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, Dusit
Laguna Resort, Laguna Beach Resort and Sheraton Grande Laguna Phuket.
These four hotels provide the main source of income for the Group. The
hotels provide an integrated resort for the guest.

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 lease the units to Sheraton Overseas
  Management Corporation to manage for them, 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 & 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 74 land plots
  located around the golf course. The land plots are for sale to the
  public. 20 land plots have been reserved for the sale of Golf Villas,
  which is a “house and land” package that has been introduced during
  2001.

  Banyan Tree Two Bedroom Pool Villas are a luxury development project
  attached to the Banyan Tree Phuket. The villas have all now been sold
  to the public, with the remainder of the villas being sold during the
  course of 2001. The individual owners may earn a return on their
  investment by contracting Banyan Tree Hotels & Resorts Pte Ltd. to
  manage their unit for them.

  Located in Chiangrai there 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 and Angsana 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

Performance for the 2001 Financial Year

The profit attributable to shareholders for the year ended 31 December
2001 was 19% lower than the previous year despite revenues being 7%
higher this year. The hotel and property sales divisions continued to
perform well in difficult economic conditions with both divisions
posting increases in revenue. The main reason for the decrease in
profitability was due to the higher income tax expense that resulted
from the tax losses having been fully utilised in 2000 and some one-off
income tax charges experienced this year. In addition a one off
provision against the carrying value of a long-term investment was made
in the third quarter of 2001 to recognise an impairment in value of this
investment. These items were partially offset by a reduction in interest
expense due to the lower prevailing interest rates combined with the
large debt repayments during the year.

PART II THE ISSUING COMPANY

The major business of Laguna Resorts & Hotels Public Company Limited
(LRH) is the hotel and tourism industry. The Head office is located at
No. 21/63-64 South Sathorn Road, Tungmahamek Sub-district, Sathorn
District, Bangkok 10120, Telephone 2850040, Facsimile 2850269-70. Total
registered and paid-up capital is Baht 846,701,430, which is divided
into 84,670,143 ordinary shares at par value of Baht 10 per share.

The Corporate Registration number is Bor Mor Jor 70.

1 Risk factors

CURRENCY FLUCTUATION

  Currency fluctuation has been the focus of our attention in recent
  years with all of the hotels in Laguna Phuket converting contract
  prices for room revenue to hard currency wherever possible. We
  successfully converted the majority of contracts by late 1998 and with
  over 80% of our rooms’ revenues now in hard currency, we are
  financially well poised for the future. The Allamanda Vacation Club
  also prices its property in hard currency.

  ECONOMY AND TOURISM IN THAILAND

During 2001, well before the tragic events of the 11^(th) September, we
began to track a negative occupancy trend throughout the resort.
However, as a result of a substantial increase in Average Rate, partly
fueled by continuing currency fluctuation in our favour, we have still
recorded increased revenues over the prior year.

Subsequent to the events in the US on 11^(th) September, the initial
signals in late September and early October were alarming, with huge
cancellations across the resort. However, Phuket is once again
demonstrating its resilience to international problems as we see a
gradual return to former business levels, with some adjustment for the
global recession, which we expect to continue into 2002.

  Competition

Destination

Indonesia has continuing stability problems, which have a direct impact
on tourism. This affects Bali, which is a direct competitor to Phuket.
However, Bali continues to assert its competitiveness by marketing
itself with aggressive rates worldwide. Fortunately Bali’s and Phuket’s
High and Low seasons are out of phase with one another, and our rate
strategies are not greatly affected by Bali’s discounting.

  Other than this, we remain optimistic that Phuket as a destination
  will bounce back ahead of international trends.

Hotels

  There are relatively few hotel projects, considering the buoyant
  market, announced or under construction. Only two new projects would
  be considered to be in our competitive set. These are the new JW
  Marriott at Mai Kow Beach, north of the airport, (270 rooms which
  opened in late 2001) and the Trisara hotel and villas (60 rooms,
  opening not yet announced) just north of Bang Tao Bay. One other
  project, approximately one kilometre north of Laguna Phuket on 139 Rai
  of land on Bang Tao Bay, has been delayed and we can consider any
  completion there to be some two to three years away.

Low Season

  Low season in Phuket is from May until October and the hotels normally
  run at low occupancies with reduced room rates. The hotels in Laguna
  Phuket joined forces and launched a promotional campaign targeting the
  regional market, as well as the meetings and incentives business. The
  “Laguna Plus” campaign has been a marked success in Laguna Phuket’s
  competitive advantage, and will be further enhanced during 2002.

Technology

We are gradually replacing the technology across the resort. We are taking the opportunity to instill some conformity to an agreed standard. All of the hotels have now installed updated “Fidelio” brand front office systems, and back office “Accpac” systems are being rolled out over a two year period. The resort has been wired with fibre optic cables by the telephone authorities, and we are examining ways to take advantage of this.

Environment 

  The tourism and hotel industries are sensitive to the local and global
  environment. Laguna Phuket is concerned about its impact on the
  environment and natural surroundings. Various environmental projects
  to protect and preserve nature continue to be conducted with
  remarkable success, with our efforts being recognized by the Tourism
  Authority of Thailand’s Sustainable Tourism Award, which we aspire to
  repeat in 2002.