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MK Restaurant Group Public Company Limited its subsidiaries and its jointly controlled entity Review report and interim financial statements For the three-month period ended 31 March 2013

Independent Auditor’s Report on Review of Interim Financial Information

To the Shareholders of MK Restaurant Group Public Company Limited

I have reviewed the accompanying consolidated statement of financial position of MK

Restaurant Group Public Company Limited, its subsidiaries and its jointly controlled entity

as at 31 March 2013, the related consolidated statements of income, comprehensive

income, changes in shareholders’ equity and cash flows for the three-month period then

ended, as well as the condensed notes to the consolidated financial statements. I have

also reviewed the separate financial information of MK Restaurant Group Public Company

Limited for the same period. Management is responsible for the preparation and

presentation of this interim financial information in accordance with Thai Accounting

Standard 34 Interim Financial Reporting. My responsibility is to express a conclusion on

this interim financial information based on my review.

Scope of review

I conducted my review in accordance with Thai Standard on Review Engagements 2410,

Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

A review of interim financial information consists of making inquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review

procedures. A review is substantially less in scope than an audit conducted in accordance

with Thai Standards on Auditing and consequently does not enable me to obtain assurance

that I would become aware of all significant matters that might be identified in an audit.

Accordingly, I do not express an audit opinion.

Conclusion

Based on my review, nothing has come to my attention that causes me to believe that the

accompanying interim financial information is not prepared, in all material respects, in

accordance with Thai Accounting Standard 34 Interim Financial Reporting.

Emphasis of matter

I draw attention to Note 3 to the financial statements regarding the change in accounting

policy as the result of the adoption of Thai Accounting Standard 12 Income Taxes. My

conclusion is not qualified in respect of this matter.

Other matter

The consolidated statement of financial position of MK Restaurant Group Public Company

Limited, its subsidiaries and its jointly controlled entity, and the separate statement of

financial position of MK Restaurant Group Public Company Limited as at 31 December

2012, presented as comparative information, were audited by another auditor of our firm

who expressed an unqualified opinion on those statements, under his report dated 26

February 2013. The consolidated statements of income, comprehensive income, changes

in shareholders’ equity and cash flows for the three-month period ended 31 March 2012 of

MK Restaurant Group Public Company Limited, its subsidiaries and its jointly controlled

entity, and the separate financial statements of MK Restaurant Group Public Company

Limited for the same period, presented herein as comparative information, were also

reviewed by the aforementioned auditor who concluded, under his report dated 14 May

2012, that nothing had come to his attention that caused him to believe that the interim

financial information was not prepared, in all material respects, in accordance with Thai

Accounting Standard 34 Interim Financial Reporting.

Kamontip Lertwitworatep

Certified Public Accountant (Thailand) No. 4377

Ernst & Young Office Limited

Bangkok: 13 May 2013

DRAFT SUBJECT TO OUTSTANDING DOCUMENTS

MK Restaurant Group Public Company Limited

its subsidiaries and its jointly controlled entity

Statements of financial position

(Unit: Thousand Baht)

31 March 31 December 1 January 31 March 31 December 1 January

Note 2013 2012 2012 2013 2012 2012

(Unaudited (Audited) (Audited) (Unaudited (Audited) (Audited)

but reviewed) (Restated) (Restated) but reviewed) (Restated) (Restated)

Assets

Current assets

Cash and cash equivalents 5 416,724 786,840 440,873 231,936 658,371 336,524

Short-term investments 6 169,806 200,960 131,256 163,459 155,731 131,256

Trade and other receivables 4, 7 59,014 59,640 68,401 119,664 119,874 108,297

Short-term loan to related party 4 - - - 140,000 200,000 170,000

Inventories 152,567 202,821 177,648 143,010 192,929 170,821

Other current assets 58,120 83,069 56,858 50,728 60,192 48,502

Total current assets 856,231 1,333,330 875,036 848,797 1,387,097 965,400

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

Director Director

Rit Thirakomen

Consolidated financial statements

Somchai Hanjitkasem

Separate financial statements




Statements of financial position (continued)



Note 2013 2012 2012 2013 2012 2012



Non-current assets

Advance for building construction 116,618 11,853 - 116,618 11,853 -

Investments in subsidiaries 8 - - - 101,480 101,480 101,480

Investment in joint venture 9 - - - 66,083 66,083 66,083

Advance for share subscription 9 - - - 83,125 - -

Other long-term investment 10 - - - - - -

Property, plant and equipment 11 3,199,235 2,992,827 2,243,548 2,606,913 2,413,766 1,826,320

Intangible assets 12 49,488 50,129 46,585 46,861 47,447 44,842

Leasehold rights 13 397,212 408,227 453,554 372,713 383,288 426,832

Deferred tax assets 3 48,953 45,131 54,225 44,280 42,988 37,857

Deposits 255,286 244,865 185,001 203,522 196,367 155,946

Total non-current assets 4,066,792 3,753,032 2,982,913 3,641,595 3,263,272 2,659,360

Total assets 4,923,023 5,086,362 3,857,949 4,490,392 4,650,369 3,624,760


Director Director

Rit Thirakomen Somchai Hanjitkasem

Consolidated financial statements Separate financial statements







Note 2013 2012 2012 2013 2012 2012



Liabilities and shareholders' equity

Current liabilities

Short-term loan from financial institution 14 1,070,000 850,000 900,000 1,070,000 850,000 900,000

Trade and other payables 4, 15 1,079,825 1,639,755 887,831 969,856 1,488,657 807,734

Short-term loan from related party 4 - - 45,000 - - -

Income tax payable 416,239 298,157 367,758 400,256 290,078 362,898

Dividend payable - 439,200 - - 439,200 -

Current portion of deferred income of membership fee 30,585 28,958 25,309 25,569 24,413 21,922

Other current liabilities 188,218 183,822 158,261 166,020 162,674 141,982

Total current liabilities 2,784,867 3,439,892 2,384,159 2,631,701 3,255,022 2,234,536

Non-current liabilities

Deferred income of membership fee - net of current portion 10,296 9,195 8,937 8,449 7,648 7,191

Provision for long-term employee benefits 16 173,092 165,836 112,961 164,375 157,788 108,136

Total non-current liabilities 183,388 175,031 121,898 172,824 165,436 115,327

Total liabilities 2,968,255 3,614,923 2,506,057 2,804,525 3,420,458 2,349,863


Director Director









Note 2013 2012 2012 2013 2012 2012



Shareholders' equity

Share capital 17

Registered

925,850,000 ordinary shares of Baht 1 each

(31 December 2012: 920,000,000 ordinary shares

of Baht 1 each)

(1 January 2012: 41,036,270 ordinary shares

of Baht 10 each) 925,850 920,000 410,363 925,850 920,000 410,363

Issued and fully paid

720,000,000 ordinary shares of Baht 1 each

(1 January 2012: 41,036,270 ordinary shares

of Baht 10 each) 720,000 720,000 410,363 720,000 720,000 410,363

Retained earnings

Appropriated - statutory reserve 92,000 92,000 41,036 92,000 92,000 41,036

Unappropriated 1,142,301 656,722 899,510 873,867 417,911 823,498

Other component of shareholders' equity 467 2,717 983 - - -

Total shareholders' equity 1,954,768 1,471,439 1,351,892 1,685,867 1,229,911 1,274,897

Total liabilities and shareholders' equity 4,923,023 5,086,362 3,857,949 4,490,392 4,650,369 3,624,760 - - - - - -


Director Director




(Unaudited but reviewed)



Income statements

For the three-month period ended 31 March 2013

(Unit: Thousand Baht except earnings per share expressed in Baht)

Separate

financial statements

Note 2013 2012 2013 2012

(Restated) (Restated)

Revenues

Sales and service income 3,388,868 2,954,109 3,093,475 2,726,455

Other income 27,215 33,861 33,162 40,072

Total revenues 3,416,083 2,987,970 3,126,637 2,766,527

Expenses

Cost of sales and services 1,115,725 977,486 1,124,535 987,537

Selling expenses 1,476,024 1,142,220 1,256,992 1,003,140

Administrative expenses 213,013 150,712 169,656 131,526

Total expenses 2,804,762 2,270,418 2,551,183 2,122,203

Profit before finance cost and

income tax expenses 611,321 717,552 575,454 644,324

Finance cost (10,024) (6,314) (10,024) (5,921)

Profit before income tax expenses 601,297 711,238 565,430 638,403

Income tax expenses 19 (115,718) (157,139) (109,474) (140,688)

Profit for the period 485,579 554,099 455,956 497,715

Basic earnings per share 20

Profit for the period (Baht) 0.67 1.35 0.63 1.21

Weighted average number of ordinary shares

(Thousand shares) 720,000 410,955 720,000 410,955


Director Director

Rit Thirakomen

Consolidated


Somchai Hanjitkasem





Statements of comprehensive income



Separate


2013 2012 2013 2012


Profit for the period 485,579 554,099 455,956 497,715

Other comprehensive income:

Exchange differences on translation

of financial statements in foreign currency (2,250) 432 - -

Other comprehensive income for the period (2,250) 432 - -

Total comprehensive income for the period 483,329 554,531 455,956 497,715


Director Director

Rit Thirakomen

Consolidated


Somchai Hanjitkasem





Statements of cash flows



Separate


2013 2012 2013 2012

Cash flows from operating activities

Profit before tax 601,297 711,238 565,430 638,403

Adjustments to reconcile profit before tax to

net cash provided by (paid from) operating activities:

Gain on sales of short-term investments (1,104) (425) (807) (425)

Loss (gain) on revaluation of short-term investments 155 (6) (24) (6)

Loss from damaged inventories 91 31 91 31

Amortisation of prepaid expenses 4,625 4,255 4,247 4,025

Depreciation and amortisation 139,985 123,607 112,730 103,335

Allowance for impairment loss 11,914 - - -

Gain on disposals of equipment (352) (40) (327) (40)

Loss on write-off of equipment - 1,864 - 1,860

Provision for long-term employee benefits 7,256 3,895 6,587 3,644

Realisation of gift voucher, net of sales

and cash received during the period (10,754) (9,861) (10,591) (9,761)

Realisation of deferred income, net of sales

and cash received during the period (8,827) (7,767) (7,488) (6,806)

Interest income (16) (1,745) (1,552) (3,198)

Interest expenses 10,024 6,314 9,990 5,921

Profit from operating activities before

changes in operating assets and liabilities 754,294 831,360 678,286 736,983


Director Director

Rit Thirakomen

Consolidated


Somchai Hanjitkasem





Statements of cash flows (continued)



Separate


2013 2012 2013 2012

Cash flows from operating activities (continued)

Operating assets (increase) decrease

Trade and other receivables 340 11,703 (76) (21,057)

Inventories 50,163 29,514 49,828 29,757

Other current assets 11,977 17,340 (1,765) 13,760

Deposits (10,421) (27,754) (7,155) (22,374)

Operating liabilities increase (decrease)

Trade and other payables (477,206) (30,338) (456,971) (26,461)

Other current liabilities 15,150 6,432 13,937 5,957

Deferred income 11,555 9,741 9,445 8,827

Cash from operating activities 355,852 847,998 285,529 725,392

Cash received from interest income 302 1,513 1,838 2,967

Cash paid for interest expenses (10,138) (6,534) (10,103) (6,141)

Cash paid for corporate income tax (1,458) (1,135) (588) (485)

Net cash from operating activities 344,558 841,842 276,676 721,733

Cash flows from investing activities

Decrease in short-term loan to related party - - 60,000 20,000

Decrease (increase) in short-term investments 32,103 78,490 (6,897) 78,500

Cash paid in advance for purchase of

plant and equipment (104,765) (24,947) (104,765) (24,287)

Cash paid for investment in joint venture - - (83,125) -

Cash paid for purchases of plant and equipment (426,451) (229,330) (355,035) (165,738)

Cash paid for purchases of software (1,424) (1,363) (1,333) (807)

Cash paid for leasehold right - (111) - (111)

Proceeds from disposals of equipment 7,313 2,963 7,244 2,963

Net cash used in investing activities (493,224) (174,298) (483,911) (89,480)


Director Director

Rit Thirakomen

Consolidated


Somchai Hanjitkasem





Statements of cash flows (continued)



Separate


2013 2012 2013 2012

Cash flows from financing activities

Decrease (increase) in short-term loan from

financial institution 220,000 (370,000) 220,000 (370,000)

Dividend paid (439,200) - (439,200) -

Cash received from share capital issues - 4,145 - 4,145

Net cash used in financing activities (219,200) (365,855) (219,200) (365,855)

Increase (decrease) in translation adjustment (2,250) 432 - -

Net increase (decrease) in cash and cash equivalents (370,116) 302,121 (426,435) 266,398

Cash and cash equivalents at beginning of period 786,840 440,873 658,371 336,524

Cash and cash equivalents at end of period 416,724 742,994 231,936 602,922

Supplement disclosure of cash flows information

Non-cash transactions

Increase (decrease) in accounts payable for purchases

of plant and equipment (74,263) 1,430 (54,735) -4,449


Director Director

Rit Thirakomen


Consolidated

Somchai Hanjitkasem





Statements of changes in shareholders' equity



Other

component

Issued and Appropriated - of equity

paid-up statutory Translation

share capital reserve Unappropriated adjustment Total

Balance as at 31 December 2011

- as previously reported 410,363 41,036 845,285 983 1,297,667

Cumulative effect of change in accounting

policy for income tax (Note 3) - - 54,225 - 54,225


- as restated 410,363 41,036 899,510 983 1,351,892

Share capital issued (Note 17) 4,145 - - - 4,145

Total comprehensive income for the period -

restated (Note 3) - - 554,099 432 554,531

Balance as at 31 March 2012 414,508 41,036 1,453,609 1,415 1,910,568


- as previously reported 720,000 92,000 611,591 2,717 1,426,308


policy for income tax (Note 3) - - 45,131 - 45,131


- as restated 720,000 92,000 656,722 2,717 1,471,439

Total comprehensive income for the period - - 485,579 (2,250) 483,329

Balance as at 31 March 2013 720,000 92,000 1,142,301 467 1,954,768


Director Director



Retained earnings





Statements of changes in shareholders' equity (continued)



Issued and Appropriated -

paid-up statutory

share capital reserve Unappropriated Total


- as previously reported 410,363 41,036 785,641 1,237,040


policy for income tax (Note 3) - - 37,857 37,857

Balance as at 31 December 2011 - as restated 410,363 41,036 823,498 1,274,897

Share capital issued (Note 17) 4,145 - - 4,145

Total comprehensive income for the period - restated

(Note 3) - - 497,715 497,715

Balance as at 31 March 2012 414,508 41,036 1,321,213 1,776,757


- as previously reported 720,000 92,000 374,923 1,186,923


policy for income tax (Note 3) - - 42,988 42,988

Balance as at 31 December 2012 - as restated 720,000 92,000 417,911 1,229,911

Total comprehensive income for the period - - 455,956 455,956

Balance as at 31 March 2013 720,000 92,000 873,867 1,685,867


Director Director



Retained earnings


1……………………....………Director

Rit Thirakomen ……………………....………Director

Somchai Hanjitkasem



Notes to consolidated interim financial statements


1. General information

MK Restaurant Group Company Limited (“the Company”) is a limited company

incorporated and domiciled in Thailand and subsequently transformed to be a public

limited company under Thai law. The Company is principally engaged in sale of foods

and beverages through restaurants, under the trademark “MK Restaurants”. The

registered office of the Company is at 589/164 Central City Tower, Bangna-trad Road,

Bangna, Bangkok.

As at 31 March 2013, the Company operates 365 branches (31 December 2012:

360 branches).

The Company registered with the Ministry of Commerce for the change of the status

of the Company to be a public limited company under the Public Limited Companies

Act and also registered for the change of its name from “MK Restaurant Company

Limited” to “MK Restaurant Group Public Company Limited” on 23 August 2012.

1.1 Basis for the preparation of interim financial statements

These interim financial statements are prepared in accordance with Thai Accounting

Standard 34 (revised 2009) “Interim Financial Reporting”, with the Company

choosing to present condensed interim financial statements. However, the Company

has presented the statements of financial position, income, comprehensive income,

changes in shareholders’ equity, and cash flows in the same format as that used for

the annual financial statements.

The interim financial statements are intended to provide information additional to

that included in the latest annual financial statements. Accordingly, they focus on

new activities, events, and circumstances so as not to duplicate information

previously reported. These interim financial statements should therefore be read in

conjunction with the latest annual financial statements.

The interim financial statements in Thai language are the official statutory financial

statements of the Company. The interim financial statements in English language

have been translated from the Thai language interim financial statements.

1.2 Basis of consolidation

These consolidated financial statements include the financial statements of the

Company, its subsidiaries and its jointly controlled entity and have been prepared on

the same basis as that applied for the consolidated financial statements for the year

ended 31 December 2012 with no structural changes related to subsidiaries during

the current period.


2……………………....………Director


Somchai Hanjitkasem

1.3 Application of new accounting standards during the period

The Federation of Accounting Professions issued the following accounting

standards, financial reporting standard, accounting standard interpretations and

accounting treatment guidance that are effective for fiscal years beginning on or

after 1 January 2013.

Accounting standards:

TAS 12 Income Taxes

TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of

Government Assistance

TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates

Financial Reporting Standard:

TFRS 8 Operating Segments

Accounting Standard Interpretations:

TSIC 10 Government Assistance - No Specific Relation to

Operating Activities

TSIC 21 Income Taxes - Recovery of Revalued Non-Depreciable

Assets

TSIC 25 Income Taxes - Changes in the Tax Status of an Entity

or its Shareholders

Accounting Treatment Guidance for Transfers of Financial Assets

These accounting standards, financial reporting standard, accounting standard

interpretations and accounting treatment guidance do not have any significant

impact on the financial statements, except for the following accounting standard.

TAS 12 Income Taxes

This accounting standard requires an entity to identify temporary differences arising

from differences between the carrying amount of an asset or liability in the statement

of financial position and its tax base in order to recognise the tax effects as deferred

tax assets or liabilities subjecting to certain recognition criteria. The Company and

its subsidiaries have changed this accounting policy in this current quarter and

restated the prior year’s financial statements, presented as comparative information,

as though the Company and its subsidiaries had initially recognised the tax effects

as deferred tax assets or liabilities. The cumulative effect of this change in

accounting policy has been presented in Note 3 to the financial statements.


3……………………....………Director


Somchai Hanjitkasem

1.4 Significant accounting policies

The interim financial statements are prepared using the same accounting policies

and methods of computation as were used for the financial statements for the year

ended 31 December 2012, except for the change in the accounting policies due to

the adoption of TAS 12 Income Taxes as follows:

Income tax

Income tax expense represents the sum of corporate income tax currently payable

and deferred tax.

Current tax

Current income tax is provided in the accounts at the amount expected to be paid to

the taxation authorities, based on taxable profits determined in accordance with tax

legislation.

Deferred tax

Deferred income tax is provided on temporary differences between the tax bases of

assets and liabilities and their carrying amounts at the end of each reporting period,

using the tax rates enacted at the end of the reporting period.

The Company and its subsidiaries recognise deferred tax liabilities for all taxable

temporary differences while they recognise deferred tax assets for all deductible

temporary differences and tax losses carried forward to the extent that it is probable

that future taxable profit will be available against which such deductible temporary

differences and tax losses carried forward can be utilised.

At each reporting date, the Company and its subsidiaries review and reduce the

carrying amount of deferred tax assets to the extent that it is no longer probable that

sufficient taxable profit will be available to allow all or part of the deferred tax asset

to be utilised.

The Company and its subsidiaries record deferred tax directly to shareholders' equity

if the tax relates to items that are recorded directly to shareholders' equity.


4……………………....………Director


Somchai Hanjitkasem

2. New accounting standards issued during the period and not yet effective

The Federation of Accounting Professions has issued notifications, which are

published in the Royal Gazette during the current period, mandating the use of

financial reporting standard, accounting standard interpretation and financial

reporting standard interpretations as follows:

Effective date

Financial Reporting Standard:

TFRS 4 Insurance Contracts 1 January 2016

Accounting Standard Interpretation:

TSIC 29 Service Concession Arrangements: Disclosures 1 January 2014

Financial Reporting Standard Interpretations:

TFRIC 1 Changes in Existing Decommissioning,

Restoration and Similar Liabilities

1 January 2014

TFRIC 4 Determining whether an Arrangement contains

a Lease

1 January 2014

TFRIC 5 Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation

Funds

1 January 2014

TFRIC 7 Applying the Restatement Approach under

TAS 29 Financial Reporting in Hyperinflationary

Economies

1 January 2014

TFRIC 10 Interim Financial Reporting and Impairment 1 January 2014

TFRIC 12 Service Concession Arrangements 1 January 2014

TFRIC 13 Customer Loyalty Programmes 1 January 2014

The management of the Company has assessed the effect of the above financial

reporting standard, accounting standard interpretation and financial reporting

standard interpretations and believes that they are not relevant to the business of

the Company, except TFRIC 1, TFRIC 10 and TFRIC 13, for which the

management is still evaluating the first-year impact to the financial statements and

has yet to reach a conclusion.


5……………………....………Director


Somchai Hanjitkasem

3. Cumulative effect of the change in accounting policies due to the adoption of

new accounting standard

During the current period, the Company and its subsidiaries made the change

described in Note 1.4 to the financial statements to their significant accounting

policies, as a result of the adoption of TAS 12 Income Taxes. The cumulative effect

of the change in the accounting policies has been separately presented in the

statements of changes in shareholders’ equity.

The amounts of adjustments affecting the statements of financial position and the

income statements are summarised below.



31 March

2013

31 December

2012

1 January

2012

31 March

2013

31 December

2012

1 January

2012

Statements of financial

position

Increase in deferred tax

assets 48,953 45,131 54,225 44,280 42,988 37,857

Increase in unappropriated

retained earnings 48,953 45,131 54,225 44,280 42,988 37,857



For the three-month periods ended For the three-month periods ended

31 March 2013 31 March 2012 31 March 2013 31 March 2012

Income statements

Increase (decrease) in income tax

expenses (3,822) 4,919 (1,292) 1,334

Increase (decrease) in basic earnings per

share (Baht) (0.005) 0.012 (0.002) 0.003


6……………………....………Director


Somchai Hanjitkasem

4. Related party transactions

During the periods, the Company, its subsidiaries and its jointly controlled entity had

significant business transactions with related parties. Such transactions, which are

summarised below, arose in the ordinary course of business and were concluded on

commercial terms and bases agreed upon between the Company, its subsidiaries

and its jointly controlled entity and those related parties.

(Unit: Million Baht)

For the three-month periods ended 31 March

Consolidated


Separate

financial statements Transfer pricing policy

2013 2012 2013 2012

Transactions with subsidiaries

(Eliminated from the consolidated financial

statements)

Sales of goods - - 167 143 Cost plus margin at the rate of 7%

Sublease and subservice income - - 5 4 At the rate stipulated in the

agreements

Management service income - - 3 3 At the rates of 5% of sales and

service income (after output VAT

deduction) with a maximum of

Baht 1 million per annum

Interest income - - 2 1 At the rate as stipulated on

promissory note of a commercial

bank (2012: At the rate of one

year fixed deposit rate of a

Commercial bank plus 0.5% per

annum)

Disposals of fixed assets - - 5 2 Net book value plus margin

Training expenses - - 25 28 Market price

Transactions with related companies

Royalty fee income 1 1 1 1 At the rate of 0.5% of gross sales

per month

Royalty fee expenses 9 7 - - At the rate of 2% of net sales per

month

Rental expenses for operating

equipment 8 7 6 6

Market price

Rental expenses for land and

construction

4 - 4 - At the rate stipulated in the

agreement

Purchases of fixed assets - 1 - 1 Market price


7……………………....………Director


Somchai Hanjitkasem

As at 31 March 2013 and 31 December 2012, the balances of the accounts between

the Company, its subsidiaries and its jointly controlled entity and those related

parties are as follows:


Consolidated


Separate


31 March

2013

31 December

2012

31 March

2013

31 December

2012

Trade and other receivables -

related parties (Note 7)

Subsidiary - - 75,281 70,719

Related companies (related

by common directors) 1,253 1,106 1,082 1,106

Total trade and other

receivables - related parties 1,253 1,106 76,363 71,825

Other accounts payable -

related parties (Note 15)

Subsidiaries - - 10,244 10,557

Related companies (related

by common directors) 10,198 9,493 4,330 4,382

Total other accounts payable -

related parties 10,198 9,493 14,574 14,939

Loan to related party and loan from related party

As at 31 March 2013 and 31 December 2012, the balance of loans between the

Company, its subsidiaries and its jointly controlled entity and those related parties

and the movements are as follows:



Balance as at Balance as at

Loan to related party Related by

31 December

2012 Increase Decrease

31 March

2013

MK Interfood Co., Ltd. Subsidiary 200,000 - (60,000) 140,000

Total 200,000 - (60,000) 140,000


8……………………....………Director


Somchai Hanjitkasem


Consolidated financial statements/separate financial statements

Balance as at Balance as at

Loan from related party Related by

31 December

2012 Increase Decrease

31 March

2013

MK Worldwide Co., Ltd. Related company

(related by

common

shareholders) - 70,000 (70,000) -

Total - 70,000 (70,000) -

a) As at 31 March 2013, the Company granted a loan in the form of promissory

note of Baht 140 million (31 December 2012: Baht 200 million) to MK Interfood

Company Limited, a subsidiary. The loan is unsecured, carrying interest at the

rate as stipulated on promissory note of a commercial bank and due for

repayment at call.

b) During the period, the Company obtained a loan in form of promissory note of

Baht 70 million from MK Worldwide Company Limited, a related party. The loan

is unsecured, carrying interest at the rate of one year fixed deposit rate of a

commercial bank plus 0.5 percent per annum and due for repayment at call.

However, the Company repaid such loan in full on 30 January 2013.

Significant agreements with related parties

Franchise agreement for use of trademark, servicemark and license to operate

On 10 February 1994, the Company entered into a franchise agreement with Plenus-

MK Limited, a related party in Japan, in order to grant the latter the right to use the

trademark and the servicemark of “MK Restaurants” in its operating of the Thai-style

Sukiyaki restaurants in Japan. An initial franchise fee was Yen 25 million which was

fully paid to the Company in 2002. A monthly royalty fee is charged at a rate of 0.5% of

gross sales. The agreement shall continue for a term of three years, and thereafter

shall be automatically renewed on a three-year basis until being terminated by either

party by giving a written notice 180 days prior to the expiration of such contract.


9……………………....………Director


Somchai Hanjitkasem

Management service agreement

On 1 March 2006, the Company entered into a management service agreement with

MK Interfood Company Limited (“MKI”), whereby the Company agreed to provide

management service to MKI in areas of branch operations, business development,

engineering, procurement, marketing, accounting and finance, human resources and

quality assurance. MKI agreed to pay management fees to the Company at a rate of

5% of sales and service income (after output VAT deduction) with a maximum of

Baht 1 million per month. The agreement is effective for the period of two years and

shall be automatically extended for another two years until MKI gives a written notice

of termination three months prior to its expiration.

Sublease and subservice agreements

The Company has entered into several sublease and subservice agreements,

granting seven leasehold rights to MK Interfood Company Limited (“MKI”). Sublease

and subservice fees are charged according to the terms of the agreements. The

agreements are effective for a period of three years and will be renewed

automatically for another three years unless MKI has breached them.

Land, building and warehouse lease agreement

The Company has entered into a lease agreement for lease of land, building and

warehouse with Global Asset Development Co., Ltd. (formerly known as “MK Global

Co., Ltd.”), whereby the latter agrees to lease land and construction thereon under

six title deeds to the Company and the Company agrees to pay the rental fee to

Global Asset Development Co., Ltd. in a total amount of Baht 1,467,438 per month,

effective from 1 January 2012 to 31 December 2014. The agreement states that the

Company shall begin to pay the monthly rent from 1 November 2012 onwards. In

addition, the Company shall give a written notice to extend the agreement at least 90

days prior to the expiry date.

Land and distribution center building lease agreement

On 1 March 2013, the Company has entered into a lease agreement for lease of land

and distribution center building with Global Asset Development Co., Ltd., whereby

the latter agrees to lease land and distribution center building to the Company and

the Company agrees to pay the rental fee to Global Asset Development Co., Ltd. at

the rate stipulated in the agreement. The lease agreement is for a period of 20

years, effective from 1 November 2013 to 31 October 2033. The agreement states

that the Company shall begin to pay the monthly rent from 1 November 2013

onwards. In addition, the Company shall give a written notice to extend the

agreement at least 90 days prior to the expiry date.


10……………………....………Director


Somchai Hanjitkasem

Directors and management’s benefits

During the three-month periods ended 31 March 2013 and 2012, the Company, its

subsidiaries and its jointly controlled entity had employee benefit expenses payable

to their directors and management as below.


Consolidated financial statements /


For the three-month periods

ended 31 March

2013 2012

Short-term employee benefits 30 24

Post-employment benefits 5 1

Total 35 25

5. Cash and cash equivalents

As at 31 March 2013 and 31 December 2012, cash and equivalents consist of the

following:


Consolidated


Separate


31 March

2013

31 December

2012

31 March

2013

31 December

2012

Cash on hand 100,912 155,106 86,593 139,184

Current deposits and savings

deposits 315,812 631,734 145,343 519,187

Total 416,724 786,840 231,936 658,371

As at 31 March 2013, bank deposits in savings accounts carried interests between

0.65 and 0.75 percent per annum (31 December 2012: between 0.60 and 0.63

percent per annum).


11……………………....………Director


Somchai Hanjitkasem

6. Short-term investments

Movements in the short-term investments in trading securities account during the

three-month period ended 31 March 2013 are summarised below.


Consolidated

financial

statements

Separate

financial

statements

Balance as at 1 January 2013 200,960 155,731

Cash paid for short-term investments in

trading securities during the period - at

cost 1,647,300 1,636,300

Sales during the period - at cost

Proceeds from sales (1,679,403) (1,629,403)

Gain on sales 1,104 807

Total (1,678,299) (1,628,596)

Gain (loss) from change in value (155) 24

Balance as at 31 March 2013 169,806 163,459

7. Trade and other receivables


Consolidated


Separate


31 March 31 December 31 March 31 December

2013 2012 2013 2012

Trade accounts receivable -

related parties

Aged on the basis of due dates

Not yet due - - 67,322 64,651

Total trade accounts receivable -

related parties - - 67,322 64,651

Trade accounts receivable -

unrelated parties

Aged on the basis of due dates

Not yet due 34,748 32,721 22,463 24,890

Total trade accounts receivable -

unrelated parties 34,748 32,721 22,463 24,890

Total trade accounts receivable 34,748 32,721 89,785 89,541


12……………………....………Director


Somchai Hanjitkasem


Consolidated


Separate


31 March 31 December 31 March 31 December

2013 2012 2013 2012

Other receivables

Other receivables - related parties 1,253 1,106 9,041 7,174

Advances 11,087 9,686 9,561 8,563

Others 11,926 16,127 11,277 14,596

Total other receivables 24,266 26,919 29,879 30,333

Total trade and other receivables 59,014 59,640 119,664 119,874

8. Investments in subsidiaries

Details of investments in subsidiaries as presented in the separate financial

statements are as follows:


Paid-up capital Shareholding percentage Cost

31 March 31 December 31 March 31 December 31 March 31 December

Company’s name 2013 2012 2013 2012 2013 2012

(%) (%)

MK Interfood Company

Limited 150,000 150,000 100 100 49,050 49,050

MK Service Training Center

Company Limited 35,000 35,000 100 100 52,430 52,430

Total 101,480 101,480


13……………………....………Director


Somchai Hanjitkasem

9. Investment in joint venture



Jointly controlled

entity's name

Nature of

business Shareholding percentage Cost

31 March

2013

31 December

2012

31 March

2013

31 December

2012

(%) (%)

Plenus & MK PTE LTD Restaurant 50 50 66,083 66,083

Total 66,083 66,083

On 26 February 2013, the Board of Directors’ Meeting of the Company passed a

resolution to approve an additional investment in the share capital increase of Plenus

and MK PTE LTD. in the proportion of the Company of SGD 3,500,000. The

Company’s shareholding remains at 50 percent of share capital; and the Company

paid for the share capital increase on 27 March 2013.

However, as at 31 March 2013, such joint venture had not registered the change of

its share capital. Therefore, the Company presented cash for share capital increase

totaling Baht 83.1 million as “Advance for share subscription” under the non-current

assets in the statement of financial position.

10. Other long-term investment


Consolidated financial

statements/Separate financial

statements

Other investment

Oversea non-marketable securities - cost 7,278 7,278

Less: Allowance for impairment (7,278) (7,278)

Other investment - net - -

Total other long-term investment - net - -


14……………………....………Director


Somchai Hanjitkasem

11. Property, plant and equipment

Movements in the property, plant and equipment account during the three-month

period ended 31 March 2013 are summarises below. (Unit: Thousand Baht)

Consolidated

financial

statements

Separate

financial

statements

Net book value as at 1 January 2013 2,992,827 2,413,766

Acquisitions - at cost

Decrease in accounts payable for

purchases of equipment during the period (74,263) (54,735)

Cash paid for acquisitions of plant and equipment 426,451 355,035

Total 352,188 300,300

Disposals - net book value at disposal date

Proceeds from disposals of equipment (7,313) (7,244)

Gain on disposals of equipment 352 327

Total (6,961) (6,917)

Depreciation for the period (126,905) (100,236)

Allowance for impairment loss for the period (11,914) -

Net book value as at 31 March 2013 3,199,235 2,606,913

The Company has mortgaged land with net book value of approximately Baht 108

million as at 31 March 2013 as collateral against overdraft facilities granted from a

financial institution (31 December 2012: Baht 108 million).


15……………………....………Director


Somchai Hanjitkasem

12. Intangible assets

Movements in the intangible assets account during the three-month period ended

31 March 2013 are summarised below.


Consolidated

financial

statements

Separate

financial

statements

Net book value as at 1 January 2013 50,129 47,447

Acquisitions during the period - at cost 1,424 1,333

Amortisation for the period (2,065) (1,919)

Net book value as at 31 March 2013 49,488 46,861

13. Leasehold rights

Movements in the leasehold rights account during the three-month period ended

31 March 2013 are summarised below.


Consolidated

financial

statements

Separate

financial

statements

Net book value as at 1 January 2013 408,227 383,288

Amortisation for the period (11,015) (10,575)

Net book value as at 31 March 2013 397,212 372,713

As at 31 March 2013, leasehold rights of the Company with aggregate net book

value of Baht 38 million (31 December 2012: Baht 39 million) were mortgaged to a

secure long-term loan facilities granted by a commercial bank. However, as at 31

March 2013 and 31 December 2012, the Company had no outstanding balance of

long-term loan from bank.


16……………………....………Director


Somchai Hanjitkasem

14. Short-term loan from financial institution

Short-term loan from financial institution is loan in form of promissory note bearing

interest at the rate as stipulated in the agreement and is guaranteed by the

Company's directors.

15. Trade and other payables


Consolidated


Separate


31 March

2013

31 December

2012

31 March

2013

31 December

2012

Trade accounts payable - unrelated

parties 309,443 518,469 303,887 510,585

Other accounts payable - related

parties 10,198 9,493 14,574 14,939

Other accounts payable - unrelated

parties (purchases of fixed assets) 155,396

238,006 126,219 187,936

Accrued expenses 576,840 846,412 499,066 749,294

Others 27,948 27,375 26,110 25,903

Total 1,079,825 1,639,755 969,856 1,488,657

16. Provision for long-term employee benefits

Movements of provision for long-term employee benefits for the three-month period

ended 31 March 2013 are summarised below.



Retirement

benefits plan

Long service

awards plan Total

As at 31 December 2012 139,315 26,521 165,836

Current service cost 4,208 1,362 5,570

Interest cost 1,425 261 1,686

As at 31 March 2013 144,948 28,144 173,092


17……………………....………Director


Somchai Hanjitkasem



Retirement

benefits plan

Long service

awards plan Total

As at 31 December 2012 132,752 25,036 157,788

Current service cost 3,794 1,190 4,984

Interest cost 1,357 246 1,603

As at 31 March 2013 137,903 26,472 164,375

Long-term employee benefit expenses included in the profit or loss for the three-

month periods ended 31 March 2013 and 2012 amounted to Baht 7.3 million and

Baht 3.9 million, respectively (separate financial statements: Baht 6.6 million and

Baht 3.6 million, respectively).

17. Share capital

17.1 On 7 March 2012, the Extraordinary Meeting of Shareholders of the Company passed

a special resolution to increase the registered share capital of the Company from Baht

410.4 million (41.04 million ordinary shares, at Baht 10 per share) to Baht 414.5 million

(41.45 million ordinary shares, at Baht 10 per share). The Company registered such

increase share capital with the Ministry of Commerce on 19 March 2012.

17.2 On 18 September 2012, the Extraordinary Meeting of Shareholders of the Company

passed special resolutions as the follows:

17.2.1 To change the par value of the Company’s ordinary shares from Baht 10 per

share to Baht 1 per share, resulting in an increase in the number of ordinary

shares from 41,450,800 shares to 414,508,000 shares. The Company

registered the change in the par value of the Company’s ordinary shares with

the Ministry of Commerce on 25 September 2012.

17.2.2 To increase the registered share capital of the Company from Baht 414.5

million (414.5 million ordinary shares, at Baht 1 per share after the change in

the par value as discussed in Note 17.2.1) to Baht 920 million (920 million

ordinary shares, at Baht 1 per share) by issuing 505,492,000 new ordinary

shares with a par value of Baht 1 per share. The Company registered the

increase of its registered share capital with the Ministry of Commerce on 27

September 2012.


18……………………....………Director


Somchai Hanjitkasem

17.2.3 To allocate 505,492,000 new ordinary shares as follows:

1) 305,492,000 shares to be offered to the existing shareholders in

proportion to their shareholding in the Company (rights offering) with a

subscription ratio of 1 new share for every 1.35685386196 existing

shares with an offer price of Baht 1 per share as a par value. The period

for subscription and payment was between and 19 to 25 September

2012.

During such period, the Company received payment amounting to Baht

305,492,000 for 305,492,000 shares of additional share capital. As a

result, issued and paid-up share capital of the Company equaled Baht

720 million (720 million ordinary shares, at Baht 1 per share). The

Company registered the increase of its paid-up share capital with the

Ministry of Commerce on 27 September 2012.

2) 180,000,000 shares to be offered to the public for the first time and

assigned to a committee which is authorised to determine conditions

and other details relevant to the allocation of shares including the

authority to take any actions necessary or incidental to the sale of

shares in all respects, including the appointment of a distributor and

underwriter. The committee is also responsible for the preparation of

requests and supporting documents which are to be submitted to the

Securities and Exchange Commission and other agencies involved as

well as other agreements that are relevant to such operations.

3) 20,000,000 shares to be reserved for the exercise of warrants that the

Company issued and offered to the management (including the

management in the director position) and employees of the Company

and/or employees of subsidiaries of the Company.

17.3 On 3 January 2013, the Extraordinary Meeting of Shareholders of the Company

passed special resolutions as follows:

17.3.1 To decrease the registered share capital of the Company from Baht 920

million (920 million ordinary shares, at Baht 1 per share) to Baht 720 million

(Baht 720 million ordinary shares, at Baht 1 per share) in order to cut

registered shares that have not been issued or cannot be issued before the

capital increase.

17.3.2 To increase the registered share capital of the Company from Baht 720

million to Baht 925.85 million (925.85 million ordinary shares, at Baht 1 per

share) by issuing 205,850,000 new ordinary shares with a par value of Baht 1

per share. The Company registered the increase of its registered share

capital with the Ministry of Commerce on 8 January 2013.


19……………………....………Director


Somchai Hanjitkasem

18. Warrants

On 18 September 2012, the Extraordinary Meeting of Shareholders of the Company

passed a special resolution to issue and offer 20,000,000 registered warrants (the

warrants are exercisable within 5 years after the warrants are issued with the

exercise price of Baht 1 per 1 ordinary share) to the management including the

management in the director position and employees of the Company and/or

employees of subsidiaries of the Company at free of charge. Such warrants identify

the name of the holder and are non-transferable unless being transferred as

inheritance or transferred to heirs or legal representatives or transferred in any case

deemed appropriate by a committee. The warrants are to be a reward for the work of

the management and staff as well as for the warrant holders to take part in the

Company’s ownership. The Company will allocate the warrants to its owners within

one year from the date of approval for issuance of warrants from the meeting of

shareholders of the Company.

On 26 February 2013, the Board of Director’s Meeting of the Company passed a

resolution to amend type of warrants to be specific name and non-transferrable

warrant. The transfer of warrant can be conducted only in the case when the

management and employees pass away.

As at 31 March 2013, the Company has not yet allocated the warrants to the

management and employees of the Company.

19. Income tax

Interim corporate income tax was calculated on profit before income tax for the

period, using the estimated effective tax rate for the year.

Income tax expenses for the three-month periods ended 31 March 2013 and 2012

are made up as follows:


Consolidated


Separate


2013 2012 2013 2012


Current income tax:

Interim corporate income tax charge 119,540 152,220 110,766 139,354

Deferred tax:

Relating to origination and reversal

of temporary differences (3,822) 4,919 (1,292) 1,334

Income tax expenses reported in

the income statements 115,718 157,139 109,474 140,688


20……………………....………Director


Somchai Hanjitkasem

20. Earnings per share

Basic earnings per share is calculated by dividing profit for the periods (excluding

other comprehensive income) by the weighted average number of ordinary shares in

issue during the period, after adjusting the number of ordinary shares in proportion

to the change in the number of shares as a result of the change in par value from

Baht 10 each to Baht 1 each as discussed in Note 17 to the financial statements.

The number of ordinary shares is adjusted as if the changes in number of shares

and per value had occurred at the beginning of the earliest period reported.

For the three-month periods ended 31 March

Consolidated


Separate


2013 2012 2013 2012


Profit for the period (Thousand Baht) 485,579 554,099 455,956 497,715

Number of ordinary shares after reflecting

the result of change in par value

(Thousand shares) 720,000 414,508 720,000 414,508

Weighted average number of ordinary

shares (Thousand shares) 720,000 410,955 720,000 410,955

Basic earnings per share (Baht) 0.67 1.35 0.63 1.21

21. Operating segment information

Operating segment information is reported in a manner consistent with the internal

reports that are regularly reviewed by the chief operating decision maker in order to

make decisions about the allocation of resources to the segment and assess its

performance.

For management purposes, the Company, its subsidiaries and its jointly controlled

entity are organised into business untils on their products and services which are

carried on in geographical areas in Thailand and oversea. There are 2 reportable

segments as follows:

(1) restaurant (Thailand and Singapore)

(2) training service providers (Thailand)

No operating segments have been aggregated to form the above reportable

operating segments.


21……………………....………Director


Somchai Hanjitkasem

The chief operating decision maker monitors the operating results of the business

units separately for the purpose of making decisions about resource allocation and

assessing performance. Segment performance is measured based on operating

profit or loss and on a basis consistent with that used to measure operating profit or

loss in the financial statements. However, financing activities (including finance costs

and finance income) and income taxes of the Company, its subsidiaries and its

jointly controlled entity are managed on a Group basis and are not allocated to

operating segments.

Transfer prices between operating segments are on an arm's length basis in a

manner similar to transactions with third parties.

Inter-segment revenues are eliminated on consolidation.

The following tables present revenue and profit information regarding the operating

segments of the Company, its subsidiaries and its jointly controlled entity for the

three-month periods ended 31 March 2013 and 2012.


Thailand Singapore

Restaurant

Training service

provider Restaurant Total segments

Adjustments

and eliminations Consolidated

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Revenues

External customers 3,373 2,947 - - 16 7 3,389 2,954 - - 3,389 2,954

Inter-segment 172 143 29 30 - - 201 173 (201) (173) - -

Total revenues 3,545 3,090 29 30 16 7 3,590 3,127 (201) (173) 3,389 2,954

Results

Gross profit margin 2,261 1,970 16 20 11 5 2,288 1,995 (15) (19) 2,273 1,976

Unallocated income and

expenses

Other income 27 34

Selling expenses (1,476) (1,142)

Administrative

expenses (213) (151)

Finance cost (10) (6)

Profit before income tax

expenses 601 711

Income tax expenses (116) (157)

Profit for the period 485 554


22……………………....………Director


Somchai Hanjitkasem

22. Commitments and contingent liabilities

22.1 Capital commitments

As at 31 March 2013, the Company had capital commitments of approximately Baht

669 million (31 December 2012: Baht 45.2 million), relating to the agreements to

construct an office building and to construct and renovate a distribution center.

22.2 Operating lease commitments

The Company and its subsidiaries have entered into several lease agreements in

respect of the lease of building space and equipment and other service agreements.

The terms of the agreements are generally between 3 and 20 years.

As at 31 March 2013, future minimum lease payments required under these non-

cancellable operating leases contracts and other service contracts were as follows:

Payable within:

Million Baht

Less than 1 year 937

1 to 5 years 1,052

More than 5 years 485

22.3 Futures contracts

The Company has entered into futures contracts with many local companies,

whereby the Company and those companies agreed quantity, schedule, place and

price of inventories to be delivered. The Company agreed to pay at the rates

stipulated in the contracts.

As at 31 March 2013, the Company had future minimum payment under such

contracts of approximately Baht 241.4 million.

22.4 Guarantees

As at 31 March 2013 and 31 December 2012, there were outstanding bank

guarantees issued by the banks on behalf of the Company and its subsidiaries of

approximately Baht 6.5 million and Baht 6.5 million, respectively (separate financial

statements: Baht 6.3 million and Baht 6.3 million, respectively), in respect of electric

use as required in the normal course of business.

23. Approval of interim financial statements

These interim financial statements were authorised for issue by the Company’s

Board of Directors on 13 May 2013.

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