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 2009
  Financial Statements is Sophon Permsirivallop, Certified Public
  Accountant (Thailand) No. 3182 of Ernst & Young Office Limited.

Conclusion of the Auditor’s Report

  For the year ended 31 December 2009

  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) Company Limited that were audited by other auditors for the
  year ended 31 December 2009. As at 31 December 2009 and 2008, these
  subsidiaries had total assets of Baht 1,436.5 and Baht 1,807.1
  million, respectively and total revenues for the years then ended of
  Baht 305.0 million and Baht 414.2 million, respectively.

  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 2009 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 2008

  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) Company Limited that were audited by other auditors for the
  year ended 31 December 2008. As at 31 December 2008 and 2007, these
  subsidiaries had total assets of Baht 1,807.1 and Baht 1,846.6
  million, respectively and total revenues for the years then ended of
  Baht 414.2 million and Baht 420.8 million, respectively.

  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 2008 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles. In addition,
  the auditors drew attention to the matter, where effective 1 January
  2008, the Company changed its accounting policies on presentation of
  goodwill and negative goodwill in the consolidated financial
  statements. Whereas goodwill and negative goodwill were previously
  stated at cost less accumulated amortisation and impairment losses,
  negative goodwill arising from business combinations under agreements
  reached on or after 1 January 2008 is to be recognised immediately in
  the statement of income, and previously recognised negative goodwill
  is to be adjusted against the opening balance of retained earnings.
  Goodwill is to be stated at cost less accumulated impairment losses.

  For the year ended 31 December 2007

  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) Company Limited that were audited by other auditors for the
  year ended 31 December 2007. As at 31 December 2007 and 2006, these
  subsidiaries had total assets of Baht 1,846.6 and Baht 2,145.5
  million, respectively and total revenues for the years then ended of
  Baht 420.8 million and Baht 441.8 million, respectively (2006: three
  subsidiaries, Laguna Beach Club Limited, Laguna (1) Company Limited
  and Lijiang Banyan Tree Hotel Limited).

  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 2007 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles. In addition,
  the auditors drew attention to the matter, where effective 1 January
  2007, the Company changed its accounting policy for recording
  investments in subsidiaries and associates in the separate financial
  statements from the equity method to the cost method. The Company has
  thus restated the separate financial statements as at 31 December 2006
  and for the year then ended to reflect this accounting change.

  Adoption of new accounting standards

  In June 2009, the Federation of Accounting Professions issued
  Notification No. 12/2552, assigning new numbers to Thai Accounting
  Standards that match the corresponding International Accounting
  Standards. The numbers of Thai Accounting Standards as referred to in
  these financial statements reflect such change.

  The Federation of Accounting Professions has issued Notification No.
  86/2551 and 16/2552, mandating the use of new accounting standards,
  financial reporting standard and accounting treatment guidance as
  follows.

  (a) Accounting standards, financial reporting standard and accounting
  treatment guidance which are effective for the current year

  -------------------------------------- --------------------------------
  Framework for Preparation and          
  Presentation of Financial Statements   
  (revised 2007)                         

  TAS 36 (revised 2007)                  Impairment of Assets

  TFRS 5 (revised 2007)                  Non-current Assets Held for Sale

                                         and Discontinued Operations

  Accounting Treatment Guidance for      
  Leasehold Right s                      

  Accounting Treatment Guidance for      
  Business Combination s under Common    
  Control                                
  -------------------------------------- --------------------------------

These accounting standards, financial reporting standard and accounting
treatment guidance became effective for the financial statements for
fiscal years beginning on or after 1 January 2009. The management has
assessed the effect of these standards and believes that TFRS 5 (revised
2007) and Accounting Treatment Guidance for Business Combinations under
Common Control are not relevant to the business of the Company, while
the Framework for Preparation and Presentation of Financial Statements
(revised 2007), TAS 36 (revised 2007) and Accounting Treatment Guidance
for Leasehold Rights do not have any significant impact on the financial
statements for the current year.

  (b) Accounting standards which are not effective for the current year

+-------------------+-----------------------------+--------------------+
|                   |                             |   Effective date   |
+-------------------+-----------------------------+--------------------+
| TAS 20            | Accounting for Government   |   1 January 2012   |
|                   | Grants                      |                    |
+-------------------+-----------------------------+--------------------+
|                   | and Disclosure of           |                    |
|                   | Government                  |                    |
+-------------------+-----------------------------+--------------------+
|                   | Assistance                  |                    |
+-------------------+-----------------------------+--------------------+
| TAS 24 (revised   | Related Party Disclosures   |   1 January 2011   |
| 2007)             |                             |                    |
+-------------------+-----------------------------+--------------------+
| TAS 40            | Investment Property         |   1 January 2011   |
+-------------------+-----------------------------+--------------------+

However, TAS 24 (revised 2007) and TAS 40 allow early adoption by the
entity before the effective date.

The management of the Company has assessed the effect of these standards
and believed that TAS 20 is not relevant to the business of the Company,
while TAS 24 (revised 2007) and TAS 40 will not have any significant
impact on the financial statements for the year in which it is initially
applied.

12.1.2 Summary of Financial Statements

Consolidated Income Statements

+-----------------------------------+---+----------+---------+---------+
|                                   |   | Cons     |         |         |
|                                   |   | olidated |         |         |
+-----------------------------------+---+----------+---------+---------+
|                                   |   | 2009     | 2008    | 2007    |
+-----------------------------------+---+----------+---------+---------+
|   Revenues                        |   |          |         |         |
+-----------------------------------+---+----------+---------+---------+
|   Revenues from hotel operations  |   | 3,300    | 3,954,  | 4,124,  |
|                                   |   | ,147,486 | 451,870 | 291,268 |
+-----------------------------------+---+----------+---------+---------+
|   Revenues from property          |   | 1,015    | 2,488,  | 2,808,  |
|   development operations          |   | ,720,235 | 769,045 | 487,035 |
+-----------------------------------+---+----------+---------+---------+
|   Revenues from office rental     |   | 58       | 66,     | 67,     |
|   operations                      |   | ,937,556 | 024,485 | 557,920 |
+-----------------------------------+---+----------+---------+---------+
|   Interest income                 |   | 62       | 90,     | 65,     |
|                                   |   | ,083,150 | 240,666 | 388,066 |
+-----------------------------------+---+----------+---------+---------+
|   Insurance claim                 |   | 23       | 226,    | -       |
|                                   |   | ,359,564 | 111,886 |         |
+-----------------------------------+---+----------+---------+---------+
|   Foreign exchange gain           |   | 5        | -       | 9,      |
|                                   |   | ,063,254 |         | 226,816 |
+-----------------------------------+---+----------+---------+---------+
|   Other income                    |   | 17       | 86,     | 62,     |
|                                   |   | ,553,968 | 719,559 | 230,319 |
+-----------------------------------+---+----------+---------+---------+
|   Total revenues                  |   | 4,482    | 6,912,  | 7,137,  |
|                                   |   | ,865,213 | 317,511 | 181,424 |
+-----------------------------------+---+----------+---------+---------+
|   Expenses                        |   |          |         |         |
+-----------------------------------+---+----------+---------+---------+
|   Cost of hotel operations        |   |   1,322  |         |         |
|                                   |   | ,981,750 |  1,541, |  1,456, |
|                                   |   |          | 625,938 | 701,046 |
+-----------------------------------+---+----------+---------+---------+
|   Cost of property development    |   |   286    |         |         |
|   operations                      |   | ,031,204 |  1,016, |  1,267, |
|                                   |   |          | 362,453 | 986,327 |
+-----------------------------------+---+----------+---------+---------+
|   Cost of office rental           |   | 29       | 36,     | 38,     |
|   operations                      |   | ,079,953 | 571,474 | 966,551 |
+-----------------------------------+---+----------+---------+---------+
|   Selling expenses                |   | 388      | 539,    | 572,    |
|                                   |   | ,139,890 | 247,463 | 480,407 |
+-----------------------------------+---+----------+---------+---------+
|   Administrative expenses         |   | 1,448    | 1,707,  | 1,548,  |
|                                   |   | ,029,856 | 146,995 | 814,225 |
+-----------------------------------+---+----------+---------+---------+
|   Management benefit expenses     |   | 121      | 148,    | 102,    |
|                                   |   | ,165,991 | 009,524 | 675,847 |
+-----------------------------------+---+----------+---------+---------+
|   Depreciation                    |   | 444      | 417,    | 368,    |
|                                   |   | ,318,500 | 769,554 | 435,620 |
+-----------------------------------+---+----------+---------+---------+
|   Other expenses                  |   | -        | 59,     | -       |
|                                   |   |          | 063,382 |         |
+-----------------------------------+---+----------+---------+---------+
|   Foreign exchange loss           |   | -        | 11,     | -       |
|                                   |   |          | 350,383 |         |
+-----------------------------------+---+----------+---------+---------+
|   Total expenses                  |   | 4,039    | 5,477,  | 5,356,  |
|                                   |   | ,747,144 | 147,166 | 060,023 |
+-----------------------------------+---+----------+---------+---------+
|   Income before share of income   |   | 443      | 1,435,  | 1,781,  |
|   (loss) from investments         |   | ,118,069 | 170,345 | 121,401 |
|                                   |   |          |         |         |
|   in associates, finance cost and |   |          |         |         |
|   corporate income tax            |   |          |         |         |
+-----------------------------------+---+----------+---------+---------+
| Share of income (loss) from       |   | (3,      | 119,    | (4,9    |
| investments in associates         |   | 893,511) | 558,024 | 54,548) |
+-----------------------------------+---+----------+---------+---------+
| Income before finance cost and    |   | 439      | 1,554,  | 1,776,  |
| corporate income tax              |   | ,224,558 | 728,369 | 166,853 |
+-----------------------------------+---+----------+---------+---------+
| Finance cost                      |   | (159,    | (185,8  | (220,6  |
|                                   |   | 036,695) | 05,055) | 58,513) |
+-----------------------------------+---+----------+---------+---------+
|   Income before corporate income  |   | 280      | 1,368,  | 1,555,  |
|   tax                             |   | ,187,863 | 923,314 | 508,340 |
+-----------------------------------+---+----------+---------+---------+
|   Corporate income tax            |   | (115,    | (196,7  | (188,9  |
|                                   |   | 847,884) | 75,109) | 59,722) |
+-----------------------------------+---+----------+---------+---------+
|   Net income for the year         |   | 164      | 1,172,  | 1,366,  |
|                                   |   | ,339,979 | 148,205 | 548,618 |
+-----------------------------------+---+----------+---------+---------+
|   Net income attributable to:     |   |          |         |         |
+-----------------------------------+---+----------+---------+---------+
|   Equity holders of the parent    |   | 133      | 1,103,  | 1,289,  |
|                                   |   | ,358,369 | 682,190 | 567,404 |
+-----------------------------------+---+----------+---------+---------+
|   Minority interest               |   | 30       | 68,     | 76,     |
|                                   |   | ,981,610 | 466,015 | 981,214 |
+-----------------------------------+---+----------+---------+---------+
|                                   |   | 164      | 1,172,  | 1,366,  |
|                                   |   | ,339,979 | 148,205 | 548,618 |
+-----------------------------------+---+----------+---------+---------+
| Basic earnings per share          |   | 0.80     | 6.62    | 10.60   |
|                                   |   |          |         |         |
| Net income attributable to equity |   |          |         |         |
| holders of the parent             |   |          |         |         |
+-----------------------------------+---+----------+---------+---------+

Unit: Baht

 Consolidated Balance Sheets 

Unit: Baht

+-----------------------------------+---+---------+----------+----------+
|                                   |   | Conso   |          |          |
|                                   |   | lidated |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   | 2009    | 2008     | 2007     |
+-----------------------------------+---+---------+----------+----------+
| ASSETS                            |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Current assets                    |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Cash and cash equivalents         |   | 627,    | 474      | 1,533    |
|                                   |   | 906,627 | ,125,431 | ,422,290 |
+-----------------------------------+---+---------+----------+----------+
| Trade accounts receivable – net   |   | 804,    | 1,197    | 1,726    |
|                                   |   | 905,836 | ,848,866 | ,422,011 |
+-----------------------------------+---+---------+----------+----------+
| Amounts due from related parties  |   | 93,     | 193      | 108      |
|                                   |   | 393,256 | ,635,173 | ,860,861 |
+-----------------------------------+---+---------+----------+----------+
| Inventories – net                 |   | 147,    | 171      | 158      |
|                                   |   | 632,788 | ,540,088 | ,103,959 |
+-----------------------------------+---+---------+----------+----------+
| Property development cost – net   |   | 1,540,  | 1,044    | 875      |
|                                   |   | 103,896 | ,632,739 | ,919,886 |
+-----------------------------------+---+---------+----------+----------+
| Other current assets              |   | 210,    | 425      | 340      |
|                                   |   | 305,337 | ,011,012 | ,936,184 |
+-----------------------------------+---+---------+----------+----------+
| Total current assets              |   | 3,424,  | 3,506    | 4,743    |
|                                   |   | 247,740 | ,793,309 | ,665,191 |
+-----------------------------------+---+---------+----------+----------+
| Non-current assets                |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Restricted deposits at financial  |   | 2,      | 2        | 2        |
| institution                       |   | 140,000 | ,140,000 | ,140,000 |
+-----------------------------------+---+---------+----------+----------+
| Long-term trade accounts          |   | 777,    | 843      | 278      |
| receivable                        |   | 252,310 | ,638,829 | ,616,284 |
+-----------------------------------+---+---------+----------+----------+
| Investments in associates - net   |   | 395,    | 419      | 269      |
|                                   |   | 392,960 | ,802,119 | ,105,050 |
+-----------------------------------+---+---------+----------+----------+
| Other long-term investments -net  |   | 232,    | 188      | 210      |
|                                   |   | 222,971 | ,424,686 | ,399,386 |
+-----------------------------------+---+---------+----------+----------+
| Long-term loans to associate      |   | -       | 308      | 298      |
|                                   |   |         | ,965,052 | ,707,673 |
+-----------------------------------+---+---------+----------+----------+
| Long-term loans to employees      |   | 25,     | 34       | 34       |
|                                   |   | 112,231 | ,965,908 | ,045,000 |
+-----------------------------------+---+---------+----------+----------+
| Property, plant and equipment –   |   | 15,567, | 18,350   | 18,667   |
| net                               |   | 799,951 | ,362,885 | ,452,348 |
+-----------------------------------+---+---------+----------+----------+
| Land awaiting development         |   | 809,    | 811      | 432      |
|                                   |   | 396,453 | ,069,743 | ,124,018 |
+-----------------------------------+---+---------+----------+----------+
| Goodwill                          |   | 385,    | 385      | 19       |
|                                   |   | 491,758 | ,491,758 | ,794,338 |
+-----------------------------------+---+---------+----------+----------+
| Leasehold rights - net            |   | 30,     | 34       | 45       |
|                                   |   | 939,976 | ,108,008 | ,068,721 |
+-----------------------------------+---+---------+----------+----------+
| Other non-current assets          |   | 50,     | 53       | 12       |
|                                   |   | 438,310 | ,493,328 | ,720,177 |
+-----------------------------------+---+---------+----------+----------+
| Total non-current assets          |   | 18,276, | 21,432   | 20,270   |
|                                   |   | 186,920 | ,462,316 | ,172,995 |
+-----------------------------------+---+---------+----------+----------+
| TOTAL ASSETS                      |   | 21,700, | 24,939   | 25,013   |
|                                   |   | 434,660 | ,255,625 | ,838,186 |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Consol                            |   |         |          | Unit:    |
| idated Balance Sheets (continued) |   |         |          | Baht     |
+-----------------------------------+---+---------+----------+----------+
|                                   |   | Conso   |          |          |
|                                   |   | lidated |          |          |
+-----------------------------------+---+---------+----------+----------+
|                                   |   | 2009    | 2008     | 2007     |
+-----------------------------------+---+---------+----------+----------+
| LIABILITIES AND SHAREHOLDERS'     |   |         |          |          |
| EQUITY                            |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Current liabilities               |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Short-term loans from financial   |   | 520,    | 486      | 862      |
| institutions                      |   | 000,000 | ,000,000 | ,000,000 |
+-----------------------------------+---+---------+----------+----------+
| Trade accounts payable            |   | 248,    | 213      | 271      |
|                                   |   | 148,955 | ,234,248 | ,473,155 |
+-----------------------------------+---+---------+----------+----------+
| Current portion of long-term      |   | 827,    | 890      | 824      |
| loans from financial institutions |   | 766,000 | ,415,000 | ,914,000 |
+-----------------------------------+---+---------+----------+----------+
| Amounts due to related parties    |   | 101,    | 60       | 71       |
|                                   |   | 929,497 | ,981,831 | ,455,192 |
+-----------------------------------+---+---------+----------+----------+
| Corporate income tax payable      |   | 71,     | 72       | 101      |
|                                   |   | 530,736 | ,328,566 | ,015,266 |
+-----------------------------------+---+---------+----------+----------+
| Other current liabilities         |   | 1,059,  | 1,275    | 1,404    |
|                                   |   | 897,286 | ,994,649 | ,939,728 |
+-----------------------------------+---+---------+----------+----------+
| Total current liabilities         |   | 2,829,  | 2,998    | 3,535    |
|                                   |   | 727,474 | ,954,294 | ,797,341 |
+-----------------------------------+---+---------+----------+----------+
| Non-current liabilities           |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Long-term loans from financial    |   | 1,956,  | 2,098    | 2,480    |
| institutions – net of current     |   | 434,408 | ,932,743 | ,347,743 |
| portion                           |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Other non-current liabilities     |   | 91,     | 117      | 90       |
|                                   |   | 816,069 | ,067,769 | ,600,118 |
+-----------------------------------+---+---------+----------+----------+
| Total non-current liabilities     |   | 2,048,  | 2,216    | 2,570    |
|                                   |   | 250,477 | ,000,512 | ,947,861 |
+-----------------------------------+---+---------+----------+----------+
| Total liabilities                 |   | 4,877,  | 5,214    | 6,106    |
|                                   |   | 522,951 | ,954,806 | ,745,202 |
+-----------------------------------+---+---------+----------+----------+
| Shareholders’ equity              |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Share capital                     |   | 2,116,  | 2,116    | 2,116    |
|                                   |   | 753,580 | ,753,580 | ,753,580 |
|   Registered                      |   |         |          |          |
|                                   |   |         |          |          |
| 211,675,358 ordinary shares of    |   |         |          |          |
| Baht 10 each                      |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
|   Issued and fully paid-up        |   | 1,666,  | 1,666    | 1,666    |
|                                   |   | 827,010 | ,827,010 | ,827,010 |
| 166,682,701 ordinary shares of    |   |         |          |          |
| Baht 10 each                      |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Share premium                     |   | 2,062,  | 2,062    | 2,062    |
|                                   |   | 460,582 | ,460,582 | ,460,582 |
+-----------------------------------+---+---------+----------+----------+
| Capital reserve                   |   | 634,    | 634      | 634      |
|                                   |   | 698,720 | ,698,720 | ,698,720 |
+-----------------------------------+---+---------+----------+----------+
| Unrealised gain (loss)            |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Revaluation surplus on assets     |   | 7,124,  | 9,589    | 9,869    |
|                                   |   | 038,312 | ,532,118 | ,857,161 |
+-----------------------------------+---+---------+----------+----------+
| Revaluation deficit on changes in |   | -       | -        | (28,     |
| value of investment               |   |         |          | 856,095) |
+-----------------------------------+---+---------+----------+----------+
| Translation adjustment            |   | 85,     | 110      | 74       |
|                                   |   | 036,351 | ,064,267 | ,347,437 |
+-----------------------------------+---+---------+----------+----------+
| Retained earnings                 |   |         |          |          |
+-----------------------------------+---+---------+----------+----------+
| Appropriated – statutory reserve  |   | 166,    | 151      | 84       |
|                                   |   | 682,701 | ,713,962 | ,670,143 |
+-----------------------------------+---+---------+----------+----------+
| Unappropriated                    |   | 4,118,  | 4,367    | 3,431    |
|                                   |   | 986,232 | ,298,380 | ,673,827 |
+-----------------------------------+---+---------+----------+----------+
|                                   |   | 4,285,  | 4,519    | 3,516    |
|                                   |   | 669,024 | ,012,342 | ,343,970 |
+-----------------------------------+---+---------+----------+----------+
| Equity attributable to Company’s  |   | 15,858, | 18,582   | 17,795   |
| shareholders                      |   | 729,999 | ,595,039 | ,678,785 |
+-----------------------------------+---+---------+----------+----------+
| Minority interest                 |   | 964,    | 1,141    | 1,111    |
|                                   |   | 181,710 | ,705,780 | ,414,199 |
+-----------------------------------+---+---------+----------+----------+
| Total shareholders’ equity        |   | 16,822, | 19,724   | 18,907   |
|                                   |   | 911,709 | ,300,819 | ,092,984 |
+-----------------------------------+---+---------+----------+----------+
| TOTAL LIABILITIES AND             |   | 21,700, | 24,939   | 25,013   |
| SHAREHOLDERS’ EQUITY              |   | 434,660 | ,255,625 | ,838,186 |
+-----------------------------------+---+---------+----------+----------+

 Consolidated Statements of Cash Flows 

Unit : Baht

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

                                           2009            2008              2007

  Cash flows from (used in) operating                                        
  activities                                                                 

  Net cash inflows (outflows) from         788,725,576     922,339,414       1,111,672,778
  operating activities                                                       

  Cash flows from (used in) investing                                        
  activities                                                                 

  Net cash inflows (outflows) from         (77,094,742)    (794,590,521)     (1,024,867,730)
  investing activities                                                       

  Cash flows from (used in) financing                                        
  activities                                                                 

  Net cash inflow (outflows) from          (557,849,638)   (1,187,045,752)   358,693,722
  financing activities                                                       

  Net increase (decrease) in cash and      153,781,196     (1,059,296,859)   445,498,770
  cash equivalents                                                           

  Cash and cash equivalents at             474,125,431     1,533,422,290     1,087,923,520
  beginning of year                                                          

  Cash and cash equivalents at end of      627,906,627     474,125,431       1,533,422,290
  year                                                                       

                                                                             

                                                                             

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

 

Separate Income Statements

Unit : Baht

+--------------------------------------+---------+---------+---------+
|                                      | S       |         |         |
|                                      | eparate |         |         |
+--------------------------------------+---------+---------+---------+
|                                      | 2009    | 2008    | 2007    |
+--------------------------------------+---------+---------+---------+
| Revenues                             |         |         |         |
+--------------------------------------+---------+---------+---------+
|   Revenues from hotel operations     | 521,    | 525,    | 538,    |
|                                      | 328,822 | 988,313 | 378,014 |
+--------------------------------------+---------+---------+---------+
|   Revenues from property development | 100,    | 752,    | 961,    |
|   operations                         | 652,138 | 342,692 | 034,521 |
+--------------------------------------+---------+---------+---------+
|   Interest income                    | 124,    | 104,    | 89,     |
|                                      | 744,789 | 516,956 | 745,135 |
+--------------------------------------+---------+---------+---------+
|   Insurance claim                    | 2,      | 91,     | -       |
|                                      | 636,951 | 772,425 |         |
+--------------------------------------+---------+---------+---------+
|   Foreign exchange gain              | 7,      | -       | 38,     |
|                                      | 065,265 |         | 360,363 |
+--------------------------------------+---------+---------+---------+
|   Other income                       | 56,     | 51,     | 39,     |
|                                      | 925,807 | 331,563 | 042,461 |
+--------------------------------------+---------+---------+---------+
|   Dividend income                    | 629,    | 267,    | 282,    |
|                                      | 610,833 | 997,585 | 329,317 |
+--------------------------------------+---------+---------+---------+
| Total revenues                       | 1,442,  | 1,793,  | 1,948,  |
|                                      | 964,605 | 949,534 | 889,811 |
+--------------------------------------+---------+---------+---------+
| Expenses                             |         |         |         |
+--------------------------------------+---------+---------+---------+
|   Cost of hotel operations           | 137,    | 154,    | 160,    |
|                                      | 816,603 | 670,834 | 528,980 |
+--------------------------------------+---------+---------+---------+
|   Cost of property development       | 5,      | 301,    | 449,    |
|   operations                         | 723,452 | 909,135 | 245,816 |
+--------------------------------------+---------+---------+---------+
|   Selling expenses                   | 50,     | 65,     | 69,     |
|                                      | 022,652 | 826,546 | 545,046 |
+--------------------------------------+---------+---------+---------+
|   Administrative expenses            | 375,    | 361,    | 320,    |
|                                      | 789,224 | 082,224 | 386,667 |
+--------------------------------------+---------+---------+---------+
|   Management benefit expenses        | 83,     | 98,     | 102,    |
|                                      | 084,155 | 046,710 | 675,847 |
+--------------------------------------+---------+---------+---------+
|   Depreciation                       | 64,     | 56,     | 45,     |
|                                      | 729,516 | 570,826 | 036,389 |
+--------------------------------------+---------+---------+---------+
|   Other expenses                     | -       | 23,     | -       |
|                                      |         | 849,999 |         |
+--------------------------------------+---------+---------+---------+
|   Foreign exchange loss              | -       | 2,      | -       |
|                                      |         | 111,826 |         |
+--------------------------------------+---------+---------+---------+
| Total expenses                       | 717,    | 1,064,  | 1,147,  |
|                                      | 165,602 | 068,503 | 418,746 |
+--------------------------------------+---------+---------+---------+
| Income before finance cost and       | 725,    | 729,    | 801,    |
| corporate income tax                 | 799,003 | 881,031 | 471,065 |
+--------------------------------------+---------+---------+---------+
| Finance cost                         | (62,4   | (82,5   | (107,9  |
|                                      | 76,458) | 47,232) | 28,485) |
+--------------------------------------+---------+---------+---------+
| Income before corporate income tax   | 663,    | 647,    | 693,    |
|                                      | 322,545 | 333,799 | 542,580 |
+--------------------------------------+---------+---------+---------+
| Corporate income tax                 | (15,4   | -       | -       |
|                                      | 65,323) |         |         |
+--------------------------------------+---------+---------+---------+
| Net income for the year              | 647,    | 647,    | 693,    |
|                                      | 857,222 | 333,799 | 542,580 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
| Net income attributable to:          |         |         |         |
+--------------------------------------+---------+---------+---------+
| Equity holders of the parent         | 647,    | 647,    | 693,    |
|                                      | 857,222 | 333,799 | 542,580 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
| Basic earnings per share             |         |         |         |
+--------------------------------------+---------+---------+---------+
| Net income attributable to equity    | 3.89    | 3.88    | 5.70    |
| holders of the parent                |         |         |         |
+--------------------------------------+---------+---------+---------+

Separate Balance Sheets 

Unit : Baht

  --------------------------------------- --------------- --------------- ---------------
                                          Separate                        

                                          2009            2008            2007

  ASSETS                                                                  

  Current Assets                                                          

  Cash and cash equivalents               35,595,602      41,982,211      855,575,874

  Trade accounts receivable – net         97,589,752      205,914,215     583,538,199

  Amounts due from related parties        93,750,185      111,393,648     57,037,880

  Inventories – net                       14,311,934      16,757,515      17,135,024

  Property development cost – net         133,847,783     133,493,824     221,483,990

  Other current assets                    49,930,391      159,293,713     171,150,301

  Total current assets                    425,025,647     668,835,126     1,905,921,268

  Non-current assets                                                      

  Long term trade accounts receivable     438,197,570     511,199,415     -

  Investment in subsidiaries              3,492,207,114   3,492,207,114   3,491,257,814

  Other long-term investments - net       -               -               13,674,001

  Long-term loans to subsidiaries         2,408,490,629   1,699,070,629   1,480,600,000

  Long-term loans to employees            11,682,115      14,932,640      10,803,000

  Property, plant and equipment – net     1,210,525,062   1,980,965,566   2,001,248,648

  Land awaiting development               28,638,873      28,638,873      28,638,873

  Other non-current assets                5,719,973       11,033,629      6,863,477

  Total non-current assets                7,595,461,336   7,738,047,866   7,033,085,813

  TOTAL ASSETS                            8,020,486,983   8,406,882,992   8,939,007,081

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

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

 Separate Balance Sheets (continue)

  Unit : Baht

+--------------------------------------+---------+---------+---------+
|                                      | S       |         |         |
|                                      | eparate |         |         |
+--------------------------------------+---------+---------+---------+
|                                      | 2009    | 2008    | 2007    |
+--------------------------------------+---------+---------+---------+
| LIABILITIES AND SHAREHOLDERS’ EQUITY |         |         |         |
+--------------------------------------+---------+---------+---------+
| Current liabilities                  |         |         |         |
+--------------------------------------+---------+---------+---------+
| Short-term loans from financial      | 260,    | 333,    | 470,    |
| institutions                         | 000,000 | 000,000 | 000,000 |
+--------------------------------------+---------+---------+---------+
| Trade accounts payable               | 32,     | 24,     | 33,     |
|                                      | 105,563 | 374,536 | 420,740 |
+--------------------------------------+---------+---------+---------+
| Current portion of long - term loans | 168,    | 266,    | 233,    |
| from financial institutions          | 000,000 | 000,000 | 000,000 |
+--------------------------------------+---------+---------+---------+
| Amounts due to related companies     | 18,     | 21,     | 62,     |
|                                      | 233,419 | 557,368 | 219,706 |
+--------------------------------------+---------+---------+---------+
| Corporate income tax payable         | 6,      | -       | -       |
|                                      | 978,534 |         |         |
+--------------------------------------+---------+---------+---------+
| Other current liabilities            | 179,    | 214,    | 284,    |
|                                      | 808,507 | 993,884 | 821,823 |
+--------------------------------------+---------+---------+---------+
| Total current liabilities            | 665,    | 859,    | 1,083,  |
|                                      | 126,023 | 925,788 | 462,269 |
+--------------------------------------+---------+---------+---------+
| Non-Current liabilities              |         |         |         |
+--------------------------------------+---------+---------+---------+
| Long-term loans from subsidiaries    | 881,    | 813,    | 1,040,  |
|                                      | 140,000 | 640,000 | 350,000 |
+--------------------------------------+---------+---------+---------+
| Long-term loans from financial       | 385,    | 133,    | 399,    |
| institutions – net of current        | 000,000 | 000,000 | 000,000 |
| portion                              |         |         |         |
+--------------------------------------+---------+---------+---------+
| Other non-current liabilities        | 23,     | 29,     | 5,      |
|                                      | 231,702 | 174,762 | 878,150 |
+--------------------------------------+---------+---------+---------+
| Total non-current liabilities        | 1,289,  | 975,    | 1,445,  |
|                                      | 371,702 | 814,762 | 228,150 |
+--------------------------------------+---------+---------+---------+
| Total liabilities                    | 1,954,  | 1,835,  | 2,528,  |
|                                      | 497,725 | 740,550 | 690,419 |
+--------------------------------------+---------+---------+---------+
| Shareholders' equity                 |         |         |         |
+--------------------------------------+---------+---------+---------+
| Share capital                        |         |         |         |
+--------------------------------------+---------+---------+---------+
|   Registered                         | 2,116,  | 2,116,  | 2,116,  |
|                                      | 753,580 | 753,580 | 753,580 |
| 211,675,358 ordinary shares of Baht  |         |         |         |
| 10 each                              |         |         |         |
+--------------------------------------+---------+---------+---------+
|   Issued and fully paid-up           | 1,666,  | 1,666,  | 1,666,  |
|                                      | 827,010 | 827,010 | 827,010 |
| 166,682,701 ordinary shares of Baht  |         |         |         |
| 10 each                              |         |         |         |
+--------------------------------------+---------+---------+---------+
| Share premium                        | 2,062,  | 2,062,  | 2,062,  |
|                                      | 460,582 | 460,582 | 460,582 |
+--------------------------------------+---------+---------+---------+
| Unrealised gain (loss)               |         |         |         |
+--------------------------------------+---------+---------+---------+
| Revaluation surplus on assets        | 776,    | 1,562,  | 1,592,  |
|                                      | 260,726 | 569,445 | 542,225 |
+--------------------------------------+---------+---------+---------+
| Revaluation deficit on changes in    | -       | -       | (10,1   |
| value of investment                  |         |         | 75,999) |
+--------------------------------------+---------+---------+---------+
| Retained earnings                    |         |         |         |
+--------------------------------------+---------+---------+---------+
| Appropriated – statutory reserve     | 166,    | 151,    | 84,     |
|                                      | 682,701 | 713,962 | 670,143 |
+--------------------------------------+---------+---------+---------+
| Unappropriated                       | 1,393,  | 1,127,  | 1,013,  |
|                                      | 758,239 | 571,443 | 992,701 |
+--------------------------------------+---------+---------+---------+
|                                      | 1,560,  | 1,279,  | 1,098,  |
|                                      | 440,940 | 285,405 | 662,844 |
+--------------------------------------+---------+---------+---------+
| Total shareholders' equity           | 6,065,  | 6,571,  | 6,410,  |
|                                      | 989,258 | 142,442 | 316,662 |
+--------------------------------------+---------+---------+---------+
| TOTAL LIABILITIES AND SHAREHOLDERS'  | 8,020,  | 8,406,  | 8,939,  |
| EQUITY                               | 486,983 | 882,992 | 007,081 |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+
|                                      |         |         |         |
+--------------------------------------+---------+---------+---------+

Separate Statements of Cash Flows

Unit : Baht

  ------------------------------------ --------------- ----------------- ---------------
                                       Separate                          

                                       2009            2008              2007

  Cash flows from (used in) operating                                    
  activities                                                             

  Net cash inflows (outflows) from     372,016,292     270,757,787       193,886,391
  operating activities                                                   

  Cash flows from (used in) investing                                    
  activities                                                             

  Net cash inflows (outflows) from     (160,201,214)   (20,930,212)      (448,474,395)
  investing activities                                                   

  Cash flows from (used in) financing                                    
  activities                                                             

  Net cash inflows (outflows) from     (218,201,687)   (1,063,421,238)   1,007,050,222
  financing activities                                                   

  Net increase (decrease) in cash and  (6,386,609)     (813,593,663)     752,462,218
  cash equivalents                                                       

  Cash and cash equivalents at         41,982,211      855,575,874       103,113,656
  beginning of year                                                      

  Cash and cash equivalents at end of  35,595,602      41,982,211        855,575,874
  year                                                                   
  ------------------------------------ --------------- ----------------- ---------------

12.1.3 Financial ratios of the company and its subsidiaries

  --------------------------------- ------- -------------- -- -------- -- --------- --
  CONSOLIDATED FINANCIAL RATIOS                                                     

                                            Consolidated                            

                                            2009              2008        2007      

  Liquidity Ratios                                                                  

  Current Ratio                     Times   1.21              1.17        1.34      

  Quick Ratio                       Times   0.51              0.56        0.92      

  Cash Flow From Operating          Times   0.27              0.28        0.35      
  Activities Ratio                                                                  

  Receivables Turnover              Times   4.14              4.37        5.04      

  Collection Period                 Days    86.96             82.38       71.43     

  Inventory Turnover                Times   8.29              9.35        9.21      

  Inventory Turnover Period         Days    43.43             38.49       39.10     

  Accounts Payable Turnover         Times   5.73              6.36        5.38      

  Payment Period                    Days    62.83             56.60       66.91     

  Cash Cycle                        Days    67.55             64.27       43.62     

                                                                                    

  Profitability Ratios                                                              

  Gross Profit Margin               %       62.56             60.14       60.52     

  Profit Margin from Operations     %       10.13             22.05       25.44     

  Net Profit Margin                 %       2.97              15.97       18.07     

  Return On Equity                  %       0.73              5.71        9.38      

                                                                                    

  Efficiency Ratios                                                                 

  Return On Total Assets            %       0.57              4.42        6.46      

  Return On Fixed Assets            %       3.25              7.94        10.93     

  Asset Turnover                    Times   0.19              0.28        0.36      

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

+--------------------------------+----+--------+---+--------+---+--------+---+
| CONSOLIDATED FINANCIAL RATIOS  |    |        |   |        |   |        |   |
| (Continued)                    |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
|                                |    | Consol |   |        |   |        |   |
|                                |    | idated |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
|                                |    | 2009   |   | 2008   |   | 2007   |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Financial Policy Ratios        |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Debt To Equity                 | T  | 0.29   |   | 0.26   |   | 0.32   |   |
|                                | im |        |   |        |   |        |   |
|                                | es |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Interest Coverage              | T  | 6.81   |   | 7.30   |   | 7.14   |   |
|                                | im |        |   |        |   |        |   |
|                                | es |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Payout Ratio (Cash Basis)      | T  | 0.47   |   | 0.35   |   | 0.62   |   |
|                                | im |        |   |        |   |        |   |
|                                | es |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Dividend Payout Ratio          | %  | 62.49  |   | 33.23  |   | 36.19  |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
|                                |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Share value                    |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Book Value Per Share           | Ba | 100.93 |   | 118.33 |   | 113.43 |   |
|                                | ht |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Earnings (loss) Per Share      | Ba | 0.80   |   | 6.62   |   | 10.60  |   |
|                                | ht |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Dividend Per Share *           | Ba | 0.50   |   | 2.20   |   | 2.80   |   |
|                                | ht |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
|                                |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Growth rate                    |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Total Assets                   | %  | (      |   | (0.30) |   | 67.79  |   |
|                                |    | 12.99) |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Total Liabilities              | %  | (6.47) |   | (      |   | (3.47) |   |
|                                |    |        |   | 14.60) |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Total Revenues                 | %  | (      |   | (3.15) |   | 15.95  |   |
|                                |    | 35.15) |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Total Expenses                 | %  | (      |   | 2.26   |   | 16.68  |   |
|                                |    | 26.24) |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
| Net Income (Loss)              | %  | (      |   | (      |   | 15.88  |   |
|                                |    | 87.92) |   | 14.41) |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+
|                                |    |        |   |        |   |        |   |
+--------------------------------+----+--------+---+--------+---+--------+---+

  * At the time of printing this report, a Baht 0.50 per share final
  dividend had been proposed by the Board of Directors but had not been
  approved by the Annual General Meeting.

  -------------------------------- ------- ---------- -- --------- -- --------- -- --
  SEPARATE FINANCIAL RATIOS                                                        

                                           Separate                                

                                           2009          2008         2007         

  Liquidity Ratios                                                                 

  Current Ratio                    Times   0.64          0.78         1.76         

  Quick Ratio                      Times   0.20          0.29         1.33         

  Cash Flow From Operating         Times   0.49          0.28         0.21         
  Activities Ratio                                                                 

  Receivables Turnover             Times   3.79          3.19         4.58         

  Collection Period                Days    94.99         112.85       78.60        

  Inventory Turnover               Times   8.87          9.13         8.80         

  Inventory Turnover Period        Days    40.59         39.43        40.91        

  Accounts Payable Turnover        Times   4.88          5.35         4.71         

  Payment Period                   Days    73.77         67.29        76.43        

  Cash Cycle                       Days    61.81         84.99        43.08        

                                                                                   

  Profitability Ratios                                                             

  Gross Profit Margin              %       76.92         64.28        59.33        

  Profit Margin from Operations    %       116.69        57.10        53.45        

  Net Profit Margin                %       44.90         36.08        35.59        

  Return On Equity                 %       10.25         9.97         13.40        

                                                                                   

  Efficiency Ratios                                                                

  Return On Total Assets           %       7.89          7.46         9.36         

  Return On Fixed Assets           %       43.87         34.85        51.76        

  Asset Turnover                   Times   0.18          0.21         0.26         

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

  ------------------------------- ------- ---------- -- --------- -- --------- --
  SEPARATE FINANCIAL RATIOS                                                    
  (Continued)                                                                  

                                          Separate                             

                                          2009          2008         2007      

  Financial Policy Ratios                                                      

  Debt To Equity                  Times   0.32          0.28         0.39      

  Interest Coverage               Times   7.11          4.37         2.85      

  Payout Ratio (Cash Basis)       Times   0.26          0.20         0.24      

  Dividend Payout Ratio           %       12.86         56.65        67.29     

                                                                               

  Share value                                                                  

  Book Value Per Share            Baht    36.39         39.42        38.46     

  Earnings (loss) Per Share       Baht    3.89          3.88         5.70      

  Dividend Per Share*             Baht    0.50          2.20         2.80      

                                                                               

  Growth rate                                                                  

  Total Assets                    %       (4.60)        (5.95)       51.95     

  Total Liabilities               %       6.47          (27.40)      30.44     

  Total Revenues                  %       (19.56)       (7.95)       (7.33)    

  Total Expenses                  %       (32.60)       (7.26)       90.36     

  Net Income (Loss)               %       0.08          (6.66)       (48.80)   

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

  * At the time of printing this report, a Baht 0.50 per share final
  dividend had been proposed by the Board of Directors but had not been
  approved by the Annual General Meeting.

2.  Explanation and Analysis by management

  For the year ended 31 December 2009, Laguna Resorts & Hotels Public
  Company Limited achieved a net profit of Baht 133 million which was
  Baht 970 million lower when compared to the prior year.

  Total revenue for the year decreased by Baht 2,429 million as compared
  to the prior year mainly due to the following:

-   Revenue from hotel operations decreased by Baht 654 million mainly
    due to lower room rates as a result of promotions and discounting to
    drive occupancies during the global economic downturn. There was
    also less corporate business as many companies cut back on spending
    on meetings and incentives due to the global economic downturn. In
    addition, lower retail sales from gallery outlets were recorded due
    to the lower business levels.

-   Revenue from property development operations decreased by Baht 1,473
    million mainly due to a significant slowdown in sales and revenue
    recognition as a result of the global economic downturn.

-   Interest income decreased by Baht 28 million mainly due to the
    settlement of a long-term loan to an associated company in July
    2009, a decrease in property sales trade accounts receivables and
    the settlement relating to the tsunami insurance claim in the prior
    year.

-   Insurance claim revenue decreased by Baht 203 million due to the
    final settlement of an insurance claim in the prior year relating to
    the tsunami in 2004 offset by the settlement for losses incurred
    during an illegal blockade at Laguna Phuket in February 2009.

-   Foreign exchange gain amounting to Baht 5 million in 2009 compared
    to foreign exchange loss amounting to Baht 11 million in 2008 was
    mainly due to the impact of the movement of the Thai Baht on foreign
    currency dominated loans from finance institutions, foreign currency
    trade receivables and loan to associated company.

-   Other income decreased by Baht 69 million mainly due to a gain on
    reduction in share capital of an associated company in the prior
    year.

  Total expenses decreased by Baht 1,437 million as compared to the
  prior year mainly due to the following:

-   Cost of hotel operations decreased by Baht 219 million mainly due to
    the decrease in hotel revenue of the Laguna Phuket operations.

-   Cost of property development operations decreased by Baht 730
    million associated with the decrease in revenue from property
    development operations.

-   Selling expenses decreased by Baht 151 million associated with the
    lower hotel and property revenue.

-   Administrative expenses decreased by Baht 259 million mainly due to
    a decrease in payroll costs (introduction of unpaid leave scheme
    during the year) and a decrease in legal fees (associated with the
    tsunami insurance claim from prior years).

-   Management benefit expenses decreased by Baht 27 million due to
    lower payroll costs (introduction of an unpaid leave scheme during
    the year).

-   Depreciation increased by Baht 27 million mainly due to completed
    hotel renovations at Dusit Thani Laguna Phuket and Banyan Tree
    Bangkok.

-   Other expenses decreased by Baht 59 million mainly due to impairment
    losses recognised on an investment and a building in the prior year.

  Share of loss from investments in associates amounting to Baht 4
  million in 2009 compared to share of income from investments in
  associates amounting to Baht 120 million in 2008 was mainly due to the
  lower performance of Lijiang Banyan Tree Hotel Co. Ltd.

  Finance cost decreased by Baht 27 million as compared to the prior
  year mainly due to lower loan balances and interest rates.

Corporate income tax decreased by Baht 81 million as compared to the
prior year mainly due to the lower profits from hotel and property
development operations.

Net income attributable to minority interests decreased by Baht 37
million as compared to the prior year due to the decreased profits of
Laguna Beach Club Limited and Banyan Tree Gallery (Singapore) Pte Ltd.
in which there are a 50% and 49% minority interest respectively.

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

Hotel Operations

  (Unit: Million Baht)

+----------------------+---------+------+-------+-----+------+------+
|                      | 2009    | %    | 2008  | %   | 2007 | %    |
+----------------------+---------+------+-------+-----+------+------+
| Revenues             | 3,300   | 100  | 3,954 | 100 | 4    | 100  |
|                      |         |      |       |     | ,124 |      |
| Expenses             | 1,323   | 40   | 1,542 | 39  |      | 35   |
|                      |         |      |       |     | 1    |      |
| Gross Operating      | 1,977   | 60   | 2,412 | 61  | ,457 | 65   |
| Profit               |         |      |       |     |      |      |
|                      |         |      |       |     | 2    |      |
|                      |         |      |       |     | ,667 |      |
+----------------------+---------+------+-------+-----+------+------+

 

  Hotel revenues were Baht 654 million and expenses were Baht 219
  million lower than last year resulting in operating profit being Baht
  435 million lower than last year. The operating margin of 60 percent
  was similar the prior year level of 61 percent but below the 2007
  level of 65 percent. The main reasons for this were:

-   A decrease in revenue of the Laguna Phuket operations mainly due to
    lower room rates as a result of promotions and discounting to drive
    occupancies during the low season. There was also less corporate
    business as many companies have cut back on spending on meetings and
    incentives due to the global economic downturn.

-   A decrease in the Cost of hotel operations mainly due to the
    decrease in hotel revenue of the Laguna Phuket operations.

  Property Sales and Holiday Club Membership Operations

(Unit: Million Baht)

+--------------------+--------+-------+-------+-------+-------+------+
|                    | 2009   | %     | 2008  | %     | 2007  | %    |
+--------------------+--------+-------+-------+-------+-------+------+
| Revenues           | 1,015  | 100   |       | 100   | 2,808 | 100  |
|                    |        |       | 2,488 |       |       |      |
| Expenses           | 286    | 28    |       | 41    | 1,268 | 45   |
|                    |        |       |       |       |       |      |
| Gross Operating    | 729    | 72    | 1,015 | 59    | 1,540 | 55   |
| Profit             |        |       |       |       |       |      |
|                    |        |       | 1,473 |       |       |      |
+--------------------+--------+-------+-------+-------+-------+------+

  Revenues were Baht 1,473 million and expenses were Baht 729 million
  lower than last year resulting in operating profit being Baht 744
  million lower than last year. The operating margin of 72 percent was
  above the prior year level of 59 percent and the 2007 level of 55
  percent. The main reasons for this were:

-   Lower sales and revenue recognition of the unbranded products of
    Laguna Village Villas, Laguna Residences and Laguna Townhomes were
    partially offset by higher of sales and revenue recognition of
    branded products of Banyan Tree Residences. The 9 units sold during
    the year was lower than the 61 units in the prior year as buyers
    curtailed their spending on properties as a result of the global
    economic downturn.

  Balance Sheet

  The main balance sheet items at 31 December 2009 and 2008 are as
  follows:

(Unit: Million Baht)

  ---------------------------- -------- ---------------- -----------------
                               Note     31 December 2009 31 December 2008

  Cash and cash equivalents    1        628              474

  Trade accounts receivable    2        1,582            2,041

  Property development cost    3        1,540            1,045

  Other long term investments  4        232              188

  Property, plant, equipment   5        16,377           19,161
  and land                                               

  Loans from banks             6        3,304            3,475

  Shareholders’ equity         7        15,859           18,583
  ---------------------------- -------- ---------------- -----------------

  The main points to be noted in regard to the Balance Sheet movements
  in the year ended 31 December 2009 are:

1.  Main movements are explained in the commentary on Cash Flows below.

2.  The decrease in accounts receivable balances is due to the decrease
    in property sales receivables, time share receivables and hotel
    receivable

3.  The increase in property development cost is mainly due to the
    construction of Banyan Tree Two-Bedroom Pool Villa and Double Pool
    Villa which are largely completed.

4.  The increase in other long term investment is due to the additional
    investment in Banyan Tree Indochina Hospitality Fund during the
    year.

5.  The decrease in property, plant, equipment and land is mainly due to
    changing the value of 5 hotel buildings and an office building from
    Income Approach to Depreciated Replacement Cost Approach. This was
    to comply with a new accounting guidance on asset valuation methods
    of the Federation of Accounting Professions.

6.  Loans from banks have decreased in 2009 due to scheduled long term
    loan repayments from current year cash flow.

7.  The decrease in shareholders’ equity is mainly due to devaluation of
    hotel buildings of Baht 2,383 million and dividend paid of Baht 387
    million offset against net income for the year 2009 amounting to
    Baht 133 million.

  Cash Flows

  The cash and cash equivalents of Baht 628 million at 31 December 2009
  represented a Baht 154 million increase as compared to 31 December
  2008. The main components of cash generated during the year are net
  cash generated by operations amounting to Baht 789 million. This was
  largely a function of net earnings for the year adjusted for
  depreciation and working capital movements.

  Cash received from long-term loans, repayment of associate and
  employee loans and sales of fixed assets amounted to Baht 322 million.
  The draw down of short term and long term loans of Baht 754 million
  were mainly used for the renovation of Banyan Tree Bangkok.

  Cash outflow comprised of expenditure on fixed asset of Baht 355
  million largely related to the construction projects in Laguna Phuket
  and Banyan Tree Bangkok Hotel. The scheduled long term loan repayments
  of Baht 925 million and dividend payment of Baht 387 million were the
  other components of the cash outflow.

  Commentary on Consolidated Financial Ratios

  Liquidity ratios

-   Current ratio – This is higher in 2009 due to the decrease in
    advance receipts from customers and construction payable.

-   Quick ratio – This is lower in 2009 due to the decrease in accounts
    receivable.

-   Cash flow from operating activities ratio – This is consistent with
    the prior year level.

-   Receivable turnover – This is lower than the prior year levels due
    to the lower hotel revenue and property development revenue coupled
    with lower average accounts receivable in 2009.

-   Collection period – This is higher than the prior year levels due to
    the lower hotel revenue and property development revenue in 2009
    coupled with lower average accounts receivables.

-   Inventory turnover – This is lower than the prior year levels due to
    lower direct cost coupled with lower average inventories.

-   Inventory turnover period – This is higher than the prior year
    levels due to the lower direct cost coupled with lower average
    inventories.

-   Accounts payable turnover – This is lower than the prior year levels
    due to lower direct costs coupled with lower average accounts
    payable in 2009.

-   Payment period – This is higher than the prior year levels due to
    lower direct costs coupled with lower average accounts payable in
    2009.

-   Cash cycle – This is higher than the prior year levels due to longer
    collection period for property sales, increase inventory turnover
    period of hotel operation and payment period

  Profitability ratios

-   Gross profit margin – This is consistent with the prior year level.

-   Profit margin from operations – This is lower than the prior year
    level due to lower profit on hotel operations and property
    development operations.

-   Net profit margin from operations and return on equity – This is
    lower in 2009 due to the lower profits due to the global economic
    downturn.

  Efficiency ratios

-   Return on total assets, return on fixed assets and asset turnover –
    This is lower than the prior year levels due to lower profits due to
    the global economic downturn.

  Financial policy ratios

-   Debt to equity – This is consistent with the prior year level.

-   Interest coverage – This is lower than the prior year due to the
    reduction in profits.

-   Pay-out ratio (cash) – This increased as compared to last year due
    to an increase in long-term loan repayments offset against a
    decrease in acquisition assets and dividend payment coupled with
    lower revenues in 2009.

-   Dividend pay-out ratio – This is based on the dividend policy which
    is one-third of the consolidated net profit for the year 2009
    attributable to the shareholders and a variable component subject to
    the Board of Directors.

    12.3 Auditors' Remuneration (for the fiscal year ended 31
    December 2009)

  1. Audit fees

  The Company and subsidiaries paid audit fees for the fiscal year to an
  audit firm which amounted to Baht 7,092,521 and subsidiaries paid
  audit fees to another audit firm which amounted to Baht 1,412,386.
  This amount does not include the audit fees paid by associated
  companies.

  2. Non-audit fees

  The subsidiaries paid non-audit fees for agreed upon procedures on
  statement for the fiscal year to an audit firm which amounted to Baht
  401,620. There is no outstanding commitment to pay any fees in the
  future for uncompleted engagements relating to the year 2009.