturity of interest-bearing liabilities, is as follows:

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

2004

Within one year

336,352

748,594

1,224,207

After one year but within five years

632,640

1,795,045

632,640

-

After five years

-

-

113,300

113,300

Total

968,992

2,543,639

1,970,147

3,747,861

Secured interest-bearing liabilities are secured on the following assets:

Consolidated

2004

3,634,561

The Company

2005

2005

Land

240,000

288,600

240,000

288,600

Building

165,893

2,996

165,893

2,996

Investment in related parties

-

445,393

-

1,623,447

Total

405,893

736,989

405,893

1,915,043

The currency denomination of interest-bearing liabilities is as follows:

(in thousand Baht)

Consolidated

2005

2004

The Company

2005

(in thousand Baht)

Thai Baht (THB)

986,992

2,543,639

1,970,147

2004

2004

3,747,861

On 15 December 2005, the Company entered into a loan agreement with a local financial institution totalling Baht 950 million. This loan bears interest at the minimum loan rate minus 1.5% per annum for the first year and minus 1.25% per annum during the second to the third years. The repayment of principal will be made in 36 monthly installments in amount specific in the agreement commencing from January 2006.  The loan is collateralised by the mortgage of a portion of the Company’s land and structures thereon under the credit line totalling Baht 1,500 million and a negative pledge for the Company’s leasehold rights and structures thereon of the Company, maintaining minimum percentage of investment by Group of related companies and certain financial ratio as specified in the agreement.

Partially secured amortising notes

On 5 October 2001, the Company issued partially secured amortising notes (convertible upon default) totalling Baht 3,614.5 million pursuant to the rehabilitation plan of the Company (Note 23).

082


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

The notes bear interest at the rate specified in the Terms and Conditions and included as part of future payable amounts. The Company shall make an amortised repayment of interest together with principal amount and times specified in the Terms and Conditions through maturity date, which means the earliest of 31 December 2005 or the date when all of the Notes have been fully redeemed and/or converted into shares of the Company. The conversion right attaching to a note may be exercised, at the option of the holder thereof, at any time and not less than 15 business days following the occurrence of an event of default. The number of shares to be issued on conversion of a note will be determined by dividing the aggregate of the principal amount of the notes to be converted and interest due to the maturity date and the bonus payment by the conversion price in effect at the conversion date, which means the market price as at the conversion date. The Noteholders may by a special resolution direct that all Noteholders shall convert their notes into shares on a pro rata basis in accordance with Terms and Conditions (Mandatory Conversion). Nevertheless, the Company has the right to make early redemption according to the Terms and Conditions.

The Company and subsidiaries have mortgaged and pledged property and equipment including shares of subsidiaries and associated companies with net book value as at 31 December 2004 of approxi mately Baht 1,915.0 million as collateral for these notes.

As at 31 December 2005 the Group had unutilised credit facilities for letter of guarantee totalling Baht 6.3 million (2004: Baht 6.6 million).

19

Other current liabilities

Consolidated

2005

The Company

2004

2005

(in thousand Baht)

2004

Accrued expenses

188,832

196,415

141,854

119,032

Deposits and advances received

60,971

62,618

30,919

33,540

Other accounts payable

116,191

99,736

97,541

84,554

Revenue department payable

22,658

16,868

11,457

14,215

Others

195,641

67,846

183,527

41,159

Total

584,293

443,483

465,298

20

Unearned lease income

Consolidated

Note

2005

292,500

The Company

2004

2005

(in thousand Baht)

2004

Unearned lease income:

- related party

5

76,234

174,712

52,487

122,470

- other parties

78,062

87,155

-

-

Total

154,296

261,867

52,487

122,470

083


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

21

Other non-current liabilities

Consolidated

2005

The Company

2004

2005

(in thousand Baht)

2004

Accrued leasehold rights

39,599

15,999

-

-

Others

3,442

6,103

1,996

4,658

Total

43,041

22,102

1,996

4,658

22

Share capital

Par

2005

value

Number

10

1,110,661

10

1,110,661

(in Baht)

Baht

2004 Number

Baht

11,106,611

1,110,661

11,106,611

11,106,611

1,110,661

11,106,611

(thousand shares/in thousand Baht)

Authorised

Issued and paid

At 1 January

- ordinary shares

At 31 December

- ordinary shares

23

Rehabilitation plan

On 10 June 1998, the Company temporarily suspended payments of its financial debts in conjunction with the commencement of a restructuring of its indebtedness. These suspensions constituted events of defaults, the occurrence of which enables lenders to declare their debt due and demand immediate repayment.

On 2 May 2000, the Central Bankruptcy Court ordered the Company to enter into business rehabilitation and appointed Robinson Planner Limited to be the plan preparer. On 20 December 2000, the Court approved the rehabilitation plan and appointed Robinson Planner Limited to be the plan administrator and to operate the business of the Company in accordance with the rehabilitation plan. Under the rehabilitation plan, the Company is required to comply with outlined conditions as follows:

(a)

084

On 13 June 2001, the Company proceeded with the registration of decrease in the Company’s registered share capital, which was reserved for convertible debentures from Baht 1,870,000,000 (ordinary share 187,000,000 shares at Baht 10 par value) to Baht 1,480,881,510 (ordinary share 148,088,151 shares at Baht 10 par value) and on 15 June 2001, the Company proceeded with the registration for the increase of the Company’s registered share capital from Baht 1,480,881,510 (ordinary share 148,088,151 shares at Baht 10 par value) to Baht 14,808,815,100 (ordinary share 1,480,881,510 shares at Baht 10 par value).


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

(b)

On 5 October 2001, the Company issued the partially secured amortizing notes (convertible upon default) in the amount of Baht 3,614.5 million, for allocating to the unsecured financial creditors as described in the rehabilitation plan of the Company, and in October 2001, the Company has provided, to the extent possible, the Noteholders’ representative, acting on behalf of the unsecured financial creditors who are the Noteholders, the securities for the issuance of such Notes in accordance with the conditions stipulated in the rehabilitation plan and other related documents.

(c)

On 10 October 2001, and 13 November 2001, the Company made initial repayments to the unsecured financial creditors of the Company in the amount of totalling Baht 956 million.

(d)

On 30 October 2002, the Company converted unsecured debt of approximately Baht 1,777 million into approximately 888 million ordinary shares, representing 60% of the enlarged total share capital of the Company. The conversion of unsecured debt into ordinary share was made at the rate of Baht 2 per share, resulting in a discount on share capital of approximately Baht 7,108.2 million. The ordinary shares issued to the unsecured financial creditors, approximately 311 million ordinary shares (CRC Option Shares), representing 21% of the enlarged total share capital of the Company were issued to CRC (Central Retail Corporation Ltd. and/or its designee) in line with conditions and time indicated in the Company’s rehabilitation plan in April 2003.

(e)

On 30 October 2002, the Company issued approximately 370 million ordinary shares, representing 25% of the enlarged total share capital of the Company to CRC (CRC Support Shares) at Baht 0.0001 per share resulting in an increase in discount on share capital of approximately Baht 3,702.2 million. The CRC support shares would be conditionally assigned to the unsecured financial creditors. The Security Agent will hold the share certificates. The condition assignment will be released and the share certificates will be released to CRC pro rata to the total repayments of principal and interest.

In addition, on 30 October 2002, the Company issued approximately 74 million ordinary shares, representing 5% of the enlarged total share capital of the Company, to a Special Purpose Vehicle, owned by the management of the Company (MIOP Shares) at Baht 0.0001 per share resulting to increase in discount on share capital of approximately Baht 740.4 million. These shares would be conditionally assigned to the unsecured financial creditors. The Security Agent would hold the share certificates. To the extent these shares are earned by management, the conditional assignment, and custody of the Security Agent will be released within 5 years.  In consideration for the issuance of new ordinary shares to CRC and the Special Purpose Vehicle, CRC and the Company’s management undertake to provide their continuous support for the Company. (f)

On 8 November 2002, the Company proceeded with the registration of decrease in the Company’s capital from Baht 14,808,815,100 (ordinary share 1,480,881,510 shares at Baht 10 par value) to Baht 11,106,611,330 (ordinary share 1,110,611,133 shares at Baht 10 par value). The purpose of the capital reduction is to reduce the Company’s deficit as stipulated in the rehabilitation plan.

(g)

On 8 November 2002, the portion of debt remaining was forgiven by the unsecured financial creditors in line with the condition stipulated in the Company’s rehabilitation plan. The Company recorded the difference of the total of the partially secured amortising notes and related interest, the amount of initial repayment and the ordinary shares issued to creditors, which is lower than book value of debt under the Company’s rehabilitation plan, as gain on debt restructuring.

085


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

(h)

During the third quarter of 2002, a subsidiary entered into a debt restructuring agreement with a local financial institution to settle the Company’s debt as a guarantor, of Baht 159.2 million. Such liability bears interest at the rate of MLR and has to be repaid on 1 January 2003. Subsequently, the financial institution made three amendments to the debt restructuring agreement to extend the repayment date in which the most recent repayment date was scheduled on 1 April 2004, with the interest rate at MLR. On 10 May 2004, the Company entered into a new amendment to the debt restructuring agreement with the said financial institution to extend the repayment schedule into the three consecutive periods as specified in the agreement. The final repayment will be within 30 December 2005 with MLR interest rate. During the year 2004, the subsidiary made repayments to a financial institution of Baht 159.2 million.

Adjustment to shareholders’ equity as at 1 January 2005

Shareholders’ equity as at 1 January 2005 has been adjusted in accordance with the requirements of the circular issued by the Office of the Securities and Exchange Commission on 16 November 2005 (“Circular”) to inform a guideline of the Federation of Accounting Professions dated 10 November 2005. The Circular requires listed companies which issue share capital at a discount to the par value of the issued shares and which subsequently undergo a capital reduction, either by canceling a portion of their issued and paid-up share capital or by reducing the par value of their shares, to apply the credit or premium arising from such capital reduction to set off against the share capital discount until such discount is eliminated before setting off any remaining balance of the credit or premium against the accumulated deficit.

The Company had previously applied the whole of the share premium arising from the capital reduction in 2002 to set off against the accumulated deficit without first setting off, and eliminating, the share capital discount. The Company has made adjustment to the shareholders’ equity as at 1 January 2005 in compliance with the Circular by transferring Baht 3,702 million from the retained earnings brought forward in the financial statements as at 1 January 2005 to set off against the balance of share capital discount carried as at that date in the balance sheets. The total shareholders’ equity as at 31 December 2004 and 1 January 2005 is unaffected by this adjustment.

Termination of the business reorganisation of the Company

The Plan Administrator filed an application with the Central Bankruptcy Court to terminate the Business Reorganisation of the Company after the Plan was considered as having been successfully implemented and completed by the Official Receiver in the report dated 3 February 2006. The application for termination had been approved by the Creditors. On 6 February 2006, the Central Bankruptcy Court ordered to terminate the Business Reorganisation of the Company.

086


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

24

The Voluntary Debt Refinance Program

The Voluntary Debt Refinance Program (“VDRP”) was launched by the Company to reduce the refinancing risk upon the maturity of the Notes in 2005. In order for the VDRP to be implemented, the Company had to amend the rehabilitation plan dated 14 November 2000 to accommodate the repurchase of the Notes. Therefore, the statutory creditors’ meeting was held on 5 November 2003 by the Official Receiver in order to consider and vote for the plan amendment proposal. Accordingly, the plan amendment proposal was approved by special resolution of the creditors’ meeting according to the Bankruptcy Act.

Further from the creditor’s meeting pursuant to the Bankruptcy Act, the Noteholders’ Representative called the Noteholders meeting according to the term and condition of the Note on 5 November 2003 for the Noteholders to consider and vote on the proposal to amend the terms and conditions of the Note for consistency between the terms and conditions of the Note and the reorganisation plan as amended. The meeting unanimously resolved to approve such amendment proposal. On 29 December 2003, the Central Bankruptcy Court approved the plan amendment as approved by the creditors’ meeting.

In January 2004, the Company started implementing the VDRP program by having Robinson S.P.V. Ltd. (“SPV”), the Company’s subsidiary, sign long-term loan agreements with 2 local banks on 16 January 2004 with credit line not exceeding Baht 2,700 million (Baht 1,350 million from each bank), at the interest rate of average minimum lending rate of lending banks (MLR) minus 1.75% per annum or 4% per annum, whichever is higher. The proceeds drawn down under the agreements shall be used by SPV to repurchase the Notes pursuant to the VDRP during the period from 16 January 2004 to 30 December 2005. Consequently, the Company and its subsidiary made four offerings to repurchase Notes during the year 2004. The tender offer prices per unit were set at Baht 115.01, Baht 119.13, Baht 119.50 and Baht 120 for the first to the fourth offer, respectively, which offer prices were below the book value of the Notes (Par value of Baht 100 each). Accordingly, 77.04% of the total outstanding principal of Notes as at 31 December 2004 or 16,996,310 units was tendered. The premium over par value paid by the subsidiary for the repurchased Notes will be compensated throughout the agreement period by the difference between the subsidiary’s loan rate and the coupon rate of the Note to be received by the subsidiary, which is lower than the loan rate, and the bonus payment to be received by the subsidiary according to the terms and conditions of the Notes. During the year 2004, SPV has commenced the drawdown of the loan for payment to the Noteholders, who tendered their Notes, and pledged repurchased Notes with the lending banks as collateral for the loans.

Subsequently, on 19 December 2005, the Company repaid the outstanding Notes to all Noteholders and all Notes collateral was then released to the Company consequently in December 2005. As a result, SPV managed to pass-thru the proceeds received from the Notes to repay its outstanding debt with financial institution on 19 December 2005.

087


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

25

Reserves

Share premium

The share premium account is set up under the provisions of Section 51 of the Public Companies Act B.E. 2535, which requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). The account is not available for dividend distribution.

Fair value and revaluation reserve

Fair value and revaluation reserve includes the cumulative net change in the fair value of available-forsale investments until the investment is derecognised, and the surpluses arising from the revaluations of freehold land and buildings.

Legal reserve

The legal reserve is set up under the provisions of Section 116 of the Public Companies Act B.E. 2535. Section 116 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

26

Interest income

Note

2005

Consolidated

2004

2005

-

-

447,759

434,381

(in thousand Baht)

2004

Interest income from related parties

Interest income from financial institutions

19,338

10,811

3,822

1,443

Total

19,338

10,811

451,581

435,824

27

Other income

5

The Company

Consolidated

2005

The Company

2004

2005

(in thousand Baht)

2004

Utilities income

174,835

172,914

110,272

101,721

Promotion and advertising income

43,935

37,685

45,090

38,838

Management fee income

6,934

6,545

103,006

101,791

Income sharing and trade commissions

6,424

6,967

6,424

5,655

Others

113,623

131,328

90,025

89,108

Total

345,751

355,439

354,817

337,113

088


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

28

Selling and administrative expenses

Consolidated

2005

The Company

2004

2005

(in thousand Baht)

2004

Employee expenses

564,324

524,293

428,929

394,032

Promotion expenses

232,446

185,016

180,468

142,416

Utilities expenses

413,269

400,720

267,765

255,413

Depreciation and amortisation

532,192

524,319

364,984

362,967

Building expenses

192,651

165,776

156,631

128,763

Others

495,363

451,923

369,241

337,833

Total

2,430,245

2,252,047

1,768,018

1,621,424

29

Provident fund

The Group has established contributory provident funds for its employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at rates ranging from 3% to 5% of their basic salaries and by the Group from 3% to 5% of the employees’ basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by a licensed Fund Manager.

30

Interest expense

Consolidated

The Company

Note

2005

2004

2005

2004

5

1,435

1,637

2,861

5,686

(in thousand Baht)

Interest paid

- related parties

- financial institutions

1,045

1,558

1,548 96

Total

2,480

3,195

4,409

5,782

089


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

31

Income tax expense

Consolidated

Note

2005

The Company

2004

2005

(in thousand Baht)

2004

Income tax expense

Current year

15,246

34,103

-

-

Adjustment in respect of previous years

-

-

-

-

Total

15,246

34,103

-

-

The Company and certain subsidiaries had no income tax expense for the year ended 31 December 2005 and 2004 because of the utilization of tax loss carry forward.

32

Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 December 2005 was based on the profit attributable to ordinary shareholders of Baht 851.2 million (2004: Baht 716.8 million) and the weighted average number of shares outstanding during the year ended 31 December 2005 of 1,110,661,133 (2004: 1,110,661,133).

33

Dividends

At the meeting of the directors of Robinson Rajdamri Co., Ltd., a local direct subsidiary, held on 5 July 2004, dividends of Baht 100,000 per share were approved from the unappropriated retained earnings as at 30 June 2004, (total sum of Baht 91.4 million). This dividend was paid to shareholders during 2004.

At the annual general meeting of the shareholders of CR Phuket (Thailand) Co., Ltd., a local subsidiary, held on 30 April 2004, dividends of Baht 45 share were approved from net profit 2003 (total sum of Baht 79.65 million). On 30 April 2005, the annual general meeting of the shareholders of the subsidiary approved the distribution of dividends from the retained earning as at 31 December 2004, dividends of Baht 33.4 per share (total sum of Baht 59.12). The dividends were paid to shareholders during 2004 and 2005, respectively.

34

Financial instruments

Financial risk management policies

The Group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group does not issue derivative financial instruments for speculative or trading purposes.

090


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows.

As at December 31, 2005 and 2004, the Company and subsidiaries had risk from the changing value of financial instruments, from changing market interest rates as follows:

2005

Consolidated

Floating

Interest

1 year or

rate

less

Fixed interest rate maturing in:

Over 1 to More than 5 Years

5 Years

Average interest rate Total

Floating

(In Thousand Baht)

Fixed %

Financial assets

Cash at financial institutions

974,825

-

-

-

974,825

0.50-2.50

-

Restricted cash at bank

222,931

-

-

-

222,931

0.50-2.50

-

Financial liabilities

Current portion of long-term loan 317,360

-

-

-

317,360

MLR-1.5

-

632,640

-

-

-

632,640

MLR-1.5

-

18,992

-

-

-

18,992

MOR+1.5

-

from financial institution Long-term loan from financial

institution Short - term loans and advances

from related parties

The Company only

Floating

Interest

1 year or

rate

less

Fixed interest rate maturing in:

Financial assets

Cash at financial institutions

Restricted cash at bank

Short-term loans and advances

to subsidiaries

Long-term loans to related parties

Financial liabilities

Current portion of long-term loan

from financial institution

Over 1 to More than 5 Years

5 Years

Average interest rate Total

Floating

(In Thousand Baht)

Fixed %

56,246

-

-

-

56,246

0.50-2.50

-

206,927

-

-

-

206,927

0.50-2.50

-

5,722,576

-

-

-

5,722,576

-

-

-

61,223

61,223

317,360

-

-

-

317,360

MLR-1.5

-

632,640

-

-

-

632,640

MLR-1.5

-

906,847

-

-

-

906,847

MOR+1.5

-

-

-

-

113,300

113,300

MOR+1.5 -

6.00

Long-term loan from financial institution Short-term loans and advances from Related parties Long-term loan from subsidiary

-

2.00

091


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

2004

Consolidated

Floating

Interest

1 year or

rate

less

Fixed interest rate maturing in:

Financial assets

Cash at financial institutions

Restricted cash at bank

Financial liabilities

Long-term loan from financial

institutions

5 Years

5 Years

Average interest rate Total

Floating

(In Thousand Baht)

Fixed %

1,533,885

-

-

-

1,533,885

0.25-1.50

-

137,222

-

-

-

137,222

0.50-1.00

-

1,795,045

-

-

-

1,795,045

-

26,927

-

-

26,927

MOR-1.75

-

Short - term loans and advances

Over 1 to More than

from related parties

-

15.00

The Company only

Floating

Interest

1 year or

rate

less

Fixed interest rate maturing in:

Over 1 to More than 5 Years

5 Years

Average interest rate Total

Floating

(In Thousand Baht)

Fixed %

Financial assets

Cash at financial institutions

397,007

-

-

-

397,007

0.25-1.25

-

Restricted cash at bank

120,986

-

-

-

120,986

0.25-1.00

-

Short-term loans and 6,127,178

-

-

-

6,127,178

-

-

-

61,223

61,223

960,512

-

-

-

960,512

-

-

-

113,300

113,300

advances to subsidiaries

Long - term loans to related parties

Financial liabilities

Short - term loans and advances

from related parties

MOR+1.5 -

MOR+1.5 -

6.00

-

Long-term loan from subsidiary

2.00

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Group as and when they fall due.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. However, due to the large number of parties comprising the Group’s customer base, Management does not anticipate material losses from its debt collection.

092


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.

Fair values

The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. In determining the fair value of its financial assets and liabilities, the Group takes into account its current circumstances and the costs that would be incurred to exchange or settle the underlying financial instrument.

The Company and subsidiaries use the following methods and assumptions in estimate the fair values of financial instruments.

-

The carrying amount approximates fair value because of the short period to maturity of those instruments.

-

Due to the fair value of long-term investment and liabilities under rehabilitation plan cannot be properly calculated, no disclosure is made.

-

The fair value approximates carrying amounts stated in the balance sheets, since interest on financial instruments approximates market rates.

-

The fair value of partially secured amortizing notes (convertible upon default) is estimated using a discounted cash flow method based on the current market rate and the remaining period to maturity. As at 31 December 2004, the fair value was of approximately Baht 2,481.5 million.

Financial assets classified as current assets and accounts and notes payable - trade

Long-term investments and liabilities under rehabilitation plan

Loans from and loan to related parties

Partially secured amortizing notes (Convertible upon default)

093


Robinson Department Store Public Company Limited and its Subsidiaries Notes to the financial statements For the years ended 31 December 2005 and 2004

35

Commitments

The Company and its subsidiaries have lease agreements covering rental and service agreements with local certain companies. These agreements are for periods until the year 2025. The annual rental and service fees are payable as follows:

Consolidated

2005

Operating lease commitments

Due within one year

The Company

2004

2005

192,660

192,660

167,779

167,779

Due after one year but within five years

770,640

770,640

671,116

671,116

Due after five years

1,190,018

1,382,679

818,867

986,647

Total

2,153,318

2,345,979

1,657,762

1,825,542

36

Reclassification of accounts

Certain accounts in the 2004 financial statements have been reclassified to conform with the presentation in the 2005 financial statements.

(in thousand Baht)

2004

094


ROBINS : Annual Report 2005  

Annual Report 2005

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