NOTE OF FINANCIAL STATEMENT FOR YEAR 1999

transfer the hotel management service business of the Company to Dusit Resort Cha-am Company Limited on January 1, 2000 and also to sell the equipment relating to this business. Dusit Resort Cha-am Company Limited changed its name to Dusit Hotels and Resorts Company Limited on December 23, 1999. On November 15, 1999, the Directors meeting of the Company passed a resolution to close Dusit Thani Delaware, Inc. which is a subsidiary included in the consolidated financial statements. On December 31, 1999, this subsidiary in the liquidation process. For the year ended December 31, 1999 and 1998, Dusit Thani Delaware, Inc. has net income of Baht 2,663,121 and Baht 92,262,057, respectively. The retained earnings of Philippine Hoteliers, Inc. as of December 31,1999 and 1998 are restricted for dividend declaration to the extent of the accumulated deficit that was wiped-out in connection with the companys quasi-reorganization and restructuring of equity position, net of accumulated depreciation on appraisal increase charged to operations. The net amount is Baht 9,950,373 and Baht 12,358,810 has to be accumulated before the company can pay dividends as of December 31, 1999 and 1998, respectively. .../22 - 22 - 20.2 Loans to/from subsidiary, associated and related companies CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 Baht Baht Baht Baht Loans from subsidiary Dusit Thani Delaware, Inc. - - - 107,199,580 - - - 107,199,580 The costs of borrowing are as follows : December 31, 1999 - Loan to subsidiaries commercial bank deposit rate for the period from January 1, 1999 to September 30, 1999 and MLR since October 1, 1999. - Loans from subsidiaries in foreign currencies commercial bank loan outside Thailand rate. All inter company borrowings are not secured. December 31, 1998 - Loan to subsidiaries commercial bank deposit rate - Loans from subsidiaries in foreign currencies commercial bank loan outside Thailand rate All inter - company borrowings are not secured. .../23 - 23 - 20.3 Significant business transactions The Company only 1999 Company Management Other Cost of Selling and Interest Interest Accounts Management Other Leasehold Goodwill on Bank Trade Other service income sales administrative income expense receivable accounts current the acquisition overdraft accounts current income expenses receivable assets of hotel payable liabilities business from the subsidiary Royal Princess Public Co., Ltd. - 25,427,656 - 21,582 15,904 - 88,742 23,975,574 13,620,130 - - 11,458 - - Dusit Hotels and Resorts Co., Ltd. (formerly Dusit Resort Cha-am Co., Ltd.) - 60,000 49,000,000 10,800,000 12,329 - - - 5,350 150,000,001 358,750,000 - - - Philippine Hoteliers, Inc. 28,081,088 1,166,076 - - - - - 7,524,457 11,400 - - - - - Dusit Thani Delaware, Inc. - - - - - 6,531,819 - - - - - - - - Dusit Thani International Co,Litd. - 1,801,200 - - 1,058 - - - 642,000 - - - - - Acme Printing Company Limited - - - 4,779,242 - - - - - - - - 1,481,040 258,338 Crown Property Bureau - - - 2,820,000 - - - - - - - - - - Baht 28,081,088 28,454,932 49,000,000 18,420,824 29,291 6,531,819 88,742 31,500,031 14,278,880 150,000,001 358,750,000 11,458 1,481,040 258,338 1998 Company Management Other Cost of Selling and Interest Interest Management Other Leaseshold Goodwill on Trade Loan from Accrued Other service income sales administrative income expense accounts current the acquisition accounts subsidiary expenses current income expenses receivables assets of hotel payable and liabilities business from associated the subsidiary companies Royal Princess Public Co., Ltd. - 20,467,594 - 53,850 - 1,199,537 11,919,031 17,093,954 - - 9,444 - - 1,242,300 Dusit Hotels and Resorts Co., Ltd. (formerly Dusit Resort Cha-am Co., Ltd.) 8,580,478 859,151 12,249,999 2,700,000 3,072,245 327,945 - 16,500 158,000,001 399,750,000 - - - 17,100,000 Philippine Hoteliers, - Inc. 23,923,854 506,150 - - - - 4,851,683 14,136 - - - - - - Dusit Thani Delaware, Inc. - 736 - - - 4,555,640 - - - - - 107,199,580 4,564,307 - Acme Printing Company Limited - - - 3,576,157 - - - - - - 444,620 - - 128,700 Crown Property Bureau - - - 2,892,108 - - - - - - - - - - Baht 32,504,332 21,833,631 12,249,999 9,222,115 3,072,245 6,083,122 16,770,714 17,124,590 158,000,001 399,750,000 454,064 107,199,580 4,564,307 18,471,000 ..../24 - 24 - Prices and terms are as follows : Management fee 2% of total income Incentive fee 5% of gross profit Marketing fee 2.5% of room revenues Technical fee 3% of room revenues The aforemention fees are similar to the fee charged to other the Companys management hotels. Other income is calculated based on actual expenses incurred. Goodwill on the acquisition of hotel business from the subsidiary is based on the price agreed upon by the Company and the subsidiary. 21. COMMITMENTS AND CONTINGENCIES As at December 31, 1999 and 1998, subsidiaries have various contracts for premises construction totalling Baht 623,337,123, which were completed in 1998. As at December 31, 1999 and 1998, the portion of works which has to be paid by these subsidiaries in subsequent years amounts to Baht 32,230,145. As at December 31, 1999 and 1998, the Company and subsidiaries have contingent liabilities for bank guarantees totalling Baht 19,763,943 and Baht 19,616,543, respectively. As at December 31, 1999 and 1998, the Company has contingent liabilities for bank guarantees totalling Baht 14,551,243 and Baht 14,766,243, respectively. On April 2, 1999, the Company and a subsidiary entered into an agreement to sell 3,000,000 shares of DPMN Industries Company Limited to MBK Industry Company Limited at Baht 0.01 per share (Baht 15,000 for each company). According to the agreement, the Company and subsidiary agree at their option to buy the shares back within 3 years at the net book asset value on the repurchase date. As at December 31, 1999 and 1998, the Company was a third defendant in a lawsuit claiming Baht 1,045,860,000 from the 4 defendants. Based on consultation with legal advisors, management believes that such case will not have material effect on the operations and financial position of the Company. /25 - 25 - 22. INVESTMENT PROMOTION PRIVILEGES Two subsidiaries, namely, Korat Thani Corporation Limited and Supsinthanee Company Limited were granted investment promotion privileges for hotel business by virtue of the provisions of the Investment Promotion Act B.E. 2520 (1977) such as exemption from customs duty and/or business tax on equipment, etc. The companies also obtained exemption from company income tax for hotel business for 8 years from the date of receiving income from operations. Shareholders of these companies will also benefit from exemption of tax on dividends from hotel business during the period in which the companies receive exemption from company income tax. The aforementioned two subsidiaries thus have to comply with certain terms and conditions required of each promoted business. 23. REVENUES FROM PROMOTED BUSINESS For the year ended December 31, 1999, revenue from 2 subsidiaries which are promoted businesses included in the consolidated financial statements consist of the following : Promoted Non-promote Total business business Amount Baht Baht Baht Revenues from sales and services 78,465,286 181,500 78,646,786 Interest Income 132,289 772 133,061 Other Income 6,793,007 149,612 6,942,619 Total Revenues 85,390,582 331,884 85,722,466 24. PROVIDENT FUND The Company and four subsidiaries, namely, Dusit Hotels and Resorts Company Limited (formerly Dusit Resort Cha-am Company Limited), Royal Princess Public Company Limited, Korat Thani Corporation Limited and Supsinthanee Company Limited, also have set up a provident fund for its employees which has been registered in accordance with the Provident Fund Act B.E. 2530 (1987). During the year 1999, the Company and subsidiaries were granted permission from the Ministry of Finance to temporarily cease the operation of the provident fund of the Company and subsidiary companies until December 31, 1999. Philippine Hoteliers, Inc. has a noncontributory retirement plan covering all of its regular employees. Current and past service costs charged to operations are actuarially determined. Past service costs are amortized over 10 years. .../26 - 26 - 25. BUSINESS SEGMENT INFORMATION Business segment information of the Company and subsidiaries by industries is as follows: Million Baht Revenues Profit Net Income Assets (loss) (Loss) Employed 1999 Parent Company Room 535.43 449.82 Food and beverage 515.71 193.00 Others 116.45 60.37 Total 1,167.59 703.19 254.67 3,845.95 Dusit Hotels and Resorts Company Limited (formerly Dusit Resort Cha-am Company Limited) Room - - Food and beverage - - Condominium 7.80 0.66 Others - - Total 7.80 0.66 (19.51) 381.83 Royal Princess Public Company Limited and Subsidiaries Room 172.60 136.22 Food and beverage 219.76 74.95 Others 33.88 17.19 Total 426.24 228.36 (113.11) 1,332.86 Philippine Hoteliers, Inc. Room 372.78 Food and beverage 213.82 Others 28.87 Total 615.47 498.88 (2.33) 753.43 Dusit Thani Delaware, Inc. Total - - 2.66 88.58 Dusit Thani International Co., Ltd. Total - - (1.67) 4.45 2,217.10 1,431.09 120.71 6,407.10 Add (Less) Inter-company transactions - - 22.30 (2,523.21) Total 2,217.10 1,431.09 143.01 3,883.89 Add Minority interest in net loss of subsidiaries 23.69 Consolidated net income 166.70 Consolidated Assets 3,883.89 .../27 - 27 - Million Baht Revenues Profit Net Income Assets (loss) (Loss) Employed 1998 Parent Company Room 495.32 406.03 Food and beverage 442.97 161.85 Others 109.49 58.90 Total 1,047.78 626.78 348.95 3,899.27 Dusit Hotels and Resorts Company Limited (formerly Dusit Resort Cha-am Company Limited) Room 82.30 70.11 Food and beverage 69.78 27.55 Condominium 10.27 1.38 Others 14.81 6.38 Total 177.16 105.42 354.63 402.74 Royal Princess Public Company Limited and Subsidiaries Room 154.56 120.67 Food and beverage 213.30 71.21 Others 32.64 10.27 Total 400.50 202.15 (176.86) 1,439.40 Philippine Hoteliers, Inc. Room 453.37 Food and beverage 217.38 Others 30.02 Total 700.77 374.72 54.06 984.17 Dusit Thani Delaware, Inc. Total - - 92.26 113.36 Dusit Thani International Co., Ltd. Total - - 0.98 6.60 2,326.21 1,309.07 674.02 6,845.54 Less Inter-company transactions (0.42) (0.42) (87.44) 2,616.36 Total 2,325.79 1,308.65 586.58 4,229.18 Add Minority interest in net loss of subsidiaries 10.47 Consolidated net income 597.05 Consolidated Assets 4,229.18 .../28 - 28 - 26. DISCLOSURE OF FINANCIAL INSTRUMENTS According to a letter received from The Stock Exchange of Thailand dated October 21, 1998, the Company is required to use the International Accounting Standard (IAS) No. 32 - Presentations and Disclosure of Financial Instruments as a guideline for disclosure of the Companys financial instruments both on-balance sheet and off-balance sheet. 26.1 Accounting policies Details of significant accounting policies are disclosed in Note 4.7. 26.2 Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Company and its subsidiaries. Concentrations of the credit risk with respect to trade receivables are limited due to the large number of customers comprising the customer base, and dispersion across different geographic regions in Thailand and the Philippines. In the case of recognized financial assets, the carrying amount of the assets recorded in the balance sheet, net of a portion of allowance for doubtful debts, represents the Company and its subsidiaries maximum exposure to credit risk. In addition, the Company still has credit risk of off balance sheet transactions as disclosed in Note 26.4. 26.3 Interest risk Interest rate risk in the balance sheet arises from the potential for a change in interest rates to have an adverse effect on the net interest earnings of the Company and its subsidiaries in the current reporting period and in future years. Information related to interest rate and maturities of long-term loans are disclosed in Note 14. 26.4 Fair value of financial instruments The following methods and assumptions were used by the Company and its subsidiaries in estimating fair value of financial instruments as disclosed herein: Cash in hand and at banks, and short-term investments whose maturity is less than 90 days, and trade accounts and notes receivable; the carrying values approximate their fair values. .../2 - 29 - As at December 31, 1999 and 1998, fixed deposits with maturity of 1 year and short-term investments whose maturities is more than 90 days have carrying value of Baht 263,423,003 and Baht 1,976,306, respectively, and fair value of Baht 270,909,727 and Baht 2,075,986, respectively. The fair value is estimated using the discounted cash flow analysis based on the interest rate currently offered for deposits with similar terms. The determination of fair value of investments and the presentation of such items are described in Notes 4.4 and 9 to the financial statements. Bank overdrafts and loans from banks, carrying variable rates of interest and trade accounts and notes payable; the carrying amounts of these financial liabilities approximate their fair values. Short-term and long-term loan carrying variable rates of interest; the carrying values approximate their fair values. Forward exchange contract As at December 31, 1998, the Company has a forward exchange contract with a bank to buy US$ 1,750,000 at the rate of Baht 40.07 for US$ 1, for the remaining period of 15 days. As at December 31, 1998, the exchange rate for US$ 1 is Baht 36.89. 27. YEAR 2000 PROBLEM (Unaudited Not Covered by the Report of Independent Certified Public Accountants) The Company and its subsidiaries had modified their computer systems to address the Year 2000 problems and evaluated its impact. To date, the Company and its subsidiaries have not experienced any material impact on their operations. 28. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE 28.1 On January 7, 2000, the Directors meeting of Royal Princess Public Company Limited passed a resolution to purchase 480,003 ordinary shares of Supsinthanee Company Limited from the existing shareholders at Baht 0.01 per share. On January 10, 2000, the 480,000 shares were purchased, as a result the percentage of shareholding of Royal Princess Public Company Limited in Supsinthanee Company Limited increased from 77.46% to 99.99%. 28.2 On January 20, 2000, a subsidiary, Royal Princess Public Company Limited was a defendant in a lawsuit claiming Baht 39,666,350. Based on consultation with legal advisors, management believes that such case will not have material effect on the operations and financial position of the company.