Minor International public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004 13 1 Accounting policies These interim consolidated and Company financial statements are prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Account Profession Act B.E. 2547 and the financial reporting requirements of the Securities and Exchange Commission. The primary financial statements (i.e. balance sheets, statements of income, changes in shareholders’ equity and cash flows) are prepared in the full format as required by the Securities and Exchange Commission. The notes to the interim financial statements are prepared in a condensed format according to Thai Accounting Standard 41, ‘Interim Financial Reporting’ and additional notes are presented as required by the Securities and Exchange Commission. The accounting principles applied may differ from generally accepted accounting principles adopted in other countries and jurisdictions. The accompanying interim financial statements are therefore not intended to present the financial position and results of operations and cash flows in accordance with jurisdictions other than Thailand. Consequently, the interim financial statements are prepared based on the assumption that the users of the interim financial statements have an understanding of Thai generally accepted accounting principles and practices. The interim consolidated and Company financial statements have been prepared under the historical cost convention. For the convenience of the user, an English translation of the interim financial statements has been prepared from the interim financial statements that are issued in the Thai language. The preparation of interim financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The comparative figures in interim consolidated and company financial statements as at 31 December 2004 and for the three-month period ended 31 March 2004 have been adjusted to conform with changes in presentation in the interim consolidated and company financial statements as at 31 March 2005 and for the three-month period ended 31 March 2005. The significant accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2004. Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would be also appropriate to anticipate or defer such costs at the end of the financial year. Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate respected for the full financial year. These interim financial statements should be read in conjunction with the 2004 annual financial statements.
Transcript
Minor International public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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1 Accounting policies
These interim consolidated and Company financial statements are prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Account Profession Act B.E. 2547 and the financial reporting requirements of the Securities and Exchange Commission. The primary financial statements (i.e. balance sheets, statements of income, changes in shareholders’ equity and cash flows) are prepared in the full format as required by the Securities and Exchange Commission. The notes to the interim financial statements are prepared in a condensed format according to Thai Accounting Standard 41, ‘Interim Financial Reporting’ and additional notes are presented as required by the Securities and Exchange Commission. The accounting principles applied may differ from generally accepted accounting principles adopted in other countries and jurisdictions. The accompanying interim financial statements are therefore not intended to present the financial position and results of operations and cash flows in accordance with jurisdictions other than Thailand. Consequently, the interim financial statements are prepared based on the assumption that the users of the interim financial statements have an understanding of Thai generally accepted accounting principles and practices. The interim consolidated and Company financial statements have been prepared under the historical cost convention. For the convenience of the user, an English translation of the interim financial statements has been prepared from the interim financial statements that are issued in the Thai language. The preparation of interim financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. The comparative figures in interim consolidated and company financial statements as at 31 December 2004 and for the three-month period ended 31 March 2004 have been adjusted to conform with changes in presentation in the interim consolidated and company financial statements as at 31 March 2005 and for the three-month period ended 31 March 2005. The significant accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2004. Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would be also appropriate to anticipate or defer such costs at the end of the financial year. Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate respected for the full financial year. These interim financial statements should be read in conjunction with the 2004 annual financial statements.
Minor International public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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2 Segment information
The Group and the Company operate in Thailand in several business segments. Financial information by segment for the consolidated financial statements are as follows :- For the three-month period ended 31 March (Baht Million) Retails and Food and Land Investing Hotel property Entertainment beverage Management development in other operations business operations Spa services operations operation operation company Eliminated Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 Revenues 1,178 680 109 95 22 14 70 69 1,199 1,084 49 33 - - - - (79) (57) 2,548 1,918 Segment results 829 469 82 73 12 7 28 31 754 686 49 33 - - - - (51) (33) 1,703 1,266 Other income 76 72 (Gain)/loss on foreign exchange 5 (1) Selling and administrative expenses (1,297) (1,049) Interest expense (69) (53) Profit before income tax 418 235 Income tax (97) (56) Profit before minority interests 321 179 (Profit) attributable to minority interests, net (21) (19) Profit for the period 300 160
Minor International public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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2 Segment information (Cont’d)
As at 31 March (Baht Million) Land and Retails and Food and projects Investing in Hotel property Entertainment beverage Management development other operations business operations Spa services operations operation operation companies Eliminated Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
As at 31 March (Baht Million) Land and Retails and Food and projects Investing in Hotel property Entertainment beverage Management development other operations business operations Spa services operations operation operation companies Eliminated Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
Trade accounts receivable, net 464,097 441,047 26,963 31,235 Certain debtors with settlements problems are included in the above trade account receivable. The Group has set up allowances to recognize these doubtful accounts. The outstanding balances as at 31 March 2005 and 31 December 2004 can be aged as follows: Consolidated Company
31 March
2005 31 December
2004 31 March
2005 31 December
2004 Baht’000 Baht’000 Baht’000 Baht’000 Not yet due 318,980 324,614 17,771 24,612 Overdue Under 90 days 110,519 94,737 8,057 6,406 91 days to 180 days 35,754 14,658 1,168 596 Over 180 days 3,486 12,172 563 216 Trade accounts receivable 468,739 446,181 27,559 31,830 Less Allowance for doubtful accounts (4,642) (5,134) (596) (595)
Trade accounts receivable, net 464,097 441,047 26,963 31,235 4 Related party transactions
Certain major shareholders of the Company are also major shareholders in Minor Corporation Public Company Limited and its subsidiaries. Therefore, Minor Corporation Public Company Limited and its subsidiaries are considered related companies of the Group. During the period the Group and the Company have entered into significant transactions with its subsidiaries, associates, joint venture and related companies. The terms and basis of such transactions are negotiated between the parties in the ordinary course of business and according to normal trade conditions.
Pricing policies for related party transactions comprise : Pricing policies Sales and purchases Market prices Rental income Agreed prices which approximate market prices Management income and other income Agreed prices which approximate market prices Interest income Rate as mutually agreed by shareholders and rate determined
with reference to the interest rate quoted by commercial banks Rental expenses Agreed prices which approximate market prices Management expenses Agreed prices which approximate market prices Royalty fee Agreed prices which approximate market prices Interest expenses Rate determined with reference to the interest rate quoted by
commercial banks
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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4 Related party transactions (Cont’d)
Significant transactions with the related companies for the three-month period ended 31 March 2005 and 2004 are summarised as follows:- For the three-month period ended 31 March Consolidated Company 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000 Sales Associates 4,362 4,054 - - Rental income Subsidiaries - - 9,654 9,017 Related companies 5,017 4,089 - - Total rental income 5,017 4,089 9,654 9,017 Interest income Subsidiaries - - 29,982 14,669 Associates 1,527 643 1,345 228 Related companies 31 38 - - Total interest income 1,558 681 31,327 14,897
Management fee income Subsidiaries - - 22,079 22,341 Associates 225 225 - - Related companies 4,590 2,902 300 300 Total management fee income 4,815 3,127 22,379 22,641 Other income Subsidiaries - - 1,998 2,923 Associates 890 916 680 680 Total other income 890 916 2,678 3,603
Management fee expenses Related companies 9,545 8,614 2,553 2,553
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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Royalty fee Subsidiaries - - 3,982 3,512
Other expenses Related companies 790 962 132 -
Directors’ remuneration 1,327 335 533 300
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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4 Related party transactions (Cont’d)
Directors’ remuneration represents directors’ fees (exclusive of salaries and related benefits payable to the executive directors) paid to the Company’s directors in accordance with Section 90 of the Public Limited Company Act, and was approved by the shareholders in their Annual General Meeting. As at 31 March 2005 and 31 December 2004, outstanding balances arising from receivable, payable, advances and loans from/to related companies are summarised as follows:
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000
Amounts due from related companies Subsidiaries - - 71,592 103,313 Associates 15,076 19,302 11,838 2,074 Related companies 6,342 5,522 1,200 600 Total amounts due from related companies 21,418 24,824 84,630 105,987
Outstanding amounts due from related companies as at 31 March 2005 and 31 December 2004 can be analysed by aging as follows:
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000
Not yet due 9,141 8,112 28,101 29,484 Overdue less than 90 days 1,289 5,419 18,429 21,666 Overdue 91 - 180 days 935 590 11,144 14,083 Overdue 181 - 365 days 1,010 602 15,001 20,342 Overdue over 365 days 9,043 10,101 11,955 20,412 Total amounts due from related companies 21,418 24,824 84,630 105,987
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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4 Related party transactions (Cont’d)
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000
Amounts due to and advances from related companies
Subsidiaries - - 9,052 5,052 Associates 1 168 - - Related companies 10,102 34,406 50 - Total amounts due to and advances from related companies
10,103
34,574
9,102
5,052
Long-term loans to related companies Subsidiaries - - 2,158,370 1,750,013 Associates 142,954 188,849 109,424 126,740 Related companies 3,133 3,129 - - Total long-term loans to related companies 146,087 191,978 2,267,794 1,876,753 Short-term loans from related companies Subsidiaries - - 1,462,040 847,924 Total short-term loans from related companies - - 1,462,040 847,924
5 Investments - equity method
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000
Subsidiaries - - 7,391,121 6,670,912 Associates 125,450 126,912 93,538 91,251 Total investments - equity method 125,450 126,912 7,484,659 6,762,163 a) Investments in subsidiaries
Company Baht’000 For the three-month period ended 31 March 2005 Opening net book value 6,670,912 Opening balance of negative equity in investment in a subsidiary (37,654) Acquisitions 455,241 Decapitalise in Thai Assets Management Property Fund (9,086) Share of profit in subsidiaries, net 287,282 Translation adjustment (691) Changes in fair value reserve for available-for-sale securities of a subsidiary 1,772 Dividends received (25,292) Realised gain on sales of warrants by a subsidiary 19,711 Closing balance of negative equity in investment in a subsidiary 28,926 Closing net book value 7,391,121
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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5 Investments - equity method (Cont’d)
a) Investments in subsidiaries (Cont’d)
All holdings are in the ordinary share capital of the subsidiaries and in fund units in the Property Fund subsidiary.
Subsidiaries included in the consolidated financial statements are as follows: Company - 31 March 2005 Investment Nature of Country of Nature of portion
business incorporation relationship (%) Chao Phaya Resort Limited Hotel operation and Thailand Shareholder 81.24 shopping mall Hua Hin Resort Limited Hotel operation Thailand Shareholder 100 Maerim Terrace Resort Limited Hotel operation Thailand Shareholder 45.3 (1) Baan Boran Chiangrai Limited Hotel operation Thailand Shareholder 100 Samui Resort and Spa Limited Hotel operation Thailand Shareholder 100 Royal Garden Development Limited Hotel operation Thailand Shareholder 100 Royal Garden Plaza Limited Shopping mall Thailand Shareholder 100 Royal Garden Entertainment Limited Entertainment operation Thailand Shareholder 100 Mandara Spa (Thailand) Limited Spa services Thailand Shareholder 51 (2) Royal Garden Hotel Management Limited Hotel management Thailand Shareholder 100 R.G.E. (HKG) Limited Management Hong Kong Shareholder 100 RGR International Limited Management British Virgin Shareholder 100 Island RNS Holding Limited Property investment Thailand Shareholder 72.39 The Minor Food Group Public Company Limited
Sales of food and beverage
Thailand Shareholder 99.70
Rajadamri Hotel Public Company Limited Hotel operation Thailand Shareholder 49.3 (3) Thai Project Property Fund Property investment Thailand Shareholder 99.90 Thai Assets Management Property Fund Property investment Thailand Shareholder 100 Samui Village Limited Hotel operation Thailand Shareholder 99.93
(1) Investment portion of 45.3% represents direct holding in Maerim Terrace Resort Limited. Another 23.7% indirect holding is invested through subsidiary.
(2) Investment portion of 51% represents direct holding in Mandara Spa (Thailand) Limited. Another 49% indirect holding is
invested through subsidiary. (3) Investment portion of 49.3% represents direct holding in Rajadamri Hotel Public Company Limited. Another 41.5% indirect
holding is invested through subsidiary.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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5 Investments - equity method (Cont’d)
a) Investments in subsidiaries (Cont’d)
Subsidiaries under MFG, Hua Hin Resort Limited, RGR International Limited and Rajadamri Hotel Public Company Limited included in the preparation of the consolidated financial statements are:
Investment
portion
hold Country of Company Nature of business (%) incorporation
MFG’s subsidiaries Swensen’s (Thai) Limited Sales of food and beverage 100 Thailand Sizzler Thai Limited Sales of food and beverage 100 Thailand Minor Cheese Limited Manufacturing and 100 Thailand sales of cheese Minor Dairy Limited Manufacturing and 100 Thailand sales of ice-cream Minor DQ Limited Sales of food and beverage 100 Thailand R.G.R. Food Service Limited Sales of food and beverage 100 Thailand Catering Associates Limited Catering service 51 Thailand Burger (Thailand) Limited Sales of food and beverage 95 Thailand International Franchise Holding (Labuan) Limited
Franchise owner 100 Malaysia
The Pizza Restaurant Company Limited Sales of food and beverage 100 Thailand Sub Thawee Property Fund Real estate investor 100 * Thailand SLRT Limited Sales of food and beverage 100 Thailand
*Paid up capital of Sub Thawee Property Fund represents capital of Class B and Class C unitholders.
Hua Hin Resort Limited’s subsidiary Hua Hin Village Limited Hotel operation 100 Thailand RGR International Limited’s subsidiary Mandara Spa Ventures Limited Spa services 100 British Virgin Rajadamri Hotel Public Company Limited’s subsidiaries Luxury Limosine Company Limited Domestic transportation 100 Thailand Rajadamri Residence Company Limited Project development 100 Thailand Rajdamri Hotel Public Company Limited During the period, the Group acquired 14,927,490 additional ordinary shares in Rajdamri Hotel Public Company Limited for consideration of Baht 705 million. As a result, the Group holds 40,873,155 shares representing 90.8% in RHC’s issued shares. Goodwill arising from this acquisition is amounting to Baht 61.9 million.
b) Investments in associates Consolidated Company Baht’000 Baht’000
For the three-month period ended 31 March 2005 Opening net book value 126,912 91,251 Acquisition - 7,285 Share of loss in associates (1,462) (4,998) Closing net book value 125,450 93,538
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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5 Investments - equity method (Cont’d)
b) Investments in associates (Cont’d)
Maikao Vacation Villas Limited During the period, the Company purchased 60,000 ordinary shares in Maikao Vacation Villas Limited (MVVL), representing 15% of the issued shares, for consideration of Baht 7.3 million from its subsidiary, RNS Holding Limited. As a result, the Company holds directly 50% of MVVL’s issued shares. The investment status of MVVL therefore changed from investment in associated company to investment in joint venture. The equity method of accounting is applied to this investment in both the consolidated and Company financial statements. Select Service Partner Limited The Group has not included the financial statements of Select Service Partner Limited which is a MFG’s associated company in the consolidated financial statements because it does not have control over this company although the equity interest held is 51 percent. The equity method of accounting is applied to this investment in the consolidated financial statements. Associated companies are as follows:
Consolidated - 31 March 2005 Investment Nature of Country of Nature of portion
business incorporation relationship (%) Coco Plam Hotel & Resort Co., Ltd. Hotel operation Thailand Shareholder 40(1)
Maikhao Vacation Villas Limited Sales of Right-to-Use Thailand Shareholder 50
in time sharing resort
Select Service Partner Limited Sales of food Thailand Shareholder 51 and beverage S&P Minor Food Limited Real estate rental Thailand Shareholder 50
(1) Investment portion in Coco Palm Hotel & Resort Co., Ltd is 65.04% but the Company has voting right of 40%.
Company – 31 March 2005 Investment Nature of Country of Nature of portion
business incorporation relationship (%) Coco Plam Hotel & Resort Co., Ltd. Hotel operation Thailand Shareholder 40(1) Maikhao Vacation Villas Limited Sales of Right-to-Use Thailand Shareholder 50
in time sharing resort
(1) Investment portion in Coco Palm Hotel & Resort Co., Ltd is 65.04% but the Company has voting right of 40%.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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6 Other long-term investments, net
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000 Other companies, net 46,172 45,813 13 13 Related companies, net 144,478 142,719 21,783 21,238 Other long-term investments, net 190,650 188,532 21,796 21,251 a) Investments in other companies Consolidated Company Baht’000 Baht’000
For the three-month period ended 31 March 2005 Opening net book amount 45,813 13 Acquisition 5 - Change in fair value of investments 354 - Closing net book amount 46,172 13
b) Investments in related companies
Consolidated Company Baht’000 Baht’000
For the three-month period ended 31 March 2005 Opening net book amount 142,719 21,238 Change in fair value of investments 1,759 545 Closing net book amount 144,478 21,783
7 Property, plant and equipment, net
Consolidated Company Baht’000 Baht’000 For the three-month period ended 31 March 2005 Opening net book amount 10,146,919 490,489 Additions 214,936 7,606 Write off (14,057) - Disposals (7,640) (12) Reverse impairment charge 1,730 - Depreciation (273,760) (13,981) Closing net book amount 10,068,128 484,102
A subsidiary operate its hotel on leasehold land. The subsidiary has mortgaged parts of their leasehold rights to land and the constructions thereon, machinery and equipment to secure long-term loans from financial institutions. Another subsidiary has mortgaged parts of its land and building to secure long-term loans from financial institutions (Note 9). During 2002 to 2003, certain subsidiaries entered into sale and leaseback agreements with the Thai Assets Management Property Fund and Sub Thawee Property Fund with the first right of repurchase. The financial statements of these property funds are consolidated in the consolidated financial statements. The sale and leaseback transactions were accounted for as secured borrowing (Note 9). There was no change in the presentation of the property, plant and equipment in the consolidated financial statements as a result of these transactions.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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7 Property, plant and equipment, net (Cont’d)
As at 31 March 2005, long-term borrowings (Note 9) are secured by fixed assets of MFG and its subsidiaries with book values of Baht 342 million. Consolidated Company Baht Million Baht Million Capital commitments as at 31 March 2005 944.4 350.0 Capital commitments as at 31 December 2004 65.4 1.1
8 Intangible asset, net
Consolidated (Baht’000) Franchise Initial development franchise Negative expenses fees Goodwill goodwill Total For the three-month period ended 31 March 2005
Opening net book value 6,154 20,743 1,567,153 (449,774) 1,144,276 Goodwill arisen from acquisition of RHC (Note 5) - - 61,896 - 61,896 Additions during the period - 390 - - 390 Write-off - - 59 - 59 Amortisation charge (354) (947) (13,898) 8,533 (6,666) Closing net book value 5,800 20,186 1,615,210 (441,241) 1,199,955
9 Long-term borrowings
Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000 Current portion Loans from financial institutions 300,250 263,250 - - Long-term borrowings Loans from financial institutions 2,128,757 1,490,449 1,154,040 469,440 Other borrowings 1,250,000 1,274,900 - - 3,378,757 2,765,349 1,154,040 469,440 Total long-term borrowings 3,679,007 3,028,599 1,154,040 469,440 Maturity of long-term borrowings : Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht’000 Baht’000 Baht’000 Baht’000 Within 1 year 300,250 263,250 - - Between 2 and 5 years 2,128,757 1,443,449 1,154,040 469,440
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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After 5 years 1,250,000 1,321,900 - - Total long-term borrowings 3,679,007 3,028,599 1,154,040 469,440
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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9 Long-term borrowings (Cont’d)
The movements in the borrowings can be analyzed as follows : Consolidated Company Baht’000 Baht’000 For the three-month period ended 31 March 2005 Opening amount, net 3,028,599 469,440 Borrowings 684,600 684,600 Repayment of borrowings (34,400) - Transaction costs 208 - Closing amount, net 3,679,007 1,154,040
Loans from financial institutions As at 31 March 2005, loans from financial institutions in the consolidated financial statements totalling Baht 2,429 million comprised : a) The Company’s outstanding loans of Baht 319.4 million and Baht 150 million. The first loan carries a MLR minus a fixed rate of
interest and is due for repayment in 2006. The loan is subject to certain conditions with which the Company has to comply with the loan period. Another loan of Baht 150 million carries a fixed rate of interest and is due for repayment in 2006. The loan is subject to certain conditions with which the Company has to comply with the loan period.
b) The Company’s outstanding loans of Baht 684.6 million. The loan carries a MLR minus a fixed rate of interest and is due for
repayment in 2007. The loan is subject to certain conditions with which the Company has to comply with the loan period. c) Two subsidiaries’ outstanding loans amounting to Baht 821 million. The loans are secured against a mortgage of land, part of their
leasehold rights to land and constructions thereon, the machinery and equipment of two subsidiaries (Note 7). The loans carry interest at a fixed rate for the year 2004 to 2005 and will change to MLR minus a fixed rate and MLR on 1 January 2006. The loans are due for repayment during 1999 to 2009.
d) A subsidiary’s unsecured loan of Baht 220 million. The loan carries a fixed rate of interest for the first 3 years and a floating rate
of interest for the fourth year. The loan is to be repaid in seven semi-annually installments starting from 30 June 2004. The loan is subject to certain conditions with which the subsidiary has to comply with the loan period.
e) A subsidiary’s unsecured loan of Baht 124 million. The loan carries a fixed rate of interest and is due for repayment within 4 years.
The first repayment totalling Baht 26 million is due in the fourth quarter of 2004. The loan is subject to certain conditions with which the subsidiary has to comply with the loan period.
f) A subsidiary’s unsecured loan of Baht 110 million. The loan carries a fixed rate of interest and is due for repayment within 2006.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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9 Long-term borrowings (Cont’d)
Other borrowings Other borrowing loan amounting to Baht 1,250 million represents borrowings by the two property funds as follows : a) Long-term loan amounting to Baht 800 million representing Type A and B investment units in the Thai Assets Management Property
Fund being units held by banks and financial institutions. These unitholders receive interest at fixed rates and MLR minus fixed rates as specified in the Unit Holders Agreement. The loans are repayable within 10 years.
Thai Assets Management Property Fund holds sub-lease rights and legal titles in the Group’s property, plant and equipment with a book value of Baht 1,172 million as collateral.
b) Long-term loan amounting to Baht 450 million representing Type A investment units in the Sub Thawee Property Fund being units held
by banks and financial institutions. These unitholders receive interest at MLR minus fixed rates as specified in the Unit Holders Agreement. The loans are repayable within 10 years.
Sub Thawee Property Fund holds the sub-lease rights and legal titles in the Group’s property, plant and equipment with a book value of Baht 342 million as collateral.
10 Liabilities under finance lease agreements, net
Consolidated Company 31 March
2005 31 December
2004 31 March
2005 31 December
2004 Baht’000 Baht’000 Baht’000 Baht’000
Liabilities under finance lease agreements 50,959 55,765 - - Less Deferred interest expenses (3,984) (5,000) - - 46,975 50,765 - - Less Current portion (13,838) (14,889) - - Liabilities under finance lease agreements, net 33,137 35,876 - - Three subsidiaries have entered into finance lease agreements with a leasing company for rental of motor vehicles for operations and are committed to pay rental fees on a monthly basis. As at 31 March 2005, minimum lease commitments under the finance lease agreements are as follows:
Year Million Baht 2005 16,763
2006 - 2013 34,196 50,959
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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11 Debentures
Consolidated and Company
31 March 31 December 2005 2004 Baht’000 Baht’000
Current portion 212,500 212,500 Debentures due in longer term 2,562,500 2,668,750
Total debentures 2,775,000 2,881,250 The movements in debentures can be analysed as follow: Consolidated and Company Baht’000 For the three-month period ended 31 March 2005 Opening amount, net 2,881,250 Repayment (106,250)
Closing amount, net 2,775,000
Debentures comprise: a) 1,700,000 units of debentures issued during the third quarter of 2002, (unsecured, senior and without a debenture holder’s
representative) with a par value of Baht 1,000 each, totalling Baht 1,700 million, to be used for the repayment of previous debentures and long-term loans before their due dates. The maturity period of the debentures is 5 years. The debentures will be due semi-annually and will be redeemed 8 times in amount of Baht 106.25 million each with the first redemption due on 23 August 2003. The last redemption amount will be Baht 850 million on 23 August 2007. The debentures holders are entitled to receive interest at a fixed rate, and the Company will pay interest semi-annually on 23 February and 23 August of each year, throughout the debentures’ term. The terms and conditions of the debentures holders’ rights contain certain covenants, including the maintenance of a certain debt to equity ratio, and limits on the payment of dividends and the disposal and transfer or pledge of certain operating assets of the Company which are used in its main operations.
b) Debentures issued in January 2004 which are unsecured, senior and without a debenture holder’s representatives totalling Baht 1,000
million. These debentures have a fixed rate of interest and are due for repayment within 2010. c) Debentures issued in December 2004 which are unsecured, senior and without a debenture holder’s representatives amounting to Baht
500 million. These debentures have a fixed rate of interest and due for repayment within 2007. The Board of Directors of a subsidiary has approved the issue of additional six-year unconvertible debentures without warrants of an amount not exceeding Baht 2,000 million. However, as at 31 March 2005 these debentures have not yet been offered. The carrying amounts of long-term debentures for consolidated and Company financial statement as of 31 March 2005 approximate to their fair values.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
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12 Share capital and share premium
Consolidated Number of
ordinary shares
Shares’000
Number of preferred
shares Shares’000
Ordinary
shares Baht’000
Preference
shares Baht’000
Share
premium Baht’000
Total Baht’000
For the three-month period ended 31 March 2005 Opening balance 2,413,258 63,520 2,413,258 63,520 487,212 2,963,990 Reclassify warrant issued by by Company to share premium - - - - 19,711 19,711 Issue of shares 6,443 - 6,443 - 2,339 8,782 Closing balance 2,419,701 63,520 2,419,701 63,520 509,262 2,992,483 Company Number of
ordinary shares
Shares’000
Number of preferred
shares Shares’000
Ordinary
shares Baht’000
Preference
shares Baht’000
Share
premium Baht’000
Total Baht’000
For the three-month period ended 31 March 2005 2,413,258 63,520 2,413,258 63,520 481,272 2,958,050 Opening balance Reclassify warrant issued by by Company to share premium - - - - 19,711 19,711 Issue of shares 6,443 - 6,443 - 2,339 8,782 Closing balance 2,419,701 63,520 2,419,701 63,520 503,322 2,986,543 As at 31 March 2005, the registered shares comprise 2,565.4 million ordinary shares and 200 million preferred shares with par value of Baht 1 per share. The issued and fully paid up shares comprise of 2,419,701,141 ordinary shares and 63,520,000 preferred shares.
As at 31 March 2005, the Company has not recorded dividends for cumulative preferred shares amounting to Baht 15.6 million as liabilities in the financial statements.
13 Warrants
13.1 Warrants issued to the directors and employees of the Company and its subsidiaries The Company has issued 5,000,000 warrants to the directors, employees of the Company and its subsidiaries at no cost. As at 31 March 2005, 3,212,146 warrants have been exercised, of which 526,000 warrants totaling Baht 8,783,118 were exercised during the three-month period ended 31 March 2005. 1,787,854 warrants remain unexercised. The extraordinary meeting of the shareholders held on 21 February 2005 approved the issuance of additional 123,800,000 warrants to the directors, employees of the Company and its subsidiaries at no cost. The exercise ratio is 1 warrant per 1 ordinary share at an exercise price of Baht 2.98. Their term is 5 years from the first issue and offering date. As at 31 March 2005, the issuance and offering of the above warrants have been in process of approval from the Office of the Securities and Exchange Commission.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
31
13 Warrants (Cont’d)
13.2 Warrants issued by subsidiary
Warrants issued to the directors and employees of MFG and/or its subsidiaries At the meeting of the Board of Directors held on 19 March 2002, the Board of Directors approved the issue of new 1.6 million units of warrants at no cost to the directors and employees of the subsidiary and/or its subsidiaries. One unit of warrants is entitled to be exercised against one ordinary share with the exercise price at Baht 10 per unit. The warrants can be exercised within the exercise period up to 2007. The plan was approved by the Annual General Meeting of Shareholders on 29 April 2002. As at 31 March 2005, 420,000 units of warrants have been allocated. The first 126,000 units can be exercised starting on May 2003 and 126,000 units starting on May 2004 and the remaining can be exercised starting on May 2005. Up to 31 March 2005, the 237,000 units of warrants have been exercised.
14 Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to shareholders for the period by the weighted average number of paid-up ordinary shares in issue during the period. For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Company and its subsidiaries have convertible preference shares (Note 12) and warrants in issue (Note 13). A calculation is done to determine the number of shares that could have been acquired at market price (determined as the average share price of the Company’s shares during the period) based on the outstanding warrants. The potential shares are added to the ordinary shares outstanding but no adjustment is made to net profit. For the calculation of the diluted earnings per share, the weighted average number of shares assuming conversion of all dilutive potential ordinary shares for the three-month period ended 31 March 2005 are 69,927,658 shares (as at 31 March 2004 : 94,892,460 shares). Earnings per share is calculated using the post-split number of shares following the reduction in par value of ordinary shares registered with the Ministry of Commerce in May 2004. Earnings per share for three-month periods ended 31 March 2004 have been recalculated using the post-share split number of shares.
Consolidated and Company For the three-month period ended 31 March 2005 2004 Shares’000 Shares’000 (Restated)
Weighted average number of ordinary shares in issue 2,417,581 2,252,280 Adjusted for own shares held by a subsidiary (151,634) (151,634) Weighted average number of ordinary shares in issue, net 2,265,947 2,100,646 Effect of dilulive potential ordinary shares Warrants 6,407 51,998 Convertible preferred shares 63,520 42,895 Dilutive potential ordinary shares 69,927 94,893 Weighted average number of ordinary shares for diluted earnings 2,335,874 2,195,539
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
32
14 Earnings per share (Cont’d)
Consolidated and Company For the three-month
period ended 31 March 2005 2004 (Restated)
Net profit for the period (Baht’000) 300,447 160,067 Less Accumulated dividends for Preferred shares (Baht’000) (2,301) (4,075) Net profit attributable to shareholders (Baht’000) 298,146 155,992 Basis earnings per share (Baht) 0.13 0.07 Net profit for the period (Baht’000) 300,447 160,067 Less Accumulated dividends for Preferred shares (Baht’000) - - Net profit attributable to shareholders (Baht’000) 300,447 160,067 Diluted earnings per share (Baht) 0.13 0.07
15 Commitments
During the three - month period ended 31 March 2005 commitments which have changed from those reported at 31 December 2004 are as follows: The Company
- The Company has entered into an agreement to lease the land on which its hotel building is built for 30 years, ending in the year 2018. The
Company is committed to pay rental fees at a certain percentage of gross revenue (which is to be increased annually until it reaches a specified rate) or at a minimum rental fee as stipulated in the agreement, whichever is higher. As at 31 March 2005, the Company’s future payment commitments, according to the minimal rental fees stipulated in the agreement are approximately Baht 68.75 million.
- The Company has entered into rental and service agreements with a subsidiary related to its opening of a restaurant. The Company is committed
to pay rental and service fees under the agreements of approximately Baht 5.09 million. In addition, the Company is committed to pay this subsidiary fees for the area used in the sale of food and beverages, at a percentage of the Company’s food and beverage revenues stipulated in the agreements, ending in the year 2006.
The subsidiaries and joint venture
- Four subsidiaries have entered into separate land lease agreements for a period between 30 and 42 years, effective on 1 August 1982, 8 May
1987, 23 November 1988 and 2 July 1994, respectively. The subsidiaries are committed to pay rental fees at a certain percentage of annual gross revenue (to be increased annually until it reaches a specified rate) or at a minimum rent stipulated in the agreement, whichever is higher. As at 31 March 2005, the subsidiaries’ future payment commitments in accordance with the minimal rental fees stipulated in the agreements are approximately Baht 220 million.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
33
15 Commitments (Cont’d)
The subsidiaries and joint venture (Cont’d) - In December 2000 a subsidiary company entered into a shareholders agreement with an overseas partner to establish Maikhao Vacation Villas
Limited. Pursuant to the agreement, the subsidiary committed to grant a shareholder loan of Baht 476.9 million to this company, subjected to the terms as specified in the agreement. The agreement contains certain covenants and restriction including a call option to acquire share of this company from the counterparty. The agreement will be terminated upon the dissolution of this company or mutual agreement by both parties.
Under the above commitment, during 2001 up to 31 March 2005, the Company and the subsidiary company funded a portion of the capital needs of Maikhao Vacation Villa Limited in forms of loan and equity amounting to Baht 121 million and the Company has provided guarantees for bills of exchange amounting to Baht 205 million. Such funding and guarantees are in accordance with the proportion of shareholding structure.
- A subsidiary has entered into lease agreement covering the land where the hotel is situated. Under the lease agreement, subsidiary has
transferred the ownership of the hotel buildings and improvements to the landlord. Subsidiary is committed to pay rental at the rates specified in the lease agreements. The lease agreement is for a period of thirty years up to the year 2013 and is renewable after the expiry date for another two periods of fifteen years each. As at 31 March 2005, subsidiary has commitment to pay minimal rental fees as stipulated in the agreement as follows :
Year Million Baht
2005 4.22 2006 - 2013 58.96
63.18 - As at 31 March 2005 and 31 December 2004, there were lease commitments for the leases of restaurant outlets (the lease agreements are
for the periods of 6-30 years) payable as follows: - Consolidated Company 31 March 31 December 31 March 31 December 2005 2004 2005 2004 Baht Million Baht Million Baht Million Baht Million
Next year 186 220 - - Between 2 and 5 years 166 195 - - After 5 years 232 232 - - Total 584 647 - -
In addition to these sums, a certain part of restaurant rental fees are payable based on a percentage of either gross or net sales as specified in the relevant agreements.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
34
16 Contingencies
In January 2002, MFG received notice from the Revenue Department in relation to the under-payment of 1997 withholding taxes and related value added taxes amounting to Baht 23.6 million. MFG has disputed the claim and filed for appeal with the Board of Tax Appeal and the Central Taxation Court. On 15 December 2003, the Central Taxation Court rendered its judgement in favour of MFG and cancelled all tax assessments of the Revenue Department and the decisions of the Board of Tax Appeal. Subsequently, the Revenue Department has brought the case to the Supreme Court. At present, the final outcome of this litigation is not yet known and cannot be quantified with any certainty at this stage. Therefore, no liability, if any has arisen, has been recorded in these financial statements.
MFG pledged a tax refund of Baht 18.3 million included in “Other non-current assets” together with a bank guarantee totalling Baht 5.3 million as a guarantee for the court process.
17 Guarantees
The group has given the following guarantees in the normal courses of business
31 March 2005 Baht Million US$ Million Yuan Million Letters of guarantees issued by bank on behalf of the Group 92.9 - - Guarantee given by the Group to financial institution to guarantee for credit facilities 702.0 2.6 11.0
31 December 2004 Baht Million US$ Million Yuan Million Letters of guarantees issued by bank on behalf of the Group 91.3 - - Guarantee given by the Group to financial institution to guarantee for credit facilities 687.3 2.6 10.0
18 Delisting subsidiary’s shares from the Stock Exchange of Thailand At the Board of Directors Meeting of MFG `No.12/2004, held on 3 August 2004, the Board approved a resolution to delist MFG’s shares from the Stock Exchange of Thailand. The delisting was approved by the shareholders at an Extraordinary Meeting of MFG’s Shareholders No.1/2004, on 7 September 2004. MFG complied with the Stock Exchange of Thailand’s rules and regulations re: Delisting of Securities,1999. The Board of Governors of the SET has approved the delisting of MFG on 5 January 2005.
Minor International Public Company Limited (Formerly “Royal Garden Resort Public Company Limited”) Condensed Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the three-month periods ended 31 March 2005 and 2004
35
19 Subsequent event
At the annual general meeting of the shareholders of the Company held on 21 April 2005, the shareholders passed a resolution to approve the following matters:
19.1 Dividend payments
19.1.1 Cash dividend to the holders of common share of Baht 0.12 per share and to the holders of preferred shares at the fixed rate of 3.75 % of the final offering price, totaling Baht 300.8 million.
19.1.2 Stock dividend to the holders of common share at the ratio of 10 existing shares to 1 new share at the price of Baht 1 per share.
19.2 Decrease in the registered share capital of the Company from Baht 2,765.4 million to Baht 2,628.9 million by canceling the
136,480,000 registered preferred shares, which are not issued, at the par value of Baht 1 per share. 19.3 Issuance and offering warrants not exceeding 287,695,792 units to the existing shareholders at no cost, at a ratio of 10 existing
shares per one warrant. The exercise ratio is 1 warrant per 1 ordinary share at an exercise price not over Baht 6. Expiration date is not over 24 months from the issue date.
19.4 Increase in the registered share capital of the Company from Baht 2,628.9 million to 3,297.9 million, which comprises 3,097.9
million ordinary shares at the par value of Baht 1 per share and 200 million preferred shares, and considering to allot the additional shares as follows:
- 136,480,000 class B convertible preferred shares will be offered for sales to specific person and/or institutional investors or
investors having the specific characters under the notification of the Office of the Securities and Exchange Commission at the offering price higher than the market price of ordinary shares of third working days preceding the offering date.
- 242,969,098 ordinary shares will be allotted as stock dividend. - 287,695,792 ordinary shares will be reserved for warrants as mentioned in Note 19.3.
- 1,785,320 ordinary shares will be reserved for the right adjustment of warrants issued to the directors and employees of the
Company and its subsidiaries. 19.5 Issuance of no more than ten-year unsubordinated debentures with guarantee and/or no long-term guarantee (depending on the
market at the issue date) of an amount not exceeding Baht 5,000 million, to be used for the refinance of the existing loans and working capital.
MINOR INTERNATIONAL PUBLIC COMPANY LIMITED (Formerly “Royal Garden Resort Public Company Limited”) INTERIM CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (UNAUDITED)
