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 2008
  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 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 draw attention to the matter, 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 earning.
  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 draw attention to the matter, 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.

  For the year ended 31 December 2006

  In summary, a clean audit report was issued.

  Reference was made to three subsidiary companies included in
  consolidated financial statements, Laguna Beach Club Limited, Laguna
  (1) Company Limited and Lijiang Banyan Tree Hotel Company Limited that
  were audited by other auditors for the year ended 31 December 2006.
  The Company’s financial statements included investments in these
  subsidiaries as at 31 December 2006 of Baht 412.4 million, accounted
  for under the equity method, and the share of loss from these
  subsidiaries for the year then ended amounted to Baht 47.4 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 2006 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles.

  Adoption of New Accounting Standards

  (a) Accounting Standards which are Effective for the Current Year

  The Federation of Accounting Professions (FAP) has issued
  Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting
  Standards. The notifications mandate the use of the following new
  Accounting Standards.

TAS 25 (revised 2007) Cash Flow Statements

TAS 29 (revised 2007) Leases

TAS 31 (revised 2007) Inventories

TAS 33 (revised 2007) Borrowing Costs

TAS 35 (revised 2007) Presentation of Financial Statements

TAS 39 (revised 2007) Accounting Policies, Changes in Accounting

Estimates and Errors

TAS 41 (revised 2007) Interim Financial Reporting

TAS 43 (revised 2007) Business Combinations

TAS 49 (revised 2007) Construction Contracts

TAS 51 Intangible Assets

  These accounting standards became effective for the financial
  statements for fiscal years beginning on or after 1 January 2008. The
  management has assessed the effect of these accounting standards and
  believes that TAS 49 is not relevant to the business of the Company,
  whereas TAS 25, TAS 29, TAS 31, TAS 33, TAS 35, TAS 39, TAS 41 and TAS
  51 do not have any significant impact on the financial statements for
  the current year. The following accounting standard has an impact to
  the financial statements for the current year.

  TAS 43 (revised 2007) “Business Combinations”

TAS 43 (revised 2007) does not require the amortisation of goodwill and
negative goodwill acquired in a business combination. Such goodwill is
instead to be tested for impairment, and measured at cost less
accumulated impairment losses. Such negative goodwill is instead to be
recognised immediately in income statements. This accounting standard
applies to goodwill and negative goodwill arising from business
combinations for which the agreement date is on or after 1 January 2008.
Previously recognised goodwill can be accounted for prospectively, with
the Company discontinuing the amortisation of the goodwill and instead
testing for impairment, as from the beginning of the first fiscal year
starting on or after 1 January 2008. Previously recognised negative
goodwill is adjusted to the opening balance of retained earnings, as
from the beginning of the first fiscal year starting on or after 1
January 2008.

(b) Accounting Standards which are not Effective for the Current Year

    The Federation of Accounting Professions (FAP) has issued
    Notifications No. 86/2551 regarding Accounting Standards. The
    notifications mandate the use of the following new Accounting
    Standards.

    TAS 36 (revised 2007) Impairment of Assets

    TAS 54 (revised 2007) Non-current Assets Held for Sale and
    Discontinued

    Operations

    These accounting standards will become effective for the financial
    statements for fiscal years beginning on or after 1 January 2009.
    The management has assessed the effect of these accounting standards
    and believes that they will not have any significant impact on the
    financial statements for the year in which they are initially
    applied.

    Change in Accounting Policies

    (a) Change in Accounting Policy for Recording Negative Goodwill

  During the current year, the Company changed its accounting policy for
  recording negative goodwill from investment in subsidiary in the
  consolidated financial statements, and adjusted the previously
  recorded negative goodwill against the opening balance of retained
  earnings, in compliance with Accounting Standard No. 43 (revised 2007)
  regarding “Business Combinations”. The cumulative effect of the change
  in accounting policy has been presented under the heading of
  “Cumulative effect of the change in accounting policy for negative
  goodwill” in the consolidated statements of changes in shareholders’
  equity.

Such change in accounting policy had no effect to the separate financial
statements.

(b) Change in Accounting Policy for Recording Goodwill

    During the current year, the Company changed its accounting policy
    for measurement of goodwill acquired from a business combination,
    from stating it at cost less accumulated amortisation (the maximum
    amortisation period was 20 years) and impairment losses, to stating
    it at cost less accumulated impairment losses, in compliance with
    Accounting Standard No. 43 (revised 2007). The Company applied the
    change prospectively, beginning with the accounting period
    commencing 1 January 2008, by discontinuing amortisation of goodwill
    and eliminating the accumulated carrying amount of amortisation of
    goodwill at the beginning of 2008, with a corresponding decrease in
    the amount of goodwill.

12.1.2 Summary of Financial Statements

Consolidated Income Statements 

 Unit: Baht

+-----------------------------------+---+-----------+---------+---------+
|                                   |   | Con       |         |         |
|                                   |   | solidated |         |         |
+-----------------------------------+---+-----------+---------+---------+
|                                   |   | 2008      | 2007    | 2006    |
+-----------------------------------+---+-----------+---------+---------+
|   Revenues                        |   |           |         |         |
+-----------------------------------+---+-----------+---------+---------+
|   Revenues from hotel operations  |   | 3,95      | 4,124,  | 3,589,  |
|                                   |   | 4,451,870 | 291,268 | 806,682 |
+-----------------------------------+---+-----------+---------+---------+
|   Revenues from property          |   | 2,48      | 2,808,  | 2,327,  |
|   development operations          |   | 8,769,045 | 487,035 | 817,464 |
+-----------------------------------+---+-----------+---------+---------+
|   Revenues from office rental     |   | 6         | 67,     | 80,     |
|   operations                      |   | 6,024,485 | 557,920 | 764,484 |
+-----------------------------------+---+-----------+---------+---------+
|   Interest income                 |   | 9         | 65,     | 26,     |
|                                   |   | 0,240,666 | 388,066 | 797,803 |
+-----------------------------------+---+-----------+---------+---------+
|   Foreign exchange gain           |   | -         | 9,      | 87,     |
|                                   |   |           | 226,816 | 965,436 |
+-----------------------------------+---+-----------+---------+---------+
|   Other income                    |   | 31        | 62,     | 42,     |
|                                   |   | 2,831,445 | 230,319 | 500,004 |
+-----------------------------------+---+-----------+---------+---------+
|   Total revenues                  |   | 6,91      | 7,137,  | 6,155,  |
|                                   |   | 2,317,511 | 181,424 | 651,873 |
+-----------------------------------+---+-----------+---------+---------+
|   Expenses                        |   |           |         |         |
+-----------------------------------+---+-----------+---------+---------+
|   Cost of hotel operations        |   |   1,54    |         |         |
|                                   |   | 1,625,938 |  1,456, |  1,276, |
|                                   |   |           | 701,046 | 820,233 |
+-----------------------------------+---+-----------+---------+---------+
|   Cost of property development    |   |   1,01    |         |   841,  |
|   operations                      |   | 6,362,453 |  1,267, | 182,992 |
|                                   |   |           | 986,327 |         |
+-----------------------------------+---+-----------+---------+---------+
|   Cost of office rental           |   | 3         | 38,     | 56,     |
|   operations                      |   | 6,571,474 | 966,551 | 772,073 |
+-----------------------------------+---+-----------+---------+---------+
|   Selling expenses                |   | 53        | 572,    | 438,    |
|                                   |   | 9,247,463 | 480,407 | 690,278 |
+-----------------------------------+---+-----------+---------+---------+
|   Administrative expenses         |   | 1,86      | 1,651,  | 1,575,  |
|                                   |   | 6,506,902 | 490,072 | 664,513 |
+-----------------------------------+---+-----------+---------+---------+
|   Depreciation                    |   | 41        | 368,    | 401,    |
|                                   |   | 7,769,554 | 435,620 | 334,179 |
+-----------------------------------+---+-----------+---------+---------+
|   Other expenses                  |   | 5         | -       | -       |
|                                   |   | 9,063,382 |         |         |
+-----------------------------------+---+-----------+---------+---------+
|   Total expenses                  |   | 5,47      | 5,356,  | 4,590,  |
|                                   |   | 7,147,166 | 060,023 | 464,268 |
+-----------------------------------+---+-----------+---------+---------+
|   Income before finance cost and  |   | 1,43      | 1,781,  | 1,565,  |
|   corporate income tax            |   | 5,170,345 | 121,401 | 187,605 |
+-----------------------------------+---+-----------+---------+---------+
| Finance cost                      |   | (185      | (220,6  | (202,0  |
|                                   |   | ,805,055) | 58,513) | 55,630) |
+-----------------------------------+---+-----------+---------+---------+
| Share of income (loss) from       |   | 11        | (4,9    | -       |
| investments in associates         |   | 9,558,024 | 54,548) |         |
+-----------------------------------+---+-----------+---------+---------+
|   Income before corporate income  |   | 1,36      | 1,555,  | 1,363,  |
|   tax                             |   | 8,923,314 | 508,340 | 131,975 |
+-----------------------------------+---+-----------+---------+---------+
|   Corporate income tax            |   | (196      | (188,9  | (228,3  |
|                                   |   | ,775,109) | 59,722) | 80,356) |
+-----------------------------------+---+-----------+---------+---------+
|   Net income for the year         |   | 1,17      | 1,366,  | 1,134,  |
|                                   |   | 2,148,205 | 548,618 | 751,619 |
+-----------------------------------+---+-----------+---------+---------+
|   Net income attributable to:     |   |           |         |         |
+-----------------------------------+---+-----------+---------+---------+
|   Equity holders of the parent    |   | 1,10      | 1,289,  | 1,112,  |
|                                   |   | 3,682,190 | 567,404 | 877,149 |
+-----------------------------------+---+-----------+---------+---------+
|   Minority interest               |   | 6         | 76,     | 21,     |
|                                   |   | 8,466,015 | 981,214 | 874,470 |
+-----------------------------------+---+-----------+---------+---------+
|                                   |   | 1,17      | 1,366,  | 1,134,  |
|                                   |   | 2,148,205 | 548,618 | 751,619 |
+-----------------------------------+---+-----------+---------+---------+
| Basic earnings per share          |   | 6.62      | 10.60   | 13.14   |
|                                   |   |           |         |         |
|   Net income attributable to      |   |           |         |         |
|   equity holders of the parent    |   |           |         |         |
+-----------------------------------+---+-----------+---------+---------+
|   Weighted average number of      |   | 16        | 121,    | 84,     |
|   ordinary shares (shares)        |   | 6,682,701 | 671,226 | 670,143 |
+-----------------------------------+---+-----------+---------+---------+

Consolidated Balance Sheets 

Unit: Baht

+----------------------------------+---+---------+----------+----------+
|                                  |   | Conso   |          |          |
|                                  |   | lidated |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   | 2008    | 2007     | 2006     |
+----------------------------------+---+---------+----------+----------+
| ASSETS                           |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Current assets                   |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Cash and cash equivalents      |   | 474,    | 1,533    | 1,087    |
|                                  |   | 125,431 | ,422,290 | ,923,520 |
+----------------------------------+---+---------+----------+----------+
|   Trade accounts receivable –    |   | 1,197,  | 1,726    | 1,023    |
|   net                            |   | 848,866 | ,422,011 | ,141,357 |
+----------------------------------+---+---------+----------+----------+
|   Amounts due from related       |   | 193,    | 108      | 33       |
|   companies                      |   | 635,173 | ,860,861 | ,256,763 |
+----------------------------------+---+---------+----------+----------+
|   Inventories – net              |   | 171,    | 158      | 158      |
|                                  |   | 540,088 | ,103,959 | ,314,368 |
+----------------------------------+---+---------+----------+----------+
|   Property development cost –    |   | 1,044,  | 875      | 593      |
|   net                            |   | 632,739 | ,919,886 | ,414,126 |
+----------------------------------+---+---------+----------+----------+
|   Other current assets           |   | 425,    | 340      | 421      |
|                                  |   | 011,012 | ,936,184 | ,283,706 |
+----------------------------------+---+---------+----------+----------+
| Total current assets             |   | 3,506,  | 4,743    | 3,317    |
|                                  |   | 793,309 | ,665,191 | ,333,840 |
+----------------------------------+---+---------+----------+----------+
| Non-current assets               |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Restricted deposits at         |   | 2,      | 2        | 2        |
|   financial institution          |   | 140,000 | ,140,000 | ,140,000 |
+----------------------------------+---+---------+----------+----------+
|   Long-term trade accounts       |   | 843,    | 278      | 138      |
|   receivable                     |   | 638,829 | ,616,284 | ,524,336 |
+----------------------------------+---+---------+----------+----------+
|   Investments in associates      |   | 419,    | 269      | -        |
|                                  |   | 802,119 | ,105,050 |          |
+----------------------------------+---+---------+----------+----------+
|   Other long-term investments    |   | 188,    | 210      | 210      |
|                                  |   | 424,686 | ,399,386 | ,399,386 |
+----------------------------------+---+---------+----------+----------+
|   Long-term loans to associate   |   | 308,    | 298      | -        |
|                                  |   | 965,052 | ,707,673 |          |
+----------------------------------+---+---------+----------+----------+
|   Long-term loans to employees   |   | 34,     | 34       | -        |
|                                  |   | 965,908 | ,045,000 |          |
+----------------------------------+---+---------+----------+----------+
|   Property, plant and equipment  |   | 18,350, | 18,667   | 10,477   |
|   – net                          |   | 362,885 | ,452,348 | ,003,044 |
+----------------------------------+---+---------+----------+----------+
|   Land awaiting development      |   | 811,    | 432      | 639      |
|                                  |   | 069,743 | ,124,018 | ,390,200 |
+----------------------------------+---+---------+----------+----------+
|   Goodwill                       |   | 385,    | 19       | 20       |
|                                  |   | 491,758 | ,794,338 | ,305,564 |
+----------------------------------+---+---------+----------+----------+
|   Leasehold rights - net         |   | 34,     | 45       | 84       |
|                                  |   | 108,008 | ,068,721 | ,328,941 |
+----------------------------------+---+---------+----------+----------+
|   Other non-current assets       |   | 53,     | 12       | 18       |
|                                  |   | 493,328 | ,720,177 | ,396,056 |
+----------------------------------+---+---------+----------+----------+
| Total non-current assets         |   | 21,432, | 20,270   | 11,590   |
|                                  |   | 462,316 | ,172,995 | ,487,527 |
+----------------------------------+---+---------+----------+----------+
| TOTAL ASSETS                     |   | 24,939, | 25,013   | 14,907   |
|                                  |   | 255,625 | ,838,186 | ,821,367 |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Consoli                          |   |         |          | Unit:    |
| dated Balance Sheets (continued) |   |         |          | Baht     |
+----------------------------------+---+---------+----------+----------+
|                                  |   | Conso   |          |          |
|                                  |   | lidated |          |          |
+----------------------------------+---+---------+----------+----------+
|                                  |   | 2008    | 2007     | 2006     |
+----------------------------------+---+---------+----------+----------+
| LIABILITIES AND SHAREHOLDERS'    |   |         |          |          |
| EQUITY                           |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Current liabilities              |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Short-term loans from          |   | 486,    | 862      | 637      |
|   financial institutions         |   | 000,000 | ,000,000 | ,000,000 |
+----------------------------------+---+---------+----------+----------+
|   Trade accounts payable         |   | 213,    | 271      | 270      |
|                                  |   | 234,248 | ,473,155 | ,304,320 |
+----------------------------------+---+---------+----------+----------+
|   Current portion of long-term   |   | 890,    | 824      | 648      |
|   loans from financial           |   | 415,000 | ,914,000 | ,597,000 |
|   institutions                   |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Amounts due to related         |   | 60,     | 71       | 96       |
|   companies                      |   | 981,831 | ,455,192 | ,695,820 |
+----------------------------------+---+---------+----------+----------+
|   Corporate income tax payable   |   | 72,     | 101      | 135      |
|                                  |   | 328,566 | ,015,266 | ,140,265 |
+----------------------------------+---+---------+----------+----------+
|   Other current liabilities      |   | 1,275,  | 1,404    | 985      |
|                                  |   | 994,649 | ,939,728 | ,778,540 |
+----------------------------------+---+---------+----------+----------+
| Total current liabilities        |   | 2,998,  | 3,535    | 2,773    |
|                                  |   | 954,294 | ,797,341 | ,515,945 |
+----------------------------------+---+---------+----------+----------+
| Non-current liabilities          |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Long-term loans from related     |   | -       | -        | 416      |
| company                          |   |         |          | ,449,627 |
+----------------------------------+---+---------+----------+----------+
| Long-term loans from financial   |   | 2,098,  | 2,480    | 3,080    |
| institutions – net of current    |   | 932,743 | ,347,743 | ,271,743 |
| portion                          |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Other non-current liabilities    |   | 117,    | 90       | 55       |
|                                  |   | 067,769 | ,600,118 | ,933,570 |
+----------------------------------+---+---------+----------+----------+
| Total non-current liabilities    |   | 2,216,  | 2,570    | 3,552    |
|                                  |   | 000,512 | ,947,861 | ,654,940 |
+----------------------------------+---+---------+----------+----------+
| Total liabilities                |   | 5,214,  | 6,106    | 6,326    |
|                                  |   | 954,806 | ,745,202 | ,170,885 |
+----------------------------------+---+---------+----------+----------+
| Shareholders’ equity             |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Share capital                  |   | 2,116,  | 2,116    | 846      |
|                                  |   | 753,580 | ,753,580 | ,701,430 |
|   Registered                     |   |         |          |          |
|                                  |   |         |          |          |
|   211,675,358 ordinary shares of |   |         |          |          |
|   Baht 10 each                   |   |         |          |          |
|                                  |   |         |          |          |
| (31 December 2006: 84,670,143    |   |         |          |          |
| ordinary shares of Baht 10 each) |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
|   Issued and fully paid-up       |   | 1,666,  | 1,666    | 846      |
|                                  |   | 827,010 | ,827,010 | ,701,430 |
|   166,682,701 ordinary shares of |   |         |          |          |
|   Baht 10 each                   |   |         |          |          |
|                                  |   |         |          |          |
| (31 December 2006 : 84,670,143   |   |         |          |          |
| 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    |   | 9,589,  | 9,869    | 1,789    |
|                                  |   | 532,118 | ,857,161 | ,995,216 |
+----------------------------------+---+---------+----------+----------+
| Revaluation deficit on changes   |   | -       | (28,     | (28,     |
| in value of investment           |   |         | 856,095) | 856,095) |
+----------------------------------+---+---------+----------+----------+
| Translation adjustment           |   | 110,    | 74       | 72       |
|                                  |   | 064,267 | ,347,437 | ,905,170 |
+----------------------------------+---+---------+----------+----------+
| Retained earnings                |   |         |          |          |
+----------------------------------+---+---------+----------+----------+
| Appropriated – statutory reserve |   | 151,    | 84       | 84       |
|                                  |   | 713,962 | ,670,143 | ,670,143 |
+----------------------------------+---+---------+----------+----------+
| Unappropriated                   |   | 4,367,  | 3,431    | 2,353    |
|                                  |   | 298,380 | ,673,827 | ,781,781 |
+----------------------------------+---+---------+----------+----------+
|                                  |   | 4,519,  | 3,516    | 2,438    |
|                                  |   | 012,342 | ,343,970 | ,451,924 |
+----------------------------------+---+---------+----------+----------+
| Equity attributable to Company’s |   | 18,582, | 17,795   | 7,816    |
| shareholders                     |   | 595,039 | ,678,785 | ,356,947 |
+----------------------------------+---+---------+----------+----------+
| Minority interest                |   | 1,141,  | 1,111    | 765      |
|                                  |   | 705,780 | ,414,199 | ,293,535 |
+----------------------------------+---+---------+----------+----------+
| Total shareholders’ equity       |   | 19,724, | 18,907   | 8,581    |
|                                  |   | 300,819 | ,092,984 | ,650,482 |
+----------------------------------+---+---------+----------+----------+
| TOTAL LIABILITIES AND            |   | 24,939, | 25,013   | 14,907   |
| SHAREHOLDERS’ EQUITY             |   | 255,625 | ,838,186 | ,821,367 |
+----------------------------------+---+---------+----------+----------+

Consolidated Statements of Cash Flows 

Unit : Baht

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

                                          2008              2007              2006

  Cash flows from (used in) operating                                         
  activities                                                                  

  Net cash inflow (outflow) from          922,339,414       1,111,672,778     1,266,266,024
  operating activities                                                        

  Cash flows from (used in) investing                                         
  activities                                                                  

  Net cash inflow (outflow) from          (794,590,521)     (1,024,867,730)   (1,751,888,370)
  investing activities                                                        

  Cash flows from (used in) financing                                         
  activities                                                                  

  Net cash inflow (outflow) from          (1,187,045,752)   358,693,722       903,713,005
  financing activities                                                        

  Net increase (decrease) in cash and     (1,059,296,859)   445,498,770       418,090,659
  cash equivalents                                                            

  Cash and cash equivalents at            1,533,422,290     1,087,923,520     669,832,861
  beginning of year                                                           

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

                                                                              

                                                                              

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

 

Separate Income Statements

Unit : Baht

+-------------------------------------+----------+----------+----------+
|                                     | Separate |          |          |
+-------------------------------------+----------+----------+----------+
|                                     | 2008     | 2007     | 2006     |
+-------------------------------------+----------+----------+----------+
| Revenues                            |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Revenues from hotel operations    | 525      | 538      | 475      |
|                                     | ,988,313 | ,378,014 | ,512,469 |
+-------------------------------------+----------+----------+----------+
|   Revenues from property            | 752      | 961      | 4        |
|   development operations            | ,342,692 | ,034,521 | ,120,000 |
+-------------------------------------+----------+----------+----------+
|   Interest income                   | 104      | 89       | 49       |
|                                     | ,516,956 | ,745,135 | ,732,344 |
+-------------------------------------+----------+----------+----------+
|   Foreign exchange gain             | -        | 38       | 98       |
|                                     |          | ,360,363 | ,217,273 |
+-------------------------------------+----------+----------+----------+
|   Other income                      | 143      | 39       | 51       |
|                                     | ,103,988 | ,042,461 | ,847,188 |
+-------------------------------------+----------+----------+----------+
|   Dividend income                   | 267      | 282      | 1,423    |
|                                     | ,997,585 | ,329,317 | ,679,351 |
+-------------------------------------+----------+----------+----------+
| Total revenues                      | 1,793    | 1,948    | 2,103    |
|                                     | ,949,534 | ,889,811 | ,108,625 |
+-------------------------------------+----------+----------+----------+
| Expenses                            |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Cost of hotel operations          | 154      | 160      | 146      |
|                                     | ,670,834 | ,528,980 | ,402,671 |
+-------------------------------------+----------+----------+----------+
|   Cost of property development      | 301      | 449      | 2        |
|   operations                        | ,909,135 | ,245,816 | ,220,000 |
+-------------------------------------+----------+----------+----------+
|   Selling expenses                  | 65       | 69       | 48       |
|                                     | ,826,546 | ,545,046 | ,479,507 |
+-------------------------------------+----------+----------+----------+
|   Administrative expenses           | 461      | 423      | 366      |
|                                     | ,241,163 | ,062,515 | ,098,990 |
+-------------------------------------+----------+----------+----------+
|   Depreciation                      | 56       | 45       | 39       |
|                                     | ,570,826 | ,036,389 | ,562,675 |
+-------------------------------------+----------+----------+----------+
|   Other expenses                    | 23       | -        | -        |
|                                     | ,849,999 |          |          |
+-------------------------------------+----------+----------+----------+
| Total expenses                      | 1,064    | 1,147    | 602      |
|                                     | ,068,503 | ,418,746 | ,763,843 |
+-------------------------------------+----------+----------+----------+
| Income before finance cost          | 729      | 801      | 1,500    |
|                                     | ,881,031 | ,471,065 | ,344,782 |
+-------------------------------------+----------+----------+----------+
| Finance cost                        | (82,     | (107,    | (145,    |
|                                     | 547,232) | 928,485) | 819,995) |
+-------------------------------------+----------+----------+----------+
| Net income for the year             | 647      | 693      | 1,354    |
|                                     | ,333,799 | ,542,580 | ,524,787 |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
| Net income attributable to:         |          |          |          |
+-------------------------------------+----------+----------+----------+
| Equity holders of the parent        | 647      | 693      | 1,354    |
|                                     | ,333,799 | ,542,580 | ,524,787 |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
| Basic earnings per share            |          |          |          |
+-------------------------------------+----------+----------+----------+
| Net income attributable to equity   | 3.88     | 5.70     | 16.00    |
| holders of the parent               |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Weighted average number of        | 166      | 121      | 84       |
|   ordinary share (shares)           | ,682,701 | ,671,226 | ,670,143 |
+-------------------------------------+----------+----------+----------+

Separate Balance Sheets 

Unit : Baht

+-------------------------------------+----------+----------+----------+
|                                     | Separate |          |          |
+-------------------------------------+----------+----------+----------+
|                                     | 2008     | 2007     | 2006     |
+-------------------------------------+----------+----------+----------+
| ASSETS                              |          |          |          |
+-------------------------------------+----------+----------+----------+
| Current Assets                      |          |          |          |
+-------------------------------------+----------+----------+----------+
| Cash and cash equivalents           | 41       | 855      | 103      |
|                                     | ,982,211 | ,575,874 | ,113,656 |
+-------------------------------------+----------+----------+----------+
| Trade accounts receivable – net     | 205      | 583      | 66       |
|                                     | ,914,215 | ,538,199 | ,899,074 |
+-------------------------------------+----------+----------+----------+
| Amounts due from related companies  | 111      | 57       | 30       |
|                                     | ,393,648 | ,037,880 | ,004,929 |
+-------------------------------------+----------+----------+----------+
| Inventories – net                   | 16       | 17       | 19       |
|                                     | ,757,515 | ,135,024 | ,363,469 |
+-------------------------------------+----------+----------+----------+
| Property development cost – net     | 133      | 221      | 29       |
|                                     | ,493,824 | ,483,990 | ,639,622 |
+-------------------------------------+----------+----------+----------+
| Other current assets                | 159      | 171      | 162      |
|                                     | ,293,713 | ,150,301 | ,076,519 |
+-------------------------------------+----------+----------+----------+
| Total current assets                | 668      | 1,905    | 411      |
|                                     | ,835,126 | ,921,268 | ,097,269 |
+-------------------------------------+----------+----------+----------+
| Non-current assets                  |          |          |          |
+-------------------------------------+----------+----------+----------+
| Long term trade accounts receivable | 511      | -        | -        |
|                                     | ,199,415 |          |          |
+-------------------------------------+----------+----------+----------+
| Investment in subsidiaries          | 3,492    | 3,491    | 3,491    |
|                                     | ,207,114 | ,257,814 | ,257,814 |
+-------------------------------------+----------+----------+----------+
| Other long-term investments         | -        | 13       | 13       |
|                                     |          | ,674,001 | ,674,001 |
+-------------------------------------+----------+----------+----------+
| Long-term loans to subsidiaries     | 1,699    | 1,480    | 1,137    |
|                                     | ,070,629 | ,600,000 | ,000,000 |
+-------------------------------------+----------+----------+----------+
| Long-term loans to employees        | 14       | 10       | -        |
|                                     | ,932,640 | ,803,000 |          |
+-------------------------------------+----------+----------+----------+
| Property, plant and equipment – net | 1,980    | 2,001    | 824      |
|                                     | ,965,566 | ,248,648 | ,008,317 |
+-------------------------------------+----------+----------+----------+
| Land awaiting development           | 28       | 28       | -        |
|                                     | ,638,873 | ,638,873 |          |
+-------------------------------------+----------+----------+----------+
| Other non-current assets            | 11       | 6        | 5        |
|                                     | ,033,629 | ,863,477 | ,900,799 |
+-------------------------------------+----------+----------+----------+
| Total non-current assets            | 7,738    | 7,033    | 5,471    |
|                                     | ,047,866 | ,085,813 | ,840,931 |
+-------------------------------------+----------+----------+----------+
| TOTAL ASSETS                        | 8,406    | 8,939    | 5,882    |
|                                     | ,882,992 | ,007,081 | ,938,200 |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
| Separate Balance Sheets (continued) |          |   -- --  | Unit :   |
|                                     |          | -------- | Baht     |
|                                     |          |          |          |
|                                     |          | Separate |          |
|                                     |          |          |          |
|                                     |          |   -- --  |          |
|                                     |          | -------- |          |
+-------------------------------------+----------+----------+----------+
|                                     | Separate |          |          |
+-------------------------------------+----------+----------+----------+
|                                     | 2008     | 2007     | 2006     |
+-------------------------------------+----------+----------+----------+
| LIABILITIES AND SHAREHOLDERS’       |          |          |          |
| EQUITY                              |          |          |          |
+-------------------------------------+----------+----------+----------+
| Current liabilities                 |          |          |          |
+-------------------------------------+----------+----------+----------+
| Short-term loans from financial     | 333      | 470      | 415      |
| institutions                        | ,000,000 | ,000,000 | ,000,000 |
+-------------------------------------+----------+----------+----------+
| Trade accounts payable              | 24       | 33       | 34       |
|                                     | ,374,536 | ,420,740 | ,760,668 |
+-------------------------------------+----------+----------+----------+
| Current portion of long - term      | 266      | 233      | 140      |
| loans from financial institutions   | ,000,000 | ,000,000 | ,000,000 |
+-------------------------------------+----------+----------+----------+
| Amounts due to related companies    | 21       | 62       | 43       |
|                                     | ,557,368 | ,219,706 | ,141,178 |
+-------------------------------------+----------+----------+----------+
| Other current liabilities           | 214      | 284      | 108      |
|                                     | ,993,884 | ,821,823 | ,467,067 |
+-------------------------------------+----------+----------+----------+
| Total current liabilities           | 859      | 1,083    | 741      |
|                                     | ,925,788 | ,462,269 | ,368,913 |
+-------------------------------------+----------+----------+----------+
| Non-Current liabilities             |          |          |          |
+-------------------------------------+----------+----------+----------+
| Long-term loans from subsidiaries   | 813      | 1,040    | 556      |
|                                     | ,640,000 | ,350,000 | ,750,000 |
+-------------------------------------+----------+----------+----------+
| Long-term loans from financial      | 133      | 399      | 632      |
| institutions – net of current       | ,000,000 | ,000,000 | ,000,000 |
| portion                             |          |          |          |
+-------------------------------------+----------+----------+----------+
| Other non-current liabilities       | 29       | 5        | 8        |
|                                     | ,174,762 | ,878,150 | ,430,010 |
+-------------------------------------+----------+----------+----------+
| Total non-current liabilities       | 975      | 1,445    | 1,197    |
|                                     | ,814,762 | ,228,150 | ,180,010 |
+-------------------------------------+----------+----------+----------+
| Total liabilities                   | 1,835    | 2,528    | 1,938    |
|                                     | ,740,550 | ,690,419 | ,548,923 |
+-------------------------------------+----------+----------+----------+
| Shareholders' equity                |          |          |          |
+-------------------------------------+----------+----------+----------+
| Share capital                       |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Registered                        | 2,116    | 2,116    | 846      |
|                                     | ,753,580 | ,753,580 | ,701,430 |
|   211,675,358 ordinary shares of    |          |          |          |
|   Baht 10 each                      |          |          |          |
|                                     |          |          |          |
| (31 December 2006 : 84,670,143      |          |          |          |
| ordinary shares of Baht 10 each)    |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Issued and fully paid-up          | 1,666    | 1,666    | 846      |
|                                     | ,827,010 | ,827,010 | ,701,430 |
|   166,682,701 ordinary shares of    |          |          |          |
|   Baht 10 each                      |          |          |          |
|                                     |          |          |          |
| (31 December 2006 : 84,670,143      |          |          |          |
| 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       | 1,562    | 1,592    | 428      |
|                                     | ,569,445 | ,542,225 | ,607,642 |
+-------------------------------------+----------+----------+----------+
| Revaluation deficit on changes in   | -        | (10,     | (10,     |
| value of investment                 |          | 175,999) | 175,999) |
+-------------------------------------+----------+----------+----------+
| Retained earnings                   |          |          |          |
+-------------------------------------+----------+----------+----------+
| Appropriated – statutory reserve    | 151      | 84       | 84       |
|                                     | ,713,962 | ,670,143 | ,670,143 |
+-------------------------------------+----------+----------+----------+
| Unappropriated                      | 1,127    | 1,013    | 532      |
|                                     | ,571,443 | ,992,701 | ,125,479 |
+-------------------------------------+----------+----------+----------+
|                                     | 1,279    | 1,098    | 616      |
|                                     | ,285,405 | ,662,844 | ,795,622 |
+-------------------------------------+----------+----------+----------+
| Total shareholders' equity          | 6,571    | 6,410    | 3,944    |
|                                     | ,142,442 | ,316,662 | ,389,277 |
+-------------------------------------+----------+----------+----------+
| TOTAL LIABILITIES AND SHAREHOLDERS' | 8,406    | 8,939    | 5,882    |
| EQUITY                              | ,882,992 | ,007,081 | ,938,200 |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+
|                                     |          |          |          |
+-------------------------------------+----------+----------+----------+

Separate Statements of Cash Flows 

Unit : Baht

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

                                       2008              2007            2006

  Cash flows from (used in) operating                                    
  activities                                                             

  Net cash inflow (outflow) from       538,755,372       193,886,391     1,258,893,505
  operating activities                                                   

  Cash flows from (used in) investing                                    
  activities                                                             

  Net cash inflow (outflow) from       (288,927,797)     (448,474,395)   (613,618,692)
  investing activities                                                   

  Cash flows from (used in) financing                                    
  activities                                                             

  Net cash inflow (outflow) from       (1,063,421,238)   1,007,050,222   (596,000,000)
  financing activities                                                   

  Net increase (decrease) in cash and  (813,593,663)     752,462,218     49,274,813
  cash equivalents                                                       

  Cash and cash equivalents at         855,575,874       103,113,656     53,838,843
  beginning of year                                                      

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

12.1.3 Financial ratios of the company and its subsidiaries

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

                                         Consolidated                              

                                         2008              2007         2006       

  Liquidity Ratios                                                                 

  Current Ratio                  Times   1.17              1.34         1.20       

  Quick Ratio                    Times   0.56              0.92         0.76       

  Cash Flow From Operating       Times   0.28              0.35         0.50       
  Activities Ratio                                                                 

  Receivables Turnover           Times   4.37              5.04         6.63       

  Collection Period              Days    82.38             71.43        54.30      

  Inventory Turnover             Times   9.35              9.21         8.43       

  Inventory Turnover Period      Days    38.49             39.10        42.70      

  Accounts Payable Turnover      Times   6.36              5.38         4.84       

  Payment Period                 Days    56.60             66.91        74.38      

  Cash Cycle                     Days    64.27             43.62        22.62      

                                                                                   

  Profitability Ratios                                                             

  Gross Profit Margin            %       60.14             60.52        63.74      

  Profit Margin from Operations  %       22.05             25.44        26.09      

  Net Profit Margin              %       15.97             18.07        18.08      

  Return On Equity               %       5.71              9.38         13.76      

                                                                                   

  Efficiency Ratios                                                                

  Return On Total Assets         %       4.42              6.46         8.09       

  Return On Fixed Assets         %       7.94              10.93        14.12      

  Asset Turnover                 Times   0.28              0.36         0.45       

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

  --------------------------- ------- -------------- -- ----------- -- ----------- --
  CONSOLIDATED FINANCIAL                                                           
  RATIOS (Continued)                                                               

                                      Consolidated                                 

                                      2008              2007           2006        

  Financial Policy Ratios                                                          

  Debt To Equity              Times   0.26              0.32           0.74        

  Interest Coverage           Times   7.30              7.14           7.78        

  Payout Ratio (Cash Basis)   Times   0.35              0.62           0.52        

  Dividend Payout Ratio       %       33.23             36.19          19.02       

                                                                                   

  Share value                                                                      

  Book Value Per Share        Baht    118.33            113.43         101.35      

  Earnings (loss) Per Share   Baht    6.62              10.60          13.14       

  Dividend Per Share *        Baht    2.20              2.80           2.50        

                                                                                   

  Growth rate                                                                      

  Total Assets                %       (0.30)            67.79          18.15       

  Total Liabilities           %       (14.60)           (3.47)         25.80       

  Total Revenues              %       (3.15)            15.95          92.01       

  Total Expenses              %       2.26              16.68          50.83       

  Net Income (Loss)           %       (14.41)           15.88          5,726.35    

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

  * At the time of printing this report, a Baht 2.20 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                                  

                                             2008                   2007          2006          

  Liquidity Ratios                                                                              

  Current Ratio                Times         0.78                   1.76          0.55          

  Quick Ratio                  Times         0.29                   1.33          0.23          

  Cash Flow From Operating     Times         0.55                   0.21          1.63          
  Activities Ratio                                                                              

  Receivables Turnover         Times         3.19                   4.58          7.32          

  Collection Period            Days          112.85                 78.60         49.18         

  Inventory Turnover           Times         9.13                   8.80          7.96          

  Inventory Turnover Period    Days          39.43                  40.91         45.23         

  Accounts Payable Turnover    Times         5.35                   4.71          3.79          

  Payment Period               Days          67.29                  76.43         94.99         

  Cash Cycle                   Days          84.99                  43.08         (0.58)        

                                                                                                

  Profitability Ratios                                                                          

  Gross Profit Margin          %             64.28                  59.33         69.01         

  Profit Margin from           %             57.10                  53.45         312.81        
  Operations                                                                                    

  Net Profit Margin            %             36.08                  35.59         64.41         

  Return On Equity             %             9.97                   13.40         41.39         

                                                                                                

  Efficiency Ratios                                                                             

  Return On Total Assets       %             7.46                   9.36          24.72         

  Return On Fixed Assets       %             34.85                  51.76         172.71        

  Asset Turnover               Times         0.21                   0.26          0.38          

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

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

                                        Separate                               

                                        2008          2007          2006       

  Financial Policy Ratios                                                      

  Debt To Equity                Times   0.28          0.39          0.49       

  Interest Coverage             Times   7.62          2.85          9.61       

  Payout Ratio (Cash Basis)     Times   0.40          0.24          1.02       

  Dividend Payout Ratio         %       56.65         67.29         15.63      

                                                                               

  Share value                                                                  

  Book Value Per Share          Baht    39.42         38.46         46.59      

  Earnings (loss) Per Share     Baht    3.88          5.70          16.00      

  Dividend Per Share*           Baht    2.20          2.80          2.50       

                                                                               

  Growth rate                                                                  

  Total Assets                  %       (5.95)        51.95         15.91      

  Total Liabilities             %       (27.40)       30.44         (21.69)    

  Total Revenues                %       (7.95)        (7.33)        400.83     

  Total Expenses                %       (7.26)        90.36         26.82      

  Net Income (Loss)             %       (6.66)        (48.80)       1,022.91   

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

  * At the time of printing this report, a Baht 2.20 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 2008, Laguna Resorts & Hotels Public
  Company Limited achieved a net profit of Baht 1,104 million which was
  Baht 186 million lower when compared to the prior year.

  Total revenue for the year decreased by Baht 225 million as compared
  to the prior year mainly due to the following:

-   Revenue from hotel operations decreased by Baht 170 million. This
    was mainly due to a decrease in revenue of the Laguna Phuket
    operations from the second quarter onwards which were adversely
    affected by the global economic crisis and local political turmoil
    resulting in a downturn in tourism. This was evidenced by lower
    hotel occupancies of 53 percent in the second half of the year
    compared to 70 percent for the same period last year.

-   Revenue from property development operations decreased by Baht 320
    million mainly due to lower sales and revenue recognition of the
    unbranded products of Laguna Village Villas, Laguna Residences,
    Laguna Townhomes partially offset by higher of sales and revenue
    recognition of branded products of Banyan Tree Residences. The 61
    units sold during the year was lower than the 85 units in the prior
    year as buyers curtailed their spending on properties as a result of
    the global economic crisis.

-   Interest income increased by Baht 25 million mainly due to an
    increase in deferred installment plans for property sales and the
    settlement relating to the tsunami insurance claim.

-   Foreign exchange gains decreased by Baht 9 million reflecting 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 increased by Baht 251 million mainly due to the final
    settlement of an insurance claim relating to the tsunami in 2004 and
    a gain on reduction in share capital of an associated company.

  Total expenses increased by Baht 121 million as compared to the prior
  year mainly due to the following:

-   Cost of hotel operations increased by Baht 85 million mainly due to
    an increase in hotel operating costs and cost of merchandise sales.

-   Cost of property development operations decreased by Baht 252
    million associated with the decrease in revenue from property
    development operations.

-   Selling expenses decreased by Baht 33 million associated with the
    lower hotel and property revenue.

-   Administrative expenses increased by Baht 215 million mainly due to
    an increase in payroll costs, legal fees associated with the tsunami
    insurance claim, villa rentals, provision for doubtful accounts and
    exchange losses.

-   Depreciation increased by Baht 49 million mainly due to new hotel
    facilities and renovations in both Laguna Phuket and Banyan Tree
    Bangkok.

-   Other expenses increased by Baht 59 million mainly due to impairment
    losses recognized on an investment and a building.

  Finance cost decreased by Baht 35 million as compared to the prior
  year mainly due to lower loan balances and interest rates.

  Share of income from investments in associates increased by Baht 125
  million as compared to the prior year due to the better performance of
  Lijiang Banyan Tree Hotel Co. Ltd.

Corporate income tax increased by Baht 8 million as compared to the
prior year mainly due to the income from the tsunami insurance
settlement as mentioned above.

Net income attributable to minority interests decreased by Baht 9
million as compared to the prior year due to the decreased profit of
Laguna Beach Club Limited in which there is a 50 percent minority
interest.

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)

+--------------------+-------+------+--------+------+--------+------+
|                    | 2008  | %    | 2007   | %    | 2006   | %    |
+--------------------+-------+------+--------+------+--------+------+
| Revenues           |       | 100  | 4,124  | 100  | 3,590  | 100  |
|                    | 3,954 |      |        |      |        |      |
| Expenses           |       | 39   | 1,457  | 35   | 1,277  | 36   |
|                    |       |      |        |      |        |      |
| Gross Operating    | 1,542 | 61   | 2,667  | 65   | 2,313  | 64   |
| Profit             |       |      |        |      |        |      |
|                    |       |      |        |      |        |      |
|                    | 2,412 |      |        |      |        |      |
+--------------------+-------+------+--------+------+--------+------+

 

  Hotel revenue was Baht 170 million lower than last year and expenses
  were Baht 85 million higher than last year resulting in operating
  profit being Baht 255 million lower than last year. The operating
  margin of 61 percent was below the prior year level of 65 percent and
  the 2006 level of 64 percent. The main reasons for this were:

-   A decrease in revenue of the Laguna Phuket operations from the
    second quarter onwards which were adversely affected by the global
    economic crisis and local political turmoil resulting in a downturn
    in tourism.

-   Cost of hotel operations mainly due to an increase in hotel
    operating costs and cost of merchandise sales.

  Property Sales and Holiday Club Membership Operations

(Unit: Million Baht)

+--------------------+-------+------+--------+------+--------+------+
|                    | 2008  | %    | 2007   | %    | 2006   | %    |
+--------------------+-------+------+--------+------+--------+------+
| Revenues           |       | 100  | 2,808  | 100  | 2,328  | 100  |
|                    | 2,489 |      |        |      |        |      |
| Expenses           |       | 41   | 1,268  | 45   | 841    | 36   |
|                    |       |      |        |      |        |      |
| Gross Operating    | 1,016 | 59   | 1,540  | 55   | 1,487  | 64   |
| Profit             |       |      |        |      |        |      |
|                    |       |      |        |      |        |      |
|                    | 1,473 |      |        |      |        |      |
+--------------------+-------+------+--------+------+--------+------+

  Revenue was Baht 319 million lower than last year and expenses were
  Baht 252 million lower than last year resulting in operating profit
  being Baht 67 million lower than last year. The operating margin of 59
  percent was above the prior year level of 55 percent but below the
  2006 level of 64 percent. The main reasons for this were:

-   Lower sales and revenue recognition of the unbranded products of
    Laguna Village Villas, Laguna Residences, Laguna Townhomes were
    partially offset by higher of sales and revenue recognition of
    branded products of Banyan Tree Residences. The 61 units sold during
    the year was lower than the 85 units in the prior year as buyers
    curtailed their spending on properties as a result of the global
    economic crisis.

  Balance Sheet

  The main balance sheet items at 31 December 2008 and 2007 are as
  follows:

(Unit: Thousand Baht)

  ----------------------------- ------- ----------------- ----------------
                                Note    31 December 2008  31 December 2007

  Cash, cash equivalents and    1       474,125           1,533,422
  fixed deposits                                          

  Trade accounts receivable     2       2,041,488         2,005,038

  Property development cost     3       1,044,633         875,920

  Other investments             4       188,425           210,399

  Property, equipment and land  5       19,161,433        19,099,576

  Loans from banks              6       3,475,348         4,167,262

  Shareholders’ equity          7       18,582,595        17,795,679
  ----------------------------- ------- ----------------- ----------------

  The main points to be noted in regard to the Balance Sheet movements
  in the year ended 31 December 2008 are:

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

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

3.  The increase in property development cost is mainly due to the
    purchase of new 17 units in Hua Hin and the fact that the
    construction of Laguna Village Villa, Banyan Tree Two-Bedroom Pool
    Villa and Banyan Tree Residences Bangkok is largely completed.

4.  The decrease in other investment is due to the recognition of
    impairment loss on investment in Universal Starch Public Company
    Limited during the year.

5.  The increase in property, equipment and land is mainly due to
    expenditure on land awaiting development and the renovation of
    Banyan Tree Bangkok.

6.  Loans from banks have decreased in 2008 due to scheduled long term
    and short term loan repayments from current year cash flow.

7.  The increase in shareholders’ equity is due to net income for the
    year 2008 amounting to Baht 1,104 million offset against dividend
    paid of Baht 497 million.

  Cash Flows

  The cash and cash equivalents of Baht 474 million at 31 December 2008
  represented a Baht 1,059 million decrease as compared to 31 December
  2007. The main components of cash generated during the year are net
  cash generated by operations amounting to Baht 922 million. This was
  largely a function of net earnings for the year adjusted for
  depreciation and working capital movements.

  Cash received from sales of fixed assets and investment in Tropical
  Resorts Limited amounted to Baht 138 million. The draw down of long
  term loans of Baht 509 million were used for the renovation of Banyan
  Tree Bangkok and the investment in Lijiang Banyan Tree Hotel Co.,Ltd.

  Cash outflow comprised of expenditure on fixed asset of Baht 513
  million largely related to the construction projects in Laguna Phuket
  and Banyan Tree Bangkok Hotel. The purchase of land near Laguna Phuket
  of Baht 376 million and the scheduled long term and short term loan
  repayments of Baht 1,201 million and dividend payment of Baht 497
  million were the other components of the cash outflow.

+--------------------------+------+---+-------------------------+------+
| Cash Inflow              | Mil  |   | Cash Outflow            | Mil  |
|                          | lion |   |                         | lion |
|                          | Baht |   |                         | Baht |
+--------------------------+------+---+-------------------------+------+
| Cash flow from           | 922  |   | Short-term investment   | 41   |
| operations               |      |   |                         |      |
+--------------------------+------+---+-------------------------+------+
| Cash received from sales |      |   | Payments made on        | 513  |
| of                       |  138 |   | construction            |      |
|                          |      |   |                         |      |
| fixed asset and          |      |   |                         |      |
| investment               |      |   |                         |      |
+--------------------------+------+---+-------------------------+------+
|                          |      |   | Purchase land           | 376  |
+--------------------------+------+---+-------------------------+------+
| Long term loans draw     | 509  |   | Loan repayment          | 1    |
| down                     |      |   |                         | ,201 |
+--------------------------+------+---+-------------------------+------+
|                          |      |   | Dividend payment        | 497  |
+--------------------------+------+---+-------------------------+------+
| Total                    | 1    |   | Total                   | 2    |
|                          | ,569 |   |                         | ,628 |
+--------------------------+------+---+-------------------------+------+

  Commentary on Consolidated Financial Ratios

  Liquidity ratios

-   Current ratio – This is lower in 2008 due to the decrease in cash at
    bank, accounts receivable and short term loan.

-   Quick ratio – This is lower in 2008 due to the decrease in cash at
    bank and accounts receivable.

-   Cash flow from operating activities ratio – This is lower than the
    prior year levels due to the higher average liabilities in 2008.

-   Receivable turnover – This is lower than the prior year levels due
    to the higher average property accounts receivable in 2008.

-   Collection period – This is higher than the prior year levels due to
    the lower property revenue in 2008 coupled with higher average
    property accounts receivables.

-   Inventory turnover – This is consistent with the prior year level.

-   Inventory turnover period – This is consistent with the prior year
    level.

-   Accounts payable turnover – This is higher than the prior year
    levels due to higher direct costs in 2008.

-   Payment period – This is an improvement on the prior year levels due
    to higher direct costs in 2008.

-   Cash cycle – This is higher than the prior year levels due to longer
    collection period for property sales.

  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 2008 due to the impact of local political turmoil, the
    closure of both the airports in Phuket and Bangkok, and the global
    economic crisis.

  Efficiency ratios

-   Return on total assets, return on fixed assets and asset turnover –
    This is lower than the prior year levels due to the impact of the
    local political turmoil, the closure of both the airports in Phuket
    and Bangkok, and the global economic crisis.

  Financial policy ratios

-   Debt to equity – This is lower than the prior year due to increase
    in short-term and long-term loan repayments.

-   Interest coverage – This is consistent with the last year.

-   Pay-out ratio (cash) – This decreased as compared to last year due
    to an increase in short-term and long-term loan repayments and
    dividend payment coupled with lower revenues in 2008.

-   Dividend pay-out ratio – This is based on the dividend policy which
    is one-third of the consolidated net profit for the year 2008
    attributable to the shareholders.

    12.3 Auditors' Remuneration (for the fiscal year ended 31
    December 2008)

1.  Audit fees

  The Company and subsidiaries paid audit fees for the fiscal year to an
  audit firm which amounted to Baht 6,512,062 and subsidiaries paid
  audit fees to another audit firm which amounted to Baht 1,323,268.
  This amount does not include the audit fees paid by associated
  companies.

  2. Non-audit fees

  An overseas subsidiary paid non-audit fees for review of business
  reporting language (XBRL) implementing for financial reporting and
  analysis for the fiscal year to an audit firm which amounted to Baht
  58,631. There is no outstanding commitment to pay any fees in the
  future for uncompleted engagement relating to the year 2008.