Invitation to Extraordinary General Shareholders’ …...For the Meeting to confirm the Minutes of the Annual General Shareholders’ Meeting No. 21 (after conversion into a public

Invitation to Extraordinary General Shareholders’ Meeting No. 1/2014

Page 1 of 4 Pages

September 9, 2014

Subject : Invitation to Extraordinary General Shareholders’ Meeting No. 1/2014

To : The Company's Shareholders

Enclosures : 1) A copy of the Minutes of the Annual General Shareholders’ Meeting No. 21

(after conversion into a public company limited) held on April 23, 2014

2) Information Memorandum in relation to Connected Transaction

3) The opinions of the Independent Financial Advisor on the acquisition of asset

and the connected transaction

4) The Articles of Association of the Company regarding the shareholders’

meeting and the votes

5) Documents and evidence to be declared on the Meeting date

6) Information of the Company’s Independent Directors that the shareholders

may appoint to be the proxy

7) 3 Proxy Forms

8) Map of the Meeting location

Pursuant to the resolution adopted by the Board of Directors, the Extraordinary General Shareholders’

Meeting No. 1/2014 will be held on September 26, 2014 at 3.00 p.m., at Wassana Room, 3rd

Floor,

Golden Tulip Sovereign Hotel Bangkok, No. 92 Soi Saengcham, Rama 9 Road, Bangkapi

Subdistrict, Huay Kwang District, Bangkok Metropolis, Thailand to consider various matters

according to the following agenda.

(1) To consider and confirm the Minutes of the Annual General Shareholders’ Meeting

No. 21 (after conversion into a public company limited) held on April 23, 2014

Objective and Reason

For the Meeting to confirm the Minutes of the Annual General Shareholders’ Meeting No. 21

(after conversion into a public company limited) held on April 23, 2014 and posted on the

Company’s website (as details in Enclosure 1).

Board of Directors' opinion

Board of Directors is of the opinion that it would be appropriate for the meeting of shareholders

to consider and confirm the Minutes of the Annual General Shareholders’ Meeting No. 21 (after

conversion into a public company limited) held on April 23, 2014.


Page 2 of 4 Pages

(2) To consider approving the investment in assets for establishing the new head office and

the connected transaction

Objective and Reason

Since currently the Company has problems in relation to providing a proper office for

employees of the head office which as at 31 July 2014 there were approximately 541 regular

employees, as well as 80 temporary employees and outsource, totaling 621 persons. At present,

there are total 3 offices for employees of the head office separately as follows:

- First office, located in front of Makro store, Lard Prao Branch, on the 2nd

and 3rd

floors of a

leased commercial building, is an office of the Chief Executive Officer, internal audit

department, international business division, and human resources and business development

division.

- Second office, located on the mezzanine of Makro store, Lard Prao Branch, is an office of

operation department, logistic department, customer development department, and business

and information technology division.

- Third office, located at Jit Uthai Building on Ramkamhaeng Road, is an office of

commercial-food retail department, commercial-food service department, marketing and food

service development, financial and shared service department and innovation development

department.

In this regard, the separate offices of employees of the head office cause difficulty and

inefficiency in management and incur transportation expenses of the employees to attend

meetings held in those 3 buildings randomly. In addition, the said 3 buildings do not have

sufficient meeting rooms to be used for negotiation between business partners, and do not have

sufficient basic facilities, dining rooms, and sufficient parking for employees who have cars

which ruin happiness and spirit in working of the employees. Sometimes the Company has to

use a container as a work place for the employees. Also, for meetings or trainings, the Company

has to rent location outside the office to be used for meetings or trainings for employees which

causing increasing necessary expenses and lack of efficiency.

Furthermore, currently the Company has a plan for store expansion at a fast rate in domestic and

has been studying the business investment in overseas including creating new commercial

forms; therefore, it is necessary for the Company to employ more employees. These factors are

causing problems to the Company regarding the provision of a proper office for employees of

the head office and retaining current employees to work for the Company for a long-term period.

Therefore, in order to create working efficiency and to reduce expenses in transportation of the

employees, as well as to have meeting rooms for commercial negotiation, computer center,

training center, and large meeting place to support the Company’s annual seminar including to

create happiness for employees in relation to sufficient basic facilities, for instances, dining

rooms and sufficient parking, it is necessary for the Company to have the new proper head

office.

The Company therefore desires to purchase the land and Structure of CP ALL Public Company

Limited located on Pattanakarn Road, Suan Luang Subdistrict, Prakhanong District, Bangkok

Metropolis at the amount of Baht 470.0 million to be used as the new head office. The details

are as follows:

Land Title Deed Nos. 38439-38463, 74346, 85240, 155179 and 210414, total land area of

approximately 9 rai – ngarn 47 square wa with a 5-storey building (including 1 deck floor and


Page 3 of 4 Pages

1 basement floor), having area of approximately 27,459 square meters, structure and

component parts (“Structure”), located on Pattanakarn Road, Suan Luang Subdistrict,

Prakhanong District, Bangkok Metropolis.

Since CP ALL Public Company Limited is the major shareholder of the Company and has

mutual directors with the Company, the purchase of land and Structure from CP ALL Public

Company Limited at the amount of Baht 470.0 million is connected transaction pursuant to

Notification of the Capital Market Supervisory Board, the Securities and Exchange

Commission No. TorJor. 21/2008 regarding the rules on conducting the connected transactions

and Notification of the Board of Governors of the Stock Exchange of Thailand regarding

disclosure of information and other acts of listed companies concerning the connected

transactions, 2003 and the amendment thereto. The transaction value is 4.25% of value of net

tangible assets according to the Company’s audited interim consolidated financial statement for

the six-month period ended 30 June 2014 (Baht 11,058.5 million). Therefore, in order to enter

into the said transaction, the Company must seek an approval from the shareholders’ meeting.

The said resolution must consist of at least three-fourths of the total votes of shareholders or

proxy holders attending the meeting and having voting right, excluding interested shareholders’

equity. The Company must also arrange to have the independent financial advisor to render

opinions to the Company’s shareholders in relation to reasonableness of the transaction and

fairness of price and conditions of the transaction to support the shareholders’ consideration for

approval of the transaction.


The Company’s Board of Directors (excluding interested directors) opines that the land and

Structure purchase price is reasonable by referring to the appraisal price of land and Structure

by 2 independent appraisers approved by the office of SEC. The purchase of land and Structure

shall also benefit the Company and shareholders. In addition, the price and conditions are fair

and not causing misappropriation of benefits. In this connection, the sale and purchase price is

close to the appraisal price by 2 independent appraisers, namely, Plan Appraisal Company

Limited and UK Valuations and Agency Company Limited appraised on 10 July 2014 at Baht

476.15 million and on 17 July 2014 at Baht 480 million respectively. In this regard, both

independent appraisers appraised the land value by market value and appraised the Structure

value by depreciated replacement cost.

The Board of Directors is therefore of the opinion that the shareholders’ meeting should

consider approving the investment in assets for establishing the new head office and the

connected transaction as detailed above.

(3) To consider other businesses (if any)


Board of Directors is of the opinion that this agenda should be included in order to allow the

shareholders to propose any other matter to be considered at the meeting of shareholders in

addition to those proposed by the Board of Directors.

The shareholders are hereby invited to attend the meeting on the date and at the time and place

mentioned above. The shareholders may appoint proxies to attend the meeting and vote for

them. Kindly fill information and sign in Proxy forms enclosed herewith (Enclosure 7).


Page 4 of 4 Pages

If you wish to appoint an Independent Director to be your proxy, you can appoint any one of the

following Independent Directors;

1. Mr. Athaporn Khaimarn Independent Director and Chairman of the Audit Committee

2. Mr. Chavalit Uttasart Independent Director and Member of the Audit Committee

3. Mr. Thira Wipuchanin Independent Director and Member of the Audit Committee

4. Dr. Chaiyawat Wibulswasdi Independent Director and Member of the Audit Committee

5. Mr. Joti Bhokavanij Independent Director and Member of the Audit Committee

Enclosure 1

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Enclosure 2

1

9 September 2014

To: Shareholders

Siam Makro Public Company Limited

Information Memorandum in Relation to Connected Transaction of


Reference is made to the Board of Directors’ Meeting of Siam Makro Public Company Limited (the

“Company”) No. 3/2014 held on 5 August 2014 having resolved to approve the purchase of assets

and the entering into the connected transaction between the Company and CP ALL Public Company

Limited (“CP ALL”) which is the major shareholder of the Company and has mutual directors with

the Company to purchase land of Land Title Deed Nos. 38439-38463, 74346, 85240, 155179 and

210414, total land area of approximately 9 rai – ngarn 47 square wa with a 5-storey building

(including 1 deck floor and 1 basement floor), structure and component parts (“Structure”), located

on Pattanakarn Road, Suan Luang Subdistrict, Prakhanong District, Bangkok Metropolis at the total

amount of Baht 470.0 million and approve the additional investment to improve and decorate the

building as well as installing systems on the land and Structure that the Company will invest to be

used as the new head office of the Company at the amount of approximately Baht 791.8 million, being

total investment amount for the whole project of Baht 1,261.8 million.

Since CP ALL is the major shareholder of the Company and has mutual directors with the Company,

the purchase of land and Structure from CP ALL at the amount of Baht 470.0 million is connected

transaction pursuant to Notification of the Capital Market Supervisory Board, the Securities and

Exchange Commission No. TorJor. 21/2008 regarding the rules on conducting the connected

transactions and Notification of the Board of Governors of the Stock Exchange of Thailand regarding

disclosure of information and other acts of listed companies concerning the connected transactions,

2003 and the amendment thereto. The transaction value is 4.25% of value of net tangible assets

according to the Company’s interim consolidated financial statement for the six-month period ended

30 June 2014 (Baht 11,058.5 million). Therefore, in order to enter into the said transaction, the

Company must seek an approval from the shareholders’ meeting. The said resolution must consist of

at least three-fourths of the total votes of shareholders or proxy holders attending the meeting and

having voting right, excluding interested shareholders’ equity. The Company must also arrange to

have the independent financial advisor to render opinions to the Company’s shareholders in relation to

reasonableness of the transaction and fairness of price and conditions of the transaction to assist the

shareholders’ consideration for approval of the transaction. The details of the connected transaction

are summarized as follows:

1. Transaction Date

The Company shall proceed with the transfer of ownership of the land and Structure as well as

the payment to CP ALL after approval to enter into the said transaction from the Extraordinary

General Shareholders’ Meeting No. 1/2014 which will be held on 26 September 2014 has been

granted.

2. Parties Involved

Transaction of purchase of land and Structure

The Purchaser: Siam Makro Public Company Limited

The Seller: CP ALL Public Company Limited, which is the major shareholder of

the Company and has mutual directors with the Company

Enclosure 2

2

3. List and Shareholding Percentage of the First 10 Major Shareholders as at 21 August

2014

No. Shareholders Number of Shares

Shareholding

Percentage of

Total Shares (%)

1. Siam Makro Holding (Thailand) Limited 2,640,302,800 55.01

2. CP ALL Public Company Limited 2,057,846,700 42.87

3. AIA Company Limited- APEX 14,882,000 0.31

4. Mr. Parinya Thiaravorn 13,000,000 0.27

5. AIA Company Limited - TIGER 11,418,000 0.24

6. Mr. Surachai Boonyaprateeprat 5,600,000 0.12

7. AIA Company Limited – AIA D-Plus 4,000,000 0.08

8. Thai NVDR Company Limited 2,993,360 0.06

9. Mr. Alfred Russell Jentes 2,500,000 0.05

10. Thanachart Low Beta Fund 2,238,400 0.05

11. Other minority shareholders 45,218,740 0.94

Total 4,800,000,000 100.00

Remark: Siam Makro Holding (Thailand) Limited is an affiliated company of CP ALL Public Company Limited holding

combined shares in the Company of 97.88% of total shares of the Company.

4. List of the Company’s Board of Directors and the Management

The Company’s Board of Directors

As at 21 August 2014, the Company’s Board of Directors consisted of 18 directors as follows:

1. Mr. Arsa Sarasin Independent Director and Chairman

2. Mr. Athaporn Khaimarn Independent Director and Chairman of the Audit Committee

3. Mr. Chavalit Uttasart Independent Director and Member of the Audit Committee

4. Mr. Thira Wipuchanin Independent Director and Member of the Audit Committee

5. Dr. Chaiyawat Wibulswasdi Independent Director and Member of the Audit Committee

6. Mr. Joti Bhokavanij Independent Director and Member of the Audit Committee

7. Mr. Korsak Chairasmisak First Vice Chairman and Executive Director (Group 1)

8. Mrs. Suchada Ithijarukul Second Vice Chairman and Executive Director (Group 2)

9. Dr. Prasert Jarupanich Executive Director (Group 1)

10. Mr. Pittaya Jearavisitkul Executive Director (Group 2)

11. Mr. Piyawat Titasattavorakul Executive Director (Group 2)

12. Mr. Soopakij Chearavanont Director

13. Mr. Narong Chearavanont Executive Director (Group 1)

14. Mr. Suphachai Chearavanont Director

15. Mr. Adirek Sripratak Director

16. Mr. Umroong Sanphasitvong Executive Director (Group 1)

17. Mrs. Saowaluck Thithapant Executive Director (Group 2)

18. Mr. Philip William Cox Director

In this regard, the directors Nos. 7 and 10-16 are representative directors of CP ALL.

The authorized directors according to the Company’s Affidavit are as follows:

Any one of the Executive Directors (Group 1), namely, Mr. Korsak Chairasmisak or Mr.

Umroong Sanphasitvong or Mr. Narong Chearavanont or Mr. Prasert Jarupanich signing jointly

with any one of the Executive Directors (Group 2), namely, Mrs. Suchada Ithijarukul or Mrs.

Saowaluck Thithapant or Mr. Pittaya Jearavisitkul or Mr. Piyawat Titasattavorakul, totaling 2

persons, with the Company's seal be affixed.

Enclosure 2

3

The Management

As at 21 August 2014, the Company’s Management consisted of 6 members as follows:

1. Mrs. Suchada Ithijarukul Chief Executive Officer

2. Mr. Lin, Chi-Lung Chief Operation Officer - Thailand Business

3. Mr. Thomas Leslie Hammer Chief Operation Officer - International Business

4. Mrs. Saowaluck Thithapant Chief Financial Officer - Finance and Shared Services

5. Mr. Paul Stephen Howe Chief Information Officer - Business and Information Technology

6. Mr. Jean-Michel de Geyer Executive Board Member - Innovation

Remark:

The management as listed above is the management according to the definition prescribed by the

Notification of the Board of Governors under the Securities and Exchange Act.

5. Details of the Connected Person

CP ALL is the connected person according to the definition of the connected persons pursuant

to Notification of the Capital Market Supervisory Board, the Securities and Exchange

Commission No. TorJor. 21/2008 regarding the rules on conducting the connected

transactions and Notification of the Board of Governors of the Stock Exchange of Thailand

regarding disclosure of information and other acts of listed companies concerning the

connected transactions, 2003 and the amendment thereto since CP ALL and related persons

are major shareholders of the Company holding combined shares of 97.88%. Furthermore, the

Company and CP ALL have mutual directors, namely, Mr. Korsak Chairasmisak, Mr.

Soopakij Chearavanont, Mr. Adirek Sripratak, Mr. Umroong Sanphasitvong, Mr. Narong

Chearavanont, Mr. Prasert Jarupanich, Mr. Pittaya Jearavisitkul, and Mr. Piyawat

Titasattavorakul.

Connected Persons The Company CP ALL

Director Shareholding(1)

Director Shareholding(2)

1. Companies in CP ALL Group

1.1 Siam Makro Holding (Thailand)

Limited

1.2 CP ALL Public Company Limited

X

X

97.88%

55.01%

42.87%

X

X

X

X

2. Related Persons

2.1 Mr. Dhanin Chearavanont (father of

directors, namely, Mr. Narong

Chearavanont, Mr. Soopakij

Chearavanont, and Mr. Suphachai

Chearavanont)

X 200 shares � 0.01705%

2.2 Mr. Korsak Chairasmisak � X � 0.09384%

2.3 Mr. Soopakij Chearavanont � X � 0.00248%

2.4 Mr. Adirek Sripratak � X � X

2.5 Mr. Umroong Sanphasitvong � X � X

2.6 Mr. Narong Chearavanont � X � 0.00339%

2.7 Mr. Prasert Jarupanich � 200 shares � X

2.8 Mr. Pittaya Jearavisitkul � X � 0.01820%

2.9 Mr. Piyawat Titasattavorakul � X � 0.00092%

2.10 Mr. Suphachai Chearavanont � X X X

Remark: (1) Updated shareholders information as at 21 August 2014 and

(2) Updated shareholders information as at 27 December 2013

Enclosure 2

4

6. Direct and Indirect Interested Persons Having No Voting Right for Approving the

Entering into the Connected Transaction in the Extraordinary General Shareholders’

Meeting No. 1/2014 List of the Company’s shareholders who have no right to vote for the entering into this

transaction according to the list of shareholders as at 21 August 2014 is as follows:

Shareholders Number of

Shares

% of Total

Shares

Nature of Relationship and Interests

1. Siam Makro Holding

(Thailand) Limited

2,640,302,800 55.01 Having CP ALL Public Company

Limited as major shareholder and having

5 mutual directors with the Company as

follows:

1. Mr. Korsak Chairasmisak

2. Mr. Pittaya Jearavisitkul

3. Mr. Piyawat Titasattavorakul

4. Mr. Umroong Sanphasitvong

5. Mr. Narong Chearavanont

2. CP all Public Company

Limited

2,057,846,700 42.87 Being major shareholder of the

Company and having 8 mutual directors

with the Company as follows:

1. Mr. Korsak Chairasmisak

2. Mr. Prasert Jarupanich

3. Mr. Pittaya Jearavisitkul

4. Mr. Piyawat Titasattavorakul

5. Mr. Soopakij Chearavanont

6. Mr. Narong Chearavanont

7. Mr. Adirek Sripratak

8. Mr. Umroong Sanphasitvong

3. Dr. Prasert Jarupanich 200 0.00 Being Executive Director of the

Company and being Director of major

shareholder of the Company

4. Mr. Dhanin

Chearavanont

200 0.00 Being father of Mr. Narong

Chearavanont, Mr. Soopakij

Chearavanont, and Mr. Suphachai

Chearavanont who are directors of the

Company and being Chairman of the

Board of Directors of major shareholder

of the Company

7. Total Value of Transactions The Company agrees to pay for the sale and purchase assets to CP ALL for the total amount of

Baht 470.0 million. Conditions of the sale and purchase are as follows:

7.1 The Company and CP ALL shall be equally responsible for fee of the registration of

the ownership transfer;

7.2 CP ALL shall be solely responsible for withholding tax, stamp duty or specific

business tax in the registration of ownership transfer;

Enclosure 2

5

7.3 CP ALL shall be responsible for house and building tax, local development tax,

including duty and other expenses for the assets to be sold and purchased until the

date of ownership transfer registration. The Company shall be responsible for the said

taxes and expenses as from the date following the date of ownership transfer

registration.

8. Sources of Fund for Purchasing Land and Structure

Fund that the Company uses for investment in the whole project consists of 2 parts, namely,

the Company’s cash inflows and short term loan from financial institutions with no securities.

9. Types of Transactions

9.1 Connected Transaction This transaction is the connected transaction, the calculated value of which is 4.25%

of the value of net tangible assets (NTA) according to the Company’s interim

consolidated financial statement for the six-month period ended 30 June 2014 (NTA =

Baht 11,058.5 million). The value of the said transaction exceeds 3% of NTA which

requires approval from the shareholders’ meeting of at least three-fourths of the total

votes of shareholders or proxy holders attending the meeting and having voting right,

excluding interested shareholders’ equity pursuant to Notification of the Capital

Market Supervisory Board, the Securities and Exchange Commission No. TorJor.

21/2008 regarding the rules on conducting the connected transactions and Notification

of the Board of Governors of the Stock Exchange of Thailand regarding disclosure of

information and other acts of listed companies concerning the connected transactions,

2003 and the amendment thereto.

In addition, the Board of Directors’ Meeting of the Company No. 3/2014 held on 5

August 2014 has resolved to appoint JayDee Partners Limited to be the independent

financial advisor to render opinions to the Company’s shareholders in relation to

reasonableness of the transaction and fairness of price and conditions of the

transaction to assist the shareholders’ consideration for approval of the transaction (as

details in Enclosure 3).

9.2 Transaction of Acquisition of Assets

This transaction is also considered as acquisition of assets. With reference to the

investment value for the whole project of Baht 1,261.8 million, the highest transaction

value is 3.56% of the value of the total assets according to the test for value of the

consideration calculated from the Company’s interim consolidated financial statement

for the six-month period ended 30 June 2014 (Baht 35,400.7 million). In this regard,

when combining with other transactions of acquisition of assets that the Board of

Directors of the Company has also approved in the Board of Directors’ Meeting of the

Company No. 3/2014 of Baht 1,092.7 million having highest transaction value

according to the test for value of the consideration at 3.09% and other transactions of

acquisition of assets of the Company during the past 6 months of totaling Baht 4,967.5

million having highest transaction value according to the test for value of the

consideration at 14.03%, the total value of transactions is 20.68% of the value of total

assets. Due to the said value of transactions, the Company must prepare a report

disclosing information to the Stock Exchange of Thailand and send a written notice to

inform shareholders within 21 days from the date of disclosure of information to the

Stock Exchange of Thailand pursuant to Notification of the Capital Market

Supervisory Board, the Securities and Exchange Commission No. TorJor. 20/2008

regarding rules and regulations on the acquisition and disposition of assets and

Notification of the Board of Governors of the Stock Exchange of Thailand regarding

disclosure of information and other acts of the listed companies concerning the

acquisition and disposition of assets, 2004. In this regard, the Company has prepared

Enclosure 2

6

the report and disclosed information of the said transaction to the Stock Exchange of

Thailand on 6 August 2014 and has also sent the letter dated 14 August 2014 to the

shareholders within 21 days from the date of disclosure of information to the Stock

Exchange of Thailand.

10. Reasons and Necessity of the Company Since currently the Company has problems in relation to providing a proper office for

employees of the head office which as at 31 July 2014 there were approximately 541 regular

employees, as well as 80 temporary employees and outsource, totaling 621 persons. At

present, there are total 3 offices for employees of the head office separately as follows:

- First office, located in front of Makro store, Lard Prao Branch, on the 2nd and 3rd

floors of a leased commercial building, is an office of the Chief Executive Officer, internal

audit department, international business division, and human resources and business

development division.

- Second office, located on the mezzanine of Makro store, Lard Prao Branch, is an

office of operation department, logistic department, customer development department, and

business and information technology division.

- Third office, located at Jit Uthai Building on Ramkamhaeng Road, is an office of

commercial-food retail department, commercial-food service department, marketing and food

service development, financial and shared services department and innovation department.

In this regard, the separated offices for employees of the head office cause difficulty and

inefficiency in management and incur transportation expenses of the employees to attend

meetings held in those 3 buildings randomly. In addition, the said 3 buildings do not have

sufficient meeting rooms to be used for negotiation between business partners, and do not

have sufficient basic facilities, dining rooms, and sufficient parking for employees who have

cars, which ruin happiness and spirit in working of the employees. Sometimes the Company

has to use a container as a work place for the employees. Also, for meetings or trainings, the

Company has to rent location outside the office to be used for meetings or trainings for

employees which causing increasing necessary expenses and lack of efficiency.

Furthermore, currently the Company has a plan for store expansion at a fast rate in domestic

and has been studying the business investment in overseas including creating new commercial

forms; therefore, it is necessary for the Company to employ more employees. These factors

are causing problems to the Company regarding the provision of a proper office for employees

of the head office and retaining current employees to work for the Company for a long-term

period.

Therefore, in order to create working efficiency and to reduce expenses in transportation of the

employees, as well as to have meeting rooms for commercial negotiation, computer center,

training center, and large meeting place to support the Company’s annual seminar including to

create happiness for employees in relation to sufficient basic facilities, for instances, dining

rooms and sufficient parking, it is necessary for the Company to have the new proper head

office.

11. The Board of Directors’ Meeting to Approve the Entering into the Connected

Transaction

In the Board of Directors’ Meeting of the Company No. 3/2014 held on 5 August 2014, the

interested directors or directors being connected persons who did not attend the meeting and

did not vote in the said agenda are as follows:

Name Position

1. Mr. Korsak Chairasmisak First Vice Chairman and Executive Director (Group 1)

2. Mr. Pittaya Jearavisitkul Executive Director (Group 2)

Enclosure 2

7

3. Mr. Piyawat Titasattavorakul Executive Director (Group 2)

4. Mr. Soopakij Chearavanont Director

5. Mr. Narong Chearavanont Executive Director (Group 1)

6. Mr. Suphachai Chearavanont Director

7. Mr. Adirek Sripratak Director

8. Mr. Umroong Sanphasitvong Executive Director (Group 1)

12. Opinions of the Board of Directors

The Company’s Board of Directors (excluding interested directors) opines that the land and

Structure purchase price is reasonable by referring to the appraisal price of the land and

Structure by 2 independent appraisers approved by the office of SEC. The purchase of land

and Structure shall also benefit the Company and shareholders as described in Item 10. In

addition, price and conditions are fair and not causing misappropriation of benefits. In this

connection, the sale and purchase price is close to the appraisal price by 2 independent

appraisers, namely, Plan Appraisal Company Limited and UK Valuations and Agency

Company Limited appraised on 10 July 2014 at Baht 476.15 million and on 17 July 2014 at

Baht 480 million respectively. In this regard, both independent appraisers appraised the land

value by market value and appraised the Structure value by depreciated replacement cost.

13. Opinions of the Company’s Audit Committee and/or Directors which are Different from

the Opinions of the Board of Directors - None -

14. Qualifications of the Independent Financial Advisor and the Independent Appraisers

Rendering the Opinions on the Entering into the Transaction

1. Qualifications of the Independent Financial Advisor

Independent

Financial Advisor

Shareholding and

Relationship of

the Independent

Financial Advisor

with the Company

Consent of the

Independent Financial

Advisor to Disclose the

Opinions

Date of Rendering

the Opinions

JayDee Partners

Limited

- None - Consent 25 August 2014

2. Qualifications of the Independent Appraisers

Independent

Appraisers

Shareholding and

Relationship of

the Independent

Appraisers with

the Company

Consent of the

Independent

Appraisers to Disclose

the Opinions

Date of Appraisal

Plan Appraisal

Company Limited

- None - Consent 10 July 2014

UK Valuations and

Agency Company

Limited

- None - Consent 17 July 2014

Enclosure 2

8

15. Appraisal of Asset Price by the Independent Appraisers in case of Acquisition of Assets

Having Fundamental Significance in a Form of Asset Value such as Immovable Property

Details of the appraisal of asset price prepared by the independent appraisers are in the

opinions of the independent financial advisor attached to the Invitation to the shareholders’

meeting (Enclosure 3).

16. Opinions of the Independent Financial Advisor

The opinions of the independent financial advisor are in the attachment to the Invitation to the

shareholders’ meeting (Enclosure 3).

17. Other Information that may Materially Affect the Decision of the Shareholders - None –

18. Information and the Business Operation of the Company

1. Brief Company Profile

The principal business of the Company is the operation of membership based Cash &

Carry trade centers, registered under the name of "Makro", that are located throughout

Thailand. The Company was established in Thailand in May 1988, and its shares were

listed on the Stack Exchange of Thailand in August 1994 with a total registered share

capital of 4,800 million shares at a par value of Baht 0.50 each fully paid up.

As at 30 June 2014, there were a total of 68 Makro stores of varying formats and sizes,

with 11 stores located in the Greater Bangkok Metropolitan area and 57 stores in the

provinces, together with 5 Siam Frozen Shops located in upcountry. All stores offer a

product range and assortment designed specifically to meet their respective targeted

customer groups' requirements and each store is well-positioned geographically to be

easily accessible.

With a large registered member base distributed throughout Thailand, the Company

continues to successfully operate its principal business of providing various solutions

to a multitude of customers operating in a wide range of industries, with the main

focus being small to medium size businesses who are predominantly Small Retailers,

HoReCa (Hotels, Restaurants and Catering) and services sector.

The Company has two wholly owned subsidiary companies namely, Siam Food

Services Limited ("SFS"), and Vina Siam Food Company Limited ("VSF").

1. SFS is a leading nationwide provider of premium food products together with

other value-added and logistics services to the hospitality and food service

industry sectors, operating in 4 key tourist locations, namely, Bangkok,

Pattaya, Ko Samui, and Phuket. SFS specializes in supplying high quality

specialty frozen and chilled products i.e. meats, seafood, poultry products,

potato, dairy, as well as a range of food seasonings, etc.

2. VSF is based in Ho Chi Minh City, Vietnam. Its principal business is in

trading and distribution as well as import and export of high quality food

product including butchery, seafood, potato, dairy, seasoning, etc.

2. History and Major Development of the Company

1988 : Set up the Company with the registered capital of Baht 750 million.

1989 : Opened 1st Makro store in Lard Prao.

1990 : Opened 3 Makro stores in Chaengwattana, Srinakarin and Bangbon.

Set up a subsidiary company called Makro Properties Ltd.

Enclosure 2

9

1993 : Opened 2 Makro stores in Chonburi and Chiang Mai.

1994 : Increased registered capital to Baht 2,400 million.

Opened 3 Makro stores in Nakhon Ratchasima, Rangsit and Hat Yai.

Listed on the Stock Exchange of Thailand.

1995 : Opened 1 Makro store in Udon Thani.

1996 : Opened 4 Makro stores in Phitsanulok, Khon Kaen, Surat Thani and Ubon Ratchathani.

1997 : Opened 1 Makro store in Rayong.

1998 : Opened 1 Makro store in Nakhon Sawan.

1999 : Opened 1 Makro store in Charan Sanitwongse.

2000 : Opened 2 Makro stores in Sathorn and Nakhon Pathom.

2001 : Opened 1 Makro store in Surin.

2002 : Opened 1 Makro store in Samsen.

2003 : Opened 2 Makro stores in Nakhon Si Thammarat and Chiang Rai.

Remodeled 3 existing stores (Lard Prao, Chaengwattana and Srinakarin) to new

format to focus on a wholesale Cash and Carry business and a one-stop shop for food

service.

2004 : Opened 6 Makro stores in Sakon Nakhon, Suphan Buri, Chanthaburi, Phuket, Roi Et

and Trang.

Remodeled 7 existing stores (Bangbon, Chonburi, Chiang Mai, Hat Yai, Nakhon

Sawan, Sathorn and Samsen) to new format.

2005 : Acquired 99.99% shares of Siam Food Services Limited.

Remodeled 9 existing stores (Charan Sanitwongse, Surat Thani, Nakhon Pathom,

Phitsanulok, Udon Thani, Rangsit, Nakhon Ratchasima, Khon Kaen and Rayong) to

new format.

2006 : Remodeled 2 existing stores (Ubon Ratchathani and Surin) to new format.

2007 : Opened 12 Makro stores in Sakaeo, Ko Samui, Buri Ram, Sisaket, Lamphun, Krabi,

Phetchaburi, Chaiyaphum, Saraburi, Pran Buri, Chachoengsao and Chiang Mai.

Remodeled non-food area in 3 stores (Sathorn, Chaengwattana and Bangbon) to have

new assortment and display to cope with the strategy in wholesale Cash and Carry

Business.

Installed air conditioning and reviewed assortment and display in 3 stores (Sakon

Nakhon, Suphan Buri and Roi Et) to enhance customers' satisfaction.

Enclosure 2

10

Launched "Makro Retailer Alliance" (MRA) project to continuously develop member

customers to improve their competitiveness.

2008 : Remodeled non-food area in 4 stores (Chonburi, Chiang Mai, Rangsit and Charan

Sanitwongse) to have new assortment and display to cope with the strategy in

wholesale Cash and Carry business.

Installed air conditioning and reviewed assortment and display in 4 stores (Nakhon Si

Thammarat, Chiang Rai, Chanthaburi and Trang) to enhance customers' satisfaction.

Continued to run "Makro Retailer Alliance" (MRA) project activities by opening the

MRA Centre at Makro Lard Prao branch as well as organized Retail Expo, training

sessions and seminars for small retailers and their successors to improve their

competitiveness.

2009 : Opened 3 Makro stores in Ram Inthra, Chumphon and Pattaya.

Installed air conditioning and reviewed assortment and display in Phuket store to

enhance customers' satisfaction.

Continued to run “Makro Retailer Alliance” (MRA) project activities, cooperated

with 12 business alliances and 32 leading universities to jointly assist and support

small food retailers.

Entire business transfer of Makro Properties Ltd. to Siam Makro Public Company

Limited.

2010 : Opened 4 Makro stores in Kamphangphet, Kanchanaburi, Lop Buri and Nong Khai.

Launched the first pilot frozen shop under the name “Siam Frozen” in Chiang Mai.

Remodeled store in Hang Dong (Chiang Mai 2) to new format.

2011 : Opened 4 Makro stores in Ratchaburi, Mae Rim (Chiang Mai), Phra Nakhon Si

Ayutthaya and Lampang and also opened the second “Siam Frozen” Shop in Udon

Thani as well as remodeled 2 existing Makro outlets (at Lard Prao and Chonburi) to

new format and the existing Ko Samui outlet to more effectively meet and serve

specific requirements of key target customer groups.

Initiated and built building a pilot Makro foodservice Store, which was a new store

format dedicated to the HoReCa customers group that was opened on 11 January

2012.

2012 : Invested in Vietnam to incorporate a new company in Vietnam under the name “Vina

Siam Food Company Limited” where the Company held 100 shares.

Opened a pilot Makro Foodservice Store in Hua Han, which was a new store format

providing a one-stop solution for the HoReCa customers group.

Opened 4 Makro stores in Khlong Luang (Pathum Thani), Loei, Phetchabun and

Bang Phli and also opened 3 Siam Frozen Shops in Nakhon Si Thammarat, Nakhon

Ratchasima and Chonburi.

Enclosure 2

11

Remodeled non-food area in 3 stores (Kanchanaburi, Lop Buri and Nong Khai) to

have new assortment and display to cope with our strategy in wholesale Cash and

Carry business as well as remodeled and expanded sales area of the existing Phuket

outlet to cater for future growth more effectively meet and serve specific

requirements of key target customer groups.

2013 : Changed the major shareholder from SHV Nederland B.V. to CP ALL Public

Company Limited by the acquisition of the Company's shares on 26 June 2013 and

making the tender offer to the Company's shareholders to purchase the Company's

shares during 28 June 2013 to 5 August 2013.

Registered the change of par value of the Company's ordinary shares from Baht 10

per share, totaling 240,000,000 shares, to Baht 0.50 per share, totaling 4,800,000,000

shares.

Opened 5 Makro stores in Mukdahan, Stun, Trat, Chum Phae (Khon Kaen) and

Naknon Phanom.

Opened 2 small Makro foodservice Stores in Patong and Rawai (Phuket), which were

new store format.

2014 : As at 30 June 2014

Opened 2 Makro stores in Bueng Kan and Mae Sai (Chiang Rai)

Opened 2 small Makro foodservice Stores in Ko Pha Ngan (Surat Thani) and North

Pattaya (Chonburi)

3. Information of the Subsidiaries as at 30 June 2014

(1) Siam Food Services Limited

Company registration No. : 0105527032739 (Former No. 3276/2527)

Date of Incorporation : 7 September 1984

Head office : 2439 Old Paknam Railway Road,

Prakhanong, Klongtoey, Bangkok 10110

Tel. 0-2620-6000

Fax. 0-2620-6001

Website : www.siamfoodservices.com

Type of business : Specializing in the import and distribution of

value added, temperature controlled, high

quality specification meats, seafood, poultry,

potato, dairy and both international and

domestic ethnic food brand products.

Distribution reach is to all provinces of

Thailand.

Type and No. of shares : Registered ordinary shares, totaling 450,000

shares

Registered capital : Baht 45,000,000, with 450,000 shares at a

par value of Baht 100 each

Issued and paid-up capital : Baht 45,000,000, with 450,000 shares at a

par value of Baht 100 each

Enclosure 2

12

(2) Vina Siam Food Company Limited

Company registration No. : 411043002045

Date of Incorporation : 15 October 2012

Head office : 56 Pham Ngoc Thach Street, Ward 6,

District 3, Ho Chi Minh City, Vietnam

Tel. (848) 7309-1188

Fax. (848) 3820-1886

Website : www.vinasiamfood.com.vn

Type of business : Trading and distribution, and import and

export business, of high quality food product

including butchery, seafood, potato, dairy,

seasoning etc.

Registered capital : USD 1,500,0000

Paid-up capital : USD 1,500,0000

4. Nature of Business Revenue structure of Company Group (Revenue net of inter-group transactions)

Activities/Products/Services Operate by Shareholding of

Company (%)

January – June

2014 2013 2012 2011

Mil.

Baht %

Mil.

Baht %

Mil.

Baht %

Mil.

Baht %

Makro Cash and Carry

Sales of consumer goods and

other income

The Company - 69,509 98.9 128,295 98.9 113,746 98.9 98,592 98.9

Importing and trading of

frozen and chilled foods

Sales of goods and services and

other income

Siam Food

Services

Limited

99.99 733 1.0 1,422 1.1 1,206 1.1 1,078 1.1

Importing, exporting, and

trading of frozen and

chilled foods

Sales of goods and services and

other income

Vina Siam Food

Company

Limited

100 67 0.1 64 0.0 4 0.0 - -

Grand total

70,309 100.0 129,781 100 114,956 100 99,670 100

Enclosure 2

13

19. Connected Transactions during the Past Year

For the past one-year period ended 31 December 2013 and the six-month period ended 30 June 2014, the Company and its subsidiaries have entered

into connected transactions with persons that might have conflict of interests which are summarized as follows:

Persons that might have conflict of

interests and nature of relationship Nature of transaction

Value of transaction

(million Baht)

Necessity and reasonableness of transaction One-year

period

ended 31

December

2013

Six-month

period ended

30 June 2014

Orkam Asia Trademark AG

Nature of relationship

• At present, Orkam Asia

Trademark AG is not person that

might have conflict of interests

with the Company.

• Orkam Asia Trademark AG is an

affiliated company of SHV

Group which was major

shareholder of the Company. On

26 June 2013, SHV transferred

all shares in Siam Makro

Holding (Thailand) to CP ALL.

Also, affiliated companies of

SHV Group transferred all

shares in the Company to CP

1. Software License Fee

The Company and its subsidiaries

paid software license fee and were

granted maintenance services of

information management software to

be used for business operations from

Orkam Asia Trademark AG.

2.9 - The said service was the receipt of technical

assistance from affiliated company in overseas to

be used for main business operations of the

Company which included recording sales

transactions, goods receiving, stock movement

and customer information system of the

Company’s stores. The said software can be used

for recording information of new stores and for

consolidation of information of all stores. The

costs of software are cheaper than local system

development.

2. Trademark and Service Mark

License Fee The Company and its subsidiaries

paid Trademark and Service mark

License fee to Orkam Asia

80.2 - The Company was granted the right to use

trademarks and service marks from Orkam Asia

Trademark AG which included the use the

trademarks such as “Makro”, “ARO” etc. in

operating the businesses including the store lay

Enclosure 2

14




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

ALL. As a result, companies in

SHV Group have no longer been

major shareholders of the

Company.

Trademark AG. out, products display and the business

management. Also, whenever there was any

development of new store lay out of “Makro” in

other countries, the company would obtain

knowledge and technique of the business

operation resulting in efficiency in the business

operation.

CP ALL Public Company Limited

(“CP ALL”)


CP ALL is major shareholder of the

Company holding shares directly and

indirectly of 97.9% of total shares.

1. Software License and

Trademark and Service Mark

License Fees The Company has paid software

license and trademark and service

mark license fees to CP ALL at the

amount of Baht 91.0 Million during

2014.

91.0 87.8 The said service is the receipt of technical

assistance from CP ALL to be used for main

business operations of the Company which

includes recording sales transactions, goods

receiving, stock movement and customer

information system of the Company’s stores. The

said software can be used for recording

information of new stores and for consolidation of

information of all stores. The costs of software are

cheaper than local system development.

In addition, the Company is granted the right to

use trademarks and service marks from CP ALL

which includes the use the trademarks such as

2. Other Creditors - Service

Fees [Software License and

Trademark and Service mark

License]

91.0 87.2

Enclosure 2

15




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

“Makro”, “ARO” etc. in operating the businesses

including the store lay out, products display and

the business management. Also, whenever there

was any development of new store lay out of

“Makro” in other countries, the company would

obtain knowledge and technique of the business

operation resulting in efficiency in the business

operation.

C.P. Food Store Company Limited

(“C.P. Food Store”)


• C.P. Food Store is an affiliated

company of CP ALL Group

which is major shareholder of

the Company.

• A director of CP ALL is major

shareholder of C.P. Food Store.

1. Income from the Sale of

Goods and Services

10.3 8.8 The sale price of goods and services is in

accordance with normal business conditions as

similar to the sale transactions with unconnected

persons and is in accordance with the market price

or mutually agreed conditions.

2. Expenses of Purchasing

Goods

187.0 135.7 The purchase price of goods is in accordance with

normal business conditions as similar to the

purchase transactions with unconnected persons

and is in accordance with the market price or

mutually agreed conditions. 3. Trade Account Payable

77.6 72.0

Enclosure 2

16




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

CPF Trading Company Limited

(“ CPF Trading”)


• CPF Trading is an affiliated



the Company.

• CPF Trading has Charoen

Pokphand Group Company

Limited (“Charoen Pokphand

Group”) as major shareholder. In

this regard, Charoen Pokphand

Group is major shareholder of

CP ALL and has a mutual

director with CP ALL.


Goods and Services







Goods






76.7 104.2

Perfect Companion Group

Company Limited (“Perfect

Companion Group”)


Goods and Services






Enclosure 2

17




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014


• Perfect Companion Group is an

affiliated company of CP ALL

Group which is major

shareholder of the Company.

• Perfect Companion Group has

Charoen Pokphand Group as

major shareholder. In this regard,

Charoen Pokphand Group is

major shareholder of CP ALL

and has a mutual director with

CP ALL.


Goods






36.7 39.7

CPRAM Company Limited

(Formerly “C.P. Retailing and

Marketing Company Limited”)

(“CPRAM”)


CP ALL, which is major shareholder

of the Company, is major shareholder


Goods






35.8 31.1

Enclosure 2

18




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

of CPRAM holding shares of 99.99%

of total shares.

CP-Meiji Company Limited (“CP

Meiji”)


• CP Meiji is an affiliated



the Company.

• CP Meiji has Charoen Pokphand

Group as major shareholder. In






Goods





mutually agreed conditions.

2. Trade Account Payable

29.7 30.0

C.P. Consumer Products Company

Limited (“C.P. Consumer Products”)


Goods and Services




Enclosure 2

19




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014


• C.P. Consumer Products is an

affiliated company of CP ALL

Group which is major shareholder

of the Company.

• C.P. Consumer Products has

Charoen Pokphand Group as

major shareholder. In this regard,


major shareholder of CP ALL and

has a mutual director with CP

ALL.




Goods






29.4 27.9

Gosoft (Thailand) Company Limited


CP ALL, which is major shareholder


[Fixed Assets and Intangible

Assets]

The Company and its subsidiary

have purchased fixed assets and

intangible assets [which are

computer equipment and computer






Enclosure 2

20




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

of the Company, is major shareholder

of Gosoft holding shares of 99.99% of

total shares.

programs] from Gosoft.

2. Other Creditors – Purchasing

[Fixed Assets and Intangible

Assets]

45.0 59.3

CPF (Thailand) Public Company

Limited (“CPF”)


• CPF is an affiliated company of

CP ALL Group which is major

shareholder of the Company.

• CPF has Charoen Pokphand

Group as major shareholder. In






Goods and Services






Freewill Solutions Company 1. Expenses of Purchasing

[Intangible Assets]



Enclosure 2

21




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

Limited (“ Freewill Solutions”)


• Freewill Solutions is an affiliated



the Company.

• Freewill Solutions has Charoen

Pokphand Group as major

shareholder. In this regard,


major shareholder of CP ALL

and has a mutual director with

CP ALL.

The Company and its subsidiary

have purchased intangible assets

[which are computer programs]

from Freewill Solutions.




Other affiliated companies of CP

ALL Group


1. Service Fees [Insurance

premiums, training expenses,

communication services which

are mainly from True Group

including software

maintenance services]

8.6 27.3 The said services are for main business operations

of the Company. The service fees are in

accordance with the mutually agreed prices and

agreements.

Enclosure 2

22




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

CP ALL is major shareholder of the

Company holding shares in the

Company directly and indirectly of

97.9% of total shares including

affiliated companies that have

Charoen Pokphand Group as major

shareholder.


Goods and Services







Goods






4. Account Receivable 2.2 1.5

5. Trade Account Payable 5.1 4.5

6. Other Creditors – Services

[Communication services

which are mainly from True

Group including software

maintenance services and

training programs]

3.6 15.2

Enclosure 2

23




(million Baht)


period

ended 31

December

2013

Six-month

period ended

30 June 2014

7. Purchase of Fixed Assets and

Intangible Assets

- 0.1

8. Other Debtors [Advance

expenses which are insurance

premiums and software

maintenance services]

0.2 7.8

Enclosure 2

24

20. Financial Position and Operating Result

Summary of Financial Statements The statements of financial position, statements of income, statements of cash flows, and

material financial ratios of the Company for the periods ended 31 December 2011, 2012, 2013

and for the 6-month period ended 30 June 2014. (Details are in Item 1.5 of the opinions of the

Independent Financial Advisor, Enclosure 3.)

Explanation and Analysis of Financial Position and Operating Result of the Company

For the year 2013 and 6-month period ended 30 June 2014 (Details are in Item 1.5 of the opinions of the Independent Financial Advisor, Enclosure 3.)

The Company hereby certifies that information and details contained in this Information

Memorandum are accurate and complete, true, not causing misunderstanding, or not lacking of

material information that should be disclosed which may cause damage to other persons or

shareholders.

The opinions of the Independent Financial Advisor on the acquisition of asset and the connected transaction

regarding the purchase of Land and building from CP ALL Public Company Limited

of


presented to

The Shareholders of Siam Makro Public Company Limited

by

JayDee Partners Limited

August 25, 2014

This English report of the Independent Financial Advisor’s Opinions has been prepared solely for the convenience of foreign shareholders of Siam Makro Public Company Limited and should not be relied upon as the definitive and official document. The Thai language version of the Independent Financial Advisor’s Opinion is the definitive and official document and shall prevail in all aspects in the event of any inconsistency with this English Translation.

Enclosure 3

The opinions of IFA on the acquisition of assets and the connected transactions (For the purpose of translation only)

1

Table of Contents

Page

Executive Summary 5

Section 1 Section 2

Information of Siam Makro Public Company Limited

The approval for the purchase of Land and building from CP ALL Public Company Limited

8

2.1 Characteristic and details of the transaction 18 2.2 Reasonableness of the transaction 30 2.3 Fairness of the transaction price and condition 37 Section 3

Summary of the Opinion of the Independent Financial Advisor

44 Appendix

Summary of the asset appraisal report of Land and building by the Independent appraiser

47


2

Glossary

The Company or MAKRO MAKRO Group

CPALL or Seller Siam Makro Holding OHT Land

Building

PLAN UK Independent Financial Advisor or IFA

Siam Makro Public Company Limited Siam Makro Public Company Limited and its subsidiaries, comprising of Siam Food Services Limited and Vina Siam Food Company Limited CP ALL Public Company Limited Siam Makro Holding (Thailand) Limited OHT Company Limited Title Deed no. 38439 – 38463, 74346, 85240, 155179 and 210414. Total of 29 deeds. Total area of Land of 9 – 0 – 47 rai located at 1466 1468 1470 1472 and 1474 Phatthanakan Road, Suan Luang Subdistrict, Phra Khanong District, Bangkok 5-Storey Building (including 1 deck floor and 1 basement floor), Building and fixture parts on Land Title Deed Nos. 38439-38463, 74346, 85240, 155179 and 210414. Total area of Land of 9 - 0 - 47 rai located at 1466 1468 1470 1472 and 1474 Phatthanakan Road, Suan Luang Sub-district, Phra Khanong District, Bangkok Plan Appraisal Ltd. UK Valuation and Agency Co., Ltd. JayDee Partners Limited

SET The Stock Exchange of Thailand SEC The Office of the Securities and Exchange Commission Acquisition or Disposition Notification

Connected Transaction Notification

The Notification of the Board of Governor of the Stock Exchange of Thailand, Tor. Chor. 20/2008 Re: Rules of Significant Transactions Constituting an Acquisition or Disposal of Assets and Notification of the Board of Governors of the Stock Exchange of Thailand dated August, 31, 2008. Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E.2547 (2004) dated October 29, 2004, and its amendments. The Notification of Capital Supervisory Board, Tor. Chor. 21/2008 Re: Rules on Connected Transactions dated August 31, 2008 and its amendments, as well as the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and the Acts of Listed Companies concerning Connected Transaction B.E. 2546 (2003) dated November 19, 2003 and its amendments

3


25 August 2014

Attention: The shareholders of Siam Makro Public Company Limited

Subject: The opinions on the independent financial advisor on the acquisition of asset and the connected transaction

The Board of Director’s Meeting of Siam Makro Public Company Limited (“the Company” or “MAKRO”) No. 3/2014 on August 5, 2014, passed a resolution to approve a connected transaction between the Company and CP All Public Company Limited (“CP ALL” or “Seller”), which is the major shareholder of the company and has mutual directors with the Company, to purchase Land Title Deed Nos. 38439-38463, 74346, 85240, 155179 and 210414, total Land area of approximate 9 - 0 - 47 rai (“Land”) with a 5-storey building (including 1 deck floor and 1 basement floor), Building and component parts (“Building”), located at Phatthanakan Road, Suan Luang Sub-district, Phra Khanong District, Bangkok at the amount of THB 470.00 million and approve the additional investment to improve and decorate the Building as well as install systems on the Land and Building that the Company will invest to be used as the new head office of the Company at the amount of approximately THB 791.80 million, resulting in ,total investment value for the whole project of THB 1,261.80 million.

The purchase of Land and Building from Seller and the approval for additional investment to improve and decorate including installation of various systems on the said Land and Building, which totaled to the investment value for the whole project of BHT 1,261.80 million, is considered as acquisition of assets pursuant to Notification of the Capital Market Supervisory Board, the Securities and Exchange Commission No. Tor. Jor. 20/2008 regarding rules and regulations on the acquisition and disposition of assets dated August 31, 2008 and its’ amendments. In addition, the Notification of the Board of Governors of the Stock Exchange of Thailand regarding disclosure of information and other acts of the listed companies concerning the acquisition and disposition of assets, B.E.2547 (2004) dated October 29, 2004, and its amendments (“Acquisition or Disposition Notification”) with the highest acquisition transaction size of 3.56% of total assets according to these for value of the consideration calculated from the Company’s interim consolidated financial statement for the six-month period ended June 30, 2014 (THB 35,400.72 million). In this regard, when combining with other transactions of acquisition of assets that the Board of Directors of the Company has also approved in this meeting of THB 1,092.70 million having the highest value according to the test value of the consideration at 3.09% and other transaction of assets of the Company during the past six months totaling to THB 4,967.50 million having the highest value according to the test for value of the consideration at 14.03%, total value of transactions is 20.68% of value of total assets. Due to the said value of transactions, which is higher than 15%, but less than 50%. The Company must prepare a report disclosing information to the Stock Exchange of Thailand (“the SET”) and send a written notice to inform shareholders within 21 days from the date of disclosure of information to the SET.

Nonetheless, since Seller is the main shareholder of the Company (as of August 21, 2014CP ALL holds direct and indirect shares of the Company totaled to 4,698,149,500 shares or as 97.88% of shares issued and sold by the Company1) and has mutual directors.2 As a result, the transaction of Land and Building from CP ALL valued at THB 470.00 million is considered as a connected transaction according to the Notification of Capital Supervisory Board, Tor. Chor. 21/2008 Re: Rules on Connected Transaction dated August 31, 2008 and its amendments, as well as the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosures of Information and the Acts of

1 CPALL holds direct shares in the Company valued at 2,057,846,700 shares or as 42.87% of shares issued and sold by

the Company and hold indirectly through Siam Makro Holding (ThaiLand) Limited (“Siam Makro Holding”) amounted to 2,640,320,800 shares or as 55.01% of total shares issued and sold by the Company (as of July 4, 2014 CPALL holds 49.00% of Siam Makro Holding direct shares and hold indirect shares of Siam Makro Holding through OHT Company Limited (“OHT”) at 51.00% as of July 4, 2014 CPALL holds 100.00% of OHT shares.)

2 Common directors of the Company and CPALL (8 out of 18 people) include Mr. Korsak Chairasmisak, Mr. Prasert Jarupanich, Mr. Pittaya Jearavisitkul, Mr.Piyawat Titasattavorakul, Mr. Soopakij Chearavanont, Mr. Narong Chearavanont, Mr. Adirek Sripratak and Mr. Umroong Sanphasitvong.

4


Listed Companies concerning Connected Transaction B.E. 2546 (2003) dated November 19, 2003 and its amendments (“the Notification of Connected Transaction”) with the connected transaction size of 4.25% of net tangible assets (“NTA”) as of June 30, 2014 (THB 11,058.52 million), which is higher than 3.00% of NTA. Thus, the Company is required to seek the approval from the shareholders with affirmative votes of not less than three-fourth of the votes attending the meeting and having the right to vote, excluding the votes from the shareholders who have conflict of interest. Also, the Company is required to appoint an independent financial advisor to render opinion regarding the reasonableness of the transaction as well as the fairness of the transaction price and conditions to present to the shareholders of the Company for consideration.

The Board of Directors’ Meeting No.3/2014, held on August 5, 2014 approved the appointment of JayDee Partners Limited (“independent financial advisor” or “the IFA”), the financial advisor approved by the Office of the Securities and Exchange Commission (“the SEC”), to be the independent financial advisor of the Company to render the opinions to the shareholders as supporting information for their voting consideration in respect of entering into this asset acquisition and the connected transaction.

The IFA has given opinion based on the information from interview, information received from the Company, publicly available information as well as current economic condition. If there are any signification changes to such information in the future, it might alter the opinion of the IFA accordingly. Information used for this report is as follows: The resolutions of the Company’s Board of Directors’ Meeting related to the transaction. The Company’s Information memorandum disclosure to the SET. Form 56-1 of the Company for 2013 Audited financial statements of the Company ended December 31, 2011-2013 and reviewed financial statements

for 6 months ended June 30, 2014. Draft agreements and/or agreements related to the transaction such as the document for proposed sale of Land

and Building of CP ALL dated July 8, 2014. Information from interview with the management and staff of the Company and site visit of the Land and

Building on July 31, 2014. Report evaluating the value of assets related to the transaction conducted by 2 independent appraiser, which

have been approved by SEC dated July 16, 2014 and July 22, 2014. Report estimating construction cost of additional investment of the Company, which is prepared by

independent consulting engineers and management on Quantity Surveying and Cost Management dated August 15, 2014.

Survey data of lands and other Buildings in surrounding area and assets to be acquired from the real estate firm by the IFA.

Information and documents obtained from the Company

Additionally, this report is based on these underlying assumptions. All information and documents obtained from the Company are complete, adequate, and truthful and that the

opinion from the interview with the Company’s management are reflective of the current situation. There are not any event that had occurred, is going to occur or is likely to occur that might materially affect the

operating results and financial performances of the Company. All business contracts related to the Company’s business with its counterparties are still legal, valid and binding

and have not been amended, revoked or terminated;

In this regards, the IFA has prepared this report on August 25, 2014 and hereby certified that we have studied, analyzed and prudently performed our duties as an Independent Financial Advisor, complying with the generally accepted professional standard and rendered our opinion based on the unbiased analysis with regards to the best benefit of the shareholders. However, it is important to note that the IFA’s opinions are based on the information and documents received from the Company and other publicly available information. The IFA assumes that such information is accurate and reliable at the time the IFA prepared this opinion report. However, if such information is found to be inaccurate and/or incomplete and/or unreliable and/or have any significant changes in the future, the opinion provided by the IFA may differ accordingly. As a result, the IFA is unable to hold responsible for any impacts on the Company and its shareholders resulting from such transaction. In addition, the objective of this report is merely to provide opinion on the transaction to the Company’s shareholders. The decision to vote is the sole discretion of the

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shareholders, which shall include the consideration of advantages, disadvantages, and risk associated with the transactions as well as consideration of the attached documents submitting to the shareholders along with the invitation letter so as to make the most appropriate decision. In this regards, the opinion of the IFA does not certify the success of the transaction as well as their possible impacts. The IFA does not hold any responsibilities for the impacts that might arise from such transaction both directly and indirectly.

The IFA has considered the reasonableness of the transactions with details as follows:

Executive Summary

On August 5, 2014, the Company’s Board of Directors Meeting No.3/2014 approved the purchasing of Land title no. 38439-38463, 74346, 85240, 155179, and 210414 with a total area of 9-0-47 rai with 5-Storey Building (including 1 deck floor and 1 basement floor), Building, and fitting equipment located on Phatthanakan Road, Suan Luang Subdistrict, Phra Khanong District, Bangkok from CPALL, which is the major shareholder of the Company, share directors, valued at THB 470.00 million, including approval to further invest in renovation, decoration, and installation of systems on the Land and Building. The Company will invest with a total investment of approximately THB 791.80 million, representing a total investment of the project of THB 1,261.80 million.

The purchase of Land and Building with the investment to renovate and redecorate the said Building is design for the new headquarter building of the Company in place of the old three headquarter, which currently is located in the area of Makro Lad Phrao branch, Lad Phrao Road, and rented area of Jit-Uthai Building, Ramkhamhaeng Road. To solve the problem of insufficient space in business operation to the number of current employees, and to support the future increase in personnel of the Company in accordance to future growth plans in several areas, such as opening of the new Makro branch, expanding the Food Service business, expanding of channels of distribution through E-commerce, and so on. As well as increase in performance, and reduce of long-term costs of the Company that occurs from financing of work area, meeting rooms, seminars, to support the employees’ operations and activities of the Company including other costs arise from having separate offices in different areas, such as travel costs and transportation.

The reason that the Building is not ready for immediate use because the Building that the Company will enter into this transaction (The original Building was the headquarter of Liberty Insurance Company Limited) has terminated its use since approximately 2010 before CPALL started to invest in said asset in 2013. The said asset is also under demolish process of demolition of all interior decorations and some exterior parts that had dilapidated according to CPALL’s plan renovate the Building before the negotiation of the asset with the Company. Therefore, it is neccessary to invest renovation, decoration, and invest in equipment in order for the Building to be ready for usage as the Company’s new headquarter and in accordance to the plan to use the area to support the current business operation of the Company, and future expansion plans in other businesses in the future.

The purchase of Land and Building are concurrent with the investment for the said additional construction, renovation, and decoration of Building by the Company, such as the acquisition of asset is prescribed as Acquisition or Disposition Notification with the highest acquisition transaction size of 3.56% of NTA. When including the acquisition of other assets of the Company approved at the same meeting amounted to THB 1,092.70 million, which total value of the transaction under consideration is equal to 3.09% and the acquisition of other assets of the Company that occurred in the last 6 months, a total of THB 4,967.50 million, which total value of the transaction under consideration is 14.03% to will amounted to 20.68% of total assets.

In addition, as Seller is the major shareholder of the Company, and both companies have common directors, hence the purchase of Land and Building from CPALL valued at THB 470.00 million is regarded as a related party transaction under the Connected Transaction Notification, with the transaction size of 4.25% of NTA which is higher than 3.00% of NTA. Thus, the Company is required to seek approval from the shareholders with affirmative votes of not less than three-fourths of the total number of votes of the shareholders attending the meeting, excluding the shareholders with conflict of interest. The Company is also required to appoint an independent financial advisor to render opinions to the Company’s shareholders regarding the reasonableness of the transaction and the fairness of the transaction price and condition.

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From the analysis of the IFA regarding the fairness of the price and terms of the purchasing of the Land and Building of CP ALL that has been mentioned above. The IFA views that the Transaction is appropriate based on the following reasons: 1. The Company acquired the Land and Building that potential is determined by the main criteria of the Company in

terms of space, location, and nature of the assets. (Details are shown in Section 2 Item 2.1 of this report) to support the Company’s business. Currently, all three of the Company’s headquarters (located on Lat Phrao Road and Ramkhamhaeng Road) has

the total area of approximately 8,300 square meters, which is not sufficient to facilitate the employees activities as the number of employees are increasing dramatically especially in the past 2-3 years. This transaction will allow sufficient space for effective operation of the Company’s business as well as the ability to allocate basic facilities such as conference rooms, large size training room, and server room, which the current offices do not have sufficient space to provide. Additionally, the asset located in close proximity to the headquarters of the Company at present, and Makro Lad Phrao branch is the hub of operation will help to maintain the efficiency and continuity of business operations. As well as for the benefit of the employees as the majority reside in the area.

The Company’s new headquarter is with a potential to support future growth of the Company within the next 10-20 years due to the policies and plans to continue the investments such as opening new Makro branches, for foreign investment, to expand food service businesses and so on.

2. The transaction will help to reduce long term costs of the Company as following: The expense of renting the office space as currently, the Company is renting one office building, which is Jit-

Uthai Building located on Ramkhamhaeng Road with approximately 4,007 square meters of space in which the rental expense is approximately THB 1.18 million per month, as well as additional parking spaces fee.

The expense of providing temporary work area in the containers for the employees due to lack of space especially during the expansion of new Makro branches. In 2013 and the first six-months of 2014, the Company’s said costs are approximately THB 1.12 million, and THB 0.05 million, respectively.

The expenses of renting facilities for conferences, trainings and seminars, which are ongoing programs as the Company’s existing conference rooms are limited in number and size. In 2013, and six-months of 2014, the Company’s said costs are approximately THB 4.33 million, and THB 2.96 million, respectively.

Travel, transportation and other miscellaneous expenses incurred from having separate headquarter offices.

3. By having the Company’s headquarter in one building (Centralized Headquarter Office), the performance of the management and the staff will improve as well as the mobility and speed for communication between divisions. Moreover, the Company will be able to managed and utilized the available resources to benefit the Company such as information technology systems, communications system and office equipment that would allow the use of the Company’s resources at most.

4. The transaction will help to mitigate the risk from renting other office buildings to utilize as headquarter building

for the Company, such as risk of changes in the price of rent and service charges and leasing period, as well as changes in terms and condition, which may alter the benefit of the Company as the lessee that may affect the operations of the Company.

5. The amount the Company is going to invest need to be paid in the acquisition of Land and Building valued at 470.00

million, and use for the renovation of the Building amounted to THB 791.80 million is appropriate as: The price of the acquisition of Land and Building is THB 470.00 million is lower than the fair value as determined

by 2 independent appraiser, which is equivalent to THB 476.15 million, and THB 480.00 million. Additional renovation of the Building has the total investment of THB 791.80 million in order for the Building to be

ready for usage as the new headquarter of the Company. After deducting Contingency Cost that the Company sets at THB 60.00 million, registration of transfer of Land of THB 4.70 million, and central furniture amounted to 4.00 million, will amounted to THB 723.10 million, which is close to the construction cost by consulting engineer estimated THB 743.62 million. (The estimation of construction costs and costs in association with construction excluding miscellaneous, contingency cost, registration of transfer of ownership, and furniture fee)

Investment of the new headquarter of the Company with a total investment capital of THB 1,261.80 million that is a worthwhile investment when compared to the rental of this Buildings from CPALL, which is the net value

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amounted to THB 1,300.23 million. While the additional rental of other office buildings in the close proximity to the current Company’s office is lowly than the net value of this investment, but has several limitations and considerations such as the insufficient size of the leased space, the aged condition of the buildings, and so on.

The details of the assessment of the reasonableness of the price of transaction appears in Section 2 Item 2.3 of this report.

6. The terms and conditions of the transaction are in accordance with general business practice and should not

adversely impact the benefit of the Company.

Therefore, the shareholders should approve the transaction. However, the transaction has disadvantages and risks that shareholders should take into consideration in order to approve the transaction, which are: 1. By entering the transaction, the Company will be obliged to pay for the Land and the Building as well as the

investment for improvement, decoration and install systems to make the Building available for use totaled to THB 1,261.80 million, which is expected to be paid by 2015. As a result, cash flow and liquidity of MAKRO Group may decline as well as loss of opportunity to use the cash to invest in other investments that would result in revenues such as expanding Makro branches or to use the said amount as working capital in MAKRO Group’s businesses.

2. The impact of the transaction on the financial position of the Company In the case that the Company has drawn short-term loans from financial institutions to use as a part of the

source of funds for the acquisition of the asset will cause the Company to bear liabilities and increase in interest expense due to the withdrawl of the loan to pay for the land and the construction expenses at the end of 2014 until the 3rd quarter of 2015. However, the Company has the policy to maintain the interest bearing debt per equity share that does not exceed 1.00 times. (as of June 30, 2014, the ratio is equal to 0.38 times)

After the asset which the Company will enter into Transaction, is available for use according to the estimation of the Company as expected in the 3rd quarter of 2015, the Company will have to start depreciating the cost of the asset and recognized the said expense in the consolidated income statement of the Company. Most of the assets of the Company that the Company enters into investment (excluding the land that does not depreciate) consists of buildings and building improvements. The management of the Company expects the gradual depreciation period of approximately 6-30 years as according to the usage life that will be assessed by the engineers, or as THB 60 - 70 million per year.

The Company assume to conduct business and have operating results to continue to grow in the future, as the Company will use the cash flow from operations and/or use 3 – 5 years loan from commercial for investment expansion in the next 2-3 years. The IFA views that although the transaction could cause the Company’s cash flow that the Company could use for dividend payment to decrease, however, it is expected that there will be no effect on the operations and the financial position of the Company. More significantly, the Company currently has no plan to change its dividend policy (not less than 40% of net profit after tax annually), of any kind.

3. The Company could be at risk in difficulties in delay scheduling from the renovation and installation of systems than

planned such as delay in the performance of the contractors or service providers to install engineering systems, a delay in the delivery of furniture and appliances and so on, causing the Company to unable to take advantage of the Building as planned and the increase in costs and expenses. Nonetheless, the Company has established guidelines to supervise the operations of the contractors in accordance with the Company’s plan, both in terms of execution time and quality, such as requiring the contractors to produce performance bond from financial institutions in the ratio of work value according to the Company assigned to the Commpany before the start of construction, the designation for the contractors to provide bank guarantee from financial institutions as a warranty of the work of 1 year period started from the date of delivery, the delay imposed by the ratio of value as determined by the Company, etc.

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Section 1: Information of Siam Makro Public Company Limited

1.1 Background

Siam Makro Public Company Limited was established in May 1988 with initial paid-up capital of THB 750.00 million, to operate as distribution warehouse in cash and self-service for customers for consumer products and members of Makro Membership Card under the name of “Makro”. In 1989 the Company opened the first Makro branch at Lardprao, later in 1994, the Company increased its registered capital to THB 2,400 million and became a public company listed on the SET. In 2005, the Company invested 99.99% in Siam Food Services Limited and in 2010, the Company opened a pilot store selling frozen food under the name of “Siam Frozen” in Chiang Mai Province. In 2012, the Company started to invest in Vietnam by establishing Vina Siam Food Company Limited, which the Company held 100.00% shares. In the same year, the Company started a pilot store of Makro foodservice at Hua Hin District, which has a new style, to conduct as a comprehensive provider of food products for hotel businesses, restaurants, and catering services (HoReCa). In 2013, there is a change in the major shareholder in the Company from SHV NetherLands BV to CP ALL Public Company Limited.In addition, the Company has changed the par value from THB 10.00 per share to THB 0.50 per share as of October 4, 2013.

As of August 1, 2014, the Company’s authorized capital and paid up capital totaled to THB 2,400 million, divided into ordinary shares of 4,800.00 million shares at par value of THB 0.50 per share and has 2 subsidiary companies as follow:

Table 1: Information of the subsidiaries of the Company as of August 1, 2013

Company Name Shareholding (%) Type of business

Siam Food Services Limited Paid-up capital of THB 45.00 million

99.99 Import and distribution of food from abroad and domestic. Products include meat, seafood, potatoes, dairy products, and food additives products. The products are stored and transported under temperature-controlled environment in accordance with the required standards to prospective customers across Thailand, such as hotels, restaurants, and fast food providers.

Vina Siam Food Company Limited corporated in Vietnam, paid-up capital of USD 1.50 million

100.00 Trade and distribute food as well as import and export food products. Products include meat, seafood, potatoes, dairy products, food additives products, and so on to fast food providers, restaurants and hotel businesses in Vietnam.

1.2 Business Overview

The nature of the Company and its subsidiaries’ businesses are as follow: a) Makro Product Distribution Warehouse (Makro Cash and Carry) The core business of the Company is product distribution warehouse available for members to pay in cash and self-service under the name of “Makro”, which have branches throughout Thailand as of August 1, 2014, the Company has 61 branches, “Siam Frozen” small size frozen food store of 5 branches and Makro foodservice that provides comprehensive provider of food products for hotel businesses, restaurants, and catering services (HoReCa) of 7 branches. The consumer goods and services available at Makro can be classified into different classification as follows: Electrical appliances and maintenance equipment Stationary, office supplies Vegetable, fresh fruits, meats, seafoods, milk Cleaning products, decontaminating products, cosmetics Frozen and chilled food products Beverages, Snacks Textiles and clothing General grocery products Furniture, sporting goods, home appliances Medicine and supplements Bakery Restaurants Kitchenware equipment used in hotel, restaurant and foodservice businesses

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In addition to general consumer products, the Company is also distributing products under its own brand (D.O.B : Distributor Own Brand) The D.O.B. products are classified by the type of products and the trademark. Examples are as follow:

Trademark Product Description aro Goods and consumer goods such as glass, plastic bags, plastic containers, stainless steel

cookware, rice, vegetable oil, fish sauce, canned fruit juice, bottled fruit juice, frozen food products and so on.

Savepak Goods and consumer goods such as toilet paper, dishwashing liquid, glass noodles, sausages, etc. Q-BIZ Office supplies and equipment such as paper, notebooks, pens, files, documents, computer

desk, cabinet, office tables, chairs and so on. M & K Snack, cookies, and fruit juice. Protech Electrical appliances. PETZFRIEND Dog food, cat food and fish food. Starline Personal products Thai Ruang Kwan

Rice

b) Importing and distributing of frozen and chilled food business with collecting and delivering service

The said business, operated by Siam Food Services Limited and Vina Siam Food Company Limited, subsidiaries that the Company held 99.99% and 100.00% shares, respectively. The detailed nature of the two subsidiary businesses is in Part 1 Section 1.1 of this report.

Revenue Building of MAKRO Group during 2011 – 2013 and six-month period in 2014 are presented in the following table.

Table 2: Revenue Building of MAKRO Group during 2011 – 2013 and six-month period in 2014

Business/Product/Service (Unit : THB million) Operated by 2011 2012 2013 Jan. – Jun. 2014

Revenue % Revenue % Revenue % Revenue % Makro Product Distribution Warehouse Revenue from product sales and other income.

Makro 98,592 98.9 113,746 98.9 128,295 98.9 69,509 98.9

Importer and distributor of frozen and chilled products Revenue from sales of goods and services and other income.

Siam Food Services Limited

1,078 1.1 1,206 1.1 1,422 1.1 733 1.0

Importer, exporter and distributor of frozen and chilled products Revenue from sales of goods and services and other income.

Vina Siam Food

Company Limited

- - 4 - 64 - 67 0.1

Total 99,670 100.0 114,956 100.0 129,781 100.0 70,309 100.0 Source: The Company


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1.3 Shareholders

Major shareholders of the Company as of August 21, 2014 are as follows:

Table 3: Major shareholders of the Company as of August 21, 2014

Name of shareholders Shareholding Number of Shares %

1. Siam Makro Holding (Thailand) Limited* 2,640,302,800 55.01 2. CP ALL Public Company Limited 2,057,846,700 42.87 3. Minority shareholders 101,850,500 2.12**

Total 4,800,000,000 100.00 Remark * Siam Makro Holding is a subsidiary in CPALL Group as CPALL directly hold 49% shares in Siam Makro Holding,

and indirect shares of 51% through OHT (Moreover, CPALL holds 100% shares in OHT). ** At present, the Company is unable to meet the free float requirement of the SET pursuant to the Notification

of the Board of Governors of the Stock Exchange of Thailand Re: Maintaining the Status of Listed Companies in the Exchange, 2011, which states that a listed company shall maintain its qualification with respect to share distribution so that its ordinary shares shall be held by minority shareholders in a number not less than 150 and such shareholders shall hold shares in aggregate of not less than 15% of paid-up capital of the listed company which the Company has informed the major shareholders for their consideration and future action.

Source: The Company

Figure 1: Revenue Building of the Company

CP ALL Public Company Limited (Seller)

Holds 100.00% shares 5 common directors from

6 directors*

Holds 51.00% shares, same set of directors

Holds 49.00% shares 5 common directors from 6 directors*

OHT Company Limited

Siam Makro Holding (ThaiLand) Limited

Holds 55.01% shares

Holds 42.87% shares Have 8 common directors from 18 directors

5 common directors from 6 directors*

Siam Makro Public Company Limited (Buyer)

Reamrk* Siam Makro Holding, CPALL, and OHT have 5 common directors: Mr. Korsak Chairasmisak, Mr. Pittaya Jearavisitkul, Mr. Piyawat Titasattavorakul, Mr. Narong Chearavanont, and Mr. Umroong Sanphasitvong (5 people which are the directors of the Company)

1.4 The Board of Directors

The Board of Directors of the Company as of August 21, 2014 is listed as follows:

Table 4: The Board of Directors of the Company as of August 21, 2014

Name Position 1 Mr. Arsa Sarasin Independent Director and Chairman 2 Mr. Athaporn Khaimarn Independent Director and Chairman of the Audit Committee 3 Mr. Chavalit Uttasart Independent Director and Member of the Audit Committee 4 Mr. Thira Wipuchanin Independent Director and Member of the Audit Committee 5 Mr. Chaiyawat Wibulswasdi Independent Director and Member of the Audit Committee 6 Mr. Joti Bhokavanij Independent Director and Member of the Audit Committee 7 Mr. Korsak Chairasmisak* First Vice Chairman and Executive Director (Group1) 8 Mrs. Suchada Ithijarukul Second Vice Chairman and Executive Director (Group2) 9 Mr. Prasert Jarupanich* Executive Director (Group1)


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Name Position

10 Mr. Pittaya Jearavisitkul* Executive Director (Group2) 11 Mr. Piyawat Titasattavorakul* Executive Director (Group2) 12 Mr. Soopakij Chearavanont* Director 13 Mr. Narong Chearavanont* Executive Director (Group1) 14 Mr. Suphachai Chearavanont Director 15 Mr. Adirek Sripratak* Director 16 Mr. Umroong Sanphasitvong* Executive Director (Group1) 17 Mrs. Saowaluck Thithapant Executive Director (Group2) 18 Mr. Philip William Cox Director Remark: Executive Director means a director who has the authority to bind the Company, including one executive

director from (Group1) signing with the executive director from (Group 2). Total of two co-signs and seal of the Company. *Directors of CPALL

As of August 21, 2014, the Management of the Company is listed as follows:

Table 5: Management of the Company as of August 21, 2014

Name Position 1 Mrs. Suchada Ithijarukul Chief Executive Officer 2 Mr. Lin, Chi-Lung Chief Operation Officer – Thailand Business 3 Mr. Thomas Leslie Hammer Chief Operation Officer – International Business 4 Mrs. Saowaluck Thithapant Chief Financial Officer – Finance and Shared Services 5 Mr. Paul Stephen Howe Chief Information Officer- Business and Information Technology 6 Mr. Jean-Michel de Geyer Executive Board Member – Innovation

Source: the Company

1.5 Financial Status and Operating Performance

Financial information from the Company’s consolidated financial statements for the year ended December 31 2011 – 2013 audited by PricewaterhouseCoopers ABAS Ltd and six-months period ended June 30, 2014 reviewed by KPMG Phoomchai Audit Limited are presented as follows:

Table 6: Summary of Financial Status and Financial Performance for the year 2011 - 2013

and six-months period ended June 30, 2014 Siam Makro Public Company Limited Consolidated Financial Statement Balance Sheet (Unit: THB million) 2011 2012 2013 Jan – Jun 2014 Current Asset Cash and cash equivalents 6,288.33 6,055.83 5,010.82 2,282.00 Accounts receivable 174.92 234.94 278.30 211.26 Other receivables 7,212.13 7,275.51 9,791.95 9,520.63 Inventories 544.55 652.56 835.30 533.36 Other current assets 365.54 468.70 519.39 634.09 Total current assets 14,585.46 14,687.54 16,435.76 13,181.33 Non-current assets Property, plant and equipment 14,824.00 16,499.15 18,097.74 20,081.66 Intangible assets 119.20 112.87 112.87 112.87 Leasehold rights 555.40 529.43 728.79 1,163.38 Other non-current assets 463.61 461.58 729.19 861.47 Total non-current assets 15,962.21 17,603.03 19,668.58 22,219.38 Total assets 30,547.68 32,290.57 36,104.34 35,400.72 Liabilities and equity Short-term loans from financial institution 2,052.04 2,099.79 3,166.65 4,183.33 Trade account payables 15,595.91 15,728.46 18,176.92 15,399.22 Other account payables 2,600.63 3,172.99 3,196.41 3,234.26 Total current liabilities 20,248.58 21,001.24 24,539.98 22,816.81 Non-current liabilities


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Siam Makro Public Company Limited Consolidated Financial Statement Balance Sheet (Unit: THB million) 2011 2012 2013 Jan – Jun 2014 Financial lease liabilities 127.15 103.91 165.51 314.29 Employee benefit obligations 226.99 288.61 344.31 330.37 Other non-current liabilities 36.20 34.22 33.14 34.86 Total non-current liabilities 390.34 426.74 542.96 679.52 Total liabilities 20,638.92 21,427.98 25,082.94 23,496.33 Equity Issued and paid-up share capital 2,400.00 2,400.00 2,400.00 2,400.00 Premium on ordinary shares 3,290.15 3,290.15 3,290.15 3,290.15 Retained earnings 4,218.61 5,172.30 5,330.88 6,213.20 Other components of equity - 0.14 0.37 1.04 Total equity 9,908.76 10,862.59 11,021.40 11,904.39 Total liabilities and equity 30,547.68 32,290.57 36,104.34 35,400.72

Siam Makro Public Company Limited Consolidated Financial Statement Profit and Loss Statement (Unit: THB million) 2011* 2012 2013 Jan – Jun 2014 Revenue from sales and services 99,101.56 114,332.76 129,086.63 69,966.82 Other income 568.46 623.09 694.09 342.26 Total income 99,670.01 114,955.85 129,780.72 70,309.08 Selling expenses 89,402.41 102,760.45 115,673.26 62,784.83 Cost of sales and services 6,314.30 7,418.67 8,597.80 4,504.92 Total expenses 95,716.71 110,179.12 124,271.06 67,289.75 Profit (loss) before financial costs and income tax

3,953.30 4,776.73 5,509.66 3,019.33

Financial costs 63.25 85.21 83.93 66.09 Profit (loss) before income tax 3,890.05 4,691.52 5,425.73 2,953.24 Income (expenses) from corporate income tax 1,236.32 1,157.83 1,127.15 630.92 Net profit 2,653.73 3,533.69 4,298.58 2,322.32

Note * Revised accounting standards, new financial reporting standard, and related interpretations which are effective on 1 January 2013 on TAS 12, income taxes.

Siam Makro Public Company Limited Consolidated Financial Statement Cash Flow Statement (Unit: THB million) 2011 2012 2013 Jan – Jun 2014 Net cash inflows (outflow) from operating activities

5,596.56 5,166.30 5,306.25 820.25

Net cash inflows (outflow) from investing activities

(3,319.40) (2,831.39) (3,239.18) (3,093.91)

Net cash inflows (outflow) from financing activities

(1,282.42) (2,567.41) (3,112.08) (455.16)

Increase (decrease) in cash and cash equivalent - net

994.74 (232.50) (1,045.01) (2,728.82)

Siam Makro Public Company Limited Consolidated Financial Statement Key financial ratios 2011* 2012 2013 Jan – Jun 2014 Liquidity Ratio Current ratio (time) 0.72 0.70 0.67 0.58 Quick ratio (time) 0.32 0.30 0.22 0.11 Account receivable turnover ratio (time) 608.35 547.22 493.48 561.23 Average collection period (day) 0.59 0.66 0.73 0.64 Inventory turnover ratio (time) 13.71 14.28 13.73 13.13 Inventory period (day) 26.25 25.20 26.22 27.42 Account payable turnover ratio (time) 6.29 6.56 6.82 7.48 Payable period (day) 57.20 54.87 52.76 48.13 Cash Cycle (day) (30.36) (29.01) (25.81) (20.07)


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Siam Makro Public Company Limited Consolidated Financial Statement Key financial ratios 2011* 2012 2013 Jan – Jun 2014 Profitability Ratio Gross profit margin (%) 7.98% 8.36% 8.66% 8.60% Operating profit margin (%) 4.25% 4.18% 4.28% 4.30% Net profit margin (%) 2.66% 3.07% 3.31% 3.30% Return on equity (%) 27.55% 34.02% 39.29% 40.52% Efficiency Ratio Return on assets (%) 9.44% 11.25% 12.57% 12.99% Return on fixed assets (%) 26.53% 29.80% 32.13% 30.89% Asset turnover (time) 3.55 3.66 3.80 3.93 Financial Policy Ratio Debt to equity ratio (time) 2.08 1.97 2.28 1.97 Leverage Ratio (time) 253.13 91.95 84.43 44.90 Dividend payout ratio (%) 94.96% 84.90% 89.33% 72.34%

Note *Revised accounting standards, new financial reporting standard, and related interpretations which are effective on 1 January 2013 on TAS 12, income taxes.

Analysis of operating results and financial position Operating results of the Company Revenue In 2011-2013, the Company’s total sales income amounted to THB 99,670.01 million, THB 114,955.85 million and THB 129,780.72 million, respectively, through the revenue from sales and services amounted to THB 99,101.55 million, THB 114,332.76 million and THB 129,086.63 million, respectively. The main revenue of the Company results from wholesale business with cash and self-service payment. The reason for the continuous increasing trend in revenue from sales and service in 2011 – 2013 is due to numbers of the Company’s continuing development plans such as customer development and products development in order to meet the diverse needs of the customers, which includes the opening of new branches during the years to develop new styles of the new branches as well as producing products for the customers especially at the first half of the year, despite the fact that the Company’s distribution center was affected by the flood in 2011 and consecutively in 2012. As of the end of 2011 – 2013, the Company has opened 52, 57, 64 Makro stores, respectively, and the Company’s frozen food store (Siam Frozen) in 2011 of 2 branches, and 5 additional branches in 2012 – 2013.

By the end of the six-months period of 2014, the Company has total revenue of THB 70,309.08 million, through revenue from sales and services amounted to THB 69,966.82 million, an increase of THB 7,223.17 million, representing the growth rate of 11.51% compared to same period of last year. This resulted from a growth in both sales revenue of Makro existing and 7 new branches; majority of the sales came from food products. As of 2nd Quarter of 2014, the Company has a total of 68 Makro branches, an increase from 61 Makro branches of the same quarter last year.

Cost of goods sold In 2011 – 2013, the Company’s cost of sales amounted to THB 89,402.41 million, THB 102,760.45 million and THB 115,673.26 million, respectively, representing 90.21%, 89.88%, 89.61%, respectively, of revenue from sales and services of each respective year. The ratio of cost of sales and services is on a decreasing trend is due to the continuous development of the customer base, which the Company has focused on the food business operator as the main target.

Selling and administrative expenses during 2011 – 2013 amounted to THB 6,314.30 million, THB 7,418.66 million and THB 8,597.80 million, respectively, equivalent to 6.37%, 6.49% and 6.66% of revenue from sales and services of each respective year. In 2012, the selling and administrative expenses rose from 2011 by THB 1,104.36 million, an increase of 17.49%. While sales and administrative expenses of 2013 also rose from 2012 by THB 1,179.13 million, an increase of 15.89%, resulted from an increase in costs to support the growth of the company, an increase in the minimum wage and electricity, as well as personnel expenses for the preparation of human resources for the new branches.

For the first six-months period of 2014, the Company’s selling and administrative expenses amounted to THB 62,784.83 million, equivalent to 89.74% of revenue from sales and services, which is comparable to the same period of last year. As for selling and administrative expenses for the six-months period of 2014 amounted to THB 4,504.92 million,


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increase by THB 329.73 million or 7.90%, when compared with the same period of the previous year, an increase from branch expansion, as described above.

Net Profit For the earnings in 2011 – 2013, the Company had a net profit of THB 2,653.73 million, THB 3,533.69 million and THB 4,298.58 million, respectively, an increase of THB 879.96 million and THB 764.89 million, representing an increase rate of 33.16% and 21.65% in 2012 – 2013, respectively. The Company’s net profit margin is 2.66%, 3.07% and 3.31% of total revenue of each year. The reason for the increasing trend of the Company’s net profit margin is due to the effective increase in revenue and administrative expenses including the reduction in corporate tax rate from 23% to 20% in 2013.

For the first six-months period of 2014, the Company has a net profit of THB 2,322.32 million, an increase of THB 353.32 million, representing an increase rate of 17.94%. When compared with the same period of 2013, the Company has a net profit margin of 3.30%, an increase from 3.12% in the same period of the previous year.

Financial Position Assets As of December 31, 2011 – 2013, the Company has a total asset amounted to THB 30,547.68 million, THB 32,290.57 million and THB 36.104.34, respectively. The Company’s current assets amounted to THB 14,585.47 million, THB 14,687.54 million and THB 16,435.76 million in each respective year. The current assets include inventories, which is accounted for 49.45%, 49.54% and 59.58% of total current assets in 2011 – 2013, respectively. While non-current assets in 2011 – 2013 amounted to THB 15,962.21 million, THB 17,603.03 million and THB 19,668.58 million. Non- current assets include Land, buildings, and equipment, which as of 2011 -2013 amounted to 92.87%, 93.73% and 92.01% of each year’s total non-current assets. The reason the total assets in 2012 increased by 5.71% or THB 1,742.89 million is mainly due to the investment on Land, building and equipment amounted to THB 1,675.15 million for the expansion of 5 new branches. The Company brought 3 additional plots of Land for the construction of new buildings and the modification of existing branches as well as the purchase of new machinery and equipment to replace the old existing ones. While the total assets in 2013 increase by 11.81% or THB 3,813.77 million due to the increase in inventories and investment in Land, buildings and equipment. The Company’s inventory increased by THB 2,516.44 million from 2012, which corresponds to the products quantities for the new branches. In addition, the Company has increased the inventory to prevent future events, which may result from political instability which began in late 2013 to the beginning of 2014, and due to Land, buildings and equipment net increase of THB 1,598.59 million, which is the investment to expand new 7 branches by purchasing long-term leasehold Land and plots for the construction of 4 new branches in 2014.

As of June 30, 2014, the Company has total assets of THB 35,400.72 million consisting of current assets of THB 13,181.33 million, or as 37.23% of total assets, while non-current assets amounted to THB 22,219.39 million, or 62.77% of total assets. The reason for a decrease in the value of total assets at the end of the 2nd quarter of 2013, down from 2013 year-end of THB 703.62 million, or decrease of 1.95% is mainly due to a decrease in cash and cash equivalents of THB 2,728.82 million.

Liabilities As at December 31, 2011-2013, the Company has total liabilities amounted to THB 20,638.92 million, THB 21,427.98 million, and THB 25,082.94 million, respectively. The total liabilities during 2011-2013 consists of current liabilities amounted to 98.11%, 98.01%, and 97.84% of total liabilities of each respective year. The total liabilities during 2012 increased by 3.82%, which is THB 789.06 million mainly due to the increase in accrued expenses and other payables amounted to THB 346.21 million, and THB 208.59 million, respectively. The total debt in 2013 increased from 2012 by 17.06%, which is THB 3,654.96 million resulted from an increased in account payables and short-term loans from financial institution of THB 2,448.46 million, and THB 1,066.86 million, respectively.

As of June 30, 2014, the Company’s total liabilities amounted to THB 23,496.33 million, consists of current liabilities of THB 22,816.81 million, which is 97.11% of total liabilities. For 2nd Quarter of 2014, there is a decrease in total liabilities from the end of 2013 by 6.33%, which is THB 1,586.62 million resulted from a decrease in account payable of THB 2,777.70 million.


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Shareholder’s equity As at December 31, 2011-2013, shareholder’s equity amounted to THB 9,908.76 million, THB 10,862.59 million, and THB 11,021.40 million respectively, which increased by 9.63% from 2011 and 1.46% from 2012, which amounted to THB 953.83 million, and THB 158.81 million resulted from the net profit of the Company.

As of June 30, 2014, shareholder’s equity amounted to THB 11,904.39 million, increase of THB 882.99 million when compared with shareholder’s equity of 2013. The main cause for the increase in retained earnings is due to a turnover in the first six-months period of 2014, which has a net profit of THB 2,322.32 million, and a dividend payment amounted to THB 1,440.00 million.

Liquidity In 2011-2013, the Company had net cash flow from operating activates amounted to THB 5,596.56 million, THB 5,166.30 million, and THB 5,306.25 million, respectively. Most of net cash flow resulted from profit before income tax expense amounted to THB 3,890.05 million, THB 4,691.52 million, and THB 5,425.73 million, and increase in other account payables in 2011-2013 amounted to THB 2,783.84 million, THB 132.54 million, and THB 2,157.44 million, respectively. Net cash flow used in investing activities during 2011-2013 amounted to THB 3,319.40 million, THB 2,831.39 million, and THB 3,239.18 million, respectively. Investing activities primarily involved the purchasing of Land, building, and equipment amounted to THB 3,218.02 million, THB 2,794.23 million, and THB 2,725.64 million in each respective year, as well as for financing activities, which during 2011-2013 amounted to THB 1,282.42 million, THB 2,567.41 million, and 3,112.08 million, respectively, mainly as a result of the dividend payment between 2011-2013 amounted to THB 2,100.00 million, THB 2,580.00 million, and THB and 4,140.00 million, respectively.

For 2nd Quarter of 2014, the Company has net cash flow from operating activities of THB 820.25 million, mainly as a result of period profit of THB 2,322.32 million, and account payable of THB 2,795.61 million. Net cash flow used in investing activities of THB 3,093.91 million. Investing activities primarily involved the purchasing of Land, building, and equipment amounted to THB 2,523.44 million and for financing activities amounted to THB 455.16 million, mainly as a result of the dividend payment of 2013 amounted to THB 1,440.00 million, and short-term loans from financial institutions increased by THB 1,016.69 million.

1.6 Industry Overview

The Company’s core business is distributing of consumer products, particularly of food products. Moreover, some groups of the Company’s customers (approximately 22.3% of the total income of the Company) is customer groups are in hotel business, restaurants, and catering (Horeca). Thus, the growth of the economy, tourism industry, and domestic restaurant businesses are factors affecting the growth of the company. Details are as follows:

Overall Economy Data from The Bank of Thailand stated that the domestic economy in the second quarter of 2014 is to improve from the previous quarter due to the improvement in political situation and government policies, which help to build confidence in households and businesses, and as a result, domestic spending have started to recover. In the second quarter of 2014, the private consumption has improved compared to the first quarter due to the improvement in political situation leading to an increase in spending, especially in non-durable goods (such as food, beverage and pharmaceuticals), while the spending on durable goods (such as cars, appliances, furniture) began to stabilized in the succeeding term.

Table 7: Private Domestic Consumption Index Between 2013 – 2nd Quarter of 2014

2013 2013 2014 1H 2H 1HP 1Q 2Qp

Index 147.4 148.0 149.1 146.3 146.2 146.3 %YoY 0.3 2.2 0.0 -1.2 -1.7 -0.7 %QoQ - - - - -0.4 0.1 Remark P = basic information Source: The Bank of Thailand


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2013

Δ% 2014 Q1 Δ% April Δ% MayE Δ%

1 Wholesale Sales Index (2002 = 100) 216.2 -2.2 198.2 -15.2 181.5 -11.7 202.6 -2.5 Sales of non-durable goods 197.0 9.8 198.4 2.2 204.3 5.1 204.8 8.3 Sales of durable goods 137.9 1.0 135.0 -1.1 125.9 -2.3 136.5 -1.0 Sales of middle class goods 161.6 2.2 160.3 -6.4 145.1 0.8 163.8 2.2 Other wholesale sales 338.6 -9.3 278.3 -29.0 238.6 -27.6 283.9 -10.5

2 Retail Sales Index (2002 = 100) 219.9 -0.5 210.2 -9.1 195.4 -7.2 210.1 -8.4 Sales of non-durable goods 196.6 4.6 203.9 3.6 202.6 6.9 208.5 4.5 Sales of durable goods 176.7 -0.8 173.6 -3.2 156.7 -3.4 180.4 -1.1 Sales of department stores 222.4 2.2 219.1 -1.3 226.1 1.0 224.4 1.7 Sales of car, car repairs, and fuel 248.2 -2.9 229.5 -15.7 208.1 -11.9 223.4 -15.7 Other retail sales 205.9 3.2 199.6 -3.7 186.1 -7.9 202.2 -4.1

Trade status in April and May 2014 continues to shrink, but have improved from the previous quarter. The wholesale trade in April and May 2014 fell by 11.7% and 2.5%, respectively, improved from a negative 15.2% in the previous quarter. Retailing trade in April and May 2014 shrink 7.2%, and 8.4%, respectively, improved from negative 9.1% in the previous quarter, as a result from an improvement in sales of middle class products and non-durable goods, such as food, beverage, pharmaceuticals, cosmetics and sale of department.

Table 8: Trade Indices 2013 – May 2014

Remark Δ% = Percentage change from the same period a year earlier. E = Approximation Source: The Bank of Thailand

Product exports in 2nd Quarter in 2014 showed a slight improvement in accordance with the country’s main industry, which is in line with the expansion of industrial production for exporting. However, overall export growth has been relatively slow as demand in Asia region is still weak. As for economic stability, unemployment is low at 1.0%, inflation rises in accordance with food and energy price. Current account is on a surplus in agreement with product imports, while balancing capital flows faces a deficit due to investment in foreign securities and direct investment by Thai investors.

Tourism, Hotel and Restaurant Sector Tourism, hotel, and restaurant sector in second quarter of 2014 were affected by the political situation in Thailand as the number of foreign tourists amounted to 5.3 million people, down 12.3% from the same period last year. The decrease of foreign tourists, particularly from Asian countries, including China, Malaysia, Japan, and India, are the key market. From the impact of political change on May 22, 2014, and the declaration of curfew until June 12, 2014, the number of countries with travel warnings rose from 62 countries in May 2014 to 65 countries in June 2014, including increasing severity of warning. The political situation has caused hotel occupancy rates in the second quarter of 2014 to decrease to 47.5%, when compared to the same period last year, which decreased by 60.3% in each region. However, after the cancellation of the curfew throughout the country, the number of foreign visitors and three months prior hotel bookings rate started to improve. The number of foreign tourists in late June 2014 showed a significant declined.

Table 9: Tourism Indicator 2013 – Quarter 2 2014

2013 2014 1H 2H Yearly 1H 2H May June

1.Number of arrival foreign tourists (thousands) 13,072 13,475 26,547 6,458 5,319 1,737 1,559 Percentage change from same period last year (%) 23.1 14.8 18.8 -7.8 -12.3 -10.7 -24.4

2. Hotel occupancy (%) 66.3 63.6 64.9 60.3 47.5 46.4 40.8 Source: The Bank of Thailand

Future of Overall Economy and Tourist Sector The Fiscal Policy Office,the Ministry of Finance has estimated economic growth for Thailand in 2014 as of July 2014 to grow by 2.0% (with a range of 1.5% to 2.5%), down from its forecast in March 2014 of 2.6%. This is due to the political situation, which slowed the growth rate in the first quarter of 2014 than estimated. The protracted political crisis has an impact on the confidence of consumers and businesses in the first half of the year. However, in the second half of


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2014, improvement in the political situation is, led to the implementation of government’s stimulant measures to alleviate the civil financial difficulties and governmental policies to promote investments, including the acceleration of public investment spending and accelerating the process of 2015 budget, which is an important factor to create strong continuing domestic demand.

For 2014, the value of exports is to grow at 1.5% (with a range of 0.5% to 2.5%), although the value of exports in the first half of the year will be lower than, but in the second half of 2014, the value of exports is to grow in a better direction due to the recovery of the global economy. For imports in 2014, it is to shrink by 5.2% (with a range of negative 6.2% to negative 4.2%), despite accelerated in the second half of the year due to an increase in domestic demand related to government spending.

Internal economic stability is for inflation to rise slightly from the previous year to 2.4% (with a range of 1.9% to 2.9%), following the trend of gradual increase in raw material prices affected by drought and a shortage of raw materials, especially in the price of delicatessen and services have started to raise, such as ticket fare of MRT. However, the policy to fix prices of LPG and diesel, as well as measure to slowd owns the acceleration of inflation. The economy of international trade is to have a trade surplus due to increase from last year, since the value of exports grew at a faster pace than imports. As a result, the current account surplus of USD 13.4 billion, or equal to 3.3% of GDP (in the range of 3.1% to 3.5% of GDP).

In the second half of 2014, the Bank of Thailand is expecting the number of arrival foreign tourists are likely to rise due to the increase in confidence of the domestic political situation reflected by a decrease in the number of countries with travel warnings as well as the stimulus measures such as the exemption of visa for 3 months (August – October 2014) for Chinese and Taiwanese tourists, which are main groups of tourists. In addition to the present policy to foreign tourists to help mitigate the impact of some countries’ foreign policy, such as the USA and Hong Kong, which does not have policies covering domestic travel in countries that has been declared martial law on.


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Section 2: The approval for the purchase of Land and Building from CP ALL Public Company Limited

2.1 Characteristic and details of the transaction

The Company intends to purchase Land with an area of 9-0-47 rai and Building, which is a 5-storey building (including 1 deck floor and 1 basement floor) located in Phatthanakan Road, Suan Luang Subdistrict, Phra Khanong District, Bangkok from CP ALL, which is the main shareholder of the Company, at the price of THB 470.00 million to serve as the Company’s new headquarter, to replace the existing office building that is a part of Makro store, Lad Phrao branch, Lad Phrao Road, and rented space in Jit-Uthai Building located on Ramkhamhaeng Road. The current headquarter of the Company details are as follows:

Details of the Company’s office at present: 1. Headquarter building 1 and 2 that is a part of Makro store, Lad Phrao branch, Lad Phrao Road (located between

Soi Lad Phrao 142-144, Lad Phrao Road, Klongchan Subdistrict, Bangkapi District, Bangkok): Two headquarter buildings is the first headquarter of the Company, which has been active since the opening of Makro first branch at Lad Phrao branch in 1989, and has been renovated various of times, which the big renovation took place in 2009 and 2013 due to poor condition and to accommodate the increase in staff numbers in various departments. Details of the two buildings are as follow: Headquarter building 1: located in front of Makro Lad Phrao branch, is situate on the 2nd and 3rd floor of an

office building that has a usage area of approximately 1,750 square meters. The Company uses the Building as an office for the CEO, Internal Audit Department, International Business Department, Human Resources Department, and Business Development Department. The office currently holds 65 people.

Headquarter building 2: located on the mezzanine of Makro Lad Phrao branch, has a usage area of approximately 2,543 square meters. The Company uses the Building as a function of the Logistics Department, Customer Development Department, and Business Information Department. The office currently holds 90 people.

Picture 1: The Company’s Current Headquarter Building

Headquarter building 1 In front of Makro Lad Phrao branch

Headquarter building 2 The mezzanine of Makro Lad Phrao branch

2. Rented Space in Jit-Uthai Building on Ramkhamhaeng Road (located between Soi Ramkhamhaeng 73-75,

Ramkhamhaeng Road, Hua Mak Subdistrict, Bangkapi District, Bangkok): Due to business expansion and the rapid increase in the number of employees during 2009-2010, the Company is required to obtain space additional to the headquarter building in Lad Phrao branch, as the Company focused on providing area that is in close proximity to the existing headquarter building and Makro Lad Phrao branch, which is a Pilot Store of the Company to prepare new strategy in order to maintain efficiency and streamline operations. In 2011, the Company began leasing space in Jit-Uthai Building (which is not far from Lad Phrao branch approximately 2 kilometers) of 3 floors for the third headquarter of the Company is as follows:


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Headquarter Building 3 : located at Jit-Uthai Building on Ramkhamhaeng Road with usage area of approximately

4,007 square meters. The Company uses the said building as a function of retail business managing department, food product managing department, food marketing and development department, financial management and support units department, and cultural development department. Currently, there are 386 people working at the office.

Currently, the Company has contracts for the lease and service agreements with third parties to lease space in the building, Jit-Uthai Building, of 5 floors (from 15 floors). The current lease and service agreement is for 1 year ending in May 31, 2015.

Picture 2: The Company’s Current Headquarter Buildings (Continue)

Office building 3 Jit-Uthai Building on Ramkhamhaeng Road

Background of the Company in the transaction The reason the Company needs to obtain new headquarter building is due to the current three headquarter offices has total area of approximately 8,300 square meters (supporting 621 employees, consists of 541 full-time employees, and 80 outsourcing temporary employees) in which is insufficient in compare to the number of the current employees, especially during at the time of the opening of the new Makro branch, which is necessary for the Company to use temporary office for various activities, such as conference planning for construction, sales contact for equipment and office equipment, and so on. Currently, the Company has been approved to obtain container to use as a temporary workplace for employees at certain times, which is located in the parking lot of Makro Lad Phrao branch.

Picture 3: Company’s temporary workplace (Containers)

Temporary office (Containers) Parking area at Makro Lad Phrao branch

In addition, since all three headquarter offices have adequate meeting rooms to accommodate meetings or training within the Company, the operation is ongoing, and trade negotiations and meetings with business partners in a separated location, thus, various management cannot operate effectively that led to increased cost in providing a meeting place or place of training outside of office buildings. Employees travel expenses to attend meetings and work-


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related contacts between three different offices. In addition, the Company's plan to expand in various businesses, such as: Openings of new Makro stores in all regions of the country in order for the Company to reach as much target

customers as possible. By 2014-2015, the Company plans to open new Makro stores approximately 7-11 stores per year, an increase when compared to the number of Makro’s branches that opened in early 2011-2013, which amounted to an average of about 4-6 stores per year.

To expand the Food Service business, which is a business that produce money and profit to the Company, in addition to the retailing business. The Company is adding staffs in the food service business such as Chef and Food safety experts, to supply products and develop food service solutions for comprehensive food service business to meet the needs of customers who are entrepreneurs, food professionals, hotel operators, restaurants and caterers with plans to open Makro Food Service in the future from the present of 7 branches.

Look for opportunities for sales of goods and services to businesses in neighboring countries in the region, to support the ASEAN economic community in 2015.

Expanding channels of distribution or pattern of trade, such as e-commerce.

Therefore, in order to support an increasing number of personnel of the Company in the future according to the primary expansion plan, and to solve the problem for the current employees to have appropriate workplace, which is one method to improve performance, and reduce expenses, as well as to maintain the employees in the Company in a long-term. Thus, it is necessary for the Company to obtain a new headquarter building that is appropriate for the current business and to support its plan to expand the Company's business that will occur in the future. The main criteria that the Company uses in obtaining the new headquarter building is as follow:

The Main Criteria of the Company in the Acquisition of the new Headquarter Building 1. Located within approximately 10 kilometers of Makro Lad Phrao, the first branch and a Pilot Store of the Company

in the preparation of various new strategies. In order to maintain the performance and versatility, to maximize the continuity of the operations, and the employees’ benefits as the 90% of the employees reside in the mentioned area, due to the Company’s intends to retain in a long-term, experienced personnel in the Company.

2. Consists of adequate space to accommodate all current employees and additional employees under the plan to increase the Company’s growth in the next 10-20 years. The management of the Company expects to have office space to accommodate at least 10,000-14,000 square meters, including space needed for central operations and facilities, providing convenience to employees, such as conference rooms, training rooms, server rooms, restaurant, health clinic, parking, etc.

3. Able to utilize the space within the site within a quick period, in pace with the expansion plans of the Company as noted above.

From the criteria used in the consideration of obtaining the new headquarter, the Company sees that the Land with total area of 9-0-47 rai, with Building, which is a 5-storey building (including 1 deck floor and 1 basement floor), has total area of approximately 27,459 square meters located on Phatthanakan Road, and is approximately 10 kilometers from Makro Lad Phrao branch. The asset is owned by CPALL is appropriate when compared to the other options of supplying additional office space of the Company, such as renting additional offices. As a result, the Company has adopted the proposed acquisition of the asset of Seller, and on July 8, 2014, Seller sent the offer to sell the said asset to the Company at the price of THB 470.00 million.

Nonetheless, because the current Building is not in the condition for immediate use, as the use of the Building (The original Building was the headquarter of Liberty Insurance Company Limited) has been terminated since approximately 2010, before CPALL has acquired such asset in 2013. The asset is currently under total demolishment for interior and some part of the exterior that has disintegrated in accordance with Seller’s renovation plan that has taken place before Seller negotiation of asset purchase agreement with the Company. Therefore, the case of an extraordinary meeting of the shareholders of the Company No. 1/2014 approved the purcahse of the said Land and Building. The Company has the necessity to invest for construction, renovation, and decoration of the Building in order to prepare the Building as the new headquarter of the Company, and in correspond to the plan to support the current businesses of the Company as well as the plan to expand to other businesses in the future. The Company will use the investment to renovate and decorate the Building totaling approximately THB 791.80 million, which the executives of the Company


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assumed the process to be complete in one year. It is that access to Land and Building as the new headquarter of the company will be in 3rd Quarter of 2015.

2.1.1 Category and size of the transaction

The purchase of Land and Building from Seller and the investments to improve and decorate the Strcture mentioned above amounted to, including the whole project, THB 1,261.80 million, considered as an acquisition of assets in accordance with Acquisition or Disposition Notification. When calculate the size of the transaction, according to the total transaction value calculated by the consolidated financial statements of the Company as of June 30, 2014, amounted to 3.56% of the Company’s total assets. When including the acquisition of other assets that the Company has approved at this meeting amounted to THB 1,092.70 million, which measures to the total value of the transaction under consideration of 3.09% and the acquisition of other assets that occurred in the last 6 months total of THB 4,967.50 million, which measures the total value of the transaction under consideration of 14.03% to a total of 20.68% of the total assets of the Company. The transaction volume was higher than 15.00% but less than 50.00%, therefore, the Company is required to send disclosure to SET, and circular memorandum to shareholders within 21 days from the date of disclosure to the SET.

Nonetheless, as CPALL is the major shareholder of the Comapny (as of August 21, 2014, CPALL holds direct and indirect shares amounted to 4,698,149,500 shares, which is 97.88% of total shares issued and sold by the Company3) and both companies have common directors4. For this reason, the purchase of Land and Building valued at THB 470.00 million from Seller is regarded as connected transaction according to the Connected Transaction Notification with the size of the transaction is 4.25% ofof NTA as of June 30, 2014, which is higher than 3.00% of NTA. Thus, the Company is required to seek approval from the shareholders with affirmative votes of not less than three-fourths of the total number of votes of the shareholders attending the meeting, excluding the shareholders with conflict of interest. The conflicted shareholders who do not have the right to vote are presented in the following Table.

Table 10: Lists of conflicted shareholders who do not have the rights to vote

Name Shares held in MAKRO* Relationship with the counterparties of the transaction No. of shares %

1. Siam Makro Public Company Limited

2,640,302,800 55.01 A subsidiary company of CPALL which is a party to the acquisition of Land and Building of the Company at this time (as of July 4, 2014, CPALL holds direct and indirect shares in Siam Makro Holdings as 100.00%) Between CPALL and the Comapny, there are 5

common directors: Mr. Korsak Chairasmisak, Mr. Pitaya Jearavisitkul, Mr.Piyawat Thitasattawarakul, Mr. Narong Chearavanont, Mr. Umroong Sanphasitvong.

2. CP ALL Public Company Limited

2,057,846,700 42.87 The counterparties of the transaction.

3. Mr. Dhanin Chearavanont 200 0.00 The chairman of CPALL The father of Mr. Narong Chearavanont, Mr. Soopakij

Chearavanont, and Mr. Supachai Chearavanont, who serve as Directors of the Company.

4. Mr. Prasert Jarupanich 200 0.00 Director of CPALL Remark * information as of August 21, 2014

3 CPALL holds direct shares in the Company valued at 2,057,846,700 shares or as 42.87% of shares issued and sold by the Company and hold indirectly through Siam Makro Holding amounted to 2,640,320,800 shares or as 55.01% of total shares issued and sold by the Company (as of July 4, 2014 CPALL holds 49.00% of Siam Makro Holding direct shares and hold indirect shares of Siam Makro Holding through OHT at 51.00% as of July 4, 2014 CPALL holds 100.00% of OHT shares).

4 Common directors of the Company and CPALL (8 out of 18 people) include Mr. Korsak Chairasmisak, Mr. Prasert Jarupanich, Mr. Pittaya Jearavisitkul, Mr.Piyawat Titasattavorakul, Mr. Soopakij Chearavanont, Mr. Narong Chearavanont, Mr. Adirek Sripratak and Mr. Umroong Sanphasitvong.


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Name Position 1. Mr. Dhanin Chearavanont CEO 2. Mr. Korsak Chairasmisak* President / Vice President 3. Mr. Tanin Buranamanit CEO / Managing Director 4. Mr. Piyawat Titasattavorakul* Managing Director 5. Mr. Adirek Sripratak* Director 6. Mr. Umroong Sanphasitvong Director 7. Mr. Soopakij Chearavanont* Director 8. Mr. Narong Chearavanont* Director 9. Mr. Prasert Jarupanich* Director

10. Mr. Pittaya Jearavisitkul* Director 11. Mr. Koman Phatarabhirom Independent Director /

Chairman of the Audit Committee 12. Mr. Pridi Boonyoung Independent Director / Audit Committee 13. Mr. Padoong Techasirin Independent Director / Audit Committee 14. Mr. Suphachai Phisitvanich Independent Director 15. Police General Phacharawat

Wongsuwan Independent Director

2.1.2 Relevant parties, key condition of contracts and detail of assets

a) The purchase of CPALL’s Land and Building Relevant parties Buyer : Siam Makro Public Company Limited Seller : CP ALL Public Company Limited Relationship : CP ALL Public Company Limited is the major shareholder of the Company as of August

21, 2014, CPALL holds direct and indirect shares of the Company amounted to 4,698,149,500 shares, which is 97.88% of total shares issued and sold by the Company. Common directors of 8 people: Mr. Korsak Chairasmisak, Mr. Prasert Jarupanich, Mr.

Pittaya Jearavisitkul, Mr. Piyawat Titasattavorakul, Mr. Soopakij Chearavanont, Mr. Narong Chearavanont, Mr. Adirek Sripratak, and Mr. Umroong Sanphasitvong.

Profile of CP ALL Public Company Limited Type of business

: The main business is retailing business of convenience stores under the trademark “7- Eleven” in Thailand, and various business establishments that supports the main business such as bill payment counter service business (Counter Service Company Limited), production and distribution of food and bakery business, (CPRAM Company Limited), sale and maintenance of retail equipment business (C.P. Retailing Company Limited), service payment for goods and services through smark cards business (Thai Smartcard Company Limited), information technology service business (Gosoft (Thailand) Company LImited), product transportation and distribution business (Dynamic Management Company Limited), marketing service provider business (Mam Heart Company Limited), retailing business college and the academy of management business (Panyapiwat Company Limited), business training seminar on business management business (Panyatara Company Limited and ALL Training Company Limited), and products retail store business with cash and self-service payment under the name “Makro”, and so on.

Registered capital

: Registered capital amounted to THB 8,986,296,048.00 divided into common shares of 8,986,296,048 shares par value per share of THB 1.00 and paid up capital amounted to THB 8,983,101,348.00 divided into common shares of 8,983,101,348 shares par value per share of THB 1.00 (As of August 1, 2014).

Director As of August 1, 2014, the Board of CPALL is as follows:

Remark * A director of the Company The authorized signatories are Mr. Korsak Chairasmisak, Mr. Prasert Jarupanich, Mr. Piyawat Titasattavorakul, or Mr. Tanin Buranamanit, one of which to sign with Mr. Soopakij Chearavanont, Mr. Umroong Sanphasitvong, Mr. Narong Chearavanont, Mr. Prasert Jarupanich, or Mr. Adirek Sripratak, total of two people to sign and seal with the Company’s seal.


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10 Major Shareholders of CPALL on May 7, 2014

Table 11: 10 Major Shareholders of CPALL on May 7, 2014

Shareholders Shareholding No. of shares %

1. C. P. Merchandising Company Limited 2,717,822,300 30.25 2. Charoen Pokphand Group 1,014,577,400 11.29 3. Thai NVDR Company Limited 394,412,547 4.39 4. STATE STREET BANK EUROPE LIMITED 275,528,076 3.07 5. J.P. MORGAN IRELAND (NOMINEES) LIMITED 655 271,112,300 3.02 6. AIA Company Limited-DI-LIFE 239,900,000 2.67 7. HSBC (SINGAPORE) NOMINEES PTE LTD 200,740,386 2.23 8. UNS Agro Chemicals Company Limited 180,000,000 2.00 9. STATE STREET BANK AND TRUST COMPANY 151,130,717 1.68

10. J.P.MORGAN IRELAND (NOMINEES) LIMITED 578 148,313,900 1.65 Source: www.set.or.th

C.P. Merchandising Company Limited has the list of directors and shareholders, as follows:

Name Position Mr. Adirek Sripratak Director Mrs. Arunee Watcharananun Director Mr. Paisarn Kirakitjasern Director Ms. Patchara Chartbunchachai Director Mr. Pisit Ohmphornnuwat Director

Shareholders’ equity as of Match 31, 2014 Shareholding Number of

shares % 1. Charoen Pokphand Foods Public Company Limited 899,999,993 100.00 2. Other 7 shareholders 7 0.00

Total 900,000,000 100.00 Source: www.bol.co.th

Charoen Pokphand Group Company Limited has a list of top 10 directors and major shareholders as follows:

Name Position Mr. Charan Chearavanont Director Mr. Sumeth Chearavanont Director Mr. Montri Chearavanont Director Mr. Dhanin Chearavanont Director Mr. Wallop Chearavanont Director Mr. Prasert Poongkumarn Director Mr. Min Tieanworn Director Mr. Theerayut Phitthayaisarakul Director Mr. Pongthep Chearavanont Director Mr. Chingchai Lohawatanakul Director Mr. Iam Ngamdumrong Director

Shareholders’ equity as of March 31, 2014 Shareholding

No. of shares % 1. Mr. Dhanin Chearavanont 228,277,810 12.96 2. Mr. Sumeth Chearavanont 228,277,810 12.96 3. Mr. Charan Chearavanont 224,706,465 12.76 4. Mr. Montri Chearavanont 222,480,380 12.63 5. Mr. Kiet Chearavanont 101,439,010 5.76 6. Mr. Pongthep Chearavanont 64,348,270 3.65 7. Mrs. Yupa Chearavanont 63,739,700 3.62 8. Mr. Pratiep Chearavanont 63,707,670 3.62


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Shareholders’equity as of March 31, 2014 Shareholding

No. of shares % 9. Mrs. Phathani Srisompong 63,707,670 3.62 10. Mr. Manuas Chearavanont 63,707,670 3.62 11. Other shareholders 437,257,545 24.80

Total 1,761,650,000 100.00 Source: www.bol.co.th

Summary of key terms in the selling of Land and Building from CPALL Refered information from letter from Seller to the Company regarding of the selling of Land with Building, equipment, and fixtures, dated July 8, 2014, and information memorandum of Connected Transaction and Acquisition of the Asset of the Company founded that the sale of Land and Building of the Company from Seller has conditions as follows: Counterparties : 1. Siam Makro Public Company Limited as the “buyer”

2. CP ALL Public Company Limited as the “seller” Asset to be acquired : Land Title Deed no. 38439 – 38463, 74346, 85240, 155179 and 210414. Total of

29 deeds. Total area of Land of 9 - 0 - 47 rai with 5-Storey Building (including 1 deck floor and 1 basement floor), Building and fixture parts located at 1466 1468 1470 1472 and 1474 Phatthanakan Road, Suan Luang Subdistrict, Phra Khanong District, Bangkok

Consideration value : THB 470.00 million Key Terms and Conditions Payment and registration of transfer

: The buyer will receive ownership of Land and Building. Payment for the asset is to be made to the seller after the Extraordinary General Meeting of Shareholders No. 1/2014 of the buyer, which will be held on September 26, 2014, to have the resolution to approve of the acquisition of the asset. The shareholders have to approve the acquisition of the assets of the buyer from the seller with affirmative votes of not less than three-fourth of the votes present at the meeting and having the right to vote, excluding the votes from the shareholders who have conflict of interest.

The expenses related to trading asset

: The buyer and seller are to split the ownership transfer fee equally. Seller is the sole responsible for withholding tax fee, revenue stamp or

business tax fee especially in the registration of ownership transfer. Seller is responsible for property tax and Land, local maintenance tax, as well

as taxation and other expenses for the property to be purchased until the date of registration of ownership transfer. The seller is responsbile for taxes and said expenses from the day after the registration of ownership transfer onwards.

Information of asset Details of Land and Building of CPALL, which the Company will enter into transaction are as follow: Type of asset : Land, Total of 29 deeds. Total area of Land of 9 - 0 - 47 rai with 5-Storey Building

(previous Liberty Insurance Company Limited building), Building and fixture parts. Location : No.1466 1468 1470 1472 and 1474 Phatthanakan Road, Suan Luang Subdistrict,

Phra Khanong District, Bangkok Details of assets : Land reclamated height at the road front of the property (Phatthanakan Road)

has a total area of 9-0-47 rai (3,647.00 sq.wah). Some part of the Land is home to high voltage poles, 230 kv pole with a base width of approximately 10 meters wide and approximately 12 meters long, representing an area of approximately 30 sq.wah.

Building is 16 years of age, the Building is currently not in use, and is in the process of demolition of the Building interior and some exterior parts. The Building has a total floor area of 27,459 square meters as follows: 1) Utility space inside the Building on 1-5 floor includes 10,599 square meters. 2) Basement space is 5,268 square meters. 3) Deck floor space is 1,632 square meters. 4) Other areas inside the Building is 9,960 square meters.


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In addition, there are parking space of 749 square meters, as well as road

and concrete court of 2,475 square meters. Entrance-exit road : Front of the property is located adjacent to Phatthanakan Road, 21 meter wide

of paved road, which surface is concrete accessible to the Land by automobile. General environment : Surrounding neighborhood are used for residential and commercial purpose. Registered owner : CP ALL Public Company Limited Obligation : The Land and Building is without any obligations. Current utilization : Current asset is under demolishment process to demolish all interior parts

and some exteiror parts that has disintegrated in accordance with the renovation plan of CPALL.

The Land and Building was the headquarter of Liberty Insurance Company Limited and discontinue its use since approximately 2010 before CPALL started to invest in the asset in 2013.

Picture 4: The Location and Condition of the Building of Liberty Insurance Company Limited

Source: Property valuation report by UK Valuation and Agency Company Limited dated July 22, 2014


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4

1

2

3

4

Remark Picture 1 Front of Liberty Insurance building and Phatthanakan Road. Picture 2 Entrance of Liberty Insurance Building and its current condition, which is under demolition process of all interior and some exterior parts of the Building. Picture 3 1st floor interior Picture 4 3rd floor interior

Source: Property valuation report by UK Valuation and Agency Company Limited dated July 22, 2014 (Picture 1) and pictures taken by IFA (Picture 2 – 4 )


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5 6

7 8

9 10

Remarks: Picture 5 Floor 1-5 interiors Picture 6 Area as large hall for meetings and seminars. Picture 7 Indoor air- conditioning system Picture 8 Internal electric control box Picture 9 Some parts of the 5th floor Picture 10 Some part of deck floor

Source: Pictures taken by IFA


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b) The Construction, renovation, and decoration of the Building that the Company will invest in

In the case of the Extraordinary General Meeting of Shareholders No. 1/2014 of the Company has approved the purchase of Land and Building from Seller to use as the new headquarter of the Company. The Company will invest to renovate and decorate, to refurbish and install vaious systems on the Land and Building. The Company will invest for the Building to be in good condition in accordance with the Company’s plan. Details regarding the project are as follows:

Contract and Terms of Agreement Parties : Siam Makro Public Company Limited as the “employer” or “buyer”.

Construction company/ Interior firm/ Structural engineering company/ Furniture company/ Office supplies supplying company/ others as the “contractor” or “seller” that the Company will appropriately source and select.

Amount of investment : Total investment of THB 791.80 million. Referred from the estimation of the investment management of the Company.

Period of Performance : After Extraordinary General Meeting of Shareholders No. 1/2014, held on September 26, 2014, approved the purchase of Land and Building from Seller. The Company will start to hire contractors and procurement related to the construction, renovation, and decoration. As the construction, the Company has selected project contractor by the mean of e-auction, which the Company expects that the renovation of the building, and installation of various systems to serve as the Company’s new headquarters to be complete at approximately 3rd quarter, 2015.

The Company will pay for the Land and Building and the receive ownership transferred from Seller within 2014.

Details of construction, renovation, and refurbishment of the Building

Table 12: Details of construction, renovation, and refurbishment of the Building

List Estimated total investment (THB million)

1. Cost in renovating Building and building 493.0 - Mechanical and Electrical System 190.0 - Structural Architecture (such as floor, wall, partition, toilets) 161.0 - Curtain Wall / Façade 80.0 - Outdoor Landscaping 30.0 - Management, Design, Overseeing, and Oversighting Expenses 18.0 - Life System 10.0 - Central Furnitures Expense 4.0

2. Indoor Renovation Cost 150.0 3. Serve Room Networking and Communicating System Cost 65.0 4. Internal Building System Cost 17.0 5. Registration of Transfer of Ownership Expense 4.7 6. Demolishing of Building and Building Tests Expenses 2.1

Total 731.8 Contingency Cost 60.0 Total 791.8

Source: The Company


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Picture 5: Model of the new headquarterss of the Company, after renovation

Value of the Acquired Assets and the source of funds for the transaction The purchase of Land and Building of the Company from CPALL valued THB 470.00 million, which is an offerd price by CPALL that the Company will pay for the asset to the seller in full amount on the date the seller register for the transfer of asset ownership to the Company that expects to occur at the end of 2014. The Company and CPALL will share the transfer fee will be paid equally and CPALL is liable for income tax, withholding tax, revenue stamp or business tax, specializing in the registration of ownership transfer.

For additional investment to renovate and decorate including installation of systems on the Land and Building of that the Company will invest a total of approximately THB 791.80 million. The Company will pay for construction, and interior works. By the completion of which the parties have agreed, as the payment for furniture, office supplies and others that are related to the renovation and decoration, the Company will pay at once or gradually divided into periods, subjected to negotiation between the buyer and the contractor and/or the seller. The criteria for determining the value of the consideration of the renovation and refurbishment of Building is the hired price and/or the procurement price comparable to the market price.

The capital resources of the Company used for purchase of Land and Building from Seller and commence additional renovation on Building will come from cash flow from operations of the Company and short-term loans from financial institutions without any collateral.


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2.2 Reasonableness of the transaction

2.2.1 Objective and benefit of the transaction

This acquisition of Land and Building of the Company from Seller will make the acquisition of high potential in the area and location to serve as the Company’s new headquarter building in place of the current office buildings that have limited utilized area not enough to support the increase in number of personnel and expansion in future businesses. The operation is currently ongoing and is assumed to occur in the future, such as opening of new Makro stores, expansion of the food service business, expansion of distribution channels or new trade patterns, internal training to employees and customers, growth and investment to neighboring countries in the region after the liberalization of the ASEAN Economic Communicaty in 2015, and so on. (Details regarding the policies and plans of teh Company are presented in Section 2.1: Nature and details of the transaction).

In additional, the acquisition of the asset will allow the Company to reduce expenses associated with the provision of facilities to accommodate the employees’ activities and operations of the Company in the long term, such as rents (of JIt-Uthai building), expense in supplying temporary workspace (Containers located in the parking lot of Makro Lad Phrao branch), expense on renting a place to hold meetings or train staffs, as well as other expenses occured due to having separate offices in different areas, such as travel costs, transportation, and so on. In addition to having headquarter located in the same area will increas efficiency in the management of executives to oversee the performance of the employees thoroughly, increase in the coordination between various departments of the company, and encourages the use of existing resources to the maximum as well as providing convenience for the clients and visitors. As such asset is located not far from the previous two offices, and the commuting in and out with ease (located on Phatthanakan Road) that may be one of the option to reduce the risk of staff turnover experienced caused by the relocation of the offices. Meanwhile, it may help to promote a positive image of the Company, and appeal to those interested in joining the staff of the Company.

As Seller intends to sell the Land and Building to the Company with the current status quo, which the Building has the condition that cannot be immediately used, and is currently under a demolition process of all interior parts and some exterior parts that has dilapidated in accorance with Seller’s initial renovation plan before the negotiation of asset purchase agreement with the Company has taken place. Therefore, it is necessary to carry out the renovation of the Building in order for the Building to be usage as well as having spaces in line with the Company’s plan such as space for various departments, meeting room, seminar room, serve room, and so on to benefit the Company from this tranaction according to the goals set.

2.2.2 Advantages and disadvantages of entering and not entering into the Transaction

Advantages of entering into the transaction 1) The acquisition of asset has the potential to support the Company’s business in the long run.

The acquisition of Land and Building from Seller will enable the Company will enable the Building with total area of 27,459 square meters and is assumed to have a working space of approximately 14,500 square meters, which is more than the area of the current 3 offices that has the total area of approximately 8,300 square meters. This enable the Company to have sufficient space to accommodate the number of current employees of 621 people, and future additional number of employees to support the expansion of the Company, according to various plans placed in the 10-20 years such as the opening of new Makro stores, the expansion of food service business, and the expansion of channels of distribution or apttern of trade, such as e-commerce, and so on. In addition, sufficience space will be allocated to areas for the use in business operations, and basic faclities, such as meeting room, large training room, server room, retaurant, nursing station, parking, and so on.

2) Reduce the expenses of the Company in the long run. The acquisition of Land and Building of the Company from

CPALL for the purpose of establishing new headquarter, the Company will help to reduce expenses in the long term as follows: Rental expense of renting Jit-Uthai Buildling that currently, the rent and service charge include approximately

THB 1.18 million per month (For the leased space of 4,007 square meters), including the expenses of renting additional parking (empty Land across Jit-Uthai Building) of THB 81,675 per month.


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Cost of providing temporary work area in containers to Makro employees in the period of expanding new

branches, which have to start the work processes at the office building at Makro Lad Phrao branch during the process of building a new Makro store. Based on information obtained from interviews with executives of the Company, it is founded that the cost of providing temporary work area in the containers a rate higher than the normal building of 3 times due to various electrical and air conditioning systems, communication technology (phone, fax, Internet), security systems, and so on. In 2013 and six-month period of 2014, the Company’s expense is approximately THB 1.12 million, and THB 0.05 million, respectively.

Rental fees for hosting conference, or training in the Company as the three current headquarters have limited meeting rooms. In addtion, the current meeting rooms can accommodate a conference or training seminar for approximately 15-20 people, while the Company has the needs to host trainings to train the employees of different Makro braches nationwide regularly throughout the year. The training each time will have switching of employees of different Makro stores nationwide of approximately 60-70 employees (and the number of employees attaend is assumed to increase in the future in accordance with the number of branches opened). Resulting in the Company to obtain seminar rooms of a hotel in the area closed to the current headquarter to use as the place of event. In 2013 and six-month period of 2014, the Company’s expense is approximately THB 4.33 million, and THB 2.96 million, respectively.

Commuting costs, transportation and other miscellaneous expenses that arise from having separate offices in different areas.

3) Improve of performance from having headquarter in the same area

Having the headquarter in the same area will increase the efficiency for the overall management of the Company, enabling the management of the Company to oversee the performance of all employees’ work more closely, as well as increasing the mobility and quickness for liaison between departments. Furthermore, as the utilized area in the Building is more than the total of the three current office buildings, which gives enough space for the current number of personnel of each department, and that may increase in the future. There is also enough space for a common area for the use of all parties’ work operations and is basic amenities for the employees, such as conference rooms, large training room, nursing station, parking spaces, with the environment of a better workplace, which would affect the productivity, happiness, and morale of the Company in the same direction

Having headquarter located in the same area enables the Company to manage the available resources to befenit as a whole, such as office supplies, information technology, communication systems, messengers, and so on.

4) Reduce the risks from renting the Building to use as the office of the Company.

The acquisition of the asset will allow the Company to avoid risks that may arise from renting other offices to use as the Company’s headquarter, such as the risk of changes in the price of rent and service changes, including conditions that may cause the Company’s rights as a tenant to become inferior, and the risk of early lease termination that may affect the operations of the Company significantly, and so on.

5) An approach to maintain the personnel of the Company.

Due to the location of the Company’s Land and Building that the Company intends to purchase from Seller for the new headquarter located on Phatthanakan Road is a short distance from the currentt office (approximately a range of 10 kilometers from Makro Lad Phrao). Therefore, the decision for the Company to move the headquarter to such place is in the best interests of the employees and is an approach that reduces the potential impact that may occur to the Company from the resignation of the employees as a result of the changes in headquarter. The information from the interview with the directors of the Company indicates that the employees of the Company current, especially the employees with long work experiences with the Company, are mostly residenting in Lad Phrao and Ramkhamhaeng district, which is in the same area as the asset the Company will invest in.

6) To promote a positive image of the Company on all sides of stakeholders.

The location of the Land and Building that the Company intends to invest in is connected to Phatthanakan Road, which is connected to other major roads, and several routes, such as Srinakarin Road, Rama 9 Road, and Petchburi Road, together with the Company’s plan to renovate the said Building to such a distinctive modern concept with green energy concept, the acquisition of asset as the Building of the new headquarter of the


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Company possibly will help to promote a positive image of the company to all stakeholders, such as customers, business partners, investors, employees, and so on, as well as to help increase convenience for customers and visitors to the Company.

7) Allows to take advantages of the asset as targeted.

Construction investment to renovate and decorate the Building that the Company is seeking to obtain for the use as the new headquarter of the Company. This invest will allow the Company to take advantage of the asset as targeted as the current Building is in such a condition that it cannot be immediately use (The Building is the former headquarter of Liberty Insurance Company Limited, which had terminated its’ use since pproximately 2010, before Seller started to invest in such asset in 2013). The Building is currently under demolition process of all the interior and some exterior parts that has disintegrated. In addition, the Company is the operator of the renovation and repurbishment from the design stage onward in order to allow the Company to schedule the utilization of the space on each floor in accordance with the number of employees of each department or other business plans of the Company. The Company is also able to direct the direction of the interior and exterior decorations to reflect the identity, worth, or the value of the organization.

Disadvantages of entering into the transaction 1) Large amount of cash to be paid within a short period and may lose investment opportunities in other areas.

The purchase of Land and Building valued at THB 470.00 million, and additional investment amounted to THB 791.80 million, in total of THB 1,261.80 million. This will cause the Company to gradually pay large amounts of cash in 2015, which could cause the Company to lose the opportunity to use the money to invest in other areas that would result in revenue to the Company when compared to the investment in office buildings, such as the opening of new Makro stores, the usage of working capital in business operations, or so on. The data from the management of the Company stated that the investment to open 1 Makro store with the sale area of approximately 7,000 square meters, will cost approximately THB 500 - 700.00 million.

2) The impact of the transaction on the financial position of the Company

In the case that the Company has drawn short-term loans from financial institutions to use as a part of the source of funds for the acquisition of the asset will cause the Company to bear liabilities and increase in interest expense due to the withdrawl of the loan to pay for the land and the construction expenses at the end of 2014 until the 3rd quarter of 2015. However, the Company has the policy to maintain the interest bearing debt per equity share that does not exceed 1.00 times. (as of June 30, 2014, the ratio is equal to 0.38 times)


The Company assume to conduct business and have operating results to continue to grow in the future, as the Company will use the cash flow from operations and/or use 3 – 5 years loan from commercial bank for investment expansion in the next 2-3 years. From the analysis of the cash flow of the Company for the period 2012- 2013, and for the six-months period in 2014 founded that the cash flows from operations amounted to THB 5,166.30 million, THB 5,306.25 million, and THB 820.25 million, respectively. The cash flows used in investing activities amounted to THB 2,831.39 million, THB 3,239.18 million, and THB 3,093.91 million, respectively. The remaining cash flows before financing activities amounted to THB 2,334.91 million, THB 2,067.07 million in 2012-2013, and negative cash flow amounted to THB 2,273.66 million for the six-month period of 2014. When taking remaining cash flow for the entire operating year to be consistent with the time period of the Company expected that the asset expense payment will be made approximately at the end of 2014, founded that the Company will have sufficient cash flow for this investment, although the Transaction may caused the Company’s cash flow that can be used for dividend payments to decrease. The IFA views that it is expected that there will be no effect on the operations and the financial position of the Company. More significantly, the Company currently has no plan to change its dividend policy (not less than 40% of net profit after tax annually), of any kind.


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3) The risk of the additional investment for the renovation of the Building does not go as planned.

Potential events may occurred, which caused the construction, renovation, and refurbishment of the Building in order to be available for use in accordance with the Company’s plan, to not meet the deadlines, such as the delay in the performance of the contractor, construction or installation of engineering systems, the delay in the delivery of furniture and office supplies, and so on, causing the Company to unable to take advantage of the specified work schedule. If such event occurred, the Company is vulnerable to an increase in other expenses, such as construction expenses, expenses in obtaining temporary office for the employees, and so on. Nonetheless, the Company has established guidelines to supervise the operations of the contractors in accordance with the Company’s plan, both in terms of execution time and quality, such as requiring the contractors to produce performance bond from financial institutions in the ratio of work value according to the Company assigned to the Company before the start of construction, the designation for the contractors to provide bank guarantee from financial institutions as a warranty of the work of 1 year period started from the date of delivery, the delay imposed by the ratio of value as determined by the Company, etc.

Advantages and disadvantages of not entering into the Transaction

Advantages of not entering into the Transaction 1) The Company will not be required to make payment for the Land and Building of THB 470.00 million, and will not

have expenses in the renovation of the Building of THB 791.80 million. The Company may use THB 1,261.80 million to use as working capital for the current operations of business, and for business expansion in the future that will result in profit, such as the expansion of Makro stores, and so on.

2) In the case that the Company proceed to rent the office building instead of this investment, will cause the Company to have expense in the form of building space rental, which the Company will be able to gradually pay the rent for the rest of the time in the said area, instead of paying the full amount of investment amounted to THB 1261.80 million in 2015. According to the Company’s investment plan, the Company will be able to maintain liquidity and working capital management of the Company at a higher level.

1) In the case that the Company does not purchase the Land and Building, the Company will not incur incremental

liabilities and interest expenses resulting from borrowings for the purchase of asset, and for the additional renovation of the Building.

Disadvantages of not entering into the Transaction 1) The Company will lose an opportunity to acquire assets that have the potential and characteristics as required by

the Company, including its location in the 10 kilometers from the current office building, and utilized area of at least 10,000-14,000 square meters, which have limitations from the lack of working areas to support the current Company’s business operations, as well as the delay in providing work space to support the growth plans of the Company in the future, could affect the work performance and cause additional expenses for the Company as mentioned above.

2) The Company will have unnecessary expenses that arise out of having separate offices in different areas, such as

commuting expenses and transportation expenses, continuted into the future. It is assumed that the costs are likely to increase as the number of personnel of the Company increase in the future.

3) The Company may be affected by the leasor, Jit-Uthai building, has changed the conditions in the lease or service

contract causing the rights of the Company, as the tenant, to deteriorate, or a premature termination tha will affect the Company’s business operations significantly as the area is accounted for approximately 50% of the total office space of the Company at present.

2.2.3 Advantages and disadvantages between entering into the Transaction with connected persons and third parties

Before the Board of Directors of the Company will consider to offer to the Extraordinary General Meeting of Shareholders No. 1/2014 to consider the acquisition of Land and Building from Seller, whom is related to the Company, in the previous period the Company had studied the approaches to obtain space that would be sufficient with the number of current employees in the Company, and the future plans of the Company, from third parties in various


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forms such as, office rental at Jit-Uthai building and other rental offices, the investment in purchasing constructed office building from third parties, and so on. Based on the criteria in the procurement of the new headquarter of the Company are: 1) located within 10 kilometers of the present office building 2) the utilized space inside the Building approximately 10,000-14,000 square meters and 3) enabling the Company to benefit from the utilized space in quick period (details are shown in Section 2 Item 2.1: Characteristic and details of the transaction). Furthermore, the additional study by the IFA from various sources founded that the obtaining of the working area from third parties has details and forms, as well as advantages and disadvantages as follows:

Approach 1: The additional lease of Jit-Uthai office building or other office buildings From the data of the nearby office buildings survey and a review from the IFA of the interview with 4 real estate brokers during the period of August 13-15, 2014 founded that although there are many available office spaces for rent in the vicinity of the current Company’s office buildings such as Modern Form Building on Srinakarin Road, Twenty One Tower on Srinakarin Road, Dr. Gerhard Link Building on Krung Thep Kritha Road, UM Tower on Ramkhamhaeng Road, and so on. However, such rental office spaces has the area of less than 500 square meters or is a small office space, with lease area of approximately 2,000 square meters, and is a flat rate, while only 1 of the Building (The Plaza on Ramkhamhaeng Road) has the available full-floor rental space (approximately 4,000 square meters). The said office building’s rental rate is approximately THB 350-480 per square meter (excluding expenses and other service fees such as electricity, water, parking, etc.), higher than the rental rate of Jit-Uthai Building, which is one of the Company’s current office building. Moreover, the office building, The Plaza, has limited parking space as the tenant will receive parking space according to the area of the rented office space, and there is additional parking fee (THB 600- 1,500/car/month), which is not sufficient for the needs of the Company. This results in additional bearing of cost to provide additional parking space. While increasing rental areas in Jit-Uthai Building, one of the Company’s current office building, from the data from the real estate brokerage firm and the Company founded that Jit-Uthai Building has available space on the deck floor, approximately 255 square meters, and basement of approximately 143 square meters, which is not sufficient and consistent with the Company’s long-term goals as already mentioned above.

Figure 2: Office buildings with available rental space in the vicinity of the Company’s current office buildings

Ramintra KM 6

Available space 1,600 sq.m. Rental 280,000 THB/month

Visuthani Lat Phrao 101/3 Available space 1,200 sq.m. Rental 150,000 THB/month

Lat Phrao

Lat Phrao 120 Available space 1,890 sq.m. Rental 160,000 THB/month

Jitt-Uthai Building

Available space < 500 sq.m. Rental 300 THB/sq.m./month

Jitt-Uthai

The Plaza

Available space 4,000 sq.m. Rental 370 THB /sq.m./month

Dr. Gerhard Link Building Available space < 500 sq.m.

Rental 380 THB /sq.m./month

UM Tower Available space < 500 sq.m. Rental 480 THB/sq.m./month Modernform Tower


Twenty One Tower


Approach 2: Investment in Land and Building that has been completed by other parties From the inquiries with 4 real estate brokers during the period of August 13-15, 2014 and research for assets held by various financial institutions by the IFA founded that in the area of 10 kilometers of the Company’s current office (Makro Lad Phrao) no Land and Buildings have been completely constructed and has been issued notification of public


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sale. Nonetheless, the data provided by a real estate brokerage firm founded that there are two notification for sale of Land and completed Building, which has available space of over 10,000 square meters as follows: 10-storey office building in Muang Thong Thani on Chaeng Watthana Road, located on a Land area of 7 – 0 – 20.2

rai, which is located approximately 25.5 kilometers from Makro Lad Phrao. The utilized area in the Building is approximately 27,000 square meters with the offering price of THB 615 million.

MEC Tower on Bang Na-Trat Road 2 kilometer, of 22-storey, which is approximately 16.5 from Makro Lad Phrao. The offering price is THB 50 million per floor (each floor area of 750 square meters).

In the case that the Company implement in accordance of Approach 2, the Company suspect that the Comany would still need to make additional investment to redecorate the interior parts of the building, and install various systems according to this plan, such as serve room, and networking and communication systems, in order for the Building that the Company will enter transaction with, to be consistent with the Land use plan of the Company, such as conference rooms, large traning rooms, staff restaurant, and so on.

Figure 3: Location of the completed office building and are currently for sale

Muang Thong Th ani 10 floors ( 27,000 sq.m.) Land area

7-0-20.2 rai with off er price 615 mn.

Lat Phrao

Jitt-Uthai

MEC TOWER Bangna-Trad Km. 2

22 f loors (750 sq.m./floor) Off er price 50 /THB mn/f loor

Approach 3: The provision of empty Land and self-constructed Building From the inquiries with 4 real estate brokers during the period ofAugust 13-15, 2014 and information given in the report of two independent appraisers, which has been employed by the Company, in order to evaluate the value of the Land and Building that the Company intends to purchase at this time founded that there is a notification of sale for a vacant area on Ramkhamhaeng Road, Lad Phrao Road, and Phatthanakan Road close to many Land and Buildings that the Company will enter into transaction with. The size of the areas are from 1 ngarn – 13 rai and has offering prices from THB 70,000-170,000 per square meter, depending on the location as follows:

Table 13: Offering prices of vacant Land in the area of Ramkhamhaeng Road,

Lad Phrao Road, and Phatthanakan Road

Land for Sale Area (rai) Selling price (THB / sq.m.)

Selling price (THB million)

Land Transaction (Based on appraised by 2 independent appraisers)

9 0 47 96,000 – 100,000 286.07 – 319.09

Land: Phatthanakan 13 0 97 130,000 688.61 Land: Phatthanakan 8 0 0 100,000 320.00 Land: Phatthanakan next to main road 5 3 23 200,000 464.60 Land: Phatthanakan next to Liberty Insurance Building 5 0 4 170,000 340.68


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Land for Sale Area (rai) Selling price

(THB / sq.m.) Selling price (THB million)

Land: Phatthanakan next to main road 4 2 78 120,000 225.35 Land: Phatthanakan next to main road 4 2 70 100,000 187.00 Land: Soi Lad Phrao 69 3 1 87 150,000 208.05 Land: Soi Lad Phrao 62 (600 meters into the Soi) 3 1 41 85,000 113.99 Land: Phatthanakan next to main road 1 2 0 140,000 84.00 Land: next to Lad Phrao Road between Soi 46 – 48 1 1 89 212,224 125.00 Land: Ramkhamhaeng Road Soi 39 near The Mall Ramkhamhaeng 1 1 70 85,000 48.45 Land: Soi Phatthanakan 44 1 1 10 70,000 35.70 Land: Soi Phatthanakan 40 0 3 92 89,286 35.00 Land: Phatthanakan 0 3 20 140,000 44.80 Land: Phatthanakan Slanting with Tarawadee Complex Building 0 3 4 150,000 45.60 Land: Phatthanakan Soi 10/1 (150 meters into the Soi) 0 1 0 220,000 22.00 Source : Information from 4 real estate brokers during the period of August 13-15, 2014 by the IFA, and valuation of

assets report of UK Valuations and Agency Company Limited dated July 22, 2014, and Plan Appraisal Company Limited dated July 16, 2014.

The data from the Company’s executives stated that in the event that the Company purchase the Land and self- constructed Building, the Company will consider from the utilized size of the Building that can be construct, and other factors, including Land use requirements of each area in Bangkok, set back area, parking area, etc. The construction expenses that the Company will invest in will depend on the plan that may differ in different areas, and in the case that the Company assumes to make additional investment to install various systems inside the struction, including server room, and networking and communication systems, according to the investment plans in this time of the Company.

Summary of the IFA’s opinions on the transactions with related parties and third parties From the information of approaches in obtaining working spaces from third parties in various approaches above compared to the purchase of Land and Building from CPALL, it was founded that each approach has its advantages, disadvantages, and limitations as follows:

Table: 14 Analysis of the advantages and disadvantages in obtaining working spaces of the Company from third parties in various approaches compared to the purchase of Land and Building from CPALL

Approach Advantages Disadvantages/Limitations The acquisition of Land and Building from CPALL

Land and Building have the location and fuction in accordance to the criterias required by the Company.

Obtain Building with the plan and decoration according to the Company’s needs due to the Company is the operator of the renovation of the Building.

The Company has ownership of the assets.

No commission for acquisition of Land and Building.

Building cannot be of immediate use due to the building’s current condition. Necessary renovation needs to be carry out for the Building to have ready-to-use condition. The renovation have additional costs and uses a period of approximately of 1 year.

Approach 1: The additional lease of Jit-Uthai office building or other office buildings

No need to invest large amount of money in a short time.

Various buildings have the location consistent with the Company’s requirements.

Can be immediately use. Convenience services and facilities,

therefore, the Comapny does not need to provide, such as security system, sanitation system, etc.

No building has adequate space and parking areas in one place.

Building plan may not comply with the Land use plan of the Company.

The risk of leasing, such as the leasing period, increase of rent and service charges, conditions in contract renewal, etc.

The Company has long-term lease obligation, which the ownership of the said asset cannot be acquire.

The Company still has continuous unnecessary


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Approach Advantages Disadvantages/Limitations

expenses from offices that are located in many areas.

Approach 2: Investment in Land and Building that has been completed by other parties

The Company is able immediately make use of the Building (as the Building has been maintained continuously).


The buildings that have the criterias required by the Company (location/utilized area/parking space/building in ready-to-use condition) are limited.

Building plan may not be complying with the space use plan of the Company.

There may be transaction expensees such as brokerage.

Approach 3: The provision of empty Land and self- constructed Building

Many empty Lands are perfectly in line with the Company’s requirements.

Able to obtain new building with space, plan, and docor, according to the requirements of the Company.


Procedure requires long period of time (period in negotiation for purchasing Land and Building is not less than 2 years according to the forecasts of the directors of the Company).

Land prices are relatively high, when combined with the expenses of construction and decoration, including various system installation fees, in order for the Building to have utilized area and form in accordance with the Company’s requirements, the costs may be higher compared to purchasing fully equipt office building.

Risky investment due to the need to invest from the start, such as delays in construction and other operations, which may result in additional cost.

There may be transaction expensees such as brokerage.

From the comparison of teh advantages and disadvantages of obtaining spaces of the Company from third parties in various approaches compared to the purchase of Land and Building from CPALL founded that the Land and Building that the Company will enter into transaction has the criteria in accordance with the Company’s needs, in terms of location and utilized space, but the Company need to carry out additional renovation, which is costly and has the duration of approximately 1 year. While no information has been found on the fully-equip office building of a third party that has the location according to the Company’s requirement. Despite the said office building will have a ready- for-immediate-use condition, and is located in the area the Company require, there are limitations on the size of the rental area, and the number of parking spaces, which are insufficient to the Company’s requirement. Regarding the acquisition of Land to third parties, in order to proceed with the construction of the office building, it is founded that the Land and construction expenses may result in the acquisition of new office in such approach to be costly and requires longer time period for processes than other approaches. Therefore, the IFA views that the purchase of Land and Building from connected persons of the Company this time is an appropriate approach to the current situation.

2.3 Fairness of the transaction price and condition

2.3.1 Fairness of the price

I. Investment in Land and Building from connected persons In determining the fair value of the acquisition of Land and Building of the Company from CPALL, the IFA considered a reasonable price based on the market value of assets measured by 2 independent appraisals, which has been approved by the SEC, Thai Valuers Association, and The Valuers Association of Thailand. The 2 independent appraisals include: 1) UK Valuations and Agency Company Limited (“UK”) has prepared a report of valuations of the price of Land and

Building that the Company intends to acquire dated July 22, 2014 with the purpose of public uses. The said report is the valuation as of July 17, 2014.

2) Plan Appraisal Company Limited (“PLAN”) has prepared a report of valuations of the price of Land and Building that the Company intends to acquire dated July 16, 2014 with the purpose of public uses. The said report is the valuation as of July 10, 2014.


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Appraised result by UK Appraised result by PLAN Appraisal date July 17, 2014 July 10, 2014 Appraised asset 29 deeds of Land Totaling 9-0-47 rai

(appraised area 7-1-79.875 rai) and 5-storey building

(with deck floor and basement)

29 deeds of Land Totaling 9-0-47 rai (appraised area 9-0-17 rai)

and 5-storey building (with deck floor and basement)

Valuation Approach Market Comparison Approach for appraisal of Land price. Depreciated Replacement Cost Approach for appraisal of Building price.

Land appraised price THB 163,497,000 Land appraised price per sq.wah

THB 96,000/square meter Total of THB 286,068,480

THB 100,000 /square meter Total of THB 319,087,500

Building appraised price THB 193,991,200 THB 157,057,600 Total appraised price (net) THB 480,000,000 THB 476,150,000 Comparison between the Transaction price and the appraised price

Appraised price is higher amounted to THB 10,000,000

or higher by 2.13%

Appraised price is higher amounted to THB 6,150,000

or higher by 1.31%

The valuations of asset price by the 2 independent appraisers are as follows:

Table 15: Summary of the appraisal of asset by UK and PLAN

Remark: Details of the valuation of the price of the Land and Building by 2 independent appraisers are shown in the appendix of this report.

Based on the above evaluation, the fair value of Land and Building, which the 2 independent appraisers have use the same approach in the valuation of the Land by Market Comparison Approach, and valuation of Building on the Land, consists of 5-storey (with basement floor and deck floor) by Depreciated Replacement Cost Approach, have the estimated vaue between THB 476.15 – 480.00 million, higher than the purchase price of Land and Building of the Company at this time of THB 470.00 million, or as 1.31 – 2.13%. Therefore, the IFA view the pricing of this transaction at THB 470.00 million as an appropriate pricing.

II. Additional Construction Investment To Renovate, Decorate, and Install Systems In the evaluation of the appropriateness of the additional investing value to renovate and decorate the Building including installation of various systems, amounted to THB 791.80 million, which the Company will use to invest to prepare the asset to use as the new headquarter of the Company. The IFA consider the value of such additional investment, based on the information of the valuation of construction, renovation, decoration, and system installation pricing prepared by iECM Company Limited5 (“IECM”) on August 15, 2014 from the initial details of the construction plan of the Company. The details are as follows:

Table 16: Estimation of price for renovation of Building that the Company will invest made by IECM

Details

Area (Square meter)

Unit Cost (THB)

Total (THB)

1 Decommissioning (glass wall at the front of the building) 1,300 3,500 4,550,000 2 Renovation of building Building consists of architectural, structural,

and building systems work 27,000 13,000 351,000,000

3 Improvement of the wall at the front of the building 9,900 8,700 86,130,000 4 Lift systems 4 sets 2,500,000 10,000,000 5 Outdoor Landscaping 10,000 3,200 32,000,000 6 Interior decorations 22,900 6,575 150,567,500 7 server room, and networking and communication systems 500 155,000 77,500,000

5 IECM is a consulting engineering firm, a member of The Consulting Engineers Association of ThaiLand, and is listed in Thai Consultant Database Center of Ministry of Commerce. IECM was established in 1992. Currently, IECM provide engineering consultancy services in the three areas: 1) Project management, construction administration, and construction management 2) Energy efficiency management, and energy conservation 3) Design and construction. In the past, IECM has provided engineering consultancy services of large projects for both public and private sectors, such as Muangthai-Phatara Complex, Shinawatra Tower, Siam Paragon Shopping Center, Future Park Rangsit Shopping Center, Thammasat University Hospital, Siriraj Hospital, etc. Future information of IECM can be retrived from www.iecm.co.th


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Details Area

(Square meter)

Unit Cost (THB)

Total (THB)

8 Systems and other decorations such as lighting design, partition for showroom and/or large seminar room, and signage.

- - 31,867,200

Total 743,614,700 Total (Round To) 743,620,000

Remark: The above prices do not include VAT, furniture expenses, and contingency cost.

When comparing the price of refurbishing building by IECM in the above table with the Company’s investment budget of THB 791.80 million (details in Section 2 Item 2.1.2 (b) of this report) founded that when deducting Contingency Cost that the Company setted at THB 60.00 million, cost of registration of transfer of ownership amounted to THB 4.70 million, furniture expenses amounted to THB 4.00 million which is not included in the estimation of IECM and in order to be comparable to the investment of the Company. The Company’s investment budget will amount to THB 723.10 million, which is close to the estimated cost of renovation of the Building produced by IECM approximately at THB 743.62 million. The Company’s investment budget is higher than renovating price valuation produced by IECM by 2.84%. Therefore, the IFA view that the additional investment for renovation and redecoration is appropriate.

III The investment in the new headquarter of the Company The IFA consider the evaluation of the appropriateness and value of the investment in the new building of the Company with a total investment capital of THB 1,261.80 million by comparing the estimated cash flows assumed to be paid by the Company in the case that the Company rent office building to serve as headquarter of the Company instead of this transaction. In 2 cases as follows: Case 1 The rental of other office buildings with close proximity with the Company’s office building at Makro Lad Phrao

and Jit-Uthai Building. Case 2 The rental of Seller’s office building that the Company will invest in (after Seller has carried out the renovation

is completed according to the original plan of Seller and lease the space to the Company according to the offered the Company has received from Seller).

The evaluation is based on current market situation and assumptions. However, the changes in economic situation or other factors, which may affect the underlying assumptions, could accordingly impact the projected cash flows. The key assumptions in preparing the evaluation of both cases above are as follows:

a) Area of the lease of 14,500 square meters. Reference of working spce of the Building that the Company will purchase from CPALL after the renovation has been completed from the evaluation of the executives.

b) Rental fee growth rate 5% every 2 years. Referred from the IFA’s evaluation. c) Duration of the lease of 25 years. Terminal value for cash at the end of Year 25 at 2.00% referred from

compound annual growth rate (CAGR) of the rental fee under the assumption that the Company’s operations will continue in the future.

d) Service fee Case 1) Referred from rental rate office buildings in close proximity to the offices of the Company at Makro Lad Phrao, Jit-Uthai Building in accordance to the criteria of the Company used in obtaining headquarter building (details are shown in Section 2 Item 2.1 of this report). In Case 2) Referred from rental rate that the Company has received as offer from CPALL for the leasing of the Building that the Company will enter into transaction (after CPALL has completed the renovation according to the original plan of CPALL).

e) Discount Rate of 9.14%. The details of the calculation as follows: The IFA applied the weighted average cost of capital (WACC) as as a discount rate to calculate the present value of cash outflows from paying rental and services fee. WACC can be calculated based on the following equation.

WACC = Ke x [E/(D+E)] + Kd x (1 - t) x [D/(D+E)]

Nonetheless, cost of equity (“Ke”) is necessary in order to calculate WACC. Ke can be derived from Capital Asset Pricing Model (CAPM) based on the following equation.

Ke = Rf + β (Rm – Rf)


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Whereas Rf = The risk free rate based on the 30-year Government Bond Yield as of August 5, 2014 which is the

date before Board of Directors approved the transaction, equals to 4.15% per annum (Source: www.thaibma.or.th)

= Beta co-efficient of the Company’s trading shares over 3 consecutive years until August 5, 2014 (Source: Bloomberg) which is 0.925.

Rm = The market return in which the IFA estimated to be 12.11% per year based on the average return from investment in SET Index over 35 years during 1979 – 2013 (Source: www.set.or.th and the calculation of the IFA).

Based on the aforementioned assumptions, Ke can calculation as follows:

Table 17: Calculation of the cost of equity of MAKRO Factors Assumptions

Risk-free Rate (1) 4.15% Risk Premium (Rm – Rf) (2) 7.96% (3) 0.925 Cost of Equity or Ke (4) = (1) + [(3) x (2)] 11.51%

The cost of equity (Ke) obtained from the calculation shown in the above Table is 11.51%. Then, Ke is applied in the calculation of WACC in which the IFA obtains the value of 9.14%. The details of the calcualtion are presented in the following table. Ke = Cost of equity based on Capital Asset Pricing Model (CAPM), equals to 11.51% as shown in above Table. Kd = Average cost of interest-bearing debt in which the IFA uses the weighted average interest rate of

MAKRO’s loans, which is 3.63%. t = Corporate tax rate of MAKRO for the year 2014 equals to 20.00%. D = Portion of MAKRO’s interest bearing debt as of June 30, 2014 which is THB 4,533.57 million. E = Portion of MAKRO’sequity, based on shareholder’s equity as of June 30, 2014, which is 11,904.39 million.

Table 18: Calculation of MAKRO’s weighted average cost of capital

Factors Assumptions Cost of Equity or Ke (1) 11.51% Cost of Debt or Kd (2) 3.63% D/(D+E) (3) 27.58% Corporate income tax or t (4) 20.00% WACC or Discount Rate (5) = {(1) x [1-(3)]} + {(2) x [1-(4)] x (3)} 9.14%

Scenario 1 Rental of office buildings in close proximity to the offices of the Company at Makro Lad Phrao, and Jit-

Uthai Building

The IFA has referred the current rental rates for office space and parking areas in close proximity to the offices of the Company, at Makro Lad Phrao and Jit-Uthai Building, to estimate the rental rate of rental area of 14,500 square meters, and parking space fees of approximately 130 cars (based on the number of parking spaces of the Building that the Company will invest after the renovation of approximately 312 cars. It is assumed that if there is a renting of office spaces, the Company will receive some part of parking spaces at no additional cost) as follows:

Table 19: Market Rental Rate of Office Buildings in the Area of the Current Offices of the Company

Building Name

Space for rent Rental Rates (THB/ sq.m./ month)

Parking Rates (THB/ car/ month)

Jit-Uthai Building, Ramkhamhaeng Road < 500 sq. m. 300.00 600.00 Twenty One Tower, Srinakarin Road < 500 sq. m. 350.00 1,000.00 The Plaza, Ramkhamhaeng Road 4,000 sq. m. 370.00 1,200.00 Dr. Gerhard Link Building, Krung Thep Kritha Road < 500 sq. m. 380.00 1,200.00 Modern Form Building, Srinakarin Road < 500 sq. m. 390.00 1,400.00


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Building Name

Space for rent Rental Rates (THB/ sq.m./ month)

Parking Rates (THB/ car/ month)

UM Tower, Ramkhamhaeng Road < 500 sq. m. 480.00 1,500.00 Rental Rate/ Average Parking Cost 378.33 1,150.00

Source: Information from 4 real estate brokers during the period of August 13-15, 2014 by the IFA

From the table above, the IFA has founded that no building has available space for rent more than 14,500 square meters in the same building, which is the area the Company requires. Nonetheless, the IFA has assumed that the Company will be able to rent office area of 14,500 square meters in order to evaluate scenario 1.

The present value of rent expense involved in such cases is as follows:

Table 20: Estimation of Cash Disbursement on Office Building Rental in the Area of the Company’s Current Offices

(Unit : THB million)

Estimated Cash Disbursement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year

10 Year 11

Year 12

Year 13

Annual Rent 65.83 65.83 69.12 69.12 72.58 72.58 76.21 76.21 80.02 80.02 84.02 84.02 88.22 Growth Rate 0% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Parking Fee Per Year

1.79 1.79 1.88 1.88 1.98 1.98 2.08 2.08 2.18 2.18 2.29 2.29 2.40 Growth Rate 0% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Estimated Cash Disbursement

67.62 67.62 71.01 71.01 74.56 74.56 78.28 78.28 82.20 82.20 86.31 86.31 90.62

(Unit : THB million) Estimated Cash Disbursement

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

Year 21

Year 22

Year 23

Year 24 Year 25

Annual Rent 88.22 92.63 92.63 97.26 97.26 102.12 102.12 107.23 107.23 112.59 112.59 118.22 Growth Rate 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Parking Fee Per Year

2.40 2.52 2.52 2.65 2.65 2.78 2.78 2.92 2.92 3.07 3.07 3.22 Growth Rate 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Estimated Cash Disbursement

90.62 95.15 95.15 99.91 99.91 104.91 104.91 110.15 110.15 115.66 115.66 121.44 Terminal Value 1,735.50 Net Present Value (NPV)

990.23

From the caluculation in the table above founded that net present value of the total rent expense related to the lease of office building in the same area as the Company’s current office building. In the scenario that the rental rate increase by 5% every 2 years to the present value of the total rent expense associated value of THB 990.23 million, which is lower than the value of investment of the project, which valued at THB 1,261.80 million, which is 21.52%. Nonetheless, the IFA views that the consideration of the approach to lease office building in this scenario has limitations, which may not be feasible (with restrictions on the size of each building) in addition to several factors that should taken into consideration, such as: Size of rental space : Due to the office building is in close proximity to the current offices of the Company, which

is used in the comparison, has insufficient space available for rent that the Company requires of approximately 500-4,000 square meters per building. Therefore, in the case that the Company continues to rent additional office area, the Company may need to rent offices in separate location, which restrictions may affect: o The implementation and shared resources of the Company o Increased costs of coordination between agencies at different locations.

Rental building condition : Due to the condition of the Building in the said area has been in use for a long period of time, thus, the Building have older condition when compared with the project to invest in new headquarter of the Company at this time. In addition, IFA has not included the costs arise from the interior renovation of the rental space in order for the Building to be in ready-to-use condition, which cannot possibly be estimated.

Ownership of Land and Building : As the Company is not the owner of the asset, to assume that the lease is in perpetuity, is of high uncertainty since the lessor may change the terms of the lease in the future, while the


42

investment of the project of the new headquarter will enable the Company to acquire of title to Land and Building to reduce the risk of long-term rental.

Therefore, from limitations or considerations mentioned above, the IFA view that the above considerations cannot be compared directly with the Company’s case in entering into investment in the new headquarter project because of the physical size of the rented space in the Building of 14,500 square meters lower than at present, in addition to the older building condition.

Scenario 2 Renting of CPALL’s office building will invest in

On May 19, 2014, Seller have offered a notification to the Company to lease Libery Insurance building to new headquarter of the Company after Seller has carried out its the renovation plan, offering rental rate of THB 500.00 per square meters based on the inquiries to the management of the Company, it is founded that the ratio that is based on the market ratio of rental fee of the said period and condition of the office building that has been entirely renovated, and increases rental rate by 10% every three years, which is the offer that the Company received before the board of directors of the Company have approved of the investment in the asset. The IFA uses the proposal that assumed on the imputed rental value in Scenario 2 since it is the ratio that the Company may need to pay in the case that the Company proceed to rent the building that meets the criteria to serve as the Company’s new headquarters building, however, the IFA has lowered the increase rate of 10% of every three years to 5.00% every second year according to the conservative basis. The present value of the total rent expense involved in such case is as follows:

Table 21: Estimation of Cash Disbursement on renting CPALL’s office building that the Company will invest in

(Unit: THB million)

Estimated Cash Disbursement Year

1 Year

2 Year

3 Year

4 Year

5 Year

6 Year

7 Year

8 Year

9 Year 10

Year 11

Year 12

Year 13

Annual Rent 87.00 87.00 91.35 91.35 95.92 95.92 100.71 100.71 105.75 105.75 111.04 111.04 116.59 Growth Rate 0% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Parking Fee Per Year

1.79 1.79 1.88 1.88 1.98 1.98 2.08 2.08 2.18 2.18 2.29 2.29 2.40 Growth Rate 0% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Estimated Cash Disbursement

88.79 88.79 93.23 93.23 97.90 97.90 102.79 102.79 107.93 107.93 113.33 113.33 118.99

(Unit: THB million) Estimated Cash Disbursement

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

Year 21

Year 22

Year 23

Year 24

Year 25

Annual Rent 116.59 122.42 122.42 128.54 128.54 134.97 134.97 141.71 141.71 148.80 148.80 156.24 Growth Rate 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Parking Fee Per Year

2.40 2.52 2.52 2.65 2.65 2.78 2.78 2.92 2.92 3.07 3.07 3.22 Growth Rate 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% 0% 5% Estimated Cash Disbursement

118.99 124.94 124.94 131.19 131.19 137.75 137.75 144.64 144.64 151.87 151.87 159.46 Terminal Value 2,278.80 Net Present Value (NPV)

1,300.23

From the calculated table above, the net present value of the total rent expense including related expenses for renting office building from CPALL. In the case of the rental rate rises by 5% every two years to the present value of the total rent expense including related expenses for renting office building is amounted to THB 1,300.23 million, which is higher than the value of the Company’s total investment in this project of THB 1,261.80 million, representing 3.05%. In this scenario, the size of the rented space as offered by CPALL is sufficient, and with the fact that the entire building is in renovation process, which is consistent with the Company’s requirements to self-invest.


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Table 22: Summary of the evaluation of the value of this investment compared to rental scenario

Scenario Details Value (THB million)

Scenario 1 The Company rent another office building in close proximity of Makro Lad Phrao. 990.23* Transaction The Company purchase the Land and Building from CPALL, and invest in additional

construction. 1,261.80

Scenario 2 The Company rent Liberty Insurance Building to use as the Company’s office building in accordane to the offer received from CPALL.

1,300.23

Remark * There are limitations in consideration as no sufficient vacant office buildings are found.

From the above table, when considering the present net value of the total rent expense under the assumption that the two scenarios of investment in the new headquarter of the Company with a total investment capital of THB 1,261.80 million is value appropriate when compared to renting the Building from CPALL, which is of the present value of THB 1,300.23 million. While the renting additional office building in close proximity to the current office of the Company, despite the lower net present value of this investment, however, there are several limitations and considerations such as the insufficient size of the leased space, the older condition of the building. Therefore, the IFA views that the investment into the project is appropriate, and value appropriate more than renting additional office building.

2.3.2 Fairness of the Conditions of the Transaction

The IFA has considered the fairness of the conditions of the Transaction, which the details are shown in Section 2 Item 2.1.2 of this report, and view that the conditions of the Land and Building Sale are mostly according to general business practice in which the terms and conditions are negotiable between the buyer and the seller. Additionally, such terms and conditions will not impair the benefit of the Company, such as that both parties agree to equally responsible for the fees arising from the registration of ownership transfer and pay for their own respective, the seller is responsible for withholding tax, stamp duty, or specific business tax in registration of ownership transfer of the property, etc. Accordingly, the IFA views that the conditions underlying the Transaction are reasonable.


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Section 3: Summary of the Opinion of the Independent Financial Advisor

From the analysis of the IFA regarding the fairness of the price and terms of the purchasing of the Land and Building of CP ALL that has been mentioned above. The IFA views that the Transaction is appropriate based on the following reasons: 1. The Company acquired the Land and Building that potential is determined by the main criteria of the Company in

terms of space, location, and nature of the assets. (Details are shown in Section 2 Item 2.1 of this report) to support the Company’s business. Currently, all three of the Company’s headquarters (located on Lat Phrao Road and Ramkhamhaeng Road) has

the total area of approximately 8,300 square meters, which is not sufficient to facilitate the employees activities as the number of employees are increasing dramatically especially in the past 2-3 years. This transaction will allow sufficient space for effective operation of the Company’s business as well as the ability to allocate basic facilities such as conference rooms, large size training room, and server room, which the current offices do not have sufficient space to provide. Additionally, the asset located in close proximity to the headquarters of the Company at present, and Makro Lad Phrao branch is the hub of operation will help to maintain the efficiency and continuity of business operations. As well as for the benefit of the employees as the majority reside in the area.

The Company’s new headquarter is with a potential to support future growth of the Company within the next 10-20 years due to the policies and plans to continue the investments such as opening new Makro branches, for foreign investment, to expand food service businesses and so on.

2. The transaction will help to reduce long term costs of the Company as following: The expense of renting the office space as currently, the Company is renting one office building, which is Jit-

Uthai Building located on Ramkhamhaeng Road with approximately 4,007 square meters of space in which the rental expense is approximately THB 1.18 million per month, as well as additional parking spaces fee.

The expense of providing temporary work area in the containers for the employees due to lack of space especially during the expansion of new Makro branches. In 2013 and the first six-months of 2014, the Company’s said costs are approximately THB 1.12 million, and THB 0.05 million, respectively.

The expenses of renting facilities for conferences, trainings and seminars, which are ongoing programs as the Company’s existing conference rooms are limited in number and size. In 2013, and six-months of 2014, the Company’s said costs are approximately THB 4.33 million, and THB 2.96 million, respectively.

Travel, transportation and other miscellaneous expenses incurred from having separate headquarter offices.

3. By having the Company’s headquarter in one building (Centralized Headquarter Office), the performance of the management and the staff will improve as well as the mobility and speed for communication between divisions. Moreover, the Company will be able to managed and utilized the available resources to benefit the Company such as information technology systems, communications system and office equipment that would allow the use of the Company’s resources at most.

4. The transaction will help to mitigate the risk from renting other office buildings to utilize as headquarter building

for the Company, such as risk of changes in the price of rent and service charges and leasing period, as well as changes in terms and condition, which may alter the benefit of the Company as the lessee that may affect the operations of the Company.

5. The amount the Company is going to invest need to be paid in the acquisition of Land and Building valued at 470.00

million, and use for the renovation of the Building amounted to THB 791.80 million is appropriate as: The price of the acquisition of Land and Building is THB 470.00 million is lower than the fair value as determined

by 2 independent appraiser, which is equivalent to THB 476.15 million, and THB 480.00 million. Additional renovation of the Building has the total investment of THB 791.80 million in order for the Building to be

ready for usage as the new headquarter of the Company. After deducting Contingency Cost that the Company sets at THB 60.00 million, registration of transfer of Land of THB 4.70 million, and central furniture amounted to 4.00 million, will amounted to THB 723.10 million, which is close to the construction cost by consulting engineer estimated THB 743.62 million. (The estimation of construction costs and costs in association with construction excluding miscellaneous, contingency cost, registration of transfer of ownership, and furniture fee)


45

Investment of the new headquarter of the Company with a total investment capital of THB 1,261.80 million that

is a worthwhile investment when compared to the rental of this Buildings from CPALL, which is the net value amounted to THB 1,300.23 million. While the additional rental of other office buildings in the close proximity to the current Company’s office is lowly than the net value of this investment, but has several limitations and considerations such as the insufficient size of the leased space, the aged condition of the buildings, and so on.

The details of the assessment of the reasonableness of the price of transaction appears in Section 2 Item 2.3 of this report.

6. The terms and conditions of the transaction are in accordance with general business practice and should not

adversely impact the benefit of the Company.

Therefore, the shareholders should approve the transaction. However, the transaction has disadvantages and risks that shareholders should take into consideration in order to approve the transaction, which are: 1. By entering the transaction, the Company will be obliged to pay for the Land and the Building as well as the

investment for improvement, decoration and install systems to make the Building available for use totaled to THB 1,261.80 million, which is expected to be paid by 2015. As a result, cash flow and liquidity of MAKRO Group may decline as well as loss of opportunity to use the cash to invest in other investments that would result in revenues such as expanding Makro branches or to use the said amount as working capital in MAKRO Group’s businesses.

2. The impact of the transaction on the financial position of the Company In the case that the Company has drawn short-term loans from financial institutions to use as a part of the

source of funds for the acquisition of the asset will cause the Company to bear liabilities and increase in interest expense due to the withdrawl of the loan to pay for the land and the construction expenses at the end of 2014 until the 3rd quarter of 2015. However, the Company has the policy to maintain the interest bearing debt per equity share that does not exceed 1.00 times. (as of June 30, 2014, the ratio is equal to 0.38 times)


The Company assume to conduct business and have operating results to continue to grow in the future, as the Company will use the cash flow from operations and/or use 3 – 5 years loan from commercial bank for investment expansion in the next 2-3 years. The IFA views that although the transaction could cause the Company’s cash flow that the Company could use for dividend payment to decrease, however, it is expected that there will be no effect on the operations and the financial position of the Company. More significantly, the Company currently has no plan to change its dividend policy (not less than 40% of net profit after tax annually), of any kind.

3. The Company could be at risk in difficulties in delay scheduling from the renovation and installation of systems than

planned such as delay in the performance of the contractors or service providers to install engineering systems, a delay in the delivery of furniture and appliances and so on, causing the Company to unable to take advantage of the Building as planned and the increase in costs and expenses. Nonetheless, the Company has established guidelines to supervise the operations of the contractors in accordance with the Company’s plan, both in terms of execution time and quality, such as requiring the contractors to produce performance bond from financial institutions in the ratio of work value according to the Company assigned to the Commpany before the start of construction, the designation for the contractors to provide bank guarantee from financial institutions as a warranty of the work of 1 year period started from the date of delivery, the delay imposed by the ratio of value as determined by the Company, etc.

The decision to vote is solely dependable on the consideration and discretion of the shareholders. The shareholders should take into consideration the advantages, disadvantages and the risk of the Transaction as well as carefully consider the attached documents submitted to the shareholders along with the invitation letter to shareholders’ meeting so as to make the most appropriate decision.


46

JayDee Partners Limited, as the Independent Financial Advisory of the Company, has performed the study and analysis with care in accordance with the professional standard and has provided the opinion based on the fair analysis of information by taken into consideration the benefits of all shareholders.

The opinion of the independent financial advisor are based on the information, which have been received from the Company as well as the interviews with the Company’s management, publicly available information and other relevant documents. The Independent Financial Advisor assumed that all information received is truthful and correct. Therefore, if the said information are incorrect and/or is not truthful and/or has been significantly changed in the future, it will affect the opinion of the Independent Financial Advisor. Therefore, the Independent Financial Advisor is unable to certify or warrant the future impact that may arise to the Company and the shareholders. In addition, the opinion of the Independent Financial Advisor is only to provide the comments to the shareholders, providing this opinion does not warrant the accomplishment of the Transaction and impact to be incurred from the Transaction to the Company.

This English report of the Independent Financial Advisor’s Opinion has been prepared solely for the convenience of foreign shareholders of the Company and should not be relied upon as the definitive and official document. The Thai language version of the Independent Financial Advisor’s Opinion is the definitive and official document and shall prevail in all aspects in the event of any inconsistency with this English Translation.

Yours Sincerely,

-Mrs. Duangjai Lorlertwit- -Ms. Jirayong Anuman-Rajadhon-

(Mrs. Duangjai Lorlertwit) (Ms. Jirayong Anuman-Rajadhon) Executive Partner Managing Partner / Operation Controller JayDee Partners Limited, the independent financial advisor


47

Apprendix: Summary of the Asset Appraisal Report of Land and Building by Independent Appraisers

The Company has commissioned 2 independent appraisals, which has been approved by the SEC, Thai Valuers Association, and The Valuers Association of Thailand. The 2 independent appraisals include: 1) UK Valuations and Agency Company Limited (“UK”) has prepared a report of valuations of the price of Land and

Building that the Company intends to acquire dated July 22, 2014 with the purpose of public uses. The said report is the valuation as of July 17, 2014.

2) Plan Appraisal Company Limited (“PLAN”) has prepared a report of valuations of the price of Land and Building that the Company intends to acquire dated July 16, 2014 with the purpose of public uses. The said report is the valuation as of July 10, 2014.

Details of the asset appraisal by 2 independent appraisers are as follows:

1) Asset appraisal by UK 1.1) Land appraisal by UK UK has appraised the value of the Land that the Company will enter into Transaction by using the market comparison approach by selecting 7 market data that have similar potential to the asset for benchmarking. Then, screened and chose 3 entries of data which have similar location, size of Land, and general conditions to the asset to analyze its value taking various factors that affect the value into consideration, e.g., location, size and shape of Land, public utility, utilizationWeighted Quality Score (WQS) was then used to adjust the estimation. The Land values appraised by UK are shown in the following table:

Table 23: Summary of the Appraisal of the Land with Market Comparison Approach by UK

Description Asset Data 1 Data 2 Data 3 Property Type Land including

Building Vacant Land

(Commercial and residential type)

Vacant Land (Commercial and residential type)

Land (Commercial and residential type)

Land Area 9 – 0 – 47 rai 3 ngarn 4 sq.wah 5 rai 4 sq.wah 1 ngarn Asset Location next to

Phatthanakarn Road Slanting to Tarawadee

Complex, Phatthaakarn Road

Slanting to Liberty Insurance Building,

Phatthanakarn Road

Soi Phatthanakarn 10/1 Phatthanakarn Road,

Enter the soi approximately 15 meters

Land Shape Polygons Polygons Polygons Rectangular Land Width by the road

77 meters approximately 20 meters

150 meters approximately 20 meters

Land Level Embanked, Ground level balance with the front road Road Width Ground surface

approximately 21 meters

Ground surface approximately

21 meters

Ground surface approximately

21 meters

Ground surface approximately 6 meters

Utilities Electric power/ running water/ telephone/drain Road surface in front of the property

Concerete

City Plan Orange Area (Medium density residential Land) Advantage Next to main road Next to main road Next to main road - Disadvantage - - - Next to Soi road Offering Price - THB 45,600,000

(Approximately THB 150,000 /sq.wah)

THB 340,680,000 (Approximately THB 170,000 / sq.wah)

THB 22,000,000 (Approximately THB 220,000 / sq.wah)

Date of Sale Notification

- July 2014 July 2014 July 2014


48

Table 24: Summary of the Appraisal of the Land with Market Comparison Approach by UK (Continued)

Description Data 4 Data 5 Data 6 Data 7 Property Type Vacant Land

(Commercial and residential type)




Land Area 4 rai 2 ngarn 77.9 sq.wah

4 rai 2 ngarn 70 sq.wah 5 rai 3 ngarn 23 sq.wah 1 rai 2 ngarn

Asset Location Phatthanakarn Road Phatthanakarn Road Phatthanakarn Road Phatthanakarn Road Land Shape Polygons L-Shape Polygons Polygons Land Width by the road

60 meters 50 meters Approximately 100 meters

Approximately 30 meters

Land Level Embanked, Ground level balance with the front road Road Width Road width approximately 21 meters Utilities Electric power/ running water/ telephone/drain Road surface in front of the property

Concerete

City Plan Orange Area (Medium density

residential type Land)

Orange Area (Medium density

residential type Land)

Red Area (Commercial property

type Land)

Orange Area (Medium density

residential type Land) Advantage Next to main road Next to main road Next to main road Next to main road Disadvantage - - - - Offering Price THB 225,348,000

(Approximately THB 120,000 / sq.wah)

THB 187,000,000 (Approximately

THB 100,000 /sq.wah)


THB 200,000 / sq.wah)


THB 140,000 / sq.wah) Date of Sale Notification

July 2014 July 2014 July 2014 July 2014

Table 25: Weighted Quality Score for the Appraisal of Land by UK

Adjustment Factors Weight (%) Asset Data use for comparison Data 1 Data 2 Data 4

Location 20 8 9 8 7 Land Size and Shape 20 5 9 7 8 Land Condition 5 8 8 8 8 Transportation and accessibility 5 9 9 9 9 Land development potential 20 8 7 10 9 Environment 10 9 9 9 7 Utilities 5 8 8 8 8 Liquidity 15 5 9 8 7 Total Weighted Quality Score 100 710 850 835 780

Remark: 0 – 2 is low, 3 – 4 is fair, 5 – 6 is medium, 7 – 8 is good, 9 – 10 is excellent.

Table 26: Comparison of Land Value Appraisal by UK

Details Asset Data use for comparison Data 1 Data 2* Data 4

Offering Price (THB/meter) - 150,000 170,000 120,000 Appropriate Price (THB/meter) - 130,000 110,000 100,000 % Adjusted from Offering Price 13% 35% 17% Weighted Quality Score 710 850 835 780 Ratio Adjusted 1.00000 0.83529 0.85030 0.91026 Adjusted Price - 108,588 93,533 91,026 Weight Comparison 1.00 0.20 0.40 0.40 Comparison by the value adjustment (THB/ sq.wah)

95,541 21,718 37,413 36,410

Net Value 96,000 THB/ sq.wah Remark * Data used in comparison Data 2 has offering price (THB/ sq.wah) relatively higher and have power lines

across the front of the Land same as with property.


49

The appraisal report by UK states that the appraisal of the Land totaling to 9 – 0 – 47 has a high voltage power line runs through the middle of the asset. According to a copy of the plan of Liberty Insurance Building, the Electricity Generating Authority of Thailand has identified the same area at 24 meters, representing an area of approximately 1 rai 2ngarn 67.125 sq.wah (667.125 sq.wah). Therefore, UK did not consider the Land that is in the area of high voltage power lines in the appraisal. The details are as follows:

Table 27: Summary of Land Appraisal by UK

Details Total Area Total Area (sq.wah) Rai Ngarn sq.wah

Land according to Certificate of Ownership 9 0 47.000 3,647.000 Deduct Land on the area of high voltage lines. 1 2 67.125 667.125 The remaining area of appraisal 7 1 79.875 2,979.875 Land Price Appraisal 96,000 THB/ sq.wah Total Land Price Appraisal 286,068,480 THB

1.2) Building appraisal by UK UK has appraised the value of the Building that the Company will enter into Transaction by using depreciated replacement cost approach by considering the current market value of the construction materials, based on construction cost estimated in 2013, which is determined by the Valuers Association of Thailand as reference. Then, deduct by depreciation due to age, conditions of use, and the obsolescence from benefits of using the Building by UK. The depreciation of building is 3.00% per year (a 16-year-old building), the said building has been terminated of use since approximately 2010, and a general lack of maintenance as a result of the dilapidated building.

Table 28: Summary of Appraisal of Valuation of Building by UK

Details Area

(Sq.m.) Construction

Expenses (THB/Sq.m.)

Replacement Cost (THB)

Depreciation expense (%)

Depreciation expense (THB)

Net Replacement

Cost (THB) 5-Storey Building (including basement and deck floor) 1. Office Area 10,599 16,000 169,584,000 48 81,400,320 88,183,680 2. Basement Area 5,268 12,000 63,216,000 48 30,343,680 32,872,320 3. Deck Floor Area (machinery room)

1,632 10,000 16,320,000 48 7,833,600 8,486,400

4. Other Area 9,960 12,000 119,520,000 48 57,369,600 62,150,400 Net replacement cost of 5-storey building (including basement and deck floor) 191,692,800

Other Buildings 1. Parking Area 749 2,000 1,498,000 48 719,040 778,960 2. Road and Concerete Court

2,475 800 1,980,000 48 950,400 1,029,600

3. Fence 628 meters

(Length)

1,500 942,000 48 452,160 489,840

Net Replacement Cost of Other Buildings 2,298,400 Total Net Replacement Cost 193,991,200

Summary of Asset Appraisal by UK

Table 29: Summary of Asset Appraisal by UK No. List Appraisal Price(THB) 1. Land: 29 deeds, total area of 9-0-47 rai (appraised area of 7-1-79.875 rai) 286,068,480 2. 5-Storey Building (including basement and deck floor) 193,991,200

Total Appraisal Price 480,059,680 Total Appraisal Price (net) 480,000,000

From the table above, UK view that the value of appraised asset amounted to THB 480,000,000. UK additionally view that due to Liberty Insurance Building has terminated its use as an office since approximately 2010 (or approximately 4 years ago) causing the Building to began to deteriorate due to lack of regular maintenance. If the asset will started to


50

be use again in the future, necessary repaid of the Building may be required and capital expenditure in building maintenance for the Building to be in a ready-to-use condition as office building.

2) Asset appraisal by PLAN 2.1) Land appraisal by PLAN PLAN has appraised the value of the Land that the Company will enter into Transaction by using the market comparison approach by selecting 7 market data that have similar potential to the asset for benchmarking, which have similar location, size of Land, and general conditions to the asset to analyze its value taking various factors that affect the value into consideration, e.g., location, size and shape of Land, transportation, public utility, utilization, and limitations. Weighted Quality Score (WQS) was then used to adjust the estimation. The Land values appraised by PLAN are shown in the following table:

Table 30: Summary of the Appraisal of the Land with Market Comparison Approach by PLAN

Details Asset Data 1 Data 2 Data 3 Property Type Land with Building Vacant Land Vacant Land Vacant Land Land Area 9-0-47 rai

(Appraised 9-0-17 rai) 0-3-20 rai 13-0-97 rai 0-3-04 rai

Asset Location Phatthanakarn Road Phatthanakarn Road Phatthanakarn Road Soi Phatthanakarn 25 Road Surface Type

Concerete reinforced with metal




Road Width 21 meters 18 meters 18 meters 18 meters Location / Environment

Residential and Commercial




Utilities Electric power/ running water/ telephone/drain/road Land Shape Polygons Trapezoid Rectangle Rectangle Land Level Leveled with road Leveled with road Leveled with road Leveled with road Road Width 291 meters 10 meters (narrow) 50 meters 50 meters Limitations/ City Plan

Orange Y.5-20 FAR 1:4 OSR 7.5

Red P.3-23 FAR 1:7 OSR 4.5



Current Characteristics

Office buildilng (Under construction)

No usage No usage Restaurant

Date/Month/ Year

July 10, 2014 July 10, 2014 July 10, 2014 July 10, 2014

Offering Price / Buy-Sell

- THB 140,000/sq.wah THB 130,000/ sq.wah THB 150,000/ sq.wah

Table 31: Summary of the Appraisal of the Land with Market Comparison Approach by PLAN (Continued) Details Data 4 Data 5 Data 6 Data 7

Property Type Vacant Land Vacant Land Vacant Land Vacant Land Land Area 5-0-04 rai 8-0-0 rai (Land under high

voltage power lines 2 rai) 1-1-10 rai 0-3-92 rai

Asset Location Phatthanakan Road Phatthanakan Road Soi Phatthanakan 44 Soi Phatthanakan 40 Road Surface Type




Asphalt Pavement

Road Width 18 meters 18 meters 6 meters 6 meters Location / Environment

Residential and commercial

Residential and commercial

Residential Residential

Utilities Electric power/ running water/ telephone/drain/road Land Shape Trapezoid Rectangle Rectangle Rectangle Land Level Leveled with road Leveled with road Leveled with road Leveled with road Road Width 130 meters 55 meters 40 meters 130 meters Limitations/ City Plan





Current Characteristics

No usage No usage No usage No usage

Date/Month/ Year

July 10, 2014 July 10, 2014 July 10, 2014 July 10, 2014


51

Details Data 4 Data 5 Data 6 Data 7

Offering Price/ Buy-Sell

THB 160,000/ sq.wah THB 100,000/ sq.wah THB 70,000/ sq.wah Total offering price of THB 35,000,000 (average of THB 89,286/ sq.wah)

Table 32 Weighted Quality Score for the Appraisal of Land by PLAN

Adjustment Factors Rating Calculation Asset Data use for comparison Rating Total 1 2 3 4 5 6 7

Land Location (Commercial/ Residential)

2 5 10 4 4 4 4 4 4 3 3

Location (Plot / Normal Plot / Blind)

2 5 10 4 5 3 3 3 3 3 3

Road Surface Type/ Width 2 5 10 5 5 5 5 5 5 3 3 Land Area 2 5 10 3 5 1 5 3 3 5 5 Distance from major roads 2 5 10 5 5 5 5 5 5 1 1 Land Shape 2 5 10 3 2 5 5 4 5 5 5 Surrounding Environment 2 5 10 5 5 5 5 5 5 3 2 Utilies (water, electricity, telephone, street lamp)

2 5 10 5 5 5 5 5 5 5 5

Total 16 80 68 72 66 74 68 70 56 54 Remark: Rating scale: 1 is low, 2 is fair, 3 is medium, 4 is good, 5 is excellent

Table 33: Weighted Quality Score for the Appraisal of Land by PLAN

Considered Factors Asset Data use for comparison 1 2 3 4 5 6 7

Offering Price / Buy-Sell (THB/ sq.wah)

140,000 130,000 150,000 160,000 100,000 70,000 89,286

Adjusted Value Ratio (%) 90% 90% 90% 90% 90% 90% 90% Adjusted Value (THB/sq.wah) 126,000 117,000 135,000 144,000 90,000 63,000 80,357 Weighted Quality Score (WQS)

68 72 66 74 68 70 56 54

Adjusted Ratio 1.00 0.94 1.03 0.92 1.00 0.97 1.21 1.26 Variance 0.00 0.06 0.03 0.08 0.00 0.03 0.21 0.26 Indicated Value (THB/sq.wah) 119,000 120,545 124,054 144,000 87,429 76,500 101,191 Comparability (Rank) 21 4 5 3 0 6 2 1 Comparability (Weighted) 100.00% 19.05% 23.81% 14.29% 0.00% 28.57% 9.52% 4.76% Comparable Value (THB/ sq.wah)

106,174 22,667 28,701 17,722 - 24,980 7,286 4,819

Market Value (rounding) 100,000 THB/sq.wah

The appraisal by PLAN above stated that due some part of Land locates high voltage poles of 230 kilovolts, representing approximately 0-0-30 rai (30 sq.wah), thus, some part of the Land is unusable. Therefore, PLAN did not consider the value of Land in this area. In addition, approximate 1-2-8.75 rai (608.75 sq.wah) of the Land are under the area of high voltage poles, causing it impossible to carry out any construction of Buildings in the area, and this area’s best usage is parking spaces. PLAN considers the value of the Land area as 30.00% of market value according to the compensation of the Electricity Generating Authority of Thailand. The details are as follows:

Table 34: Summary of Land Appraisal by PLAN

Details Total area (sq.wah)

Appraised price (THB/ sq.wah)

Appraised price (THB)

1. Land outside the high voltage lines 3,008.25 100,000 300,825,000 2. Land within the high voltage lines 608.75 30,000 18,262,500 3. Land of the high voltage lines 30.00 Value not appraised

Total Price of Appraised Land 319,087,500


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2.2) Building appraisal by PLAN PLAN has appraised the value of the Building, which is a 5-Storey building, by using depreciated replacement cost approach by considering the current market value of the construction materials, based on construction cost estimated in 2013, which is determined by the Valuers Association of Thailand as reference. Then, deduct by depreciation due to age, conditions of use, and the obsolescence from benefits of using the Building by PLAN. The depreciation of building is 2.00% per year, or as the total depreciation price of 32.00% of building of 16 years. Nonetheless, since the current space inside of the Building is in the process of renovation, and demolition of materials on architecture and systems, as a depreciation rate totaling to 60.00% at present.

Table 35: Summary of Appraisal of Valuation of Building by PLAN

Details

Area

(sq.wah)

New Construction

Expense (THB/ sq.wah)

Replaceme nt Cost (THB)

Depreciation

Cost (%)

Depreciation

Cost (THB)

Net Replacement

Cost (THB) 5-Storey Office Building (including basement and deck floor) 1. Utilized area within the building

20,774 15,000 311,610,000 60 186,966,000 124,644,000

2. Utilized area of parking space

5,340 15,000 80,100,000 60 48,060,000 32,040,000

3. Open covered area

467 2,000 934,000 60 560,400 373,600

Total net replacement cost 157,057,600

Summary of Asset Appraisal by PLAN

Table 36: Summary of Asset Appraisal by PLAN No. List Appraisal Price(THB) 1. Land: 29 deeds, total area of 9-0-47 rai (appraised area of 9-0-17 rai) 319,087,500 2. 5-Storey Building (including basement and deck floor) 157,057,600

Total Appraisal Price 476,145,100 Total Appraisal Price (net) 476,150,000

From the above table, PLAN views the appraised value of asset to THB 476,150,000.

The IFA’s comments on the appraisal Assets appraised by 2 independent appraisers The IFA considered the report on the appraisal Assets appraised by 2 independent appraisers and founded that UK and PLAN use the market comparison approach and the appraisal of Building on Land, which consists of 5-storey building (including basement and deck floor), by depreciated replacement cost approach is appropriate because the appraisal from the comparison of market prices in about the same period of time, such as Land, will accurately reflect the current prices and values of the assets.

Whereas the appraisal of the value of Building using depreciated replacement cost approach is able to indicate the value of the office building that has unique characteristic and has continuous benefits for a long period of time, which is consistent with the Building’s condition in this appraisal. In addition, the 2 independent appraisers have already considered the limitations of the Land in regards to the location of the high voltage poles.

Enclosure 4

Page 1 of 2 Pages

The Articles of Association of the Company regarding the shareholders’ meeting and

the votes

1. Summoning the Shareholders’ Meeting

Article 30. The Board of Directors shall hold an annual ordinary meeting of shareholders

within 4 months from the end of the fiscal year of the Company.

All other meetings of shareholders apart from the abovementioned meeting shall be called

extraordinary shareholders meetings. The Board of Directors may summon an extraordinary meeting

of shareholders whenever it thinks fit or whenever, the shareholders holding altogether not less than

one-fifth of all issued shares or not less than 25 shareholders holding altogether not less than

one-tenth of all issued shares make a requisition in writing to the Board of Directors to summon an

extraordinary meeting by clearly specifying therein a reason of such requisition. The Board shall

summon a shareholders' meeting within 1 month from the date the shareholders' request is received.

Article 31. In summoning a shareholders' meeting, the Board of Directors shall prepare a

notice specifying the place, date, time, agenda and matters to be proposed to the meeting together

with adequate details by clearly indicating whether such matters are proposed for acknowledgement,

for approval or for consideration, as the case may be, as well as the Board’s opinions on such matters

and send to the shareholders not less than 7 days prior to the date of the meeting and advertise the

notice summoning the meeting in a newspaper for 3 consecutive days not less than 3 days prior to the

date of the meeting.

During the period of 21 days prior to each meeting of shareholders, the Company may suspend

registration of share transfer by posting up a notice for information of shareholders in advance at the

head office and every branch office for a period not less than 14 days prior to the date of

commencement of share transfer suspension.

The place where the meeting is to be held does not have to be in the locality in which the head office

of the company is situated. The meeting can be held anywhere else as the Board of Directors deems

appropriate.

2. The Quorum

Article 32. At a shareholders’ meeting, there shall be not less than 25 shareholders

and/or the shareholders' proxies (if any), or not less than half of the total number of shareholders and

holding altogether not less than one-third of the total issued shares attending the meeting to constitute

a quorum.

In case it appears at any shareholders' meeting that within one hour after the time appointed for the

meeting the number of shareholders attending the meeting does not constitute the quorum, the

meeting, if summoned upon the requisition of shareholders, shall be cancelled. If the meeting had not

been summoned upon the requisition of shareholders, another meeting shall be summoned and a

notice summoning the meeting shall be sent to the shareholders not less than 7 days before the

meeting and at such subsequent meeting no quorum shall be necessary.

Enclosure 4

Page 2 of 2 Pages

At a shareholders’ meeting, the Chairman of the Board of Directors shall preside over the meeting of

shareholders. In the case where the Chairman is absent or unable to perform the duty, the Vice

Chairman shall act as the Chairman of the meeting. If the Vice Chairman does not exist or exists but

unable to perform the duty, the shareholders present shall elect one shareholder to act as the chairman

of the meeting.

3. Voting

Article 33. The resolution of the shareholders' meetings shall require of the following

votes:

(1) In normal cases, they shall be adopted by the majority votes of the shareholders who are

present and are entitled to vote. One share shall have one vote. In case of equality of votes, the

chairman of the meeting shall have a second or casting vote.

(2) In the following cases, they shall be adopted by the votes of not less than three-fourth of the

total votes of shareholders who are present and are entitled to vote:

(a) Sale or transfer of the whole or an essential part of the Company's business to other

person.

(b) Purchase or acceptance of transfer of business of another company or private company

to the Company.

(c) Execution, amendment or termination of a contract in relation to the leasing of the

whole or an essential part of the Company's business, the assignment to any other

person to manage the Company's business or the consolidation of the business with

other persons for the purpose of sharing profit and loss.

(d) Increase of Registered Capital.

(e) Reduction of Registered Capital.

(f) Issuance of Debenture.

(g) Amalgamation.

(h) Dissolution.

(i) Amendment to Memorandum of Association and Articles of Association.

Article 34. A poll may be carried out if so requested by not less than 5 shareholders and

approved by the meeting.

Enclosure 5

Documents and evidence to be declared on the Meeting date

1. Shareholders Attending the Meeting in Person

The Shareholder presents the original of Identification Card or Government Official

Identification Card or passport (for non-Thai nationals) for registration.

2. Proxy

Please use the Proxy Form B under the Notification of Department of Business Development No. 5

B.E. 2007 which is the form providing various items to enable the shareholders to determine the

direction on the required vote of each matter whether or not they agree / disagree / abstain. In

addition, there is a separated column in Agenda on appointing director to enable the shareholder to

exercise the right to vote for appointing each individual director.

Proxy holder submits the proxy form (Enclosure 7) by proceeding as follows:

2.1 Fill in the required information clearly before signing the proxy form (Enclosure 7). Please also

affix the duty stamp of Baht 20 to the Proxy form.

- Ordinary person Please attach a copy of the identification card / passport (for

non-Thai nationals) of the proxy grantor.

- Juristic person Please attach a copy of the Affidavit of the Juristic person and

identification card / passport (for non-Thai nationals) of the

director/s who has/have the authority to sign the proxy.

2.2 All copies of the documents in 2.1 must be certified as true.

2.3 If a shareholder prefers to appoint Siam Makro Public Company Limited’s independent

directors to be the proxy, please appoint:

(1) Mr. Athaporn Khaimarn Independent Director and Chairman of the

Audit Committee

(2) Mr. Chavalit Uttasart Independent Director and Member of the

Audit Committee

(3) Mr. Thira Wipuchanin Independent Director and Member of the

Audit Committee

(4) Dr. Chaiyawat Wibulswasdi Independent Director and Member of the

Audit Committee

(5) Mr. Joti Bhokavanij Independent Director and Member of the

Audit Committee

Information of the Company’s Independent Directors that the shareholders may appoint to be

the proxy is shown in Enclosure 6.

2.4 For your convenience, please deliver the proxy form to Siam Makro Plc. Head Office

located at 3498 2nd

Floor, Lardprao Road, Klongchan Subdistrict, Bangkapi District, Bangkok

10240 at least one day prior to the meeting date.

3. Change of Title / Name / Surname of Meeting Participants

Please present the evidence to verify that change.

Enclosure 6


the proxy

Mr. Athaporn Khaimarn

Position

Age

Education

Address

Personal interest in related

agenda items

Independent Director and Chairman of

the Audit Committee

69 years

• Associate member of the Institute of

Chartered Accountants in Australia

• Associateship in Accounting from

Western Australia Institute of

Technology (Now, Curtin University

of Technology)

Siam Makro Plc., Head Office

3498 2nd

Floor, Lardprao Road,

Klongchan Subdistrict,

Bangkapi District, Bangkok 10240

None

Mr. Chavalit Uttasart

Position

Age

Education

Address


agenda items

Independent Director and Member of

the Audit Committee

65 years

• LL.B. (Second Class Honours),

Chulalongkorn University

• Barrister-At-Law, The Institute of

Legal Education

• Barrister-At-Law, Gray’s Inn, London


3498 2nd




None

Mr. Thira Wipuchanin

Position

Age

Education

Address


agenda items


the Audit Committee

64 years

• B.Sc. in Economic and Business

Administration, University of

Wisconsin-Stevents Point, U.S.A.


3498 2nd




None

Enclosure 6


the proxy (Continued)

Dr. Chaiyawat Wibulswasdi

Position

Age

Education

Address


agenda items


the Audit Committee

67 years

• B.A. Williams College, U.S.A.

• Ph.D. Massachusetts Institute of

Technology, U.S.A.


3498 2nd




None

Mr. Joti Bhokavanij

Position

Age

Education

Address


agenda items


the Audit Committee

71 years

• Fellow of the Association of Chartered

Certified Accounts, England

• Programme for Management

Development, Harvard Business

School, U.S.A.

• Marketing Management Programme,

Stanford University, Graduate School

of Business, U.S.A.


3498 2nd




None

Enclosure 7

Notification of Department of Business Development

Re: Provision of Proxy Forms

(No. 5)

B.E. 2550 (A.D.2007)

-----------------------------------------

Whereas it deemed appropriate to reform the Proxy Forms for any meeting of the share subscribers

and the shareholders of the Limited Public Company to be more suitable.

By virtue of Section 34 of the Limited Public Company Act B.E. 2535 (A.D.1992), the Director –

General of the Department of Business Development, acting as the Registrar hereby issues a

notification as follows:

Clause 1. The Notification of Department of Business Development, Re: Provision of Proxy

Forms (No. 4) B.E. 2549 (A.D.2006) dated September 27, 2006 be repealed.

Clause 2. Three Proxy Forms for any meeting of the share subscribers and the shareholders be

provided as follows:

(1) Form A. being a simple non-complicated form;

(2) Form B. being a form demonstrating the fixed and clear detailed authorization; and

(3) Form C. being a form to be used only by foreign investor appointing a custodian in Thailand

to be the securities depositor and caretaker.

Clause 3. The shareholder being a foreign investor appointing a custodian in Thailand to be the

securities depositor and caretaker may use either Form A or Form B or Form C of the said Proxy

Forms. The other shareholder may use only either Form A or Form B.

Clause 4. The share subscriber or the shareholder of a public company may use the Proxy

Forms prescribed under Notification of Department of Business Development, Re: Provision of

Proxy Form (No. 4) B.E. 2549 (A.D.2006) dated September 27, 2006 having been repealed for the

share subscribers’ meeting and shareholders’ meeting of a public company limited to be held in the

year 2007.

Effective from the date hereof onwards.

Notified on February 2, 2007

(Mr. Kanissorn Nawanukror)

Director-General of Department of Business Development

Registrar

Enclosure 7

Proxy Form A (a simple non-complicated form)

Attachment to the Notification of the Department of Business Development

Re: Provision of Proxy Forms (No. 5) B.E. 2550 (A.D.2007) ____________________

Written at

Date

(1) I/We Nationality

Residing at No. Road Subdistrict/ Kwang

District/ Khet Province Postal Code

(2) Being a shareholder of Siam Makro Public Company Limited

holding the total number of shares, entitled to votes as follows:

ordinary shares, entitled to votes

preferred shares, entitled to votes

(3) I/We hereby appoint

(1) aged years Residing at No.

Road Subdistrict/ Kwang District/ Khet

Province Postal Code or






Province Postal Code

only one of the above persons to be my/our proxy holder to attend and vote in my/our

behalf at the Extraordinary General Shareholders’ Meeting No. 1/2014 held on September 26, 2014 at

3.00 p.m., at Wassana Room of Golden Tulip Sovereign Hotel Bangkok, No. 92 Rama 9 Road,

Bangkapi Subdistrict, Huay Kwang District, Bangkok Metropolis, or on the other date and at the

other place as may be postponed or changed.

I/We shall be liable for any action taken by the proxy holder at the meeting in all respects.

Signed: Proxy Grantor

( )

Signed: Proxy Holder

( )


( )


( )

Remark:

The shareholder shall appoint only one proxy holder to attend and vote at the meeting. The number of shares

may not be allocated to more than one proxy holder in order to separately vote.

Enclosure 7

Proxy Form B (Demonstrating the Fixed and Clear Detailed Authorization)


Re: Provision of Proxy Form (No. 5) B.E. 2550 (A.D.2007) ____________________

Written at

Date




(2) Being a shareholder of Siam Makro Public Company Limited

holding the total number of shares, entitled to votes as follows:

ordinary shares, entitled to votes

preferred shares, entitled to votes
















(4) I/We hereby authorize the proxy holder to vote on my/our behalf in this meeting as

follows:

Agenda 1 To consider and confirm the Annual General Shareholders’ Meeting

No. 21 (after conversion into a public company limited) held on April 23,

2014

(a) The proxy holder shall be entitled to consider and vote on my/our

behalf in all respect as he/she deems appropriate.

(b) The proxy holder shall vote according to my intention as follows:

Agreed Disagreed Abstained

-1-

Enclosure 7

Agenda 2 To consider approving the investment in assets for establishing the new

head office and the connected transaction





Agenda 3 To consider other businesses (if any)





(5) Any vote of the proxy holder not being in compliance with that specified in this Proxy

Form shall be deemed that the said vote is incorrect and is not my vote as a shareholder.

(6) In case I do not specify my intention to vote in any Agenda or unclear specify or in case

the meeting considers or votes in other businesses than those specified above, including in case of an

amendment or addition to any fact, the proxy holder shall be entitled to vote on my/our behalf in all

respect as he/she deems appropriate.

I/We shall be liable for any action taken by the proxy holder at the meeting in all respects,

except in the case where the proxy holder fails to vote in compliance with those specified in the Proxy

Form.


( )


( )


( )


( )

Remark:

1. The shareholder shall appoint only one proxy holder to attend and vote in the meeting. The number of

shares can not be allocated to more than one proxy holder in order to separately vote.

2. Agenda on Appointment of Directors are eligible to appoint all directors or to appoint each individual

director.

3. In case where the agenda to be considered at the meeting exceed those specified above, the Proxy Grantor

can specify additional details in the Continued List of Proxy Form B attached hereto.

-2-

Enclosure 7

The Continued List of Proxy Form B

The proxy of the shareholder of Siam Makro Public Company Limited

At the Extraordinary General Shareholders’ Meeting No. 1/2014 held on September 26, 2014

at 3.00 p.m., at Wassana Room of Golden Tulip Sovereign Hotel Bangkok, No. 92 Rama 9 Road,

Bangkapi Subdistrict, Huay Kwang District, Bangkok Metropolis or on the other date and at the other

place as may be postponed or changed.

__________________________

Agenda No…………………Subject…………………………………….

(a) The proxy holder shall be entitled to consider and vote on my/our behalf in all














Agenda No…………Subject: Appointment of Directors (Continued)

Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


-3-

Enclosure 7

Proxy Form C (To be used only by foreign investor appointing a custodian in Thailand to be

the securities depositor and caretaker)


Re: Provision of Proxy Form (No. 5) B.E. 2550 (A.D.2007) ____________________

Written at

Date




As a business operator as a custodian business as the security depositor and caretaker to

being a shareholder of Siam Makro Public Company Limited

holding the total number of shares and entitled to votes as follows:

ordinary share shares, entitled to votes

preferred share shares, entitled to votes
















-1-

Enclosure 7

3) I/We hereby authorize the proxy holder to vote on my/our behalf in this meeting as follows:

Authorize all the number of shares held and entitled to vote.

Partly authorize as follows:

……………..ordinary shares, entitled to…………………votes

……………..preferred shares, entitled to ………………..votes

Totaling……………………votes.

(4) I/We hereby authorize the proxy holder to vote on my/our behalf in this meeting as follows:

Agenda 1 To consider and confirm the Annual General Shareholders’ Meeting

No. 21 (after conversion into a public company limited) held on April 23,

2014





Agenda 2 To consider approving the investment in assets for establishing the new

head office and the connected transaction





Agenda 3 To consider other businesses (if any)





(5) Any vote of the proxy holder not being in compliance with that specified in this Proxy

Form shall be deemed that the said vote is incorrect and is not my vote as a shareholder.

(6) In case I do not specify my intention to vote in any Agenda or unclear specify or in case

the meeting considers or votes in other businesses than those specified above, including in case of an

-2-

Enclosure 7

amendment or addition to any fact, the proxy holder shall be entitled to vote on my/our behalf in all


I/We shall be liable for any action taken by the proxy holder at the meeting in all respect,

except in the case where the proxy holder fails to vote in compliance with those specified in the Proxy

Form.


( )


( )


( )


( )

Remark:

1. This Proxy Form C applies only for a shareholder whose name appeared in the shareholder register being a

foreign investor appointing a custodian in Thailand as the securities depositor and caretaker.

2. Evidences to be attached to the Proxy Form are:

(1) A power of Attorney from the shareholder authorizing the custodian to sign the Proxy Form on his/her/its

behalf.

(2) A confirmation letter that the person signing the Proxy Form authorized to engage in the custodian

business.

3. The shareholder shall appoint only one proxy holder to attend and vote in the meeting. The number of

shares can not be allocated to more than one proxy holder in order to separately vote.

4. Agenda on Appointment of Directors are eligible to appoint all directors or to appoint each individual

director.

5. In case where the agenda to be considered at the meeting exceed those specified above, the Proxy Grantor

can specify additional details in the Continued List of Proxy Form C attached hereto.

-3-

Enclosure 7

The Continued List of Proxy Form C

The proxy of the shareholder of Siam Makro Public Company Limited

At the Extraordinary General Shareholders’ Meeting No. 1/2014 held on September 26, 2014

at 3.00 p.m., at Wassana Room of Golden Tulip Sovereign Hotel Bangkok, No. 92 Rama 9 Road,

Bangkapi Subdistrict, Huay Kwang District, Bangkok Metropolis or on the other date and at the other

place as may be postponed or changed.

__________________________
















Agenda No…………Subject: Appointment of Directors (Continued)

Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


Director Name:………………………………………..


-4-

Enclosure 8