03 April 2001
NOTES OF FINANCIAL STATEMENT DECEMBER 31,2000 (REVISED)
DUSIT THANI PUBLIC COMPANY LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
1. ASIA-PACIFIC ECONOMIC TURMOIL
Thailand and many Asia-Pacific countries continue to experience economic
difficulties since 1997. The accompanying consolidated and the Company's
financial statements reflect management's current assessment of the possible
impact of the economic conditions on the financial position of the Company
and its subsidiaries.
2. COMPANY OPERATIONS
Dusit Thani Public Company Limited is a company registered in Thailand with
its head office located at 946 Dusit Thani Office Building, 7th floor, Rama IV
Road, Silom, Bangrak, Bangkok. The Company's main business is hotel and
hotel management.
The number of employees and personnel expenses of the Company and
subsidiaries are as follows:
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Number of employees persons 3,275 3,494 1,715 1,910
Personnel expenses Baht 533,508,345 543,236,927 261,492,814 283,456,588
3. BASIS FOR PREPARATION OF THE CONSOLIDATED AND THE COMPANY'S
FINANCIAL STATEMENTS
3.1 The accompanying consolidated and the Company's financial statements
are presented in accordance with the form of balance sheet and statement
of income for public companies as required by the Ministerial Regulation
No.7 B.E. 2539 (1996), dated October 25, 1996, issued under the Public
Companies Act, B.E. 2535 (1992) and effective for accounting periods
starting on January 1, 1997.
The Company prepares its statutory financial statements in the Thai
language in conformity with accounting standards and practices generally
accepted in Thailand.
In the financial statements for the year ended December 31, 1999, other
current assets, other payables, accounts payable-construction, accrued
expenses, other current liabilities, selling and administrative expenses and
interest expenses have been reclassified to conform to the classifications
used in the financial statements for the year ended December 31, 2000.
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3.2 The consolidated financial statements include account balances of the
subsidiaries as follows:
% of shareholding
2000 1999
Dusit Hotels and Resorts Company Limited
(formerly Dusit Resort Cha-am Company Limited) 97.44 97.32
Royal Princess Public Company Limited 79.65 79.65
Korat Thani Corporation Limited by Royal
Princess Public Company Limited 68.00 68.00
Supsinthanee Company Limited by Royal
Princess Public Company Limited 99.99* 77.46*
Philippine Hoteliers, Inc. 85.76 85.76
Dusit Thani Delaware, Inc. - 100.00
Dusit Thani International Company Limited 99.99 99.99
Devarana Spa Company Limited 99.99** -
* Including preferred shares which have the same rights as the ordinary
shares to receive dividends and vote in shareholders' meetings.
** The financial statements of Devarana Spa Company Limited have
been audited by another auditor whose report thereon expressed an
unqualified opinion.
As at December 31, 2000, Dusit Hotels and Resorts Company Limited
(formerly Dusit Resort Cha-am Company Limited) held 106,300 ordinary
shares of the Company. The acquisition cost was Baht 2,643,111 which
was presented as investments available for sale in the consolidated
balance sheet. Such investment was not deducted from shareholders'
equity as the amount was immaterial.
On January 10, 2000, Royal Princess Public Company Limited had
acquired 480,000 ordinary shares of Supsinthanee Company Limited
from the existing shareholders at Baht 0.01 per share. As a result the
percentage of shareholding of Royal Princess Public Company Limited in
Supsinthanee Company Limited increased from 77.46% to 99.99%.
All material inter-company transactions and balances have been
eliminated.
The financial statements of Korat Thani Corporation Limited have been
audited by another auditor of the same firm whose report thereon
disclaimed an opinion. This disclaimer of opinion issued by the other
auditor was due to the uncertainty of Korat Thani Corporation Limited to
continue as a going concern as a result of the significant of liabilities and
legal proceedings has been undertaken against it by one of its lenders
since December 1999. Currently, the case is under the consideration of
the Court. As at December 31, 2000, the Company had an indirect equity
interest of 54.16% in Korat Thani Corporation Limited and this company
had total assets of Baht 203,038,183 and total revenues of Baht
61,566,353, or 4.95% and 2.43% of the related consolidated totals.
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The financial statements of Supsinthanee Company Limited have also
been audited by another auditor of the same firm whose report thereon
expressed an unqualified opinion with an explanatory paragraph
regarding the ability of the company to continue as a going concern.
Management has implemented plans to resolve this issue. During the
year 1999, this subsidiary had increased its share capital by issuing
preferred shares and in year 2000, entered into debt restructuring
agreement with the creditor. In addition, the subsidiary will revise its
marketing plans in order to increase operating cash flows. On April 26,
2000, the shareholders' meeting of Supsinthanee Company Limited
passed a special resolution to decrease the capital of the company from
Baht 213,000,000 to Baht 53,250,000 by a reduction of the par value
from Baht 100 per share to Baht 25 per share. However, the number of
outstanding shares remains the same which are 930,000 preferred shares
and 1,200,000 ordinary shares, totalling 2,130,000 shares. The
resolution was registered with the Registrar of Partnerships and
Companies on September 21, 2000. The aforementioned decrease in
capital does not affect financial position and operation of Royal
Princess Public Company Limited since the company has recognized
net loss of this subsidiary until its investment in ordinary shares and
preferred shares has been reduced to zero. As at December 31, 2000,
the Company had an indirect equity interest of 79.64% in Supsinthanee
Company Limited. As at December 31, 2000, this company had total
assets of Baht 258,632,726 and total revenues of Baht 60,265,602
(including gain on debts restructuring of Baht 37,950,139), or 6.31%
and 2.38% of the related consolidated totals.
Subsequently, on December 13, 2000, the Board of Directors' meeting
of Royal Princess Public Company Limited passed a resolution to sell
investment in Supsinthanee Company Limited consisting of 930,000
preferred shares and 1,199,997 ordinary shares to Dusit Thani
International Company Limited which is a subsidiary of the Company
in amount of Baht 0.01 per share. As of December 20, 2000, Royal
Princess Public Company Limited has sold 500,000 preferred shares
and the remaining will be sold within the year 2001. Since the
investment in Supsinthanee Company Limited has a book value of zero,
the sale of such investment resulted in a gain of Baht 5,000.
Should the two subsidiaries are unable to continue as a going concern,
they may be required to realize their assets and extinguish their
liabilities other than in the normal course of business and at amounts
different from those stated in the financial statements. The financial
statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or to the amounts and
classification of liabilities that might be necessary should these two
subsidiaries not continue as a going concern.
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4. SIGNIFICANT ACCOUNTING POLICIES
4.1 Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and at banks and short-
term investments which represent deposits with financial institutions with
original maturities of 3 months or less.
In the statement of cash flows, cash and short-term investments used as
collateral are not included in cash and cash equivalents but are presented
as part of the other current assets.
4.2 Allowance for doubtful accounts
The determination of the allowance for doubtful accounts is based on the
collection experience of the Company and subsidiaries in the prior year
together with a review of the financial position of the debtors.
4.3 Inventories
Hotel business; inventories are stated at the lower of cost or net realizable
value. Cost is determined on a moving weighted average basis. For
Supsinthanee Company Limited and Philippine Hoteliers, Inc.,
inventories are stated at cost or net realizable value. Cost is determined on
a first-in, first-out basis.
Condominium and commercial building business; inventories consisting
of land, buildings, furniture and equipment, are stated at the lower of cost
or net realizable value. Cost is determined on a specific identification
basis.
4.4 Investments
Investments in securities
Investment in securities are accounted for according to Thai Accounting
Standard No. 40, "Accounting for Investments in Debt and Equity
Securities", which stipulates the classification, valuation and recognition
of gain or loss on the change in carrying value of investment as follows:
Available for sale securities are carried at fair value. Gains or losses on
the change in fair value are presented as an item in shareholder's equity.
Securities for general investment are stated at cost.
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Investments in subsidiary and associated companies are presented by the
equity method.
Investment in Dusit Thani College is stated at cost.
In case an impairment in value of investment has occurred, the resultant
loss for all classification of investment is recognized in the statement of
income.
An accounting for the equity in net loss of subsidiaries in excess of the
Company's investments in those subsidiaries :
Since 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. The change
has been presented on retained earnings brought forward in 1999 (See
Note 17).
4.5 Property, premises and equipment
Property is stated at cost. Premises and equipment are stated at cost, net
of accumulated depreciation.
Depreciation is computed by the straight-line method. Estimated useful
lives of the assets are as follows:
Premises on leased land Per lease agreement
Premises 20 33 years
Interior and renovation of buildings on lease land 5 10 years
Interior and renovation of buildings 5 10 years
Furniture and equipment on lease land 5 15 years
Furniture and equipment 5 15 years
Vehicles 5 10 years
Leasehold Per lease agreement
Depreciation of chinaware, glassware, silverware and linen is determined
on the basis of physical inventory and revaluation at the end of the year.
In case an impairment of assets has occurred, the resultant loss is
recognized in the statement of income.
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Premises and equipment of Philippine Hoteliers, Inc. which have been
acquired before October 23, 1980 were stated at the appraised value as at
November 20, 1980 of the independent appraisers. Those acquired
subsequently were stated at cost. Depreciation of appraisal increase is
charged to operations.
Depreciation of the assets of Philippine Hoteliers, Inc. is computed by the
straight-line method on the estimated useful lives of the assets ranging
from 5 to 50 years. The costs of originally acquired chinaware, glassware,
silverware, linen and uniform are capitalized and amortized over a period
of 10 years. Subsequent purchases are charged to operations.
4.6 Other assets
Other assets are amortized as follows:
Goodwill on the acquisition of hotel
business from subsidiary 10 years
Impairment of other assets is assessed annually and any resultant loss is
recognized in the statement of income.
4.7 Translation of foreign currency transactions
4.7.1 Assets and liabilities denominated in foreign currencies are
translated into Baht at the rates of exchange prevailing at the
transaction dates. All balances of assets and liabilities in foreign
currencies at the end of the year are converted at the reference
exchange rates established by the Bank of Thailand at the end of
the year.
All foreign exchange gains or losses on exchange are recognized
in the statement of income.
4.7.2 Balance sheet and statement of income of foreign subsidiaries are
translated into Baht at the exchange rates prevailing at the balance
sheet date and the average exchange rates, respectively. The
exchange differences on the translation is in the shareholders'
equity.
4.8 Recognition of revenues
Sales of condominium units and commercial buildings are recognized as
revenue upon the transfer of title to the property.
Management income is recognized on accrual basis.
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4.9 Income tax
Income tax expense is based on the tax paid and accrued for the period.
For Philippine Hoteliers, Inc., deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial reporting bases of assets and liabilities and their
related tax bases. Deferred tax assets and liabilities are measured using
the tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
4.10 Basic earnings per share
Basic earnings per share is computed on the basis of number of
outstanding ordinary shares at the balance sheet date. In case of a capital
increase, the number of shares are weighted according to time of
registration of issued and paid-up share capital.
4.11 Use of accounting estimates
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities and disclosure of contingent assets and liabilities.
Actual results may differ from those estimates.
5. SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
5.1 Cash and cash equivalents
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Cash in hand and at banks 240,155,073 196,217,827 84,007,035 73,586,002
Short-term investments 603,264,389 458,067,317 489,110,054 420,191,686
Less - Deposits with maturity
of more than 3 months
and cash at banks used
as collateral (1,964,389) (3,557,317) (710,054) (2,691,686)
- Short-term investments
with maturity of more
than 3 months (478,800,000) (277,800,000) (377,900,000) (245,500,000)
Baht 362,655,073 372,927,827 194,507,035 245,586,002
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5.2 Cash paid for interest and income tax are as follows:
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Baht Baht Baht Baht
Interest 11,000,869 27,500,704 61,594 8,870,273
Income tax 141,475,418 19,029,334 95,216,569 -
5.3 Non cash transactions in the financial statements are as follows :
5.3.1 For the years ended December 31, 2000 and 1999, the recording
of exchange differences on the translation of the subsidiary's
financial statements into Baht which was presented as an addition
(deduction) in the shareholders' equity amount of Baht
(35,681,862) and Baht 688,052, respectively.
5.3.2 For the years ended December 31, 2000 and 1999, the recording
of investments available for sale at fair value and recognizing
unrealized gain (loss) on such investments in the consolidated and
the Company's financial statements amount of Baht (14,547,277)
and Baht 9,196,852, respectively, which were included in
shareholders' equity.
5.3.3 In the Company's financial statements for the year ended
December 31, 1999, the recognition of undistributed net loss of
subsidiary in excess of the Company's investments and minority
interest in the amounts of Baht 140,323,239, as the Company will
continue to provide financial support to the subsidiary.
5.3.4 In the consolidated financial statements for the year ended
December 31, 2000, the transferring of accrued interest payable of
Baht 76,132,556, other payable of Baht 6,107,674 and loan from
financial institution of Baht 240,712,500, totalling Baht
322,952,730 of Supsinthanee Company Limited to current
portion of long-term liabilities of Baht 160,235,396 and long-term
liabilities of Baht 162,717,334 in accordance with the conditions
specified in debt restructuring agreement dated March 28, 2000.
5.3.5 In the consolidated financial statements for the year ended
December 31, 2000, the reduction of accrued interest has been
granted by creditor to one subsidiary in the amount of Baht
37,950,139, was presented as gain on debts restructuring (see Note
18).
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5.3.6 In the Company's financial statements for the year ended
December 31, 2000, the Company has transferred the hotel
management service business to one subsidiary on January 1,
2000. According to the contract, the Company has transferred
related assets totalling Baht 3,860,585 and liabilities of Baht
1,671,065 and the difference between assets and liabilities is
recorded as cash received from sale of assets relating to the hotel
management service business in the amount of Baht 2,189,520.
6. SHORT-TERM INVESTMENTS
As at December 31, 2000 and 1999, short-term investments in the consolidated
financial statements include fixed deposits of Baht 1,964,389 and Baht
3,557,317, respectively, which are used as collateral for bank guarantees and
employees' loans from bank.
As at December 31, 2000 and 1999, short-term investments in the Company's
financial statements include fixed deposit of Baht 710,054 and Baht 2,691,686,
respectively, which are used as collateral for bank guarantees and employees'
loans from bank.
7. TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are classified by aging as follows:
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Number of accounts
receivable - past due 1,010 1,032 528 606
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Amount past due
Less than 3 months 147,995,063 142,907,550 92,850,143 91,212,930
3-4 months 2,633,911 2,637,450 1,762,346 1,027,952
Over 4 months 16,412,136 17,170,137 7,430,727 9,457,861
Total Baht 167,041,110 162,715,137 102,043,216 101,698,743
Allowance for doubtful
accounts Baht (15,415,755) (20,610,401) (11,403,352) (12,202,268)
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8. INVENTORIES
Inventories consist of the following:
CONSOLIDATED THE COMPANY ONLY
2000 1999 2000 1999
Hotel business
Food and beverage 25,533,590 33,908,119 13,339,987 16,922,939
Chinaware, glassware,
silverware and linen 7,759,747 9,054,823 6,638,742 8,205,647
Mechanical supplies 2,829,783 3,172,352 2,368,218 2,914,318
Other supplies 19,350,950 19,755,103 10,056,033 10,591,729
55,474,070 65,890,397 32,402,980 38,634,633
Condominium business
Land 946,337 1,398,545 - -
Condominium units 35,213,451 51,911,774 - -
Furniture and equipment 10,605,362 15,583,732 - -
46,765,150 68,894,051 - -
Less Allowance for
diminution in value of
condominium units (7,435,150) (5,980,301) - -
39,330,000 62,913,750 - -
Commercial building business
Land 5,440,000 5,440,000 - -
Buildings 51,220,971 51,220,971 - -
Equipment 2,196,040 2,196,040 - -
58,857,011 58,857,011 - -
Less Allowance for
diminution in value
of commercial
buildings (15,454,811) (4,617,010) - -
43,402,200 54,240,001 - -
Baht 138,206,270 183,044,148 32,402,980 38,634,633
As at December 31, 2000 and 1999, interest of Baht 4,107,841 and Baht
6,062,535, respectively, on a loan to finance construction was included in
condominium units.
As at December 31, 2000 and 1999, commercial building is mortgaged as
security for a loan from a financial institution of a subsidiary (see Note 12).
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9. INVESTMENTS AND LOANS
Investments and loans consist of the following :
9.1 Related parties
(more)