11 Related party transactions 

During 2002, the Company had significant business transactions with its
subsidiaries, associated and related companies (related by way of common
shareholders and/or common directors).

Laguna Resorts & Hotels plc by the nature of its product and its complex
group structure has a large number of related party transactions. Laguna
Phuket is an integrated resort with a number of hotels and associated
resort services being incorporated in different companies within the
group. This in itself results in a significant number of related party
transactions which are considered to be necessary and reasonable for the
operation of Laguna Phuket. The nature of these transactions are
summarised below:

● Loans to subsidiary companies and between group companies are
unsecured and are denominated in Thai Baht. The loans are repayable on
demand and carry interest at a rate equal to the lenders’ borrowing
costs per annum plus a margin of 1.1%. Where loans have been made by
Allamanda Vacation Club Ltd to subsidiaries, the interest rate charged
is 6%.

● Costs are often incurred in one company within the group which are
reimbursed by the company to which the expense relates. Actual costs are
reimbursed with no handling costs applied.

● In a number of instances goods and services that are consumed by
customers in one part of Laguna Phuket are billed centrally to the
customer at the hotel at which the customer is staying. Such charges
relate to meals at restaurants, golf fees, treatments at Spa’s and goods
purchased at shops in the resort. On receiving the funds centrally from
the customer, the hotel reimburses the company in which the goods and
services are consumed. Actual receipts are paid and handling charges are
generally not charged with the exception of credit card commissions as
noted below.

● When monies are received in a different company in which the revenue
was earned, credit card commissions are deducted from the gross receipts
of customers in the company in which the monies were received. As a
result there is an inter company charge that passes on the cost to the
company in which the revenue is recognised. The rates charged range from
1% to 3.5% of the revenue and are based on the actual commissions
charged by the credit card companies.

● Laguna Beach Resort charges a commission to Banyan Tree Spa Co., Ltd.
for guests that it provides to the closely located Spa. The commission
is paid by the Spa to incentivise Laguna Beach Resort to market the
Spa’s facilities to its guests. The rates charged range from 5% to 10%
of spa revenue based on the number of guests that Spa provides to Laguna
Beach Resort each month.

● There is a charge from the golf course to the hotels on the basis that
the golf course is a facility for all of the hotels in Laguna Phuket to
use. The rate charged to each hotel is Baht 10,000 per hotel room per
annum.

● Laguna Service Co., Ltd. provides centralised services to each
operation in the group located at Laguna Phuket which are charged at the
following rates:

- Utility charge : at the determined price and actual usage

- Laundry charge : at the price as based on cost plus certain margin

- Beach cleaning and transportation charge : based on actual cost

- Marketing fee : at the rate of 1 % of hotel revenue

● The employees of the PCD division of LRH manage projects that are
undertaken by the groups operations during the year. The contracted fee
is set at a rate of 5% of the actual or budgeted costs of the project
which is on normal commercial terms and conditions.

● Operating agreements to manage the hotels are as follows:

  (i) the management contract of the Banyan Tree Phuket pays a basic
  management fee of 2% of total revenue and an incentive fee of 7.5% of
  gross operating profit. In addition, expenses relating to the sharing
  of promotional campaigns and adverts, sales staff salaries, central
  reservations and international sales offices incurred by the Banyan
  Tree corporate head office are reimbursed on the basis of each of the
  individual hotels revenue in the Banyan Tree group.

  (ii) the management contract of the Dusit Laguna Resort pays a basic
  management fee of 2% of total revenue and an incentive fee of 5% of
  gross operating profit. In addition the sharing of promotional
  campaigns and adverts incurred by the Dusit Thani corporate head
  office are reimbursed.

  (iii) the management of the golf course is governed by the Technical
  Assistance Agreement to conduct the golf business. The terms of the
  agreement set a basic management fee of 3% of total revenue and an
  incentive fee of 10% of gross operating profit.

  All management fees are consistent with industry practice and the
  share of group marketing costs incurred by LBT and LRH are the
  reimbursement of costs benefiting each of the hotels. As a result
  these transactions are on normal commercial terms and conditions.

● A Service Agreement was previously in place to share expenses for
Group Corporate Finance, Human Resources, Information Technology, Legal,
Corporate Affairs and Administration, with TWC. Actual expenses were
allocated on pre-agreed formulas which are based on factors relating to
the function of the corporate head office department (e.g. human
resources on headcount, legal on time and number of court cases). From 1
January 2002, the basis of this charge was changed with the staff now
being employed by, and salaries being charged to, the specific companies
for which the staff work.

● Discounts are provided on retail sales between group companies as
follows:

  (i) sales from Banyan Tree Gallery (Thailand) Limited and other Thai
  subsidiary and related companies which are priced at a 30% to 50%
  discount to the retail price; and

(ii) sales from Banyan Tree Gallery (Thailand) Limited to Banyan Tree
Gallery (Singapore) Pte Limited and shops in Bintan and the Maldives
which are priced at cost plus a handling fee of 5%. In this instance BTG
(T) acts as a purchasing agent on behalf of BTG (S) in order to
centralise the purchasing function.

  ● Rent is paid for premises and land and are on the following bases:

  (i) Rental of hotel premises and service income is on the basis of 5%
  to 11.5% of sales revenue which is dependent on criteria such as the
  location, budgeted sales, term of the lease, size of area leased and
  type of operation. Rent charged is on normal commercial terms and
  conditions.

  (ii) rental of office space with monthly rent varying from Baht 200 to
  Baht 550 per square metre which is dependent on criteria such as the
  location, term of the lease, size of area leased.

(iii) rental of space in Canal Village for marketing and property sales
office. The rates charged range from Baht 260 to Baht 350 per square
metre.

(iv) rental of hotel premises and is on the basis of Baht 893 to 937 per
square metre which is dependent on criteria such as the location, term
of the lease, size of area leased.

(v) rental of land on which hotel premises are located at the rate of
Baht 11.4 million to Baht 12.5 million per annum.

(vi) rental of land on which hotel operations are located at the rate of
Baht 1.3 million to Baht 1.4 million per annum.

(vii) rental of a marquee which is rented on normal commercial terms.

(viii) rental of land on which the shopping village and staff dormitory
are located at the rate of Baht 0.5 million to Baht 1.16 million per
annum.

(ix) rental of land on which hotel premises are located at the rate of
Baht 4.3 million per annum.

  Rents charged and paid are on normal commercial terms and conditions
  and are on an arms length basis.

● The sale of units to Allamanda Vacation Club Limited for use as
inventory in its timeshare business. Sales prices are based on normal
selling price after deducting a certain discount.

● The purchase of lease rights of 27 hotel units in the Angsana Resort &
Spa on Bintan Island, Indonesia for use as inventory in the time-share
business at the price specific in the agreement. The purchase price was
at a significant discount to the listed price for the properties.

● Before the hotel units in the Angsana Resort & Spa are sold for use as
inventory in the time-share business, a management agreement has been
signed to manage these hotel units. A return amounting to one third of
net room revenue over the period of which the units were owned in 2002.

● The Allamanda Vacation Club purchases vouchers from the Banyan Tree
Spa which it provides to potential customers as a marketing tool. These
Spa vouchers are priced at a 40% discount to the Spa list price.

It is the group’s policy to ensure that there is no conflict of interest
when related party transactions are executed. All existing related party
transactions are communicated by each of the operations within Laguna
Phuket on a quarterly basis and reviewed by management. New proposed
related party transactions are identified by and/or communicated to
higher level management and the transactions are approved in accordance
with the requirements of the SET. All efforts are made to ensure that
interested executives and shareholders, where applicable, do not take
part in approving the transaction. This is achieved by obtaining the
approval of such transactions by the independent directors via the Audit
Committee.

Related party transactions, which have been concluded on the terms and
bases determined by the Company and those companies, or in accordance
with the agreement, are detailed below. Significant transactions greater
than Baht 1 million are disclosed separately and non significant
transactions have been grouped.

RELATED PARTY TRANSACTIONS IN YEAR 2002

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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RELATED PARTY TRANSACTIONS IN YEAR 2002 (CONT’D)

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  ---- ------ ------ ---------- ---------- ----- ------ ----- ------ -------- ---------- --- ----- ---- ------- ------
  72   LSC    LRH    Purchase   Net book   N/A   3.65   3.9   TWC,   Common   Transfer   2   NA    NA   (a) LBC JRB,
                     of fixed   value                         BTHL   Shr      marquee                   owns    KCH,
                     assets                                                   tents into                27.1%   MA,
                     (Marquee                                                 company                   in LSC  NT,
                     tents)                                                   that is                   (b) (c) SSU
                                                                              deriving                  (d)     
                                                                              rental                            
                                                                              from the                          
                                                                              marquee                           
                                                                              rental                            

  73   BTHL   TWRH   Sale loan  Sale at    N/A   66.9   -     TWC,   Common   Recover    -   Yes   NA   (b) (c) -
                     stock of   cost plus                     BTHL   Shr      loan at                   (d)     
                     TRL USD    accrued                                       full face                         
                     1.235      interest                                      value plus                        
                     million                                                  accrued                           
                                                                              interest                          
  ---- ------ ------ ---------- ---------- ----- ------ ----- ------ -------- ---------- --- ----- ---- ------- ------

REFERENCE FOR REASON of Having Related Person Being a Shareholder in
lieu of the Co.

+----+----------------------+-----------------------------------------+
| Re |   Relationship       |   Reason                                |
| f. |                      |                                         |
+----+----------------------+-----------------------------------------+
| (  |   TWC owns 34.78% in |   TWC was the original joint venture    |
| a) |   LRH and 10% in LBC |   partner in LBC which subsequently     |
|    |                      |   sold all but 10% of its shares to LRH |
+----+----------------------+-----------------------------------------+
| (  |   TWC owns:          |   TWC has interests in hotels and       |
| b) |                      |   resorts and LRH was a spin off from   |
|    |   - 34.78% in LRH,   |   TWC when it consolidated most of its  |
|    |                      |   hotel interests into LRH. Apart from  |
|    |   - 87.45% in TWPL,  |   LRH, TWC also has hotel interests     |
|    |                      |   through TRL. TWC's other interests    |
|    |   - 19.80% in TRL,   |   include commercial and residential    |
|    |                      |   property development (through TWPL,   |
|    |   - 45.45% in TWFP,  |   TWRL, MJ) as well as consumer food    |
|    |                      |   products (through TWFP).              |
|    |   - 99.99% in TWRL,  |                                         |
|    |                      |                                         |
|    |   - 49.99% in MJ     |                                         |
+----+----------------------+-----------------------------------------+
| (  |   BTHL owns :        |   BTHL has interests in hotel           |
| c) |                      |   operations worldwide and Thailand is  |
|    |   - 37.14% in LRH,   |   one of these countries. BTHL and LRH  |
|    |                      |   have a joint venture relationship in  |
|    |   - 49.00% in BTS,   |   several companies in using the Banyan |
|    |                      |   Tree brandname and know-how for the   |
|    |   - 49.00% in BTG    |   mutual benefit of maximising the      |
|    |   (T),               |   return on such investments.           |
|    |                      |                                         |
|    |   - 49.00% in BTG    |                                         |
|    |   (S),               |                                         |
|    |                      |                                         |
|    |   - 100.00% in HMPL, |                                         |
|    |                      |                                         |
|    |   - 100.00% in BTGC, |                                         |
|    |                      |                                         |
|    |   - 100.00% in BTR   |                                         |
+----+----------------------+-----------------------------------------+
| (  |   TRL owns:          |   TRL has interests in hotels and       |
| d) |                      |   resorts and TWC and BTHL were a spin  |
|    |   1.45% in BTHL      |   off from TRL when it consolidated     |
|    |                      |   most of its hotels interests into TWC |
|    |   40.00% in TRMC     |   and BTHL.                             |
|    |                      |                                         |
|    |   100.00% in THL     |                                         |
|    |   through TRMC       |                                         |
|    |                      |                                         |
|    |   100.00% in GSI     |                                         |
+----+----------------------+-----------------------------------------+

REFERENCE FOR Procedures for Approving Related Transaction

  ----------- -------------------------------------------------------------
  Reference   Reason

  1           Transaction is less than 0.03% of the Company’s NTA.

  2           Normal course of business pursuant to clause 8 (1) of SET’s
              regulations under “Notification of the Stock Exchange of
              Thailand Re : Rules, Procedures, and Disclosures of Connected
              Transactions of Listed Companies”.

  3           Normal course of business pursuant to clause 8 (2) of SET’s
              regulations under “Notification of the Stock Exchange of
              Thailand Re : Rules, Procedures, and Disclosures of Connected
              Transactions of Listed Companies”.
  ----------- -------------------------------------------------------------

REFERENCE FOR Valuation Price / Rental Fee Assessed by 3rd Parties

+-----+-----+----------------------------------------------------------+
| Ref | Tr  | Justification for Transactions                           |
| ere | ans |                                                          |
| nce | act |                                                          |
|     | ion |                                                          |
|     | T   |                                                          |
|     | ype |                                                          |
+-----+-----+----------------------------------------------------------+
| A   | Ret | - Rental rate set at a sqm basis is in line with market  |
|     | ail | rate.                                                    |
|     | Ren |                                                          |
|     | tal | - The majority of the rental of Banyan Tree Gallery, Spa |
|     |     | and Courtyard are contracted on a % of revenue basis and |
|     |     | have been separately negotiated with the management of   |
|     |     | each hotel operation.                                    |
|     |     |                                                          |
|     |     | - Spa contracts being negotiated with other unrelated    |
|     |     | hotel operators are also structured on a % of revenue    |
|     |     | basis i.e. this is the general rental policy applied by  |
|     |     | the Banyan Tree Group.                                   |
+-----+-----+----------------------------------------------------------+
| B   | Off | - Rental rate is in line with market rate. Generally in  |
|     | ice | the upper range if compared to the same building in a    |
|     | Ren | similar location.                                        |
|     | tal |                                                          |
|     |     | - Terms and conditions in the agreement are similar to   |
|     |     | other customers and the market.                          |
|     |     |                                                          |
|     |     | - Service has been separated from rental for tax         |
|     |     | reasons.                                                 |
+-----+-----+----------------------------------------------------------+
| C   | L   | - Land lease rates are very different in the market      |
|     | and | depending on the location and type of land.              |
|     | Ren |                                                          |
|     | tal | - NPV calculation of rent charged has been compared to   |
|     |     | valuations as performed by an independent property       |
|     |     | valuer.                                                  |
+-----+-----+----------------------------------------------------------+

Financial Assistance

  In 2002, the Company entered into significant transactions with
  related companies which there were persons with mutual interest as
  follows:-

  Lending

Million Baht

[TABLE]

  Guarantees

Million Baht

+------+-----+----+-----+-----+------------+-------------------------+
| G    | Deb | 20 | 2   | P   | Nature of  | Necessity /             |
| uara | tor | 02 | 001 | ers | Re         | Reasonableness of       |
| ntor |     | Am | Amo | ons | lationship | contract                |
|      |     | ou | unt | w   |            |                         |
|      |     | nt |     | ith |            |                         |
|      |     |    |     | mut |            |                         |
|      |     |    |     | ual |            |                         |
|      |     |    |     | in  |            |                         |
|      |     |    |     | ter |            |                         |
|      |     |    |     | est |            |                         |
+------+-----+----+-----+-----+------------+-------------------------+
| LRH  | LSC | 2. | 2   | T   | Common     | 1. Due to their         |
|      |     | 00 | .00 | WC, | S          | financial size, the     |
|      |     |    |     | B   | hareholder | debtors are not able to |
|      |     |    |     | THL |            | obtain favorable        |
|      |     |    |     |     |            | borrowing terms from    |
|      |     |    |     |     |            | banks without the       |
|      |     |    |     |     |            | guarantee of LRH /      |
|      |     |    |     |     |            | TWRH.                   |
|      |     |    |     |     |            |                         |
|      |     |    |     |     |            | 2. It is a generally    |
|      |     |    |     |     |            | accepted practice to    |
|      |     |    |     |     |            | rely on the parent      |
|      |     |    |     |     |            | company's financial     |
|      |     |    |     |     |            | strength to act as a    |
|      |     |    |     |     |            | guarantor for its       |
|      |     |    |     |     |            | subsidiaries borrowings |
|      |     |    |     |     |            | to obtain favorable     |
|      |     |    |     |     |            | terms which result in   |
|      |     |    |     |     |            | higher profitability    |
|      |     |    |     |     |            | for the group.          |
+------+-----+----+-----+-----+------------+-------------------------+
| LRH  | BTG | 7. | 7   | T   | Common     |                         |
|      | (T) | 00 | .00 | WC, | S          |                         |
|      |     |    |     | B   | hareholder |                         |
|      |     |    |     | THL |            |                         |
+------+-----+----+-----+-----+------------+-------------------------+
| LRH  | PCD | 0. | 0   | TWC | Common     |                         |
|      |     | 50 | .50 |     | S          |                         |
|      |     |    |     |     | hareholder |                         |
+------+-----+----+-----+-----+------------+-------------------------+
| LRH  | WTL | 1. | 1   | KP  | Common     |                         |
|      |     | 00 | .00 |     | Director   |                         |
+------+-----+----+-----+-----+------------+-------------------------+
| T    |     | 1  | 10  |     |            |                         |
| otal |     | 0. | .50 |     |            |                         |
| G    |     | 50 |     |     |            |                         |
| uara |     |    |     |     |            |                         |
| ntee |     |    |     |     |            |                         |
| Baht |     |    |     |     |            |                         |
+------+-----+----+-----+-----+------------+-------------------------+

  Investment in convertible loan

Million Baht or Million US$

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