2 Nature of the business

2.1 Company History

  Laguna Resorts & Hotels Public Company Limited (“LRH”) was formerly
  named Thai Wah Resorts Development Public Company Limited (“TWRD”)
  which was a subsidiary of Thai Wah Public Company Limited (“TWC”). The
  operations of the TWC Group of Companies involved the manufacturing
  and exporting of commodities as well as investing in hotels, resorts &
  property through TWRD plus other affiliated companies in the group.

  On 5^(th) March, 1993 TWRD ameliorated its structure and increased its
  share capital to expand the hotel business, as well as property
  development, by investing in TWC’s subsidiaries where the hotel
  businesses were involved. TWRD’s operational policy was revealed
  whereby the operations of TWRD were separated from TWC and it was
  agreed that hotel resort businesses in Thailand would be handled by
  TWRD and located at Bangtao Bay, Phuket. TWC on the other hand, would
  only run hotel businesses within city areas.

  In November 1993 TWRD was listed on the Stock Exchange of Thailand.
  The significant events between 1992-2001 are listed as follows:

-   In late 1992 Sheraton Grande Laguna Phuket opened with 327 rooms
    including 52 villas.

-   The Allamanda Phase I opened in September 1993 with 94 apartments. *

-   Banyan Tree Phuket opened in May 1995 with 86 villas. An additional
    12 villas were added in 1997.

-   The Canal Village shopping complex opened in 1994 on 10 Rai of land
    with 52 shops.

-   Development of Laguna Homes Chiangrai commenced in 1994 - the real
    estate development at Ban Ging Praow, Tambol Janwa, Chiangrai
    occupies a 901 Rai site. This project was suspended in 1997 due to
    the Asian economic crisis.

-   Opening of Quest Laguna Phuket Adventure in 1994 as a corporate
    outdoor management training program. In 1996, it was expanded to
    include Camp Laguna for children aged 8 – 15.

-   In late 1996, Allamanda Phase II and III opened with a further 141
    apartments. *

-   In 1996 the Laguna Royale project was started with 184 apartments
    but was subsequently suspended due to the regional economic crisis
    in 1997.

-   In late 1997, 12 two bedroom pool villas at Banyan Tree were opened.

-   On May 15, 1998, TWRD has changed its name to Laguna Resorts &
    Hotels Public Company Limited.

-   In December 1999 the agency of Laguna Tours and Travel commenced
    which provides guests of Laguna Phuket access to high quality tours.

-   From 1999 to 2001 the refurbishment program of the rooms and
    facilities of the hotels in Laguna Phuket was performed.

-   There was a significant change in the Company’s shareholding
    structure in the second half of 2000 following Banyan Tree Holdings
    Pte., Ltd.’s (BTHL) 30% acquisition of the Company’s total issued
    and paid up ordinary shares from certain shareholders. This
    acquisition caused BTHL to undertake a mandatory tender offer for
    all remaining shares in the Company from which BTHL purchased an
    additional 1.2%.

-   At the end of September 2001, LRH purchased the 15.5% minority
    shareholding in Laguna Grande Limited through its 100% owned
    subsidiaries.

-   During 2001 the Banyan Tree Phuket constructed 14 new Spa Pool
    villas which were completed and available for use by December 2001
    and January 2002.

-   On 8 January 2002 LRH purchased the remaining 49% in Laguna Banyan
    Tree Limited, which resulted in the group now having a 100%
    ownership interest in the operations of the Banyan Tree Phuket.

  * The Allamanda Laguna Phuket is not owned or managed by LRH as these
  condominiums have been sold through the groups property sales
  division.

2.2 Type of businesses and income structure

Hotels

Within Laguna Phuket, there are 4 hotels which Laguna Resorts and Hotels
Plc either owns or has an ownership stake – Banyan Tree Phuket, Dusit
Laguna Resort, Laguna Beach Resort and Sheraton Grande Laguna Phuket.
These four hotels provide the main source of income for the Group. The
hotels provide an integrated resort for the guest.

Property

The Island Villas are a small condominium project attached to the
Sheraton Grande Laguna Phuket. The units have been sold to the public.
The individual owners may lease the units to Sheraton Overseas
Management Corporation to manage for them, and in doing so earn a return
on their investment.

  The Allamanda Laguna Phuket is a large condominium project. It is not
  attached to any other hotel. The units are for sale to the public. The
  individual owners may earn a return on their investment by contracting
  Banyan Tree Hotels & Resorts Pte Ltd. to manage their unit for them.
  As most of the condominiums have been sold, The Allamanda Laguna
  Phuket is neither owned or managed by Laguna Resorts and Hotels Plc.

  Laguna Homes is a housing plot development. There are 74 land plots
  located around the golf course. The land plots are for sale to the
  public. 20 land plots have been reserved for the sale of Golf Villas,
  which is a “house and land” package that has been introduced during
  2001.

  Banyan Tree Two Bedroom Pool Villas are a luxury development project
  attached to the Banyan Tree Phuket. The villas have now all been sold
  to the public, with the remainder of the villas being sold during the
  course of 2001. The individual owners may earn a return on their
  investment by contracting Banyan Tree Hotels & Resorts Pte Ltd. to
  manage their unit for them.

  Located in Chiangrai there is another housing plot development called
  Laguna Homes Chiangrai. This project has been suspended.

  The Allamanda Vacation Club sells memberships that entitle
  participants to annual vacations, for at least one week, at the
  participating member resorts of Allamanda Laguna Phuket, Sheraton
  Grande Laguna Phuket and Angsana Bintan.

Others

  In addition to the above there are the following facilities in Laguna
  Phuket:

-   18-hole golf course

-   An outdoor management training program

-   Canal Village shopping complex

-   Banyan Tree Gallery retail outlets

  Income Structure

  The percentage of income generated by each individual line of business
  is detailed as follows:

+--------------------+---------+-----+---------+----+---------+----+
|                    | 2001    | %   | 2000    | %  | 1999    | %  |
|                    |         |     |         |    |         |    |
|                    | Baht    |     | Baht    |    | R       |    |
|                    | 000’s   |     | 000’s   |    | estated |    |
|                    |         |     |         |    | Baht    |    |
|                    |         |     |         |    | 000’s   |    |
+--------------------+---------+-----+---------+----+---------+----+
|                    |         |     |         |    |         |    |
+--------------------+---------+-----+---------+----+---------+----+
| Hotel operations   | 2,      | 8   | 2,      | 90 | 2,      | 94 |
|                    | 629,787 | 7.6 | 537,635 | .2 | 064,394 | .6 |
+--------------------+---------+-----+---------+----+---------+----+
|                    |         |     |         |    |         |    |
+--------------------+---------+-----+---------+----+---------+----+
| Property sales     | 312,057 | 1   | 235,788 | 8  | 57,845  | 2  |
|                    |         | 0.4 |         | .4 |         | .6 |
+--------------------+---------+-----+---------+----+---------+----+
|                    |         |     |         |    |         |    |
+--------------------+---------+-----+---------+----+---------+----+
| Interest and other | 59,221  | 2.0 | 39,006  | 1  | 60,317  | 2  |
| income             |         |     |         | .4 |         | .8 |
+--------------------+---------+-----+---------+----+---------+----+
|                    |         |     |         |    |         |    |
+--------------------+---------+-----+---------+----+---------+----+
| Total revenue      | 3,      | 10  | 2,      | 1  | 2,      | 1  |
|                    | 001,065 | 0.0 | 812,429 | 00 | 182,556 | 00 |
|                    |         |     |         | .0 |         | .0 |
+--------------------+---------+-----+---------+----+---------+----+

  The most significant line of business of the group is the hotel
  operations for which further details are provided below on an
  operation by operation basis. Note 27 to the financial statements of
  the company for the year ended 31^(st) December 2001 (note 30 for the
  year ended 31^(st) December 2000) discloses the operating results of
  the hotel operations and property sales in accordance with accounting
  standards and principles.

Banyan Tree Phuket

  --------------------- ----------------- ---------------- ----------------
                        2001              2000             1999

  Available Rooms       109               109              108

  Occupancy %           73%               78%              80%

  Average Rate (Baht)   16,279            13,452           10,956
  --------------------- ----------------- ---------------- ----------------

+--------------------+---------+-----+---------+----+---------+----+
|                    | 2001    |     | 2000    |    | 1999    |    |
+--------------------+---------+-----+---------+----+---------+----+
|                    | Baht    | %   | Baht    | %  | Baht    | %  |
|                    | 000’s   |     | 000’s   |    | 000’s   |    |
+--------------------+---------+-----+---------+----+---------+----+
| Room Revenue       | 473,633 | 7   | 416,901 | 69 | 340,776 | 67 |
|                    |         | 1.8 |         | .6 |         | .3 |
+--------------------+---------+-----+---------+----+---------+----+
| F&B Revenue        | 163,514 | 2   | 161,419 | 26 | 142,835 | 28 |
|                    |         | 4.8 |         | .9 |         | .2 |
+--------------------+---------+-----+---------+----+---------+----+
| Other Revenue      | 22,065  | 3.4 | 20,897  | 3  | 22,956  | 4  |
|                    |         |     |         | .5 |         | .5 |
+--------------------+---------+-----+---------+----+---------+----+
| Total              | 659,212 | 10  | 599,217 | 1  | 506,567 | 1  |
|                    |         | 0.0 |         | 00 |         | 00 |
|                    |         |     |         | .0 |         | .0 |
+--------------------+---------+-----+---------+----+---------+----+

The Banyan Tree Phuket hotel is owned by Laguna Banyan Tree Limited in
which LRH had a 51% ownership interest at 31 December 2001. The
remaining 49% shareholding was purchased in early 2002 which has
resulted in LRH now having a 100% ownership interest. The hotel
continues to show strong growth year on year. The decline in occupancy
was more than compensated by the significant improvement in average room
rate. The hotel is located at 33 Moo 4 Cherngtalay District, Amphur
Talang, Phuket Province. The management of the Banyan Tree Phuket hotel
is contracted out to Banyan Tree Hotels & Resorts Pte Ltd.

Dusit Laguna Resort

  --------------------- ----------------- ---------------- ----------------
                        2001              2000             1999

  Available Rooms       224               224              226

  Occupancy %           65%               74%              72%

  Average Rate (Baht)   5,251             4,506            3,555
  --------------------- ----------------- ---------------- ----------------

+--------------------+----------+----+---------+----+---------+----+
|                    | 2001     |    | 2000    |    | 1999    |    |
+--------------------+----------+----+---------+----+---------+----+
|                    | Baht     | %  | Baht    | %  | Baht    | %  |
|                    | 000’s    |    | 000’s   |    | 000’s   |    |
+--------------------+----------+----+---------+----+---------+----+
| Room Revenue       | 277,093  | 63 | 273,508 | 62 | 209,811 | 59 |
|                    |          | .9 |         | .7 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+
| F&B Revenue        | 133,560  | 30 | 136,104 | 31 | 125,537 | 35 |
|                    |          | .8 |         | .2 |         | .3 |
+--------------------+----------+----+---------+----+---------+----+
| Other Revenue      | 23,000   | 5  | 26,516  | 6  | 20,513  | 5  |
|                    |          | .3 |         | .1 |         | .7 |
+--------------------+----------+----+---------+----+---------+----+
| Total              | 433,653  | 1  | 436,128 | 1  | 355,861 | 1  |
|                    |          | 00 |         | 00 |         | 00 |
|                    |          | .0 |         | .0 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+

The Dusit Laguna Resort is directly owned by Laguna Resorts & Hotels
Public Company Limited. The performance in 2001 was flat as compared to
the previous year. The significantly reduced occupancy was largely
compensated by the increase in average room rate. The hotel is located
at 390 Srisoonthorn Road, Cherngtalay District, Amphur Talang, Phuket
Province. The management of the Dusit Laguna Resort is contracted out to
Dusit Hotels and Resorts Co., Ltd.

Laguna Beach Resort

  --------------------- ----------------- ---------------- ----------------
                        2001              2000             1999

  Available Rooms       252               252              252

  Occupancy %           69%               80%              69%

  Average Rate          4,779             3,797            3,521
  --------------------- ----------------- ---------------- ----------------

+--------------------+----------+----+---------+----+---------+----+
|                    | 2001     |    | 2000    |    | 1999    |    |
+--------------------+----------+----+---------+----+---------+----+
|                    | Baht     | %  | Baht    | %  | Baht    | %  |
|                    | 000’s    |    | 000’s   |    | 000’s   |    |
+--------------------+----------+----+---------+----+---------+----+
| Room Revenue       | 303,436  | 64 | 280,834 | 62 | 222,001 | 62 |
|                    |          | .5 |         | .4 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+
| F&B Revenue        | 139,630  | 29 | 144,091 | 32 | 115,572 | 32 |
|                    |          | .7 |         | .0 |         | .3 |
+--------------------+----------+----+---------+----+---------+----+
| Other Revenue      | 27,710   | 5  | 25,165  | 5  | 20,346  | 5  |
|                    |          | .8 |         | .6 |         | .7 |
+--------------------+----------+----+---------+----+---------+----+
| Total              | 470,776  | 1  | 450,090 | 1  | 357,919 | 1  |
|                    |          | 00 |         | 00 |         | 00 |
|                    |          | .0 |         | .0 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+

The Laguna Beach Resort is owned by Laguna Beach Club Limited in which
LRH has a 41.67% effective ownership interest. The increase in average
room rate has more than offset the reduction in occupancy as compared to
2000, which resulted in 2001 being a record year. The hotel is located
at 323 Moo 2 Srisoonthorn Road, Cherngtalay District, Amphur Talang,
Phuket Province. The management of the Laguna Beach Resort is jointly
performed by the LRH management and its joint venture partner, Pacific
Resort (Thailand) Co. Ltd.

Sheraton Grande Laguna Phuket 

  --------------------- ----------------- ---------------- ----------------
                        2001              2000             1999

  Available Rooms       289               253              254

  Occupancy %           70%               84%              83%

  Average Rate          6,422             5,701            4,754
  --------------------- ----------------- ---------------- ----------------

+--------------------+----------+----+---------+----+---------+----+
|                    | 2001     |    | 2000    |    | 1999    |    |
+--------------------+----------+----+---------+----+---------+----+
|                    | Baht     | %  | Baht    | %  | Baht    | %  |
|                    | 000’s    |    | 000’s   |    | 000’s   |    |
+--------------------+----------+----+---------+----+---------+----+
| Room Revenue       | 460,775  | 56 | 442,073 | 52 | 363,604 | 50 |
|                    |          | .7 |         | .4 |         | .7 |
+--------------------+----------+----+---------+----+---------+----+
| F&B Revenue        | 292,338  | 36 | 337,088 | 40 | 295,229 | 41 |
|                    |          | .0 |         | .0 |         | .1 |
+--------------------+----------+----+---------+----+---------+----+
| Other Revenue      | 59,021   | 7  | 63,782  | 7  | 58,909  | 8  |
|                    |          | .3 |         | .6 |         | .2 |
+--------------------+----------+----+---------+----+---------+----+
| Total              | 812,134  | 1  | 842,943 | 1  | 717,742 | 1  |
|                    |          | 00 |         | 00 |         | 00 |
|                    |          | .0 |         | .0 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+

The Sheraton Grande Laguna Phuket is owned by Bangna Place Realty
Limited in which LRH has a 100% ownership interest. The reduction in the
revenue as compared to the previous year was due to the significantly
lower occupancies which was partially compensated by the increase in
rates. The hotel is located at 10 Moo 4 Cherngtalay District, Amphur
Talang, Phuket Province. The management of the Sheraton Grande Laguna
Phuket is contracted out to Sheraton Overseas Management Corporation.

Banyan Tree Golf Club

+--------------------+----------+----+---------+----+---------+----+
|                    | 2001     |    | 2000    |    | 1999    |    |
+--------------------+----------+----+---------+----+---------+----+
|                    | Baht     | %  | Baht    | %  | Baht    | %  |
|                    | 000’s    |    | 000’s   |    | 000’s   |    |
+--------------------+----------+----+---------+----+---------+----+
| Green Fees         | 33,504   | 52 | 32,561  | 48 | 28,792  | 48 |
|                    |          | .3 |         | .6 |         | .5 |
+--------------------+----------+----+---------+----+---------+----+
| Retail Revenue     | 12,212   | 19 | 12,744  | 19 | 12,317  | 20 |
|                    |          | .1 |         | .0 |         | .8 |
+--------------------+----------+----+---------+----+---------+----+
| Other Revenue      | 18,313   | 28 | 21,629  | 32 | 18,247  | 30 |
|                    |          | .6 |         | .4 |         | .7 |
+--------------------+----------+----+---------+----+---------+----+
| Total              | 64,029   | 1  | 66,934  | 1  | 59,356  | 1  |
|                    |          | 00 |         | 00 |         | 00 |
|                    |          | .0 |         | .0 |         | .0 |
+--------------------+----------+----+---------+----+---------+----+

The Banyan Tree Golf Club is owned by Laguna Grande Limited in which LRH
has a 100% ownership interest. The reduction in revenue in 2001 was
primarily due to the lower occupancies across Laguna Phuket this year.
The Banyan Tree Golf Club is located at 34 Moo 4 Cherngtalay District,
Amphur Talang, Phuket Province. The management of the Banyan Tree Golf
Club is contracted out to Banyan Tree Golf Club Limited.

[]

+------------+---------------------------------------------------------+
| ABB        |                                                         |
| REVIATIONS |                                                         |
+------------+---------------------------------------------------------+
| AVC        | Allamanda Vacation Club Limited                         |
+------------+---------------------------------------------------------+
| BNPL       | Bangna Place Realty Limited                             |
+------------+---------------------------------------------------------+
| BT1        | Bang Thao (1) Company Limited                           |
+------------+---------------------------------------------------------+
| BT2        | Bang Thao (2) Company Limited                           |
+------------+---------------------------------------------------------+
| BT3        | Bang Thao (3) Company Limited                           |
+------------+---------------------------------------------------------+
| BT4        | Bang Thao (4) Company Limited                           |
+------------+---------------------------------------------------------+
| BTD        | Bang Tao Development Company Limited                    |
+------------+---------------------------------------------------------+
| BTGS       | Banyan Tree Gallery (Singapore) Pte Ltd.                |
+------------+---------------------------------------------------------+
| BTGT       | Banyan Tree Gallery (Thailand) Limited                  |
+------------+---------------------------------------------------------+
| L1         | Laguna (1) Company Limited                              |
+------------+---------------------------------------------------------+
| L3         | Laguna (3) Company Limited                              |
+------------+---------------------------------------------------------+
| LBC        | Laguna Beach Club Limited                               |
+------------+---------------------------------------------------------+
| LBTL       | Laguna Banyan Tree Limited                              |
+------------+---------------------------------------------------------+
| LCL        | Laguna Central Limited                                  |
+------------+---------------------------------------------------------+
| LDCL       | Laguna Development Company Limited                      |
+------------+---------------------------------------------------------+
| LGL        | Laguna Grande Limited                                   |
+------------+---------------------------------------------------------+
| LRH        | Laguna Resorts & Hotels Public Company Limited          |
+------------+---------------------------------------------------------+
| LSC        | Laguna Service Company Limited                          |
+------------+---------------------------------------------------------+
| LSL        | Laguna Sports Limited                                   |
+------------+---------------------------------------------------------+
| MCP        | Mae Chan Property Company Limited                       |
+------------+---------------------------------------------------------+
| OPS        | Ownrep Project Services Pte Ltd.                        |
+------------+---------------------------------------------------------+
| PCD        | PCD Limited                                             |
+------------+---------------------------------------------------------+
| PKRD       | Phuket Resort Development Company Limited               |
+------------+---------------------------------------------------------+
| PSD        | Pai Samart Development Company Limited                  |
+------------+---------------------------------------------------------+
| TRL        | Tropical Resorts Limited                                |
+------------+---------------------------------------------------------+
| TWC        | Thai Wah Public Company Limited                         |
+------------+---------------------------------------------------------+
| TWR-H      | TWR-Holdings Limited                                    |
+------------+---------------------------------------------------------+
| WEN        | Wenco-Thai Limited                                      |
+------------+---------------------------------------------------------+