PART I

EXECUTIVE SUMMARY

1. Core Business

  The key businesses of the Company are: hotel operations, property
  development operations and office rental. The Company’s major business
  investment largely revolves around the operation and management of the
  integrated resort of Laguna Phuket, located on the island of Phuket in
  Thailand, as well as its investments in the Banyan Tree Bangkok and
  the Banyan Tree Lijiang, People’s Republic of China.

Hotel Operations

Within Laguna Phuket, there are 5 hotels which the Company either owns
or has an ownership stake:

Banyan Tree Phuket, opened in 1995 features 148 exclusive villas. The
resort is managed by Banyan Tree Hotels & Resorts Pte. Ltd.

Dusit Laguna Resort, opened in 1987, offers beachfront accommodation in
226 rooms and suites, managed by Dusit Hotels and Resorts Company
Limited.

Sheraton Grande Laguna Phuket, opened in 1992, features 419 rooms,
suites and villas and is a member of the Starwood Luxury Collection. It
is managed by Sheraton Overseas Management Corporation.

Laguna Beach Resort, opened in 1991 features 254 rooms and suites and is
owner operated.

  Laguna Holiday Club Phuket Resort, opened in 2006 as a dedicated
  resort for members of the Laguna Holiday Club. It comprises 79 suites
  in three room types and is owner-operated,

  In addition to these core properties, Laguna Phuket also provides the
  following facilities:

  Allamanda Laguna Phuket, opened in 1993, is a condominium-style resort
  and features 205 one and two bedroom suites and duplexes. It is
  managed by Banyan Tree Hotels & Resorts Pte. Ltd.

  Laguna Phuket Golf Club, opened in 1992, is a resort style 18-hole,
  par-71 golf course managed by Banyan Tree Hotels & Resorts Pte. Ltd.

  Quest Laguna Phuket Adventure, opened in 1994, offering dynamic
  programs for corporate training. The facility is managed by Sheraton
  Overseas Management Corporation.

  Canal Village Laguna Shopping, opened in 1994, as an owner-managed
  boutique shopping centre with more than 50 leased outlets.

  Banyan Tree and Angsana Gallery, a chain of retail outlets
  specialising in indigenous handicrafts and spa products, operates 14
  outlets located within Laguna Phuket at the hotels, spas, and Canal
  Village shopping centre.

  Laguna Wedding Chapel is Thailand's first resort wedding chapel
  offering comprehensive wedding packages. Opened in early 2005, the
  facility is owner-managed.

  Laguna Service Company Limited, established in 1991, provides laundry,
  water supply, inter-resort transport and other centralised services
  for the Laguna Phuket hotels and ancillary operations.

The Company also owns hotels and resorts outside of Phuket, Thailand as follows:

Banyan Tree Bangkok, purchased in 2005, features 216 suites and is
managed by Banyan Tree Hotels & Resorts Pte. Ltd. The hotel is located
in the central business district of Bangkok.

  Banyan Tree Lijiang, opened in 2006, features 55 exclusive villas and
  is managed by Banyan Tree Hotels & Resorts Pte. Ltd. The resort is
  located in Yunnan Province, People’s Republic of China. The Group has
  a 49.04 percent ownership interest in this project.

Property Development Operations

  Property Sales offers a range of residential and vacation properties
  such as condominiums, semi-detached and detached villas including
  hotel residences such as the high-end Dusit Pool Villas and Banyan
  Tree Residences that are situated within a resort or hotel property.

  Laguna Holiday Club, previously known as Allamanda Vacation Club,
  commenced operations in 1998, selling holiday club memberships that
  entitle participants to annual vacations at the various club
  properties as well as at over 4,000 resorts in more than 100 countries
  through reciprocal arrangements with RCI and Interval International.

  The Company also owns land in Chiang Mai and Chiang Rai which has
  future development potential.

  Office Rental

  The Company owns a number of units in Thai Wah Tower I, a 24-storey
  building located on Sathorn Road in Bangkok which is rented as
  commercial offices.

2.  Major Risk Factors

  The risk factors impacting the business and financial performance of
  LRH are set out in Part II, section 1. These are summarised as being
  as follows:

-   Currency fluctuation

-   Economy and tourism in Thailand

-   Competition

-   Destination

-   Hotels

-   Low season

-   Management risk

-   Land title

-   Thai labour laws

-   Operating risks inherent in the hospitality industry

-   Operating risks inherent in the property industry

3.  Group Structure

  The LRH group is predominately owned by two shareholders:

-   Banyan Tree Holdings Group which owns 54.8 percent; and

-   Universal Starch Public Company Limited (Formerly known as Thai Wah
    Public Company Limited) which owns 17.7 percent.

  The Company has a number of subsidiary companies and the group
  structure is set out on page 23. Most of the subsidiary companies are
  100 percent owned with the main operating subsidiaries that are not
  fully owned being:

-   Laguna Beach Club Limited and its subsidiaries (50 percent effective
    ownership interest)

-   Banyan Tree Gallery (Thailand) Limited (51 percent effective
    ownership interest)

-   Banyan Tree Gallery (Singapore) Pte Limited (51 percent effective
    ownership interest)

-   Laguna Service Company Limited (89.2 percent effective ownership
    interest)

  The Company has an affiliated company as below.

-   Lijiang Banyan Tree Hotel Co. Ltd. Effective from 1 January 2007,
    the equity interest ratio of Laguna Banyan Tree Limited (a
    subsidiary company) in Lijiang Banyan Tree Hotel Co. Ltd. decreased
    from 70.00 percent to 49.04 percent., therefore its status changed
    from a subsidiary company to an associated company.

  During the year, the Company had significant business transactions
  with its subsidiaries, associated and related companies (related by
  way of shareholding, common shareholders, directors and/or
  management). The group by the nature of its product and its complex
  group structure has a large number of related party transactions.
  Laguna Phuket is an integrated resort with a number of hotels and
  associated resort services being incorporated in different companies
  within the group. This in itself results in a significant number of
  related party transactions which are considered to be necessary and
  reasonable for the operation of Laguna Phuket. The nature, pricing and
  agreements of these transactions are summarised in section 11, as well
  as a detailed description of the main related party transactions.

4.  Financial Performance

A summary of the performance of the year ended 31 December 2007 is
included as follows:

(unit : Million Baht)

+---------------------------+-------------+-------------+-------------+
|                           | 2007        | 2006        | 2005        |
+---------------------------+-------------+-------------+-------------+
| Revenues                  |             |             |             |
+---------------------------+-------------+-------------+-------------+
| Hotel Operations          | 4,122       | 3,590       | 2,306       |
+---------------------------+-------------+-------------+-------------+
| Property development      | 2,820       | 2,328       | 750         |
| operations                |             |             |             |
+---------------------------+-------------+-------------+-------------+
| Office rental             | 68          | 81          | 101         |
+---------------------------+-------------+-------------+-------------+
| Interest income           | 65          | 27          | 9           |
+---------------------------+-------------+-------------+-------------+
| Other income              | 71          | 130         | 40          |
+---------------------------+-------------+-------------+-------------+
|                           | 7,146       | 6,156       | 3,206       |
+---------------------------+-------------+-------------+-------------+
| Operating profit          | 2,149       | 1,973       | 515         |
+---------------------------+-------------+-------------+-------------+
| Depreciation,             | (372)       | (408)       | (352)       |
| amortization and          |             |             |             |
|                           |             |             |             |
| provisions                |             |             |             |
+---------------------------+-------------+-------------+-------------+
| Interest expenses         | (221)       | (202)       | (138)       |
+---------------------------+-------------+-------------+-------------+
| Corporate income tax      | (189)       | (228)       | (47)        |
+---------------------------+-------------+-------------+-------------+
| Minority shareholders     | (77)        | (22)        | (12)        |
| interest                  |             |             |             |
+---------------------------+-------------+-------------+-------------+
| Extraordinary item        | -           | -           | 14          |
+---------------------------+-------------+-------------+-------------+
|                           |             |             |             |
+---------------------------+-------------+-------------+-------------+
| Net earnings              | 1,290       | 1,113       | (20)        |
+---------------------------+-------------+-------------+-------------+
|                           |             |             |             |
+---------------------------+-------------+-------------+-------------+

  For the year ended 31 December 2007, Laguna Resorts & Hotels Public
  Company Limited achieved a net profit of Baht 1,290 million which was
  Baht 177 million higher when compared to the prior year.

  Total revenue for the year increased by Baht 991 million as compared
  to the prior year mainly due to the following:

-   Revenue from hotel operations increased by Baht 532 million mainly
    comprising an increase in revenue of the Laguna Phuket operations
    resulting from higher average room rates and occupancies by 7
    percent and 13 percent respectively as compared to the same period
    last year.

-   Revenue from property development operations increased by Baht 492
    million mainly due to sales and recognition of new projects
    including Laguna Village Villas, Laguna Residences and Dusit Pool
    Villas, partially offset by lower sales of Banyan Tree Double Pool
    Villas, and continued growth of Laguna Holiday Club including the
    commencement of new branch operations during the year.

-   Revenue from office rental operations decreased by Baht 13 million
    mainly due to office leases in Thai Wah Tower 2 being cancelled as
    this area is now being converted to hotel suites and apartments as
    part of the Banyan Tree Bangkok expansion, partially offset by
    increased revenue in Thai Wah Tower 1 due to additional office space
    being acquired and leased.

-   Interest income increased by Baht 38 million due to interest from
    loans to an associated company, Lijiang Banyan Tree Hotel Co. Ltd.,
    and interest on installment plans for property sales and holiday
    club memberships.

-   Foreign exchange gains decreased by Baht 79 million mainly due to a
    lower exchange rate differential on US dollar denominated bank loans
    partially offset by exchange losses on US dollar denominated loans
    to Lijiang Banyan Tree Hotel Co. Ltd.

-   Other income increased by Baht 20 million mainly due to a reversal
    of a prior period land devaluation which was previously recognized
    as an expense.

Total expenses increased by Baht 780 million as compared to the prior
year mainly due to the following:

-   Expenses of hotel operations increased by Baht 202 million mainly
    due to the increase in hotel revenue of the Laguna Phuket operations
    partially offset by lower expenses of Lijiang Banyan Tree Hotel Co.
    Ltd., as its status changed to an associated company in the current
    year (a subsidiary company in the prior year).

-   Expenses of property development operations increased by Baht 514
    million mainly due the costs recognized from new projects including
    Laguna Village Villas, Laguna Residences and Dusit Pool Villas and
    increased costs associated with the expansion of the Laguna Holiday
    Club business including the opening of new branches and a full year
    of operations of the Laguna Holiday Club Phuket Resort.

-   Expenses of office rental operations decreased by Baht 34 million
    mainly due to a decrease in property tax and depreciation on former
    office rental space in Thai Wah Tower 2 which is now being converted
    to hotel suites and apartments as part of the Banyan Tree Bangkok
    expansion.

-   Selling and administrative expenses increased by Baht 94 million
    mainly due to an increase in staff costs, an increase in legal and
    professional fees mainly associated with the Tsunami insurance
    claim, and expenses in respect of Laguna Phuket’s 20^(th)
    anniversary celebrations.

-   Share of loss from investment in associated company increased by
    Baht 5 million from the 49 percent investment in Lijiang Banyan Tree
    Hotel Co. Ltd.

-   Interest expenses increased by Baht 19 million as compared to the
    prior year mainly due to interest on bank loans for various capital
    projects no longer being capitalized as projects have now been
    completed.

-   Taxation decreased by Baht 39 million as compared to the prior year
    mainly due to continued utilization of tax losses and timing
    differences in accounting and tax treatment of leasehold income from
    property sales.

-   Net income attributable to minority interests increased by Baht 55
    million as compared to the prior year mainly due to the increased
    profit of Laguna Beach Club Limited (in which there is a 50 percent
    minority interest) and Lijiang Banyan Tree Hotel Co. Ltd. changing
    its status to an associated company during the current year (a
    subsidiary in the prior year in which there was a 30 percent
    minority interest).

  For the reasons stated above, the company has shown an increase in net
  profit as compared to the prior year.