Annual Report 2018
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Annual Report 2018 A Vision “Proud of our Thai heritage,uniquely delivering gracious hospitality to the world.” Mission “We empower our people to exceed expectations. Always.” Core Values “CARE” “COMMIT” “CAN DO!” Contents 2 Key Milestone 4 Chairman’s Message 6 Group CEO’s Message 18 Board of Directors 20 Significant Financial Information 21 The Results of Operations and Profit Appropriation for Year 2018 22 Shareholding Structure 23 Awards of Dusit International for Year 2018 25 Revenue Structure 28 Nature of Business 52 Risk Factors 56 Shareholders 58 Dividend Policy 59 Management Structure 69 Corporate Governance Report 97 Dusit Thani and Sustainability Development 119 Internal Controls and Risk Management 120 Auditor’s fee 121 Related Party Transactions 125 Management Discussion and Analysis 2018 135 The Board of Directors’ Responsibility for Financial Reports 136 The Audit Committee Report for year 2018 138 Independent Auditor’s Report and Financial Statements 250 Board of Directors, Executives, Authorized Persons and Company Secretary 272 Subsidiary and Associated Companies 277 General Information and Other Significant Information Dusit Thani Public Company Limited 2018 Key Milestones March April May • Established Dusit Foods Co., Ltd. to • Launched “ASAI Hotels” under ASAI • Established Dusit Gourmet Co., acquire 2,652,076 ordinary shares Holdings Co., Ltd., the Company’s Ltd., a new joint venture company, from NR Instant Produce Co., Ltd. subsidiary. This affordable lifestyle to conduct sales and marketing (“NRIP”), or equivalent to 25.977% brand is designed to serve activities for food products under of the total shares, totalling THB millennial-minded travellers and Dusit brands. Shareholders include 613,019,000. NRIP manufactures will offer compact rooms with quality Dusit Foods Co., Ltd. at 90%, and and distributes seasonings, and facilities and high technology. NR Instant Produce Co., Ltd at 10%. instant food. There are currently five ASAI Hotels in the pipeline across three countries, • Disposed of 1,430,000 shares in namely Thailand, Myanmar and Dusit Bird Hotels Private Limited the Philippines. (“DBH”), or equivalent to 50% of the registered and paid-up shares in • The Annual General Meeting of DBH, amounting to THB 290,000, Shareholders No. 25/2018, held on which is considered the fair value. 23 April 2018, approved the issuance and offering of debentures at the total amount not exceeding THB 5 Billion, used for business operation and expansion and/or partial debt repayment. 2 Annual Report 2018 September December • Dusit Overseas Company Limited, • The head office of Dusit Thani Public a subsidiary registered in Hong Company Limited and subsidiaries Kong, acquired 100% of shares was relocated from 946 Dusit Thani of LVM Holdings Pte Ltd. (“LVM Building, 5th Floor, Rama IV Road, Holdings”), the ultimate holding Silom, Bangrak, Bangkok 10500 to company of Elite Havens, registered 319 Chamchuri Square Building, in Singapore, which is engaged in 29th Floor, Phayathai Road, Pathumwan the business of marketing, booking Sub-District, Pathumwan District, and full-service management of Bangkok 10330. luxury villas under the Elite Havens brand. • Established Dusit Hospitality Services Co., Ltd. to engage in hospitality services, including outside catering, cleaning, restaurant and hotel pre-opening. 3 Dusit Thani Public Company Limited Chairman’s Message Our heritage inspires our future Dear shareholders and stakeholders, The year 2018 served as a significant milestone in our company’s history as we bid farewell to our flagship Dusit Thani Bangkok hotel in its current form and prepared for new developments to come. From strategically investing in adjacent industries to launching new brands and entering new markets, in 2018 we continued to lay the groundwork for sustainable and profitable growth following the same principles Dusit’s founder, Thanpuying Chanut Piyaoui, had when she first established the company almost 70 years ago – to be bold and do great things, to create things that never existed before, and to always pursue perfection. That our heritage inspires our future is something we are very proud of. In fact, the distinctive, personalised service pioneered at Dusit Thani Bangkok forms the basis for the Thai-inspired gracious hospitality delivered at all of our hotels and resorts – and across all of our business units – worldwide. Our Thai heritage makes us unique. And in an increasingly crowded business environment, it remains our distinct competitive advantage. This is why one of our major campaigns in 2018 involved partnering with experts from Silpakorn University in Thailand to preserve various artistic and architectural elements of Dusit Thani Bangkok for use in the new version of the hotel, which is expected to open in 2023 as a new beacon of gracious hospitality to the world. 4 Annual Report 2018 ‘That our heritage inspires our future is something we are very proud of. In fact, the distinctive, personalised service pioneered at Dusit Thani Bangkok forms the basis for the Thai-inspired gracious hospitality delivered at all of our hotels and resorts – and across all of our business units – worldwide.’ It is also the reason why we invested heavily in our people, In pursuing these goals, we will never lose sight of what and continued to explore business models and investments makes us unique. The distinctive Thai character and heritage which would allow us to fulfill our no lay-off policy at the created at Dusit Thani Bangkok have always been central to hotel during its redevelopment. our growth, and through our operations, our people, and our vision to uniquely deliver gracious hospitality to the world, Our people are the heart of our business, and by investing they will always remain at the heart of our business. in the team at Dusit Thani Bangkok, and recognising their commitment, we are now poised to add even greater value to On behalf of the Board of Directors, I would like to thank all the company through new business units that will leverage our shareholders, customers, guests, business partners and their collective expertise and experience to achieve revenue all other stakeholders for your much-appreciated support for while the hotel is temporarily closed. These projects will be our company. We are delighted to have you with us on our announced in 2019. journey, and we look forward to creating enduring value for you all as we continue to evolve and embrace new paradigms As a company, Dusit has constantly evolved to meet the while championing the heritage at our core. needs of stakeholders. From our first asset-light expansion overseas in the 1980s to the formation of Dusit Hospitality Graciously yours, Education in the 1990s to the introduction of new hotel brands in the 2000s, our history features several chapters of positive change driven by a vision for growth that recognises, embraces, and builds on the value of our past. Now we are three years into our latest chapter – the pursuit of expansion, balance, and diversification. The aim is to enhance value creation, support the development of new hotels and Arsa Sarasin colleges, and position the company for success in an era of Chairman/ Independent Director rapid change and disruption. 5 Dusit Thani Public Company Limited “Over the past three years we have been strengthening our foundations, consolidating our operations, and diversifying our portfolio across different geographies and business models to position ourselves for sustainable and profitable growth.” Message from the Dear shareholders and stakeholders, The hospitality industry is, by its very nature, a capital intensive business Group CEO which requires continuous investment in existing properties to maintain their competitive advantage. Because of this, it is essential that we, as a hospitality company, embrace innovation as our modus operandi and constantly seek ways to enhance revenue creation so we can maintain and enhance our property portfolio while delivering value to share- holders – especially while our flagship hotel, Dusit Thani Bangkok, is 2018 Total Revenue redeveloped as part of a landmark mixed-use project. 9.2% In this regard, over the past three years we have been strengthening our foundations, consolidating our operations, and diversifying our 7.6% portfolio across different geographies and business models to position ourselves for sustainable and profitable growth. At year-end, Dusit Thani Public Company Limited reported THB 290 5,565 million net profit and 5,565 million total revenue. The profit represents 83.2% million baht an 8.6% increase on the THB 267 million posted in 2017. Demonstrating the strength of our multi-year strategy, which completed its first stage in 2018, the growth in profit was achieved despite the Other business absence of revenue from Dusit Princess Korat, which was divested in 2017, and non-recurring expenses in relation to the redevelopment and Education business temporary closure of Dusit Thani Bangkok. This included investing in the hotel’s team to deliver a legendary closure for the hotel while Hotel business 6 Annual Report 2018 preparing to launch new business models following our no exporter of ready-to-cook sauces, seasoning powders, and lay-off policy. And they succeeded admirably. soft drinks, where we saw the potential to leverage our own experience in food and beverage services to drive additional Outside of Dusit Thani Bangkok, I am happy we achieved several revenue and enhance our brand presence. significant milestones throughout