PART I EXECUTIVE SUMMARY

The business of Laguna Resorts and Hotels Plc revolves around the
integrated resort of Laguna Phuket, located on the island of Phuket in
Thailand. The operations of the group are summarised as follows:

Hotels

Within Laguna Phuket, there are 4 hotels which Laguna Resorts and Hotels
Plc either owns or has an ownership stake:

-   Banyan Tree Phuket – 121 exclusive villas, 50 with Jacuzzis and 71
    of which have their own swimming pools. The resort is managed by
    Banyan Tree Hotels and Resorts Pte. Ltd.

-   Dusit Laguna Resort – 226 rooms and suites, managed by Dusit Hotels
    and Resorts Co., Ltd.

-   Sheraton Grande Laguna Phuket – 343 rooms and suites, managed by
    Sheraton Overseas Management Corporation.

-   Laguna Beach Resort – 254 rooms and suites and is owner operated.

Property

  The Island Villas are a small condominium project attached to the
  Sheraton Grande Laguna Phuket. The units have been sold to the public.
  The individual owners may rent their units to the Group which in turn
  contracts Sheraton Overseas Management Corporation to manage the
  units, and in doing so earn a return on their investment.

  The Allamanda Laguna Phuket is a large condominium project. It is not
  attached to any other hotel. The units are for sale to the public. The
  individual owners may earn a return on their investment by contracting
  Banyan Tree Hotels and Resorts Pte. Ltd. to manage their unit for
  them. As most of the condominiums have been sold, the Allamanda Laguna
  Phuket is neither owned or managed by Laguna Resorts and Hotels Plc.

  Laguna Homes is a housing plot development. There are 54 land plots
  located around the golf course. The land plots have been sold to the
  public. Twenty land plots were reserved for the sale of Laguna
  Residences, a “house and land” package, that was introduced in 2001
  and was sold out in 2003. A new development, Laguna Townhomes, was
  introduced in the last quarter of 2002.

  Banyan Tree Two Bedroom Pool Villas are a luxury development project
  attached to the Banyan Tree Phuket. All of the twelve villa’s in Phase
  I have been sold to the public. A further 14 villas are currently
  being constructed and are available for sale. The individual owners
  may earn a return on their investment by contracting Banyan Tree
  Hotels and Resorts Pte. Ltd. to manage their unit for them.

  Located in Chiangrai is another housing plot development called Laguna
  Homes Chiangrai. This project has been suspended.

  The Allamanda Vacation Club sells memberships that entitle
  participants to annual vacations, for at least one week, at the
  participating member resorts of Allamanda Laguna Phuket, Sheraton
  Grande Laguna Phuket, Laguna Townhomes and Angsana Resort and Spa
  Bintan.

Others

  In addition to the above there are the following facilities in Laguna
  Phuket:

-   18-hole golf course

-   An outdoor management training program

-   Canal Village shopping complex

-   Banyan Tree Gallery retail outlets

A summary of the performance of the year ended 31 December 2003 is
included as follows:

  ---------------------------------- ------------------ ------------------
                                     2003               2002

  Revenues                                              

  Hotel Operations                   2,443              2,557

  Property development               366                142

  Timeshare                          175                136

  Interest income                    10                 20

  Other income                       38                 14

                                     3,032              2,869

  Earnings before interest expenses  778                460
  and income tax                                        

                                                        

  Interest expense                   (57)               (79)

  Corporate income tax               (158)              (151)

  Minority shareholders interest     (62)               (77)

                                                        

  Net earnings                       501                153

                                                        
  ---------------------------------- ------------------ ------------------

The net earnings attributable to the shareholders of Baht 501 million
for the year ended 31st December 2003 was Baht 348 million higher than
that of the prior year. This comparison is distorted by the one-off
recognition in the profit and loss account of the permanent diminution
in the value of the Groups investment in available-for-sale securities
in 2002 which had the effect of reducing the net earnings by Baht 284
million. When comparing the 2003 result with 2002 before this
exceptional item the net earnings for the year ended 31 December 2003
increased by Baht 64 million or 15%.

The improvement in net earnings was despite a very difficult operating
environment for the hotel operations in the first half of 2003 which saw
the continued impact of the Bali bombing in October 2002, and subsequent
travel advisories warning against travel to Phuket flow into the first
quarter of 2003. This together with the uncertainty surrounding the Iraq
War, and then the war itself, meant that there was a reduction in the
traditional high season European travelers and resulted in a lower than
expected first quarter performance. The impact of the SARS virus on the
second quarter performance was devastating as travel to and within the
South East Asia region was severely reduced. This resulted in very low
occupancies and average room rates during this period. On the positive
side, the recovery from SARS has been exceptional with occupancies
across Laguna Phuket for the second half of the year being 83%. During
the course of SARS our hotels introduced promotional rates to the market
in order to stimulate demand as soon as SARS was contained. This
strategy proved to be successful with high occupancies being achieved at
the expense of lower average room rates. The good second half
performance resulted in the revenue of the hotel operations being only
Baht 114 million or 4% lower than that achieved in 2002.

The reason for the improved group net earnings in 2003 as compared to
2002 was entirely due to the Property Sales division. This division
capitalised on the buoyant Phuket property market with its well
positioned and priced “Residence” and “Townhome” products to register an
increase in revenues of Baht 224 million, or 158%, as compared to last
year. Allamanda Vacation Club also had a very good year with revenues
Baht 39 million, or 29%, higher than the prior year. This was largely
due to the Bangkok Sales office which took advantage of favourable
market conditions in Bangkok.

Expenses were generally well controlled in the face of reduced hotel
revenues in the first half of the year. Corporate income tax continues
to benefit from tax planning projects and the interest expense is lower
than last year due to a combination of lower loan balances and reduced
interest rates. The strengthening of the Thai Baht throughout 2003
resulted in an exchange loss of Baht 22 million.