:: Annual Report 2007/2008 ::

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Details of Subsidiaries and Affiliates Companies

Type of Business

Address

Paid-up Capital (Baht)

Shareholding (%)

Siam Paging and Communication Co., Ltd.

Land owner

5,000,000

100.00

Sam Pao Petch Co., Ltd.

Land owner

1,000,000

100.00

Saraburi Property Management Co., Ltd.

Land owner

21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516 100-100/1 Moo 4 Bangna-Trad Road Km.14, Bangchalong, Bangplee Samutprakarn Tel: 0 2336-1938 FAX: 0 2336-1985 100-100/1 Moo 4 Bangna-Trad Road Km.14, Bangchalong, Bangplee Samutprakarn Tel: 0 2336-1938 FAX: 0 2336-1985

100,000,000

30.00

50,000,000

100.00

433,500,000

100.00

234,000,000

100.00

10,000,000

100.00

859,000,000

68.00

1,000,000

100.00

Property Development

Hotel, Hospitality, Property Management and Services

DNAL Co., Ltd.

Office Building for rent

Muangthong Assets Co., Ltd.

Hotel

Yongsu Co., Ltd.

Serviced Apartment

Thana City Golf & Country Club Co., Ltd.

Management and Operation

Kamala Beach Resort & Hotel Management Co., Ltd.

Hotel and Property Development

Tanayong Property Management Co., Ltd.

Building Management

21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516 21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516 21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516 100-100/1 Moo 4 Bangna-Trad Road Km.14, Bangchalong, Bangplee Samutprakarn Tel: 0 2336-1938 FAX: 0 2336-1985 21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516 100-100/1 Moo 4 Bangna-Trad Road Km.14, Bangchalong, Bangplee Samutprakarn Tel: 0 2336-1938 FAX: 0 2336-1985

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Absolute Hotel Services Co., Ltd.

Hotel Management

21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516

8,000,000

50.00

Companies

Type of Business

Address

Paid-up Capital (Baht)

Shareholding (%)

Tanayong Food & Beverage Co., Ltd.

Restaurant

1,000,000

100.00

Muang Thong Lakeside Restaurant Co., Ltd.*

Restaurant

1,000,000

100.00

Hip Hing Construction (Thailand) Co., Ltd.

Construction

100-100/1 Moo 4 Bangna-Trad Road Km.14, Bangchalong, Bangplee Samutprakarn Tel: 0 2336-1938 FAX: 0 2336-1985 50/492 Moo 6 Banmai Pak Kret, Nonthaburi Tel: 0 2503-2062 FAX: 0 2503-2061 21 Soi Choei Phuang, Viphavadi-Rangsit Road, Jompol, Jatujak, Bangkok 10900 Tel: 0 2273-8511-15 FAX: 0 2273-8516

25,000,000

51.00

Companies

Type of Business

Address

Paid-up Capital (USD)

Shareholding (%)

Tanayong International Co., Ltd.

Securities Investment

1,000 USD

100.00

Tanayong Treasury Services Co., Ltd. **

Securities Investment

2.00 USD

100.00

Treasure Pool Investments Co., Ltd. **

Securities Investment

1.00 USD

100.00

Rictor Assets Co., Ltd. **

Securities Investment

P.O. BOX 258, FIRST HOME TOWER BRITISH AMERICAN CENTER, CAYMAN ISLANDS P.O. BOX 258, FIRST HOME TOWER BRITISH AMERICAN CENTER, CAYMAN ISLANDS P.O. BOX 258, FIRST HOME TOWER BRITISH AMERICAN CENTER, CAYMAN ISLANDS P.O. BOX 258, FIRST HOME TOWER BRITISH AMERICAN CENTER, CAYMAN ISLANDS

1.00 USD

100.00

Other Business

Note * Muang Thong Lakside Restaurant Co., Ltd. is 100% owned by Muangthong Assets Co., Ltd. ** Rictor Assets Co., Ltd., Treasury Pool Investment Co., Ltd., Tanayong Treasury Services Co., Ltd., are 100% owned by Tanayong International Co., Ltd.

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Nature of Business History and Major Change and Development

Tanayong Public Company Limited (The Company) was established on March 27, 1968 with initial registered capital of 5,000,000 baht to operate property development business. The Company launched its first property development project “Thana City” on Bangna-Trad Road Km. 14 in 1988, the project consists of single-detached houses, townhouses, condominium units and lands.

The Company was listed on the Stock Exchange of Thailand and commenced first day trading of its securities on March 1, 1991. The Company was converted from a private limited company into a public limited company on June 2, 1993 and changed the name from Tanayong Company Limited to Tanayong Public Company Limited. At the same time, the Company expanded its business to condominiums in the city center, serviced apartments, office buildings, hotels and the outsized public utility project that required substantial investment capital, namely it was the initiative operator of the first sky train system in Thailand under Bangkok Mass Transit System Public Company Limited, which commenced its services on December 5, 1999.

In 1997, Thailand suffered severe economics crisis such that the government had to announce the floating of the Thai baht currency, which directly affected the private sector particularly business operators with foreign loans. The floating of the Thai baht currency had amplified the value of existing debt. The Company was also affected by the floating exchange rate.

During 2002 - 2006, the Company had gone through debt restructuring and rehabilitation process. After the completion of the business rehabilitation process, the Central Bankruptcy Court had ordered the termination of the business rehabilitation at the end of 2006.

With the management’s vision to enhance business potential in the future, the Company has reorganized the Company’s shareholding structure and management team as well as entered business alliances with partners from Dubai, Hong Kong and China. These companies have investments in various countries around the world.

Since 2001, the Company’s major developments related to business operation and management are as follows:

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2001

The Stock Exchange of Thailand posted the SP sign to suspend trading of the Company’s security from September 7, 2001.

2002 - 2006

The Company had gone through debt restructuring and rehabilitation process.

2005

Decreased registered capital from 4,684,557,000 baht to 3,677,468,400 baht with 367,746,840 shares.

Changed par value from 10 baht per share to 1 baht per share.

Decreased registered capital from 3,677,468,400 baht to 533,333,333 baht with paid-up capital of 533,333,333 baht.

Increased registered capital by 4,800,000,000 baht from 533,333,333 baht to 5,333,333,333 baht with the same amount of paid-up capital of 533,333,333 baht.

2006

Changed paid-up capital from 533,333,333 baht to 5,333,333,333 baht.

The Central Bankruptcy Court ordered the termination of business rehabilitation on November 14, 2006.

The Stock Exchange of Thailand approved the trading of the Company’s securities in property development sector since December 28, 2006.

2007

Increased registered capital by 480,000,000 bath from 5,333,333,333 baht to 5,813,333,333 baht.

Changed paid-up capital to 5,733,333,333 baht and 5,813,333,333 baht respectively.

Increased registered capital by 2,243,589,743 bath from 5,813,333,333 baht to 8,056,923,076 baht with the same amount of paid-up capital of 5,813,333,333 baht.

Established a joint venture company, Kamala Beach Resort & Hotel Management Company Limited to operate hotel business and develop property in Phuket.

Established a joint venture company, Hip Hing Construction (Thailand) Company Limited to operate construction business.

2008

Established a joint venture company, Absolute Hotel Services Co., Ltd. to operate the hotel management business.

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Land owner Land owner Land owner

Business Type

Building Management Hotel Management

Tanayong Property Management Co., Ltd. Absolute Hotel Services Co., Ltd.

Tanayong Food & Beverage Co., Ltd. Muang Thong Lakeside Restaurant Co., Ltd.* Hip Hing Construction (Thailand) Co., Ltd.

Restaurant Restaurant Construction

Serviced Apartment Management and Operation Hotel and Property Development

Yongsu Co., Ltd. Thana City Golf & Country Club Co., Ltd. Kamala Beach Resort & Hotel Management Co., Ltd.

Others Business

Office Building for rent Hotel

DNAL Co., Ltd. Muangthong Assets Co., Ltd.

Hotel, Hospitality, Property Management and Services

Siam Paging and Communication Co., Ltd. Sam Pao Petch Co., Ltd. Saraburi Property Management Co., Ltd.

Property Development

Companies

1.00 8.00

1.00 25.00

1.00 1.00 25.00

234.00 10.00 859.00

234.00 10.00 859.00

1.00 1.00 100.00

50.00 433.50

5.00 1.00 100.00

Paid-up Capital (MB)

50.00 433.50

5.00 1.00 100.00

Registered Capital (MB)

Ceased trading Ceased trading Not yet commence trading

TST Tower U Chiang Mai

TST Tower Eastin Lakeside Hotel U Chiang Mai Yongsu Apartment Sport Club Kamala Hotel, Phuket Kamala Villa, Phuket

-

Operation

Shareholding Structure of the Company in Subsidiaries and Affiliates

100.00 100.00 51.00

100.00 50.00

100.00 100.00 68.00

100.00 100.00

100.00 100.00 30.00

Shareholding (%)

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Securities Investment

Securities Investment Securities Investmen

Securities Investment

Business Type

Treasure Pool Investments Co., Ltd. Rictor Assets Co., Ltd. Tanayong Treasury Services Co., Ltd. Tanayong Plc. Bangkok Mass Transit System Plc. Bangkok Mass Transit System Plc.

Operation

1.00 USD

2.00 USD 1.00 USD

1,000 USD

Registered Capital (USD)

1.00 USD

2.00 USD 1.00 USD

1,000 USD

Paid-up Capital (USD)

Note * Muang Thong Lakside Restaurant Co., Ltd. is 100% owned by Muangthong Assets Co., Ltd. ** Rictor Assets Co., Ltd., Treasury Pool Investment Co., Ltd., Tanayong Treasury Services Co., Ltd., are 100% owned by Tanayong International Co., Ltd.

Rictor Assets Co., Ltd.**

Tanayong Treasury Services Co., Ltd. ** Treasure Pool Investments Co., Ltd. **

Tanayong International Co., Ltd.

Companies

100.00

100.00 100.00

100.00

Shareholding (%)

The Company separates its core business operation into 3 groups as follows: (1) Property Development (2) Hotel, Hospitality, Property Management and Services and (3) Project Management.

(1) Property Development

The Company develops properties with emphasis diversity of project location across Bangkok and vicinity area in order to cover clients in various areas. Presently, the Company has a full range of projects as follows: Project

Operators

Type of Project

1. Thana City Bangna-Trad Road Km. 14

Tanayong Plc.

Lands, condominium units, single-detached houses and townhouses

(2) Hotel, Hospitality, Property Management and Services

The Company operates hotels, rental services for residential apartment, office building and serviced apartment and other services as follows: Project

Operators

Type of Project

Hotel

1. Eastin Lakeside Hotel 2. U Chiang Mai

Muangthong Assets Co., Ltd. Muangthong Assets Co., Ltd.

3 star hotel 4 star hotel

Tanayong Plc. Tanayong Plc. Tanayong Plc.

Residential Apartment for rent Residential Apartment for rent Residential Apartment for rent

DNAL Co., Ltd. and Tanayong Property Management Co., Ltd.

Office Building for rent

Yongsu Co., Ltd.

Serviced Apartment

Thana City Golf & Country Club Co., Ltd.

Sport Club

Residential Apartment

1. The Royal Place 1 2. The Royal Place 2 3. The Grand Office Building

1. TST Tower Serviced Apartment

1. Youngsu Apartment Services

1. Thana City Golf & Country Club (3) Project Management

The Company has been selected by National Housing Authority to do Baan Aur-Arthorn Project. The project consists of 3 storey and 4 storey residential condominiums with utility system and infrastructure in accordance with the standard of National Housing Authority. At present, the Company has been approved to construct 9,584 units from total of 20,000 units of Baan Aur-Arthorn in several locations as follows: Project

Operators

Type of Project

Baan Aur-Arthorn

1. Baan Aur-Arthorn (Na Jomtien) 2. Baan Aur-Arthorn Prajuabkirikhan (Hua Hin 3) 3. Baan Aur-Arthorn Samutprakarn (Bang Bor 2) 4. Baan Aur-Arthorn Saraburi (Kok Yae)

Tanayong Plc. Tanayong Plc. Tanayong Plc. Tanayong Plc.

3 storey condominium 4 storey condominium 4 storey condominium 3 storey condominium

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5.5 53.4

Tanayong Plc. Tanayong Plc.

100%

-

Tanayong Plc.

Share of income from investment accounted for under equity method-Associated Companies Interest Income Reverse of payable Others

2,478.9

5.5 32.7

-

Gain on Sales of investment associate Tanayong Plc.

Total Revenue

-

114.4

Tanayong Plc.

Reversal of allowance for doubtful debts

3,419.9

25.6

6.5

2,647.1

1,149.2

2,717.40

502.1

170.6

29.8

1,322.5

53.35

39.37

6.86

0.41

2006/2007 MB

Tanayong Plc.

976.0

170.1

10.2

2007/2008 MB %

Gain on debt restructuring & Business rehabilitation

Tanayong Plc.

Muangthong Assets Co., Ltd. Tanayong Plc. Tanayong Plc. Tanayong Plc. DNAL Co., Ltd. and Tanayong Property Management Co., Ltd. Yongsu Co., Ltd. Thana City Golf & Country Club Co., Ltd.

Tanayong Plc.

Operators

4. Others

Baan Aur-Arthorn

3. Project Management

Yongsu Apartment Thana City Golf & Country Club

Eastin Lakeside Hotel The Royal Place 1 The Royal Place 2 The Grand TST Tower

2. Hotel, Hospitality, Property Management and Services

Thana City

1. Property Development

Revenue/Project

Revenue Structure

100%

79.46

14.68

4.99

0.87

%

4,407.7

119.1 83.3 38.6

14.6

-

-

3,962.1

4,217.7

-

181.4

8.6

100%

95.69

-

4.12

0.20

2005/2006 MB %

Business Goal

The Company targets its core business operation into 3 groups as follows; (1) Property Development (2) Hotel, Hospitality, Property Management and Services, and (3) Project Management. In the short run, a large portion of the Company’s revenue shall be generated by project management. In the long term, the Company’s revenue shall be generated by all 3 core businesses in more even proportion.

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Nature of Business by Business Group Products Characteristic

The Company separates its core business operation into 3 groups as follows (1) Property Development (2) Hotel, Hospitality, Property Management and Services, and (3) Project Management.

Business 1: Property Development Business

Thana City Project on Bangna-Trad Road Km. 14 Thana City project located on Bangna-Trad Road Km. 14 is operated by the Company with total project area of more than 1,600 rais completed with utilities, infrastructure and flood prevention system in the midst of green spaces. Moreover, there is an 18 hole golf course, par 72 designed by a world class professional golfer and large sport complex to serve the clients.

The project offers convenient access to Bangna-Trad roads or an express way, to On-Nuch and Bangkok-Chonburi motorway. The project is also situated near Central City Bangna Shopping Complex, Krirk University, Assumption University, King Mongkut’s Institute of Technology Ladkrabang, Hospital, Suvarnabhumi Airport as well as Airport Link, which will facilitate access to the city by BTS sky train in the future.

Since Thana City is an outsized project that serves the need of all clients, the Company has developed various type of property to serve clients’ need. Parts of the project such as Prestige House 1, single-detached house with land 400 sq.wah. up project, were already completed and sold out.

At present, there are property development projects within Thana City for all clients as follows:

Single-detached house with land 1. Prestige House II 2. Prestige House III (Habitat) 3. Thana Place King Kaew

Townhouse 1. Townhouse (Habitat) 2. Townhouse beside lake and garden

Condominium 1. Prestige Condominium 2. Nouvell Condominium 3. King Kaew Condominium

Land 1. Prestige Prime and land around golf course 2. Californian

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Single-detached House with Land Details

Location Project Area Investment Capital Project Value Project Type Units Price per Unit Sold Value Units Sold and Transferred Backlog

Prestige House III (Habitat)

Prestige House II

Bangna-Trad Road Km.14 73-0-0 rais 144.4 MB 662.2 MB Single-house with land 200 sq.wah up 85 units 38,000-42,000 baht/sq.wah 315.3 MB 42 units 43 units

Bangna-Trad Road Km.14 130-0-0 rais 242.2 MB 844 MB Single-house with land 100-250 sq.wah 288 units 38,000-42,000 baht/sq.wah 601.5 MB 204 units 84 units

Thana Place King Kaew

Bangna-Trad Road Km.14 101-2-80 rais 231.7 MB 439.9 MB Single-house with land 100 sq.wah up 307 units 30,000-35,000 baht/sq.wah 240.6 MB 214 units 93 units

The Company already sold out Prestige House I with 400 sq.wah over of land plot. Presently, Prestige House II, Prestige House III and Thana Place King Kaew have smaller land plots of approximately 100-250 sq.wah.

Townhouse Details

Location Project Area Investment Capital Project Value Project Type Units Price per Unit Sold Value Units Sold and Transferred Backlog

Townhouse Beside Lake and Garden

Bangna-Trad Road Km. 14 12-0-0 rais 118.7 MB 188.1 MB Townhouse 8 meters width 3 storey/4 storey utility space 40-50 sq.wah 72 units 3.8 - 4.6 MB 134.4 MB 54 units 18 units

Townhouse (Habitat)

Bangna-Trad Road Km. 14 2-3-20 rais 15.2 MB 24.7 MB commercial townhouse 3.5 storey utility space 40-60 sq.wah 20 units 3.0 - 5.1 MB 5.5 MB 4 units 16 units

Townhouse beside lake and garden emphasizes the design with large utility space of 250-300 sq.m. on 40-50 sq.wah of land under a resort concept both 3 and 4 storeys with 3-4 rooms. Currently, there are only 18 units available. Throughout the project all power lines are built underground.

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Condominium Details

Location Project Area Investment Capital Project Value Project Type Units Price per Unit Sold Value Units Sold and Transferred Backlog

Prestige Condominium

Nouvelle Condominium

Bangna-Trad Road Km.14 24-0-0 rais 1,169.8 MB 993.9 MB 16 storey condominium 6 buildings 340 units 15 MB 979.3 MB 338 units 2 units

Bangna-Trad Road Km.14 25-0-0 rais 1,026.1 MB 1,386.4 MB 17 storey condominium 6 buildings 905 units 2.5-7.9 MB 927.1 MB 757 units 148 units

King Kaew Condominium

Bangna-Trad Road Km.14 6-2-10 rais 384.0 MB 300.3 MB 6-7 storey condominium 15 buildings 456 units 0.8-1.3 MB 136.12 MB 218 units 238 units

Prestige Condominium There are currently only 2 units available, which is a 2-storey penthouse concept with 5 bedrooms with 428 sq.m utility space at the price of approximately 15 million baht. Front view of the project offers beautiful atmosphere and golf course scene.

Nouvelle Condominium The project consists of 6 buildings of 17-storey condominium and total of 3 swimming pools with each swimming pool connecting between 2 buildings for the convenience of the residents.

All units are fully decorated with stylish furniture with 60 sq.m. utility space for 1 bedroom unit at 2.5 million baht, 97 sq.m. utility space for 2 bedrooms unit at 3.8 million baht and 250 sq.m. utility space for 3-4 bedrooms 2-storey penthouse unit at 7.9 million baht.

King Kaew Condominium The project consists of 15 buildings of 6-7 storey condominium with 41-45 sq.m. utility space for 1 bedroom unit at 900,000 baht, 60 sq.m. utility space for 2 bedrooms unit at 1.3 million baht and 98 sq.m. utility space for 3 bedrooms 2-storey penthouse unit at 2.4 million baht.

Both Nouvelle and King Kaew condominium are pre-built residential condominium offering convenience to clients as all units are fully furnished with air-conditioning and ready to move in. All units are well designed with spacious bedroom, separated kitchen area with ventilation system.

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Land Details

Location Project Area Investment Capital Project Value Project Type Units Price per Unit Sold Value Units Sold and Transferred Backlog

Prestige Prime Land

Bangna-Trad Road Km. 14 106-0-0 rais 172.9 MB 1,223.5 MB land plot around golf course 123 units 3.8-23.2 MB 970.2 MB 91 units 32 units

Californian

Bangna-Trad Road Km. 14 14-3-7.5 rais 41.5 MB 161.4 MB Single-detached house 63 units 1.2- 4.7 MB 75.5 MB 32 units 31 units

Land allocated for sale and build-to-order for clients. The Company has various sizes of land plot to suit the need of each client group such as Prestige Prime Land with land plot of approximated area of 250 sq.wah. at approximately 40,000 bath per sq.wah. Californian project comprises of land plot with approximated area of 80 sq.wah at approximately 40,000 baht per sq.wah.

Marketing and Competitive Overview Competitive Strategy 1. Create good perception of the return of the Company by promoting the Company’s image in confidence and Loyalty of the products.

2. Reposition existing products in line with current market demand by focus on modifying concept and pricing strategy.

3. Emphasize product differentiation for new products with regards to design, eminent quality and uniqueness.

4. Highlight clients’ satisfaction and fully integrated services.

Clients Characteristics and Target Clients 1. Most clients of residential housing projects are individuals or families with medium and high incomes. Most clients are those who prefer modern houses with large utility space, first-class surroundings and serene atmosphere.

2. Clients purchasing land are individuals who want to build personalized designed homes with the facilities offered by the projects.

3. Townhouse clients focus on families who require rooms that are suitable for diverse purposes.

4. Condominium clients target both Thai and foreign clients with medium or relatively high income who look for a second home or work near the Suvarnabhumi airport and require a residence with all the facilities.

Pricing Policy The Company has policies regarding price settings that takes into consideration market suitability, competitiveness of each project such that the Company shall select pricing in the conjunction with the promotion strategy for success based on suitability of each project.

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Industry Overview Since the government has a policy to stimulate economic growth, therefore on 4 March 2008, the Cabinet had approved the Ministry of Finance’s economic stimulus policy with measures that directly and positively affect property development business as follows: Tax measures to increase personal income 1. Increase the personal income tax waiver from the first 100,000 baht in annual income to 150,000 baht.

2. Increase personal income tax deduction for annual insurance premium payments from 50,000 baht to 100,000 baht.

3. Increase personal income tax deduction for annual investment in retirement fund (RMF) and long term equity fund (LTF) from 300,000 baht to 500,000 baht.

4. Increase personal income tax deduction for taxpayer with handicapped dependents 30,000 baht per handicapped person.

Tax measures to stimulate investment and competitive advantages of private business operators 1. Reduce specific business tax for property from 3.3 percent to 0.11 percent for 1 year from the effective date of law.

2. Reduce property transfer fee from 2.0 percent to 0.01 percent and mortgage registration fee from 1.0 percent to 0.01 percent for 1 year from the effective date of law.

Newly Registered Residential Unit

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Number of residential units Changes (%)

2003

2004

37,487 92.4%

49,187 31.2%

2005

2006

2007

46,828 (4.8)%

49,167 5.0%

48,970 (0.4)%

Source: Government Housing Bank Note: Bangkok and Vicinity Area Include Samutprakarn, Nonthaburi, Patumthani, Nakorn Prathom and Samutsakorn In 2007, number of newly registered single-detached houses had indicated a declining trend during the year 2006 to 2007 (16,374 units in 2007 equaling to 2 percent decrease from 2006) while townhouses had shown an increasing trend during the year 2005 to 2007 with 14,931 newly registered units in 2007, a slight increase from 2006. Condominium had the highest growth rate since 2003 but lost pace by 4.0 percent in 2007 with only 16,229 newly registered units. At the same time, there were 1,436 newly registered semi-detached houses, an increase of 65.0 percent from 2006.

New Property Development Projects opened in January - December 2007 by Price Range Price (Million Baht)

Less than 0.501 0.501 - 1.000 1.001 - 2.000 2.001 - 3.000 3.001 - 5.000 5.001 - 10.000 10.001 - 20.000 Over 20

Single-Detached House

26 2,536 2,490 5,158 1,146 27

11,383 Total Source: Agency for Real Estate Affair Company Limited

Townhouse

Condominium

Semi-Detached House

6,388 7,680 2,593 1,153 62 26

9,918 17,930 8,014 6,166 2,118 464 140

476 1,730 2,638 569 21

17,902

44,750

5,434

From these price ranges, most of the property development projects opened in 2007 were in price ranges of 1-2 million baht (29,876 units) with the majority of properties being condominium and townhouse whereas single-detached houses were in price range of 3-5 million baht and most of semi-detached houses were in price range of 2-3 million baht.

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Single-Detached House and Townhouse Demand for single-detached houses had declined during 2004 - 2007 due to the economic slow down affecting consumer confidence together with rising oil prices, higher cost of living, rising loan interest rate, lower purchasing power, all of which had directly influenced the decision to buy residential units. As a result, several property developers have built up condominiums in the city centers along the sky train’s route which offer convenience in transportation with lower cost and less travel time.

Subsequent consumer’s demand was townhouse, especially in price ranges of 1-2 million baht since townhouses are cheaper than single-detached houses and more spacious than condominium. Demand for townhouse had increased during 2005 - 2007.

In Thana City, the Company offers single-detached houses, townhouses and lands with ranges of sizes and prices to proficiently serve demand of different group of customers.

Condominium Since 2003, supply of condominiums had continued to increase from 7,399 units in 2003 to 16,229 units in 2007. In the past year, condominium was still in demand by both Thai and foreign buyers for living as well as investment.

Several condominium projects with price ranges under 3 million baht have been launched and received well response from customers. Meanwhile expensive luxury condominium projects for upper market and foreigners are also still in demand since this group has high purchasing power and from foreigners’ point of view, purchasing condominium in Thailand is a cheaper investment compared to those in Singapore and Hong Kong where land prices are much higher.

Other factors that make condominium market so attractive are (1) changing life style with traveling by the sky train becoming more popular (2) more opening of inexpensive condominiums especially along the routes of the BTS sky train and underground offering convenient transportation and therefore appeals to the customer group with lower income (3) condominium units competently serving demand for those who live alone and families with no children (4) speculative purchase where re-sale offers higher return than bank’s interest.

Thana City consists of 3 types of condominium namely Prestige Condominium with prices around 15 million baht, Nouvelle Condominium with prices between 2.5-7.9 million baht and King Kaew Condominium with project prices between 0.8-1.3 million baht. Hence, the Company has condominium units to fully serve all customer group and although the projects are not located in the city center but the projects still offer convenient travel by Bangna-Trad road and express way to Suvarnabhumi Airport and city center.

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Business 2: Hotel, Hospitality, Property Management and Services Business

Hotel, Hospitality, Property Management and Services Business comprises of (1) Hotel (2) Office Building for rent (3) Residential Apartment for rent (4) Serviced Apartment.

(1) Hotel Hotel business comprises Eastin Lakeside Hotel and U Chiang Mai, the hotel under the hotel chain “U Hotels & Resorts” opened in Chiang Mai.

Eastin Lakeside Hotel Eastin Lakeside Hotel is operated by Muangthong Assets Company Limited. It is a 3 star hotel located in Muangthong Thani near Impact Exhibition and Convention Center with convenient access to express way level 3 or Chaengwattana road.

The hotel offers beautiful panoramic view of the lake.

The hotel consists of 143 rooms, each with its distinctive style unlike other hotels. All rooms consist of bedroom, living room and pantry. Hotel rooms provide facilities for guests who stay just over night as well as rent a room on a monthly basis. The hotel offers variety of room ranging from 1-3 bedrooms in standard unit to 3 bedrooms in a 2-storey penthouse unit.

In addition, the hotel provides the following services: restaurants, meeting rooms, banquet rooms and karaoke together with free limousine services between exhibition center and the hotel for clients.

U Chiang Mai Hotels under the hotel chain “U Hotels & Resorts” will emphasize unique services on top of general international standard services. The free supplementary services include 24-hours usages of the room such that client can check-in at their convenient time, breakfast at any time and place selected by clients, i-pod in all rooms, library offering collection of magazines, books with general topics as well as books on local history and culture for hotel guests.

U Chiang Mai is the Company’s first hotel under the hotel chain “U Hotels & Resorts”, which opened on June 1, 2008.

It is a 4 star boutique hotel with Lanna architecture on Rachadamnern road in the city center of Chiang Mai with 41 rooms.

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Marketing and Competitive Overview Competitive Strategy Hotels under the hotel chain in “U Hotels & Resorts� will be small hotels with a difference that emphasize the history of the place, distinctive design with uniqueness along with guests’ satisfaction and fully integrated services.

Clients Characteristic and Target Clients Clients of the two hotels consists of Thai and international clients both tourists and business with medium or high income who needs diversity and distinctiveness. Target clients of Eastin Lakeside Hotel also include government agencies and companies that attend or arrange events at Impact Exhibition and Convention Center.

Industry Overview Number of International Tourists and Length of Stay (average)

Source: Tourism Authority of Thailand

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The number of international tourists has shown a continuous rising trend. In 2007, there were 14.46 million international tourists, an increase of 4.65 percent from 2006 with an average length of stay increased to 9.19 days and average spending per person per day of 4,120.95 baht, which accumulated to total revenue of 547,781.81 million baht, an increase of 13.57 percent from 2006 with total revenue of 482,319.17 million baht. A number of tourist arrivals to Thailand by country of residence were East Asia (ASEAN), Europe, the America, Oceania, South Asia, Middle East and Africa in descending order.

Factors affecting tourism business in 2007 were political instability, bombing incident at the end of 2006 and unrest situation in southern provinces were significant factors during the first half of the year. However, the numbers of tourist recovered in the second half since the political situation became more certain with the likelihood of election, off-season promotional activities by Tourism Authority of Thailand (TAT), exploring new tourism markets and convenient transportation formulated Thailand as a gateway to neighbor countries.

Thai tourism business has shown positive trend with the government promoting 2008-2009 as “Amazing Thailand” as a mean of economic stimulation and compensation for lower export revenue which has shown declining trends due to the sub-prime loan crisis and appreciation of the Thai baht currency together with incessant rising oil price. This policy shall directly benefit hotel business, with TAT targets to increase the number of tourist in 2008 to 15.70 million and revenue of 602,000 million baht by emphasis to increase number of quality tourists, which include (1) tourists with high income (upper market) (2) business tourist with government’s policy to support Thailand to be Meeting Incentive Convention and Exhibition (MICE) center of Asia-Pacific region (3) health tourism according to the policy to promote Thailand as the Medical Hub of Asia.

Rising trends of both number of tourists and length of stay in Thailand together with all year round meetings, conventions and exhibitions have benefited the Company’s hotel business located in the key tourist attraction such as Chiang Mai and Bangkok.

(2) Office Building TST Tower is operated by DNAL Company Limited and located on Viphavadi-Rungsit road opposite Thai Airways head office. It is a 24-storey with a total rental area of 15,875.5 sq.m. including 15-storey office and 8-storey carpark for 267 cars.

Present occupancy rate is 96 percent an with average rental rate of 450 baht/month/sq.m.Most tenants are medium and large corporations with long-term lease contract. Key clients include Office of Small and Medium Enterprises Promotion (OSMEP), United Oversea Bank (Thai) Plc. - Viphavadi-Rungsit 9 branch and Rangsit University - Viphavadee Study Center.

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Marketing and Competitive Overview Competitive Strategy Principally emphasizes quality of services and clients’ satisfaction.

Clients Characteristic and Target Clients Tenants of the office building are corporations or organizations that require office location with easy access to transportation route such as Viphavadi-Rungsit road, BTS sky train and MRT underground.

Industry Overview Political predicaments in Thailand in 2006-2007 had directly affected rental office business causing lack of foreigners’ confidence to invest in Thailand along with the sign of an economic slow down from sub-prime loan crisis that instigated foreign business to be more vigilant regarding disbursements has shown negative factors for the office rental business in 2007.

Rental Rate of Office Buildings Type

Grade A Grade B

July 2007

January 2008

666 baht/sq.m.

503 baht/sq.m.

656 baht/sq.m.

511 baht/sq.m.

Change (%)

-1.5 +1.6

Source: Jones Lang LaSalle During the second half of 2007, average rental rate of grade A office had slightly declined to 656 baht/sq.m. since additional supply of new office buildings offered tenants more negotiating power. Hence grade B office has attracted more interest with much lower rental rate than grade A office, which resulted to an increase of rental rate to 511 baht/sq.m. in the second half of 2007.

Since TST Tower is grade B office building and most of the tenants are Thai companies or organizations who have the long-term lease contracts and TST Tower’s occupancy rate is 96 percent and, therefore, will not be affected by political predicaments and economic slow down.

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(3) Residential Apartment Details

Location Land ownership Project type Unit sold Remaining unit available for rent Remaining area available for rent Rental rate per unit

The Royal Place 2

Soi Mahardlekluang 2 near Rajdamri BTS station Office of the Privy Purse 26-storey condominium 315 units 56 units 4,675.85 sq.m.

450 baht/month/sq.m.

The Grand

Soi Mahardlekluang 2 near Rajdamri BTS station Office of the Privy Purse 25-storey condominium 312 units 26 units 1,616 sq.m.

500 baht/month/sq.m.

The Royal Place 2 and The Grand are residential apartments for long-term lease of 30 years that were opened in 1993 and already closed sale except for fully furnished units for short-term lease of 6 months or 1 year. Both projects are located in Soi Mahardlekluang 2 in the city center near Rajdamri BTS station offering convenient means of transportation.

Marketing and Competitive Overview Competitive Strategy The projects are situated in one of the best locations in Bangkok with convenient transportation access and suitable room size allowing for proficient price competitiveness.

Clients Characteristics and Target Clients Target clients of residential apartment projects focus on both Thai and international clients with medium or high income who want to rent a residential unit in city centers with all the facilities.

(4) Serviced Apartment Yongsu Apartment is operated by Yongsu Co., Ltd. It is a 16-storey apartment on Soi Sukhumvit 39 near Prompong BTS station with 56 units of 3 bedrooms unit. All units have utility space of 200 sq.m per unit.

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Industry Overview

Zone

Location

CBD (Central Sathorn, Rajdamri, Langsuan, Saladaeng, Tonson, Silom, Wireless Road, Ploenchit, Suanplu, Business District) and Rama 4 Sukhumvit Sukhumvit Soi 1-65 and Soi 2-42 Rama 3 Yanawa, Chan Road, Nanglinchee Riverside Charoen Krung, Charoen Nakhon Others Ratchadapisek, Phayathai, Petchburi, Rajprarop, Phaholyothin, and Din Daeng Source: Knight Frank Research In 2007, the serviced apartment business has increased to 11,963 units from 10,744 units in 2006 with the majority of 40.7 percent located in Sukhumvit and subsequent 35.2 percent in CBD because it is near to the workplace of expatriates and sky train stations.

Vital factors for business growth include the promotion of Thailand as a tourism destination and medical center of Asia, which has increased the number of international arrivals to Thailand and length of stay. Other factors are free trade zones and offer a number of branches for foreigner together with low cost of living compared to certain countries in the region.

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Business 3: Project Management

Baan Aur-Arthorn Project Details

Baan Aur-Arthorn Chonburi (Na Jomtien )

Sukhumvit road (Highway 3) Km. 155-156 Land ownership National Housing Authority 154-0-59.6 rais Project area 3-storey condominium Project Type 4,598 units Units Project value 1,931.2 MB Location

Baan Aur-Arthorn Prajuabkirikhan (Hua Hin 3 )

Petchkasem road (Highway 4) Km. 242-243 National Housing Authority 22-0-17.5 rais 4-storey condominium 1,008 units 423.4 MB

Baan Aur-Arthorn Samutprakarn (Bang Bor 2 )

Baan Aur-Arthorn Saraburi (Kok Yae )

Panvithee road Km. 3-4 (Highway 3117 Klongdan-Bang Bor route) National Housing Authority 41-2-83 rais 4-storey condominium 1,536 units 645.1 MB

Panhonyothin road Km. 91-92 (in Nong Khae Industrial Estate) National Housing Authority 72-1-98.2 rais 3-storey condominium 2,442 units 1,025.6 MB

Products and Services Selection Land Selection Key factors that are taken into consideration for land selection is land potential in accordance with the Company’s marketing policy of each business. Business Development Department is the unit that is responsible for selecting and proposing lands in suitable location for consideration of the executives.

Contractor and Construction Material Selection The Company will select contractors with appropriate experiences and qualifications for each project. For large projects, the Company has jointed with Hip Hing Overseas Limited which is a construction expert from Hong Kong with extensive construction experience, setting up Hip Hing Construction (Thailand) Company Limited in 2007 to construct the Company’s certain projects as appropriate.

Architecture Consultant Selection The Company has a Project Development Department, with experienced architects and engineers, that is responsible for selecting consultants and project architects.

Hotel Management Selection As regards 5-6 star hotel, the Company will select an international hotel chain with appropriate qualification for each project to manage each hotel. As regards 3-4 star hotels, the Company will have these hotels managed by the hotel chain under “U Hotel & Resorts” or may select the international hotel chain with appropriate qualification to manage such hotel.

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Risk Factors Risks from Discontinuous Revenue Stream

The Company has just been approved the termination of the business rehabilitation at the end of 2006 and is still in the process of restructuring its business organization to support future growth. Therefore, in the last fiscal year, the Company’s revenue came from property development projects and project management, which had project basis feature and hence risk of discontinuous revenue stream. The management realizes this risk and plans to continually develop new projects in conjunction with the hotel business expansion so that the Company shall have a continual revenue stream.

Risks from Hotel Business Operation

Formerly, the Company’s core business was on property development related business. At present, the Company targets to focus more on 3-6 star hotel projects in Bangkok as well as up-country. Hence, there may be risks from operating new business as that was not the Company’s core business.

However, with reference 3-4 star hotels, the Company has entered into a joint venture with partners with experience in hotel business to build its own hotel network under the brand ‘U Hotels & Resorts’ to mange 3-4 star hotels of the Company. As regards 5-6 star hotel project, the Company will have international hotel chains to manage these hotels. These international hotel chains already have clienteles. In the past, the Company was a shareholder of the Regent Hotel on Rajadamri road and the Empress Hotel in Chiang Mai as well as used to operate hotels such as the Empress Bangkok.

At present, the Company still operates Eastin Lakeside Hotel and therefore has the capiacity to operate hotel business.

Risk from Construction Business Operation

The Company and Hip Hing Overseas Limited have jointly established Hip Hing Construction (Thailand) Company Limited (Hip Hing) to operate construction business, which is the new business unlike property development business in which the Company has extensive experience.

Construction business is related to property development and facilitates the Company’s business management since Hip Hing will construct the Company’s certain projects as appropriate and the Company, therefore, will not have to acquire services from various sub-contractors. Hip Hing also has foreign executives who have expertise in construction works with extensive experience in constructing large scale projects overseas and thus have superior construction know-how and technology that will greatly support the Company’s core business.

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Risks from Baan Aur-Arthorn Project

The Company has signed a contract with National Housing Authority to construct Baan Aur-Arthorn project on April 25, 2006. However, due to political uncertainty which may influence public policy concerning the continuity of this project, this uncertainty directly affects the amount of work and hence future revenue. However, the Company still has an installment revenue from the completed construction works delivered to National Housing Authority.

Presently, the Company has been approved to construct 9,584 units of Baan Aur-Arthorn from the total of 20,000 units. The Company has made allowance for depreciation of project capital cost in the amount of 92.6 million baht and 19.8 million baht as stated in the financial statement as at March 31, 2007 and 2008 respectively.

The Company is scheduled to handover completed houses in the amount of 7,142 units by February-March 2008.

The Company has requested for 180 days extension to National Housing Authority who has approved the extension and re-scheduled the handover to August-September 2008. As a result, the Company has no expense regarding penalty.

Risk from Rising Price of Construction Materials

In 2007, oil and construction material prices have significantly increased. Consequently, production cost in all industries have risen. As regards property development business, all property developers also experienced rising construction cost, and, therefore, the situation has an insignificant impact upon companies’ competitive advantages.

However, the Company has qualified Project Development Department that has experience and good relationship with suppliers and can negotiate prices and reduce certain risks.

Risks from Interest Rate Volatility

After the success of the business rehabilitation, the Company still has a certain amount of debt that must be paid back but these debts are non-interest bearing debts and thus the Company is not affected by risk from interest rate volatility. As regards the new financing from the financial instiutions for the Company’s projects after the termination of the business rehabilitation, the Company has negotiated with sereval financial institutions and entered into the borrowings with the financial institution offered the best interest rate.

As for future projects, the Company has a policy to find source of funds that are appropriate to the economics and financial situation of the present time.

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Future Projects Project at Kamala beach, Phuket

Property development and hotel project on 460 rais of land at Kamala beach, Kamala Sub-District, Kratu District, Phuket is currently being designed by WIMBERLY ALLISON TONG & GOO (WATG) and BILKEY LLINAS DESIGN LIMITED (BLD), who designed and decorated various leading luxury hotels and resorts around the world and is in the stage of contract negotiation with 5-6 star international hotel chains. At the preliminary stage, the project is separated into 2 parts as follows: 5 and 6 star hotels with 285 rooms and 100 rooms respectively with 6,500 sq.m. of meeting and function spaces.

40 units of luxury pool villas for sale.

Baan Suan Sathorn Project on Sathorn Road, Bangkok

Leasehold property development project on 16.5 rais of land in Central Business District on Sathorn road features 50 units of 150 sq.m. pool villa for sale and luxury boutique resort hotel with 60 rooms with room area of 50 sq.m. The project is currently being designed by Denniston International Architects and Planners and is in the stage of contract negotiation with the 5-6 star international hotel chains.

U Hotels & Resorts Projects, Kanchanaburi

4 star boutique hotel project on 5 rais of land by River Khwae under hotel name “U Kanchanaburi�. The project is currently in design planning stage for renovation of some existing buildings and the construction of the new buildings.

Design & Build Turnkey Hotel Project on Sathorn Road, Bangkok

Project management for the design & build turnkey of a 32-storey 4 star hotel with 437 rooms in the city center on Sathorn road near Surasak BTS sky train station with a project value of approximately 2,500 million baht.

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Shareholding Structure and Management As at March 31, 2008, the Company has registered capital of 8,056,923,076 baht and paid-up capital of 5,813,333,333 baht consisted of 5,813,333,333 shares at par value of 1 baht per share.

Shareholders

Top 10 major shareholders according to the latest book closing date as at July 19, 2007.

Name

Number of Shares

1. Mr. Keeree Kanjanapas Group* 2. State Street Bank and Trust Company for Australia 3. UOB Kay Hian Private Limited 4. Mr. Cheng Yu Tung 5. Citigroup Global Markets Limited-IPB Customer Collateral AC 6. Mr. Cheng Wan Yen 7. Tanayong Food and Beverage Co., Ltd.** 8. UOB Asia Limited 9. Thai NVDR Co., Ltd. 10. Kim Eng Securities Pte. Ltd.

2,174,062,524 467,794,000 445,391,302 400,000,000 380,000,000 300,000,000 275,628,054 267,214,000 220,375,282 60,820,000

%

37.40 8.05 7.66 6.88 6.54 5.16 4.74 4.60 3.79 1.05

Note * Mr. Keeree Kanjanapas Group already includes shares held by K2J Holding Co., Ltd. of 2,000,0000,000 shares or 34.40%. ** In the process of transferring shares to creditors under the Company’s busibess rehabilitation plan.

Dividend policy

(1) Dividend policy of the Company The Company has the policy to pay dividend not less than 50 percent of net profit after tax in accordance with the Company’s separated financial statements. The Company shall pay dividend in the next fiscal year taking into consideration the cash flow from the operation. The annual dividend announcement must be approved at the Annual General Meeting of Shareholders.

For interim dividend payment, the Company’s Board of Directors may deem it appropriate to pay interim dividend if the Company has sufficient profits and working capital for business operation after the interim dividend payment. The Board of Directors has the responsibility to inform shareholders of the payment in the subsequent shareholders’ meeting.

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The Board of Directors shall take the following factors into account when considering dividend payment to the shareholders.

The Company’s performance, liquidity, current cash flow and financial status.

Articles of Association and conditions regarding dividend payment as stated in loan agreements, debentures or any contracts concerning the Company’s liabilities or agreements or any contracts that the Company is obliged.

Future business plan and investment capital requirement.

Other factors as deem appropriate by the Board of Directors.

Moreover, the Company must comply with the Public Limited Companies Act B.E. 2535 (1992), which stated that the Company cannot pay dividend if the Company has accumulated loss even though the Company has a net profit in that particular year. Additionally, the Public Limited Companies Act B.E. 2535 (1992) also states that a public company must reserve an appropriation of 5 percent of the annual net profit deducted total accumulated loss brought forward (if any) as legal reserve until the legal reserve shall amount to not less than 10 percent of the registered capital.

(2) Dividend policy of subsidiaries For subsidiaries, the dividend policy takes into consideration growth potential of business performance, investment plan, business expansion plan, conditions of loan agreements and debentures of the Company and subsidiaries together with future requirement and appropriateness. The dividend policy is to pay dividend not less than 50 percent of net profit after tax and legal reserve providing that there are no other obligations and that dividend payment does not have an effect on the normal business operation of that subsidiary.

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Management

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Management Structure

As at March 31, 2008, the Company’s management consists of three sets of committee, namely Board of Directors Audit Committee Executive Committee 1) Board of Directors No.

is consisted of 13 directors as follows:

Name

Position

Mr. Keeree Kanjanapas 1.

Mr. Kavin Kanjanapas 2.

Mr. Sutham Siritipsakorn 3.

Mr. Rangsin Kritalug 4.

Mr. Kom Panomreongsak 5.

Mr. Kong Chi Keung 6.

Mr. Abdulhakeem Kamkar 7.

Dato’ Amin Rafie Othman 8.

Dr. Paul Tong 9.

Mr. Cheung Che Kin 10.

Lt. Gen Phisal Thepsitthar 11.

Dr. Anat Arbhabhirama 12.

Pol.Maj.Gen Vara Ieammongkol 13.

Mr. Rangsin Kritalug is the Secretary to the Board of Directors.

Chairman Director Director Director Director Director Director Director Director Director Independent Director/ Chairman of the Audit Committee Independent Director/ Audit Committee Member Independent Director/ Audit Committee Member

Authorized Directors are consisted of 6 persons as follows: Group A Director

Group B Director

1. Mr. Keeree Kanjanapas 2. Mr. Kavin Kanjanapas 3. Mr. Rangsin Kritalug 4. Mr. Sutham Siritipsakorn 5. Mr. Kong Chi Keung 6. Mr. Kom Panomreongsak

Names and number of directors who can sign for and on behalf of the Company are any one director from Group A Director signing jointly with any one director from Group B Director, totaling 2 persons together with the Company’s seal affixed.

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Roles and Responsibilities of the Board of Directors 1. To conduct duties and responsibilities in accordance with laws and the Company’s Articles of Association including resolutions of the shareholders’ meeting with honesty and due care for the benefits of the Company.

2. To determine the Company’s vision, policy, business direction and oversee the management to efficiently achieve the performance to maximize the value for the Company and shareholders.

3. To determine the Company’s policy, strategy, business plan, annual budget including the progress of monthly and quarterly performance of the Company comparing to business plan and budget also overseeing and considering the future trend for the year ahead.

4. To consider and approve the acquisition and deposition of asset, investment in new business and any operational matters in accordance with laws excluding the operational matters which have to have the resolutions of the share holders’ meeting.

5. To consider and/or comment to the Company and subsidiaries’ connected transactions complied with the SET notifications and regulations.

6. To regularly evaluate the management’s performance and determine the remuneration.

7. To conduct the management to provide sufficiency and accuracy of accounting system, accounting report according to accounting standard and ensure that the Company has appropriate and efficient internal controls.

8. To prevent the problem of conflict of interest among stakeholders.

9. The director shall report directly to the Company, without delay if he or she has any conflict of interest in the contract executed with the Company or acquires more shares or sells shares in the Company or subsidiaries. Hence, for any transaction with the director or the person having conflict of interest or may be in conflict of interest in any kinds with the Company or subsidiaries, the director having conflict of interest shall have no right to approve to the transaction.

10. To conduct the operating procedure to comply with business ethic, review and evaluate the corporate governance regularly at least once a year.

11. To be responsible for the preparation of the financial statements along with the auditor’s report the execution of the Board’s responsibilities to prepare financial reports, along with the external auditor’s report in the Company’s Annual Report covering key issues according to the code of conduct of the SET. 12. The Board of Directors may delegate one or more directors or other persons to take any action on behalf of the Board of Directors. Therefore, the delegation excludes the authority to approve any transactions caused to the conflict of interest by the Board of Director itself or any stakeholders. Moreover, any of connected transactions and the acquisition of deposition of important asset of the Company must be approved from the shareholder’s meeting according to the SET regulations.

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2) Audit Committee No.

is consisted of three members as at March 31, 2008 as follows:

Name

Position

Lt. Gen Phisal Thepsitthar Chairman of the Audit Committee 1.

Dr. Anat Arbhabhirama Member of the Audit Committee 2.

Pol .

Maj .

Gen Vara Ieammongkol Member of the Audit Committee 3.

Mrs. Duangkamol Chaichanakojorn is the Secretary to the Audit Committee.

Roles and Responsibilities of the Audit Committee 1. To review and ensure the Company to provide a sufficient and accurate report of financial statements.

2. To review and ensure the Company to have appropriate and efficient internal controls and internal audit system.

3. To review and ensure the Company to comply with the Securities and Exchange Act, the requirements of the Stock Exchange of Thailand and other related laws and regulations.

4. To consider, select, nominate the auditor of the Company including to determine the auditing fee.

5. To consider the Company’s information disclosure about the connected transactions and conflict of interest.

6. To prepare the Audit Committee’s disclosure report.

7. To perform any other duties designated by the Board of Directors.

Criteria for Selection of the Audit Committee The Company has the criteria for selection of the members of the Audit Committee as follows: 1. Holding shares not more than 5 percent of the total number of shares with the voting rights of the Company, parent company, subsidiary, associate or other juristic person with conflict of interest.

2. Neither being employee, staff member, advisor who receives regular salary from the Company, nor the controlling person of the Company, parent company, subsidiary, associate, or other juristic person with conflict of interest.

3. Not having blood or marriage relationship or relationship by legal registration as father, mother, spouse, brother, sister and children, including the spouse of children of executives, major shareholders, controlling persons or the persons who have been nominated as the executive or controlling person of the Company or subsidiary.

4. Having no business relationship with the Company, parent company, subsidiary, affiliate or other juristic person with conflict of interest in the manner that it will obstruct the exercise of independent judgment and no other nature that obstructs the giving of comment as to the Company’s operation independently.

5. Knowledgeable and experienced to review the creditability of the financial statements including other duties to be performed as member of the Audit Committee.

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Moreover, the members of the Audit Committee shall be able to give their opinions or independently report without any concern with the asset or position of any person.

3) Executive Committee No.

is consisted of 6 members as at March 31, 2008 as follows:

Name

Position

Mr. Keeree Kanjanapas Chairman 1.

Mr. Kavin Kanjanapas Managing Director 2.

Mr. Sutham Siritipsakorn Deputy Managing Director 3.

Mr. Rangsin Kritalug Deputy Managing Director 4.

Mr. Kom Panomreongsak Director 5.

Mr. Kong Chi Keung Deputy Managing Director* 6.

Mr. Bernardo Godinez Garcia is the Secretary to the Executive Committee. * appointed as Deputy Managing Director on June 27, 2008

Roles and Responsibilities of the Executive Committee 1. To prepare business policy, strategy, and management structure in business operation in line with the economic conditions and competitiveness and propose to the Board of Directors for approval and consideration.

2. To prepare a business plan, budget and management authority and propose to the Board of Directors for approval and consideration.

3. To monitor and oversee the specified business policy and operation in order to achieve the business goals.

4. To monitor and ensure the Company’s performance in line with the approved policy and business plan.

5. To approve the acquisition and deposition of assets in the value of not exceeding 100,000,000 (One Hundred Million baht) baht per transaction.

6. To release the mortgage from the real property after the debts have been serviced by the Company.

7. To open a bank account, apply banking services and change bank authorized signatories.

8. To consider and approve the matters on the amendment of plot plan under the land allocation law.

4) Executives No.

1.

2.

3.

4.

5.

6.

7.

8.

is consisted of 8 persons as at March 31, 2008 as follows: Name

Position

Mr. Kavin Kanjanapas Mr. Sutham Siritipsakorn Mr. Rangsin Kritalug Mr. Kong Chi Keung Mrs. Duangkamol Chaichanakajorn Ms. Unchana Rojviboonchai Mr. Wisith Chawalitanont Ms. Thitikorn Yodyingtammakul

Managing Director Deputy Managing Director Deputy Managing Director Deputy Managing Director * Accounting Director Financial Director Project Development Director Legal Director

*appointed as Deputy Managing Director on June 27, 2008

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Roles and Responsibilities of Executive Committee 1. To efficiently and effectively proceed the business operation according to the Company’s policy, strategy and business.

2. To proceed with the arrangement of business plan, budget and authorization for the Executive Committee’s approval.

3. To proceed with the Company’s business operations in line with business plan or annual budget as approved by the Executive Committee with honesty, integrity and do care for the benefits of the Company and shareholders.

4. To monitor the Company’s performance in line with the approved business plan and annual budget.

5. To regularly report and inform the Company’s performance to the Board of Directors.

6. To perform any other activities as designated by the Board of Directors.

7. To conduct general business operation according to the Company’s Articles of Association.

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Profile of Directors and Executives

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Annual Report 2007/2008

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Information on the Position of Directors and Executives in Subsidiaries and Associates

Nomination and Removal of the Directors

The Board of Directors is responsible to nominate the new director with the appropriate experience and qualification including the dedication of sufficient time to the Company in order to perform his or her duties professionally. Therefore, the Board of the Directors has assigned the Executive Committee to nominate the new director for submission to the Board of Directors’ approval and/or submission for the approval of the shareholders’ meeting according to the regulation and guideline in the Company’s Articles of Association as follows: 1. At the Annual General Meeting of Shareholders each year, one-third (1/3) of the directors shall be retired by rotation.

If the number of directors to be retired by rotation is not divisible by three, a number of director closed to one-third (1/3) of all directors shall be retired. The Directors who are retired by rotation are eligible for re-elected.

2. The election of directors by shareholders’ meeting shall be in accordance with the following rules and procedures: 2.1 Each shareholder shall have one vote for one share 2.2 Each shareholder shall use all his or her votes they have to elect one or several persons as a director.

However, he or she may not divide his or her votes among any candidate.

2.3 The persons who receive the most votes in ranking order will be elected as directors up to the number of directors the Company shall have or elect at that meeting. In the event that the persons being elected in subsequent order have equal votes but their election would exceed the number of directors required to be elected in that meeting, the chairman of the meeting shall have a casting vote.

3. Apart from the retirement by rotation, the directors shall resign in case of: 3.1 Mortality 3.2 Resignation by submitting a resignation letter to the Company 3.3 Lacking of the required qualification or forbidden by any provisions according to the Public Limited Companies Act B.E. 2535 (1992) 3.4 The order by the resolution of shareholders’ meeting 3.5 The order by the Court 4. In case of any directorship becomes vacant prior its term, the replacement requires approval from at least three-fourths (3/4) of the remaining directors by appointing one who is not forbidden by the Public Limited Companies Act B.E. 2535 (1992) in the next Board of Directors’ meeting, with the exception of the situation in which the remaining tenure of vacant directorship is less than two months 5. The shareholders’ meeting may pass a resolution removing any director from office prior to retirement as a result of the expiration of the director’s term of office, by vote of not less than three-fourth (3/4) of the number of shareholders attending the meeting who have the right to vote and who have shares totaling not less than half (1/2) of the number of shares held by the shareholders attending the meeting and having the right to vote.

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Remuneration of the Board of Directors, Executive Committee and Executives 1. Remuneration of the Board of Directors

1.1 Monetary Compensation For monetary remuneration, the Company made payments to thirteen members of the Board of Directors during April 1, 2007 - March 31, 2008 in amount of 3,180,000 baht. The remuneration was paid for chairman, directors, and independent directors.

Remuneration

1. Mr. Keeree Kanjanapas 2. Mr. Kavin Kanjanapas 3. Mr. Sutham Siritipsakorn 4. Mr. Rangsin Kritalug 5. Mr. Kom Panomreongsak 6. Mr. Kong Chi Keung 7. Mr. Abdulhakeem Kamkar 8. Dato’ Amin Rafie Othman 9. Dr. Paul Tong 10. Mr. Cheung Che Kin 11. Lt. Gen Phisal Thepsitthar 12. Dr. Anat Arbhabhirama 13. Pol.Maj.Gen Vara Ieammongkol Total

Year 2007/2008

300,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 3,180,000

Year 2006/2007

515,000 80,000 80,000 490,000 490,000 80,000 80,000 80,000 80,000 80,000 490,000 490,000 490,000 3,525,000

1.2 Non-monetary Compensation - None -

2. Remuneration of the Executive Committee and Executives

2.1 The Company made payments to ten members of the Executive Committee and Executives during April 1, 2007 - March 31, 2008 in a total amount of 27,117,500 baht.

2.2 Non-monetary Compensation - None -

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Corporate Governance Policy on Corporate Governance

The Company believes in good management system, the Board of Directors with the vision and responsibilities, balance of power mechanism to ensure transparency management that can be monitored, equitable treatment of shareholders as well as be responsible to stakeholders as important factors in creating value and optimal return for shareholders in the long run.

On June 27, 2008, the Board of Directors has approved a corporate governance policy with principles and guidelines, that are in line with the principles of good corporate governance of the Stock Exchange of Thailand. The Company has constantly communicated with the executives and the employees regarding the policy and the compliance to abide by the policy.

The policy can be summarized into 5 categories covering corporate governance principles as follows: 1. Rights and Equalities of Shareholders and Roles of Stakeholders 2. Structure, Roles, Duties, Responsibilities and Independence of the Board of Directors 3. Transparent Information Disclosure 4. Internal Control and Risk Management 5. Ethic and Code of Conduct 1) Rights and Equalities of Shareholders and Roles of Stakeholders

The Company strongly emphasizes rights and equalities of shareholders such that all shareholders shall be equitably treated in all matters including the attending of the Shareholders’ Meeting to acknowledge the Company’s annual performance and information, rights to vote in the Shareholders’ Meeting as regard appointing and removal of directors, dividend payment as well as rights to make enquiries and comment on all matter that the Board of Directors presents or request comments at the Shareholders’ Meeting.

1.1 The Shareholders’ Meeting The Board of Directors must hold the Annual General Meeting of Shareholders within 120 days from the ending date of the Company’s fiscal year. Other Shareholders’ Meeting shall be called Extraordinary General Meeting and held when deemed necessary. The Company has established a compliance unit to ensure that Shareholders’ Meetings are arranged according to the Company’s policy, law, principles on Shareholders’ Meeting as stipulated by the Stock Exchange of Thailand. In arranging Shareholders’ Meeting, the Company sends the notice of the meeting stating the place, date and time of the meeting with the meeting’s agenda to shareholders more than 7 days before the date of the Shareholders’ Meeting as required by the law to allow sufficient time to study the documents. The documents include detailed objectives and reason for each agenda as well as comments of the Board of Directors. There shall be no hidden agenda or other agenda not stated in the notice except for urgent matters that arise after the notice has been sent. The minutes of the meetings are completely recorded and can be reviewed by shareholders. If any shareholders cannot attend the meeting, the Company has sent a proxy form with the notices for shareholders to assign a representative to attend the meeting on his/her behalf.

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At the Shareholders’ Meeting, all shareholders have rights and equality to acknowledge the information, make comments or enquiries on the matters according to the meeting’s procedure. The Company shall inform shareholders as regards voting rights and procedures prior to the commencement of the meeting. The Chairman of the meeting shall arrange appropriate time and encourage shareholders to make comment or enquiries in the meeting. For every Shareholder’ Meeting, the Company shall provide a name of independent directors who has been appointed to act as proxy for shareholders who cannot attend the meeting in the notice.

1.2 Rights of Stakeholders The Company realizes the significance of rights of all group of stakeholders including shareholders, employees, executives, customers, trading partners, creditors as well as the pubic and community who shall be properly, equitably and honesty treated. : The Company operates business with transparency, judge and fairness to ensure business growth with an objective to generate continuous healthy return for all shareholders.

Customers : The Company aims to create clients’ satisfaction and confidence, which affects the business success by continuing to effectively and efficiently improve quality and features of products and services to serve customers’ demand and maintain good relationships in the long run.

Employees : The Company treats all employees with judgement and equality by creating good culture and working atmosphere as well as support teamwork. The Company also consistently arranges internal and external training session to enhance quality and potential of all employees as well as takes care of remuneration and benefits of the employees.

Trading Partners : The Company operates a business with the view of all stakeholders’ benefit and treats all trading partner with judge and fairness.

Society, community : The Company pays great attention to the social benefits and quality of life of the Thai society by taking active roles in community development and contribution to the and Environment society.

Shareholders

2) Structure, Roles, Duties, Responsibilities and Independence of the Board of Directors

The Company has the Board of Directors, the Audit Committee and the Executive Committee responsible for considering and reviewing the Company’s management. All directors can independently remark upon the Company’s performance to monitor that the management manages the Company with efficiency, precision and transparency.

2.1 At present, the Board of Directors consists of 13 directors (as at March 31, 2008) comprising of

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6 Executive Directors 4 Non-Executive Directors 3 Independent Directors 2.2 Leadership and Vision The Board of Directors is determined to build the Company and subsidiaries into a leading organization that is perceived at the international level as one of the most successful companies in Thailand with diverse business operation, resilient management and competent personnel that play a role in the Company’s vision, mission and strategy.

The Board of Directors has leadership, vision and independence to make decision and take responsibility concerning corporate governance for optimal benefit of the shareholders.

The Board of Directors has duties and responsibilities to the Company’s shareholders to monitor the management’s performance. Duties of the Board of Directors and the management are clearly segregated.

2.3 Conflicts of Interest The Board of Directors has established guidelines on conflict of interest by adhering to the principles of the Stock Exchange of Thailand. The Company carefully resolves conflict of interest based on authenticity, honesty, judgment and independence with ethic. The Company also sufficiently discloses information for the Company’s benefit.

2.4 Remuneration of Directors and Executives The remuneration of Directors is paid in the form of monthly director gratuity. For the executives, the remuneration is paid by a monthly salary as same as other employees of the Company.

2.5 The Board of Directors’ Meetings All the Committees including the Board of Directors and the Audit Committee will hold a meeting every quarter to review and monitor the Company’s performance. The Executive Committee will hold a monthly meeting or other additional meetings as necessary and appropriate to consider and approve the Company’s operation in important matters which are under the decision authority of the Executive Committee and to report the operating result to the Board of Directors for acknowledgement.

The number of the Board of Directors’ meeting and directors’ attendance during April 1, 2007 to March 31, 2008 are as follows:

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Name

1. Mr. Keeree Kanjanapas 2. Mr. Kavin Kanjanapas 3. Mr. Sutham Siritipsakorn 4. Mr. Rangsin Kritalug 5. Mr. Kom Panomreongsak 6. Mr. Kong Chi Keung 7. Mr. Abdulhakeem Kamkar 8. Dato’ Amin Rafie Othman 9. Dr. Paul Tong 10. Mr. Cheung Che Kin 11. Lt. Gen Phisal Thepsitthar 12. Dr. Anat Arbhabhirama 13. Pol.Maj.Gen Vara Ieammongkol

Position

Number of meetings attended

Chairman Managing Director Deputy Managing Director Deputy Managing Director Director Deputy Managing Director* Director Director Director Director Independent Director/ Chairman of the Audit Committee Independent Director/ Audit Committee Member Independent Director/ Audit Committee Member

7/7 7/7 7/7 7/7 7/7 7/7 1/7 4/7 2/7 1/7 6/7 7/7 6/7

* appointed as Deputy Managing Director on June 27, 2008 3) Transparent Information Disclosure

Roles and Duties of the Board of Directors Regarding Transparent Information Disclosure are as follows: 3.1 The Board of Directors has a duty to fully, sufficiently, trustworthy and timely disclose information both financial and non-financial information to all shareholders and stakeholders.

3.2 The Company has Investor Relations unit as the Company representative to publicize valuable information to shareholders, investors, analysts and related parties. The Company also has a Compliance unit that discloses information to the Stock Exchange of Thailand, Securities and Exchange Commission to ensure that the Company strictly abide by the regulation and by-laws.

3.3 The Company has a policy to disclose significant information to the public as follows: The Company’s objective Financial status, the Company’s performance, shareholder structure and voting rights List of Directors, Committees and Executives Factors and policies on material foreseeable operational and financial risk factors Corporate governance structures and policies as well as directors’ responsibility as regard financial report and chairman of audit committee report Disclose information on directors and/or members of sub-committee meetings’ attendance compare with the number the meetings of the Board of Directors and/or the meetings of committees on yearly basis in annual report 058 Annual Report 2007/2008

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Additionally, the Company also discloses information as stated related regulation or law for investors and potential investors to use in investment decision making via the Stock Exchange of Thailand information distribution channel and the Company’s website at www.tanayong.co.th 4) Internal Control and Risk Management

4.1 Internal Control The Board of Directors has an arranged internal control system in order to protect shareholders’ investments and the Company’s assets.

The Board of Directors has a duty to review the efficiency of internal control system at least once a year and report to shareholders. The review must cover all aspects of internal control including financial control, business operation, compliance control and risk management.

4.2 Internal Audit The Company is in the process of setting up an internal audit unit which shall be a unit of the Company that directly reports to the Audit Committee and high level of executives with a duty to provide advice, audit and appraise the internal control system, risk management system and corporate governance system.

4.3 Risk Management The Company has a policy to lessen both internal and external risks that affect the Company to an appropriate and acceptable level. Risk management is part of the annual business plan in order to ensure that risk management guidelines corresponding with the Company’s objective and strategic plan. All executives and all employees are possessors of the risk and have a duty to appraise the risk of each unit and working procedure, efficiency of existing control system, proposed plan and procedures to lessen the risks as well as report to executives, audit committee and the Board of Directors.

5) Ethic and Code of Conduct

The Company has ethic and code of conduct as guidelines to appropriately perform their duties in order to create good images, which will form resilient foundation for the Company, and abide by the Company’s policy on good corporate governance. All new employees shall attend training on basic ethic and code of conduct in order to generate understanding and be able to follow the guideline in practices.

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Supervision of the Use of Inside Information

The Company has informed directors and executives to comply with rules and regulations of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) as follows: 1.

Require the executives, spouse and minor child to submit the report of any changes in the holding of securities to SEC and SET in compliance with Section 59 of the Securities and Exchange Act B.E. 2535 and send copy of the report to the Company on the same day that submit the report to SEC and SET.

2.

Inform directors and executives as regards the prohibition of the use of inside information for securities trading. If any securities are traded, he/she must report the trading to SEC within 3 day of the trading. Directors and executives cannot disclose any significant information to outsiders or any persons who have no related duties prior to informing the SET of that information. If any related persons violate the regulation regarding the use of inside information, that person shall be deem as has violate the Company’s regulations and shall be subjected to disciplinary punishment. There are four disciplinary measures subject to the characteristic of the guilt or the impact of such action or the severity of the consequences of that action as follows: Verbal warning Written warning Written warning and not more than 7 days of suspension without pay Dismissal without compensation

Human Resources

As at April 1, 2008, the Company had 104 employees, including the executives and the Executive Committee, which can be summarized according to work unit as follows: The Office of Managing Director Legal Human Resource and Administration Asset Management Special Projects Projects Development Marketing and Sale Accounting Finance Total

13 5 8 28 9 18 9 12 2 104

Remuneration of the Company’s employees is in the form of salaries and bonus in the total amount of 60,080,114 baht.

Labor Disputes during the past year - None 060 Annual Report 2007/2008

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Human Resource Development Policy

The Company’s objective in human resource management is to select, develop, support and maintain quality employees in order for the Company to effectively and efficiently achieve its goals. Human resource development policies can be summarized as follows: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

All employees shall be treated fairly as part of vital resources of the Company.

Nomination of employees in any position within the Company shall be preceded with fair base on qualification of each position, educations, experiences, physical condition and others requirement necessary for the job. The Company shall first consider its employees in order to offer career advancement and if there is no suitable candidate, the Company shall consider outsiders.

In determining remuneration for employees, the Company shall consider performance of the Company and each employee together with the Company’s ability to pay and economic situation during the year.

The Company shall make certain of safe and healthy working environments for employees’ safety.

The Company has a policy to encourage training and development of employees for benefit of both the Company and employee as well as offer career advancement opportunity for employees.

With the intention of ensuring that employees comply with the Company’s rule for the benefit of group discipline, if any employee evades or violates, that employee shall be held responsible and punished according to disciplinary measures as deems appropriates.

The Company has established compliant procedure for employees as guideline for employees to ensure that all employees are fairly treated and as guideline to resolve any dilemma in the workplace.

The Company considers chief of departments having duties and responsibilities to manage business and employees as well as encourage good relationship between employees and the Company. At the same, all employees also have responsibility to maintain this good relationship.

The Company shall encourage employees to make comments that will conserve time, money and resources and improve safety or enhance working procedure with the aim of involving employees in efficiency development process.

The Company realizes that superior communication will lead to efficiency and good working relationship.

Therefore the Company supports the publication of relevant information as deems appropriate.

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Internal Control Audit Committee of the Company consists of 3 independent directors who are appointed by the Company’s Board of Directors to review all information related with financial report, internal audit and audit by certified accountant auditors. The Audit Committee also supports and encourages the Company to comply the Code of Best Practices of Listed Company so as to have good corporate governance as well as advises executives on risk management and internal control system.

In each meeting, the Audit Committee independently meets with the management to review and appraise accounting policy and standard, code of practice concerning accounting and finance, internal control and audit planning. The Audit Committee also reviews and certifies financial information and reports at the end of each quarter as well as advises the Board of Directors on the plan to prevent or lessen weakness of internal control and risks that might occur.

The Audit Committee and the Board of Directors completed the Internal Control Sufficiency Assessment Form in accordance with the following topics: Organization Control and Environment Measure Risk Management Measure Management Control Activities Information and Communication Measure Monitoring

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0 63 Annual Report 2007/2008

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Related Transactions

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Necessity and Rationale for Related Transactions

Related transactions of the Company are the outstanding transactions that occurred long time ago. However, the Audit Committee has reviewed these transactions regarding the appropriateness of the monitoring and execution and regarding the determinations of remunerations conforming with the market price, and the evaluations of the transaction statuses and debt settlement capability of the debtors as well as the appropriateness of determining allowance for doubtful debt in the amount sufficient for any damages that might already occurred.

Measures and Procedure in Approving Related Transactions

All related transactions must be approved by the Board of Directors with the attendance of the Audit Committee or approved at the shareholders’ meeting depending on nature of the transactions in accordance with the Notification of the Board of Governors of the Stock Exchange of Thailand re: the Connected Transactions 2003. The Board of Directors must not approve any transactions that he/she or any persons who may have conflicts of interest with the Company or its subsidiaries. The Company must comply with relevant laws under the Securities and Stock Exchange, regulations, notifications, orders or requirements of the Stock Exchange of Thailand relating to the requirements in entering of related transactions with the connected persons.

Policy and Trend of Related Transactions

The Company may need to enter into related transactions in the future. However, most of the transactions will be entered with subsidiaries in which the transaction will be exempted from the connected transaction required to follow the Notification of the Stock Exchange of Thailand. If the transaction is not exempted, the Company will stipulate conditions in accordance with general trading conditions at market price that can be compared with the price and terms given to other third parties and will comply with the regulations of the Stock Exchange of Thailand concerning the related transactions.

If there are any related transactions between the Company or subsidiaries and the persons who may have conflicts of interest in the transactions, the Company shall have the Audit Committee to comment on the necessity and appropriateness of the transactions. If Audit Committee has no expertise to evaluate any particular transactions, the Company shall arrange for an independent expert or the Company’s auditor to provide advices, which shall be considered by the Board of Directors or shareholders for approval depending on nature of the transactions. The Company will disclose related transactions in notes to financial statements as audited by the Company’s auditor.

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Discussion and Analysis on Financial Status and Busienss Performance 1. An Overview of the Business Performance in the previous period

The Company has commenced normal business operation since the end of 2006 after the accomplishment of the business rehabilitation. For fiscal year 2005-2007, the Company had revenue from core business in the amount of 129 million baht, 642 million baht and 1,094 million baht respectively. Revenue growth was mainly due to incessant development of Baan Aur-Arthorn projects. In addition, the Company generated revenue from the debt restructuring under the Rehabilitation Plan. The Company, therefore, had total revenue in 2005-2007 in the amount of 4,408 million baht, 3,420 million baht and 2,479 million baht respectively and accordingly had net profit of 26,215 million baht and 1,089 million baht in 2006 and 2007 respectively subsequent to net loss of 450 million baht in 2005. Nonetheless, the Company still has deficits pursuant to the consolidated financial statements, in the amount of 5,264 million baht and 4,175 million baht in 2006 and 2007 respectively.

This deticits occurred prior to the business rehabilitation and debt restructuring but is still outstanding after the termination of the business rehabilitation.

2. Performance by Business Units in the Previous Period Revenues

During the accounting periods of 2005 - 2007, the Company had total revenues of 4,408 million baht, 3,420 million baht and 2,479 million baht, respectively. The consecutive decreases of the total revenues were mainly attributed to the major declines of the revenues from the accomplishment of the business rehabilitation since the end of 2006. The revenues from the Company’s core business operations, however, were consecutively improved during the accounting period of 2005 - 2007 in the amount of 129 million baht, 642 million baht and 1,094 million baht, respectively. Such growth of the revenues from core business operations were mainly due to the progress of the land procurement and construction services of Baan Aur-Arthorn projects in 2006 and 2007.

Currently, the Company’s revenues from core business operations consist of (1) revenues from sales of real estate, (2) revenues from land procurement of Baan Aur-Arthorn projects, (3) revenues from construction services of Baan Aur-Arthorn projects, (4) rental and service income and (5) hotel income, as can be described below: (1) Revenues from sales of real estate During 2005 - 2006, the Company was in the process of business rehabilitation, and afterwards in the year 2007, the Company was focusing on the preparation of its existing real estate projects to re-position them in the market. In the mean time, the sale volume of the real estate projects was minimized, and the revenues from sales of real estate did not contribute much in the revenues from core business operations. During these 3-year periods, the revenues from sales of real estate were 9 million baht, 30 million baht and 10 million baht, respectively.

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(2) Revenues from land procurement of Baan Aur-Arthorn projects Baan Aur-Arthorn projects are the governmental projects operated by the National Housing Agency to recruit turnkey construction from private sectors via bidding process to procure lands and render construction services of residential housing for low-income population groups in order to promote the ownership of residences and improve the quality of living for such population groups. The Company has been awarded to operate the Baan Aur-Arthorn projects for National Housing Agency and started to record the revenues from land procurement of the projects in the amount of 502 million baht for 2006 and 144 million baht for 2007.

(3) Revenues from construction services of Baan Aur-Arthorn projects The Company began to record the revenues from construction services of Baan Aur-Arthorn projects 832 million baht in 2007 from the construction progress and delivery of the projects in Chonburi (Najomtien) in the amount of 624 million baht, in Prajuabkirikhan (Hua-Hin 3) in the amount of 186 million baht and in Samutprakarn (Bang Bor 2) in the amount of 22 million baht.

(4) Rental and service income During the periods of 2005 - 2007, the Company had rental and service income from the operations of office building for rent, TST Tower, and Yongsu Apartment in the total amount of 80 million baht, 75 million baht and 70 million baht, respectively. The decrease of total revenue was due to the decrease of revenue from Yongsu Apartment.

(5) Hotel income During the periods of 2005 - 2007, the Company had the revenues from the hotel business, Eastin Lakeside Hotel, 40 million baht, 35 million baht and 37 million baht, respectively. The hotel is 3-star hotel with the average occupancy rate around 45 percent over the past 3 years.

Other Incomes

During the periods of 2005 - 2007, other incomes materialized were attributed to the transactions from the results of debt restructuring and the performance under the Rehabilitation Plan. The main sources of such transactions were, for example, the share of income from investment for under equity method of subsidiaries awaiting transfer under the Rehabilitation Plan, the reversal of liabilities in excess of amounts per comptroller’s order, and the gain on transfer of (assets for debt settlement). During the periods of 2005 - 2007, these transactions were in the total amount of 3,962 million baht, 2,647 million baht and 1,149 million baht, respectively, and contributed to 89.9 percent, 77.4 percent and 46.4 percent of the total revenues, respectively. The transactions, however, tend to decline over time due to the accomplishment of the obligations under the Rehabilitation Plan.

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Costs of Sales and Services

During the periods of 2005 - 2007, the Company’s costs of sales and services were 77 million baht, 540 million baht and 1,049 million baht, respectively. The costs of sales and services consecutively increased by 463 million baht in the year 2006 or 600.6 percent compared with the year 2005 and by 509 million baht in 2007 or 94.3 percent compared with the year 2006 mainly due to the incremental of the costs of sales and services as the following: (1) Costs of sales of real estate The Company’s costs of sales of real estate were 4 million baht, 12 million baht and 7 million baht during the period 2005 - 2007 respectively. In the year 2006, the costs of sales increased by 8 million baht from 2005 or 186.4 percent conforming with the increase in sales of Thana City project during the period, and in the year 2007, the costs of sales decreased by 5 million baht from 2006 or 41 percent conforming with the decline in sales of Thana City project during the period.

(2) Costs of land procurement of Baan Aur-Arthorn projects In 2006 and 2007, the Company’s costs of land procurement for Baan Aur-Arthorn projects were 449 million baht and 145 million baht, respectively. In 2007, the decrease by 304 million baht from 2006 or 67.7 percent conformed with the decline in the revenues from land procurement of Baan Aur-Arthorn projects during the period.

(3) Costs of construction services of Baan Aur-Arthorn projects In 2007, the Company’s costs of construction services of Baan Aur-Arthorn projects were 845 million baht, and it was the first year that the Company began to record the revenues from the projects. Such costs, however, were 102 percent of the revenues from the projects. The gross profits from the construction services of Baan Aur-Arthorn projects were lower than those from the land procurement of the projects or even slightly negative in some projects, because the overall profits of Baan Aur-Arthorn projects were recognized as the revenues from land procurement for the projects in the previous years, which can be seen in the table below:

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(4) Costs of rentals and services The Company’s costs of rentals and services were 50.8 million baht, 56.9 million baht and 29.7 million baht during 2005 - 2007, respectively. In 2006, the costs of rentals and services increased by 6.1 million baht from the year 2005 or 12 percent. In 2007, the costs of rentals and services decreased by 27.3 million baht from 2006 or 47.9 percent conforming to the decline of the revenues from rentals and services.

(5) Costs of hotel operation The Company’s costs of hotel operation were 22.1 million baht, 21.6 million baht and 21.6 million baht during 2005 - 2007, respectively. In 2006, the costs of hotel decreased by 0.4 million baht from 2005 or 1.8 percent conforming with the revenues from hotel, but the decreasing rate of the costs was lower than that of the revenues because the costs were mainly fixed costs.

Selling, Servicing and Administrative Expenses

During 2005 - 2007, the Company’s selling, servicing and administrative expenses were 261 million baht, 343 million baht and 318 million baht, respectively. In 2006 the expenses increased by 82 million baht from 2005 or 31.2 percent due to the expenses from fees for assets sold in auction by the Legal Execution Department in the amount of 36 million baht and the record of loss from a loan receivable in the amount of 42 million baht in which the said debtor entered into the business rehabilitation. These expenses, however, declined in 2007. Consequently, in 2007, the overall selling, servicing and administrative expenses decreased by 25 million baht from 2006 or 7.3 percent.

Interest Expenses

The Company’s interest expenses were 220 million baht, 2 million baht and 1 million baht during 2005 - 2007. The down trend of the interest expenses was attributed to the decreases in debt obligations in accordance with the Rehabilitation Plan since 2006.

Corporate Income Tax

In 2005, the Company’s subsidiaries had only 1 million baht of corporate income tax. In 2006 and 2007, the Company and its subsidiaries had no corporate income tax.

Net Profit

In 2005, the Company had the net loss of 450 million baht. On the contrary, in 2006 and 2007, the Company had the net profit of 26,215 million baht and 1,089 million baht, respectively, most of which were attributed to the gains on debt restructuring under the Rehabilitation Plan.

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Return on Equity

During 2005 - 2006, the Company’s average shareholders’ equity was still negative. In 2006, the shareholders’ equity, however, began to be positive due to the significant increase of the extraordinary item from debt restructuring under the Rehabilitation Plan and the continuous improvement of the core business operations. Consequently, the Company’s return on equity was 38.55 percent in 2007.

3. Financial Status Assets

Composition and the change of Key Assets The total assets at the end of accounting period 2007, as at March 31, 2008 were 6,658 million baht, consisting of current assets of 1,975 million baht and non-current assets of 4,684 million baht or equivalent to 29.7 percent and 70.3 percent of the total assets, respectively. The total assets decreased by 276 million baht from 2006 or 4 percent due to the transfers of assets for debt settlements under the Rehabilitation Plan, and as at the end of the accounting period 2007, the net assets awaiting transfer under the Rehabilitation Plan were 228 million baht, decreased by 1,082 million baht from previous accounting period or 82.6 percent.

Non-current assets as at the end of the accounting period 2006 was increased by 1,697 million baht from the previous accounting period due to the record of revaluation surplus of the land from Thana City Golf Course to reflect its market price. Moreover, non-current assets as at the end of the accounting period 2007 was increased by 828 million baht from the previous period due to the increase of 640.2 million baht of the net investment to establish Kamala Beach Resort & Hotel Management Company Limited to develop property project and operate hotel business in Phuket.

Liquidity

Cash Flows The Company’s net cash flows were increased 36.5 million baht in the end of accounting period 2007 and had the beginning cash from the year 2006 of 117.3 million baht; as a result, the ending cash for 2007 was 153.8 million baht.

The increase of the net cash flows was mainly attributed to the increase in cash flows from financing activities of 750.4 million baht due to the increase in short-term loan from financial institution of 132.2 million baht and in cash received from issuance of additional shares of 614.4 million baht. The net cash received from financing activities was used in the investing activities 705.1 million, divided into baht to finance the business expansion for the investment in Kamala Beach Resort & Hotel Management Company Limited of 640.2 million baht to expand the Company’s property development and hotel business in Phuket, and for other investments in (1) the purchases of land held for future development, (2) the purchases of property, plant and equipment, (3) the purchase of condominiums and fixtures for rent, and (4) the advances for purchases of land and buildings, all of which were 180.4 million baht in total. The net cash flows from operating activities, however, were slightly negative 8.9 million baht due to the large amount of non-cash items including in the operating incomes, the gain on transfer

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of assets for debt settlement of 1,149.2 million baht and the reversal of allowance for doubtful debts of 114.4 million baht.

Most of which were attributed to the success of debt restructuring under the Rehabilitation Plan.

Significant Liquidity Ratios For the last 3 accounting periods, the Company’s liquidity ratio had continuously improved from 0.13 times as at March 31, 2006 to 0.73 times as at March 31, 2007 and to 0.82 times as at March 31, 2008. The improvements were attributed to the significant decline of debts under the Rehabilitation Plan and the capital increase in accordance with the Rehabilitation Plan. As at March 31, 2007, the Company’s current portion of creditors per the Rehabilitation Plan decreased by 31,143.7 million baht from the end of previous accounting period to 4,021 million baht, and increased in cash received from the capital increase of 2,133.3 million baht and cash received from the sales of investment in associates 150 million baht.

Moreover, as at 31 March 2008, the Company’s current portion of creditors per the Rehabilitation Plan decreased by 2,132.4 million baht from the end of previous accounting period, resulting in the 3-consecutive improvement of liquidity ratios over the past 3 accounting years. In line with the improvement of liquidity ratios, the quick ratios had also increased over the same accounting periods ending as at March 31, 2006 - March 31, 2008 with the amount of 0.00 times, 0.04 times and 0.07 times, respectively. Even though the quick ratio is low, the Company is still capable of matching its current debt obligations under the Rehabilitation Plan, because most of the current assets were real estate development costs, and assets and investments in subsidiaries awaiting transfer under the Rehabilitation Plan, most of which will be used in debt settlements under the Rehabilitation Plan.

Regarding debt service capability, during 2005 - 2007, the Company’s interest coverage ratios were 1.02 times, (42.84) times and (15.73) times, respectively, and its debt service coverage ratios were 0.02 times, (0.05) times and (0.08) times, respectively. The negative results of both ratios were attributed to the negative cash flow from operating activities due to non-cash items incorporated as a significant portion in the income sources such as gain on transfer of assets for debt settlement and reversal of liabilities in excess of amounts per comptroller’s orders. However, the non-cash items were from the process and accomplishment under the Rehabilitation Plan since the end of 2006, and the Company’s operating cash flows were improved in the accounting period 2007 due to the positive development of rental, service and hotel businesses.

Source of Funds

Capital Structure The Company’s debt to equity ratios, as of the ended accounting period 2005 - 2007, were (1.24) times, 2.57 times and 0.82 times, respectively. The improvement of the debt to equity ratios reflected the reducing risk from capital base in accordance with the successful debt restructuring under the Reorganization Plan in 2006 and turned the shareholders’ equity to be positive. In addition to the progress of debt restructuring, the development of operating performances in 2006 - 2007 partially contributed to the decrease in deficits and the respective increase of the shareholders’ equity.

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Liabilities As at the end of the accounting period 2005 - 2007, the Company’s liabilities were 35,458 million baht, 4,991 million baht and 3,001 million baht, respectively, and had been continuously decreased due to the successful debt restructuring and the transfers of assets for debt settlements under the Rehabilitation Plan. In the accounting period 2006, the Company’s gain on debt restructuring was 24,443 million baht, and the transfers of assets, proceeds from capital increase and cash for debt settlements were 2,564 million baht, 249 million baht and 1,542 million baht, respectively, all of which were attributed to the significant decrease of the Company’s liabilities. In the accounting period 2007, the Company continued to transfer its assets for debt settlements under the Rehabilitation Plan in the amount of 1,082 million baht which left the liabilities under the Rehabilitation Plan to only 2,469 million baht which are composed of the current portion due within 1 year of 1,889 million baht and the remaining non-current portion of 580 million baht. The remaining liabilities under the Rehabilitation Plan can also be classified as secured and unsecured creditors in the amount of 1,318 million baht and 1,152 million baht, respectively.

The unsecured creditors will be paid in installments with 125 million baht each. The table below is the details of creditors under the Rehabilitation Plan and loans from the financial institutions.

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Shareholders’ Equity As at the end of the accounting period 2005 - 2007, the Company’s shareholders’ equity was (28,666) million baht, 1,944 million baht and 3,645 million baht, respectively, and continuously improved over the times. In the end of the accounting period 2006, the shareholders’ equity was increased by 30,610 million baht from the end to the accounting period 2005 or 106.8 percent, and in the end of the accounting period 2007, the shareholders’ equity was increased by 1,701 million baht from the end of the accounting period 2006 or 87.5 percent. The improvements of the shareholders’ equity were mainly due to accomplishment under the Rehabilitation Plan since 2006, which can be described below.

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During the accounting period 2006, the Company increased paid-up capital by 4,800 million baht (4,800 million shares with the par value of 1 baht) according to its obligations under the Rehabilitation Plan. Of the capital increase, 800 million shares were allocated to creditors for conversion of debt to equity and the remaining portion of 4,000 million shares were allocated to new investors. The new shares from capital increase, however, were issued at the price of 0.50 baht per share and resulted in the discount on ordinary share capital in the amount of 2,400 million baht which was recorded as a deduction against the premium on ordinary shares of 7,600 million baht. The proceeds from the capital increase were for debt repayments under the Rehabilitation Plan. The Company also offset its gain from debt restructuring under the Rehabilitation Plan 24,443 million baht, the statutory reserve of 366 million baht and the remaining premium on ordinary shares of 5,200 million baht with its deficits; as a result, the deficits decreased drastically from (37,044) million baht as of the ende of the accounting period 2005 to (5,264) million baht as of the end of the accounting period 2006. Consequently, the reduction of the deficits by 31,780 million baht and the increase of revaluation surplus of the assets by 2,021 million baht improved the shareholders’ equity.

For the improvement of the shareholders’ equity as of the end of the accounting period 2007, the Company increased its paid-up capital by 480 million baht (480 million shares with the par value of 1 baht) at the price of 1.28 baht per share.

Such capital increase resulted in the increase of premium on shares by 134.4 million baht. In addition, the deficits decreased from (5,264) million baht as of the end of the accounting period 2006 to (4,175) million baht as of the end of the accounting period 2007 or the decrease by 1,089 million baht, which was attributed to the gain on transfer of assets for debt settlement under the Rehabilitation Plan of 1,149 million baht.

Auditor’s Remunerations

As at March 31, 2008, the Company’s auditor was Ernst & Young Office Limited. The audit fee was in total amount of 3,437,011 baht, which was composed of fees from the reviews of quarterly financial statements in the amount of 600,000 baht (200,000 baht per quarter) and the audit of annual financial statements in the amount of 2,750,000 baht. In addition, the non-audit fees were 87,011 baht as the documenting, managing and traveling expenses of the auditor.

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Report on the Responsibilities of the Board of Directors to the Financial Report Tanayong’s Financial Statements have been prepared under the policies of the Board of Directors to comply with the generally accepted accounting principles and consistently applied and supported by reasonable and prudent judgments and estimations to reflect the Company’s accurate performance.

The Board of Directors recognizes the essential of the quality of the financial statements by providing the reviewing of the financial data and sufficient information in the notes to the financial statements and the explanation and analysis report for the interest of the shareholders and investors to access into the financial statements.

The Board of Directors has also appointed the Audit Committee, consisting of independent directors and non-executive members, to oversee the quality of the financial statements. The opinion of the Audit Committee has been shown in the Report of the Audit Committee in this annual report.

According to the management structure and the internal control system including the audit results of the Certified Public Accountant, the Board of Directors believes that the Company’s financial statements as of March 31, 2008 have shown essentially accurate data of its financial status, performance and cash flow statements in accordance with the generally accepted accounting principles.

Mr. Keeree Kanjanapas Chairman

Mr. Kavin Kanjanapas Managing Director

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Report of Independent Auditor and Financial Statements Report of Independent Auditor To the shareholders of Tanayong Public Company Limited I have audited the accompanying consolidated balance sheets of Tanayong Public Company Limited and its subsidiaries as at 31 March 2008 and 2007, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, and the separate financial statements of Tanayong Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tanayong Public Company Limited and its subsidiaries and of Tanayong Public Company Limited as at 31 March 2008 and 2007, the results of their operations, and cash flows for the years then ended in accordance with generally accepted accounting principles.

Without qualifying my opinion on the above financial statements, I draw attention to the aforementioned financial statements as follows: a) The Company followed most of the significant mandatory terms and conditions stipulated in the rehabilitation plan and on 14 November 2006, the Central Bankruptcy Court ordered the termination of the Company’s business rehabilitation. As discussed in Note 26 to the financial statements, the Company has been unable to transfer the Company’s 275,628,054 ordinary shares temporarily registered in the name of a subsidiary, deposited with the Central Bankruptcy Court as guarantees of debt settlement, to creditors since there are still undue debts and debts pending final court judgment or comptroller’s orders. As a result, the number of shares allocated to each creditor is still uncertain as the debt ratio might be altered to accord with final court judgment or comptroller’s orders. However, the creditors will still receive total numbers of ordinary shares as stipulated in the rehabilitation plan and the Company adjusted issuance of ordinary shares for debt settlement to settle with the Company’s debts during the year ended 31 March 2007.

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In addition, installment debts of unsecured creditors amounting to Baht 125 million came due during the current year.

However, the Company did not make payment to such unsecured creditors since the Company has not been called from a creditor and is in negotiation with another creditor. b) As discussed in Note 14 to the financial statements, the Company has the outstanding balances of cash deposited with the Central Bankruptcy Court as guarantees of settlement of unsecured and secured creditors, amounting to Baht 270.3 million and Baht 42.5 million, respectively, due to the debts pending final court judgment or comptroller’s orders.

Such amounts of cash deposited are still lower than the maximum amount of debt that may arise on a proportional basis of unsecured and secured creditors by Baht 95.6 million and Baht 416.5 million, respectively. The Company is obliged to pay or transfer assets to settle such debts as stipulated in the rehabilitation plan. However, the Company completely recorded such debts in its book and the secured creditors are provided guarantees by the mortgage of the Company’s assets in full. c)

As discussed in Note 16 and 19 to the financial statements, the Company has been unable to transfer certain assets to creditors since there are still debts pending final court judgment or comptroller’s orders. In addition, the Company is in the process of selling certain assets to make debt settlement and certain assets have already been deposited with the Central Bankruptcy Court for debt settlement.

d) As discussed in Note 4 to the financial statements, during the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method. The Company has thus restated the separate financial statements as at 31 March 2007 and for the year then ended to reflect this accounting change.

Supachai Phanyawattano Certified Public Accountant (Thailand) No. 3930 Ernst & Young Office Limited Bangkok: 29 May 2008

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Tanayong Public Company Limited and its Subsidiaries Balance Sheets As at 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its Subsidiaries Balance Sheets (Continued) As at 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its Subsidiaries Balance Sheet (Continued) As at 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its Subsidiaries Income Statements For the years ended 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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The accompanying notes are an integral part of the financial statements.

Tanayong Public Company Limited and its Subsidiaries Statements of Changes in Shareholders’ Equity For the years ended 31 March 2008 and 2007

Annual Report 2007/2008

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The accompanying notes are an integral part of the financial statements.

Tanayong Public Company Limited and its Subsidiaries Statements of Changes in Shareholders’ Equity (Continued) For the years ended 31 March 2008 and 2007

Tanayong Public Company Limited and its Subsidiaries Cash Flow Statements For the years ended 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its Subsidiaries Cash Flow Statements (Continued) For the years ended 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its Subsidiaries Cash Flow Statements (Continued) For the years ended 31 March 2008 and 2007

The accompanying notes are an integral part of the financial statements.

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Tanayong Public Company Limited and its subsidiaries Notes to consolidated financial statements For the years ended 31 March 2008 and 2007 1.

General information

Tanayong Public Company Limited (“The Company�) is a public company incorporated and domiciled in Thailand. Its major shareholder is K2J Holdings Company Limited, which was incorporated in Thailand. The Company is principally engaged in the property development and provision of construction services and its registered address is 21 Soi Choeypuang, Wipawadi Rangsit, Chompol, Chatuchak, Bangkok.

2.

Basis of preparation

2.1

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 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.

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2.2.

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a) The consolidated financial statements include the financial statements of the Company and the following subsidiaries:

Basis of consolidation

b) The financial statements of overseas subsidiaries are translated into Thai Baht at the closing exchange rate as to assets and liabilities, and at monthly average exchange rates as to revenues and expenses. The resultant differences have been shown under the caption of “Translation adjustment” in shareholders’ equity. c) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. d) Investments in the subsidiaries as recorded in the Company’s books of account are eliminated against the equity of the subsidiaries. e) The meeting of the Company’s board of directors No. 10/2007, held on 15 August 2007, passed a resolution to jointly invest in a newly established company, Hip Hing Construction (Thailand) Company Limited, engaged in the provision of construction services. This company has a share capital of Baht 100 million (10,000,000 ordinary shares with a par value of Baht 10 each), of which it has called up 25%, and is 51% owned by the Company. f) During the current year, Muang Thong Apartment Co., Ltd. invested Baht 490,000 (4,900 ordinary shares with a par value of Baht 100 each) in Muang Thong Lakeside Restaurant Co., Ltd.. As a result, its shareholding in Muang Thong Lakeside Restaurant Co., Ltd. increased to 100%. g) During the current year, Siam Paging and Communication Co., Ltd. and Tanayong Property Management Co., Ltd. called up share capital amounting to Baht 3.75 million and Baht 0.75 million, respectively.

2.3

The separate financial statements, which present investments in subsidiaries and associates presented under the cost method, have been prepared solely for the benefit of the public.

3.

Adoption of new accounting standards

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

3.1

Accounting standards which are effective for the current year

TAS 44 (revised 2007) TAS 45 (revised 2007) TAS 46 (revised 2007)

Consolidated and Separate Financial Statements Investments in Associates Interests in Joint Ventures

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These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44 and 45 as discussed in Note 4 to the financial statements. Thai Accounting Standard No. 46 is not relevant to the business of the Company.

3.2

Accounting standards which are not effective for the current year

TAS 25 (revised 2007) TAS 29 (revised 2007) TAS 31 (revised 2007) TAS 33 (revised 2007) TAS 35 (revised 2007) TAS 39 (revised 2007) TAS 41 (revised 2007) TAS 43 (revised 2007) TAS 49 (revised 2007) TAS 51

Cash Flow Statements Leases Inventories Borrowing Costs Presentation of Financial Statements Accounting Policies, Changes in Accounting Estimates and Errors Interim Financial Reporting Business Combinations Construction Contracts Intangible Assets

These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these revised accounting standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied.

4.

Change in accounting policy for recording investments in subsidiaries and associates in the separate financial statements

During the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method, in compliance with Thai Accounting Standard No. 44 (Revised 2007) regarding “Consolidated and Separate Financial Statements�, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method.

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In this regard, the Company has restated the previous year’s separate financial statements as though the investments in the subsidiaries and associates had originally been recorded using the cost method. The change has the effect of decreasing net income in the separate income statements for the year ended 31 March 2008 by Baht 7.1 million (Baht 0.001 per share) (2007: No impact). The cumulative effect of the change in accounting policy has been presented under the heading of “Cumulative effect of the change in accounting policy for investments in subsidiaries and associates” in the separate statements of changes in shareholders’ equity.

Such change in accounting policy affects only the accounts related to investments in subsidiaries and associates in the Company’s separate financial statements, with no effect to the consolidated financial statements.

5.

Significant accounting policies

5.1

Revenue recognition

a) b) c)

d) e) f) g)

Revenues from sales of land and completed buildings are recognised as revenue when contracts to purchase and to sell and completed buildings have been executed and initial payments have been received not less than 20% from the buyers.

Revenues from land procurement of low-cost residential housing projects are recognised when the agent, responsible for acquisition of the land, transfers ownership to the National Housing Authority.

Revenues from construction services are recognised when services have been rendered taking into the stage of completion. Stage of completion is measured by reference to total costs incurred as a percentage of total budgetary cost in relation to the projects.

The recognised revenue which is not yet due per the contracts has been presented under the heading of “Unbilled receivables” under current assets.

Rental income in conjunction with apartment and condominium is recognised as revenue on an accrual basis.

Revenues from hotel operations, mainly consisting of room and restaurant revenues, are recognised when services have been rendered and represent the invoiced value (excluding value added tax) of goods supplied and services rendered after deducting discounts and service charges.

Interest income is recognised on an accrual basis based on the effective interest rate.

Dividends are recognised when the right to receive the payment is established.

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5.2

Expenses

Costs of construction Costs of construction are recognised in accordance with the percentage of work completed based on total estimated costs. Provision for anticipated losses on construction projects is made in the accounts in full when the possibility of loss is ascertained. Differences between the estimated costs and the actual costs are recognised as current assets or current liabilities in the balance sheets.

Costs of sales of real estate Costs of sales of real estate, which are determined by attributing the total anticipated real estate development costs after recognition of the costs incurred to date to the units already sold on the basis of salable area are recognised as costs in the income statements.

5.3

Real estate development costs

Real estate development costs are stated at cost less allowance for loss on diminution in value.

Real estate development costs consist of the costs of land, land development, management fees, construction and related interest.

5.4

Cash and cash equivalents

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

5.5

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 experiences and analysis of debtor aging.

5.6

Investments

a)

Investments in available for sale securities are stated at fair value. Changes in the carrying amounts of securities are recorded as separate items in shareholders’ equity until the securities are sold, when the changes are then included in determining income.

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b)

Investments in debt securities, both due within one year and expected to be held to maturity are recorded at amortised cost. The premium/discount on debt securities is amortised by effective rate method with the amortised amount presented as an adjustment to the interest income. c) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). d) Investments in associates are accounted for in the consolidated financial statements using the equity method. e) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method.

The fair value of marketable securities is based on the latest bid price of the last working day of the year as quoted on the Stock Exchange of Thailand. The fair value of debt instruments is determined based on the required rate of return or the yield rates quoted by the Thai Bond Market Association. The fair value of unit trusts is determined from their net asset value.

The weighted average method is used for computation of the cost of investments.

In the event the Company reclassifies investments in securities, such investments are adjusted to their fair value as at the reclassification date. Differences between the carrying amount of the investments and their fair value on that date are included in determining income or recorded as surplus (deficit) from change in the value of investments in shareholders’ equity, depending on the type of investment which is reclassified.

5.7

Property, plant and equipment and depreciation

Before the year ended 31 March 2007, land was stated at cost, while buildings and equipment were stated at cost less accumulated depreciation and allowance for impairment (if any).

During the year ended 31 March 2007, the Company changed its values of some categories of property, plant and equipment from cost to the revalued amount. As from the year ended 31 March 2007, land is stated at cost/ revalued amount and buildings and equipment are stated at cost/revalued amount less accumulated depreciation and allowance for loss on impairment of assets (if any).

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Land, buildings and improvements and golf course development costs are initially recorded at cost on the acquisition date, and subsequently revalued by an independent professional appraiser to their fair values.

Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the balance sheet date.

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 a revaluation of the Company’s assets, the increase is credited directly to equity under the heading of “Revaluation surplus”. 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 a revaluation of the Company’s 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 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 5 - 20 years Golf course development costs 5 - 30 years Furniture and office equipment 3 - 5 years Motor vehicles 5 years Depreciation is included in determining income.

No depreciation is provided on land and construction in progress.

5.8

Leasehold rights and amortisation

Leasehold rights are stated at cost less accumulated amortisation and allowance for loss on impairment of assets (if any). Amortisation of leasehold rights is calculated by reference to their cost on a straight-line basis over the leasehold period.

Amortisation is included in determining income.

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5.9

Condominiums and fixtures for lease

Condominiums and fixtures for lease are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation is calculated by reference to their costs on the straight-line basis over the following estimated useful lives: Condominiums for lease Fixtures

Period of lease 5 years

Depreciation is included in determining income.

5.10 Company’s shares held by subsidiaries

Company’s shares held by its subsidiaries are stated at cost and presented as a deduction in shareholders’ equity.

5.11 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 associates 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.

5.12 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.

Gains and losses on exchange are included in determining income.

5.13 Impairment of assets

The Company and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company and its subsidiaries make 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.

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5.14 Gains from troubled debt restructurings

The Company and its subsidiaries adopt an accounting policy related to troubled debt restructuring whereby in case of transfer of assets to settle debts which the excess of the debt extinguished by the creditors over the fair value of the assets transferred is recognised as an extraordinary gain in the income statements and the difference between the fair value and the net book value of the assets transferred is treated as a gain (loss) from transfer of assets.

When the debt restructuring involves a waiver of debts, a portion of the waived debts that exceeds the aggregate amount of interest expenses to be incurred over the term of the new agreement is recognised as an extraordinary gain in the income statements.

5.15 Employee benefits

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

5.16 Income tax

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

5.17 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.

6.

Cash and cash equivalents

(Unit: Baht)

Cash Current deposits and saving deposits BOT bonds with maturity date due not more than 3 months Total

Consolidated financial statements 2008 2007 514,868 437,659 83,279,411 46,867,639 70,000,000 70,000,000 153,794,279 117,305,298

Separate financial statements 2008 2007 343,000 265,000 60,464,093 9,924,543 50,000,000 110,807,093

70,000,000 80,189,543

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7.

Short-term investment

(Unit: Baht)

Equity security available for sale Add: Unrealised gain Total 8.

Consolidated financial statements 2008 2007 46,228,663 905,686 47,134,349

Separate financial statements 2008 2007 -

Trade accounts receivable / Other receivables Trade accounts receivable

Total value of contracts signed

Percentage of total project sale value Installments due Less: Cash received Trade accounts receivable - real estate Trade accounts receivable - hotel, rental and service, net Trade accounts receivable, net

(Unit: Thousand Baht) Consolidated financial statements Separate financial statements 2008 2007 2008 2007 10,012,072 10,001,871 10,012,072 10,001,871 70.96 70.90 70.96 70.90 10,012,072 10,001,871 10,012,072 10,001,871 (10,012,072) (10,001,871) (10,012,072) (10,001,871) 8,506 8,506

13,836 13,836

-

-

The outstanding balances are undue accounts receivable of subsidiaries with which collection problems are not expected since most are customers with good financial status and payment histories.

Other receivables

Other receivables Less: Allowance for doubtful debts Other receivables, net

Consolidated financial statements 2008 2007 45,702 569,992 (16,447) (545,170) 29,255 24,822

(Unit: Thousand Baht) Separate financial statements 2008 2007 45,672 568,992 (16,447) (545,170) 29,225 23,822

The Company and its subsidiaries believe that there will be no doubtful debt beyond the provision amount set aside.

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9.

Unbilled receivables / Advances received from employer

(Unit: Thousand Baht) Consolidated and Separate financial statements 2008 2007 Unbilled receivables

Project value as per contracts Accumulated amounts recognised as revenue on percentage of completion basis Less: Value of total billed Unbilled receivables

2,334,137

-

831,662 (684,907) 146,755

-

823,647 20,140

2,334,137 68,668

20,140

68,668

Advances received from employer

Project value as per contracts Value of total billed Less: Accumulated amount recognised as revenue on percentage of completion basis Advances received from employer 10.

Short-term loans and advances to related parties

(Unit: Thousand Baht) Consolidated financial statements 2008 2007

Separate financial statements 2008 2007

Interest policy

10,408 218

10,252 218

10,408 218

10,252 218

At cost of fund At cost of fund

10,626 Less: Allowance for doubtful debts (10,626) Net -

10,470 (10,470) -

10,626 (10,626) -

10,470 (10,470) -

Related companies

EGV Ltd. Others

The relationship between the Group and these related companies is under common management.

All of the balance of short-term loans and advances to related parties has been long outstanding. The Company and its subsidiaries therefore set up provision in full amount.

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11.

Real estate development costs

12.

Construction in progress

The Company has concluded that the economic benefit generated may not fully cover the project costs because the uncertainties with regard to the political situation may affect approval of low-cost residential housing projects by the National Housing Authority (As at 31 March 2008, the Company had received approval for 9,584 units of low-cost residential housing projects, from a total of 20,000 units). Therefore, the Company recorded provision for impairment amounting to Baht 19.8 million and Baht 92.6 million for the project costs in the income statements for the years ended 31 March 2008 and 2007, respectively and presented separately under the heading of “Loss on provision for impairment of low-cost residential housing projects�.

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(Unit: Thousand Baht)

The low-cost residential housing projects, comprising 7,142 completed units, are to be transferred to the National Housing Authority within February and March 2008. The Company sent a letter to the National Housing Authority in order to extend the construction period for another 180 days. In March 2008, the National Housing Authority permitted the Company to extend the construction period to end within August and September 2008, without the Company being liable for fines, interest and expenses.

13.

Advances for purchased of land and buildings

Consolidated financial statements 2008 2007 BalanceBalatance beginning of the year 65,000 at beginning of the year IncreaseIncrease during the yearthe year 71,819 65,000 during Transferred in duringin the yearthe year (48,319) Transferred during Transferred right to right purchase of land ofto laassociate Transferred to purchase nd to associate (65,000) BalanceBalatance end atof the 23,500 65,000 endyear of the year

(Unit: Thousand Baht) Separate financial statements 2008 2007 65,000 48,319 65,000 (48,319) (65,000) 65,000

During the current year, the Company transferred the right to purchase of land to an associate and received payment for a plot of land for which the Company paid in advance, from an associate.

As at 31 March 2008, its subsidiaries were contracted to purchase and to sell land and buildings amounting to Baht 99 million.

14.

Cash deposited as collateral for debt settlement

As at 31 March 2008, the Company has the outstanding balances of cash deposited with the Central Bankruptcy Court as guarantees of settlement of unsecured and secured creditors, amounting to Baht 270.3 million and Baht 42.5 million, respectively (2007: Baht 318.5 million and Baht 42.5 million, respectively), due to the debts pending final court judgment or comptroller’s orders. Such amounts of cash deposited are still lower than the maximum amount of debt that may arise on a proportional basis of unsecured and secured creditors by Baht 95.6 million and Baht 416.5 million, respectively. The Company is obliged to pay or transfer assets to settle such debts as stipulated in the rehabilitation plan. However, the Company completely recorded such debts in its book and the secured creditors are provided guarantees by the mortgage of the Company’s assets in full.

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15.

Loans to related parties

The relationship between the Group and these related companies is under common shareholders and management.

During the current year, the Company received debt settlement amounting to Baht 61.9 million, with land amounting to Baht 29.7 million transferred from Sampaopetch Co., Ltd., and cash receipts totaling Baht 32.2 million

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from Dnal Co., Ltd. amounting to Baht 20.5 million, Siam Paging and Communication Co., Ltd. amounting to Baht 3.8 million and Saraburi Property Co., Ltd. amounting to Baht 7.9 million. In addition, the Company provided Baht 39.0 million loan to Muang Thong Apartment Co., Ltd. On 12 November 2007, the Company entered into a memorandum with a company regarding the transfer of rights of claim over debts of United Bangkok Development Co., Ltd. (“UBD”) amounting to Baht 100 million (the Company had recorded full allowance for doubtful debt for this amount), with the Company to receive payment totaling Baht 10 million. Baht 1 million has already been received and the remaining payment will be received when UBD makes payment to that company. The Company will not record this transaction in its accounts until it receives payment.

The Company and its subsidiaries believe that there will be no allowance for doubtful debt beyond the amount set aside.

16.

Assets awaiting transfer under rehabilitation plan

Consolidated financial statements 2008 2007 Real estate opment - netcosts - net 937,770 937,770 Realdevel estate develcosts opment Land heldLand for future opment 506,948 506,948 held fordevel future devel-onet pment - net Property, Property, plant andplequipment - net - net 187,819 188,990 ant and equipment Total Total 1,632,537 1,633,708 Add: GainAdd: on transfer assets offorassets debt settl ementsettlement Gain onoftransfer for debt - accumul- aaccumul ted ated 1,388,956 239,748 Less: Transferred assets to assets creditors per rehabilperitation Less: Transferred to creditors rehabilitation plan - accumul ted ated (2,793,591) (563,386) plan - aaccumul Net Net 227,902 1,310,070

(Unit: Thousand Baht) Separate financial statements 2008 2007 937,770 937,770 502,248 502,248 37,354 38,525 1,477,372 1,478,543 1,388,956

239,748

(2,793,591) 72,737

(563,386) 1,154,905

During the current year, the Company deposited certain assets with the Central Bankruptcy Court for debt settlement. Therefore, the Company adjusted the value of such assets in accordance with the values stipulated in the rehabilitation plan and recorded gain on transfer of assets for debt settlement amounting to Baht 1,149.2 million, presented as the separate item under the heading of “Gain on transfer of assets for debt settlement” in the income statement for the year ended 31 March 2008 (2007: Baht 239.7 million).

The Company is in the process of selling certain assets, with a net book value of Baht 150.5 million, to a company at a price of Baht 859.0 million, which is equal to value stipulated in the rehabilitation plan. As stipulated in agreements to purchase and to sell, the Company is to be paid the full amount on the date of transferring ownerships of its assets within December 2008. However, the repayment period can be extended with the agreements between the Company and such company. The creditors are to receive cash from sales after deducting expenses relating to the transfer of the assets.

However, the Company has been unable to transfer certain assets to creditors since there are still debts pending final court judgment or comptroller’s orders.

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Investments in subsidiaries 17.

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Investments in associates

Details of associates

18.

18.1

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The meeting of the Company’s board of directors No. 5/2007 held on 29 March 2007 passed a resolution to invest in a company, Kamala Beach Resort & Hotel Management Co., Ltd. (“Kamala”) engaged in the property development business, with a share capital of Baht 800 million (75,200,000 ordinary shares with a par value of Baht 10 each and 4,800,000 preference shares with a par value of Baht 10 each). The Company purchased 54,400,000 ordinary shares at a price of Baht 11.03 each, for a total of approximately Baht 600 million. The Company has 50% of voting rights and rights to receive dividend of such company.

The extraordinary meeting of Kamala’s shareholders No. 2/2008 held on 10 March 2008, passed a resolution to approve an increase in the share capital from Baht 800 million to Baht 859 million by issuing 5,546,000 new ordinary shares with a par value of Baht 10 each and 354,000 new preference shares with a par value of Baht 10 each.

The Company purchased Kamala’s additional share capital of Baht 40.1 million (4,012,000 ordinary shares with a par value of 10 Baht each) in order to maintain its percentage of voting rights and rights to receive dividend.

The meeting of the Company’s board of directors No. 1/2008 held on 12 February 2008, passed a resolution to jointly invest in a newly established company, Absolute Hotel Services Co., Ltd., engaged in the hotel management and real estate. This company is to have a share capital of Baht 25 million (2,500,000 ordinary shares with a par value of Baht 10 each), and is to be 50% owned by the Company. Currently, it is being established.

19.

Investments in subsidiaries awaiting transfer under rehabilitation plan

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During the year ended 31 March 2007, the Company transferred the above companies’ shares to creditors per rehabilitation plan and deposited certain shares with the Deposit of Property Central Office, Legal Execution Department as collateral of debt repayment. The Company adjusted the value of such companies’ shares in accordance with the values stipulated in the rehabilitation plan and therefore recorded gain on transfer of assets for debt settlement amounting to Baht 809.9 million in the income statement for the year ended 31 March 2007.

The outstanding balance represents BTSC’s 72,000,000 ordinary shares, equivalent to 5.92% owned by the Group’s shareholding, which were not transferred to the creditors, since there are still debts pending final court judgment.

20.

Other long-term investments

On 31 March 2006, the Company entered into agreements to purchase and to sell 2,000 ordinary shares of Changklan Way Co., Ltd. for Baht 150,000 per share, a total of Baht 300 million, to individuals and a company.

During the year ended 31 March 2007, the Company received Baht 150 million and the Company transferred ordinary shares to the individuals and company. As a result, the Company’s percentage holding decreased from 30.30% to 15.15% and the Company has therefore classified its investment as “Other long-term investments” and recorded gain of approximately Baht 25.6 million on the sales of this investment. The Company is waiting for a buyer to take the shares and pay the remainder of the share price to the Company

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21.

Land held for future development

During the current year, the Company has received land amounting to Baht 29.7 million from its subsidiary in settlement of debt.

The Company owned land of Baht 539.5 million, 70% of the whole land co-owned by the Company and a company. Such land was seized by the Legal Execution Department for compulsory sale by auction, by court order, as a result of the Company having sued the co-owner of the land. The Company had paid the co-owner company for the land in advance, but has not received the return of its funds. The Company therefore recorded full allowance for doubtful debts for the advance for such company. Currently, the Company successfully bid for the land at an open auction with a value of Baht 645.0 million, and as a result, its ownership of such land stands at 100 percent. The Company therefore recorded the difference of land cost and the reversal of allowance for doubtful debts of Baht 105.5 million, presenting it as a part of the heading of “Reversal of allowance for doubtful debts� in the income statements for the year ended 31 March 2008.

The Company has mortgaged certain plots of land thereon with net book value as at 31 March 2008 of Baht 645 million as collateral for short-term loan facility from a financial institution.

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22.

Property, plant and equipment

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The Company arranged for an independent professional valuer to appraise the value of certain assets during the year ended 31 March 2007 on an asset-by-asset basis. The basis of the revaluation was as follows: - Land was revalued using the market approach.

- Buildings and improvements were revalued using the depreciated replacement cost approach.

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The Company recorded the increases and decreases of the revaluation of those assets as follows:

As at 31 March 2008, certain plant and equipment items have been fully depreciated but are still in use. The original costs of those assets amounted to approximately Baht 378 million (2007: Baht 386 million) (Separate financial statements: Baht 311 million (2007: Baht 318 million).

The Company has mortgaged land and construction thereon with net book value as at 31 March 2008 of Baht 2,215.3 million (2007: Baht 2,228.7 million) as collateral for guarantee facility granted by a bank.

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23.

Leasehold rights

On 19 January 2007, the Company entered into the “Building Construction Service and Leasehold Land” agreement with an individual, which has a term of 21 years. Currently, the Company is in the process of selling the leasehold rights to the subsidiary, as approved by a resolution of the meeting of the Company’s board of directors No. 1/2008, held on 12 February 2008. However, the subsidiary is constructing a hotel on the land in accordance with a memorandum among the lender, the Company and the subsidiary and the rights in property on such land are to be transferred to the lender, as stated in the leasehold agreement. The subsidiary recorded the construction of the hotel as “Construction in progress” under the heading of “Property, plant and equipment” in the balance sheets. The subsidiary is to reclassify as “Leasehold right” and will commence amortising it once the hotel is ready to be utilised and the rights in the hotel have been transferred to the lender.

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24.

Condominiums and fixtures for lease

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25.

Short-term loan from financial institution

The Company has a credit facility of short-term loan from a financial institution amounting to Baht 400 million, which is subject to the interest at a rate tied to the minimum loan rate (MLR) and is secured by the mortgage of plots of the Company’s land held for future development as discussed in Note 21 to the financial statements.

26.

Creditors per rehabilitation plan

During the year ended 31 March 2007, the Company followed most of the significant mandatory terms and conditions stipulated in the rehabilitation plan and recorded gain on debt restructuring in accordance with the rehabilitation plan amounting to Baht 24,442.9 million (Separate financial statements: Baht 25,072.9 million), presented as an extraordinary item in the income statement for the year ended 31 March 2007.

In addition, the Company lodged a petition to terminate the rehabilitation plan with the Central Bankruptcy Court on 6 October 2006, the Central Bankruptcy Court consequently ordered the termination of the Company’s business rehabilitation on 14 November 2006.

During the year ended 31 March 2007, the Company adjusted certain liabilities which the Company had recorded in its books at a value higher than the balance per the comptroller’s order, to leave amounts equal to the liability per the comptroller’s order. The Company recorded the differences adjusted, amounting to Baht 1,597.4 million, as a separate item under the caption of “Reversal of liabilities in excess of amounts per comptroller’s order” in the income statement for the year ended 31 March 2007.

Creditors per rehabilitation plan are detailed as follows:

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The outstanding balances as at 31 March 2008 are detailed as follows:

During the current year, the Company entered into a dispute settlement agreement with a company, an unsecured creditor, with a book value of approximately Baht 57.2 million, whereby the Company paid Baht 45.2 million to such company. The Company therefore recorded the difference of approximately Baht 12 million as an extraordinary item under the heading of “Gain on debt restructuring� in the income statement for the year ended 31 March 2008.

Installment debts of unsecured creditors amounting to Baht 125 million came due during the current year. However, the Company did not make payment to such unsecured creditors since the Company has not been called from a creditor and is in negotiation with another creditor.

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The Company has been unable to transfer the Company’s 275,628,054 ordinary shares temporarily registered in the name of a subsidiary, deposited with the Central Bankruptcy Court as guarantees of debt settlement, to creditors since there are still undue debts and debts pending final court judgment or comptroller’s orders. As a result, the number of shares allocated to each creditor is still uncertain as the debt ratio might be altered to accord with final court judgment or comptroller’s orders. However, the creditors will still receive total numbers of ordinary shares as stipulated in the rehabilitation plan and the Company adjusted issuance of ordinary shares for debt settlement to settle with the Company’s debts during the year ended 31 March 2007.

27.

Short-term loans and advances from related parties

28.

Loans from related parties

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29.

Convertible debentures

The ordinary meeting of the Company’s shareholders No. 1/2007 held on 31 July 2007 passed a resolution to approve the issue and offer of not more than Baht 3,500 million convertible debentures, or the equivalent in another currency, as detailed below.

Period : Not less than 5 years from the issue date Exercise period : From about 30 days after the issue date until 15 days before the maturity date, except for closed periods Conversion ratio : Principal of convertible debentures divided by conversion price Conversion price : Calculated based on the market price of the Company’s shares trading on the Stock Exchange of Thailand for the 15 previous consecutive working days (including the date on which the conversion price is fixed) plus a premium, with such conversion price to be at least 130% of the weighted average closing price of the Company’s shares for the 15 consecutive working days before the offering date Number of ordinary : Not over 2,243,589,743 ordinary shares shares reserved for conversion Allocation method : To overseas investors and/or local institutional investors, to be issued and offered in one or several tranches, in both foreign currency and Baht However, the Company’s management is authorised to stipulate or amend details of the method and conditions regarding the issue and offer of the convertible debentures, such as the issue date, par value, offering price, interest rate, calculation and payment of interest, conversion price, exercise period and redemption.

Currently, the Company’s management is considering the details of the issue and offer of these convertible debentures.

30.

Share capital / premium on ordinary shares

The extraordinary meeting of the Company’s shareholders No. 1/2007, held on 3 May 2007, passed a resolution to approve an increase in the Company’s share capital from Baht 5,333,333,333 (5,333,333,333 ordinary shares with a par value of Baht 1 each) to Baht 5,813,333,333 (5,813,333,333 ordinary shares with a par value of Baht 1 each) by issuing 480,000,000 new ordinary shares with a par value of Baht 1 each, to be sold at a price of Baht 1.28 per share. As a result, premium on ordinary shares increased by Baht 134.4 million.

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The Company registered the increase in its share capital with the Ministry of Commerce on 4 May 2007 and the increase in its issued and paid share capital with the Ministry of Commerce on 8 May 2007 and 15 May 2007.

The ordinary meeting of the Company’s shareholders No. 1/2007, held on 31 July 2007, passed a resolution to approve an increase in its share capital from Baht 5,813,333,333 (5,813,333,333 ordinary shares with a par value of Baht 1 each) to Baht 8,056,923,076 (8,056,923,076 ordinary shares with a par value of Baht 1 each) by issuing 2,243,589,743 ordinary shares with a par value of Baht 1 each to be reserved to support the conversion of the convertible debentures to ordinary shares, as discussed in Note 29 to the financial statements.

The Company registered the increase in its share capital with the Ministry of Commerce on 10 August 2007.

31.

Revaluation surplus

This represents surplus arising from revaluation of land as discussed in Note 22 to the financial statements.

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

32.

Company’s shares held by subsidiaries

During the year ended 31 March 2007, the Company allocated 35,577,912 ordinary shares at a price of Baht 0.50 each or for a total of Baht 17,788,956 to subsidiaries as the Company’s creditors, and recorded this amount under the heading of “Company’s shares held by subsidiaries”, presented as a deduction from the shareholders’ equity in the consolidated balance sheet. Subsequently, on 29 November 2006, a subsidiary sold 3,800,000 shares in the Company to the Company’s directors, at a price of Baht 0.50 each, totaling Baht 1,900,000. As a result, 31,777,912 shares at a price of Baht 0.50 each, totaling Baht 15,888,956 of the Company’s shares are held by subsidiaries.

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33.

Related party transactions

During the years, the Company and its subsidiaries had significant business transactions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of those transactions.

For the years ended 31 March 2008 2007

(Unit: Million Baht) Pricing policy

Consolidated financial statements

Transactions with related companies Interest income

332

100

At cost of fund and defaulted interest rate

Transactions with subsidiaries Interest income Dividend income

48 26

103 44

At cost of fund As a resolution of meeting of board of directors

Transactions with related companies Interest income

332

100

At cost of fund and defaulted interest rate

Separate financial statements

The outstanding balances of the above transactions were shown as separate items in the balance sheets.

The Company recorded allowance for doubtful debts for the full amount of interest income receivable for the years ended 31 March 2008 and 2007.

Directors and management’s remuneration

During the current year, meeting allowances and gratuities to their directors and management totaling Baht 23.3 million (2007: Baht 15.1 million).

34.

Corporate income tax

The Company and its subsidiaries are not liable to corporate income tax for the years due to tax loss brought forward.

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35.

Number of employees and related costs

Number of employees at end of the year (Persons) Employee costs during the year (Thousand Baht) 36.

Consolidated financial statements 2008 2007 253 225 78,704 53,811

Separate financial statements 2008 2007 104 83 60,080 30,242

Basic earnings per share Consolidated financial statements

Basic earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year net of the number of the Company’s shares held by subsidiaries.

Separate financial statements

Basic earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year.

37.

37.1

Commitments and contingent liabilities Capital commitments

a) The Company had outstanding commitments of approximately Baht 2,218 million in respect of the construction contracts of low-cost residential housing projects of which the Company had already entered into agreements with contractors. b) The Company had outstanding commitment of approximately Baht 5 million in respect of the consultation fee of a low-cost residential housing project. c) The subsidiaries had outstanding commitments of approximately Baht 75.5 million in respect of agreements to purchase and to sell land and buildings. d) The Company and its subsidiary had outstanding commitments of approximately Baht 174 million in respect of agreements of consultation, design and construction projects.

37.2

Operating lease commitment

The Company entered into leasehold agreements for the period of 30 years, as from 1 July 1997 and 1 December 1997. The monthly rental charges are Baht 200,000 and Baht 500,000, respectively and will be increased by 5 percent each year of the lease period.

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37.3

Other commitments

BTSC filed a claim with the comptroller in the Central Bankruptcy Court seeking settlement of liabilities of Baht 2,083,703,957 in respect of financial support provided by the principal shareholders under the Principal Shareholders Subordinated Debt Facilities Agreement. Subsequently, BTSC, as plan administrator, agreed to the termination of commitment under such agreement under a letter dated 27 March 2007, since it believes that the rights under such agreement give rise to the receipt of more liabilities than benefits from the Company. However, four creditors per the rehabilitation plan of BTSC lodged a petition with the Supreme Court of Thailand to appeal the Central Bankruptcy Court’s order approving BTSC’s rehabilitation plan. The Supreme Court of Thailand agreed to hear the appeal lodged by the creditors. Subsequently on 3 April 2008, the creditors per rehabilitation plan of BTSC lodged a petition to cancel the appeal of the Central Bankruptcy Court’s order approving BTSC’s rehabilitation plan. Currently, BTSC is complying with the rehabilitation plan and still agrees to terminate the commitment under the above agreement.

37.4

Guarantee

As at 31 March 2008, there was bank guarantees totaling Baht 420 million issued by a bank on behalf of the Company to the National Housing Authority for the low-cost residential housing projects.

37.5

Litigations

As at 31 March 2008, the litigations related to the Company and its subsidiaries are detailed below. a) The Company and its subsidiary have been sued by account payable for land fee, together with their directors, for repayment of land of approximately Baht 436.8 million. The price of the land was outstanding because the creditor had breached a condition of the contract to purchase and to sell the land. Currently, the Company and its subsidiary are negotiating for a dispute settlement. However, the Company and its subsidiary believe that they will suffer no loss significantly as a result of this litigation. b) A creditor has sued the Company for the refund cost of land, amounting to approximately Baht 237.5 million, plus interest at the rate of 7.5% per annum as from 7 October 1994. The land price was outstanding because the creditor had breached a condition of the contract to purchase and to sell the land. Currently, the lawsuit is in the process of the Supreme Court’s consideration.

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c) The Company and the two subsidiaries, as mortgagers of the assets for guarantee of the Company’s bonds, were sued by a local bank, for payment of secured bonds, together with interest charges and other related expenses, totaling approximately Baht 4,250.8 million and the Court of First Instance ordered the two subsidiaries to make payment of such amount. The two subsidiaries appealed the decision and the Appeals Court found in accordance with the Court of First Instance. However, such bank has submitted settlement claims under the Company’s rehabilitation plan and the Company is in the process of selling such assets to make debt settlement. Therefore, these subsidiaries have not made provision for the contingent liability in their accounts. d) The Company has been sued by a local financial institution, together with its directors, for repayment of a short-term loan and interest charges amounting to Baht 150.5 million. e) The Company has been sued by the representative of the group of bondholders of the convertible bonds, for debt totaling Baht 5,830.2 million. f) The Company has been sued by a local financial institution, as guarantor for issuance of trust receipt contract by a company, amounting to Baht 150.5 million.

The litigation discussed in b) to f) represents cases in which creditors submitted claims under the rehabilitation plan, and on 14 November 2006 the Central Bankruptcy Court ordered the termination of the Company’s business rehabilitation. However, liabilities in respect of this litigation are pending final court judgment or comptroller’s orders or the Company is in the process of selling assets to make debt settlement. The Company believes that it will incur no loss beyond the amount set aside.

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38.

The Company’s and its subsidiaries’ financial information of real estate business, construction service business, rental and service business and hotel business in the consolidated financial statements for the years ended 31 March 2008 and 2007 are as follows:

Segment information

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The Company’s and its subsidiaries’ assets of real estate and construction service business, rental and service business and hotel business in the consolidated financial statements as at 31 March 2008 and 2007 are as follows:

39.

Financial instruments

39.1

Financial risk management

The Company’s and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally consist of the following.

Financial assets - Cash and cash equivalents - Short-term investment - Trade accounts receivable - Advances for purchases of land and buildings - Other receivables - Restricted deposits - Cash deposited as collateral for debt settlement - Loans to related parties - Investments in subsidiaries - Investments in associates - Other long-term investments

Financial liabilities - Short-term loan from financial institution - Trade accounts payable - Short-term loans and advances from related parties - Creditors per rehabilitation plan - Advances received from employer - Loans from related parties

The financial risks associated with these financial instruments and how they are managed is described below.

Credit risk

The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, other receivables and loans. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have various and large customer base. The maximum exposure to credit risk is limited to the carrying amounts of trade accounts receivable, other receivables and loans as stated in the balance sheets.

Interest rate risk

Interest rate risk is the risk that future fluctuations in market interest rates will affect the operating results and cash flows of the Company and its subsidiaries.

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The Company and its subsidiaries consider themselves no interest rate risk because the Company and its subsidiaries have most of financial assets carrying floating interest rate which will fluctuate in line with the market interest rates or fixed interest rates which approximate the current market interest rate and most of financial liabilities under the rehabilitation plan and no interest.

Foreign currency risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate because of changes in foreign exchange rate.

The Company and its subsidiaries consider themselves no foreign currency risk because the Company and its subsidiaries have most of financial assets in foreign currency, loans to related parties which were recorded allowance for doubtful debts in full amount.

39.2

Fair value of financial instruments

Since the majority of the Company’s and its subsidiaries’ financial assets and liabilities are short-term or have interest rates close to the market rates and under the rehabilitation plan. The fair values of these financial assets and liabilities are not expected to differ materially from the amounts presented in the balance sheets.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

40.

Subsequent event

On 22 April 2008, the Company’s representatives attended a meeting with representatives of the National Housing Authority (“NHA”), and agreed to a proposal of the NHA to cancel a low-cost residential housing project (Bangbor2) in accordance with a Cabinet’s resolution to decrease the number of low-cost residential housing projects in line with public demand. Subsequently, on 7 May 2008, the Company received a letter from the NHA which requested the Company sign a letter of consent to cancel the project, and on 12 May 2008, the Company signed the letter of consent to cancel the project, comprising 1,536 units. The Company adjusted the transactions relating to the cancellation of the project in the financial statements for the year ended 31 March 2008. However, the Company still has commitments amounting to Baht 484.3 million to a contractor in respect of the provision of construction services for the low-cost residential housing project. The Company is negotiating the cancellation of the construction service agreement with the contractor and believes that there will be no significant loss from the cancellation of the construction service agreement.

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41.

Reclassification

In addition to the change in accounting policy as discussed in Note 4 to the financial statements, which affects the previously reported shareholders’ equity, certain other amounts in the financial statements for the year ended 31 March 2007 have been reclassified to conform to the current year’s classification but with no effect to previously reported net income or shareholders’ equity other than from the change in accounting policy.

42.

Approval of financial statements

These financial statements were authorised for issue by the Company’s board of directors on 29 May 2008.

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Corporate Social Responsibilities

Tanayong Group places emphasis on the participation in the maintenance of religion. On October 27, 2007, Tanayong Group hosted thr presentation of Kathin robes at Makut-Keereewan temple at Pak Chong Nakornratchasema, including financial supporting in stupa construction of this temple. Moreover, Mr. Keeree Kanjanapas, Chairman of the Company, was also the chairman in patronizing in education materials.

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