1998 FINANCIAL STATEMENT (2)

/10 - 10 - 13. LONG-TERM LOANS Long-term loans consist of the following: CONSOLIDATED Interest rate US$ Exchange Baht % p.a. rate 1998 Loans from financial institution Repayable in Repayable in annual installments through 2001 MLR+0.75 240,000,000 Repayable in annual installments through 2002 MLR+0.75 252,000,000 Repayable in semi-annual installments through 2002 LIBOR+2.50 1,750,000 36.89 64,557,500 Repayable in annual Installments through 2000 MLR+0.75 182,000,000 Long-term loans of Philippine Hoteliers, Inc. SIBOR+1.60 339,202,515 1,077,760,015 Less Current portion (152,445,000) Long-term liabilities Converted to current Liabilities according to contracts (240,000,000) 685,315,015 In January and February 1999, the current portion of long-term debt has been prepaid in the amount of Baht 61,222,500 and also the long-term portion in the amount of Baht 127,000,000. /11 - 11 - CONSOLIDATED Interest rate US$ Exchange Baht % p.a. rate 1997 Long-term loans Syndicated bank loans outside Thailand Repayable in 1998 SIBOR+0.90 4,500,000 47.556 214,002,000 SIBOR+0.90 6,000,000 47.556 285,336,000 Repayable in 2000 Tranche 1 SIBOR+1.40 3,000,000 47.556 142,668,000 SIBOR+1.40 1,500,000 47.556 71,334,000 Tranche 2 SIBOR+1.95 8,600,000 47.556 408,981,600 23,600,000 1,122,321,600 Loans from financial institution Repayable in April 1998 LIBOR+2.50 3,000,000 47.556 142,668,000 December 1998 LIBOR+2.50 10,000,000 47.556 475,560,000 Repayable in semi-annual installments through 2002 LIBOR+2.50 250,000 47.556 11,889,000 LIBOR+2.50 1,750,000 47.556 83,223,000 From 1998-2002 LIBOR+2.50 625,000 47.556 29,722,500 LIBOR+2.50 4,375,000 47.556 208,057,500 20,000,000 951,120,000 Repayable in annual installments through 2000 MLR+0.75 182,000,000 Long-term loans of Philippine Hoteliers, Inc. SIBOR+1.60 376,516,530 2,631,958,130 Less Current portion (1,343,457,000) 1,288,501,130 EQUITY METHOD Interest rate US$ Exchange Baht % p.a. rate 1998 Loans from financial institution Repayable in semi-annual installments through 2002 LIBOR+2.50 1,750,000 36.89 64,557,500 Repayable in annual installments through 2002 MLR+0.75 252,000,000 316,557,500 Less Current portion (48,445,000) 268,112,500 /12 - 12 - In January and February 1999, the current portion of long-term debt has been prepaid in the amount of Baht 39,222,500 and also the long-term portion in the amount of Baht 127,000,000. EQUITY METHOD Interest rate US$ Exchange Baht % p.a. rate 1997 Long-term loans Syndicated bank loans outside Thailand Repayable in 1998 SIBOR+0.90 4,500,000 47.556 214,002,000 SIBOR+0.90 6,000,000 47.556 285,336,000 Repayable in 2000 Tranche 1 SIBOR+1.40 3,000,000 47.556 142,668,000 SIBOR+1.40 1,500,000 47.556 71,334,000 Tranche 2 SIBOR+1.95 8,600,000 47.556 408,981,600 23,600,000 1,122,321,600 Less Current portion (713,340,000) 408,981,600 As at December 31, 1998, loan from financial institution repayable in annual installments through 2001 is guaranteed by the pledge of land and premises of Korat Thani Corporation Limited (see Note 10) and also guaranteed by Royal Princess Public Company Limited. Korat Thani Corporation Limited had not complied with the covenant in the loan agreement, accordingly, the loan was presented as long-term liabilities converted to current liabilities according to contracts. However, the subsidiary will negotiate with the lender regarding this matter at a later date. As at December 31, 1998, loans from financial institution repayable in annual installment through 2002 and semi-annual installment through 2002 are secured by the mortgaged of land, premises and condominium units of subsidiaries, leasehold of the Company (see Notes 8 and 10). As at December 31, 1998, loans from financial institution repayable in annual installment through 2000 are secured by the mortgage of land and premises of Royal Princess Public Company Limited (see Note 10). As at December 31, 1998 and 1997, long-term loans of Philippine Hoteliers, Inc. is collaterized by a mortgage on the hotel building and its improvement and an assignment of the insurance contract on the said building and improvements. As at December 31, 1997, syndicated bank loans outside Thailand repayable in 2000, Tranche 1 is subject to the call option which may be exercised by the lender at the end of the first, second or third year. For Tranche 2 the same option may be exercised at the end of the second or third year. The loans are secured by the pledge of investment in securities of the chairperson of the Company. /13 - 13 - As at December 31, 1997, loans from financial institution repayable in 1998 and repayable in semi-annual installments through 2002 are secured by the mortgage of land and premises (see Note 10). As at December 31, 1997 , loans from financial institution repayable in semi-annual installments from 1998 to 2002 are secured by the mortgage of land and premises (see Note 10). The loan agreement with a financial institution carry certain restrictive covenants pertaining to the operations and financial position of the Company. Some loan agreements also carry restrictive covenant pertaining to the registered capital, the amount of tangible assets and dividend payment. As at December 31, 1997, the Company had not complied with the covenant for maintaining net borrowing to equity ratio of not over 1:1 as specified in the loan agreement. However, the Company has obtained a waiver from the lender in 1998. 14. SHARE CAPITAL 1998 1997 Baht Baht Authorized share capital 850,000,000 850,000,000 Issued and paid-up share capital 850,000,000 850,000,000 On July 17, 1997, the shareholders meeting passed a resolution to increase the authorized share capital of the Company from Baht 600,000,000 to Baht 850,000,000 consisting of 85,000,000 shares of Baht 10 par value each and to allocate 25,000,000 additional shares to Investment Partnership Affiliated to The Goldman Sachs Group, L.P. and/or Thai financial institution authorized by Goldman Sachs Group, L.P. and/or Goldman, Sachs Co. at Baht 30 per share. On September 25, 1997, the additional 24,000,000 shares were allotted to the aforementioned investors at Baht 30 per share which were fully paid up. The remaining 1,000,000 shares cannot be allotted as they would cause the proportion of foreign investors to exceed 40% as previously determined by the Company. The increase in authorized share capital from Baht 600,000,000 to Baht 850,000,000 with the paid up capital Baht 840,000,000 was registered with the Department of Commercial Registration on October 2, 1997. On December 11, 1997, the shareholders meeting passed a resolution to increase the proportion of foreign investors from 40% to 45%. The remaining 1,000,000 shares were issued and fully paid up. The increase in paid up share capital from Baht 840,000,000 to 850,000,000 was registered with the Department of Commercial Registration on December 19, 1997. /14 - 14 - 15. LEGAL RESERVE Pursuant to the Public Companies Act B.E. 2535 (1992), the Company must allocate to a reserve fund not less than five percent of the annual net income, after deduction of the total accumulated loss brought forward (if any) until the reserve fund reaches an amount of not less than ten percent of the registered capital, unless the Company has a regulation or other law which prescribes for a higher amount of such reserve. 16. OTHER RESERVES 1998 1997 Reserve for business expansion 277,000,000 277,000,000 Reserve for dividend equalization 33,000,000 33,000,000 Baht 310,000,000 310,000,000 17. PROFIT ON SALES OF INVESTMENTS For the year ended December 31, 1998, a subsidiary had profit on sale of a hotel in the amount of Baht 92,406,245 which is calculated based on the percentage of investment in this hotel. In addition, the Company had profit in the amount of Baht 375,770,889 from the sale of investment in Dusit Sindhorn Company Limited which is an associated company to Siam Sindhorn Company Limited, which had a carrying value based on the equity method of Baht 734,229,111 and selling price of Baht 1,110,000,000. 18. LOSS ON THE APPLICATION OF THE MANAGED FLOAT EXCHANGE SYSTEM For the year ended December 31, 1997, loss on the application of the managed float exchange system which was calculated by translating the assets and liabilities denominated in foreign currencies into Baht as described in Note 3.7 to the financial statements and presented as an extraordinary item in the statement of income amounted to Baht 1,033,267,984. /15 - 15 - 19. LONG-TERM LEASES Long-term leases consist of the following: Dusit Thani Public Company Limited Type of lease Period Rental payment per year Land rental April 1, 1973-March 31, 2003 1st ten year 420,000 2nd ten year 780,000 3rd ten year 1,200,000 Land rental April 1, 1993-March 31, 2003 780,000 Land rental April 1, 1993-March 31, 2003 300,000 The Company also has land lease agreement for the period from February 1, 1994, to September 30, 2017, the rental payments per year are as follows: Period Rental payment per year February 1, 1994 - December 31, 2004 3,000,000 January 1, 2005 - December 31, 2010 3,600,000 January 1, 2011 - September 30, 2017 4,200,000 However, the rental payment may be changed according to the Swiss Franc exchange rate. On October 1, 1998, the Company has land and hotel building lease agreement with one subsidiary, namely Dusit Resort Cha-am Company Limited, for period of 3 years commencing on October 1, 1998, with the condition that the lease can be extended for another 6 periods, consisting of 5 periods of 3 years each and the last period of 2 years, the rental payment is Baht 900,000 per month. Royal Princess Public Company Limited Type of lease Remaining Period Rental Expenses for the Remaining Lease Period 1998 Building 1999-1999 5,596,570 Building 2000-2010 24,393,505 Baht 29,990,075 1997 Building 1998-2000 10,958,966 Building 2000-2010 24,393,505 Baht 35,352,471 /16 - 16 - Philippine Hoteliers, Inc. The subsidiary company has lease agreement for the land on which the hotel building is situated at a specified rental payable quarterly. The term of the lease is up to December 31, 2001 and is renewable for another period of 25 years at the option of the company. Upon termination of the lease, the company shall return and surrender to the lessor the leased property together with the building constructed thereon, and with all the permanent fixtures therein. 20. TRANSACTIONS BETWEEN RELATED COMPANIES Transactions between related companies are as follows: 20.1 Investment in subsidiary, associated, and related companies Equity method financial statements 1998 Companys Type of Relationship Issued and % of Cost Equity Dividend name business paid-up shareholding Subsidiary companies 1. Dusit Resort Cha-am Hotel and Co., Ltd. condominium Subsidiary 225,000,000 93.556231112 391,191,880 0 2. Royal Princess Hotel and Public Co., Ltd. management Subsidiary 600,000,000 79.649891372 780,046,661 498,330,486 3. Philippine Hoteliers, Inc. Hotel Subsidiary PESO 40,000,000 85.76 688,948,558 614,275,899 4. Dusit Thani Delaware, Inc. Holding Subsidiary US$ 800,000 100.00 21,726,000 113,968,118 5. Dusit Thani International Co., Ltd. Holding Subsidiary 4,000,000 99.993 3,999,720 4,802,335 6. Best Western (Thailand) Room Co., Ltd. reservation agent Subsidiary 25,000 99.30 24,825 25,787 7. Format Advertising Co., Ltd. Advertisement Subsidiary 500,000 59.70 298,500 1,106,178 8. Landmark Hotel Co., Ltd. Hotel Subsidiary 10,000,000 99.88 9,988,000 0 Associated companies 1. DPMN Industries Co., Ltd. Laundry Associated 60,000,000 25.00 15,000,000 0 2. Worldclass Rent a Car Co., Ltd. Car rental Associated 100,000,000 20.00 20,000,000 0 Related companies 1. Acme Printing Co., Ltd. Printing house Director holds the shares 40,000,000 - - - 2. Crown Property Bureau Land leasing Major shareholder - - - - /17 - 17 - Equity method financial statements 1997 Companys Type of Relationship Issued and % of Cost Equity Dividend name business paid-up shareholding Subsidiary companies 1. Dusit Resort Cha-am Hotel and Co., Ltd. condominium Subsidiary 225,000,000 90.357991112 380,397,820 0 2. Royal Princess Hotel and Public Co., Ltd. management Subsidiary 600,000,000 79.649891372 780,046,661 595,828,450 9,557,989 3. Philippine Hoteliers, Inc. Hotel Subsidiary PESO 40,000,000 85.76 687,897,640 676,768,072 4. Dusit Thani Delaware, Inc. Holding Subsidiary US$ 800,000 100.00 21,726,000 39,138,609 5. Dusit Thani International Co., Ltd. Holding Subsidiary 4,000,000 99.993 3,999,720 3,827,065 6. Best Western (Thailand) Room Co., Ltd. reservation agent Subsidiary 25,000 99.30 24,825 36,144 7. Format Advertising Co., Ltd. Advertisement Subsidiary 500,000 59.70 298,500 1,106,178 8. Landmark Hotel Co., Ltd. Hotel Subsidiary 10,000,000 99.88 9,988,000 0 Associated companies 1. Dusit Sindhorn Ltd. Hotel Associated 2,200,000,000 49.999929411 1,103,780,390 816,651,744 2. DPMN Industries Co., Ltd. Laundry Associated 60,000,000 25.00 15,000,000 5,585,979 3. Worldclass Rent a Car Co., Ltd. Car rental Associated 100,000,000 20.00 20,000,000 0 Related companies 1. Acme Printing Co., Ltd. Printing house Director holds the shares 40,000,000 - - - 2. Crown Property Bureau Land leasing Major shareholder - - - - Baht 3,023,159,556 2,138,942,241 9,557,989 20.2 Loans to/from subsidiary, associated and related companies CONSOLIDATED EQUITY METHOD 1998 1997 1998 1997 Baht Baht Baht Baht Loans from subsidiaries Dusit Thani Delaware, Inc. - - 107,199,580 6,720,548 Dusit Resort Cha-am Co., Ltd. - - - 26,000,000 Royal Princess Public Co., Ltd. - - - 30,500,000 - - 107,199,580 63,220,548 The costs of borrowing are as follows : December 31, 1998 Loans from subsidiaries in foreign currencies commercial bank loan outside Thailand rate All inter - company borrowings are not secured. (More)