9 Management

  9.1 Management structure as at 31^(st) December 2005

  9.1.1 Board of Directors

+----------------------------+-----------------------------------------+
| Name                       | Position                                |
+----------------------------+-----------------------------------------+
| 1. Mr. Ho Kwon Ping        | Chairman                                |
+----------------------------+-----------------------------------------+
| 2. Mr. Surapon Supratya    | Group Managing Director                 |
+----------------------------+-----------------------------------------+
| 3. Mr. Ho Kwoncjan         | Managing Director (Design & Services)   |
+----------------------------+-----------------------------------------+
| 4. Mr. James R. Batt       | Managing Director (Laguna Phuket)       |
+----------------------------+-----------------------------------------+
| 5. Mr. Michael R. Ayling   |   Deputy Managing Director (Laguna      |
|                            |   Phuket)                               |
+----------------------------+-----------------------------------------+
| 6. Mr. Steven M. Small     | Independent Director                    |
+----------------------------+-----------------------------------------+
| 7. Mr. Udom Vichayabhai    | Independent Director                    |
+----------------------------+-----------------------------------------+
| 8. Dr. Jingjai Hanchanlash | Independent Director                    |
+----------------------------+-----------------------------------------+
| 9. Mr. Satit Rungkasiri    | Independent Director                    |
+----------------------------+-----------------------------------------+
| 10. Mr. Vudhiphol          | Independent Director                    |
| Suriyabhivadh              |                                         |
+----------------------------+-----------------------------------------+
| 11. Mr. Ariel P. Vera      | Director                                |
+----------------------------+-----------------------------------------+
| 12. Ms. Sirivan            | Director                                |
| Skulkerevathana            |                                         |
+----------------------------+-----------------------------------------+
| 13. Mr. Kuan Chiet         | Director                                |
+----------------------------+-----------------------------------------+
| 14. Mr. Niyom              | Director                                |
| Tassaneetipagorn           |                                         |
+----------------------------+-----------------------------------------+
| 15. Mr. Bernold O.         | Director                                |
| Schroder                   |                                         |
+----------------------------+-----------------------------------------+
| 16. Ms. Nanchalee          | Director & Secretary to the Board       |
| Kecharananta               |                                         |
+----------------------------+-----------------------------------------+

  Duties, Authorities and Responsibilities of the Company’s Directors

The Board’s primary functions are to set corporate policy and overall
strategy for the Group and to provide effective oversight of the
management of the Group’s business and affairs. Apart from its statutory
duties, the responsibilities of the Board includes:

i. formulating and approving broad policies, strategies and financial
objectives of the Group;

ii. reviewing the financial performance and taking responsibility for
the financial statements of the Group;

iii. monitoring and approving the Group’s key operational initiatives,
annual budget, major investment and funding decisions;

iv. ensuring that the adequacy of internal controls and risk management
of the Group is regularly reviewed and evaluated;

v. approving the nominations of Board directors and appointments to the
various Board committees; and

vi. assuming responsibility for corporate governance.

These functions are either carried out directly by the Board or through
committees established by the Board, principally the Audit and Risk
Committee and Remuneration Committee. The delegation of authority by the
Board to the Committees enables the Board to achieve operational
efficiency by empowering these Committees to decide on matters within
certain limits of authority and yet maintain control over major policies
and decisions.

  9.1.2 Audit and Risk Committee (“ARC”)

  In 2005 the Audit Committee, which was formed in November 1999 and has
  performed its duties since 2000, expanded its role to include Risk
  Management and in doing so the Committee was renamed the Audit and
  Risk Committee. The Audit and Risk Committee comprises three
  independent directors as follows:

  ------------------------------------- ---------------------------------
  Name                                  Position

  1. Mr. Steven M. Small                Chairman

  2. Mr. Udom Vichayabhai               Member

  3. Dr. Jingjai Hanchanlash            Member

  Ms. Nanchalee Kecharananta            Secretary to the Audit and Risk
                                        Committee
  ------------------------------------- ---------------------------------

  Duties and Responsibilities of the Audit and Risk Committee

1.  To seek to ensure that the financial reports of the Company are
    accurate and sufficient;

2.  To seek to ensure that the Company has appropriate and effective
    internal controls and internal audit;

3.  To consider, select, nominate and propose fees for the external
    auditor of the Company;

4.  To be responsible for the resolution of disagreements between
    management and the external auditor regarding financial reporting;

5.  To evaluate the independence of the external auditor. In this
    connection, the external auditor shall report directly to the Audit
    and Risk Committee on matters related to the activities within the
    Company;

6.  To seek to ensure that the Company has complied with the Securities
    and Exchange Acts, Stock Exchange requirements or laws related to
    the business of the Company;

7.  To seek to ensure disclosure of accurate and complete information
    concerning the Company in the case of an entry into a related party
    transaction or a transaction that may cause a conflict of interest;

8.  To review or discuss, as and when appropriate, policies regarding
    risk assessment and risk management and the steps management has
    taken to monitor and control such exposures;

9.  To seek to oversee and ensure a continuous process for managing risk
    and to report on all areas of concern to the Board;

10. To review and assess the adequacy of the Audit and Risk Committee
    Charter annually and recommend modification to the Board as needed;

11. To prepare a report concerning the control and supervision of the
    business of the Audit and Risk Committee to be disclosed in the
    annual report of the Company, which must be signed by the Chairman
    of the Audit and Risk Committee; and

12. To perform any other acts authorised by the Board of Directors of
    the Company with the approval of the Audit and Risk Committee.

  Authority of the Audit and Risk Committee

  In order that the duties and responsibilities of the Audit and Risk
  Committee can be fulfilled, the Audit and Risk Committee shall have
  the following power:

1.  Management Power

  The Audit and Risk Committee shall have the power to request the Group
  Risk Committee, other senior management, the internal auditor, and
  other staff of the Company to provide clarification, opinions,
  reports, reviews and attend meetings or submit documents as deemed
  relevant and necessary.

2.  Power with respect to the Internal Auditor

-   To ensure that there exists a common objective and understanding
    amongst the internal auditor, external auditor, Board of Directors,
    and Group Risk Committee in regard to internal control;

-   To provide opinions about the appointment, removal, transfer,
    termination of employment and to consider the merits of the internal
    auditor; and

-   To secure the independence of the internal auditor.

3.  Power with respect to the External Auditor

-   To review and evaluate the work performance of the external auditor;

-   To submit the names of the external auditor and annual auditing fee
    to the Board of Directors of the Company for the purpose of
    obtaining approval for the appointment of the external auditors at
    the Annual General Meeting of Shareholders; and

-   To approve fees charged for audit services and other advisory
    services provided by the external auditor.

  4. Other powers

  The Audit and Risk Committee shall have the power to investigate
  related persons and matters within the scope of the authority and duty
  of the Audit and Risk Committee and, with the approval of the Board of
  Directors, shall have the power to employ or ask a specialist to
  provide advice and opinions as deemed appropriate by the Audit and
  Risk Committee.

  9.1.3 Remuneration Committee “REMCO”

+------------------------------------+---------------------------------+
| Name                               | Position                        |
+------------------------------------+---------------------------------+
| 1. Mr. Ho Kwon Ping                | Chairman                        |
+------------------------------------+---------------------------------+
| 2. Mr. Udom Vichayabhai            | Member                          |
+------------------------------------+---------------------------------+
| 3. Dr. Jingjai Hanchanlash         | Member                          |
+------------------------------------+---------------------------------+
| Mr. Kuan Chiet                     | Secretary to the                |
|                                    |                                 |
|                                    | Remuneration Committee          |
+------------------------------------+---------------------------------+

Objectives

  1. To formulate and align HR policies and programs for senior
  management to business goals and market practices;

  2. To attract and retain the right people for senior management
  positions in the Company; and

  3. To ensure that the Company’s senior management remuneration and
  benefit package remain competitive.

Scope of Work

  1. To propose guidelines and make broad recommendations for the annual
  salary increment and bonus policies for the Company;

  2. To review and if necessary, propose changes to the remuneration of
  the Company’s directors serving on the Board of Directors, Audit and
  Risk Committee and Remuneration Committee;

  3. To review and if necessary, propose changes or additions to senior
  management welfare, benefit, salary and bonus policies (such as
  employee stock options and other employee welfare allowances,
  subsidies and schemes);

  4. To report to the Board of Directors on the Remuneration Committee’s
  activities and findings; and

  5. To review the Remuneration Committee charter at least once a year
  and recommend modifications to the Board of Directors as needed.

  The emolument of individual employees shall be determined by the
  management of the Company.

Authority of the Remuneration Committee

  To assist the Remuneration Committee in achieving its objectives, the
  Remuneration Committee shall have the discretion to appoint
  appropriate third party consultants to review existing employee
  related policies, propose new employee benefit and welfare programs
  and/or undertake other HR related research and studies.

  9.2 Method of Appointment and Removal of Directors as included in the
  Company’s Articles of Association

  9.2.1 Appointment of the Directors

(a) The number of the Board of Directors shall not be less than 5
    directors and at least half of the total directors shall reside in
    Thailand.

(b) Directors shall be elected in the General Meeting of shareholders in
    accordance with the following rules and procedures:

-   In voting to elect directors, the votes shall be non-cumulative.

-   In voting, the shares of each shareholder shall be counted as one
    vote for every share.

(c) If any vacancy occurs in the Board of Directors other than by
    rotation, the Board of Directors shall elect another person who is
    qualified and has not been prohibited by Section 68 of the Public
    Limited Company Act. B.E. 2535 to be a director for the next
    directors’ meeting, except when the period of office for the
    vacating director is less than 2 months, it is then not necessary to
    appoint any new director. The appointed person shall stay in office
    for the remaining period of the vacating director.

  In the event where there are director positions vacant and the number
  of remaining directors are unable to form a quorum, the remaining
  directors shall transact on behalf of the Board of Directors only to
  arrange for the shareholders’ meeting to appoint new directors for the
  vacant positions.

  The shareholders’ meeting to appoint new directors to fill the vacant
  positions shall be made within 1 month from the date they became
  vacant.

  9.2.2 Removal of Directors

(a) At each Annual General Meeting of shareholders one-third of the
    directors shall retire from office, or if their number is not a
    multiple of three, then the number nearest to one-third shall retire
    from office. The retired director shall be eligible for re-election.

(b) Apart from retiring by rotation, a director position shall also be
    vacated upon:-

-   Death

-   Resignation

-   Lack of qualification or subject to any prohibition under Articles
    68 of the Public Limited Company Act B.E. 2535

-   Removal by a resolution of a shareholders’ meeting

-   Removal by a court order

(c) A director may be removed by a resolution of the shareholders’
    meeting passed by a majority of not less than three-quarters of the
    votes of shares of the shareholders who attend such meeting and the
    shares which voted shall not be less than half of the total shares
    of the shareholders who attended the meeting and are entitled to
    vote thereon.

  9.3 Directors’ and Executives’ Remuneration:

  9.3.1 Monetary Remuneration

(a) Directors:

  Monetary remuneration was paid as meeting fees to 16 directors of the
  Board, 3 Audit and Risk Committee members and 3 Remuneration Committee
  members for the 12 months ended 31^(st) December 2005 in the total
  amount of Baht 8,413,000.

(b) Executives of the Company:

  Monetary remuneration was paid to 5 executives for the 12 months ended
  31^(st) December 2005 in the total amount of Baht 40,122,930
  consisting of salaries, bonus, car allowance, housing social security
  payment, provident fund payment, tax paid by the Company and laptop
  allowance.

2.  Other Remuneration

(a) Independent Directors:

  Benefits in the form of spa and gallery vouchers were given to the 5
  independent directors of the Board for the 12 months ended 31^(st)
  December 2005 in the total amount of Baht 400,000.

(b) Executives of the Company:

  Employee benefits such as medical, accident & health insurance,
  complimentary vouchers, etc. were given to 5 executives for the year
  ended 31^(st) December 2005 in the total amount of Baht 2,514,435.

  Remuneration & Other Benefits of the Directors and Shareholdings of
  Directors and Executives During the Year 2005

[]

Note: Mr. Bernold O. Schroeder was appointed to the Board on 5^(th)
February 2005 after the first Board meeting of the year

9.4 Management contracts

  The Company and its subsidiaries entered into operating agreements
  with certain companies whereby these companies are to operate the
  Company’s and its subsidiaries’ hotels and golf business. In
  consideration for such services, the Company and subsidiaries are
  committed to pay remuneration at the rates, terms and basis specified
  in the agreements. These agreements are summarised as follows:

+------------+-----------+---------+----------------+----------------+
| Company    | Business  | O       | Contract       | Fees           |
|            | unit      | perator | period         |                |
+------------+-----------+---------+----------------+----------------+
| Laguna     | Dusit     | Dusit   | 1.10.1992 -    | - Basic        |
| Resorts    | Laguna    | Hotels  | 30.9.2012      | management fee |
| and Hotels | Resort    | and     |                | : 2 % of total |
| Public     |           | Resorts |                | revenue        |
| Company    |           | Co.,    |                |                |
| Limited    |           | Ltd.    |                | - Incentive    |
|            |           |         |                | fee : 5% of    |
|            |           |         |                | gross          |
|            |           |         |                | operating      |
|            |           |         |                | profit         |
+------------+-----------+---------+----------------+----------------+
| Bangtao    | Sheraton  | S       | 11.1.1989 -    | - Basic        |
| Grande     | Grande    | heraton | 31.12.2012     | management fee |
| Limited    | Laguna    | O       |                | : 2 % of total |
|            | Phuket    | verseas | (a)            | revenue        |
|            |           | Man     |                |                |
|            |           | agement |                | - Incentive    |
|            |           | Corp    |                | fee : 7.5% of  |
|            |           | oration |                | gross          |
|            |           |         |                | operating      |
|            |           |         |                | profit         |
+------------+-----------+---------+----------------+----------------+
| Laguna     | Laguna    | Banyan  | 1.10.1992 -    | - Basic        |
| Grande     | Phuket    | Tree    | 31.12.2014     | management fee |
| Limited    | Golf Club | Hotels  |                | : 3 % of total |
|            |           | and     | (b)            | revenue        |
|            |           | Resorts |                |                |
|            |           | Pte     |                | - Incentive    |
|            |           | Ltd.    |                | fee : 10% of   |
|            |           |         |                | gross          |
|            |           |         |                | operating      |
|            |           |         |                | profit         |
+------------+-----------+---------+----------------+----------------+
| Laguna     | Banyan    | Banyan  | 1.5.1995 –     | - Basic        |
| Banyan     | Tree      | Tree    | 31.12.2015     | management fee |
| Tree       | Phuket    | Hotels  |                | : 2 % of total |
| Limited    |           | and     | (c)            | revenue        |
|            |           | Resorts |                |                |
|            |           | Pte     |                | - Incentive    |
|            |           | Ltd.    |                | fee : 7.5% of  |
|            |           |         |                | gross          |
|            |           |         |                | operating      |
|            |           |         |                | profit         |
+------------+-----------+---------+----------------+----------------+
| Thai Wah   | Banyan    | Banyan  | 1.1.2002 –     | - Basic        |
| Plaza      | Tree      | Tree    | 31.12.2021     | management fee |
| Limited    | Bangkok   | Hotels  |                | : 3 % of total |
|            |           | and     | (d)            | revenue        |
|            |           | Resorts |                |                |
|            |           | Pte     |                | - Incentive    |
|            |           | Ltd.    |                | fee : 10% of   |
|            |           |         |                | gross          |
|            |           |         |                | operating      |
|            |           |         |                | profit         |
+------------+-----------+---------+----------------+----------------+

(a) Operator has exercised its option to extend for 10 years as the
required conditions have been met.

(b) Operator has option to extend for 1 additional period of 10 years.

  (c) Operator has exercised option to extend 31.12.2015 (as notified on
  28 July 2004) and has an option

  to extend for a future 10 year.

(d) Operator has option to extend for 1 additional periods of 20 years.

  9.5 Good Corporate Governance

LRH is committed to maintaining high standards of corporate governance
within the Group in order to protect and enhance long-term shareholder
value. The Company has adopted a set of good corporate governance
practices and policies which are modeled on principles advocated by The
Stock Exchange of Thailand. These practices and policies are set out in
the ensuing sections.

1.  Policy on Corporate Governance

For the purpose of preserving the interests of all its stakeholders, the
Company has adopted the following Code of Business Conduct in the course
of its operations, approved by the Board and distributed through the
organization. The Code has been drafted based on the principles of
integrity, transparency and good business and social ethics to achieve
sustainable growth.

-   The Board of Directors and Senior Management are expected to:

1.  Carry out their duties and responsibilities prudently, with due care
    and at all times take into consideration the interests of the
    Company’s various groups of stakeholders.

2.  Attend every meeting, except for special circumstances which make
    attendance not possible, with the view to effectively contribute to
    issues being considered. Sufficient time should be allocated to
    important matters for in-depth discussions and independent views and
    opinions should be sought from each director / senior management.

3.  Ensure that the legal rights of stakeholders, including employees,
    suppliers, communities, competitors and creditors are not violated
    by any of the Company’s actions or decisions.

4.  Support cooperation between the Company and the various groups of
    stakeholders in order to secure the business wealth and stability.

5.  Resolve conflict of interests carefully, honestly, fairly and
    independently in the best interest of the Company.

6.  Fix remuneration, which is commensurate with market rates in the
    same business and with the performances of the Company and the
    individual.

7.  Disclose information correctly, completely, transparently and on a
    timely basis together with adequate supporting data, if any.

8.  Implement and maintain an effective internal monitoring and control
    system over finance, operations and regulatory compliance of the
    Company. The system should incorporate risk management to capture
    early warning signs to problems and extraordinary items, which may
    arise.

9.  Value the importance of human resources by providing competitive
    compensation packages to attract, retain and motivate quality staff
    and treat each employee fairly and without prejudice.

10. Define the proportion of executive directors and independent
    non-executive directors to balance their power. There should be a
    clear separation of power and authorities so that no one would be
    granted unlimited power.

11. Ensure all corporate business is conducted in accordance with high
    standards of corporate governance with legally and ethically
    accepted corporate practices.

12. Strictly safe keep the Company’s confidential information and
    activities and not to use any internal and/or confidential
    information of the Company for personal gain.

13. Report their transaction of the Company’s shares in accordance with
    the rules of the relevant authorities and Company.

-   Employees of the Company are expected to:

1.  Strictly follow all rules and regulations of the Company and
    instructions from their superior. Be polite, obedient, and
    respectful and maintain esprit de corps among colleagues and assist
    each other in the course of work.

2.  Perform their duties diligently and punctually and not to abandon or
    disregard any duty or work that has been assigned to them.

3.  Treat all Company’s clients courteously, respectfully and promptly.

4.  Strictly safe keep the Company’s confidential information and
    activities and not to use any internal and/or confidential
    information of the Company for personal gain.

Social Contributions & Responsibility

1.  The Company shall not perform any activity, which may adversely
    affect the national security, economy and well being of the people.
    The Company shall consider supporting charitable organization at its
    discretion.

2.  The Company shall give support to the employees, the management, and
    Board of Directors to pursue environmental and nature conservation
    activities and shall not undertake any activities, which may cause
    harm to the environment and community.

3.  The Board of Directors, management and all employees shall uphold
    themselves as honorable citizens and avoid any illicit activities,
    which may damage the reputation of the Company.

2. Board Composition - Balance of Power for Non-Executive Directors

The Board currently comprises 16 members of whom 5 are Independent
Directors, being about one-third of the Board, thus providing for a
strong and independent element on the Board capable of exercising
objective judgment on corporate affairs of the Group.

The independent Directors are Messrs Steven M. Small, Udom Vichayabhai,
Satit Rungkasiri, Vudhiphol Suriyabhivadh and Dr. Jingjai Hanchanlash.
The qualification of all the independent directors comply with the
Securities and Exchange Commission’s notification no. Kor. Jor. 12/2000.
The Board comprises business leaders and professionals with financial,
accounting, legal and business management backgrounds. Key information
on the Directors are set out in the Attachment 1.

3. Board Functions - Leadership & Vision

The Board’s primary functions are to set corporate policy and overall
strategy for the Group and to provide effective oversight of the
management of the Group’s business and affairs. Apart from its statutory
duties, the responsibilities of the Board includes:

i. formulating and approving broad policies, strategies and financial
objectives of the Group;

ii. reviewing the financial performance and taking responsibility for
the financial statements of the Group;

iii. monitoring and approving the Group’s key operational initiatives,
annual budget, major investment and funding decisions;

iv. ensuring that the adequacy of internal controls and risk management
of the Group is regularly reviewed and evaluated;

v. approving the nominations of Board directors and appointments to the
various Board committees; and

vi. assuming responsibility for corporate governance.

These functions are either carried out directly by the Board or through
committees established by the Board, principally the Audit and Risk
Committee and Remuneration Committee. The delegation of authority by the
Board to the Committees enables the Board to achieve operational
efficiency by empowering these Committees to decide on matters within
certain limits of authority and yet maintain control over major policies
and decisions.

  All major investments require the approval as follows:-

  - Investments more than US$ 10 million to be approved by the Board.

  - Investments between US$ 5 million to US$ 10 million to be jointly
  approved by the Chief Executive Officer and any 1 director.

  - Investments less than US$ 5 million to be approved by the Chief
  Executive Officer.

  All information disclosure must comply with rules and regulations of
  The Stock Exchange of Thailand pertaining to the acquisition and
  disposition of assets and/or the connected transaction.

4. Board of Directors’ Meetings

The Company conducts regular scheduled Board meetings on a quarterly
basis which are planned and formally agreed upon in advance at the start
of the financial year. Additional meetings are convened as and when
circumstances warrant. In 2005, the Company conducted 4 Board meetings
and the attendance of the Directors at these meetings is shown below.

  -----------------------------------------------------------------------
  Name                                           No. of Board Meetings
                                                 Attended
  ---------------------------------------------- ------------------------
  Mr. Ho Kwon Ping                               4

  Mr. Surapon Supratya                           4

  Mr. Ho Kwoncjan*                               3

  Mr. James R. Batt                              4

  Mr. Michael R. Ayling                          4

  Mr. Steven M. Small                            4

  Mr. Udom Vichayabhai                           4

  Dr. Jingjai Hanchanlash                        4

  Mr. Satit Rungkasiri*                          3

  Mr. Vudhiphol Suriyabhivadh                    4

  Mr. Ariel P. Vera                              4

  Ms. Sirivan Skulkerevathana                    4

  Mr. Kuan Chiet                                 4

  Mr. Niyom Tassaneetipagorn                     4

  Mr. Bernold O. Schroder**                      3

  Ms. Nanchalee Kecharananta                     4
  -----------------------------------------------------------------------

  * Absent with reason

  ** Appointed to the Board on 5^(th) February 2005 after the first
  Board meeting of the year.

The Corporate Secretary is responsible for collating and distributing
board papers for each of the agenda items at least 7 days prior to the
meeting so as to provide Directors with sufficient time to prepare for
the meeting. Each meeting typically lasts between one to two hours and
the Chairman of the Board will provide adequate time for management to
present information and to allow the Directors to fully discuss the
important issues.

Additionally, the Board is of the view that the contribution of each
Director should not be focused only on his or her attendance at Board
and/or Committee meetings. A Director’s contribution may also extend
beyond the confines of the formal environment of Board meetings, through
the sharing of views, advice, experience and strategic networking
relationships which would further the interests of the Company.

5. Chairman & Chief Executive Officer - Aggregation or Separation of
Positions

Currently, the Chairman of the Board, Mr. Ho Kwon Ping, is also the
Chief Executive Officer of the Company. Mr. Ho is the founder of the
Company and is the sibling of Mr Ho Kwoncjan, an Executive Director and
Managing Director (Design & Services) of the Company.

As Chairman, Mr. Ho Kwon Ping bears responsibility for the workings of
the Board. The Chairman, in consultation with the management and the
Corporate Secretary, sets the board meeting agenda and ensures that
board members are provided with adequate and timely information. Key
management staff who have prepared the papers, or who can provide
additional insight into the matters to be discussed are invited to
present the paper during the Board meeting. As Chief Executive Officer,
Mr. Ho bears executive responsibility for the workings of the Group.

Mr. Ho Kwon Ping has been a director of the Company since July 1986 and
Chief Executive Officer since September 1999 and is closely associated
with the Group’s success. The Board is of the view that the current
structure is adequate given that Mr. Ho Kwon Ping has been able to
effectively and competently execute the responsibilities of both the
Chairman and Chief Executive Officer positions.

6. Shareholders’ Rights & Equitable Treament and Shareholders’ Meetings

The Company fully complies with all relevant laws and regulations in
respect of shareholders’ rights and treatment. All shareholders have the
same basis and rights in the casting of votes at meetings and the
receipt of dividends when declared by the Company. These are calculated
based on their respective shareholding in the Company.

At every Annual General Meeting, shareholders are given the right to
approve matters such as election of Directors (shareholders can elect
Directors individually), Directors’ remuneration, appointment of
external auditors and dividend payment.

The Company’s policy is to conduct shareholders’ meetings which not only
meet all legal requirements but to also provide a platform and
opportunity for shareholders to communicate their views and ask the
Directors and the management questions regarding matters affecting the
Company.

At least 7 days prior to the date of the Annual General Meeting, all
shareholders will receive a package containing the notice and agenda of
the meeting, information related to the agenda items, proxy forms and
the annual report of the Company. This is to enable shareholders to
prepare themselves for the meeting and to appoint a proxy to attend and
vote on their behalf at the meeting if they are unable to attend the
meeting personally. Additionally, at every meeting the Company will
appoint one independent director to undertake proxy voting on behalf of
shareholders who are unable to attend the meeting and had informed the
Company prior to the meeting. The notice of the Annual General Meeting
will also be advertised in the press.

At the start of each meeting, the Chairman will explain the meeting
proceedings and voting methodoloy to shareholders. Apart from the
external auditor who will attend the Annual General Meeting, the
Chairman of the Audit and Risk Committee and Remuneration Committee will
also endeavour as far as reasonably practicable to be present at the
Annual General Meeting to address, and assist the Directors in
addressing, queries raised by the shareholders. Ample time will be
allocated to shareholders to discuss each agenda item and a professional
translator is present at the meeting to assist shareholders and the
Board to communicate more effectively in English and Thai.

Detailed results of the vote of each agenda item will be displayed for
shareholders’ scrutiny at the end of each meeting. The same results will
also be included in the minutes of the meeting which are accurately and
completely documented and will be sent to all shareholders for their
review prior to the following meeting.

7. Conflicts of Interests

Transactions between the Company and its related parties which may give
rise to a conflict of interest are scrutinized by the Audit and Risk
Committee and if necessary, the approval to enter into such transactions
are sought from the Board of Directors and shareholders.

Such transactions are made on terms and pricing that has been negotiated
on an arm’s length basis. In the event that the price is unavailable,
the Company will then rely on the report of an independent appraiser
appointed by the Company to value important related party transactions
to arrive at a pricing which is fair to both the Company and the related
party.

The Company has and will always comply with all Rules and Regulations
laid down by the Stock Exchange of Thailand. In addition, all connected
party transactions are completely and accurately disclosed in the
Company’s 2005 annual report and in section 11 of this report under the
topic “Related Party Transactions”.

The Company has put in place preventive measures in regards to the use
of inside information for personal gains and this is disclosed in the
Company’s 2005 annual report and in section 9.6 of this report under the
topic ‘Supervision on the Use of Inside Information’.

8. Busines Ethics

The Company holds strongly to the belief that good business ethics is
one of the key elements for sustainable growth. In the interest of
promoting and advocating good business ethics throughout the
organization, standard operating procedures and a statement of business
conduct has been documented, distributed to employees of the Company and
there are monitored on an on-ging basis to ensure the compliance by all
employees.

9. Various Groups of Stakeholders

  In its pursuit for sustainable growth and financial returns for its
  shareholders, the Company strives to become a role model corporate
  citizen. It respects the rights of all its stakeholders and conducts
  its operations fairly and strictly in compliance with all laws, rules
  and regulations.

  Shareholders: The Board of Directors is committed to perform its
  duties honestly, transparently and diligently in the best interest of
  all its shareholders to preserve and enhance long term shareholder
  value. All important information which may have an impact on the
  Company’s share price and/or shareholders decisions are fully
  disclosed on a timely manner.

  Employees: Being in the hospitality industry, the Company believes
  that its people are its greatest asset. The Company has therefore
  taken steps to ensure that all labour laws are complied with and all
  employees are treated fairly without discrimination or favoritism so
  as to instill a sense of pride and dignity into the work that they
  perform. The Company offers competitive pay packages and welfare
  benefits to all its employees and has continual upgrading programs so
  that employees have the opportunity to advance in their careers.
  Additionally, the Company provides its employees a safe and conductive
  working environment.

  Customers: The Company aims to provide its guests a safe and
  unforgettable experience at its hotels and resorts. Safety of its
  guests is one of the Companies top priorities and in this regard a
  safety committee has been formed at each property with the objective
  of improving the safety of our guests.

  Competitors: The Company believes that competition is the essence of a
  free and open market and therefore avoids any actions which may
  prevent, obstruct or discourage potential competitors from entering
  the markets in which the Company operates in. The Company takes the
  view that healthy competition encourages product and service
  innovations in the market place which would increase market standards
  and ultimately benefit consumers and society at large.

  Society: The Company aims to be a socially responsible company by
  contributing towards environmental conservation programs and to the
  local community which is exemplified by participating and organizing
  events such as the Sea Turtle Conservation Program, Elephant Help
  Foundation, establishing Laguna Childcare Centre, holding National
  Children’s Day event and establishing the Phuket Tsunami Recovery
  Fund.

  Suppliers: The Company strives to forge long term business
  relationships with its suppliers and therefore has the policy to
  always give a fair profit to its suppliers and to respect payment
  terms and conditions.

  Creditors: The Company considers creditors as important business
  partners and therefore aims to fulfill all its obligations to its
  creditors.

10. Remuneration for Directors & Management

  The Company is careful in giving competitive, but not excessive,
  remuneration to its directors and management so as to attract and
  retain highly qualified personnel and has consistently used the
  industry practice as a guideline.

  Remuneration for Directors is first reviewed by the Remuneration
  Committee which is then submitted for approval by shareholders at each
  Annual General Meeting. Independent directors/directors who take on
  the additional responsibility of being a member of the Audit and Risk
  Committee and/or Remuneration Committee are each paid an additional
  fee.

  Annual review of management remuneration is based on the performance
  of the Company and performance of the individual employee.

  Remuneration paid to individual directors of the Board and management
  is disclosed in the Company’s 2005 annual report and in section 9.3 of
  this report under the topic ‘Directors’ and Executives’ Remuneration”

11. Committees

  In 2005 the Audit Committee, which was formed in November 1999 and has
  performed its duties since 2000, expanded its role to include Risk
  Management and in doing so the Committee was renamed the Audit and
  Risk Committee. The Audit and Risk Committee comprises three
  independent directors and is chaired by Mr. Steven M. Small. The
  Committee performs the functions as mentioned under section 9.1.2 in
  this report.

The Audit and Risk Committee has full access to and cooperation from the
Company’s management and the internal auditor and has full discretion to
invite any director or senior management to attend its meetings. The
Audit and Risk Committee met five times in the year 2005. Each of the
Audit and Risk Committee members attended all the 5 meetings convened in
2005.

The Remuneration Committee was formed in November 2003 and has started
to perform its duties in 2004. It comprises three members and is chaired
by Mr. Ho Kwon Ping. The Committee has an objective to formulate and
align HR policies and programs for senior management to business goals
and market practices, to attract and retain the right people for senior
management positions in the Company and to ensure that the Company’s
senior management remuneration and benefit package remain competitive.
The Committee performs the functions as mentioned under section 9.1.3 of
this report.

The Remuneration Committee met once in the year 2005 and all members
attended.

12. Controlling System & Internal Audit

The Company realizes the significance of effective systems of control,
such as standard operating procedures, particularly in management and
operations. Hence, the duties and responsibilities of the employees and
the management are clearly defined. The Company has put in place
policies to safe guard the Company’s assets and duties between the
operators and the appraisal are clearly separated for effective checks
and balances. Furthermore, the internal audit of the financial systems
is also performed.

Internal Audit

Internal Audit plays an important role in monitoring an effective
systems of internal controls. To enable the effectiveness of the
internal audit function, the internal auditors of the Company report to
the Chairman of the Audit and Risk Committee and administratively to the
Group Managing Director of the Company. The Internal Audit checks and
monitors the operations of the Company for compliance with the Company’s
internal policies as well as all relevant laws and regulations. The
Audit and Risk Committee reviews the activities of the internal auditors
on a quarterly basis and is satisfied that the internal audit function
is independent of the activities which it audits; is adequately
resourced; and has appropriate standing within the Group to perform its
role effectively.

Enterprise Risk Management

In 2005 the Company appointed an external consultant to assist
management in implementing a Risk Management framework for the business
of the Compnay. The Risk Management framework covers all aspects of the
Company’s operations to enable significant business risks within the
Group’s current business environment to be identified, assessed,
monitored, managed and evaluated. As part of the on-going risk
management process, management conducts a risk assessment and
evaluation; considers the adoption of adequate and cost-effective system
of internal controls to mitigate significant business risks; and
provides for significant risks to be managed through regular reviews by
management and the Audit and Risk Committee. The Audit and Risk
Committee has reviewed the Group’s risk management processes and
procedures and is satisfied that there are adequate internal controls in
place to manage the significant risks identified.

13. Directors’ Reporting

The Board of Directors is accountable to its shareholders for the
Company’s consolidated financial statements as well as the financial
information as shown in the annual report. The Company’s financial
statements are prudently prepared in accordance with generally accepted
accounting principles and are independently reviewed by an international
audit firm every quarter with a full audit performed at each year-end.
All pertinent information relating to the financial statements are
clearly and completely disclosed in the accompanying notes.

Through the implementation of various policies, system of internal
control and the work of the internal and external auditors, the Board of
Directors is reasonably satisfied with the integrity and reliability of
the Company’s financial report and safeguard of assets. Additionally,
the Audit and Risk Committee has been tasked to review the Company’s
financial report and internal control practices directly with the
external auditors for an impartial and non-biased feedback. ‘Opinion of
the Board of Directors on the Company’s system of Internal Control’ is
disclosed in the Company’s 2005 annual report and in section 10 of this
report under the topic “Internal Control”.

14. Relations with Investors

The Company discloses all general and financial information correctly,
completely, transparently and on a timely manner particularly any
information which may affect the price of the Company’s securities. All
information is communicated to investors, shareholders and relevant
sectors through the Stock Exchange of Thailand, the SET Community Portal
(New ELCID).

Mr. Surapon Supratya (Group Managing Director) is the ‘Liaison Officer’
to represent the Company in communicating with individual investors,
shareholders, stock analysts and state agencies. Investors may
communicate with the Laison Officer at tel. 66 (0) 2285-0040 extension
425 or through the Company’s corporate website (www.lagunaresorts.com)
where the latest financial reports and other corporate information are
also available.

  9.6 Supervision on the use of inside information

  Laguna Resorts & Hotels Public Company Limited has a Statement of
  Business Conduct to guide its Board of Directors, senior management
  and all rank and file employees in the use of inside information for
  the purpose of preserving the interest of all stakeholders of the
  Company. To prevent misuse of sensitive or confidential corporate
  information, the Company’s policy prohibits any employee, regardless
  of rank, from disclosing such corporate information for personal gain
  or for any other reason not in the Company’s interest. Sensitive and
  confidential information is also restricted to only those officers who
  have a direct responsibility over such matters. Additionally, the
  Company monitors the trading of the Company’s shares by its directors,
  and senior management who are required to report on the holding of the
  Company’s shares in accordance with the rules of the Securities and
  Exchange Commission.

7.  Human resources

-   The number of employees as at 31^(st) December 2005 was 503
    employees detailed below:

  ------------------------------------------------ ----------------------
  Department                                       No. of Employees

  Management Office                                9

  Project Control                                  20

  Accounts                                         27

  Administration                                   15

  IT                                               5

  Corporate Affairs                                26

  Finance                                          2

  Human Resources                                  3

  Internal Audit                                   3

  Design & Planning                                29

  Purchasing                                       2

  Canal Village                                    9

  Legal                                            3

  Wedding Chapel                                   4

  Dusit Laguna Resort                              346

  Total                                            503
  ------------------------------------------------ ----------------------

  Total remuneration and benefits paid to employees (such as salary,
  bonus, car allowance, social security payment, provident fund payment,
  medical, accident & health insurance, complimentary vouchers, etc.)
  during the 12 months ended 31^(st) December 2005 amounted to Baht
  209,132,901.

  Human Resources Development Policy

  The Group does not have a specific Human Resources development policy
  due to the number and nature of the different operations within the
  Group. Rather the responsibility is divested to each of the operating
  departments and companies to ensure that the appropriate development
  needs of its employees and the required training resources are
  identified and allocated respectively.