FINANCIAL STATEMENTS ENDED MARCH31, 1999(2)

- 6 - 8. PROFIT ON SALE OF INVESTMENT For the quarter ended March 31, 1998, the Company had profit in the amount of Baht 375,771 thousand from the sale of investment in Dusit Sindhorn Company Limited which is an associated company to Siam Sindhorn Company Limited. Such investment had a carrying value based on the equity method of Baht 734,229 thousand and selling price of Baht 1,110,000 thousand. 9. DERIVATIVE FINANCIAL INSTRUMENTS As at March 31, 1999, as a hedge of a certain portion of liabilities in foreign currencies, the Company entered into a forward exchange contract with bank to buy US$ 1,500,000 at the rate of Baht 39.4612 for US$ 1, for the remaining period of 181 days. The spot rate at March 31, 1999, was Baht 37.7915 for US$ 1. 10. TRANSACTIONS BETWEEN RELATED COMPANIES Transactions between related companies 10.1 Investment in subsidiary, associated, and related companies Equity method financial statements March 31, 1999 Baht :000 Companys Type of Relationship Issued and % of Cost Equity name business paid-up shareholding Subsidiary companies 1. Dusit Resort Cha-am Hotel and Co., Ltd. Condominium Subsidiary BAHT 225,000,000 97.09 403,109 54 2. Royal Princess Hotel and Public Co., Ltd. Management Subsidiary BAHT 600,000,000 79.65 780,047 489,298 3. Philippine Hoteliers, Inc. Hotel Subsidiary PESO 40,000,000 85.76 688,949 630,556 4. Dusit Thani Delaware, Inc. Holding Subsidiary US$ 800,000 100.00 21,726 124,475 5. Dusit Thani International Co., Ltd. Holding Subsidiary BAHT 4,000,000 99.99 4,000 4,179 6. Best Western (Thailand) Room reservation Co., Ltd. agent Subsidiary BAHT 25,000 99.30 25 26 Associated companies 1. DPMN Industries Co., Ltd. Laundry Associated BAHT 60,000,000 25.00 15,000 0 2. Worldclass Rent a Car Co., Ltd. Car rental Associated BAHT 100,000,000 20.00 20,000 0 3. Landmark Hotel Co., Ltd. Hotel Associated BAHT 10,000,000 99.88 9,988 - Related companies 1. Acme Printing Co., Ltd. Printing house Mutual management BAHT 40,000,000 - - - 2. Crown Property Bureau Land leasing Major shareholder - - - - 1,942,844 1,248,588 .../7 - 7 - Equity method financial statements March 31, 1998 Baht :000 Companys Type of Relationship Issued and % of Cost Equity name business paid-up shareholding Subsidiary companies 1. Dusit Resort Cha-am Hotel and Co., Ltd. Condominium Subsidiary BAHT 225,000,000 90.36 380,398 0 2. Royal Princess Hotel and Public Co., Ltd. Management Subsidiary BAHT 600,000,000 79.65 780,047 582,019 3. Philippine Hoteliers, Inc. Hotel Subsidiary PESO 40,000,000 85.76 687,897 653,007 4. Dusit Thani Delaware, Inc. Holding Subsidiary US$ 800,000 100.00 21,726 37,687 5. Dusit Thani International Co., Ltd. Holding Subsidiary BAHT 4,000,000 99.99 4,000 6,274 6. Best Western (Thailand) Room reservation Co., Ltd. agent Subsidiary BAHT 25,000 99.30 25 31 Associated companies 1. DPMN Industries Co., Ltd. Laundry Associated BAHT 60,000,000 25.00 15,000 3,064 2. Worldclass Rent a Car Co., Ltd. Car rental Associated BAHT 100,000,000 20.00 20,000 0 3. Format Advertising Co., Ltd. Advertisement Associated BAHT 500,000 59.70 299 1,106 4. Landmark Hotel Co., Ltd. Hotel Associated BAHT 10,000,000 99.88 9,988 - Related companies 1. Acme Printing Co., Ltd. Printing house Mutual management BAHT 40,000,000 - - - 2. Crown Property Bureau Land leasing Major shareholder - - - - 1,919,380 1,283,188 10.2 Loans to/from subsidiary, associated and related companies Baht :000 CONSOLIDATED EQUITY METHOD March 31, March 31, 1999 1998 1999 1998 Loans from subsidiaries Dusit Thani Delaware, Inc. - - 115,885 5,490 Royal Princess Public Co., Ltd. - - - 16,000 - - 115,885 21,490 The costs of borrowing are as follows: March 31, 1999 Loans from subsidiaries in Baht Commercial bank saving rate Loans from subsidiaries in foreign currencies- Commercial bank loan outside Thailand rate All inter company borrowings are not secured. March 31, 1998 Loans from subsidiaries in Baht Commercial bank overdraft rate Loans from subsidiaries in foreign currencies- Commercial bank loan outside Thailand rate All inter-company borrowings are not secured. .../8 - 8 - 10.3 Business transactions Equity method March 31, 1999 Baht :000 Company Management Other Selling and Interest Interest Account Management Other Goodwill on the Loans from Accrued service income administrative income expenses receivable receivable current acquisition of subsidiary expenses income expenses assets hotel business from the Royal Princess Public Co., Ltd. - 210 - - - 30 10,188 15,535 - - - Dusit Resort Cha-am Co., Ltd. - 15 - 12 - - - 12 389,500 - - Philippine Hoteliers, Inc. 6,466 - - - - - 6,507 - - - - Dusit Thani Delaware, Inc. - - - - 1,626 - - - - 115,885 6,339 Dusit Thani International Co., Ltd - 600 - - - - - 654 - - - Acme Printing Co., Ltd. - - 810 - - - - - - - 274 Crown Property Bureau - - 705 - - - - - - - - 6,466 825 1,515 12 1,626 30 16,695 16,201 389,500 115,885 6,613 Equity method March 31, 1998 Baht :000 Company Management Other Selling and Interest Other Loans from Accrued Other current service income income administrative expenses current subsidiary expenses liabilities assets Royal Princess Public Co., Ltd. - 422 26 828 13,398 16,000 1,593 27 Dusit Resort Cha-am Co., Ltd. 4,114 140 - 328 1,770 - 1,094 - Philippine Hoteliers, Inc. 6,795 114 - - 729 - - - Dusit Thani Delaware, Inc. - - - 19 - 5,490 - - Acme Printing Co., Ltd - - 595 - - - - - Crown Property Bureau - - 723 - - - - - 10,909 676 1,344 1,175 15,897 21,490 2,687 27 Prices and terms are as follows: Management fee 2.5% - 3% of total income Incentive fee 5% of gross profit Marketing fee 2.5% of room revenues License fee 1.5% of total revenues Other income are calculated based on actual expenses incurred. Goodwill on the acquisition of hotel business from the subsidiary which occurred in 1998 and included in other assets, is based on the price agreed upon by the Company and the subsidiary. 11. COMMITMENTS AND CONTINGENCIES As at March 31, 1999 and 1998, subsidiary companies have various contracts for premises construction totalling Baht 623,337 thousand and Baht 630,503 thousand. As atMarch 31, 1999 and 1998, the portion of uncompleted works which has to be paid by these subsidiary companies in subsequent periods amounts to Baht 32,230 thousand and Baht 38,180 thousand, respectively. As at March 31, 1999 and 1998, the Company and subsidiaries have contingent liabilities for bank guarantees totalling Baht 20,366 thousand and Baht 19,647 thousand, respectively. As at March 31, 1999 and 1998, the Company has contingent liabilities for bank guarantees totalling Baht 14,766 thousand and Baht 12,537 thousand, respectively. .../9 - 9 - 12. BUSINESS SEGMENT INFORMATION Business segment information of the Company and subsidiaries by industries are as follows: Million Baht Revenues Operating Net Income Assets Profit (Loss) Employed March 31, 1998 Parent Company Room 163.11 141.33 Food and beverage 146.57 64.01 Others 32.04 16.67 Total 341.72 222.01 123.79 1,074.73 Dusit Resort Cha-am Company Limited Room - - Food and beverage - - Condominium - - Others - - Total - - (7.53) 397.70 Royal Princess Public Company Limited and Subsidiaries Room 44.04 34.96 Food and beverage 55.09 19.99 Others 8.67 4.31 Total 107.80 59.26 (24.45) 1,420.90 Philippine Hoteliers, Inc. Room 89.10 Food and beverage 53.08 Others 6.70 Total 148.88 65.97 14.51 1,163.03 Dusit Thani Delaware, Inc. Total - - 5.98 2.26 Dusit Thani International, Co., Ltd. Total - - (0.02) 4.99 Total 598.40 347.24 112.28 4,063.61 Add Minority interest in net loss of subsidiary companies 3.87 Consolidated net income 116.15 Consolidated Assets 4,063.61 .../10 - 10 - 13. PLAN FOR RESOLVING THE MILLENNIUM BUG (Y2K) PROBLEM (Not covered by the review report of independent certified public accountants) The Company has been in the process of modifying its computer system and equipment to resolve the millennium bug (Y2K) problem since May 1998. As at March 31, 1999, the progress of such modifications for all systems is approximately 70% to 100%. The Company expects that all systems will be tested within 1999 in order to have sufficient time for each system to be modified, if necessary. The Company has arranged a budget of approximately Baht 1,451 thousand for the Y2K project. The subsidiary companies have been in the process of modifying their computer systems and equipments to resolve the millennium bug (Y2K) problem since May 1998. As at March 31, 1999, the progress of such modifications for all systems is approximately 70% to 100%. The subsidiary companies expect that all systems will be tested within 1999 in order to have sufficient time for each system to be modified, if necessary. All subsidiary companies have arranged a budget totalling approximately Baht 3,696 thousand for the Y2K project. Although the Company and its subsidiaries believe that they can modify all systems before the coming year 2000, they still have a risk if at that time other companies with whom they will be doing business cannot modify their systems. However, the Company and each subsidiary expect that such problems can be resolved and the impact of Y2K will not materially affect their operations.