12 Financial Position and Operating Results

12.1 Summary of Financial Position and Operating Results for the past 3
years

12.1.1 Summary of auditors findings and significant accounting policies.

The name of Company’s and its subsidiaries’ Auditor for the 2001
Financial Statements is Sophon Permsirivallop, Certified Public
Accountant (Thailand) No. 3182 of Ernst & Young Office Limited.

Conclusion of the Auditors Report

For the year ended 31 December 2001

In summary, a clean audit report was issued.

  Reference was made to two subsidiary companies included in
  consolidated financial statements, Laguna Beach Club Limited and
  Laguna (1) Co., Ltd. that were audited by another auditor for the year
  ended 31 December 2001. The company’s financial statements included
  investments in these subsidiaries as at 31 December 2001 of Baht 251
  Million, accounted for under the equity method, and the share of
  profit from these subsidiaries for the year then ended amounted to
  Baht 53 million.

  The financial statements were audited in accordance with generally
  accepted auditing standards which included such tests of the
  accounting records and such other auditing procedures as considered
  necessary in the circumstances.

  The auditors issued a clean audit opinion on the financial statements
  for the year ended 31 December 2001 and stated that the financial
  statements presented fairly the financial position of the company in
  conformity with generally accepted accounting principles.

For the year ended 31 December 2000

In summary, a clean audit report was issued.

Reference was made to the fact that the previous years financial
statements were audited by another auditor and that a qualified audit
opinion was issued on the 1999 financial statements due to the fact that
the auditors were unable to gain sufficient evidence regarding the share
of loss in a foreign associate amounting to Baht 3.8 Million and the
carrying value of that investment of Baht 231 Million, for the year
ended 31 December 1999.

  The financial statements were audited in accordance with generally
  accepted auditing standards which included such tests of the
  accounting records and such other auditing procedures as considered
  necessary in the circumstances.

  The auditors issued a clean audit opinion on the financial statements
  for the year ended 31 December 2000 and stated that the financial
  statements presented fairly the financial position of the company in
  conformity with generally accepted accounting principles.

For the year ended 31 December 1999

In summary, a clean audit report was issued except for the fact that the
auditors were unable to gain sufficient evidence regarding the share of
loss in a foreign associate amounting to Baht 3.8 Million and the
carrying value of that investment of Baht 231 Million, for the year
ended 31 December 1999. The reason for this was that the auditor of the
associate company did not provide a copy of their audit report.

  The financial statements were audited in accordance with generally
  accepted auditing standards which included such tests of the
  accounting records and such other auditing procedures as considered
  necessary in the circumstances except as noted above.

Except for the above, the auditors issued a clean audit opinion and
stated that the financial statements presented fairly the financial
position of the company in conformity with generally accepted accounting
principles.

  The audit report referred to the fact that a restatement of the 1998
  Accounts was made to comply with the new accounting framework that
  became effective in February 1999 with particular reference to the
  treatment of pre-opening expenses

Accounting policies

The financial statements have been prepared in accordance with
accounting standards pronounced by the Institute of Certified
Accountants and Auditors of Thailand and with the Accounting Act B.E.
2543.

Significant accounting policies adopted by the Company and its
subsidiaries are summarized below :-

    Revenue recognition

  (a) Revenue from hotel and restaurant operations

  Revenue from hotel and restaurant operations mainly comprises room
  sales, food and beverage sales and revenues from auxiliary activities,
  and represents the invoiced value (excluding value added tax) of goods
  supplied and services rendered after deducting discounts and adding
  service charges.

  (b) Revenue from sales of property under development

  Revenues from sales of property under development are recognised when
  a legally binding contract is signed using the percentage of
  completion method. The percentage of completion is arrived at based on
  actual costs against the total anticipated construction costs,
  excluding cost of land, and estimations performed by independent
  engineers. The subsidiaries recognise income when the initial payment
  and installments received are twenty percent of the contract price and
  the construction work is at least ten percent completed. Revenue
  recognition is discontinued when there are three consecutive
  installments overdue.

  (c) Revenue from sales of furniture in condominium units

  Revenue from sales of furniture in condominium units is recognised
  when furniture is completely installed according to the customers’
  specifications.

  (d) Revenue from time-sharing business

  “Lease income from members” on a time – share basis is recognized as
  income when a legally binding contract has been signed and the initial
  payment and installments received amount to at least twenty – five
  percent of the contract price.

    Allowance for doubtful accounts

Allowance for doubtful accounts is provided for the estimated collection
losses that may be incurred in the collection of receivables. The
allowance is based on collection experience and current status of
receivables outstanding at the balance sheet date.

    Property development cost

Property development cost is stated at the lower of cost and net
realisable value. Cost comprises cost of land, design fee,
infrastructure, construction and related interest.

In determining the cost of sales of time share business, the cost of
each condominium unit is divided equally by the number weeks in a year
and then the cost of each week sold is recognized in the earnings
statement on the first-in, first-out basis.

    Inventories

Inventories are valued at the lower of cost and net realisable value,
cost being determined on either the first-in, first-out or the weighted
average basis.

    Investments

Investments in subsidiaries (in the financial statements of the Company)
and associated companies are stated under the equity method of
accounting. Under this method, the investment is recorded at cost. For
each subsequent year the investment is adjusted to incorporate the
Company's proportionate share of the operating results in the
subsidiaries and associated companies. Loss over cost of investments is
presented as liabilities under the caption of "Provision for loss on
investment in subsidiary and associate company".

    Other long-term investments

Long-term investments in marketable equity securities, which the Company
and subsidiaries intend to hold as available-for-sale are determined at
fair value (fair value is based on the latest bid prices quoted by the
Stock Exchange of Thailand on the last working day as of the balance
sheet date) and recognise changes in value of investments as a separate
item under shareholders’ equity under the caption of “Unrealised
gain/loss of investment on available-for-sale securities”.

Investment in debt securities which are classified as held-to-maturity
securities are carried at amortised cost.

Long-term investments in non-marketable equity securities which the
Company and subsidiaries hold as other investments are carried at cost.
A test for impairment is carried out when there is a factor indicating
that such investments might be impaired. Loss on impairment (if any) is
recognised in the earnings statement.

On disposal of an investment, the difference between the net disposal
proceeds and the carrying amount is charged or credited to the earnings
statement.

When disposing of part of a particular investment in debt or equity
securities, the carrying amount of the disposed part is determined from
the weighted average carrying amount of the total holding of the
investment.

    Property, plant and equipment

  (a) Hotel properties

  Hotel properties which consist of land, buildings, fixtures and
  equipment are stated at cost less accumulated depreciation. The
  Company and subsidiaries initially record land, buildings, fixtures
  and equipment at cost at the acquisition date. Such fixed assets have
  been however subsequently revalued by an independent appraiser, to
  their fair values. As a policy, the revaluation will be performed
  every three years. If within that period, there are factors which may
  cause significant changes in the value of assets, the revaluation will
  be performed in that year.

  (b) Other fixed assets/land awaiting for future development

  Fixed assets other than hotel properties are stated at cost less
  accumulated depreciation, except for land and land awaiting for future
  development which is stated at revaluation made by an independent
  appraiser. As a policy, land revaluation by an independent appraiser
  will be made every three years. If within that period, there are
  factors which may cause significant changes in the value of assets,
  the revaluation will be performed in that year.

The differences arising from revaluation are dealt with in the financial
statements of the Company and subsidiaries as follows:

- When an asset’s carrying amount is increased as a result of the
revaluation of the Company and subsidiaries, the increase is credited
directly to equity under the heading of “Surplus on revaluation of
assets”. The Company’s proportional interest in the surplus from
revaluation of the fixed assets of the subsidiary companies (based on
the Company’s equity holding in the subsidiaries) is presented under the
caption of “Surplus on revaluation of assets” in shareholders’ equity in
the balance sheet. However, a revaluation increase will be recognised as
income to the extent that it reverses a revaluation decrease of the same
asset previously recognised as an expense.

- When an asset’s carrying amount is decreased as a result of the
revaluation of the Company and subsidiaries, the decrease is recognised
as expenses in the earnings statement. However, a revaluation decrease
is to be charged directly against the related “Surplus on revaluation of
assets” to the extent that the decrease does not exceed the amount held
in the revaluation surplus in respect of that same assets. Any excess
amount is to be recognised as expense in the earnings statement.

    Depreciation

Depreciation of plant and equipment is calculated by reference to their
costs on a straight-line basis over estimated useful lives as follows:-

  ----------------------------------------------- -----------------------
  Buildings and improvements                      10 - 50 years

  Operating equipment                             5 - 10 years

  Furniture, fixtures and equipment               5 - 15 years

  Golf course                                     10 years

  Vehicles                                        5 years
  ----------------------------------------------- -----------------------

No depreciation has been provided for land.

Depreciation on revalued/devalued assets is calculated on the
straight-line method, based on the revalued amount of the fixed asset
and its remaining useful life. Depreciation is included in determining
earnings. The surplus on revaluation of assets is amortised as a
deduction against retained earnings based on its remaining useful life.

    Foreign currencies

Foreign currency transactions during the year are recorded at the rates
ruling on the transaction dates. Assets and liabilities in foreign
currency outstanding on the balance sheet date are translated into Baht
at the rates ruling on the balance sheet date.

Exchange gains and losses are included in determining earnings.

The financial statements of the associated companies incorporated
overseas are translated to Thai Baht at the closing exchange rate for
assets and liabilities, and at the average exchange rate for revenues
and expenses. The resulting difference has been shown under the caption
of “Translation adjustment” in the shareholders’ equity.

    Basic earnings per share

Basic earnings per share is determined by dividing the net earnings for
the year by the number of ordinary shares in issue during the year.

12.1.2 Summary of financial statements

Consolidated Income Statement

Unit : Baht

+--------------------------------+---+-----------+-----------+-----------+
|                                |   | Con       |           |           |
|                                |   | solidated |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|                                |   | 2001      | 2000      | 1999      |
+--------------------------------+---+-----------+-----------+-----------+
| REVENUES                       |   |           |           | Restated  |
+--------------------------------+---+-----------+-----------+-----------+
|   Revenue from hotel           |   | 2,62      | 2,53      | 2,06      |
|   operations                   |   | 9,786,992 | 7,635,151 | 4,394,041 |
+--------------------------------+---+-----------+-----------+-----------+
|   Revenue from property        |   | 31        | 23        | 5         |
|   development operations       |   | 2,057,065 | 5,787,953 | 7,844,609 |
+--------------------------------+---+-----------+-----------+-----------+
|   Interest income              |   | 4         | 2         | 2         |
|                                |   | 0,413,201 | 3,976,897 | 5,739,498 |
+--------------------------------+---+-----------+-----------+-----------+
|   Other income                 |   | 1         | 1         | 3         |
|                                |   | 8,807,661 | 5,028,787 | 4,578,352 |
+--------------------------------+---+-----------+-----------+-----------+
| Total revenues                 |   | 3,00      | 2,81      | 2,18      |
|                                |   | 1,064,919 | 2,428,788 | 2,556,500 |
+--------------------------------+---+-----------+-----------+-----------+
| EXPENSES                       |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Direct hotel operations      |   | 1,74      | 1,61      | 1,35      |
|   expenses                     |   | 3,662,859 | 8,238,177 | 8,517,905 |
+--------------------------------+---+-----------+-----------+-----------+
|   Direct cost of property      |   | 19        | 9         | 6,054,941 |
|   development operations       |   | 4,517,401 | 7,966,885 |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Selling & administrative     |   | 19        | 22        | 13        |
|   expenses                     |   | 8,359,056 | 2,006,553 | 6,322,556 |
+--------------------------------+---+-----------+-----------+-----------+
|   Provision for diminution in  |   | 4         | -         | -         |
|   value of other long-term     |   | 0,590,246 |           |           |
|   investment                   |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Provision for decrease in    |   | -         | -         | 1         |
|   market value of              |   |           |           | 2,882,439 |
|                                |   |           |           |           |
|   property under development   |   |           |           |           |
|   cost                         |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Directors fees               |   | 5,933,832 | 4,571,875 | 640,000   |
+--------------------------------+---+-----------+-----------+-----------+
|   Foreign exchange loss        |   | -         | 1         | 1         |
|                                |   |           | 0,476,481 | 4,436,362 |
+--------------------------------+---+-----------+-----------+-----------+
| Total expenses                 |   | 2,18      | 1,95      | 1,52      |
|                                |   | 3,063,394 | 3,259,971 | 8,854,203 |
+--------------------------------+---+-----------+-----------+-----------+
|                                |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
| Operating profit               |   | 81        | 85        | 65        |
|                                |   | 8,001,525 | 9,168,817 | 3,702,297 |
+--------------------------------+---+-----------+-----------+-----------+
| Share of profit (loss) of      |   | -         | (250,643) | (3        |
| subsidiaries and associates    |   |           |           | ,585,485) |
+--------------------------------+---+-----------+-----------+-----------+
| Earnings before interest and   |   | 81        | 85        | 65        |
| income tax                     |   | 8,001,525 | 8,918,174 | 0,116,812 |
+--------------------------------+---+-----------+-----------+-----------+
| Interest expenses              |   | (66       | (93       | (157      |
|                                |   | ,870,961) | ,747,892) | ,856,419) |
+--------------------------------+---+-----------+-----------+-----------+
| Corporate income tax           |   | (279      | (199      | (96       |
|                                |   | ,391,316) | ,451,675) | ,023,561) |
+--------------------------------+---+-----------+-----------+-----------+
| Earnings before minority       |   | 47        | 56        | 39        |
| interest                       |   | 1,739,248 | 5,718,607 | 6,236,832 |
+--------------------------------+---+-----------+-----------+-----------+
| Share of profit (loss) of      |   | (171      | (195      | (114      |
| subsidiaries to minority       |   | ,269,535) | ,799,193) | ,066,341) |
| interest                       |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
| Net earnings for the year      |   | 30        | 36        | 28        |
|                                |   | 0,469,713 | 9,919,414 | 2,170,491 |
+--------------------------------+---+-----------+-----------+-----------+
| Basic earnings per share       |   | 5.57      | 6.68      | 4.68      |
|                                |   |           |           |           |
|   Earnings before minority     |   |           |           |           |
|   interest                     |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Share of profit in           |   | (2.02)    | (2.31)    | (1.35)    |
|   subsidiaries to minority     |   |           |           |           |
|   interest                     |   |           |           |           |
+--------------------------------+---+-----------+-----------+-----------+
|   Net earnings                 |   | 3.55      | 4.37      | 3.33      |
+--------------------------------+---+-----------+-----------+-----------+

Consolidated Balance Sheet

Unit : Baht

[TABLE]

Consolidated Balance Sheet (continued)

Unit : Baht

+----------------------------------+---+---+---+----------+-----------+-----------+
|                                  |   |   |   | Cons     |           |           |
|                                  |   |   |   | olidated |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
|                                  |   |   | 2 |          | 2000      | 1999      |
|                                  |   |   | 0 |          |           |           |
|                                  |   |   | 0 |          |           |           |
|                                  |   |   | 1 |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| LIABILITIES AND SHAREHOLDERS'    |   |   |   |          |           | Restated  |
| EQUITY                           |   |   |   |          |           |           |
|                                  |   |   |   |          |           |           |
| (continued)                      |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Non Current liabilities          |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Provision for loss on investment |   |   |   | -        | -         | -         |
| in subsidiary                    |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Provision for loss on investment |   |   |   | 4        | 4,850,123 | -         |
| in associated company            |   |   |   | ,850,123 |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Loans from a minority            |   |   |   | -        | -         | 13        |
| shareholder                      |   |   |   |          |           | 5,848,500 |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Long-term loans - net of current |   |   |   | 562      | 62        | 80        |
| portion                          |   |   |   | ,500,000 | 0,000,000 | 1,751,747 |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Other liabilities                |   |   |   | 35       | 2         | 1         |
|                                  |   |   |   | ,767,604 | 1,963,147 | 6,461,309 |
+----------------------------------+---+---+---+----------+-----------+-----------+
| TOTAL LIABILITIES                |   |   |   | 1,624    | 1,57      | 2,10      |
|                                  |   |   |   | ,387,920 | 7,832,520 | 8,577,531 |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Shareholders' equity             |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Share capital - registered,    |   |   |   | 846      | 84        | 84        |
|   issued and fully paid-up,      |   |   |   | ,701,430 | 6,701,430 | 6,701,430 |
|   84,670,143 ordinary shares of  |   |   |   |          |           |           |
|   Baht 10 each                   |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Share premium                  |   |   |   | 2,062    | 2,06      | 2,06      |
|                                  |   |   |   | ,460,582 | 2,460,582 | 2,460,582 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Capital reserve                |   |   |   | 634      | 63        | 63        |
|                                  |   |   |   | ,698,720 | 4,698,720 | 4,698,720 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Translation adjusments         |   |   |   | 89       | 9         | 8         |
|                                  |   |   |   | ,676,249 | 0,492,322 | 1,782,782 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Surplus on revaluation of      |   |   |   | 1,399    | 1,28      | 1,30      |
|   assets                         |   |   |   | ,214,033 | 1,141,966 | 2,661,437 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Unrealised losses on           |   |   |   | (282,    | (294      | (250      |
|   available-for-sale securities  |   |   |   | 813,402) | ,613,242) | ,363,842) |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Retained earnings:             |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Appropriated - statutory       |   |   |   | 71       | 5         | 3         |
|   reserve                        |   |   |   | ,631,748 | 6,608,262 | 8,112,291 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Unappropriated                 |   |   |   | 666      | 52        | 22        |
|                                  |   |   |   | ,600,807 | 6,630,513 | 6,021,813 |
+----------------------------------+---+---+---+----------+-----------+-----------+
|   Minority interests - equity    |   |   |   | 887      | 1,31      | 1,10      |
|   attributable to minority       |   |   |   | ,842,505 | 5,512,789 | 3,114,208 |
|   shareholders of subsidiaries   |   |   |   |          |           |           |
+----------------------------------+---+---+---+----------+-----------+-----------+
| Total shareholders' equity       |   |   |   | 6,376    | 6,51      | 6,04      |
|                                  |   |   |   | ,012,672 | 9,633,342 | 5,189,421 |
+----------------------------------+---+---+---+----------+-----------+-----------+
| TOTAL LIABILITIES AND            |   |   |   | 8,000    | 8,09      | 8,15      |
| SHAREHOLDERS' EQUITY             |   |   |   | ,400,592 | 7,465,862 | 3,766,952 |
+----------------------------------+---+---+---+----------+-----------+-----------+

 

Consolidated Statement of Cash Flows 

Unit : Baht

  --------------------------------- -- --------------- --------------- ---------------
                                       Consolidated                    

                                       2001            2000            1999

                                                                       Restated

  Cash flows from operating                                            
  activities                                                           

  Net cash inflow (outflow) from       948,021,321     983,774,371     729,541,255
  operating activities                                                 

  Cash flows from investing                                            
  activities                                                           

  Net cash inflow (outflow) from       (839,040,535)   (202,941,432)   (89,687,603)
  investing activities                                                 

  Cash flows from financing                                            
  activities                                                           

  Net cash inflow (outflow) from       (246,068,512)   (703,712,583)   (507,768,161)
  financing activities                                                 

  Net increase (decrease) in cash      (137,087,726)   77,120,356      132,085,491
  and cash equivalents                                                 

  Cash and cash equivalents at the     367,933,684     290,813,328     158,727,837
  beginning of the year                                                

  Cash and cash equivalents at the     230,845,958     367,933,684     290,813,328
  end of the year                                                      

                                                                       

                                                                       

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

 

Company Income Statement

Unit : Baht

+----------------------------------+-----------+-----------+-----------+
|                                  | The       |           |           |
|                                  | Company   |           |           |
|                                  | Only      |           |           |
+----------------------------------+-----------+-----------+-----------+
|                                  | 2001      | 2000      | 1999      |
+----------------------------------+-----------+-----------+-----------+
|                                  |           |           | Restated  |
+----------------------------------+-----------+-----------+-----------+
| REVENUES                         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Revenue from hotel operations  | 46        | 46        | 37        |
|                                  | 1,713,682 | 9,808,572 | 4,939,947 |
+----------------------------------+-----------+-----------+-----------+
|   Revenue from property          | -         | -         | -         |
|   development operations         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Interest income                | 6         | 10        | 13        |
|                                  | 6,400,441 | 8,710,551 | 9,657,855 |
+----------------------------------+-----------+-----------+-----------+
|   Gain on foreign exchange       | -         | -         | -         |
+----------------------------------+-----------+-----------+-----------+
|   Other income                   | 1         | 6,978,915 | 1         |
|                                  | 3,964,621 |           | 2,080,141 |
+----------------------------------+-----------+-----------+-----------+
| Total revenues                   | 54        | 58        | 52        |
|                                  | 2,078,744 | 5,498,038 | 6,677,943 |
+----------------------------------+-----------+-----------+-----------+
| EXPENSES                         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Direct hotel operations        | 27        | 27        | 23        |
|   expenses                       | 7,389,736 | 8,144,750 | 2,059,395 |
+----------------------------------+-----------+-----------+-----------+
|   Direct cost of property        | -         | -         | -         |
|   development operations         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Selling & administrative       | 13        | 9         | 7         |
|   expenses                       | 3,011,917 | 8,678,068 | 4,824,993 |
+----------------------------------+-----------+-----------+-----------+
|   Provision for decrease in      | -         | -         | -         |
|   market value of                |           |           |           |
|                                  |           |           |           |
|   property under development     |           |           |           |
|   cost                           |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Directors fees                 | 5,933,832 | 4,571,875 | 640,000   |
+----------------------------------+-----------+-----------+-----------+
|   Foreign exchange loss          | -         | 3         | 3,929,420 |
|                                  |           | 1,121,438 |           |
+----------------------------------+-----------+-----------+-----------+
|                                  |           |           |           |
+----------------------------------+-----------+-----------+-----------+
| Total expenses                   | 41        | 41        | 31        |
|                                  | 6,335,485 | 2,516,131 | 1,453,808 |
+----------------------------------+-----------+-----------+-----------+
|                                  |           |           |           |
+----------------------------------+-----------+-----------+-----------+
| Operating profit                 | 12        | 17        | 21        |
|                                  | 5,743,259 | 2,981,907 | 5,224,135 |
+----------------------------------+-----------+-----------+-----------+
| Share of profit (loss) of        | 24        | 30        | 20        |
| subsidiaries and associates      | 6,632,836 | 7,350,381 | 5,717,036 |
+----------------------------------+-----------+-----------+-----------+
| Earnings before interest and     | 37        | 48        | 42        |
| income tax                       | 2,376,095 | 0,332,288 | 0,941,171 |
+----------------------------------+-----------+-----------+-----------+
| Interest expenses                | (34       | (67       | (         |
|                                  | ,762,145) | ,916,909) | 9         |
|                                  |           |           | 8,349,743 |
|                                  |           |           | )         |
+----------------------------------+-----------+-----------+-----------+
| Corporate income tax             | (37       | (42       | (40       |
|                                  | ,144,237) | ,495,965) | ,420,937) |
+----------------------------------+-----------+-----------+-----------+
| Earnings before minority         | 30        | 36        | 28        |
| interest                         | 0,469,713 | 9,919,414 | 2,170,491 |
+----------------------------------+-----------+-----------+-----------+
| Share of profit (loss) of        | -         | -         | -         |
| subsidiaries to minority         |           |           |           |
| interest                         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
| Net earnings for the year        | 30        | 36        | 28        |
|                                  | 0,469,713 | 9,919,414 | 2,170,491 |
+----------------------------------+-----------+-----------+-----------+
|                                  |           |           |           |
+----------------------------------+-----------+-----------+-----------+
| Basic earnings per share         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
| Earnings before minority         | 3.55      | 4.37      | 3.33      |
| interest                         |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Share of profit in             | -         | -         | -         |
|   subsidiaries to minority       |           |           |           |
|   interest                       |           |           |           |
+----------------------------------+-----------+-----------+-----------+
|   Net earnings                   | 3.55      | 4.37      | 3.33      |
+----------------------------------+-----------+-----------+-----------+

Company Balance Sheet 

Unit : Baht

+-------------------------------+---+-----------+-----------+-----------+
|                               |   | The       |           |           |
|                               |   | Company   |           |           |
|                               |   | Only      |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|                               |   | 2001      | 2000      | 1999      |
+-------------------------------+---+-----------+-----------+-----------+
|                               |   |           |           | Restated  |
+-------------------------------+---+-----------+-----------+-----------+
| ASSETS                        |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Current Assets                |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Cash on hand and at banks   |   | 3         | 19        | 13        |
|                               |   | 6,728,375 | 2,943,936 | 4,969,738 |
+-------------------------------+---+-----------+-----------+-----------+
|   Other short term investment |   | 2         | -         | -         |
|                               |   | 0,148,946 |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Trade accounts receivable - |   | 7         | 8         | 5         |
|   net                         |   | 6,834,155 | 0,659,523 | 7,869,535 |
+-------------------------------+---+-----------+-----------+-----------+
|   Short-term loans and        |   | 4         | 1         | 4         |
|   advances to related         |   | 2,292,164 | 9,885,551 | 1,433,038 |
|   companies                   |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Inventories                 |   | 1         | 7,931,408 | 9,110,766 |
|                               |   | 0,864,190 |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Other current assets        |   | 8,042,749 | 1         | 1         |
|                               |   |           | 3,248,086 | 3,894,309 |
+-------------------------------+---+-----------+-----------+-----------+
| Total current assets          |   | 19        | 31        | 25        |
|                               |   | 4,910,579 | 4,668,504 | 7,277,386 |
+-------------------------------+---+-----------+-----------+-----------+
| Non Current Assets            |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Loans to subsidiaries         |   | 70        | 90        | 1,43      |
|                               |   | 0,824,000 | 9,624,000 | 4,372,500 |
+-------------------------------+---+-----------+-----------+-----------+
| Investment in subsidiaries    |   | 4,71      | 3,75      | 3,46      |
| and associated companies      |   | 7,916,421 | 7,404,264 | 7,189,829 |
| accounted for under the       |   |           |           |           |
| equity method                 |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Other long term investments   |   | 8         | 9         | 8         |
|                               |   | 8,955,300 | 8,688,400 | 9,473,400 |
+-------------------------------+---+-----------+-----------+-----------+
| Property, plant and           |   | 75        | 73        | 72        |
| equipment - net               |   | 4,037,565 | 1,507,788 | 5,370,745 |
+-------------------------------+---+-----------+-----------+-----------+
| Other assets                  |   | 3,072,848 | 2,996,103 | 5,571,111 |
+-------------------------------+---+-----------+-----------+-----------+
| Negative goodwill on          |   | (504      | -         | -         |
| consolidation                 |   | ,858,387) |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| TOTAL ASSETS                  |   | 5,95      | 5,81      | 5,97      |
|                               |   | 4,858,326 | 4,889,059 | 9,254,971 |
+-------------------------------+---+-----------+-----------+-----------+
| LIABILITIES AND SHAREHOLDERS' |   |           |           |           |
| EQUITY                        |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Current liabilities           |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Bank overdrafts and         |   | -         | -         | 15        |
|   short-term loans from       |   |           |           | 1,736,379 |
|   financial institutions      |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Trade accounts payable      |   | 2         | 2         | 7,413,710 |
|                               |   | 9,124,732 | 6,032,347 |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Current portion of          |   | 16        | 15        | 4         |
|   long-term loans             |   | 0,000,000 | 0,000,000 | 5,000,000 |
+-------------------------------+---+-----------+-----------+-----------+
|   Advances from related       |   | 1         | 7,787,129 | 9,791,255 |
|   companies                   |   | 2,930,760 |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Corporate income tax        |   | 1         | 1         | 2         |
|   payable                     |   | 0,618,820 | 2,881,726 | 0,875,163 |
+-------------------------------+---+-----------+-----------+-----------+
|   Other current liabilities   |   | 5         | 3         | 2         |
|                               |   | 0,047,615 | 9,629,014 | 8,655,255 |
+-------------------------------+---+-----------+-----------+-----------+
| Total current liabilities     |   | 26        | 23        | 26        |
|                               |   | 2,721,927 | 6,330,216 | 3,471,762 |
+-------------------------------+---+-----------+-----------+-----------+

 Company Balance Sheet (continued)

Unit : Baht

+-------------------------------+---+-----------+-----------+-----------+
|                               |   | The       |           |           |
|                               |   | Company   |           |           |
|                               |   | Only      |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|                               |   | 2001      | 2000      | 1999      |
+-------------------------------+---+-----------+-----------+-----------+
|                               |   |           |           | Restated  |
+-------------------------------+---+-----------+-----------+-----------+
| LIABILITIES AND SHAREHOLDERS' |   |           |           |           |
| EQUITY                        |   |           |           |           |
|                               |   |           |           |           |
| (continued)                   |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Non Current liabilities       |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Provision for loss on         |   | 7,921,170 | 5,906,642 | 2,801,656 |
| investment in subsidiary      |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Long-term loans - net of      |   | 18        | 36        | 76        |
| current portion               |   | 7,500,000 | 0,000,000 | 3,549,000 |
+-------------------------------+---+-----------+-----------+-----------+
| Other liabilities             |   | 8,545,062 | 8,531,648 | 7,357,340 |
+-------------------------------+---+-----------+-----------+-----------+
| TOTAL LIABILITIES             |   | 46        | 61        | 1,03      |
|                               |   | 6,688,159 | 0,768,506 | 7,179,758 |
+-------------------------------+---+-----------+-----------+-----------+
| Shareholders' equity          |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Share capital - registered, |   | 84        | 84        | 84        |
|   issued and fully paid-up,   |   | 6,701,430 | 6,701,430 | 6,701,430 |
|                               |   |           |           |           |
|   84,670,143 ordinary shares  |   |           |           |           |
|   of Baht 10 each             |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Share premium               |   | 2,06      | 2,06      | 2,06      |
|                               |   | 2,460,582 | 2,460,582 | 2,460,582 |
+-------------------------------+---+-----------+-----------+-----------+
|   Capital reserve             |   | 63        | 63        | 63        |
|                               |   | 4,698,720 | 4,698,720 | 4,698,720 |
+-------------------------------+---+-----------+-----------+-----------+
|   Translation adjustments     |   | 8         | 9         | 8         |
|                               |   | 9,676,249 | 0,492,322 | 1,782,782 |
+-------------------------------+---+-----------+-----------+-----------+
|   Surplus on revaluation of   |   | 1,39      | 1,28      | 1,30      |
|   assets                      |   | 9,214,033 | 1,141,966 | 2,661,437 |
+-------------------------------+---+-----------+-----------+-----------+
|   Unrealised losses on        |   | (282      | (294      | (250      |
|   available-for-sale          |   | ,813,402) | ,613,242) | ,363,842) |
|   securities                  |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Retained earnings:          |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
|   Appropriated - statutory    |   | 7         | 5         | 3         |
|   reserve                     |   | 1,631,748 | 6,608,262 | 8,112,291 |
+-------------------------------+---+-----------+-----------+-----------+
|   Unappropriated              |   | 66        | 52        | 22        |
|                               |   | 6,600,807 | 6,630,513 | 6,021,813 |
+-------------------------------+---+-----------+-----------+-----------+
|   Minority interests - equity |   | -         | -         | -         |
|   attributable to minority    |   |           |           |           |
|   shareholders of             |   |           |           |           |
|   subsidiaries                |   |           |           |           |
+-------------------------------+---+-----------+-----------+-----------+
| Total shareholders' equity    |   | 5,48      | 5,20      | 4,94      |
|                               |   | 8,170,167 | 4,120,553 | 2,075,213 |
+-------------------------------+---+-----------+-----------+-----------+
| TOTAL LIABILITIES AND         |   | 5,95      | 5,81      | 5,97      |
| SHAREHOLDERS' EQUITY          |   | 4,858,326 | 4,889,059 | 9,254,971 |
+-------------------------------+---+-----------+-----------+-----------+

 

Company Statement of Cash Flows 

Unit : Baht

  ---------------------------------- --------------- --------------- --------------
                                     The Company                     
                                     Only                            

                                     2001            2000            1999

                                                                     Restated

  Cash flows from operating                                          
  activities                                                         

  Net cash inflow (outflow) from     103,047,278     133,257,179     118,003,532
  operating activities                                               

  Cash flows from investing                                          
  activities                                                         

  Net cash inflow (outflow) from     72,577,447      459,672,541     62,579,772
  investing activities                                               

  Cash flows from financing                                          
  activities                                                         

  Net cash inflow (outflow) from     (331,840,286)   (534,955,522)   (48,166,519)
  financing activities                                               

  Net increase (decrease) in cash    (156,215,561)   57,974,198      132,416,785
  and cash equivalents                                               

  Cash and cash equivalents at the   192,943,936     134,969,738     2,552,953
  beginning of the year                                              

  Cash and cash equivalents at the   36,728,375      192,943,936     134,969,738
  end of the year                                                    

                                                                     

                                                                     

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

12.1.3 Financial ratios of the company and its subsidiaries

[TABLE]

[TABLE]

[TABLE]

[TABLE]

12.2 Explanation and Analysis by management

The net profit after income tax achieved for the year ended 31 December
2001 was lower than that of the previous year despite revenues being 7%
higher. The main reason for this is that the income tax expense is
significantly higher than in 2000 on slightly lower operating profits.
This is due the fact that all brought forward tax losses were fully
utlilised in 2000 and in the year ended 31 December 2001 there were a
number of provisions and write-offs that were not deductible for tax
purposes. There was also a one off item included in the tax expense that
relates to a tax planning project, the benefits of which will be
experienced in future years.

In addition to the higher tax expense a number of one off expenses were
incurred in 2001 that largely related to provisions being made against
doubtful debts and non recoverable assets. There was also a write down
in the investments in Tropical Resorts Limited and the JAIC Nippon Asia
No 1 Fund to recognise an impairment in value of these investments.

Otherwise the hotel and property sales operations generally performed
well, posting revenues higher than the previous year, as detailed below.

Hotel Operations (Unit: Million Baht)

+---------------+----------+-----+----------+-----+----------+------+
|               | 2001     | %   | 2000     | %   | 1999     | %    |
|               |          |     |          |     |          |      |
|               |          |     |          |     | Restated |      |
+---------------+----------+-----+----------+-----+----------+------+
|               |          |     |          |     |          |      |
+---------------+----------+-----+----------+-----+----------+------+
| Revenues      | 2,630    | 10  | 2,538    | 10  | 2,064    | 1    |
|               |          | 0.0 |          | 0.0 |          | 00.0 |
+---------------+----------+-----+----------+-----+----------+------+
|               |          |     |          |     |          |      |
+---------------+----------+-----+----------+-----+----------+------+
| Expenses      | 1,744    | 6   | 1,618    | 6   | 1,358    | 65.8 |
|               |          | 6.3 |          | 3.8 |          |      |
+---------------+----------+-----+----------+-----+----------+------+
|               |          |     |          |     |          |      |
+---------------+----------+-----+----------+-----+----------+------+
| Operating     | 886      | 3   | 920      | 3   | 706      | 34.2 |
| Profit        |          | 3.7 |          | 6.2 |          |      |
+---------------+----------+-----+----------+-----+----------+------+
|               |          |     |          |     |          |      |
+---------------+----------+-----+----------+-----+----------+------+

As over 85% of the Group Revenue is generated by the Hotel business,
occupancy and average room rate are the two key factors that management
focus on to improve revenue streams. The performance of the rooms
division for the year ended 31 December 2001 was driven by an increase
in rates, with occupancy decreasing to 69% which was 10% lower than the
previous year’s comparable period level of 79%. The average room rate
was 20% higher than the previous year. The weaker Baht has assisted the
rate growth by approximately 10% with the real growth in room rates
being 10% higher than 2000.

The increase in rates was largely a result of a change in the customer
mix towards higher yielding guests and the strong demand for Phuket as a
holiday destination. The different hotels at Laguna Phuket target a
broad market range, both in consumer type and spending. The hotels have
continued to concentrate on increasing the rate in the traditional low
season. Our continuing position at the top of the market largely
separates us from the larger, and much more competitive Phuket market.
Despite the aggressive increases in average room rate achieved by the
resort over the past four years, we are still seen in the marketplace as
good value for money.

The decrease in occupancy can be primarily explained by the slow down of
the global economy which is negatively impacting the world-wide travel
industry. This has been further exacerbated by the tragic events on
11^(th) September which resulted in a number of cancellations in the
last quarter of 2001.

A 6% decrease in food and beverage revenue was a result of the lower
occupancy in 2001 being partially offset by the increase in the average
spend per customer.

Total revenue from Hotel Operations for the year ended 31 December 2001
increased by Baht 92 million over 2000.

  Expenses relating to the 4 hotels increased by Baht 31 million over
  last year. This was largely due to direct costs associated with the
  increase in revenue. Despite the difficult economic operating
  conditions, the level of repairs and maintenance expenditure has been
  maintained to keep the properties in prime condition. Linens, china
  and other visible guest services were also supplemented, increasing
  our operating expenses. Whilst these expenditures are carefully
  controlled, these costs, together with ongoing capital programmes, are
  considered to be essential to the maintaining the resort in prime
  condition.

Other

Another area of revenue and profit growth was Laguna Property Sales,
both in direct villa, room and land sales and indirectly from net
proceeds from the Allamanda Vacation Club, a professional and successful
time share operation. The Allamanda Vacation Club had a particularly
successful year with the new office in Bangkok, which opened in late
2000, performing beyond expectations.

Laguna Resorts & Hotels Plc. debt reduction program continued during
2001 with an additional Baht 382 million paid off long term debt. This
combined with a decline in interest rates on borrowings, reduced the
overall interest expense from Baht 94 million in 2000 to Baht 67 million
this year, a reduction of Baht 27 million.

Commentary on Consolidated Financial Ratios

Liquidity ratios

-   Current ratio – the improving position in 2001 is due to the
    short-term loan to other company as at the end of 2001.

-   Quick ratio – worsening position in 2001 is due to the lower trade
    receivables and cash balances.

-   Cashflow from operating activities – slight improving position is
    due to decrease in average total current liabilities.

-   Receivable turnover – trend is consistent with the prior year level.

-   Collection period – trend is consistent with the prior year level.

-   Inventory turnover – the improving position can be explained by the
    large reduction in property sales inventory during 2001 due to the
    strong performance of this division.

-   Inventory turnover period – the improving position can be explained
    by the large reduction in property sales inventory during 2001 due
    to the strong performance of this division.

-   Accounts payable turnover – turnover is consistent with the prior
    year, with the increase in account payable being related to the
    increase in business.

-   Payment period – ratio is consistent with the prior year.

-   Cash cycle – continued improvement over prior years due to the
    reduction in the inventory turnover period and more efficient
    collection of trade receivables.

Profitability ratios

-   Gross profit margin – the worsening position is due to the tougher
    economic environment being experienced in 2001.

-   Profit margin from operations – the worsening position is due to the
    tougher economic environment being experienced in 2001. Also the
    high level of one-off expenses in 2001 has had the effect of
    reducing the 2001 net profit margin from operations.

-   Net profit margin – the worsening position is due to the high level
    of one-off expenses in 2001 and the high income tax expense which
    has had the effect of reducing the 2001 profit margin.

-   Return on equity – the worsening position is due to the high level
    of one-off expenses in 2001 and the high income tax expense.

Efficiency ratios

-   Return on total assets – the worsening position is due to the high
    level of one-off expenses in 2001 and the high income tax expense.

-   Return on fixed assets – the worsening position is due to the high
    level of one-off expenses in 2001 and the high income tax expense.

-   Asset turnover – the slight improving position is due to the more
    efficient use of the group assets for income generation.

Financial policy ratios

-   Debt to equity – the consistency of this ratio to last year is due
    to increase in bank overdrafts and accounts payable offsetting the
    loan repayments during the year.

-   Interest cover – major improvement is due to a much lower interest
    expense in 2001.

-   Pay-out ratio (cash) – the significantly improved position is a
    result of a decrease in shareholder loan and long term loan from
    bank.

-   Dividend pay-out ratio – the Board of Directors have proposed a
    dividend of Baht 2.50 per share for the 2001 financial year but at
    the time of this report being published, it had not been confirmed.