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 2006
Financial Statements is Sophon Permsirivallop, Certified Public
Accountant (Thailand) No. 3182 of Ernst & Young Office Limited.

Conclusion of the Auditors Report

  For the year ended 31^(st) 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 Co., Ltd. that were
  audited by other auditors for the year ended 31^(st) December 2006.
  The Company’s financial statements included investments in these
  subsidiaries as at 31^(st) 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^(st) December 2006 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles.

  For the year ended 31^(st) December 2005

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 Co., Ltd. that were
  audited by other auditors for the year ended 31 December 2005. The
  Company’s financial statements included investments in these
  subsidiaries as at 31^(st) December 2005 of Baht 494.1 million,
  accounted for under the equity method, and the share of loss from
  these subsidiaries for the year then ended amounted to Baht 5.5
  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^(st) December 2005 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles.

  For the year ended 31^(st) December 2004

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 another auditor for
  the year ended 31^(st) December 2004. The Company’s financial
  statements included investments in these subsidiaries as at 31^(st)
  December 2004 of Baht 493 million, accounted for under the equity
  method, and the share of profit from these subsidiaries for the year
  then ended amounted to Baht 47 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^(st) December 2004 and stated that the financial
  statements presented fairly the financial position of the Company in
  conformity with generally accepted accounting principles.

Accounting policies

The financial statements have been prepared in accordance with
accounting standards enunciated under the Accounting Profession Act B.E.
2547. The presentation of the financial statements has been made in
compliance with the stipulations of the Notification of the Department
of Business Development dated 14^(th) September 2001, issued under the
Accounting Act B.E. 2543.

The financial statements have been prepared on a historical cost basis
except where otherwise disclosed in the accounting policies.

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

Revenue recognition

(a) Revenue from hotel operations

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

- Revenue from sales of merchandise (Gallery operation) represents the
invoiced value (excluding value-added tax) of goods supplied after
deducting discounts.

(b) Revenue from property development operations

- Revenue from the sale of land and houses

  Revenues from the sale of land and houses are recognized when a
  legally binding contract is signed and by applying the percentage of
  completion method. The percentage of completion is arrived at based on
  actual costs incurred as compared to the total anticipated
  construction costs, excluding cost of land, and based upon estimations
  performed by qualified engineers. Revenue is recognized when the
  initial payment and installments received are at least twenty percent
  of the contract price and the construction work is at least ten
  percent completed.

  Where properties are sold to non-Thais, the land is sold under a
  long-term lease agreement comprising an initial term of thirty years
  with an option to extend for two successive periods of thirty years
  each, without any additional consideration to be paid in addition to
  the sum of the rental paid for the initial lease term. These long-term
  lease agreements also contain a further option that provides if Thai
  law permits non-Thais to own land on a freehold basis, the lessor
  shall consent to sell the land to the lessee in return for a token
  payment. Consequently, long-term leases are recognized as sales of
  land for accounting purposes in accordance with the principle of
  applying substance over form.

Revenues from the sale of land are recognized when the ownership has
been transferred to buyers or all payments are received from the buyers.

- Revenue from sales of furniture

Revenue from sales of furniture are recognised when furniture is
completely installed.

- Revenue from sale of holiday club memberships

Revenue from the sale of holiday club memberships is recognised when a
legally binding contract has been signed and at least twenty-five
percent of the contract price has been received.

  (c) Revenues from rental and services

  Rental income is recognised over the lease period. Service revenue is
  recognized when services have been rendered taking into account the
  stage of completion.

  (d) Interest income

  Interest income is recognized as interest accrues based on the
  effective rate method.

    Cost of land and houses sold

    In determining the cost of land and houses sold, the anticipated
    total development cost (after recognising the cost incurred to date)
    are attributed to units already sold and then recognised as cost in
    the income statements according to the percentage of completion
    basis.

    Cash and cash equivalents

    Cash and cash equivalents consist of cash in hand, cash at bank, and
    all highly liquid investments with an original maturity of three
    months or less and not subject to withdrawal restrictions.

    Trade accounts receivable

Trade accounts receivable are stated at the net realisable value.
Allowance for doubtful accounts is provided for the estimated losses
that may be incurred in collection of receivables. The allowance is
generally based on collection experience and analysis of debtor aging.

    Property development cost

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

    Inventories

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

Allowance for diminution in inventory value is set up for old, obsolete,
slow-moving or deteriorated inventories.

    Investments

Investments in subsidiaries (in the financial statements of the Company)
and associated companies are accounted for under the equity method.
Under this method, the investment is initially recorded at cost. For
each subsequent year the investment is adjusted to incorporate the
Company’s proportionate share of the operating results of the
subsidiaries and associated companies. Losses over the cost of
investment are presented as a liability under the caption of “Allowance
for loss on investments in subsidiaries and associated companies
accounted for under the equity method”.

    Other long-term investments

Long-term investments in marketable equity securities which the Company
and subsidiaries intend to hold as available-for-sale are determined at
fair value (The fair value is based on the latest bid price of the last
working day of the year as quoted on the Stock Exchange of Thailand) and
recognise changes in the value of investments as a separate item in
shareholders’ equity under the caption of “Unrealised gain/loss on
available-for-sale securities” until the investments are sold, when the
changes are then included in determining income.

Long-term investments in non-marketable equity securities, which the
Company and subsidiaries classified as other investments, are stated at
cost net of allowance for loss on diminution in value (if any).

For long-term investments in both marketable and non-marketable equity
or debt securities, a test for impairment is carried out when there is a
factor indicating that such investments might be impaired. Loss on
impairment (if any) is recognised in the income statements.

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

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

  Property, plant and equipment

(a) Hotel properties

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

  (b) Other fixed assets/land awaiting development

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

Differences arising from the revaluation are dealt with in the financial
statements as follows:

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

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

    Depreciation

Depreciation of plant and equipment is calculated by reference to their
costs or the revalued amounts on the straight-line basis over the
following estimated useful lives:-

  ------------------------------------------------ --------------- -------
  Buildings and improvements                       10 – 50         Years

  Furniture, fixtures and equipment                5 – 15          Years

  Operating and office equipment                   3 – 10          Years

  Golf course                                      5 – 10          Years

  Motor vehicles                                   5               Years
  ------------------------------------------------ --------------- -------

The depreciation is dealt with in the financial statements as follows:

  - Depreciation attributed to the original cost portion is included in
  determining income.

  - Depreciation attributed to the surplus portion is deducted against
  revaluation surplus in shareholders’ equity.

  The revaluation surplus can neither be offset against deficit nor used
  for dividend payment.

  No depreciation has been provided for land and construction in
  process.

    Leasehold rights and amortisation

Leasehold rights are stated at cost less accumulated amortisation and
any impairment losses (if any).

Amortisation of leasehold rights is calculated by reference to their
cost on a straight-line basis over the following leasehold periods:

Land 40 years

Hotel units 20 years

The leasehold period is in line with the underlying lease of the
respective assets.

The amortisation is included in determining income.

    Goodwill and negative goodwill

Goodwill is generated as a result of investments in subsidiaries being
made at a cost higher than the fair value of identifiable net assets of
subsidiaries.

Negative goodwill is generated as a result of investments in
subsidiaries being made at a cost lower than the fair value of
identifiable net assets of subsidiaries

Goodwill and negative goodwill are stated at cost less amortization and
allowance for loss on impairment (if any). Amortization is calculated on
a straight-line basis over 20 years for hotel operation acquisitions,
and over 3 years for other business acquisitions

    Related party transactions

Related parties comprise enterprises and individuals that control, or
are controlled by, the Company, whether directly or indirectly, or which
are under common control with the Company.

They also include associated companies and individuals which directly or
indirectly own a voting interest in the Company that gives them
significant influence over the Company, key management personnel,
directors and officers with authority in the planning and direction of
the Company’s operations.

    Foreign currencies

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

Exchange gains and losses are included in determining income.

    Impairment of assets

The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication exists,
the Company makes an estimate of the asset’s recoverable amount. Where
the carrying amount of the asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable
amount. Impairment losses are recognised in the income statement. An
asset’s recoverable amount is the higher of fair value less costs to
sell and value in use.

    Employee benefits

Salary, wages, bonuses and contributions to the social security fund and
provident fund are recognised as expenses when incurred.

    Provisions

Provisions are recognised when the Company has a present obligation as a
result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.

    Income Tax

Income tax is provided for in the accounts based on the taxable profits
determined in accordance with tax legislation.

    Derivatives

    Forward exchange contracts

Receivables and payables arising from forward exchange contracts are
translated into Baht at the rates of exchange ruling on the balance
sheet. Gains and losses from the translation are included in determining
income.

    Use of accounting estimates

Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions in certain circumstances, affecting amounts reported in
these financial statements and related notes. Actual results could
differ from these estimates.

12.1.2 Summary of financial statements

Consolidated Statements of Earnings 

 Unit : Baht

+-----------------------------------+---+----------+----------+----------+
|                                   |   | Cons     |          |          |
|                                   |   | olidated |          |          |
+-----------------------------------+---+----------+----------+----------+
|                                   |   | 2006     | 2005     | 2004     |
+-----------------------------------+---+----------+----------+----------+
| REVENUES                          |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Revenues from hotel operations  |   | 3,589    | 2,305    | 2,803    |
|                                   |   | ,806,682 | ,533,119 | ,596,825 |
+-----------------------------------+---+----------+----------+----------+
|   Revenues from property          |   | 2,327    | 750      | 1,051    |
|   development operations          |   | ,817,464 | ,134,469 | ,813,670 |
+-----------------------------------+---+----------+----------+----------+
|   Revenues from office rental     |   | 80       | 100      | -        |
|   operations                      |   | ,764,484 | ,867,345 |          |
+-----------------------------------+---+----------+----------+----------+
|   Interest income                 |   | 26       | 8        | 12       |
|                                   |   | ,797,803 | ,868,924 | ,323,064 |
+-----------------------------------+---+----------+----------+----------+
|   Foreign exchange gain           |   | 87       | -        | -        |
|                                   |   | ,965,436 |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Reversal of provision for       |   | -        | -        | 40       |
|   impairment in value             |   |          |          | ,590,247 |
|                                   |   |          |          |          |
|   of other long term investment   |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Other income                    |   | 42       | 40       | 51       |
|                                   |   | ,500,004 | ,474,916 | ,127,932 |
+-----------------------------------+---+----------+----------+----------+
| Total revenues                    |   | 6,155    | 3,205    | 3,959    |
|                                   |   | ,651,873 | ,878,773 | ,451,738 |
+-----------------------------------+---+----------+----------+----------+
| EXPENSES                          |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Direct hotel operations         |   | 3,015    | 2,158    | 1,941    |
|   expenses                        |   | ,567,942 | ,624,513 | ,659,335 |
+-----------------------------------+---+----------+----------+----------+
|   Direct cost of property         |   | 1,203    | 490      | 564      |
|   development operations          |   | ,044,509 | ,644,966 | ,392,029 |
+-----------------------------------+---+----------+----------+----------+
|   Direct cost of office rental    |   | 89       | 83       | -        |
|   operations                      |   | ,564,539 | ,186,990 |          |
+-----------------------------------+---+----------+----------+----------+
|   Selling and administrative      |   | 276      | 263      | 232      |
|   expenses                        |   | ,793,278 | ,585,463 | ,793,131 |
+-----------------------------------+---+----------+----------+----------+
|   Directors’ remuneration         |   | 5        | 8        | 10       |
|                                   |   | ,494,000 | ,563,681 | ,903,596 |
+-----------------------------------+---+----------+----------+----------+
|   Foreign exchange loss           |   | -        | 38       | 8        |
|                                   |   |          | ,804,420 | ,105,024 |
+-----------------------------------+---+----------+----------+----------+
| Total expenses                    |   | 4,590    | 3,043    | 2,757    |
|                                   |   | ,464,268 | ,410,033 | ,853,115 |
+-----------------------------------+---+----------+----------+----------+
| Income before interest expenses   |   | 1,565    | 162      | 1,201    |
| and corporate income tax          |   | ,187,605 | ,468,740 | ,598,623 |
+-----------------------------------+---+----------+----------+----------+
| Interest expenses                 |   | (202,    | (138,    | (39,     |
|                                   |   | 055,630) | 102,723) | 813,346) |
+-----------------------------------+---+----------+----------+----------+
| Corporate income tax              |   | (228,    | (46,     | (156,    |
|                                   |   | 380,356) | 517,226) | 574,480) |
+-----------------------------------+---+----------+----------+----------+
| Net income (loss) after corporate |   | 1,134    | (22,     | 1,005    |
| income tax                        |   | ,751,619 | 151,209) | ,210,797 |
+-----------------------------------+---+----------+----------+----------+
| Net income attributable to        |   | (21,     | (11,     | (78,     |
| minority interest                 |   | 874,470) | 748,527) | 821,362) |
+-----------------------------------+---+----------+----------+----------+
| Net income (loss) before          |   | 1,112    | (33,     | 926      |
| extraordinary item                |   | ,877,149 | 899,736) | ,389,435 |
+-----------------------------------+---+----------+----------+----------+
| Extraordinary item - provision    |   |          |          |          |
| for impairment                    |   |          |          |          |
|                                   |   |          |          |          |
| of fixed assets, attributable to  |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
| - Reversal of provision /         |   | -        | 16       | (45,     |
| (expenses)                        |   |          | ,230,665 | 000,000) |
+-----------------------------------+---+----------+----------+----------+
| - Minority interest               |   | -        | (2,      | 4        |
|                                   |   |          | 110,670) | ,000,000 |
+-----------------------------------+---+----------+----------+----------+
|                                   |   | -        | 14       | (41,     |
|                                   |   |          | ,119,995 | 000,000) |
+-----------------------------------+---+----------+----------+----------+
| Net income (loss) for the year    |   | 1,112    | (19,     | 885      |
|                                   |   | ,877,149 | 779,741) | ,389,435 |
+-----------------------------------+---+----------+----------+----------+

Consolidated Statements of Earnings (continued)

Unit : Baht

+-----------------------------------+---+----------+----------+----------+
|                                   |   | Cons     |          |          |
|                                   |   | olidated |          |          |
+-----------------------------------+---+----------+----------+----------+
|                                   |   | 2006     | 2005     | 2004     |
+-----------------------------------+---+----------+----------+----------+
| Basic earnings per share          |   | 13.14    | (0.40)   | 10.94    |
|                                   |   |          |          |          |
|   Net income (loss) before        |   |          |          |          |
|   extraordinary item              |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Extraordinary item              |   | -        | 0.17     | (0.48)   |
+-----------------------------------+---+----------+----------+----------+
|   Net income (loss) for the year  |   | 13.14    | (0.23)   | 10.46    |
+-----------------------------------+---+----------+----------+----------+

Consolidated Balance Sheets

Unit : Baht

+------------------------------------+---+----------+----------+----------+
|                                    |   | Cons     |          |          |
|                                    |   | olidated |          |          |
+------------------------------------+---+----------+----------+----------+
|                                    |   | 2006     | 2005     | 2004     |
+------------------------------------+---+----------+----------+----------+
| ASSETS                             |   |          |          |          |
+------------------------------------+---+----------+----------+----------+
| Current assets                     |   |          |          |          |
+------------------------------------+---+----------+----------+----------+
|   Cash and cash equivalents        |   | 1,087    | 669      | 556      |
|                                    |   | ,923,520 | ,832,861 | ,724,867 |
+------------------------------------+---+----------+----------+----------+
|   Trade accounts receivable – net  |   | 1,116    | 810      | 858      |
|                                    |   | ,496,985 | ,689,304 | ,137,461 |
+------------------------------------+---+----------+----------+----------+
|   Amounts due from related         |   | 33       | 24       | 26       |
|   companies                        |   | ,256,763 | ,464,334 | ,100,819 |
+------------------------------------+---+----------+----------+----------+
|   Inventories – net                |   | 158      | 144      | 127      |
|                                    |   | ,314,368 | ,610,503 | ,630,558 |
+------------------------------------+---+----------+----------+----------+
|   Property development cost – net  |   | 593      | 218      | 141      |
|                                    |   | ,414,126 | ,519,056 | ,364,525 |
+------------------------------------+---+----------+----------+----------+
|   Other current assets             |   | 421      | 211      | 62       |
|                                    |   | ,283,706 | ,215,265 | ,992,946 |
+------------------------------------+---+----------+----------+----------+
| Total current assets               |   | 3,410    | 2,079    | 1,772    |
|                                    |   | ,689,468 | ,331,323 | ,951,176 |
+------------------------------------+---+----------+----------+----------+
| Non-current assets                 |   |          |          |          |
+------------------------------------+---+----------+----------+----------+
|   Restricted deposits at financial |   | 2        | 2        | 2        |
|   institution                      |   | ,140,000 | ,000,000 | ,000,000 |
+------------------------------------+---+----------+----------+----------+
|   Long-term trade accounts         |   | 45       | 35       | 39       |
|   receivable                       |   | ,168,708 | ,231,689 | ,627,436 |
+------------------------------------+---+----------+----------+----------+
|   Other long-term investments      |   | 210      | 210      | 219      |
|                                    |   | ,399,386 | ,399,386 | ,318,614 |
+------------------------------------+---+----------+----------+----------+
|   Property, plant and equipment –  |   | 10,477   | 9,485    | 6,647    |
|   net                              |   | ,003,044 | ,355,231 | ,517,339 |
+------------------------------------+---+----------+----------+----------+
|   Land awaiting development        |   | 639      | 639      | 700      |
|                                    |   | ,390,200 | ,390,200 | ,335,000 |
+------------------------------------+---+----------+----------+----------+
|   Leasehold rights - net           |   | 84       | 125      | 124      |
|                                    |   | ,328,941 | ,805,115 | ,656,114 |
+------------------------------------+---+----------+----------+----------+
|   Goodwill / (Negative goodwill)   |   | 20       | 20       | (14,     |
|   on consolidation                 |   | ,305,564 | ,816,789 | 356,262) |
+------------------------------------+---+----------+----------+----------+
|   Other non-current assets         |   | 18       | 19       | 18       |
|                                    |   | ,396,056 | ,729,185 | ,378,330 |
+------------------------------------+---+----------+----------+----------+
| Total non-current assets           |   | 11,497   | 10,538   | 7,737    |
|                                    |   | ,131,899 | ,727,595 | ,476,571 |
+------------------------------------+---+----------+----------+----------+
| TOTAL ASSETS                       |   | 14,907   | 12,618   | 9,510    |
|                                    |   | ,821,367 | ,058,918 | ,427,747 |
+------------------------------------+---+----------+----------+----------+
| LIABILITIES AND SHAREHOLDERS'      |   |          |          |          |
| EQUITY                             |   |          |          |          |
+------------------------------------+---+----------+----------+----------+
| Current liabilities                |   |          |          |          |
+------------------------------------+---+----------+----------+----------+
|   Short-term loans from financial  |   | 637      | 590      | 60       |
|   institutions                     |   | ,000,000 | ,000,000 | ,000,000 |
+------------------------------------+---+----------+----------+----------+
|   Trade accounts payable           |   | 270      | 257      | 206      |
|                                    |   | ,304,320 | ,011,277 | ,182,872 |
+------------------------------------+---+----------+----------+----------+
|   Current portion of long-term     |   | 648      | 607      | 300      |
|   loans                            |   | ,597,000 | ,929,000 | ,000,000 |
+------------------------------------+---+----------+----------+----------+
|   Amounts due to related companies |   | 96       | 63       | 51       |
|                                    |   | ,695,820 | ,401,328 | ,534,241 |
+------------------------------------+---+----------+----------+----------+
|   Corporate income tax payable     |   | 135      | 23       | 74       |
|                                    |   | ,140,265 | ,111,420 | ,385,956 |
+------------------------------------+---+----------+----------+----------+
|   Other current liabilities        |   | 985      | 749      | 574      |
|                                    |   | ,778,540 | ,658,928 | ,171,509 |
+------------------------------------+---+----------+----------+----------+
| Total current liabilities          |   | 2,773    | 2,291    | 1,266    |
|                                    |   | ,515,945 | ,111,953 | ,274,578 |
+------------------------------------+---+----------+----------+----------+
|                                    |   |          |          |          |
+------------------------------------+---+----------+----------+----------+

Consolidated Balance Sheets (continued)

Unit : Baht

+-------------------------------------+---+---+---+---------+----------+----------+
|                                     |   |   |   | Conso   |          |          |
|                                     |   |   |   | lidated |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|                                     |   |   | 2 |         | 2005     | 2004     |
|                                     |   |   | 0 |         |          |          |
|                                     |   |   | 0 |         |          |          |
|                                     |   |   | 6 |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
| LIABILITIES AND SHAREHOLDERS’EQUITY |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
| Non-current liabilities             |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Long-term loans from related      |   |   |   | 416,    | 180      | -        |
|   company                           |   |   |   | 449,627 | ,252,794 |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Long-term loans – net of current  |   |   |   | 3,080,  | 2,486    | 400      |
|   portion                           |   |   |   | 271,743 | ,858,743 | ,000,000 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Other non-current liabilities     |   |   |   | 55,     | 70       | 43       |
|                                     |   |   |   | 933,570 | ,726,964 | ,171,285 |
+-------------------------------------+---+---+---+---------+----------+----------+
| Total non-current liabilities       |   |   |   | 3,552,  | 2,737    | 443      |
|                                     |   |   |   | 654,940 | ,838,501 | ,171,285 |
+-------------------------------------+---+---+---+---------+----------+----------+
| Total liabilities                   |   |   |   | 6,326,  | 5,028    | 1,709    |
|                                     |   |   |   | 170,885 | ,950,454 | ,445,863 |
+-------------------------------------+---+---+---+---------+----------+----------+
| Shareholders' equity                |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Share capital                     |   |   |   | 846,    | 846      | 846      |
|                                     |   |   |   | 701,430 | ,701,430 | ,701,430 |
|   Registered                        |   |   |   |         |          |          |
|                                     |   |   |   |         |          |          |
|   84,670,143 ordinary shares of     |   |   |   |         |          |          |
|   Baht 10 each                      |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Issued and fully paid-up          |   |   |   | 846,    | 846      | 846      |
|                                     |   |   |   | 701,430 | ,701,430 | ,701,430 |
|   84,670,143 ordinary shares of     |   |   |   |         |          |          |
|   Baht 10 each                      |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Share premium                     |   |   |   | 2,062,  | 2,062    | 2,062    |
|                                     |   |   |   | 460,582 | ,460,582 | ,460,582 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Other surpluses                   |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Capital reserve                   |   |   |   | 634,    | 634      | 634      |
|                                     |   |   |   | 698,720 | ,698,720 | ,698,720 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Revaluation surplus               |   |   |   | 1,789,  | 1,888    | 1,985    |
|                                     |   |   |   | 995,216 | ,359,140 | ,987,993 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Unrealised (loss) gain on         |   |   |   | (28,8   | (28,     | 393,328  |
|   available-for-sale securities     |   |   |   | 56,095) | 856,095) |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Translation adjustment            |   |   |   | 72,     | 104      | 84       |
|                                     |   |   |   | 905,170 | ,869,520 | ,829,377 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Retained earnings                 |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Appropriated – statutory reserve  |   |   |   | 84,     | 84       | 84       |
|                                     |   |   |   | 670,143 | ,670,143 | ,670,143 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Unappropriated                    |   |   |   | 2,353,  | 1,240    | 1,430    |
|                                     |   |   |   | 781,781 | ,904,632 | ,024,659 |
+-------------------------------------+---+---+---+---------+----------+----------+
|                                     |   |   |   | 2,438,  | 1,325    | 1,514    |
|                                     |   |   |   | 451,924 | ,574,775 | ,694,802 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Equity attributable to Company’s  |   |   |   | 7,816,  | 6,833    | 7,129    |
|   shareholders                      |   |   |   | 356,947 | ,808,072 | ,766,232 |
+-------------------------------------+---+---+---+---------+----------+----------+
|   Minority interests – equity       |   |   |   | 765,    | 755      | 671      |
|   attributable to                   |   |   |   | 293,535 | ,300,392 | ,215,652 |
|                                     |   |   |   |         |          |          |
|   minority shareholders of          |   |   |   |         |          |          |
|   subsidiaries                      |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+
| Total shareholders' equity          |   |   |   | 8,581,  | 7,589    | 7,800    |
|                                     |   |   |   | 650,482 | ,108,464 | ,981,884 |
+-------------------------------------+---+---+---+---------+----------+----------+
| TOTAL LIABILITIES AND SHAREHOLDERS' |   |   |   | 14,907, | 12,618   | 9,510    |
| EQUITY                              |   |   |   | 821,367 | ,058,918 | ,427,747 |
+-------------------------------------+---+---+---+---------+----------+----------+
|                                     |   |   |   |         |          |          |
+-------------------------------------+---+---+---+---------+----------+----------+

Consolidated Statements of Cash Flows 

Unit : Baht

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

                                          2006              2005              2004

  Cash flows from (used in) operating                                         
  activities                                                                  

  Net cash inflow (outflow) from          1,266,266,024     257,859,277       1,048,502,453
  operating activities                                                        

  Cash flows from (used in) investing                                         
  activities                                                                  

  Net cash inflow (outflow) from          (1,751,888,370)   (1,012,035,992)   (237,000,956)
  investing activities                                                        

  Cash flows from (used in) financing                                         
  activities                                                                  

  Net cash inflow (outflow) from          903,713,005       867,284,709       (683,578,317)
  financing activities                                                        

  Net increase in cash and cash           418,090,659       113,107,994       127,923,180
  equivalents                                                                 

  Cash and cash equivalents at the        669,832,861       556,724,867       428,801,687
  beginning of the year                                                       

  Cash and cash equivalents at the end    1,087,923,520     669,832,861       556,724,867
  of the year                                                                 

                                                                              

                                                                              

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

 

Company Statements of Earnings

Unit : Baht

+-------------------------------------+----------+----------+----------+
|                                     | The      |          |          |
|                                     | Company  |          |          |
|                                     | Only     |          |          |
+-------------------------------------+----------+----------+----------+
|                                     | 2006     | 2005     | 2004     |
+-------------------------------------+----------+----------+----------+
| Revenues                            |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Revenues from hotel operations    | 475      | 288      | 443      |
|                                     | ,512,469 | ,426,117 | ,335,461 |
+-------------------------------------+----------+----------+----------+
|   Revenues from property            | 4        | -        | -        |
|   development operations            | ,120,000 |          |          |
+-------------------------------------+----------+----------+----------+
|   Interest income                   | 49       | 51       | 1        |
|                                     | ,732,344 | ,588,382 | ,193,828 |
+-------------------------------------+----------+----------+----------+
|   Foreign exchange gain             | 98       | -        | -        |
|                                     | ,217,273 |          |          |
+-------------------------------------+----------+----------+----------+
|   Share of income from investments  | 1,182    | 143      | 981      |
|   accounted                         | ,031,713 | ,455,418 | ,542,281 |
|                                     |          |          |          |
|   for under the equity method       |          |          |          |
+-------------------------------------+----------+----------+----------+
| Other income                        | 51       | 76       | 24       |
|                                     | ,847,188 | ,578,722 | ,422,992 |
+-------------------------------------+----------+----------+----------+
| Total revenues                      | 1,861    | 560      | 1,450    |
|                                     | ,460,987 | ,048,639 | ,494,562 |
+-------------------------------------+----------+----------+----------+
| Expenses                            |          |          |          |
+-------------------------------------+----------+----------+----------+
|   Direct hotel operations expenses  | 339      | 262      | 295      |
|                                     | ,508,730 | ,959,971 | ,411,500 |
+-------------------------------------+----------+----------+----------+
|   Direct cost of property           | 21       | -        | -        |
|   development operations            | ,543,214 |          |          |
+-------------------------------------+----------+----------+----------+
|   Selling and administrative        | 236      | 212      | 162      |
|   expenses                          | ,217,899 | ,347,633 | ,911,915 |
+-------------------------------------+----------+----------+----------+
|   Directors’ remuneration           | 5        | 8        | 10       |
|                                     | ,494,000 | ,563,681 | ,903,596 |
+-------------------------------------+----------+----------+----------+
|   Foreign exchange loss             | -        | 10       | 3        |
|                                     |          | ,670,416 | ,574,915 |
+-------------------------------------+----------+----------+----------+
| Total expenses                      | 602      | 494      | 472      |
|                                     | ,763,843 | ,541,701 | ,801,926 |
+-------------------------------------+----------+----------+----------+
| Income before interest expenses and | 1,258    | 65       | 977      |
| corporate income tax                | ,697,144 | ,506,938 | ,692,636 |
+-------------------------------------+----------+----------+----------+
| Interest expenses                   | (145,    | (99,     | (51,     |
|                                     | 819,995) | 406,674) | 303,201) |
+-------------------------------------+----------+----------+----------+
| Net income (loss) before            | 1,112    | (33,     | 926      |
| extraordinary item                  | ,877,149 | 899,736) | ,389,435 |
+-------------------------------------+----------+----------+----------+
| Extraordinary item - provision for  |          |          |          |
| impairment                          |          |          |          |
|                                     |          |          |          |
| of fixed assets, attributable to    |          |          |          |
+-------------------------------------+----------+----------+----------+
| - Share of income from investments  | -        | 6        | (21,     |
| accounted                           |          | ,098,442 | 000,000) |
|                                     |          |          |          |
| for under the equity method         |          |          |          |
+-------------------------------------+----------+----------+----------+
| - Reversal of provision /           | -        | 8        | (20,     |
| (expenses)                          |          | ,021,553 | 000,000) |
+-------------------------------------+----------+----------+----------+
|                                     | -        | 14       | (41,     |
|                                     |          | ,119,995 | 000,000) |
+-------------------------------------+----------+----------+----------+
| Net income (loss) for the year      | 1,112    | (19,     | 885      |
|                                     | ,877,149 | 779,741) | ,389,435 |
+-------------------------------------+----------+----------+----------+
| Basic earnings per share            | 13.14    | (0.40)   | 10.94    |
|                                     |          |          |          |
| Net income (loss) before            |          |          |          |
| extraordinay item                   |          |          |          |
+-------------------------------------+----------+----------+----------+
| Extraordinary item                  | -        | 0.17     | (0.48)   |
+-------------------------------------+----------+----------+----------+
| Net income (loss) earnings for the  | 13.14    | (0.23)   | 10.46    |
| year                                |          |          |          |
+-------------------------------------+----------+----------+----------+

Company Balance Sheets 

Unit : Baht

+-----------------------------------+---+----------+----------+----------+
|                                   |   | The      |          |          |
|                                   |   | Company  |          |          |
|                                   |   | Only     |          |          |
+-----------------------------------+---+----------+----------+----------+
|                                   |   | 2006     | 2005     | 2004     |
+-----------------------------------+---+----------+----------+----------+
| ASSETS                            |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
| Current Assets                    |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Cash and cash equivalents       |   | 103      | 53       | 45       |
|                                   |   | ,113,656 | ,838,843 | ,303,078 |
+-----------------------------------+---+----------+----------+----------+
|   Trade accounts receivable – net |   | 66       | 60       | 60       |
|                                   |   | ,899,074 | ,367,391 | ,810,645 |
+-----------------------------------+---+----------+----------+----------+
|   Amounts due from related        |   | 30       | 23       | 9        |
|   companies                       |   | ,004,929 | ,163,063 | ,869,138 |
+-----------------------------------+---+----------+----------+----------+
|   Inventories – net               |   | 19       | 17       | 11       |
|                                   |   | ,363,469 | ,427,685 | ,874,246 |
+-----------------------------------+---+----------+----------+----------+
|   Property development cost – net |   | 29       | -        | -        |
|                                   |   | ,639,622 |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Other current assets            |   | 162      | 13       | 12       |
|                                   |   | ,076,519 | ,902,109 | ,907,492 |
+-----------------------------------+---+----------+----------+----------+
| Total current assets              |   | 411      | 168      | 140      |
|                                   |   | ,097,269 | ,699,091 | ,764,599 |
+-----------------------------------+---+----------+----------+----------+
| Non-current Assets                |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Investment in subsidiaries      |   | 7,342    | 7,704    | 7,703    |
|   accounted for                   |   | ,919,921 | ,642,972 | ,459,048 |
|                                   |   |          |          |          |
|   under the equity method         |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Other long-term investments     |   | 13       | 13       | 25       |
|                                   |   | ,674,001 | ,674,001 | ,168,000 |
+-----------------------------------+---+----------+----------+----------+
|   Long-term loans to subsidiaries |   | 1,137    | 604      | 38       |
|                                   |   | ,000,000 | ,500,000 | ,500,000 |
+-----------------------------------+---+----------+----------+----------+
|   Property, plant and equipment – |   | 824      | 790      | 734      |
|   net                             |   | ,008,317 | ,343,036 | ,665,597 |
+-----------------------------------+---+----------+----------+----------+
|   Goodwill / (Negative goodwill)  |   | 20       | 20       | (14,     |
|   on consolidtion                 |   | ,305,564 | ,816,789 | 356,262) |
+-----------------------------------+---+----------+----------+----------+
|   Other non-current assets        |   | 5        | 6        | 7        |
|                                   |   | ,900,799 | ,601,116 | ,018,413 |
+-----------------------------------+---+----------+----------+----------+
| Total non-current assets          |   | 9,343    | 9,140    | 8,494    |
|                                   |   | ,808,602 | ,577,914 | ,454,796 |
+-----------------------------------+---+----------+----------+----------+
| TOTAL ASSETS                      |   | 9,754    | 9,309    | 8,635    |
|                                   |   | ,905,871 | ,277,005 | ,219,395 |
+-----------------------------------+---+----------+----------+----------+
| LIABILITIES AND SHAREHOLDERS'     |   |          |          |          |
| EQUITY                            |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
| Current liabilities               |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+
|   Short-term loans from financial |   | 415      | 397      | 60       |
|   institutions                    |   | ,000,000 | ,000,000 | ,000,000 |
+-----------------------------------+---+----------+----------+----------+
|   Trade accounts payable          |   | 34       | 42       | 33       |
|                                   |   | ,760,669 | ,553,474 | ,449,873 |
+-----------------------------------+---+----------+----------+----------+
|   Current portion of long-term    |   | 140      | 280      | 200      |
|   loans                           |   | ,000,000 | ,000,000 | ,000,000 |
+-----------------------------------+---+----------+----------+----------+
|   Amounts due to related          |   | 43       | 15       | 14       |
|   companies                       |   | ,141,178 | ,535,529 | ,232,964 |
+-----------------------------------+---+----------+----------+----------+
|   Other current liabilities       |   | 108      | 69       | 49       |
|                                   |   | ,467,067 | ,133,720 | ,403,198 |
+-----------------------------------+---+----------+----------+----------+
| Total current liabilities         |   | 741      | 804      | 357      |
|                                   |   | ,368,914 | ,222,723 | ,086,035 |
+-----------------------------------+---+----------+----------+----------+
|                                   |   |          |          |          |
+-----------------------------------+---+----------+----------+----------+

Company Balance Sheets (continued)

Unit : Baht

+----------------------------------+---+----------+----------+----------+
|                                  |   | The      |          |          |
|                                  |   | Company  |          |          |
|                                  |   | Only     |          |          |
+----------------------------------+---+----------+----------+----------+
|                                  |   | 2006     | 2005     | 2004     |
+----------------------------------+---+----------+----------+----------+
| LIABILITIES AND SHAREHOLDERS'    |   |          |          |          |
| EQUITY                           |   |          |          |          |
|                                  |   |          |          |          |
| (continued)                      |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
| Non-Current liabilities          |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Long-term loans from           |   | 556      | 890      | 937      |
|   subsidiaries                   |   | ,750,000 | ,750,000 | ,550,000 |
+----------------------------------+---+----------+----------+----------+
|   Long-term loans – net of       |   | 632      | 772      | 200      |
|   current portion                |   | ,000,000 | ,000,000 | ,000,000 |
+----------------------------------+---+----------+----------+----------+
|   Other non current liabilities  |   | 8        | 8        | 10       |
|                                  |   | ,430,010 | ,496,210 | ,817,128 |
+----------------------------------+---+----------+----------+----------+
| Total non-current liabilities    |   | 1,197    | 1,671    | 1,148    |
|                                  |   | ,180,010 | ,246,210 | ,367,128 |
+----------------------------------+---+----------+----------+----------+
| Total liabilities                |   | 1,938    | 2,475    | 1,505    |
|                                  |   | ,548,924 | ,468,933 | ,453,163 |
+----------------------------------+---+----------+----------+----------+
| Shareholders' equity             |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Share capital                  |   | 846      | 846      | 846      |
|                                  |   | ,701,430 | ,701,430 | ,701,430 |
|   Registered                     |   |          |          |          |
|                                  |   |          |          |          |
|   84,670,143 ordinary shares of  |   |          |          |          |
|   Baht 10 each                   |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Issued and fully paid-up       |   | 846      | 846      | 846      |
|                                  |   | ,701,430 | ,701,430 | ,701,430 |
|   84,670,143 ordinary shares of  |   |          |          |          |
|   Baht 10 each                   |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Share premium                  |   | 2,062    | 2,062    | 2,062    |
|                                  |   | ,460,582 | ,460,582 | ,460,582 |
+----------------------------------+---+----------+----------+----------+
|   Other surpluses                |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Capital reserve                |   | 634      | 634      | 634      |
|                                  |   | ,698,720 | ,698,720 | ,698,720 |
+----------------------------------+---+----------+----------+----------+
|   Revaluation surplus            |   | 1,789    | 1,888    | 1,985    |
|                                  |   | ,995,216 | ,359,140 | ,987,993 |
+----------------------------------+---+----------+----------+----------+
|   Unrealised gain (loss) on      |   | (28,     | (28,     | 393,328  |
|   available for sale securities  |   | 856,095) | 856,095) |          |
+----------------------------------+---+----------+----------+----------+
|   Translation adjustment         |   | 72       | 104      | 84       |
|                                  |   | ,905,170 | ,869,520 | ,829,377 |
+----------------------------------+---+----------+----------+----------+
|   Retained earnings              |   |          |          |          |
+----------------------------------+---+----------+----------+----------+
|   Appropriated – statutory       |   | 84       | 84       | 84       |
|   reserve                        |   | ,670,143 | ,670,143 | ,670,143 |
+----------------------------------+---+----------+----------+----------+
|   Unappropriated                 |   | 2,353    | 1,240    | 1,430    |
|                                  |   | ,781,781 | ,904,632 | ,024,659 |
+----------------------------------+---+----------+----------+----------+
|                                  |   | 2,438    | 1,325    | 1,514    |
|                                  |   | ,451,924 | ,574,775 | ,694,802 |
+----------------------------------+---+----------+----------+----------+
| Total shareholders' equity       |   | 7,816    | 6,833    | 7,129    |
|                                  |   | ,356,947 | ,808,072 | ,766,232 |
+----------------------------------+---+----------+----------+----------+
| TOTAL LIABILITIES AND            |   | 9,754    | 9,309    | 8,635    |
| SHAREHOLDERS' EQUITY             |   | ,905,871 | ,277,005 | ,219,395 |
+----------------------------------+---+----------+----------+----------+

 Company Statements of Cash Flows 

Unit : Baht

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

                                        2006            2005            2004

  Cash flows from (used in) operating                                   
  activities                                                            

  Net cash inflow (outflow) from        (164,785,846)   (100,049,320)   (14,275,943)
  operating activities                                                  

  Cash flows from (used in) investing                                   
  activities                                                            

  Net cash inflow (outflow) from        810,060,659     (664,274,629)   350,382,420
  investing activities                                                  

  Cash flows from (used in) financing                                   
  activities                                                            

  Net cash inflow (outflow) from        (596,000,000)   772,859,714     (331,390,286)
  financing activities                                                  

  Net increase in cash and cash         49,274,813      8,535,765       4,716,191
  equivalents                                                           

  Cash and cash equivalents at the      53,838,843      45,303,078      40,586,887
  beginning of the year                                                 

  Cash and cash equivalents at the end  103,113,656     53,838,843      45,303,078
  of the year                                                           

                                                                        

                                                                        

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

12.1.3 Financial ratios of the company and its subsidiaries

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

                                          Consolidated                              

                                          2006              2005         2004       

  Liquidity Ratio’s                                                                 

  Current Ratio                   Times   1.23              0.91         1.40       

  Quick Ratio                     Times   0.79              0.65         1.12       

  Cash Flow From Operating        Times   0.50              0.14         0.81       
  Activities Ratio                                                                  

  Receivables Turnover            Times   6.14              3.75         5.29       

  Collection Period               Days    58.63             96.00        68.05      

  Inventory Turnover              Times   19.91             15.86        16.58      

  Inventory Turnover Period       Days    18.08             22.70        21.71      

  Accounts Payable Turnover       Times   11.44             9.32         11.27      

  Payment Period                  Days    31.47             38.63        31.94      

  Cash Cycle                      Days    45.24             80.07        57.82      

                                                                                    

  Profitability Ratio’s                                                             

  Gross Profit Margin             %       28.18             13.43        35.00      

  Profit Margin from Operations   %       26.09             5.15         31.17      

  Net Profit Margin               %       18.08             (0.62)       22.36      

  Return On Equity                %       13.76             (0.26)       12.25      

                                                                                    

  Efficiency Ratio’s                                                                

  Return On Total Assets          %       8.09              (0.18)       9.71       

  Return On Fixed Assets          %       14.12             3.67         15.50      

  Asset Turnover                  Times   0.45              0.29         0.43       

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

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

                                       Consolidated                               

                                       2006              2005          2004       

  Financial Policy Ratio’s                                                        

  Debt To Equity               Times   0.74              0.66          0.22       

  Interest Coverage            Times   7.78              3.52          31.27      

  Payout Ratio (Cash Basis)    Times   0.52              0.05          1.30       

  Dividend Payout Ratio        %       -                 (856.13)      19.13      

                                                                                  

  Share value’s                                                                   

  Book Value Per Share         Baht    101.35            89.63         92.13      

  Earnings (loss) Per Share    Baht    13.14             (0.23)        10.46      

  Dividend Per Share           Baht    -                 2.00          2.00       

                                                                                  

  Growth rate’s                                                                   

  Total Assets                 %       18.15             32.68         9.08       

  Total Liabilities            %       25.80             194.19        (17.15)    

  Total Revenues               %       92.01             (19.03)       28.49      

  Total Expenses               %       50.83             10.35         22.11      

  Net Income (Loss)            %       5,726.35          (102.23)      76.88      

                                                                                  

                                                                                  

                                                                                  

                                                                                  

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

  ---------------------------- ------- ---------- -- ---------- -- ---------- -- --
  COMPANY FINANCIAL RATIOS                                                       

                                       Company                                   

                                       2006          2005          2004          

  Liquidity Ratio’s                                                              

  Current Ratio                Times   0.55          0.21          0.39          

  Quick Ratio                  Times   0.23          0.14          0.30          

  Cash Flow From Operating     Times   (0.21)        (0.17)        (0.03)        
  Activities Ratio                                                               

  Receivables Turnover         Times   7.32          4.62          6.82          

  Collection Period            Days    49.18         77.98         52.80         

  Inventory Turnover           Times   18.46         17.95         27.99         

  Inventory Turnover Period    Days    19.51         20.06         12.86         

  Accounts Payable Turnover    Times   8.78          6.92          9.83          

  Payment Period               Days    40.99         52.03         36.62         

  Cash Cycle                   Days    27.69         46.01         29.04         

                                                                                 

  Profitability Ratio’s                                                          

  Gross Profit Margin          %       24.72         8.83          33.37         

  Profit Margin from           %       15.98         (27.03)       (0.87)        
  Operations                                                                     

  Net Profit Margin            %       163.80        (4.75)        188.80        

  Return On Equity             %       15.19         (0.28)        13.43         

                                                                                 

  Efficiency Ratio’s                                                             

  Return On Total Assets       %       11.68         (0.22)        10.83         

  Return On Fixed Assets       %       142.77        2.07          129.49        

  Asset Turnover               Times   0.07          0.05          0.06          

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

  ---------------------------- ------- ---------- -- ---------- -- ---------- --
  COMPANY FINANCIAL RATIOS                                                    
  (Continued)                                                                 

                                       Company                                

                                       2006          2005          2004       

  Financial Policy Ratio’s                                                    

  Debt To Equity               Times   0.25          0.36          0.21       

  Interest Coverage            Times   (0.15)        (0.02)        0.72       

  Payout Ratio (Cash Basis)    Times   (0.13)        (0.09)        (0.03)     

  Dividend Payout Ratio        %       -             (856.13)      19.13      

                                                                              

  Share value’s                                                               

  Book Value Per Share         Baht    92.32         80.71         84.21      

  Earnings (loss) Per Share    Baht    13.14         (0.23)        10.46      

  Dividend Per Share           Baht    -             2.00          2.00       

                                                                              

  Growth rate’s                                                               

  Total Assets                 %       4.79          7.81          11.85      

  Total Liabilities            %       (21.69)       64.43         (9.44)     

  Total Revenues               %       63.09         (11.17)       12.86      

  Total Expenses               %       21.88         4.60          11.52      

  Net Income (Loss)            %       5,726.35      (102.23)      76.88      

                                                                              

                                                                              

                                                                              

                                                                              

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

12.2 Explanation and Analysis by management

  The net profit attributable to the shareholders of Baht 1,113 million
  for the year ended 31^(st) December 2006 was Baht 1,133 million higher
  than the prior year. The reason for the increase in profit was due to
  the business recovery from the Tsunami which was severely affected
  tourism to Phuket in 2005 coupled with a record performance from the
  property sales and holiday club divisions.

  This was partially offset by the start-up losses incurred by Banyan
  Tree Lijiang hotel which commenced operations in April 2006 and losses
  from the office rental operations in Thai Wah Tower II in Bangkok due
  to a number of leases being terminated for planned conversion to hotel
  suites.

  Other points of note are:

-   interest income increased by Baht 18 million due to the higher
    number of holiday club memberships sold with deferred payment plans.

-   selling and administrative expenses increased by Baht 13 million
    primarily due to an increase in salary and wages and legal costs.
    The increase in legal costs primarily related to the insurance claim
    for property damage and business interruption from the Tsunami and
    land related cases.

-   a foreign exchange gain of Baht 88 million which was due to the
    appreciation of the Baht vs the US dollar during 2006.

-   an increase of depreciation of Baht 56 million which was due to the
    new Banyan Tree Lijiang hotel, a 45 room extension to the Sheraton
    Laguna Grande Hotel Phuket and a full year of depreciation of Banyan
    Tree Bangkok and Thai Wah Tower I and Thai Wah Tower II (acquired in
    March 2005).

-   an increase in interest costs of Baht 64 million which was due to
    the loans taken out resulting from the acquisition of Thai Wah Plaza
    Limited, loans taken out to fund the construction of additional room
    inventory in Laguna Phuket and the construction of Banyan Tree
    Lijiang, and an increase in interest rates during the year.

-   taxation was Baht 182 million higher than prior year due to the
    significant increase in operating profit in 2006.

-   net earnings of minority interest in subsidiaries was higher than
    the prior year due to the increase n in net income during the year
    for the respective hotel and gallery operations.

  For the reasons stated above, the company has shown an increase in net
  earnings as compared to the same period last year.

Hotel Operations

  (Unit: Million Baht)

  --------------- ---------- -------- --------- -------- --------- --------
                  2006       %        2005      %        2004      %

                                                                   

  Revenues        3,590      100.0    2,306     100.0    2,804     100.0

                                                                   

  Expenses        3,016      84.0     2,159     93.6     1,944     69.3

                                                                   

  Operating       574        16.0     147       6.4      860       30.7
  Profit                                                           

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

 

  Hotel revenue was Baht 1,284 million higher than last year and
  expenses are Baht 857 million higher than last year resulting in
  operating profit being Baht 427 million higher than last year. The
  operating margin of 16.0 percent was above the prior year level of 6.4
  percent but below the 2004 level of 30.7 percent. The main reasons for
  this were:

-   an increase in occupancies and average room rates in the Laguna
    Phuket hotels leading to increased revenue as compared to 2005 when
    the resort experienced very poor business levels in the aftermath of
    the Tsunami. However, fixed operating expenses continued to be
    incurred renovations took place resulting in a lower operating
    margin for the Laguna Phuket hotels.

-   a full year results being recorded for the Banyan Tree Bangkok which
    was acquired in March 2005.

-   the start-up losses incurred by Banyan Tree Lijiang hotel which
    commenced operations in April 2006.

  Property Sales and Holiday Club Operations

  (Unit : Million Baht)

  -------------- ---------- ------- ---------- -------- ---------- --------
                 2006       %       2005       %        2004       %

                                                                   

  Revenues       2,328      100.0   750        100.0    1,052      100.0

                                                                   

  Expenses       1,203      51.7    491        65.5     562        53.4

                                                                   

  Operating      1,125      48.3    259        34.5     490        46.6
  Profit                                                           

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

  The Property Sales business continues to experience strong growth as
  the Phuket property market develops. Laguna Property Sales sells
  residential and hotel branded villas. The Baht 1,359 million higher
  revenue and Baht 800 million higher profit than 2005 mainly comprised
  the recognition of:

-   3 partially complete Laguna Village Villas

-   22 completed and 21 partially completed Laguna Townhomes

-   10 completed and 14 partially complete Laguna Residences

-   4 completed Banyan Tree Two Bedroom Pool Villas; and

-   8 completed Banyan Tree Double Pool Villas.

  In addition, a further 27 properties were sold during the year for
  which no revenue or profit was recognised due to construction being
  less than 10 percent and/or the initial downpayment from buyers being
  less than 20 percent as at year end.

  Laguna Holiday Club is a professional and successful operation which
  sells club memberships where members purchase a right of use to
  accommodations owned by the club. The Baht 219 million higher revenue
  and Baht 67 million higher profit than 2005 was mainly due to the
  strong performance of the existing Phuket and Bangkok branches coupled
  with successful opening of an additional branch in Bintan, Indonesia
  during the year.

  Balance Sheet

  The main balance sheet items at 31 December 2006 are as follows:

+-----------------------------+---------+--------------+--------------+
|                             |   Note  | 31^(st)      | 31^(st)      |
|                             |         | December     | December     |
|                             |         | 2006         | 2005         |
|                             |         |              |              |
|                             |         | Baht 000     | Baht 000     |
+-----------------------------+---------+--------------+--------------+
|   Cash, cash equivalents    |   1     |   1,087,924  |   69,833     |
|   and fixed deposits        |         |              |              |
+-----------------------------+---------+--------------+--------------+
|   Trade accounts receivable |   2     |   1,116,497  |   810,689    |
+-----------------------------+---------+--------------+--------------+
|   Property development cost |   3     |   593,414    |   218,519    |
+-----------------------------+---------+--------------+--------------+
|   Other investments         |   4     |   210,399    |   210,399    |
+-----------------------------+---------+--------------+--------------+
|   Property, equipment and   |   5     |   11,116,393 |   10,124,745 |
|   land                      |         |              |              |
+-----------------------------+---------+--------------+--------------+
|   Loans from banks          |   6     |   4,365,869  |   3,684,788  |
+-----------------------------+---------+--------------+--------------+
|                             |         |              |              |
+-----------------------------+---------+--------------+--------------+

  The main points of note in regard to the Balance Sheet movements in
  the year ended 31^(st) December 2006 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 in 2006.

3.  The increase in property development cost in 2006 is mainly due to
    the completion of the Laguna Holiday Club Phuket Resort.

4.  There has been no change in other investments.

5.  The increase in property, plant and & equipment is mainly due to the
    completion of the new Banyan Tree Lijiang hotel, the new Double Pool
    Villas at the Banyan Tree Phuket and the acquisition of additional
    office units in Thai Wah Tower 1.

6.  Loans from banks have increased significantly in 2006 due to loans
    taken out to finance the construction in (3) and (5) above.

Cash Flows

The cash and cash equivalents of Baht 1,088 million at 31^(st) December
2006 represented a Baht 418 million increase as compared to 31^(st)
December 2005. The main components of cash generated during the year are
as follows:

-   Net cash generated by operations amounted to Baht 1,266 million and
    is largely a function of net earnings for the year adjusted for
    depreciation and working capital movements.

-   Expenditure on fixed assets amounted to Baht 1,787 million and
    largely related to the construction projects in Laguna Phuket,
    Banyan Tree Lijiang and Banyan Tree Bangkok.

-   Long term loans drawn down of Baht 1,227 million;

-   Scheduled loan repayments of Baht 593 million; and

-   A loan received from a related party to assist in the financing of
    the Banyan Tree Lijiang of Baht 214 million.

Commentary on Consolidated Financial Ratios

Liquidity ratios

-   Current ratio – this is higher in 2006 due to the increase in cash
    at bank, accounts receivable and property development cost.

-   Quick ratio – this is higher in 2006 due to the increase in cash at
    bank and accounts receivable.

-   Cash flow from operating activities – this is higher than the prior
    year levels due to the higher profitability in 2006.

-   Receivable turnover – this is higher than the prior year levels due
    to the higher revenue in 2006.

-   Collection period – this is an improvement on the prior year levels
    due to the higher revenue in 2006.

-   Inventory turnover – this is higher than the prior year levels due
    to higher direct costs in 2006 being linked to the higher revenues
    in 2006.

-   Inventory turnover period – this is an improvement on the prior year
    levels due to higher direct costs in 2006 being linked to the higher
    revenues in 2006.

-   Accounts payable turnover – this is higher than the prior year
    levels due to higher direct costs in 2006 being linked to the higher
    revenues in 2006.

-   Payment period – this is an improvement on the prior year levels due
    to higher direct costs in 2006 being linked to the higher revenues
    in 2006.

-   Cash cycle – the reduction is mainly due to an improvement on
    collection period.

Profitability ratios

-   Gross profit margin – this is higher than the prior year level due
    to the better performance whereas the results in 2005 were adversely
    impacted by the drop in business levels as a result of the Tsunami
    on 26^(th) December 2004.

-   Profit margin from operations – this is higher than the prior year
    level due to the better performance whereas the results in 2005 were
    adversely impacted by the drop in business levels as a result of the
    Tsunami on 26^(th) December 2004.

-   Net profit margin – this is higher than the prior year level due to
    the better performance whereas the results in 2005 were adversely
    impacted by the drop in business levels as a result of the Tsunami
    on 26^(th) December 2004.

-   Return on equity – this is higher than the prior year level due to
    the better performance whereas the results in 2005 were adversely
    impacted by the drop in business levels as a result of the Tsunami
    on 26^(th) December 2004.

Efficiency ratios

-   Return on total assets – this is higher than the prior year level
    due to the better performance whereas the results in 2005 were
    adversely impacted by the drop in business levels as a result of the
    Tsunami on 26^(th) December 2004.

-   Return on fixed assets – this is higher than the prior year level
    due to the better performance whereas the results in 2005 were
    adversely impacted by the drop in business levels as a result of the
    Tsunami on 26^(th) December 2004.

-   Asset turnover – this is higher than the prior year levels due to
    the higher revenue in 2006.

Financial policy ratios

-   Debt to equity – this ratio is higher than last year due to the
    increase in bank loans drawn down to fund construction of new
    projects including Banyan Tree Lijiang hotel, the Double Pool Villas
    at Banyan Tree Phuket, Laguna Holiday Club Phuket Resort and the
    expansion of a new Grande room wing at the Sheraton Laguna Grande
    Phuket all of which were largely debt financed.

-   Interest cover – the increase as compared to last year is due to the
    higher cash flows from operations as a result of the improved
    performance in 2006.

-   Pay-out ratio (cash) – the increase as compared to last year is due
    to a decrease in loan repayments and an increase in operating cash
    flows.

-   Dividend pay-out ratio – no dividend payment was made in the 2006.

    Auditors' Remuneration (for the fiscal year ended 31^(st)
    December 2006)

1.  Audit fees

  The Company and subsidiaries paid audit fees for the fiscal year to an
  audit firm which amounted to Baht 3,872,500 and subsidiaries paid
  audit fees to another audit firm which amounted to Baht 1,697,000.
  This amount does not include the audit fees paid by associated
  companies.

1.  Non-audit fees

  The Company and subsidiaries did not pay any non-audit fees for the
  fiscal year to the audit firm which acted as the auditor of the
  Company.