FINANCIAL STATEMENT FOR YEAR 1999

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS DUSIT THANI PUBLIC COMPANY LIMITED We have audited the consolidated balance sheet of Dusit Thani Public Company Limited and its subsidiaries and the balance sheet of Dusit Thani Public Company Limited as at December 31, 1999, and the related consolidated and the Companys statements of income, changes in shareholders equity, retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Companys management as to their correctness and completeness of the presentation. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated and the Company s financial statements for the year ended December 31, 1998 were audited by another auditor of the same firm whose report thereon dated February 25, 1999 expressed a qualified opinion regarding the financial statements of certain subsidiary and associated companies which have not been audited. We conducted our audit in accordance with generally accepted auditing standards in Thailand. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated and the Companys financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Dusit Thani Public Company Limited and its subsidiaries and of Dusit Thani Public Company Limited as at December 31, 1999, and the results of operations, the changes in shareholders equity, the retained earnings and the cash flows for the year then ended in conformity with generally accepted accounting principles in Thailand. - 2 - We also audited the adjustments described in Note 17 to the financial statements that were applied to restate the 1998 financial statements. In our opinion, such adjustments are appropriate and have been properly applied. As described in Note 4.4 to the financial statements, in the Companys financial statements, the Company has changed its accounting procedure for the recognition of equity in net loss of subsidiaries which are in excess of Companys investments in those subsidiaries. As from January 1, 1999, the Company has recorded all of its share of loss of subsidiary plus the minority shareholders share of loss to the extent that they do not exceed the subsidiaries debt guaranteed by the Company. Previously, the Company recorded equity in net loss of subsidiaries to the extent of the investment and the subsidiaries debt which is guaranteed by the Company according to the percentage of shareholding. As described in Note 3.2 to the financial statements, the consolidated financial statements for the year ended December 31, 1999 included the financial statements of Korat Thani Corporation Limited which have been audited by another auditor of the same firm whose report thereon dated February 4, 2000 disclaimed an opinion due to the uncertainty of the companys ability to continue as a going concern. As at December 31, 1999, this company had total assets of Baht 218,084,141, liabilities of Baht 527,579,030, capital deficiency of Baht 309,494,889, and net loss of Baht 89,962,276. In addition, the consolidated financial statements also included the financial statements of Supsinthanee Company Limited which have been audited by another auditor of the same firm whose report thereon dated January 28, 2000 expressed an unqualified opinion with an explanatory paragraph regarding the ability of the company to continue as a going concern. As at December 31, 1999, this company had total assets of Baht 280,417,880, liabilities of Baht 312,326,658, capital deficiency of Baht 31,908,778, and net loss of Baht 43,707,434. Managements plans to resolve these matters are disclosed in Note 3.2 to the financial statements. Chongchitt Leekbhai Certified Public Accountant (Thailand) BANGKOK Registration No. 2649 February 22, 2000 DELOITTE TOUCHE TOHMATSU JAIYOS DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 ASSETS CURRENT ASSETS Cash in hand and at banks 196,217,827 348,640,498 73,586,002 96,356,576 Short-term investments (Note 6) 458,067,317 385,795,097 420,191,686 346,948,390 Trade accounts and notes receivable(Note 7) 162,715,137 178,343,760 101,698,743 120,295,884 Less Allowance for doubtful accounts (Note 4.2) (20,610,401) (25,418,591) (12,202,268) (16,177,246) Net trade accounts and notes receivable 142,104,736 152,925,169 89,496,475 104,118,638 Inventories (Notes 4.3 and 8) 183,044,148 195,741,004 38,634,633 35,566,904 Other current assets Other receivables 33,316,854 43,844,616 48,812,928 41,334,851 Accrued interest receivable 4,418,758 5,097,880 3,792,918 5,054,407 Others 48,794,808 61,907,452 43,334,939 51,026,344 86,530,420 110,849,948 95,940,785 97,415,602 Total Current Assets 1,065,964,448 1,193,951,716 717,849,581 680,406,110 INVESTMENTS AND LOANS (Notes 4.4 and 9) Related parties 218,966,659 218,847,847 936,012,257 1,161,924,168 Real estate 81,817,062 81,817,062 51,582,501 51,582,501 Others 61,490,307 26,784,601 7,865,607 9,314,150 362,274,028 327,449,510 995,460,365 1,222,820,819 PROPERTY, PREMISES AND EQUIPMENT NET (Notes 4.5 and 10) 2,444,428,425 2,620,820,107 651,848,518 687,356,750 OTHER ASSETS (Notes 4.6 and 11) 11,227,604 86,950,332 358,750,000 399,750,000 TOTAL ASSETS BAHT 3,883,894,505 4,229,171,665 2,723,908,464 2,990,333,679 Notes to the consolidated and the Companys financial statements form an integral part of these statements DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 LIABILITIES AND SHAREHOLDERS EQUITY Bank overdrafts and loans from financial institutions (Notes 4.7 and 12) 378,122,448 388,196,976 14,599,973 11,814,654 Liabilities resulting from the recognition of subsidiaries loss in excess of investments - - 140,323,239 168,453,667 Trade accounts and notes payable 187,704,221 186,883,079 63,390,330 53,084,467 Current portion of long-term debt (Notes 4.7 and 14) 78,000,000 152,445,000 - 48,445,000 Long-term liabilities converted to current liabilities according to covenants in the loan agreements (Notes 13 and 14) 240,000,000 240,000,000 - - Short-term loans and advances from related parties - - - 107,199,580 Net payable per forward exchange contracts 13,419,300 19,351,805 - 5,932,505 Other current liabilities Other payables 44,008,707 46,553,420 30,731,748 46,975,914 Accounts payable-construction 10,061,190 11,548,828 - - Accrued expenses 244,118,689 91,861,458 74,833,655 43,835,322 Others 103,916,440 88,203,027 81,162,835 94,199,028 402,105,026 238,166,733 186,728,238 185,010,264 Total Current Liabilities 1,299,350,995 1,225,043,593 405,041,780 579,940,137 LONG-TERM LOANS (Notes 4.7 and 14) 112,834,838 685,315,015 - 268,112,500 TOTAL LIABILITIES 1,412,185,833 1,910,358,608 405,041,780 848,052,637 DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 LIABILITIES AND SHAREHOLDERS EQUITY (CONTINUED) SHAREHOLDERS EQUITY SHARE CAPITAL Authorized share capital 85,000,000 ordinary shares of Baht 10.00 each 850,000,000 850,000,000 850,000,000 850,000,000 Issued and paid-up capital 85,000,000 ordinary shares of Baht 10.00 each, fully paid 850,000,000 850,000,000 850,000,000 850,000,000 PAID-IN CAPITAL Premium on share capital 1,643,000,000 1,643,000,000 1,643,000,000 1,643,000,000 RETAINED EARNINGS Appropriated Legal reserve (Note 15) 85,000,000 56,000,000 85,000,000 56,000,000 Other reserves (Note 16) 310,000,000 310,000,000 310,000,000 310,000,000 Unappropriated (deficit) (559,997,242) (697,697,980) (559,997,242) (697,697,980) 2,328,002,758 2,161,302,020 2,328,002,758 2,161,302,020 Unrealized gain on securities available for sale 9,196,852 - 9,196,852 - Exchange differences on the translation of financial statements of subsidiaries (18,332,926) (19,020,978) (18,332,926) (19,020,978) TOTAL COMPANY SHAREHOLDERS EQUITY 2,318,866,684 2,142,281,042 2,318,866,684 2,142,281,042 Minority interests in subsidiaries 152,841,988 176,532,015 - - TOTAL LIABILITIES AND SHAREHOLDERS EQUITY BAHT 3,883,894,505 4,229,171,665 2,723,908,464 2,990,333,679 Notes to the consolidated and the Companys financial statements form an integral part of these statements DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 REVENUES Revenue from sales and services - Hotel business 2,209,297,771 2,315,523,490 1,167,588,053 1,047,780,210 - Condominium business (Note 4.8) 7,800,000 10,265,000 - - Other income Management service income 72,749,834 84,808,882 75,802,100 89,082,996 Interest income 21,009,226 79,432,791 17,803,222 76,847,578 Profit on sales of investments (Note 18) 30,000 468,177,134 15,000 375,770,889 Gain on exchange - 89,071,944 2,886,792 80,399,900 Others 120,938,447 113,278,829 100,725,092 90,883,775 Total Revenues 2,431,825,278 3,160,558,070 1,364,820,259 1,760,765,348 EXPENSES Cost of sales and services - Hotel business 1,176,649,309 1,236,725,560 587,492,447 530,982,162 - Condominium business 7,141,120 8,882,893 - - Selling and administrative expenses 568,501,665 680,391,567 274,564,044 303,804,331 Depreciation and amortization 377,202,797 342,345,664 151,823,575 136,830,258 Interest expenses 81,661,942 186,792,392 12,923,350 50,412,815 Directors remuneration 1,505,000 1,143,000 365,000 415,000 Loss on exchange 2,223,444 - - - Total Expenses 2,214,885,277 2,456,281,076 1,027,168,416 1,022,444,566 INCOME BEFORE EQUITY IN SUBSIDIARY AND ASSOCIATED COMPANIES AND MINORITY INTEREST 216,940,001 704,276,994 337,651,843 738,320,782 EQUITY IN UNDISTRIBUTED NET LOSS OF SUBSIDIARY AND ASSOCIATED COMPANIES 0 (93,185,477) (125,333,965) (141,274,740) MINORITY INTEREST IN NET LOSS OF SUBSIDIARIES 23,690,027 10,476,852 - - INCOME BEFORE INCOME TAX 240,630,028 621,568,369 212,317,878 597,046,042 INCOME TAX (Note 4.9) (73,929,290) (24,522,327) (45,617,140) - NET INCOME BAHT 166,700,738 597,046,042 166,700,738 597,046,042 BASIC EARNINGS PER SHAREBAHT 1.96 7.02 1.96 7.02 NUMBER OF ORDINARY SHARES SHARES 85,000,000 85,000,000 85,000,000 85,000,000 Notes to the consolidated and the Companys financial statements form an integral part of these statements DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 SHARE CAPITAL-ORDINARY SHARES Beginning balance 850,000,000 850,000,000 850,000,000 850,000,000 Ending balance 850,000,000 850,000,000 850,000,000 850,000,000 PAID-IN CAPITAL Premium on share capital Beginning balance 1,643,000,000 1,643,000,000 1,643,000,000 1,643,000,000 Ending balance 1,643,000,000 1,643,000,000 1,643,000,000 1,643,000,000 RETAINED EARNINGS Appropriated Legal reserve Beginning balance 56,000,000 56,000,000 56,000,000 56,000,000 Addition 29,000,000 - 29,000,000 - Ending balance 85,000,000 56,000,000 85,000,000 56,000,000 Other reserves Beginning balance 310,000,000 310,000,000 310,000,000 310,000,000 Ending balance 310,000,000 310,000,000 310,000,000 310,000,000 Unappropriated (deficit) Beginning balance (730,400,111) (1,131,686,426) (697,697,980) (1,131,686,426) Less Prior years adjustments (Notes 4.4 and 17) 32,702,131 (163,057,596) - (163,057,596) (697,697,980) (1,294,744,022) (697,697,980) (1,294,744,022) Addition 166,700,738 597,046,042 166,700,738 597,046,042 Deduction (29,000,000) - (29,000,000) - Ending balance (559,997,242) (697,697,980) (559,997,242) (697,697,980) Unrealized gain on securities available for sale Addition 9,196,852 - 9,196,852 - Ending balance 9,196,852 - 9,196,852 - Exchange differences on the translation of the financial statements of subsidiaries Beginning balance (19,020,978) 105,218,404 (19,020,978) 105,218,404 Addition 688,052 - 688,052 - Deduction - (124,239,382) - (124,239,382) Ending balance (18,332,926) (19,020,978) (18,332,926) (19,020,978) TOTAL SHAREHOLDERS EQUITY BAHT 2,318,866,684 2,142,281,042 2,318,866,684 2,142,281,042 Notes to the consolidated and the Companys financial statements form an integral part of these statements DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 UNAPPROPRIATED RETAINED EARNINGS (DEFICIT) As previously reported (730,400,111) (1,131,686,426) (697,697,980) (1,131,686,426) Less Prior years adjustments (Notes 4.4 and 17) 32,702,131 (163,057,596) - (163,057,596) Adjusted retained earnings (deficit) (697,697,980) (1,294,744,022) (697,697,980) (1,294,744,022) Less Appropriation for the prior year Legal reserve (17,500,000) - (17,500,000) - Appropriation for the year Legal reserve (11,500,000) - (11,500,000) - Add Net income for the year 166,700,738 597,046,042 166,700,738 597,046,042 Total unappropriated retained Earnings (deficit) (559,997,242) (697,697,980) (559,997,242) (697,697,980) APPROPRIATED RETAINED EARNINGS Legal reserve 85,000,000 56,000,000 85,000,000 56,000,000 Other reserves 310,000,000 310,000,000 310,000,000 310,000,000 Total appropriated retained earnings 395,000,000 366,000,000 395,000,000 366,000,000 TOTAL RETAINED EARNINGS (DEFICIT) BAHT (164,997,242) (331,697,980) (164,997,242) (331,697,980) Notes to the consolidated and the Companys financial statements form an integral part of these statements DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income 166,700,738 597,046,042 166,700,738 597,046,042 Adjustments to reconcile net income to net cash provided (used) by operating activities: Bad debts and doubtful accounts (3,708,280) 14,810,224 (4,045,926) 3,193,684 Depreciation and amortization 276,088,329 306,654,734 110,823,575 126,580,258 Amortization for other assets 101,114,468 35,690,930 41,000,000 10,250,000 Loss on sale of property, premises and equipment 1,182,664 - 1,588,978 - Loss on exchange 5,552,239 (111,431,265) (2,894,383) (80,399,132) Allowance for diminution in value of securities 12,920,850 39,000,000 4,000,000 17,000,000 Loss on impairment of assets 10,597,311 - - - Loss on the liquidation of subsidiaries 902,852 - 949,291 - Profit on sales of investments (30,000) (468,177,134) (15,000) (375,770,889) Minority interest in net loss of subsidiaries (23,690,027) (10,476,852) - - Equity in undistributed net loss of subsidiary and associated companies - 93,185,477 125,333,965 141,274,740 (Increase) decrease in operating assets Net trade accounts and notes receivable 15,628,622 45,475,981 18,597,140 (14,450,019) Inventories 2,099,546 19,844,536 (3,067,729) (2,547,901) Other receivables 9,427,852 8,934,399 (7,407,128) (9,213,471) Other current assets 13,812,488 28,063,056 8,942,448 3,199,287 Other assets (6,446,147) 26,241,738 - - Increase (Decrease) in operating liabilities Trade accounts and notes payable 821,142 (78,651,254) 10,305,863 (5,182,955) Accrued expenses 150,926,162 (20,691,386) 30,630,828 (13,302,837) Accounts payable-construction (1,487,637) (13,939,916) - - Other current liabilities 8,228,268 (4,086,293) (23,946,068) (110,000) Net cash provided (used) by operating activities 740,641,440 507,493,017 477,496,592 397,566,807 DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1999 1998 CASH FLOWS FROM INVESTING ACTIVITIES Sales of investments in other companies 30,000 1,233,143,294 15,000 1,110,000,000 Cash received from the liquidation of subsidiary 203,327 - 94,198,779 - Cash received from loan to subsidiary - - 10,143,000 - Cash received from sales of property, premises and equipment 19,111,782 - 16,181,496 - Purchase of shares in subsidiary, associated and other companies (52,353,635) (10,794,060) (13,923,930) (11,844,978) Loans to subsidiaries - - (10,143,000) (100,600,000) Cash payment for purchase of hotel business from subsidiary net of cash receipt - - - (25,279,524) Cash payment for purchase property, premises and equipment (120,472,067) - (93,085,817) - Net (increase) decrease in property, premises and equipment - 71,539,141 - (65,647,236) Net cash provided (used) by (more)