HEMRAJ : Annual Report 2002 by Piyanuch Meechit

Annual Report-Eng_rev.1_Mar 31, 2003.doc 2.

Message from the Board of Directors Hemaraj Land And Development Public Company Limited accomplished improved results in all operating areas of the business in 2002. Total Revenue for 2002 was Baht 1,811 million versus Baht 1,258 million in 2001. Net Profit for the corresponding period was Baht 639 million versus a loss of Baht (493) million the prior year. The profit included currency, debt restructuring, investment and other areas as outlined further in the report. The Thailand industrial property market in 2002 was flat while Hemaraj leases and sales increased to 351 rai and 19 new customers. Hemaraj achieved double digit increases in the four areas of its business, industrial estates, industrial estate utilities, lease and sale of SME factories and other utilities and services. Sales from industrial estates now at only 60 % of total operating revenue provide risk diversity and predictability of growing returns. On the capital side, Hemaraj had raised Baht 284 million in new equity in January of 2002 through a rights issue. All debt at the end of 2002 have been either restructured or paid and are active with the exception of the unsecured euro convertible bond, which we are trying to settle further. Total liabilities have decreased year over year from Baht 4,952 million in 2001 to Baht 3,615 million in 2002. Total Shareholders Equity has correspondingly increased from Baht 1,177 million to Baht 2,127 million in 2002, although there is an open issue on the classification of sinking fund assets. Net Debt to Equity decreased to 1.68 to 1 times in 2002 from 4.07 to 1 times in 2001, still a level higher than our target. The continued Hemaraj strategy to be the marker leader in Thailand as a developer of complementary property, utility, and service customer solutions will broaden the revenue base for the company. These will provide a more predictable revenue stream in a volatile industry and perhaps global investment climate as well as to provide growth opportunities for the company. Hemaraj values the support of its stakeholders, namely our shareholders, management, employees, customers, creditors, and business partners. Our obligation is to provide relevant information and consistent company performance to these stakeholders and to manage the company in line with the practices of good corporate governance. We would like to express our appreciation on behalf of the Management and Board of Directors for entrusting us with this responsibility.

Respectfully submitted,

David R. Nardone President & Chief Executive Officer 28 March 2003

Sawasdi Horrungruang Chairman of the Board of Directors 28 March 2003

Annual Report-Eng_rev.1_Mar 31, 2003.doc 3.

The Company’s Business Profile Hemaraj Land And Development Public Company Limited is a leading Thailand developer of property, utilities, infrastructure and services. The Company has assets of Baht 5.742 billion. Hemaraj was established in 1988 and listed on the Stock Exchange of Thailand (SET) in 1992. The Hemaraj strategy is to be the market leader in Thailand as a developer of complementary property platform customer solutions. By providing the customer with an integrated solution such as industrial estates, utilities and services, this creates for the Company predictable higher margin growing revenue opportunities. For Shareholders, this forms the basis for predictable growing and superior returns. 1. Industrial Estate Development Hemaraj’s three industrial estates are Chonburi Industrial Estate (Bowin), Eastern Industrial Estate (Map Ta Phut), and Eastern Seaboard Industrial Estate (Rayong). At the end of 2002, the combined land area of the industrial estates was 14,215 rai (5,686 acres) with 191 industrial customers, and over US$ 7.5 billion of customer investments. The Hemaraj target market aims at higher end infrastructure intensive industrial customer, based around process or industrial clusters such as Automotive, Petrochemical, Steel and Power. Hemaraj provides the industrial estate land infrastructure and utility development as well as managing the provision of public and private utilities, design, management, and environmental approvals. The capital-intensive industrial sectors allow Hemaraj to provide a higher level of shared infrastructure much like a municipality with utilities and services. This delivers to the customer the lowest long-term cost of ownership. This also protects the margins for the development in a competitive market environment. The Chonburi Industrial Estate (CIE) has a customer base of steel mills and power generation with some auto parts, electronics, building materials and general industries. There is an export processing zone which has mixed success to date and a number of SME factories for sale or lease. In 2002, we decreased our primarily undeveloped land bank at CIE with a debt for property swap. The Eastern Industrial Estate (EIE) is located adjacent to the Map Ta Phut Petrochemical Complex and designed for heavy industry including steel, petrochemical and chemical industries. The infrastructure is designed for a high volume of raw and potable water, wastewater and power capability with optional utility services such as power, steam, demineralized water and pipe rack distribution. The Phase II development of EIE will be available for sale from early 2003. Although the sales at EIE have been minimal and disappointing since 1997, there is considerable activity anticipated going forward with increased chemical prospects for Thailand and the expansion of utilities for current customers. The Eastern Seaboard Industrial Estate (Rayong), or ESIE is a 60:40 joint venture with Siam Food Products. The Eastern Seaboard Industrial Estate developed only since 1995 is a world-class integrated industrial environment renowned as the “Detroit of the East” with 79 automotive supply-line companies and 9 of the world’s top 10 automotive suppliers. The Eastern Seaboard Industrial Estate prospects remain strong with one third of Thailand’s volume automotive vehicle production at ESIE with Ford, Mazda, GM, Opel, and Isuzu domestic and export platforms. Through 2002, ESIE had sales (some lease) of 3,156 rai and 126 customers in total. In 2002, ESIE launched Phase IV A, B, and C with new customers in each area, namely Phase IV A for expansion of SME factories, Phase IV B for Toyota Tsusho Techno Park and Phase IV C for a major Maxxis tire production facility. The Phase V development at ESIE is available from mid 2003 with land additions continuing. C u s t o m e r s Steel/Metal,

b y

I n d u s t r y ,

T o t a l

= 1 9 1 I n d u s t r i a l

C u m m .

L a n d

S a l e s

( R a i )

L a n d

S a l e s Petrochemical,

Auto,

S a l e s / Y r

7,000

1,600

6,000

1,400 1,200

5,000

1,000

4,000 Others,

Logistics,

800 3,000

600

2,000

400

1,000 Electronics,

Consumer,

200

16 22

Bldg Material,

1994

C I E

1995

1996

1997

EIE

1998

1999

E S I E

2000

2001

2002

Land sales/year

2. Industrial Estate Utilities Utility revenue in industrial estates are mainly through the sale of raw water, treated potable water, gray recycled water, waste water treatment, and general maintenance fees. The utility revenue is a recurring and growing income stream. In

Annual Report-Eng_rev.1_Mar 31, 2003.doc addition, the majority of the utility asset base has been amortized in the cost of the industrial land. With unique exposure to the petrochemical, power, steel, automotive and major utility users, Hemaraj forecasts the utility revenues to increase in excess of 20% per annum over the next 5 years. With the restructured IEAT contracts for Eastern and Chonburi industrial estates in the 4th quarter of 2001, Hemaraj as the developer owns and manages 100% of the utility provision, revenue, and infrastructure services. The Eastern Seaboard Industrial Estate had used this concept since its inception. The three industrial estates have been awarded the â&#x20AC;&#x153;Best Environmental Managementâ&#x20AC;? in 1998, 2000, and 2001. This award was by the Office of Environmental Planning and Policy (OEPP) under the Ministry of Science and Technology. All three Hemaraj industrial estates have achieved the ISO 14001 certification by BVQI enhancing the environment for its customers and surrounding community alike. At ESIE, Hemaraj has developed an environmental friendly reed bed vegetation waste water system that has been audited by the Asian Institute of Technology for its efficiency. This system is being studied by various Thai government agencies for potential use. U t i l i t y

I n c o m e

B a h t : m i l l i o n

3 0 0 2 5 0 2 0 0 1 5 0 1 0 0 5 0 0 1 9 9 4

1 9 9 5

1 9 9 6

W a s t e

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

T r e a t m e n t

2 0 0 1

2 0 0 2

I n f r a s t r u c t u r e

W a t e r

Total Utility Income

3. SME Factories for Lease and Sale Several trends will continue to increase the attractiveness of the Hemaraj SME factories for sale or lease. International manufacturers in general prefer to set up factories within industrial estates, as they are dependent on a high level of infrastructure and industrial services. Secondly, industries have competitive advantages to cluster, even more so in Thailand due to under developed transportation networks, due to emerging support services, integrated supply line management, and the interdependence of anchor manufacturers in the automotive and petrochemical industries particularly. Third, financing costs in Thailand have been reducing as the access to capital is not artificial given a floating Baht. The company preference to lease can provide a flexible entry to the market with reduced capital costs. Manufactures with simple process buildings want to concentrate on their strategic capital areas, non core investments can be outsourced leading to lower total investment costs and thus a higher return on capital investment. As of December 31, 2002, 58 SME factories have been built with a total area of 90,462 square meters. Of these, 15 units or 29,330 square meters were sold and 28 units of 41,332 square meters are leased. C u m u l a t i v e

L e a s e

A r e a

U n i t s

S q . m .

U n i t s 3 0

5 0 , 0 0 0 4 1 , 3 3 2

4 0 , 0 0 0 3 0 , 6 3 6

2 5 2 0

3 0 , 0 0 0

1 5

1 9 , 4 1 8

2 0 , 0 0 0

1 0 7 , 2 2 6

10,000

1,110

0 1998

1999

2 0 0 0

Total Cum. Lease (sq.m.)

2001

2 0 0 2 Cum.

Units

4. Other Utilities and Industrial Services Utility and Industrial Services include power generation through Hemaraj 5% direct shareholding in Bowin Power (a 713 mw. IPP project) directly and indirectly through a 2002 year end 16.99% shareholding in Glow, both with Tractebel, a Suez Group company, 40% shareholding with Elyo-H Facilities Management Limited, a joint venture with Teo Hong Silom and Tractebel, wholly owned pipe rack distribution by subsidiary Eastern Pipeline Services, and wholly owned construction management design and engineering services under H-Construction Management and Engineering (HCME). These areas provide synergy where Hemaraj has access to the industrial customer market.

Annual Report-Eng_rev.1_Mar 31, 2003.doc Economic & Competitive Condition The Thai economy in 2002 showed stronger than expected GDP growth of 4.8% comparing to 1.9% in 2001. The main driving forces in 2002 included higher private consumption, increases in private investment and the governmentâ&#x20AC;&#x2122;s spurred domestic demand. Low inflation with a rate at 0.7% and low interest rates afforded consumers increased purchasing power. In 2002, the low level of interest rates and higher consumption of vehicles and residences boosted the Private Consumption Index to 4.4%. Manufacturing production growth was up significantly by 8.2% comparing to 1.3% in 2001, which led to rising capacity utilization at 59.7%, a 6% increase year over year. For the year 2002, the Private Investment Index grew by 11.9%. Export volumes for Thailand were increased to USD$ 66.89 billion, a 5.8% increase. Imports increased by 4.6% to USD$ 63.43 billion US resulting in a higher trade balance surplus. The revenue collection exceeded the target by 5.6% resulting in lower deficit at 2.2% of GDP, compared to a 3.6% budget deficit. The Residential sectors for housing and condominiums in 2002 showed the highest growth since the economic crisis in 1997 while the Industrial market sector remained stagnant with only a 1.2% growth. One factor was increased investment flow to China but a significant factor further were the state of world economies. Sales of industrial land were 1,848 rai in 2002 with higher transactions but less large land plots. Rayong, Chonburi and Ayutthaya were prime locations for industrial estate demand in 2002. The Board of Investment (BOI) approved projects decreased by 12% to 721 projects for January to September of 2002. Thailand remains a growing regional production hub in the ASEAN automotive industry, particularly for one-ton pickups, with a capacity approaching one million vehicles per year. The industry has grown from being one based on import substitution to becoming an export-oriented industry with 175,000 exported vehicles in 2002. The 2003 growth in Thailand should continue to be favorable, particularly for automotive and petrochemical investment. The Thailand and regional economies could reflect a slowdown due to geopolitical risks and deteriorations in world economies, influenced by higher oil prices and instability. G D P %

6.0

5.9 4.4

9 . 0 4.8

4.6

4.0

8.1

8 . 0

1.8

7 . 0

2.0

5 . 9

6 . 0

0.0 -2.0

I n f l a t i o n

8.0

1996

1997

1998

1999

2000

2001

2002

-1.7

-4.0

4 . 0 3 . 0

-6.0

1.5

2 . 0

-8.0

1.0

-10.0

-10.2

-12.0

Import

31.4

20.0

-10.0

-1.8

1996

-5.0

-13.4

1999

2 0 0 0

- 6 . 8

2001 - 6 . 9 - 2 . 8

1997

-15.0

1998

1999 -3.2

11.9 8.2

4.9 3.0

2000

3.4 1.3 -0.3

3.9

2001

2002

-20.3

-25.0 -30.0 -33.8

2 0 0 2

-10.6 -11.6

-20.0

-30.0 -40.0

6.8 4.3

-10.0

2 0 0 2

2 0 0 1

( Y o Y )

-0.8 0.1

0.0

0 . 0 1998

G r o w t h

2 0 0 0

17.2

5.0 6 . 0 5 . 4

3 . 7

1997

1999

8.4 6.9 6.5

10.0

7 . 4 0 . 6

1 9 9 8

15.0

19.6

17.0

1997

20.0

30.0

1996

0 . 5

0 . 3

% 40.0

10.0

1.6

0 . 0 1996

Export

-20.0

5 . 6

5 . 0

-27.9

-35.0

Export

Industrial Production Growth

Import

T h a i l a n d ' s ( ' 0 0 0

A u t o

Private Consumption Growth

M a r k e t

u n i t s )

1 , 4 0 0 1 , 2 0 0 E x p o r t s

1 , 0 0 0

P r o d u c t i o n

8 0 0

I m p o r t s 6 0 0

L o c a l

4 0 0 2 0 0 0 1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

Y e a r

2 0 0 0

2 0 0 1

2 0 0 2

D e m a n d

Private Investment Growth

Annual Report-Eng_rev.1_Mar 31, 2003.doc 4.

Management Analysis 1.

Operating Performance The 2002 consolidated financial results show a significant improvement with Net Income of Baht 639 million compared to a Net Loss of Baht 493 million for the year 2001. The causes of such change are highlighted as follows: Industrial land sales for 2002, being from the sale of 351 rai and 19 new customers, were Baht 633 million. This represents an increase in sales of 18% compared to Baht 569 million in sales from 261 rai and 22 new customers in 2001. Service Income from Utilities increased to Baht 284 million in 2002, reflecting an increase of 19% compared to Baht 240 million in 2001. Income from the Sales and Lease of Mini Factories increased to Baht 116 million in 2002, reflecting an increase of 25% compared to Baht 93 million in 2001. Total Operating Revenue was Baht 1,060 million compared to Baht 891 million in 2001, representing a 19% increase. As important, Hemaraj has diversified its revenue stream to have less dependence on the sale of industrial land. Total Revenue in 2002 was Baht 1,811 million versus Baht 1,258 million in 2001, a 44% increase overall. Earning per share was Baht 1.84 compared to Net Loss per share of Baht 6.97 per share in 2001. In 2002, the company realized gains on foreign exchange of Baht 60 million and from an affiliated company of Baht 274 million. Other non-operating gains of Baht 453 million net included Gains on Sales of Securities, Loan Restructuring and changes in Reserves and Revaluations.

Financial Status The consolidated Balance Sheet in 2002 is summarized as follows. Total Assets in 2002 were Baht 5,742 million, a 6% decrease from Baht 6,129 million in 2001. Total Current Assets in 2002 were Baht 3,218 million compared to Baht 2,927 million in 2001 including Land held for Real Estate development of Baht 2,356 million, reduced from Baht 2,401 million in 2001. Other Assets were Baht 2,524 million in 2002, reduced from Baht 3,202 million in 2001. This includes Land held for commercial purposes not under development of Baht 1,085 million in 2002 reduced from Baht 1,757 million in 2001. The reduction mainly resulted from transferring land in Chonburi to settle a bank loan. Total Liabilities in 2002 were Baht 3,615 million, a 27% decrease from Baht 4,952 million in 2001. The significant reductions were mainly from various liability restructuring payments and settlements as described in the notes. The convertible bond is not restructured; however, there was a meeting with bondholders in September 2002 and have been ongoing communications with bondholders in order to accomplish this. In January of 2002, Hemaraj raised Baht 283 million with the subscription of a 1/4 rights issue. The outstanding warrants were adjusted. The 2002 Net Debt to Equity ratio as a result of the new capital and reduced debt has improved to 1.67 times from 4.07 times in 2001. Total Shareholders Equity in 2002 was Baht 2,127 million versus Baht 1,177 million in 2001, or an 81% increase.

Risk Factors & Others The company faces risks from foreign exchange rates. As of December 31, 2002, Hemaraj Land And Development Public Company Limited has USD nominated liabilities of USD 47.24 million. The changes of foreign exchange between Baht and USD will directly impact the local currency book value of these debts. In general, the company policy is to match currencies where possible. The company has no open derivative positions and does not use derivative instruments. The company faces investment risks associated with the external political and economic environment. The company is dependent on the attraction of the investment levels in Thailand as opposed to other countries competing for foreign direct investment, particularly China. In addition, the company operates in a highly competitive marketplace with established competitors, some with resources greater than the company. The company is dependant on knowledge base employees and key management personnel, the access to capital, and the consistency of government policies for investment promotion.

Annual Report-Eng_rev.1_Mar 31, 2003.doc 5.

Management Structure for Internal Control 5.1

Board of Directors 1. Mr. Sawasdi Horrungruang 2. Mr. Thongchai Srisomburananonta* 3. Mr. Thavorn Anankusri 4. Mr. Prateep Trilohaka** 5. Mr. David Richard Nardone 6. Mr. Sudhipan Charumani 7. Mr. Peter John Edmondson 8. Mrs. Punnee Worawuthichongsathit 9. Mr. Vivat Jiratikarnsakul 10. Ms. Pattama Horrungruang*** -

5.2

5.3

The Board of Directors has the authority to formulate the strategy of the company to meet the objectives of the return of its shareholders of the company in accordance with the laws, objects and Articles of Association, and the principles of good governance including the resolutions of the shareholders’ meeting. * Mr. Thongchai Srisomburananonta had been the company’s director until September 2002. ** Mr. Prateep Trilohaka had been the company’s director until March 2002. *** Ms. Pattama Horrungruang has joined the company since 1st January 2003.

Executive Committee 1. Mr. Sawasdi Horrungruang 2. Mr. Thongchai Srisomburananonta* 3. Mr. Thavorn Anankusri 4. Mr. Prateep Trilohaka** 5. Mr. David Richard Nardone 6. Mr. Vivat Jiratikarnsakul 7. Ms. Pattama Horrungruang*** -

Chairman of the Board of Director Vice Chairman of the Board Vice Chairman of the Board Vice Chairman of the Board Executive Director Executive Director Executive Director

The Executive Directors shall have the duty as assigned by the Board of Directors in formulating and reviewing specific strategic or policy issues in lieu of committees or more frequent meeting for the business activities of the company. * Mr. Thongchai Srisomburananonta had been a member of the Executive Committee until September 2002. ** Mr. Prateep Trilohaka had been a member of the Executive Committee until March 2002. *** Ms. Pattama Horrungruang has joined the Executive Committee since 1st January 2003.

Audit Committee 1. Mr. Sudhipan Charumani 2. Mr. Peter John Edmondson 3. Mrs. Punnee Worawuthichongsathit -

Chairman of the Board of Director Director Director Director Director Independent Director Independent Director Independent Director Director Director

Chairman of the Audit Committee Member Member

The Audit Committee of the company has the scope of duties and responsibilities as outlined below, and shall report to the company’s Board of Directors as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9.

To review that the Company has correct and sufficient financial reports; To review that the Company has appropriate and efficient internal control and internal audit systems; To review that the Company complies with laws relating to securities and securities markets, as well as with SET’s rules and regulations and any other law relating to the Company’s business; To consider, select and propose the appointment of the Company’s statutory auditor and to propose his professional fees; To consider the Company’s correct and adequate disclosure of information with regards to third party transactions or any other transactions with a conflict-of-interest tendency; To include in the Company’s annual report the result of the audit committee’s review work, inclusive of an al statements, information disclosure therein and the internal control system. This statement shall be signed by the audit committee chairman; To report the audit committee’s work to the Company’s Board of Directors at least on quarterly basis; To take part in giving opinion on the appointment, removal, work performance and remuneration of the internal auditor; and To perform any other work as may be assigned by the Company’s Board of Directors with the consent of the audit committee.

Annual Report-Eng_rev.1_Mar 31, 2003.doc 5.4

Investment & Risk Management Committee The Company has not appointed a specific Investment and Risk Management Committee. The paramount responsibility of the Board of Directors is to formulate, examine, and assess the company strategy and investment decisions related to the appropriateness, return to shareholders, prudent levels of risk, and other criteria. The Board of Directors uses a number of safeguards in this risk scope with the Audit Committee, the outsourced internal auditor, the external auditor in terms of compliance with GAAP, and the use of professional legal advisors to safeguard the legal and regulatory compliance in Thailand that the Company is subject to. The Company fully utilizes, outside professional management and financial advisers in the assessment of alternative strategies and courses of action including financial, the diversity wisdom and experience level of the Board of Directors, and the professional management experience and qualifications of the Company management.

5.5

Remuneration Committee The Company has not appointed a Remuneration Committee to date. Remuneration is the responsibility of and approved by the Shareholders, the Board of Directors and the Company management as specified. The compensation for the Company management and employees is the responsibility of the President and CEO using internal Company, board directive and market guidelines. The compensation directive is to fairly compensate management and employees based on their performance, their contributions to the Company, and the company performance and to retain key employees as a strategic asset of the Company. The Board of Directors approves employment letters or agreements for any key executive management. The compensation to company Directors, Board Advisers, and Executive Committee are considered in the Board of Directors and are to approved by the Shareholders of the Company, or in some cases the Shareholders of the joint venture or subsidiary companies. The objective in assessing the compensation level of Directors is to be generally in line with the market and to compensate based on contribution and the performance of the Company.

5.6

Good Corporate Governance Committee The Company fully embraces the principles of Good Corporate Governance and this is the responsibility of the Board of Directors specifically to ensure its full adherence within the organization. The underlying principles of good corporate governance relies on the principles of equitable treatment and fairness of all stakeholders, the full and meaningful disclosure, and the transparency of the Company its operations and information. The stakeholders beyond all sizes of shareholders include management and employees, customers, suppliers, external organizations and businesses, joint venture partners and the business community, regulatory bodies, creditors, and the communities where we operate in.

5.7

5.8

Company Management & Structure 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Mr. David Richard Nardone Mr. Vivat Jiratikarnsakul Ms. Pattama Horrungruang* Mr. Khamhoung Ratsamany Mr. Tanin Subboonrueng Mr. Sirisak Kijraksa** Ms. Somjai Wachiraha** Mr. Paopitaya Smutrakalin** Ms. Jinnapat Tongviseskul** Mr. Apichat Trongsukson**

President & Chief Executive Officer Executive Vice President Senior Vice President & Chief Financial Officer Director – Industrial Estate Operations Director – Development Director – Accounting Director – Finance Assistant Director – Planning and Investor Relations Assistant Director – Marketing Manager – Information System & Services

The Management shall have the responsibilities as appropriately assigned by the President & CEO in order to manage the business of the company and to implement the strategies and policies as specified by the Board of Directors of the company. * Ms. Pattama Horrungruang has joined the company since 1st January 2003. ** Mr. Sirisak Kijraksa, Ms. Somjai Wachiraha, Mr. Paopitaya Smutrakalin, Ms. Jinnapat Tongviseskul and Mr. Apichat Trongsukson have been promoted, effective 1st January 2003.

Selection of Company’s Director and Management The recommendation of new Directors to serve on the Board shall be deliberated by the Board of Directors. A Director nominee may be proposed by, any Director, shareholder, or others for consideration. The Board of Directors proposes the candidates to the Shareholders meeting for approval. The executive management appointment and selection is the responsibility of the President & CEO. The President is the Chief Executive Officer appointed by the Board of Directors. The objective in selecting Directors is to be able to attract knowledgeable

Annual Report-Eng_rev.1_Mar 31, 2003.doc experienced members to the Board of the Company and the committees including independent Directors and the Audit Committee, who can assist the company in strategic initiatives to strengthen the company, maximize the return to all shareholders in a controlled way, in compliance with good corporate governance practices. The objective further is to provide a balance between the management of the Company represented on the Board with the Independent Directors and significant Director shareholder representatives. The Directors of the Company are provided with Directors liability insurance. The position of Chairman of the Board is separate from the President and CEO in order to safeguard the interests of the Shareholders and the management of the Company. 5.9

Remuneration for Director and Management Monetary Remuneration during the fiscal year (January-December) 2002: In 2002, the total remuneration for 9 directors was Baht 12,730,285.17. In 2002, the total remuneration for 10 Executive Committee and management was Baht 68,243,085.05.

5.10

Good Corporate Governance The Board of Directors are responsible for the Good Corporate Governance of the Company, and in their role to direct monitor and supervise the strategy policy and control of the Company provide this direction to the Management of the Company to be adhered to. Good Corporate Governance is developed in conformity with the 15 guidelines of the SET’s Code of Best Practices. 5.10.1

Good Corporate Governance Policy The Company policy is to fully embrace the principles of Good Corporate Governance and this is the responsibility of the Board of Directors specifically to ensure its full adherence within the organization and by practice within the management and organization of the Company. The underlying principles of good corporate governance relies on the principles of equitable treatment and fairness of all stakeholders, the full and meaningful disclosure, and the transparency of the Company its operations and information.

5.10.2

Rights and Equitable Treatment to Shareholders All shareholders are invited to the annual shareholder’s meeting. The company would send out an invitation letter and agenda of each meeting to the shareholders prior to the meeting for their consideration. Shareholders have voting rights equal to the number of shares owned and must exercise all eligible votes to safeguard their investment in voting for a resolution, an opinion for a significant decision making, for example, regulations amendment, capital increase. All shareholders have right to receive correct, up-to-date, fully disclosed information. Shareholders wishing to appoint a proxy representation may appoint any person or may elect to appoint the Independent Director and Chairman of the Audit Committee as recommended by the SEC.

5.10.3

Rights of Various Groups of Stakeholders The company realizes and respects the rights of various groups of stakeholders, including shareholders, minority shareholders, employees, customers, creditors, vendors, the public and communities through various procedures such as the Shareholders’ Meeting, providing information on employee’s rights concerning welfare benefits, receiving all inquiries from customers and nearby communities, environmental education and community programs in the areas where we operate, contracts with customers and ongoing dialogue, and contracts entered with vendors and suppliers.

5.10.4

Shareholders’ Meeting A Shareholders’ Meeting is to be held at least once a year which the company has attempted to ensure full participation of shareholders and dissemination of information to shareholders by sending invitation letter to each shareholder, advertising the meeting in the local media, and including the agenda prior to the meeting for consideration for shareholders to vote for resolution. The company’s Board of Directors provides information and answers to questions from the participants. The shareholders could also inquire and contact the Company through the company’s Investor Relations management, by attending investment briefings, and through the company’s website.

5.10.5

Leadership & Vision The company’s Board of Directors, selected to have a broad experience level, formulates the company’s vision, strategy, preparation of its business plan, and approves its operation and implementation plans. The Board of Directors also supervises the company’s business as to effectively conform to its business plan, a prudent level of risk and control, and to maximize the benefit of the Company and its stakeholders.

5.10.6

Conflict of Interest • Conflict of Interest

Annual Report-Eng_rev.1_Mar 31, 2003.doc The company’s Board of Directors and Management have been informed for legal and ethical conflict of interest and related transactions guidelines. The company has disclosed, in accordance with the regulations of Stock Exchange of Thailand, such information, detail and reason/necessity, if any in the company’s Annual Report and the 56-1 Form. The Company further uses the Audit Committee, internal auditors, external auditors, and external lawyers to review compliance. • Insider Trading Controls The Company informed all Board members and executive management about the Notification of SET concerning Rules, Procedures, and Disclosure of securities holdings. 5.10.7

Business Ethics The Company policy from the Board of Directors, communicated to both management and employees in the employee handbook is to conduct business with sound ethics toward the company, all stakeholders, the public, and the community.

5.10.8

Balance of Power for non-management Directors The company’s Board of Directors consists of 9 directors which are: • Directors 6 persons • Independent Directors - Audit Committee 3 persons Therefore, the company has 3 directors who are independent and are not involved in the daily operations of the company.

5.10.9

Aggregation or Segregation of Positions The company’s Chairman of the Board of Directors is not the same person as the President & CEO and the structure of the Board of Directors consists of Independent Directors comprising 1/3 of the Board. This creates a balance between the interests and representation of the shareholders and the management as well as independent persons whom could review the company’s business plans, controls, and create a balanced view.

5.10.10 Remuneration for Director and Management The remuneration of the company’s Directors and Management has been considered and approved as outlined. This is in order to be competitive in the market in attracting highly qualified individuals, to reflect the contributions and performance of the individuals in meeting the company objectives, and consistent with the performance of the Company. 5.10.11 Board of Directors’ Meeting During 2002, from January to December, the company held 10 Board of Directors’ Meetings and 13 Executive Committee Meetings. There were calls for regular meetings and/or for emergency meetings when need of the directors/committee’s consideration, opinion and decision by sending out prior notice, invitation and agenda to all directors and committee. 5.10.12 Committee The authority and responsibility of the Board and its committees are clearly defined. The report of the committees’ quarterly meeting as well as any items for further consideration are reviewed by the Board of Directors and Management of the company as appropriate for further action. 5.10.13 Controlling System & Internal Audit The Board of Directors Audit Committee controls the work of the external auditor, the outsourced internal audit function, the review of management information, reporting, risk controls, and systems, and the performance of the management specific to these areas. They meet and report quarterly to the Board of Directors. Ultimately, the management of the company with relevat professionals is tasked with providing a level of control to manage the performanc of the company in a controlled way. 5.10.14 Report from the Board of Directors on the company’s Financial Statements The Board of Directors is responsible for thoroughly consideration and carefully estimation in order to produce the company’s financial statements which are to be in line with the generally accepted accounting standard. The company has utilized and appropriate accounting policy and exercised regularly. In addition, the Board of Directors has had a resolution to appoint the Audit Committee and the Internal Auditors whom are not the company employees to observe the company’s internal control system and to verify that the company would have accurate and adequate financial statements. 5.10.15 Relations with Investors

Annual Report-Eng_rev.1_Mar 31, 2003.doc The Company actively seeks to provide relevant information to all investors to fairly reflect shareholder value. In addition to the SET information and releases, the company website, www.hemaraj.com and invest@hemaraj.com allow, even the smallest investor, to search for information concerning the company, its activities, and financial information. The Company has also designated one management executive for Investor Relations. The President meets often with interested investors and the Company hosts analyst meetings and industrial estate information tours.

Annual Report-Eng_rev.1_Mar 31, 2003.doc 6.

Shareholding & Organization Structure Top Ten of Hemaraj Land And Developmentâ&#x20AC;&#x2122;s Shareholders as at 27 December 2002 Name

% of total Issued Shares

No. of Shares

Thailand Securities Depository Co., Ltd. for Depositor (Thai)

128,974,734

36.36%

Miss Phenpunnee Horrungurang

40,282,371

11.36%

Mr. Sumeth Horrungruang

31,444,757

8.86%

Miss Kanokthip Nuamcharoen

17,000,000

4.79%

Mrs. Vasana Horkaew

16,800,000

4.74%

Miss Charuwan Chaisupawan

14,500,000

4.09%

Mr. Kiat Yingkiattaweesuk

13,014,514

3.67%

Thailand Securities Depository Co., Ltd. for Depositor (Foreigner)

12,963,044

3.65%

Sun Tech Group Public Company Limited

Organization Structure of Hemaraj Land And Development Public Company Limited as of January 2003

Hemaraj Organization

Shareholders

The Company's organization structure as of January 2003 Board of Directors Audit Committee Executive Committee

President & CEO Internal Audit

Executive Vice President

Corporate Marketing

Customer Development

Senior Vice President

IE Operations

Planning & Investor Relations

Information System & Services

Business Development

Development

Finance

Account

Legal

Annual Report-Eng_rev.1_Mar 31, 2003.doc 7.

General Information General Information Name

Hemaraj Land And Development Public Company Limited Registration No. 141 Share Capital 1,300,000,000 shares Issued 354,742,385 shares

Address 18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250 Tel.(662) 719-9555 Fax (662) 719-9546-7 www.hemaraj.com E-mail: sales@hemaraj.com

Revenue Structure Nature of Business Industrial Estate Developer

% 25%

Revenue (Mil. Baht) 2001 % 287.53 30%

400

11%

22%

29%

43%

78%

64%

Paid Capital (Mil.Baht) 3,547

% of Investment

2002 453.02

2000 138.11

% 20%

Subsidiary Companies Hemaraj International Limited (1)

Scotia Centre, 4th Floor P.O.Box 2804, George Town, Grand Cayman, Cayman Islands

100 ($1 = 25.29 Baht)

H-International (BVI) Company Limited (2)

Romasco Place, Wickhams Cay 1, P. O. Box 3140, Road Town, Tortola British Virgin Islands.

100

Eastern Industrial Estate Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang,

Eastern Pipeline Service Co., Ltd. (3)

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang,

Eastern Seaboard Industrial Estate (Rayong) Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang,

Industrial Estate Developer

H-Construction Management and Engineering Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang,

Supervision Service

Industrial Estate Developer

358

Associated Companies Glow Company Limited (5) (Formerly known as H-Power Company Limited)

195 Empire Tower, 38th - Park Wing, South Sathorn Road, Yannawa, Sathorn

Industrial Power Company Limited (4)

195 Empire Tower, 38th - Park Wing, South Sathorn Road, Yannawa, Sathorn

Co-Generation Power Plant

800

Operation Power Services Company Limited (4)

195 Empire Tower, 38th - Park Wing, South Sathorn Road, Yannawa, Sathorn

Operation&Maintenance

Bowin Power Company Limited (4)

195 Empire Tower, 38th - Park Wing, South Sathorn Road, Yannawa, Sathorn

Independent Power

Industrial Water Supply Company Limited (4)

195 Empire Tower, 38th - Park Wing, South Sathorn Road, Yannawa, Sathorn

Demineralised Water Plant

Elyo-H Facilities Management Limited

107/1 Moo 4, Eastern Seaboard Industrial Estate (Rayong), Pluakdeang, Rayong

Facilities Management Services

Eastern Fluid Transport Company Limited

618 Nimom Makkasan Road Makkasan, Ratchthewi

Management and Maintenance

Total Revenue : Hemaraj Land And Development PLC. and Subsidiaries Remark 1) Incorporated in the Cayman Islands 2) Incorporated in the Territory of the British Virgin Islands 3) Subsidiary of Eastern Industrial Estate 4) Indirectly held through Glow Co., Ltd. 5) Partially sold shares in 2002

15%

1,810.62

100%

954.51

100%

679.99

100%

Annual Report-Eng_rev.1_Mar 31, 2003.doc 8.

Board of Directors, Executive Committee, Audit Committee and Management Experiences Related with the Company Age

Graduation Period

1 Mr. Sawasdi Horrungruang

Chairman of The Associate

Organization / Company / Type of Management (%), as

Honorary Doctorate Degree Bachelor Degree of Business Administration, Humanity Faculty, Burapha University -

Passed

Bachelor Degree Faculty of Economics

Away

Thammasat University

MBA

Chairman of the Board of Directors 2 Mr. Thongchai Srisomburananonta

Position

Thai Industrial Association T H K Real Estate

Since 1989

Vice Chairman of The Board 3 Mr. Prateep Trilohaka Vice Chairman of The Board 4 Mr. Thavorn Anankusri

Vice Chairman of The Board 5 Mr. David Richard Nardone

President & CEO

Northeastern University, Boston, USA

6 Mr. Sudphipan Charumani Independent Directorand Chairman of Audit

7 Mr. Peter John Edmondson

52 51 47 40 36 39 42 42

Manager - Information System & Services

MBA MBA MBA, Business Administration Bachelor of Accounting Bachelor of Business Administration

Since 2003

Since 1995

Since 1996

Since 1990

Drexel University, Philadelphia, USA 32

Assistant Director - Marketing 17 Mr. Apichat Trongsukson

Since 1989

General Affairs, Ramkhamhaeng University

Assistant Director - Planning & Investor Relations 16 Ms. Jinnapat Tongviseskul

Bachelor of Sanitary, Faculty of Engineering

Bangkok University

Director of Finance 15 Mr. Paopitaya Smutrakalin

Assumption University

Director - Accounting 14 Ms. Somjai Wachiraha

Bangkok University

Director - Development 13 Mr. Sirisak Kijruksa

Bachelor of Accounting (Honor)

Thammasat University

Director - Industrial Estate Operations 12 Mr. Tanin Subboonrueng

Chulalongkorn University

Senior Vice President 11 Mr. Khamhoung Ratsamany

Chulalongkorn University

Executive Vice President 10 Ms. Pattama Horrungruang

Bachelor of Science in Chemistry (Honor) University of Sheffield, England

Independent Director and Audit Committee 9 Mr. Vivat Jiratikarnsakul

(Britian and Wales)

Independent Director and Audit Committee 8 Mrs. Punnee Worawuthichongsathit

Charter Accountant Institutes

MBA, Economic & Administration Chulalongkorn University

MBA

Annual Report-Eng_rev.1_Mar 31, 2003.doc 9.

Checklist to the SEC 56-2 Form Page 1.

General Information 1.1 Financial Highlights 1.2 Board of Directors, Executive Committee, Audit Committee and Management 1.3 General Information – The Company & its Subsidiaries 1.4 Shareholding & Organization Structure 1.5 Project Summary 1.6 Other References 2. Message from the Board of Directors 3. The Company’s Business Profile 3.1 Nature of Business 3.2 Core and Related Business 3.3 Revenue Structure by Business Line 4. Economic and Competitive Condition 5. Management Analysis 5.1 Operating Performance 5.2 Financial Status 5.3 Risk Factors & Others 6. Management Structure for Internal Control 6.1 Board of Directors and Executive Committee 6.2 Audit Committee 6.3 Company Management and Structure 7. Selection of Company’s Director and Management 8. Remuneration for Director and Management 9. Stocks held by Directors / Management 10. Good Corporate Governance 11. Report of Certified Public Accountant 12. Financial Statement and Note to Financial Statement

Annual Report-Eng_rev.1_Mar 31, 2003.doc 10. Project Summary Project Summary As of 31 December, 2002 Industrial Estate Cumulative (Rai) Sold Chonburi Industrial Estate (Bowin) Phase I, II (A,B) Phase II (C) , (D) Phase III Total Chonburi

Industrial Area

Total Area (Rai)

% of Completion

1,565**

80%

1,950

2,428

100

503

93%

542

1,099

100

200*

330

2,692

3,857

1,536

2,075

1,032

1,442

823

1,156

191

286

376

1,255*

2,320***

3,164

5,075

7,650

6,563

9,568

14,215

2,068

Eastern Industrial Estate (Map Ta Phut)

Eastern Seaboard Industrial Estate (Rayong) 1,536 100% Phase I 926** 90% Phase II (A) 494** 60% Phase II (B) 3** 3% Phase IV (A) 37 70% Phase IV (B) 168 59% Phase IV (C) Expansion: Total Eastern Seaboard Total (Rai)

* estimate ** includes land lease *** Land in hand plus fixed option to purchase from Siam Food Products Plc. Note: 1 Rai = 1,600 Sq. meters or approx. 0.4 acres.

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 AND INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS’ REPORT

EXPRESSED IN THAI BAHT

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS’ REPORT To the Shareholders of Hemaraj Land and Development Public Company Limited We have audited the consolidated balance sheet of Hemaraj Land and Development Public Company Limited and its subsidiaries as of December 31, 2002, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the year then ended. We have also audited the Company’s financial statements for the same periods of Hemaraj Land and Development Public Company Limited. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. Our responsibility is to report on these financial statement based on our review. The consolidated financial statements and financial statements of Hemaraj Land and Development Public Company Limited for the year then ended December 31, 2001 for comparison were audited by the other auditor with an unqualified opinion reported on February 15, 2002. We conducted our audits in accordance with the generally accepted auditing standard. These standards require that we plan and perform the audits to obtain moderate assurance as to 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. We believe that our audits provide a reasonable basis for our opinion. The Company and its two subsidiaries had recorded the Sinking fund, which had transferred the right to the Industrial Estate Authority of Thailand in other non-current assets (Sinking Fund) in the amount of Baht 149.4 million and Baht 239.8 million respectively as of December 31, 2002, as described in the Note 13 to the financial statements, which in our opinion it should be recorded as cost of real estate developments, in effect the retaining earnings should be decreased in the amount of Baht 335.9 million, cost of land sales should be increased Baht 6.1 million, asset for rent should be increased Baht 2.9 million and cost of real estate developments should be increased Baht 44.3 million. In our opinion, except for the item and the effects as mentioned in the third paragraph, the financial statements referred to above present fairly, in all material respects, the consolidated financial positions as at December 31, 2002, of Hemaraj Land and Development Public Company Limited and subsidiaries, and the consolidated results of their operations, changes in shareholders’ equity and their cash flows for the years then ended, and the separate financial positions as at December 31, 2002 and separate results of operations, changes in shareholders’ equity and cash flows of Hemaraj Land and Development Public Company Limited for the same periods, in conformity with generally accepted accounting principles. Without qualified opinion on the financial statements, we draw attention to the uncertainties as described in the note 14 to the financial statements. Due to the liquidity constraints, the Company has failed to redeem the convertible bonds for which the bondholders sought redemption on September 9, 1998, and have not paid all interest payables on bond which were due since September 9, 1998. According to the bond prospectus, all the bonds are due to be redeemed on September 9, 2003. The management have informed that according to the resolution of the company’s boards meeting on July 15, 2002, the Company had called the convertible bondholders meeting in August 14, 2002 to request the bondholders to approve the redemption of all outstanding bonds at 50 percent of the par value on September 9, 2002, waive and discharge all outstanding claims under the bonds including all accrued interest and any other monetary debt. As at September 2, 2002, the Company had called the convertible bondholders meeting to approve the said offer, which 71 percent of the total votes supported the proposal. However, 75 percent of the total votes was needed to be treated as the resolution. Currently, the Company is in the process of negotiating to get the approval from the bondholders.

A.M.T. & ASSOCIATES Bangkok, Thailand February 25, 2003

(KESREE NARONGDEJ) Certified Public Account Registration No. 76

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS THOUSAND BAHT CONSOLIDATED ASSETS

NOTE

THE COMPANY ONLY

As of 31st

December, 2002

December, 2001

December, 2002

December, 2001

CURRENT ASSETS Cash and cash equivalents

124,082

110,095

21,096

9,421

Deposit for investment

371,728

243,545

5,7 and 27

34,192

45,862

527

546

7 and 27

55,496

281

55,496

282

3,196

3,748

254,473

94,661

3,363

2,601

50,625

49,893

2,355,725

2,401,101

335,268

563,389

19,487

27,843

4,856

10,344

3,218,472

2,927,229

471,231

636,611

5,816

4,011

2,048,524

2,256,144

374,458

49,632

372,959

48,132

1,000

4,27,and 29

62,038

401,438

595,918

681,716

175,270

186,262

20,660

21,277

1,085,283

1,483,204

Current investments Time deposits Marketable securities Trade account receivables Related parties, net Other parties, net Short - term loans to related parties Cost of real estate developments, net

9,27 and 28

Other current assets Total Current Assets

135

NON - CURRENT ASSETS Investments for using the equity method Other long - term investments Related parties, net Other parties Long - term loans to related parties, net Property, plant and equipment, net

Other non - current assets Leasehold land and land held for 1,085,282

1,756,631

Assets for rent, net

commercial purposes, net

11,27 and 28 12 and 27

400,599

411,690

Sinking fund

13 and 28

389,234

360,335

Others Total Non - current Assets TOTAL ASSETS

149,434

96,109 147,485

29,995

30,933

11,881

8,331

2,523,692

3,201,932

4,284,659

4,742,398

5,742,164

6,129,161

4,755,890

5,379,009

The accompanying notes to financial statements are an integral part of these statements.

…………………………………………………… DIRECTOR

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS THOUSAND BAHT CONSOLIDATED LIABILITIES AND SHAREHOLDERS' EQUITY

NOTE

THE COMPANY ONLY

As of 31st

December, 2002

December, 2001

December, 2002

December, 2001

119

40,015

39,819

CURRENT LIABILITIES Bank overdrafts

Loans under debt restructuring negotiation plan

Convertible bonds

14,20 and 27

Trade account payables

535,370

1,202,308

1,272,091

1,202,308

1,272,091

78,377

91,268

7,925

5,035

Current portion of long - term loans Related person

4 and 16

118,083

102,765

Others

17 and 27

217,103

71,547

Current portion of guaranteed bonds

18 and 27

32,263

213,306

Short - term loans from related parties

52,000 158,742

134,748

1,628

14,16,17 and 18

220,659

450,670

220,659

433,673

13 and 28

41,067

60,424

24,818

37,163

10,464

38,302

10,464

23,902

56,004

118,534

37,471

30,359

2,187,189

3,129,040

1,669,291

2,466,025

1,518

1,026,808

1,465,074

137,215

54,851

26,726

32,134

Other current liabilities Income received in advance Accrued interest expenses Accounts payable - the Industrial Estate Authority of Thailand Accrued directors’ remuneration Others Total Current Liabilities NON - CURRENT LIABILITIES Long - term loans from related parties

4 and 15

Long - term loans from related persons

4,16 and 27

126,167

182,235

Other long - term loans

17 and 27

216,272

497,942

18,27 and 29

618,165

547,743

365,085

522,297

365,085

522,297

Retentions payable

29,931

21,395

1,152

1,401

Deferred leasehold right income

15,122

23,477

Others

57,255

25,967

21,195

1,427,997

1,822,574

1,516,276

2,247,542

3,615,186

4,951,614

3,185,567

4,713,567

Guaranteed bonds Provisions

102,036

237,575 -

Other non - current liabilities

Total Non - Current Liabilities Total Liabilities

…/2

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS THOUSAND BAHT CONSOLIDATED NOTE

THE COMPANY ONLY

As of 31st

December, 2002

December, 2001

December, 2002

December, 2001

13,000,000

3,270,000

13,000,000

3,270,000

SHAREHOLDERS’ EQUITY Share capital - Baht 10 par value

20 and 21

Authorized share capital Common stocks 1,300,000,000 shares, for the year 2002 and 327,000,000 shares, for the year 2001 Issued and paid-up share capital Common stocks 354,742,385 shares, for the year 2002 and 70,790,777 shares, for the year 2001 Warrants

3,547,424

707,908

3,547,424

707,908

20 and 21

14,127

14,151

14,127

14,151

997,245

20 and 21

(2,553,964)

Surplus (Deficit) paid-in capital Premium on common stocks Discount on common stocks

(2,553,964)

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities Currency translation differences

3,152

74,238

96,769

74,238

96,769

Retained earnings (deficit) Appropriated - legal reserve

210,491

95,340

Deficit

(722,390)

(1,361,122)

(607,239)

(1,245,971)

1,570,323

665,442

1,570,323

665,442

556,655

512,105

2,126,978

1,177,547

1,570,323

665,442

5,742,164

6,129,161

4,755,890

5,379,009

Total Equity of Parent Company’s Shareholders Minority interest Total Shareholders’ Equity

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

The accompanying notes to financial statements are an integral part of these statements.

…………………………………………………… DIRECTOR

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERSâ&#x20AC;&#x2122; EQUITY CONSOLIDATED FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT Issued and paid-up

Warrants

share capital

Premium on

Discount on

Unrealized

Currency

common

gain (loss) from

translation

stocks

changes in

differences

Retained earnings (deficit) Minority Appropriated

(Deficit)

interest

Total

carrying amount of available-for-sale NOTE

securities

Legal reserve

Beginning balance as of January 1,2002

707,908

14,151

997,245

96,769

210,491

(1,361,122)

512,105

1,177,547

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities Currency translation differences

3,152

(22,531)

(19,379)

638,732 44,550

Net gain (loss) not recognized -

3,152

(22,531)

Net profit (loss)

in the income statement

Minority interest

44,550

Dividend

(2,548,468)

283,163

(5,496)

2,365

3,152

74,239

210,491

(722,390)

556,655

2,126,979

(21)

71,509

210,491

(867,893)

466,970

1,600,360

Common stocks

20 and 21

2,831,631

Warrants

20 and 21

7,885

(24)

3,547,424

14,127

997,245

707,908

14,151

997,245

638,732

Ending balance as of December 31,2002

(2,553,964)

Beginning balance as of January 1,2001

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities Currency translation differences

21 -

25,260

25,281

(493,229)

Net gain (loss) not recognized -

Net profit (loss)

in the income statement

Minority interest

60,887

Dividend

(15,752)

96,769

512,105

1,177,547

25,260

(493,229)

Ending balance as of December 31,2001

The accompanying notes to financial statements are an integral part of these statements.

707,908

14,151

997,245

210,491

(1,361,122)

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERSâ&#x20AC;&#x2122; EQUITY THE COMPANY ONLY FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT Issued and

Premium on

Discount on

Unrealized

Currency

paid-up

common

gain (loss) from

translation

stocks

changes in

differences

share capital

Warrants

Retained earnings (deficit) Appropriated

(Deficit)

Total

carrying amount of available-for-sale

NOTE

Legal reserve

securities

Beginning balance as of January 1,2002

707,908

14,151

997,245

96,769

95,340

(1,245,971)

665,442

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities Currency translation differences

3,152

(22,531)

Net gain (loss) not recognized in the income statement Net profit (loss)

3,152

(22,531)

638,732

(19,379) 638,732

Common stocks

20 and 21

2,831,631

(2,548,468)

283,163

Warrants

20 and 21

7,885

(24)

(5,496)

2,365

3,547,424

14,127

997,245

3,152

74,238

95,340

(607,239)

1,570,323

707,908

14,151

997,245

71,509

95,340

(752,742)

1,133,411

Ending balance as of December 31,2002

(2,553,964)

Beginning balance as of January 1,2001

Unrealized gain (loss) from changes in carrying amount of available-for-sale securities Currency translation differences

25,260

Net gain (loss) not recognized in the income statement Net profit (loss)

25,260

96,769

95,340

25,260

(493,229)

(1,245,971)

665,442

Ending balance as of December 31,2001

The accompanying notes to financial statements are an integral part of these statements.

707,908

14,151

997,245

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT CONSOLIDATED NOTE REVENUES Sales of land 4 and 31 Sale of pre-fabricated factory 4 and 31 Service income 4 and 31 Other income Profits from sales of investments 4 Reversal of reserve on possible loss from la 24 Interest income 4 Commission and management income 4 Gain on convertible bond redemption Gain on the yield rate of guaranteed bonds Gain on exchange rate Gain on revision of the Joint Operating Agreements Others Share of profits from investments for using the equity method - subsidiary companies 4 Share of profits from investments for using 4 the equity method - associated companies Total Revenues EXPENSES Cost of land sales Cost of pre-fabricated factory sales Cost of services 10,12 and 22 Selling and administrative expenses 10,22,28 and 33 Other expenses Directorsâ&#x20AC;&#x2122; remuneration 22 Loss on exchange rate Loss on possible loss from lawsuit Reserve for possible loss of title of land and office building Others Loss on assets evaluation 23 Loss on projects evaluation Loss on impairment of assets evaluation Share of losses from investments for using the equity method - subsidiary companies 4 Share of losses from investments for using the equity method - associated companies 4 Total Expenses PROFIT (LOSS) BEFORE INTEREST AND INCOME TAX EXPENSES INTEREST EXPENSES INCOME TAX EXPENSES

4,14,16,17 and 18 31

PROFIT (LOSS) AFTER TAX NET PROFIT (LOSS) OF MINORITY INTEREST PROFIT (LOSS) FROM ORDINARY ACTIVITIES EXTRAORDINARY ITEM - GAIN FROM DEBT RELEASE AGREEMENT - GAIN FROM COMPROMISING DEBT - GAIN FROM DEBT SETTLEMENT BY TRANSFERRING ASSETS - LOSS ON PURCHASE OF DEBT AND RIGHT NET PROFIT (LOSS)

2002

THE COMPANY ONLY 2002 2001

2001

632,590 35,530 401,404

534,376 35,000 368,438

66,717

202 50,058

160,064 157,212 13,944 22,644 37,218 59,725 16,588

61,009 222,484 37,060

160,064 157,212 39,081 34,053 22,644 27,118 8,141

97,055 44,247 174,340 8,927

273,692

41,055

273,692

1,810,611

1,258,367

829,777

374,829

434,047 17,655 281,602 205,837

420,489 248,284 161,839

46,070 47,140 109,584

63,224 35,751 71,012

50,083 -

86,360 46,979 158,398

26,121 -

31,601 22,937 158,398

25,181 10,166

25,181 725

160,697 58,957 -

303,873

160,697 58,957

9,812

303,873

1,208,878

1,461,569

448,569

722,514

601,733 153,584 1,110

(203,202) 220,901 8,239

381,208 109,151 -

(347,685) 145,544 -

447,039 (74,909)

(432,342) (60,887)

272,057 -

(493,229) -

372,130

(493,229)

272,057

(493,229)

24 195,057 151,884

162,977 151,884

51,814 (132,153)

51,814 -

638,732

(493,229)

638,732

(493,229)

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT CONSOLIDATED NOTE

2002

2001

THE COMPANY ONLY 2002 2001

1.07 0.77 1.84

(2.12) (2.12)

0.78 1.06 1.84

0.69 0.51 1.20

BASIC EARNINGS (LOSS) PER SHARE (BAHT) Profit (loss) from ordinary activities Extraordinary item Net profit (loss) DILUTIVE EARNINGS (LOSS) PER SHARE (BAHT) Profit (loss) from ordinary activities Extraordinary item Net profit (loss)

The accompanying notes to financial statements are an integral part of these statements.

0.50 0.70 1.20

(2.12) (2.12)

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT CONSOLIDATED 2002

THE COMPANY ONLY 2001

2002

2001

CASH FLOW FROM OPERATING ACTIVITIES Net profit (loss)

638,732

(493,229)

6,223

5,316

638,732

(493,229)

1,693

2,926

Adjustments to reconcile net loss to net cash provided by (used in) Allowance for doubtful accounts Loss on projects evaluation Loss on impairment of assets evaluation

(160,697)

(58,957)

(41,055)

9,812

(273,692)

303,873

Share of (profits) losses from investments for using the equity method - subsidiaries companies Share of (profits) losses from investments for using the equity method - associated companies (Gain) loss on Marketable Securities (Gain) loss exchange rate (Gain) loss from sales of equipment (Gain) loss from sales of investments Depreciation and amortisation (Gain) loss on convertible bond redemption

(273,692)

303,873

(2,089)

(18,421)

(8,885)

10,098

(554)

(1,331)

(1,721)

(635)

(1,120)

(160,064)

45,120

39,743

10,968

12,200

(22,533)

(Gain) loss from debt release agreement

(195,057)

Gain from compromising debt

(151,884)

(51,814)

10,166

724

25,181

1,061

(37,216)

26,385

(37,216)

26,385 (174,340)

Gain from debt settlement by transferring assets Impairment loss on construction in process

Increase (decrease) in reserve for possible loss of title of land and office building Amortisation of goodwill Increase (decrease) in provision for convertible bond redempti Gain on revision of the Joint Operating Agreements

(222,484)

Increase (decrease) in provision for guaranteed bond redempt

10,544

58,242

(Gain) loss from the yield rate of guaranteed bonds

(37,219)

Increase (decrease) in provision for possible loss from pledge of securities

(157,212)

158,398

Realization of deferred leasehold right income

1,436

(9,905)

74,909

60,887

871

(620)

976

(45)

(Increase) decrease in accounts receivable - other parties

(176,146)

1,743

(3,296)

(715)

(Increase) decrease in cost of real estate developments

62,973

Net profit of minority interests (Increase) decrease in accounts receivable - related parties

(157,212)

158,398

188,153

(27,323)

201,467

(Increase) decrease in other current assets

8,356

109

5,488

4,448

(Increase) decrease in other non - current assets

(4,564)

36,119

(3,550)

(3,017) (3,493)

Increase (decrease) in trade account payables

(12,891)

37,734

2,890

Increase (decrease) in income received in advance

23,994

(44,556)

Increase (decrease) in accrued interest expense

(4,836)

97,968

(3,752)

100,965 (18,736)

(202)

Increase (decrease) in accounts payable - the Industrial (19,357)

(42,545)

(12,345)

Increase (decrease) in accrued directorsâ&#x20AC;&#x2122; remuneration

Estate Authority of Thailand

(27,838)

14,530

(13,437)

8,757

Increase (decrease) in other current liabilities

(62,529)

53,356

7,112

(8,650)

8,536

6,118

(249)

279

8,360

Increase (decrease) in other non - current liabilities

31,288

(16,298)

Net Cash Provided by (Use in) Operating Activities

(598,187)

570,952

Increase (decrease) in retentions payable Increase in deferred leasehold right income

(438,030)

507,110 â&#x20AC;Ś/2

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT CONSOLIDATED NOTE CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in current investments in securities (Increase) decrease in cash deposited for investment (Increase) decrease in short - term loans to related parties (Increase) decrease in investments for using the equity method (Increase) decrease in long - term loans to related parties Dividend received from subsidiary companies (Increase) decrease in long - term loans to related parties Cash received from sales of equipment Cash received from sale of the investments in securities (Increase) decrease in building and equipment (Increase) decrease in leasehold land and land held for commercial purposes (Increase) decrease in assets for rent (Increase) decrease in advance to the Provincial Electricity Authority (Increase) decrease in sinking fund

2002

THE COMPANY ONLY 2002 2001

2001

(49,974) (128,183) (3,616) (156,250) 357,821 94,934 266,990 (11,666)

(19) (243,545) (92) (5,280) 410,459 2,881 (14,272)

(49,974) (732) (152,454) 220,538 67,376 93,652 266,990 (6,994)

643,253 -

(427) (177)

644,229 (265)

5,501 (28,899)

(13,528)

(1,949)

989,912

136,000

1,080,416

394,669

(39,896) (15,640) (1,518) 52,000 (40,750) (492,298) (69,971) 283,163 2,366 (30,358)

2,276 (11,012) 222,000 (40,000) (378,450) (21,861) (15,752)

(39,741) (15,640) (429,943) (5,407) (425,526) 283,163 2,366 -

2,094 32,134 (371,376) (40,000) (28,787) -

(352,902)

(242,799)

(630,730)

(405,935)

Adjustments from financial statement translations

(36,506)

40,530

Increase (decrease) in cash and cash equivalents, Net Cash and cash equivalents, beginning of year 5 Cash at banks pledged as collateral, beginning of year 5 Cash at banks pledged as collateral, end of year 5 And 27

2,316 110,095 45,862 (28,186)

11,454 88,735 55,769 (46,898)

11,656 9,421 546 (527)

2,615 1,914 5,438 (546)

Cash and cash equivalents, end of year

130,087

109,060

21,096

9,421

Net Cash Provided by (Used in) Investing Activities CASH FLOWS FROM FINANCIAL ACTIVITIES Increase (decrease) in bank overdrafts Cash paid for convertible bond redemption Increase (decrease) in long - term loans from related parties Increase (decrease) in short - term loans from related parties Decrease in long - term loans from related parties Increase (decrease) in long - term loans from related person Increase (decrease) in other long - term loans Decrease in long - term liabilities Cash paid for guaranteed bond redemption Proceeds from increasing share capital Proceeds from exercise of warrants Dividend paid to minority interests Net Cash Provided by (Used in) Financial Activities

(19) (16,132) (5,530) 23,628 393,131 1,134 (1,543)

â&#x20AC;Ś/3

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 THOUSAND BAHT CONSOLIDATED 2002 OPERATING ACTIVITIES, INVESTING ACTIVITIES AND FINANCIAL ACTIVITIES NOT AFFECTING CASH Increase in unrealised gain (loss) from changes in carrying amount of available-for-sale securities Increase in surplus from available-for-sale securities by above

THE COMPANY ONLY 2002 2001

2001

3,151 (3,151)

Increase (decrease) in cost of real estate development by transfer to assets for rent Increase (decrease) in assets for rent by above

(104,974) 104,974

Increase (decrease) in leasehold land and land held for commercial purposes by transfer to cost of real estate development Increase (decrease) in cost of real estate development by above

(274,403) 274,403

127,001 6,789

87,398 8,496

15,192 3,624

44,283 2,968

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid during the year for : Interest expenses Income tax expenses

The accompanying notes to financial statements are an integral part of these statements.

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 1. ECONOMIC ENVIRONMENT AND BASIS OF FINANCIAL STATEMENT PRESENTATION 1.1 Economic Environment The operations of Hemaraj Land and Development Public Company Limited (“the Company”) and its subsidiaries (“Hemaraj Group”) may continue to be influenced for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The financial statements of the Company and its subsidiaries reflect the management’s current assessment of the impact of current economic conditions on the financial positions of the Company and its subsidiaries. However, actual results could differ from the management estimates. 1.2 Basis for preparation and presentation of financial statements The financial statements of the Company and its subsidiaries have been presented in accordance with the Ministerial Regulation No.7 (B.E. 2539), under the Public Company Limited Act, B.E. 2535 and in conformity with generally accepted accounting principles practiced in Thailand. They have been prepared in the Thai language as required by Thai law and regulatory requirements and have been translated into English for the convenience of the reader. 1.3 Basis for preparation and presentation of consolidated financial statements The consolidated accounts incorporate the accounts of the Company and its majority own directly or indirectly (over 50%) subsidiaries as follows:

TYPE OF BUSINESS Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Eastern Pipeline Services Company Limited H-International (BVI) Company Limited Hemaraj International Limited* H - Construction Management and Engineering Company Limited

HOLDING OF INTEREST (%) As of 31st As of 31st December, 2002 December, 2001

Industrial Estate

99.99

Industrial Estate Pipe Rack Rental Holding Company Holding Company Engineering and Construction Supervision Service

60.00 99.99 100.00 99.99

99.99

* An overseas subsidiary, the information being used to prepare the financial statements were provided by the management and have not been audited. However, the total assets and net income as show in these financial statements were not material to the consolidated financial statements as a whole. Significant intercompany transactions are eliminated from the consolidated financial statements. All subsidiaries were incorporated in Thailand except H- International (BVI) Company Limited and International Limited which were incorporated in British Virgin Islands and Cayman Islands, respectively.

Hemaraj

In addition, the consolidated and the Company’s financial statements for years ended December 31, include portions of gain (loss) from associated companies, based on information from the financial statements, which were provided by the management and were not audited or were audited by other auditors, as follows:

Economic environment and basis of financial statement presentation (continued) 2002 (Amounts:Million Baht) Elyo-H Facilities Management Limited **

(1.81)

2001 (Amounts:Million Baht) Glow Company Limited (formerly: H-Power Company Limited)*

(301.45)

Elyo-H Facilities Management Limited ** * **

(2.42)

Based on information from the financial statements, which were audited by other auditors. Based on information from the financial statements, which were provided by the management and were not audited.

2. GENERAL INFORMATION On August 15, 1988, the Company was incorporated under the Civil and Commercial Code of Thailand and was subsequently listed on the Stock Exchange of Thailand and transformed as a Public Company Limited on July 10, 1992 and July 12, 1993, respectively. The Company, which is the parent company of Hemaraj Group, operates its business as an industrial estate developer with 3 industrial estate development projects located in the Eastern Seaboard of Thailand. The projects are operating under the joint operation agreements with the Industrial Estate Authority of Thailand, in the names of the Company and its 2 subsidiaries as follows:

Company Name Hemaraj Land and Development Plc.

Industrial Estate

Site Location

Chonburi Industrial Estate (Bor Win)

Sriracha district, Chonburi province

Eastern Industrial Estate Co., Ltd.

Eastern Industrial Estate (Map Ta Phut)

Muang district, Rayong province

Eastern Seaboard Industrial Estate (Rayong) Co., Ltd.

Eastern Seaboard Industrial Estate (Rayong)

Pluak Daeng district, Rayong province

Hemaraj Groupâ&#x20AC;&#x2122;s headquarters is located at 18th Floor, UM Tower, 9 Ramkhamhaeng Road, Suan Luang, Bangkok 10250. As at December 31, 2002 and 2001, Hemaraj Group employs 141 and 145 staff, respectively. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Measurement Bases Used in Preparing the Financial Statements Other than those disclosed in other topics and other notes to the financial statements, the financial statements are prepared on the historical cost basis. Estimation Preparation of financial statements in conformity with generally accepted accounting principles requires the management to make the estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and also the disclosures of contingent assets and liabilities at balance sheet date. However, actual results may differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and at banks net of cash at banks pledged as collateral.

Summary of significant accounting policies (continued) Current Investments Available-for-sale securities consist of investments in marketable securities, which are stated at fair value net of accumulated impairment loss on investments. Account Receivables Account receivables consist of land sale contract receivables which represent the amount of contract prices net of installments received and deferred income, and service receivables which are shown net of allowance for doubtful accounts for billings overdue by more than 90 days. Cost of Real Estate Developments Cost of real estate developments consists of land costs, development costs and capitalised interest on loans for development project including advances for construction costs. These costs are transferred to cost of sales when revenue from sales is recognised. Cost of real estate developments is stated at the lower of aggregate cost or net realisable value. Loss on projects evaluation is included in the statement of income. Capitalisation of Borrowing Costs The Company and its subsidiaries have accounting policy to record interest expenses and fees on long-term loans and loan from directors and related person for development projects are capitalised to cost of real estate developments. The capitalisation will be suspended or ceased when the development projects are interrupted or completed. Investments and Loans Investments -

Investments in subsidiary and associated companies are recorded by using the equity method.

General investments represent investments in related and other companies which are stated at cost net of accumulated impairment loss on investments.

Impairment loss on investments is included in the statement of income. Loans The Company and its subsidiaries have recorded allowance for doubtful accounts by using an estimate of those amounts which may prove to be uncollectible, based on a review of the current status and the repayment ability of receivables. Leasehold Land and Land Held for Commercial Purposes Leasehold land and land held for commercial purposes consist of land leasehold, land costs, development costs and capitalised interest on loans of undeveloped projects and projects which were suspended from development. Leasehold land and land held for commercial purposes are stated at the lower of aggregate cost or net realisable value. Loss on projects revaluation is included in the statement of income. Assets for Rent Assets for rent are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets of 15 years for pipe rack and 20 years for building. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets of 5 years for equipment and 20 years for building.

Summary of significant accounting policies (continued) Deferred Interest on Hire Purchase Agreements Deferred interest on hire purchase agreement is amortised over the period of hire purchase agreements. Income Received in Advance Income received in advance represents the amounts received from land sale and purchase contracts over the amount of revenues, which are recognised using the percentage of completion method, and service income received in advance. Deferred Leasehold Right Income Deferred leasehold right income represents right of use fee received on rental of land, building and pipe rack, and is recognised as revenue over the period of rental contract. Revenue and Expense Recognition Other than those disclosed in other topics, revenue and expense recognition are as follows: -

Revenue and Cost of Land Sales Revenue from land sales is recognised upon signing of contract and receiving of deposits by the percentage of completion method, using the ratio of actual development costs incurred to total estimated development cost excluding land cost. Cost of sales is total estimated development costs proportionately recognised by the percentage of revenue recognition, using the ratio of accumulated revenue recognition to total estimated project revenues. Total estimated revenues and development costs of each project shall be revised when they reflect total revenues and costs that expected to be incurred. During 2002, the Company and its subsidiaries have revised estimated revenues and development cost for each project in order to reflect the amount that expected to be incurred, which has generally effected to the revenue and cost recognition.

Revenue and Cost of pre-fabricated Factory Sales (Eastern Seaboard Industrial Estate (Rayong) Company Limited) Revenue and cost of pre-fabricated factory sales are recognised upon signing of sale contract.

Service Income and Cost of Services Service income and cost of services are recognised on the accrual basis. Service income represents income received from providing public utilities, tap water, raw water, wastewater processing, garbage collection services, construction services and rental services in respect of land, shop house, warehouse, factory and pipe rack to the Industrial Estate. Cost of services represents cost incurred from providing of such services. The recognition of income from public utilities service is ceased when the customers cease their business operations and are in trouble to make payments.

Gain from Debt Release Agreements. (Hemaraj Land and Development Public Company Limited and Eastern Pipeline Services Company Limited) The Company has recorded portions of long-term loans under the Conditional Debt Release Agreements and related interest payable, which would be forgiven, as revenue in the statement of income in full upon the completion of debt repayments.

Gain from Compromising Debt. (Hemaraj Land and Development Public Company Limited) The Company has recorded the difference between the aggregate amount of loan and related interest payable, which would be compromised under the Restructuring Agreements as revenue in the statement of income in full on the signing date of the Restructuring Agreement.

Gain from Debt Settlement by Transferring Assets. (Hemaraj Land and Development Public Company Limited) The Company has recorded the difference between the aggregate amount of loan and related interest payable, which would be released and the fair value of transferred assets as revenue in the statement of income in full on the signing date of the Restructuring Agreement.

Summary of significant accounting policies (continued) -

Loss from Purchase Debt and Right. (Eastern Industrial Estate Company Limited) The Company has recorded the difference between the expected receivable and the price of purchase debt and right in full at the closing date and will record as revenue once the repayment is collected.

Other incomes and expenses. Other incomes and expenses are recognized on the accrual basis.

Accounts in Foreign Currency A. The financial statements of an overseas subsidiary company are translated into Baht for consolidation purposes using rates of exchange as follows: -

Assets and liabilities are translated at the average selling and purchasing price exchange rate ruling at the end of the year.

Revenues and expenses are translated at the average selling and purchasing price exchange rate ruling at the end of the month.

Share capital is translated at the exchange rate ruling on the transaction date.

Adjustments from translation of foreign financial statements are included under shareholdersâ&#x20AC;&#x2122; equity. B. Convertible bonds and related transactions are translated into Baht using rates of exchange as follows: -

Convertible bonds are translated into Baht at the forward rate of exchange stated in the Bond prospectus.

The provision for convertible bond redemption is converted into Baht at the rate of exchange stated in the bond prospectous.

Accrued interest expense on convertible bonds is translated into Baht at the rate of exchange at the end of the year.

Adjustments from translation are included in the statement of income. C. Other foreign currency transactions occuring during the year are converted into Baht at the rates prevailing on the dates of the transactions. Assets and liabilities at the end of the year are converted into Baht at the rates of exchange on that date. Gain and loss on translation is included in the statement of income. Corporate Income Tax Corporate income tax for each year is recognised on the accrual basis, which is base on the taxable profit (loss) for the year. Earning (Loss) per Share Basic earning (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders for the year by the weighted average number of ordinary shares outstanding during the year. Diluted earning (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders for the year, as adjusted for the effect of dilutive ordinary shares, by the weighted average number of ordinary shares outstanding during the year plus the number of dilutive ordinary shares.

4. RELATED PARTIES The Company has certain transactions with its related parties. Intercompany terms are determined at the maximum rate of 5% of contract price for commission on sales, maximum of 5% of service income received for management fees and 7% 12.50% for interest on loans relating to business operation and expansion, of which the recognition of interest income is ceased when overdue more than 180 days. Enterprises that directly or indirectly through one or more intermediaries, control, or are under common control with, the Company by through shareholding and/or directors as follows: PERCENTAGE OF HOLDING COMPANY NAME Subsidiary Companies Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Eastern Pipeline Services Company Limited* H-International (BVI) Company Limited Hemaraj International Limited H-Construction Management and Engineering Company Limited Associated Company Elyo - H Facilities Management Limited Related Companies Glow Company Limited Industrial Power Company Limited** Operation Power Service Company Limited** Industrial Water Supply Company Limited** Bowin Power Company Limited** Sriracha Harbor Public Company Limited Millenium Steel Public Company Limited Nakornthai Strip Mill Public Company Limited Sun Tech Group Public Company Limited Metal Star Company Limited Benz BMB Company Limited Standard Inter Trade Company Limited Tractebel S.A. Eastern Fluid Transport Company Limited Siam Food Products Public Company Limited Teo Hong Silom Company Limited Elyo South East Asia PTE LTD Related Person

TYPE OF BUSINESS

RELATIONSHIP

As of 31st December, 2002

As of 31st December, 2001

Industrial Estate

Common shareholders and management

Industrial Estate Pipe Rack Rental Holding Company Holding Company Design and Construction Supervision Service

,, ,, ,, ,,

60.00 99.99 100.00 99.99

99.99

Facilities Management Service

Common shareholders and management

39.99

Holding Company

Common shareholders and directors

16.99

24.99

16.99

24.99

16.99 16.99 21.14

24.99 24.99 24.99

0.03 1.39 -

0.76 1.39 -

,, ,, Joint investor ,, ,, ,, ,,

15.00 -

Directors and shareholders

Electricity and Steam Power Generation Energy Consulting Industrial Water Supply Independent Power Producer Port Service Steel Manufacturer and Distributor Steel Manufacturer and Distributor Agriculture and Scrap Steel Business Cut-to-length Steel Stretching Steel and Sales Automotive Sales and Service Automotive Sales and Service Energy Pipe Rack Maintenance Processing agriculture produce Facilities Management Service Facilities Management Service -

,, ,, ,, ,, ,, ,, ,, ,, Common directors

* 74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited ** Indirect holding by Glow Company Limited (formerly: H-Power Company Limited)

Transactions with related parties (continued) As at December 31, balances with related parties, which are shown in the balance sheets, are as follows: Intercompany

(Amounts:Thousand Baht) Consolidated 2002

The Company

2001

2002

Terms

2001

Assets Advance to related party: -

Associated Company Elyo-H Facilities Management Limited

Subsidiary company Eastern Seaboard Industrial Estate (Rayong) Company Limited

Maximum 5% of

Accrued commission and Management income

contract price and 5% of -

50,532

49,800

50,625

49,893

416,730

280,278

78,000

MLR(TFB)+1%

38,628

MLR(TFB)+1%

522

401,429

LIBOR + 2%

service income received

Long - term loans to related parties : -

Subsidiary companies Eastern Industrial Estate Company Limited Loans and accrued interest income

MLR(TFB)+1%

Eastern Seaboard Industrial Estate (Rayong) Company Limited Loans and accrued interest income Eastern Pipeline Services Company Limited Loans and accrued interest income H-Construction and Engineering Company Limited Loans and accrued interest income -

Related Companies Tractebel S.A. Loans and accrued interest income

62,029

401,429

62,029

Sriracha Harbor Public Company Limited Loans and accrued interest income, net Total

62,038

401,438

595,918

681,716

1% - MLR

Transactions with related parties (continued) (Amounts: Thousand Baht) Consolidated The Company 2002

2001

2002

26,726

52,000

26,726

32,134

Loans from repurchase of convertible bonds

453,783

1,010,139

Other loans

573,025

453,417

Other loan

1,518

Total

1,518

1,026,808

Intercompany Terms

2001

Liabilities Short - term loans from related parties : -

Subsidiary company Eastern Seaboard Industrial Estate (Rayong) Company Limited Advance received

32,134

Related company Siam Food Public Company Limited Loans and accrued interest expense Total

Long - term loans from related parties : -

Subsidiary company H-International (BVI) Company Limited

Related company

Loans from related person

244,250

285,000

1,518 1,465,074

MLR+1%

The significant transactions with related parties for the years ended December 31, 2002 and 2001 are as follows: MILLION BAHT CONSOLIDATED

THE COMPANY ONLY

INTERCOMPANY

2002

2001

2002

2001

0.20

Service income

37.04

30.59

3.78

0.31

Interest income

10.57

56.91

38.55

97.00

Land sale

COST POLICY

MLR (TFB) + 1% and LIBOR + 2%

Commission and Management Income

34.05

44.25

Other income

2.96

Cost of service

9.13

4.75

8.61

1.34

Interest expenses

3.82

17.99

MLR (TFB) + 1%

Maximum 5% of contract price and 5% of service income received

Transactions with related parties (continued) As at December 31, 2002 the Companyâ&#x20AC;&#x2122;s investment for using the equity method are as follows:

Company

Type of Business

Relationship

Paid-up

Holding of

Capital

Interest

Cost

Net Change in Equity

Investments Equity

(Million Baht)

(%)

(Million Baht)

Subsidiary Companies Eastern Industrial Estate Company Limited

Industrial Estate

Co. shareholders And management

400.00

99.99

400.00

(27.58)

372.42

Industrial Estate

358.00

60.00

214.80

614.21

829.01

Eastern Pipeline Services Company Limited*

Pipe Rack Rental

15.00

99.99

11.25

2.15

13.40

H-International (BVI) Company Limited

Holding Company

0.08

100.00

0.08

826.80

826.88

Holding Company

0.03

99.99

0.03

0.01

0.04

Supervision Services

0.25

99.99

0.25

0.70

0.95

Facilities Management Services

26.29

39.99

10.50

(4.68)

5.82

636.91

1,411.61

2,048.52

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Hemaraj International Limited H-Construction Management and Engineering Company Limited

Design and Construction

Associated Company Elyo-H Facilities Management Limited Total

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited

Additional information -

H-International (BVI) Company Limited was registered in the British Virgin Islands (US. currency used for business operation). Hemaraj International Limited was registered in the Cayman Islands (US. currency used for business operation). During the year 2002, the Company received dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited amounting to Baht 45.54 million and from H-International (BVI) Company Limited amounting to Baht 175 million.

Transactions with related parties (continued) As at December 31, 2001, the Companyâ&#x20AC;&#x2122;s investment for using the equity method are as follows:

Company

Type of Business

Relationship

Paid-up

Holding of

Capital

Interest

Cost

Net Change in Equity

Investments Equity

(Million Baht)

(%)

(Million Baht)

Subsidiary Companies Eastern Industrial Estate Company Limited

Industrial Estate

Co. shareholders And management

400.00

99.99

400.00

105.04

505.04

Industrial Estate

358.00

60.00

214.80

549.07

763.87

Eastern Pipeline Services Company Limited*

Pipe Rack Rental

60.00

99.99

(24.88)

H-International (BVI) Company Limited

Holding Company

0.08

100.00

0.08

1,007.97

1,008.05

Holding Company

0.03

99.99

0.03

0.01

0.04

Supervision Services

0.25

99.99

0.25

(0.24)

0.01

Facilities Management Services

17.20

39.99

6.88

(2.87)

4.01

622.04

1,634.10

2,256.14

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Hemaraj International Limited H-Construction Management and Engineering Company Limited

Design and Construction

Associated Company Elyo-H Facilities Management Limited Total

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate Company Limited

Additional information -

H-International (BVI) Company Limited was registered in the British Virgin Islands (US. currency used for business operation). Hemaraj International Limited was registered in the Cayman Islands (US. currency used for business operation). During the year 2001, no dividend was received from subsidiary, associated and related companies except for a dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited amounting to Baht 23.63 million.

Transactions with related parties (continued) Other long-term investments - related parties, net CONSOLIDATED 2002

Investments in related parties Glow Company Limited (formerly: H-Power Company Limited) Investments in related parties Sriracha Harbor Public Company Limited Eastern Fluid Transport Company Limited Bowin Power Company Limited Glow Company Limited (formerly: H-Power Company Limited) Total Less Impairment loss on investments Investments in related parties, net Other long-term investments - related parties, net

THOUSAND BAHT THE COMPANY ONLY

2001

2002

2001

26,937

75,300 1,500 125,000

75,300 1,500 -

75,300 125,000

75,300 -

226,763 428,563 (54,105)

76,800 (54,105)

226,763 427,063 (54,105)

75,300 (54,105)

374,458

22,695

372,958

21,195

374,458

49,632

372,958

48,132

Hemaraj Land and Development Public Company Limited a) According to the resolution passed by the Board of Directors’ Meeting No. 1/2000 dated February 8, 2000, the Company entered into a share transfer agreement with Tractebel S.A. (“Tractebel”), an overseas business cooperation company and transferred its 33.25 million shares in Glow Company Limited (“Glow”), an associated company, to Tractebel. All remuneration from such transactions were funded to Glow for Bowin Power Plant Project development in full under the condition of conversion into share capital of such company in the future. In the year 2001, the Company entered into a debt restructuring agreement with Tractebel as resolved by the 3/2001 Board of Directors’ Meeting held on November 30, 2001. Subsequently, in the third quarter of 2002, the Board of Directors had passed the resolution at the meeting No. 7/2545 dated August 14, 2002 to amend the Restructuring Agreement that a part of the sale to Tractebel for the loan to Glow Company should be used to pay for paid up capital of Bowin Power, and the balance of unpaid up portion of the shares capital of Glow Company, and reserve for payment of the increase in Bowin Power share capital in the future. However, the Company have the right to proceed in selling of all of Glow Company shares. For the year 2002, the Company sold part of the Glow share capital. As a result, the Company shares remaining in Glow is 16.99%. b) During the period 2002, the Company purchased 449,993 ordinary shares of Eastern Pipeline Service Company Limited from Eastern Industrial Estate Company Limited at book value of the said subsidiary as at December 31, 2002. As a result, the Company is holding 74.99% directly and 25% indirectly through Eastern Industrial Estate Company Limited. Later in November 2002, the said subsidiary has decreased its authorized ordinary shares from 600,000 shares to 150,000 shares. However, it did not affect the Company’s holding structure in Eastern Pipeline Services Company Limited directly and indirectly. 5. CASH AND CASH EQUIVALENTS, NET For the purpose of preparation of the statements of cash flows in accordance with the relevant Thai Accounting Standard, as of December 31, 2002 and 2001, cash and cash equivalents, net consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2002 2001 2002 2001 124,082 110,095 21,096 9,421 34,192 45,862 527 546

Cash on hand and at banks Current investments - time deposits Less Cash at banks pledged as collateral and deposits with maturity dates longer than 3 months Cash and cash equivalents, Net

(28,186) 130,088

(46,898) 109,059

(527) 21,096

(546) 9,421

6. DEPOSITS FOR INVESTMENT H-International (BVI) Company Limited Deposits for investment as at December 31, 2002 represent deposits with an overseas investment adviser in the amount of USD 8.6 million under the Non-Discretionary Investment Advisory Agreement dated September 18, 2001, which aim at investment in assets and investments overseas. According to the agreement condition, the investment adviser shall provide investment advisory service and act as representative of the Company to enter into transactions associated with assets as assigned by the Company. The Company has commitment to pay the investment advisory fee on a yearly basis.

7. CURRENT INVESTMENTS As at December 31, 2002 and 2001, current investments consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2002 2001 2002 2001 34,192 45,862 527 546

Time deposits Current investments classified as Available-for-sale securities - Equity securities - Nakornthai Strip Mill Plc. - Millenium Steel Plc. - Other companies and unit trusts Less Allowance for revaluation of investments Accumulated impairment loss on investments Current investments classified as Available-for-sale securities - Equity securities - net

Total Current Investments

82,900 2,524 49,820 135,244 (79,748)

82,900 3,054 281 86,235 (85,954)

82,900 2,524 49,820 135,244 (79,748)

82,900 3,054 282 86,236 (85,954)

55,496

281

55,496

282

89,688

46,143

56,023

828

The Company exchanged ordinary shares and warrants of NTS Steel Group Public Company Limited for ordinary shares and warrants of Millenium Steel Public Company Limited at the ratio of 1:1 according to NTS Steel Group Public Company Limitedâ&#x20AC;&#x2122;s restructuring plan. 8. TRADE ACCOUNTS RECEIVABLE - OTHER PARTIES, NET As of December 31, 2002 and 2001, trade accounts receivable - other parties consisted of: THOUSAND BAHT CONSOLIDATED Land sale contracts receivable Land sale contracts Less Installments received Installments receivable Less Deferred income Land Sale Contracts Receivable, net Service receivables Accrued service income Less Allowance for doubtful accounts Service Receivables, net Trade accounts receivable - other parties, Net

THE COMPANY ONLY

2002

2001

381,515 (109,899) 271,616 (39,776) 231,840

588,558 (506,758) 81,800 (17,283) 64,517

1,987 (652) 1,335 1,335

3,487 (2,152) 1,335 1,335

39,757 (17,124) 22,633

42,783 (12,639) 30,144

32,119 (30,091) 2,028

6,693 (5,427) 1,266

254,473

94,661

3,363

2,601

2002

2001

Trade accounts receivable - other parties, net (continued) As of December 31, 2002 and 2001, the land sale contracts receivable and accrued service income classified by aging are as follows: THOUSAND BAHT CONSOLIDATED Land sale contracts receivable Undue installments Less than 3 months Over 3 months to 12 months Over 12 months Installments paid on date of transfer of title deed Less Deferred income Total land sale contracts receivable Accrued service income Less than 3 months Over 3 months to 6 months Over 6 months to 12 months Over 12 months Less Allowance for doubtful accounts Accrued service income, Net

THE COMPANY ONLY

2002

2001

2002

2001

231,840 -

65,565 300 848 -

1,335 -

101 300 847 -

231,840

15,087 (17,283) 64,517

1,335

87 1,335

23,883 1,182 2,591 12,101 39,757 (17,124) 22,633

30,999 1,658 1,446 8,680 42,783 (12,639) 30,144

3,278 266 1,601 4,843 9,988 (7,960) 2,028

2,114 266 422 3,891 6,693 (5,427) 1,266

9. COST OF REAL ESTATE DEVELOPMENTS, NET As at December 31, 2002 and 2001, cost of real estate developments consisted of: THOUSAND BAHT CONSOLIDATED 2002

Land cost - under development Development project costs Interest capitalised Additional utility cost Advance for construction costs Less Accumulated costs transferred to cost of land sales Accumulated costs transferred to be assets for rent Accumulated costs transferred to repay debt Less Loss on projects revaluation Cost of Real Estate Developments, net

2001

THE COMPANY ONLY 2002

2001

3,076,675 4,865,863 1,776,321 7,340 4,305 9,730,504

2,743,483 4,583,426 1,795,804 7,054 7,419 9,137,186

845,411 927,723 634,971 7,185 2,415,290

850,138 1,011,028 654,412 7,054 2,522,632

(6,848,611)

(6,252,139)

(1,897,704)

(1,714,174)

(343,850)

(346,349)

(107,472)

(143,838) 2,394,205 (38,480) 2,355,725

(137,597) 2,401,101 2,401,101

(143,838) 373,748 (38,480) 335,268

(137,597) 563,389 563,389

Cost of real estate developments (continued) Hemaraj Land and Development Public Company Limited Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Valuation Stated in the Financial Statements Cost of real estate developments is stated at the lower of aggregate cost or net realisable value. During the year 2002, the Company and the 2 subsidiaries had obtained appraisal by an appraisal firm and had recognised loss on projects evaluation in the statements of income. Obligation of Assets as at December 31, 2002 The majority of land in the projects of the Company and the 2 subsidiaries has been mortgaged as collateral for loans from local financial institutions and the other part has been mortgaged as collateral for the issue of the US$ 15.1 million Guaranteed Bonds of an overseas subsidiary company. Capitalisation of Borrowing Costs Consolidated For the years ended December 31, 2002 and 2001, interest expenses are capitalised to the cost of real estate developments in the approximate amounts of Baht 31.41 million and Baht 41.06 million, respectively. The Company The Company has ceased interest capitalisation since January 1, 1999. Debt Settlement by Transferring Assets (Hemaraj Land and Development Public Company Limited) During 2001, the Company transferred the land in its industrial estate with the cost of Baht 137.60 million to the Industrial Estate Authority of Thailand to repay debts of the Company and a subsidiary company and as a fund in accordance with the amendment to the joint operation agreements dated October 31, 2001 as disclosed in Note 13 and Note 28 to the financial statements. During 2002, the Company transferred the land in its industrial estate with the cost of Baht 143.84 million to an asset management company, which received rights claim of the asset from a commercial bank to settle the debt under the Restructuring Agreement as disclosed in Note 24 to the financial statements.

10. PROPERTY, PLANT AND EQUIPMENT As at December 31, 2002 and 2001, property, plant and equipment consisted of: Changes in Cost

Changes in Accumulated Depreciation

Beginning

Addition

Sale

Transfer

Ending

17.28

203.43

0.77

204.20

3.79

0.58

(0.14)

4.23

Office equipment and furniture and fixture

68.51

3.36

(0.93)

Vehicles

34.40

6.95

(6.18)

Construction in progress

10.62

3.66

11.66

(7.25)

Beginning

Depreciation

Sale

Transfer

Net Book Value Ending

Beginning

Ending

Consolidated Land Building and structure Building improvements

Raw water pipe Total

341.69

17.28

42.25

7.87

50.12

161.18

154.06

1.48

0.72

2.20

2.31

2.03

70.94

46.85

7.09

(0.21)

53.73

21.66

17.22

35.17

16.84

5.67

(5.98)

16.53

17.56

18.64

10.62

10.63

3.66

0.88

0.24

1.12

2.78

2.54

346.10

108.30

21.59

(6.19)

123.70

233.39

222.40

(10.17)

Less Reserve for impairment loss of assets Less Reserve for possible loss of title of land and office building Property, Plant and Equipment, net

341.69

11.66

(7.25)

346.10

108.30

21.59

123.70

(36.96)

186.26

175.27

(6.19)

2.93

11.32

34.03

34.02

1.42

0.14

The Company Land

2.93

Building and structure

45.35

11.32

Building improvements

1.56

(0.14)

1.42

Office equipment and furniture and fixture

37.22

2.21

(0.93)

38.50

29.62

2.72

(0.21)

32.13

7.60

6.37

Vehicles

17.70

5.05

(1.55)

21.20

7.09

3.85

(1.36)

9.58

10.61

11.62

Construction in progress

0.86

Raw water pipe

3.66

0.88

0.24

1.12

2.78

2.54

7.26

(2.62)

113.92

50.33

6.81

(1.57)

55.57

58.95

58.34

(0.72)

(36.96)

21.27

20.66

Total

109.28

Less Reserve for impairment loss of assets Less Reserve for possible loss of title of land and office building Property, Plant and Equipment, net

109.28

7.26

(2.62)

113.92

50.33

6.81

(1.57)

55.57

Property, plant and equipment (continued) Consolidated For the year ended December 31, 2002, depreciation of building and equipment are included in selling and administrative expenses and cost of services in the amounts of Baht 12.86 million and Baht 9.23 million, respectively. The Company For the year ended December 31, 2002, depreciation of building and equipment are included in selling and administrative expenses and cost of services in the amounts of Baht 6.45 million and Baht 0.37 million, respectively. Hemaraj Land and Development Public Company Limited As at December 31, 2002, the Company has provided reserve for loss of the possessory right over the land and office building in the amount of Baht 36.96 million as the management of the Company view that the Company may not receive transfer of such possessory right. 11. LEASEHOLD LAND AND LAND HELD FOR COMMERCIAL PURPOSES As at December 31, 2002 and 2001, leasehold land and land held for commercial purposes consisted of: CONSOLIDATED 2002 Land bank Land cost of projects suspended from development Suspended development project costs Interest capitalized Leasehold land Less Accumulated costs transferred to repay debt Loss on projects evaluation Leasehold Land and Land Held for Commercial Purposes, net

THOUSAND BAHT THE COMPANY ONLY

2001

2002

2001

10,201 1,135,711 266,909 556,119 77,077 2,046,017

10,201 1,406,047 268,526 556,409 77,077 2,318,260

10,201 1,135,711 266,909 556,119 77,077 2,046,017

10,201 1,134,937 266,499 556,119 77,077 2,044,833

(645,413) (315,322)

(561,629)

(645,413) (315,322)

(561,629)

1,085,282

1,756,631

1,085,282

1,483,204

Hemaraj Land and Development Public Company Limited Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Valuation Stated in the Financial Statements Leasehold land and land held for commercial purposes is stated at the lower of aggregate cost or net realisable value for which during the year 2002, the Company and the subsidiary had obtained appraisal by an appraisal firm and had recognised loss from projects evaluation in the statements of income. Obligation of Assets as at December 31, 2002 The majority of land in the projects of the Company and the subsidiary has been mortgaged as collateral for loans from local financial institutions and the other part has been mortgaged as collateral for the issue of the US$ 19.2 million Guaranteed Bonds of an overseas subsidiary company. Assets Transfer for Debt Repayment (Hemaraj Land and Development Public Company Limited) During 2002, the Company transferred the land in its industrial estate with the cost of Baht 645.41 million to an asset management company, which received rights claim of the assets from a commercial bank to settle the debt under the Restructuring Agreement as disclosed in Note 24 to the financial statements.

12. ASSETS FOR RENT As at December 31, 2002 and 2001, assets for rent consisted of: (Amounts:Million Baht) Changes in Cost Beginning

Changes in Accumulated Depreciation

Addition

Sale/Written off

Transfer

Ending

65.05*

14.81

Building

280.59*

90.16

Pipe rack

116.52

Total

462.16

104.97

(107.47)

Beginning

(25.20)***

54.66*

(82.27)***

288.48*

22.07

116.52

459.66

Depreciation

Net Book Value

Sale/Written off

Transfer

Ending

Beginning

Ending

65.05

54.66

16.33

(15.51)

22.89

258.52

265.59

28.40

7.77

36.17

88.12

80.35

50.47

24.10

(15.51)

59.06

411.69

400.60

25.20

- .

Consolidated Land

The Company Land

25.20**

(25.20)***

Building

82.27**

(82.27)***

Total

107.47

(107.47)

- .

11.36

4.15

(15.51)

- .

70.91

- .

11.36

4.15

(15.51)

96.11

Consolidated -

As at December 31, 2002 and 2001, portions of land and building for rent, which have been transferred from the cost of real estate developments, were in the accumulated amounts of Baht 343.13* million and Baht 345.64* million, respectively.

Depreciation of building and pipe rack for the year ended December 31, 2002 is included in cost of services.

Debt Settlement by Transferring Assets ***

The Company -

As at December 31, 2002, portion of land and building for rent, which has been transferred from the cost of real estate developments, was in the accumulated amount of Baht 107.47** million.

Depreciation of building for the year ended December 31, 2002 is included in cost of services.

13. SINKING FUND As disclosed in the Note 28 to the financial statements, the Company and its subsidiaries had entered into the joint operating agreements with the Industrial Estate Authority of Thailand (“IEAT”). The Company and its subsidiaries are committed to be a provider and to set up a fund (“Sinking Fund”) for the maintenance and reconstruction of utilities systems and facilities for the customers in the industrial estate. The Company and its subsidiaries had made the payment by cash and by transferred of partial piece of land for the Sinking Fund and in addition, the company and its subsidiaries had transferred the withdrawal rights over the Sinking fund to the IEAT per the terms and conditions of such agreements. As a service provider for utilities system and facilities in the industrial estate under the current joint agreement with IEAT, the Company believed and proposed that the Sinking Fund should also be an asset of the joint operating partner in order to be consistent with the infrastructure assets. Thai Industrial Estate Association, of which the Company and its subsidiaries are members, are under negotiation with IEAT to amend the agreement in order to make clear and comply with the Company’s proposal. On January 21, 2003, the Board of IEAT had a resolution to accept in the concept and during the procedure to amend the announcement appropriately. As at December 31, 2002 and 2001, Sinking Fund consisted of : THOUSAND BAHT

Hemaraj Land and Development Public Company Limited Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Total

2002

2001

149,434 77,200 162,600

147,485 76,189 136,661

389,234

360,335

14. CONVERTIBLE BONDS AND DEFAULTS ON DEBT REPAYMENTS On September 9, 1993, Hemaraj Land and Development Public Company Limited were issued the US$ 60 million convertible bonds, which bear interest at the rate of 3.5 percent per annum, net of withholding tax, payable annually commencing on September 9, 1994, and will be redeemed on September 9, 2003. On September 10, 1993, a resolution was passed by the Board of Directors Meeting No.11/1993 to approve the Company to manage funds from convertible bonds in the amount of Baht 1,512.18 million for developing land for commercial purposes and to record the interest from convertible bonds as a part of land development cost. Conversion and Option for Redemption As from December 9, 1993 up to August 9, 2003, each convertible bond may be converted into 135 fully paid ordinary shares of the Company. Such conversion rate may be changed as a result of the issue of warrants and the offering of ordinary shares as disclosed in Note 25 to the financial statements, respectively. At present, the Company is waiting for the confirmation from the trustee for the new conversion rate. The convertible bonds may be redeemed, in whole or in part, by the Company as from September 9, 1996 at varying percentages of the principal amount from 109.28 percent to 116.50 percent of principal amount. At the option of the bondholders, the Company must redeem such convertible bonds on September 9, 1998 at 116.50 percent of principal amount. Repurchase of Convertible Bonds During 1998 and 1997, an overseas subsidiary repurchased part of the Hemaraj Land and Development Public Company Limited’s convertible bonds. According to the Bond prospectus, the repurchased convertible bonds shall be cancelled forthwith. As at December 31, 2001 and 2000, repurchased convertible bonds were in the approximate amounts of US$ 30.34 million, which were shown as loan from repurchase of convertible bonds. During the second and the third quarter of 2002, the Company had made an offer to retire 211 units and 553 units of the bonds respectively from the bondholders.

Convertible bonds and defaults on debt repayments (continued) Remaining Convertible Bonds and Provision for Convertible Bond Redemption As at December 31, 2002 and 2001, the remaining convertible bonds were in the amount of US$ 23.25 million (Baht 585.99 million) and in the amount of US$ 24.02 million (Baht 605.25 million), respectively. The Company has based the provision for redemption of the remaining convertible bonds. As at December 31, 2002 and 2001, the Company had reserved provision for convertible bond redemption in the approximate amounts of Baht 616.31 million and Baht 666.84 million, respectively, and included these amounts within convertible bonds. Defaults on Debt Repayments for Convertible Bonds The Company failed to redeem the convertible bonds which the bondholders sought redemption in accordance with their rights on September 9, 1998, and failed to meet payments of interest on convertible bonds which were due on September 9, 1998, 1999, 2000, 2001 and 2002. As of December 31, 2002, accrued interest on convertible bonds totaled US$ 5.09 million (Baht 220.36 million). In addition, on April 28, 2000, a resolution was passed by the Annual General Meeting of Shareholders giving approval for the Company to change some conditions of convertible bonds for the convenience of debt restructuring, based on the results of negotiation for debt restructuring. The Board of Directors’ meeting on July 15, 2002 resolved the Company to call a convertible bondholders’ meeting to approve the redemption of all outstanding bonds at 50 percent of the par value on September 9, 2003, waive and discharge all outstanding claims under the bonds including all accrued interest and any other monetary debt. As at September 2, 2002, the Company had called the convertible bondholders’ meeting to approve the said offer, which 71 percent of the total votes supported the proposal. However, 75 percent of the total votes was needed to be treated as the resolution. Currently, the Company is in the process of negotiating to get the approval from the bondholders. 15. LONG-TERM LOANS TO RELATED PARTIES As of December 31,2002, Hemaraj Land and Development Public Company Limited has made loan agreement with an overseas subsidiary company, H-International Company Limited, in the amount of Baht 1,026.89 million, which do not have the maturity date and interest rate.

16. LOANS FROM RELATED PERSONS Eastern Seaboard Industrial Estate (Rayong) Company Limited As at December 31, loans from related persons consisted of: Credit Line (Million Baht) a. Loan from director in term of promissory note with grace period of 1 year

b. Loan from 3 shareholders in terms of promissory note with grace period of 1 year - Under the agreement dated October 31, 2000

Under the agreement dated October 31, 2000 and July 24, 2002

Under the agreement Dated May 2, 2001 Total

Credit Period

Conditions

Balances (Million Baht) 2002 2001 58.67 80.00

November 2000 to April 2004 August 2002 to July 2007

Quarterly Monthly

165.00

November 2000 to August 2005

Quarterly

Total of the first 3 periods, which approximates 25% of principal of each promissory note will, after grace period, be repaid equally for each period and the remaining will be repaid in the last period.

Monthly

MLR+1% of Thai Farmers Bank Plc.

132.41

165.00

20.00 10.00

May 2001 to July 2005

Quarterly Monthly

4 12

Total of the first 3 periods, which approximates 25% of principal of each promissory note for Baht 20 million loan and the remaining will, after grace period, be repaid equally in the last period for 48 months for Baht 10 million loan.

Monthly

MLR+1% of Thai Farmers Bank Plc.

16.00 10.00

20.00 -

20.00

May 2001 to July 2005

Quarterly

Monthly

MLR+1% of Thai Farmers Bank Plc.

17.17

20.00

244.25

285.00

10.00

305.00

Less Current portion of long-term loan

Principal Repayment

Interest Payment Period Rate (%) MLR+1% of Thai Farmers Monthly Bank Plc.

Total Installments 4

80.00

Term

Total of the first 3 periods, which approximates 25% of principal of each promissory note for Baht 80 million loan and the remaining will, after grace period, be repaid in the last period. and 48 months equal installments be repaid for Baht 10 million loan.

Total of the first 3 periods, which approximates 25% of principal of each promissory note will, after grace period, be repaid in the last period. and 48 months equal installments be repaid for Baht 10 million loan.

10.00

(118.08) (102.77) 126.17 182.23

Loans from Director and Related Person, net

The Company obtained loans from its director and related person for financing the construction of micro pre-fabricated factories and mini pre-fabricated factories for sale and rent. Part of land and factories has been mortgaged as collateral for such loans.

17.

LONG-TERM LIABILITIES As at December 31, long-term liabilities consisted of:

(Amounts:Million Baht) Credit Line (Million Baht)

Credit Period

Current Repayment Condition Principal Repayment Installment Term Total Amount Installments (Million Baht)

Balances Interest Payment Term Rate (%)

Consolidated 2002 2001

The Company 2002 2001

Hemaraj Land and Development Public Company Limited Loans from 2 local banks and 3 local finance institutions 1) Loan with credit line of Baht 1,200 million, to be repaid within 3 years as from September 28, 1 994. Payment, when no mortgage, is at the rate of 60% of transferred land price. The interest rate is MLR+1% per annum. On September 30, 1998, the company had the 1st negotiation on restructuring and the 2nd negotiation on September 28, 2000. Payment for the loan had been made on December 26, 2002.

4) Loan with credit line of Baht 100 million and grace period of 36 months, which was changed from promissory note, is to be repaid within December, 2003 commencing on December 14, 2001 On November 29, 2002 until October 10 2002, the latest debt restructuring is reached under current repayment conditions.

September 28, 2000 to

Payment is made, when no mortgage, at the rate of 65% of the transferred land price and at the minimum annual rate as specified in the agreement,

297.00

December 30, 2005

commencing in 2001

75.00

September 30, 2001 To December 30, 2005

5.36 Commencing In September 2002

Quarterly

100.00

September 30, 2001 To December 30, 2005

7.14 Commencing in September 2002

Quarterly

debt

2) Loan with credit line of Baht 297 million and grace period of 18 months, which changed from promissory note from the 1st debt restructuring on September 30, 1998, to be repaid within 14 quarters from June 2000 to September 2003. The interest rate is MLR per annum, payable monthly. The 2nd debt restructuring was negotiated on September 28, 2000. Payment for the loan had been made on December 26, 2002. 3) Loan in the amount of Baht 150 million, to be repaid within 12 quarters, in 3 years from 1996. The interest rate is MLR+1% per annum. According to the results of debt restructuring on December 14, 1998 and November 29, 2001, respectively. On October 10, 2002, the latest debt restructuring is reached under current repayment conditions.

September 28, 2000 to December 30, 2005

Payment is made, when no mortgage, at the rate of 65% of the transferred land price and at the minimum annual rate as specified in the agreement, commencing in 2001

107.55

Monthly

MLR

107.55

Monthly

MLR

297.00

Monthly

MLR

58.92

75.00

58.92

75.00

Monthly

MLR

78.58

100.00

78.58

100.00

Long-term liabilities (continued)

(Amounts:Million Baht) Credit Line (Million Baht)

5) Loan in the amount of Baht 110 million, to be repaid within 20 months as from February 13, 1996. The interest rate is MLR+0.5% per annum. Debt restructuring had been negotiated on June 24, 1998 and March 31, 1999, respectively. Subsequently, debt claim right of lender had been transferred to a mutual fund, which the company had entered into a Debt Compromising Agreement, dated September 5, 2002 under current repayment conditions. 6) Loan under the Conditional Debt Release Agreement dated July 31, 2000, the original principal of Baht 172 million is to be repaid totaling Baht 86.93 million, of which Baht 12.62 million was repaid at beginning of the agreement. The remaining Baht 74.31 million is to be repaid as described in current repayment conditions. The first installment due on July 31, 2000. The remaining had been repaid on June 28, 2002. Total Eastern Industrial Estate Company Limited Loan from a local bank with credit line of Baht 93 million and grace period of 18 months, which was changed from promissory note from debt restructuring on September 30, 1998, to be repaid within 6 quarters from June, 2000 to September, 2001. The interest rate is MLR per annum, payable monthly. Subsequently, on August 30, 2000 and February 6, 2002 the debt restructuring negotiations are reached. Amendment on Debt Restructuring Agreement had been made on March 4, 2002 under current repayment conditions. Total

Credit Period

Current Repayment Condition Principal Repayment Installment Term Total Amount Installments (Million Baht)

Interest Payment Term Rate (%)

130.82

September 30, 2002 To March 30, 2004

7.27 Commencing in September 2002

Monthly

172.00

July 31, 2000 To December 31, 2002

Minimum 2.87

Monthly

11.75

882.37

93.00

February 6, 2002 To December 30, 2004

Payment is made, when no mortgage, at the rate of 70% of the transferred land price and at the minimum annual rate as specified in the agreement, commencing in 2002.

Monthly

MLR

93.00

Balances Consolidated The Company 2002 2001 2002 2001

101.75

130.82

117.42

101.75

130.82

117.42

239.25

827.79

239.25

827.79

84.00

93.00

84.00

93.00

19.14

160.20

Eastern Seaboard Industrial Estate (Rayong) Company Limited Loans from 2 local commercial banks consisted of: 1) Loan with credit line of Baht 550 million, repayable within March, 2000, subsequently, extended to March 2001. Latest, the repayment term is extended to be within March 2003.

550.00

March, 2000 To March, 2003

Repayable as titles are transferred at 50% of land contract price and the outstanding amount repayable within March, 2003.

Monthly

MLR

Long-term liabilities (continued)

(Amounts:Million Baht) Credit Line (Million Baht)

2) Loan in the amount of Baht 270 million, repayable within 7 years from the first withdrawal.

Eastern Pipeline Services Company Limited Loan from a finance company with credit line of Baht 50 million, to be repaid over 72 months from April 30, 1998 to March 31, 2004. The interest rate is MLR+1% per annum, payable monthly. The loan had been put up for sale by FRA. Subsequently, according to the Conditional Debt Release Agreement, which the Company entered into it with a Mutual Fund on July 31, 2000, the original principal is to be repaid totaling Baht 20.57 million, of which Baht 2.90 million was paid at beginning of the agreement. The remaining Baht 17.67 million is to be repaid as described in current repayment condition. The first installment due on July 31, 2000. The remaining had been repaid on April 3, 2002. Total Total Long-Term Liabilities

Current Repayment Condition Principal Repayment Installment Term Total Amount Installments (Million Baht)

270.00

March 2002 To March 2009

Minimum Baht 3.75 million per month, Commencing from the last working day of the month 13 and 30% of the repayment amount.

100.00

May 2002 To May 2006

Minimum 30% of the repayment amount. When no mortgage, not less than Baht 0.60 million per rai by deducting from the amount that already repaid.

3) Loan in the amount of Baht 100 million, repayable within 4 years from the first withdrawal.

Total

Credit Period

Interest Payment Term Rate (%)

Monthly

MLR -0.5%, only 1st year. MLR

Monthly

MLR -0.5%, only 1st year. MLR

920.00

50.00

Balances Consolidated The Company 2002 2001 2002 2001

31.75

59.24

Minimum 0.68

50.00 1,575.37

Monthly

11.75

Less Current portions of long-term liabilities shown under current liabilities Long-Term Liabilities, net

23.86

433.38

Less Portions under debt restructuring negotiation plan

160.20

110.13

July 31, 2000 to December 31, 2002

1,104.85

239.25

827.79

(535.37)

(217.11)

(71.54)

(137.22)

(54.85)

216.27

497.94

102.03

237.57

Long-term liabilities (continued) The above liabilities are variously collateralised. Hemaraj Land and Development Public Company Limited Portions of long-term loans under the Conditional Debt Release Agreement and related interest payable totaling Baht 162.98 million, which would be forgiven, are to be recognised as revenue in the statement of income upon the completion of debt repayment. In the second quarter, the debt repayment is completed. Eastern Pipeline Services Company Limited Portions of long-term loan under the Conditional Debt Release Agreement and related interest payable totaling Baht 32.08 million, which would be forgiven, are to be recognised as revenue in the statement of income upon the completion of debt repayment. In the second quarter, the debt repayment is completed.

18. GUARANTEED BONDS H-International (BVI) Company Limited On September 25, 1998, a resolution was passed by the Board of Directors Meeting No. 5/1998 to approve the company to issue, in two tranches, US$ 19.2 million Guaranteed Bonds to a foreign commercial bank which had acquired part of the convertible bonds issued by Hemaraj Land and Development Public Company Limited. The principal amounts are US$ 11.5 million for the first tranche and US$ 7.7 million for the second tranche, to be repaid within 2005 in 8 semi-annual installments, with the first installment due on March 31, 2002. The interest rates (net of withholding tax) are 1% per annum and 5% per annum, respectively, payable quarterly as from December 31, 1998. Provision for Guaranteed Bond Redemption Provision for Guaranteed Bond redemption is calculated over the period of the Guaranteed Bonds and included in Guaranteed Bonds. Collateral -

Hemaraj Land and Development Public Company Limited has co-operated with 2 related companies to guarantee the issue of Guaranteed Bonds. These companies have obligations to comply with terms and conditions of the issue of Guaranteed Bonds.

Investments in ordinary shares and certain land of a related company have been used as collateral for the issue of Guaranteed Bonds.

Other Conditions of Guaranteed Bonds -

The Guaranteed Bonds are not capable of being quoted, listed or ordinarily dealt in any stock exchange, over-thecounter or other organised securities market and may not be transferred to any person other than to a related company of the registered holder.

The Guaranteed Bonds may be redeemed early in whole or in part and the company is mandated to redeem part of the bonds when the mortgaged land is sold. The redemption price is being calculated to give a yield of 7% - 9% per annum from the issuing date to redemption date.

On March 29, 2002, a resolution was passed by the Board of Directorsâ&#x20AC;&#x2122; Meeting to authorise the Company to enter into the Supplemental Agreement Relating to Trust Deed to amend and waive certain of the terms and conditions of the Bonds, effective from April 1, 2002, are summarised as follows : 1) Prepayment The Company will make the principal prepayment of the Tranche B bond for US$1,526,000 within April 1, 2003.

Guaranteed bonds (continued) 2) Interest Tranche A : From July 1, 2002 onwards, interest rate of the first tranche will be increased from 1% per annum to 3% per annum, payable quarterly. Tranche B : No change is made. At any time the consolidated financial statements of Hemaraj and its subsidiaries show the Net Operating Profit in excess of Baht 80,000,000 for the three consecutive quarters, both tranchesâ&#x20AC;&#x2122; interest rate shall bear 1% increase from the current rate. However, if the interest rate is increased by 1% and, at any time afterwards, the consolidated financial statements of Hemaraj and its subsidiaries show the Net Operating Loss in excess of Baht 80,000,000 for the three consecutive quarters, both tranchesâ&#x20AC;&#x2122; interest rate shall be reduced by 1%. 3) Redemption Tranche A: The principal is to be redeemed semi-annually from September 30, 2003 to March 31, 2007 in 8 equal installments, US$ 1,205,000 each. Tranche B: The principal is to be redeemed semi-annually from September 30, 2003 to March 31, 2007 in the 8 installments, US$ 952,000 each for the first 5 installments, US$ 370,000 each for the next 2 installments and US$ 369,000 for the last installment. 4) Collateral 150,000 ordinary shares of Eastern Pipeline Services Company shall be additionally pledged as collateral. 5) Other Condition The redemption price will be changed as a result of changing in the Bondâ&#x20AC;&#x2122;s yield from 7% per annum to 4% per annum retroactively from the issuance date to the redemption date for Tranche A and from 9% per annum to 7% per annum effective from January 1, 2002 to the redemption date for Tranche B.

19. PROVISIONS As at December 31, 2002 and 2001, Loss Provision consisted of: THOUSAND BAHT 19.1 Maximum loss reserve that may arise from a lawsuit relating to the obligation under guarantee a subsidiary company, being under consideration of the primary court

2002

2001

128.40

19.2 Reserve for possible loss from pledge of securities on pledged agreements, against loans to a related company

236.69

212.06

19.3 Reserve for possible loss from pledge of securities on pledged agreements, against loans to a related company (withdrawn from the filing)

181.84

365.09

522.30

Total

20. SHARE CAPITAL 20.1

20.2

The Extraordinary General Meeting of Shareholders No. 1/2001 of the Company held on December 28, 2001 approved the Company to proceed its authorized share capital summarised as follows : -

Decrease authorized share capital, from authorized share capital of Baht 3,270,000,000 to authorized share capital of Baht 2,252,967,250, consisting of 225,296,725 ordinary shares of Baht 10 par value, by way of revoking 101,703,275 unissued ordinary shares (including ordinary shares allocated to accommodate the exercise of the right of convertible bonds of 51,234,425 shares, with the remaining 13,000,000 ordinary shares to accommodate the exercise of right of convertible bonds) of Baht 10 par value, amounting to Baht 1,017,032,750. The Company registered the decrease of its authorized share capital with the Ministry of Commerce on January 2, 2002.

Increase authorized share capital by Baht 7,747,032,750 from authorized share capital of Baht 2,252,967,250 to authorized share capital of Baht 10,000,000,000, divided into 1,000,000,000 ordinary shares of Baht 10 par value, by issuing authorized 774,703,275 ordinary shares of Baht 10 par value. The Company registered the increase of its authorized share capital with the Ministry of Commerce on January 3, 2002.

Allocation of the increased ordinary shares is as follows : -

283,163,108 shares for offering to the existing shareholders at the rate of 1 existing share to 4 new shares of Baht 1 each, which was completed during the period 2002 with cash received of Baht 283.16 million;

159,782,075 shares for offering via private placement in accordance with the Notification of the Securities and Exchange Commission No. Kor Jor. 12/2543 regarding request for permission and permission to offer newly issued shares at the offering price of not lower than Baht 3 per share.

331,758,092 shares to accommodate the exercise of the right of warrant holders to purchase ordinary shares in addition to the existing allocation. The ordinary shares allocated to accommodate the exercise of the right of warrant holders to purchase ordinary shares total 473,264,040 shares.

The Annual General Meeting of Shareholders of the Company on April 30, 2002 approved the Company to proceed its authorized share capital summarised as follows : -

Decrease authorised share capital, from authorised share capital of Baht 10,000,000,000 to authorised share capital of Baht 8,402,179,250, consisting of 840,217,925 ordinary shares of Baht 10 par value, by way of revoking 159,782,075 unissued ordinary shares of Baht 10 par value, amounting to Baht 1,597,820,750. The Company registered the decrease of its authorized share capital with the Ministry of Commerce on May 8, 2002.

Increase authorized share capital by Baht 4,597,820,750, from authorized share capital of Baht 8,402,179,250 to authorized share capital of Baht 13,000,000,000, divided into 1,300,000,000 ordinary shares of Baht 10 par value, by issuing authorized 459,782,075 ordinary shares of Baht 10 par value. The Company registered the increase of its authorized share capital with the Ministry of Commerce on May 10, 2002.

Allocation of the increased ordinary shares is as follows : -

402,782,075 shares for offering via private placement in accordance with the Notification of the Securities and Exchange Commission No. Kor Jor. 12/2543 regarding request for permission and permission to offer newly issued shares at the offering price of not lower than Baht 3 per share.

57,000,000 shares to accommodate the exercise of the right of warrant holders to purchase ordinary shares in addition to the existing allocation. The ordinary shares allocated to accommodate the exercise of the right of warrant holders to purchase ordinary shares total 530,264,040 shares.

21. WARRANTS According to the resolutions of the Annual General Meeting of Shareholders dated April 30, 1999, the Company issued 141,531,150 warrants to the existing shareholders and specific investors, at the unit price of Baht 0.1. Total cash received from offer of warrants was in the approximate amount of Baht 14.15 million. The Company registered its warrants with the Stock Exchange of Thailand (“SET”) as listed securities and the warrants were approved by the SET to be listed securities from December 15, 1999 onwards. The Extraordinary General Meeting of Shareholders No. 1/2001 of the Company held on December 28, 2001 approved the extension of exercised period to 10 years from the issuing date, which will end within September 30, 2009 and for the adjustment of exercised price to Baht 3 per share. Subsequently, the Board of Directors’ Meeting No. 1/2002 held on February 20, 2002 approved the adjustment to the numbers of the existing warrants with the additional ratio of 2.33333 units per each 1 existing warrant, in accordance with announcement of the Office of the Securities and Exchange Commission regarding guidelines on the adjustment to the exercise price/exercise ratio of warrants. The warrants after the adjustment are 471,686,471 units with the exercise ratio of 1 ordinary share per each warrant and exercise price of Baht 3 per share. 22. DIRECTORS’ REMUNERATION AND PERSONNEL EXPENSES For the years ended December 31, directors’ remuneration included in the consolidated and the Company’s financial statements consisted of:

Hemaraj Land and Development Public Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited H-International (BVI) Company Limited Total

(Amounts:Million Baht) 2002 2001 26.12 31.60 6.45 4.35 17.51 50.41 50.08 86.36

For the years ended December 31, personnel expenses included in selling and administrative expenses and cost of services in the statements of income are as follows: (Amounts:Million Baht) 2002 2001 91.88 63.43 53.00 26.27

Consolidated statements of income The Company’s statements of income

23. LOSS ON EVALUATION 23.1

Loss on projects evaluation The Company has recorded the difference between the book value and the fair value of cost of development as loss on projects evaluation 160.97 million baht.

23.2

Loss on impairment of assets evaluation In the second quarter of 2002, the Company and its subsidiaries had the cost of real estate developments, appraised by an independent appraiser. The Company and its subsidiaries had the policy to adjust only those value are decreased. Loss which are recorded amounting to Baht 58.96 million.

24. EXTRAORDINARY ITEM 24.1

Gain from debt release agreement In the second quarter of 2002, the Company and its subsidiaries repaid their entire debts to a mutual fund in accordance with conditions agreed upon the debt settlements agreement. The released amount are summarized as follows : CONSOLIDATED 2002

Debt under debt release agreement Less Repayment Gain from debt release agreement

24.2

302,555 (107,498) 195,057

THOUSAND BAHT THE COMPANY ONLY

2001

2002

249,902 (86,925) 162,977

2001

Gain from compromising debt In the third quarter of 2002, the Company had settled a debt with Financial Institutions Development Fund with a gain of Baht 151.88 million. The balance under the debt settlement agreement amounting to Baht 130.82 million is to be paid in 18 months installment at Baht 7.27 million each, and a related company shares had been pledged as collateral. The first installment was on September 30, 2002.

24.3

Gain from debt settlement by transferring assets In the fourth quarter of 2002, the Company had entered into the restructuring agreement with an asset management company, which have been transferred debt equity in a loan from a commercial bank. Such loan consists of long-term amounting to Baht 404.55 million, bank overdraft amounting to Baht 29.90 million and interest payable amounting to Baht 71.33 million, which the Company agreed to make loan repayment by transferred right in land and prefabricated factories to the said asset management company. However, the Company can payback all or part of it within 5 years from transferred right of asset date. As a result, the Company has gain from debt settlement by transferring assets in the amount of Baht 51.81 million.

24.4

Loss from purchased debt and right In the fourth quarter of 2002, Eastern Industrial Estate Company Limited, a subsidiary, has entered into the Transferred Debt Agreement with 2 mutual funds to release the Company from the debt obligations and cease the court litigation. The subsidiary paid Baht 132.53 million and obtained the rights claim over the Company and related person including the collateral. As a result, the mutual funds withdrew the case and released Hemaraj Land and Development Public Company Limited, a guarantor, from the lawsuit. Therefore the Company has reversed the loss provision for the legal disputes for the amount of Baht 181.84 million. The loss provision from such legal dispute was recorded by the subsidiary in full amount and shall be recorded as a gain if the Company receives the payment from the future claims.

25. EARNINGS (LOSS) PER SHARE COMPUTATION Earnings (loss) per share computation in the consolidated and the Companyâ&#x20AC;&#x2122;s financial statements for the years ended December 31, 2002 and 2001 consisted of: Thousand Baht Net profit(loss) for the Year Basic earnings (loss) per share Net profit (loss) attributable to ordinary shareholders The effect of potential ordinary shares 1. Convertible bonds 1.1 Adding back the expenses that will be saved on the conversion of convertible bonds (net of income tax 25%) 1.2 Deducting the revenues that will not be recognized upon the conversion of convertible bonds (net of income tax 25%) 1.3 Increase in ordinary shares under conversion of convertible bonds (C) 2. Warrants Number of shares that would have been issued for no consideration as the average fair value of ordinary shares exceeds the exercise price Earnings (loss) per share after adjustment by The effect of potential ordinary shares Net profit (loss) attributable to ordinary shareholders in case of convertible bonds being converted and all warrants being exercised

638,732

2002 Number of Share (Share) 347,986,275

Baht Earnings (loss) per share

Thousand Baht Net profit(loss) for the Year

2001 Number of Share (Share)

Baht Earnings (loss) per share

1.84 (B)

(493,229)

232,944,009 (A)

(2.12)

(10,385)

54,950 3,225,442

3,254,032

175,972,310

628,347

527,184,027

1.20

(438,279)

236,198,042

(1.86)

(A) The weighted average number of ordinary shares outstanding during the period as restated by the adjustment factor from the right issue during the year 2002. (B) Including the effects of right issue during the year 2002. (C) Such conversion rate may be changed as a result of the issue of warrants and the offering of ordinary shares as disclosed in Note 20 to the financial statements. Currently, the Company is waiting for the confirmation from the trustee for the new conversion rate. Diluted loss per share are not shown in the statements of income for the year ended December 31, 2001 because the effect of dilutive ordinary shares would be lower than the basic earning loss.

26. BUSINESS SEGMENT INFORMATION As of December 31, 2002 and 2001, business segment information in the consolidated balance sheets classified by domestic and overseas business are as follows: MILLION BAHT 2002 Domestic Industrial Estate Others Cost of real estate developments, net Leasehold land and land held for Commercial purposes, net Assets for rent, net Property, plant and equipment, net Other assets Total Assets

2,355.73

1,085.28 320.25 174.57 1,269.88 5,205.71

80.35 0.70 4.82 85.87

2001

Overseas Holding Company 450.58 450.58

Total

Domestic Industrial Estate Others

Overseas Holding Company

Total

2,355.73

2,401.10

1,085.28 400.60 175.27 1,725.28 5,742.16

1,756.63 323.57 186.26 1,048.76 5,716.32

88.12 -

1,756.63 411.69 186.26 1,373.48 6,129.16

92.49

320.35

The consolidated statements of income, for the years ended December 31, 2002 and 2001, operations in classified by domestic and overseas business are as follows : MILLION BAHT 2002 Domestic Industrial Estate Sales of land Sales of pre-fabricated factory Service income Total Sales and Services income Profit (loss) from operations Other income Gain on exchange rate Gain on sale of investment Gain from repurchase bonds Gain from the yield rate of Guaranteed bonds Share of profits from investments for using the equity method - associated companies Other expenses - directorsâ&#x20AC;&#x2122; remuneration - loss on evaluation Share of losses from investments for using the equity method - associated companies Reserve for other possible loss Interest expenses Income tax expenses Profit (loss) after tax

632.59 35.53 382.44 1,050.56 109.26 30.00 27.12 160.06 22.64 273.69 (32.57) (219.65) 157.21 (118.34) 409.42

2001 Overseas Holding Company

Others 18.96 18.96

(0.51) (1.11) (13.76)

Profit (loss) of minority interest Profit (loss) from ordinary activities Extraordinary item Net profit (loss)

Overseas Holding Company

Total

Industrial Estate

Others

534.37 35.00 350.28 919.65

18.16 18.16

33.58 0.22 32.61 37.22

130.39 30.53 59.72 160.06 22.64 37.22

111.82 319.23 (22.94) -

(3.69) 0.98 -

(0.93) 0.34 (24.04) -

107.20 320.55 (46.98) -

(17.51) -

273.69 (50.08) (219.65)

(35.95) (10.17)

(50.41) -

(86.36) (10.17)

(34.74) 51.38

157.21 (153.58) (1.11) 447.04

(303.87) (183.58) (161.31) (8.23) (295.00)

(1.35) (4.06)

(58.24) (133.28)

(303.87) (183.58) (220.90) (8.23) (432.34)

(74.91) 372.13 266.60 638.73

Domestic

632.59 35.53 401.40 1,069.52

(12.45) 0.31 -

Total

534.37 35.00 368.44 937.81

(60.89) (493.23) (493.23)

27. PLEDGED ASSETS As of December 31, 2002, pledged assets are as follows : Hemaraj Land and Development Public Company Limited 1) Time deposits of approximately Baht 0.52 million have been pledged to local banks against letters of guarantee issued to the Communication Authority of Thailand, the Provincial Electricity Authority, the Industrial Estate Authority of Thailand and other companies. 2) Investments in 10 million ordinary shares of Nakornthai Strip Mill Public Company Limited, a related company, have been used as collateral for loans from a financial institution. 3) Investments in 9,999,994 ordinary shares of Eastern Industrial Estate Company Limited, a subsidiary company, have been used as collateral for the issue of Guaranteed Bonds of an overseas subsidiary company. 4) Investments in 8 million ordinary shares of Sriracha Harbor Public Company Limited, which is a related company, have been used as collateral for loans obtained by a related company from financial institutions. 5) The majority of land and attachments have been mortgaged as collateral for loans from local financial institutions. 6) Investments in 112,493 ordinary shares of Eastern Pipeline Services Company Limited, which is a subsidiary company, have been used as collateral for the issue of Guaranteed Bonds of an overseas related company. Eastern Industrial Estate Company Limited 1) Time deposit of approximately Baht 14.36 million has been pledged to local banks against security given for performance under sale contracts and utility construction. 2) All of the companyâ&#x20AC;&#x2122;s land for development and the majority of its land held for commercial purposes have been mortgaged as collateral for long-term loans from a local commercial bank and the issue of Guaranteed Bonds of an overseas related company. 3) Investments in 37,500 ordinary shares of Eastern Pipeline Services Company Limited, which a subsidiary company, have been used as collateral for the issue of Guaranteed Bonds of an overseas related company. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1) Time deposit of approximately Baht 13.23 million has been pledged to local banks against security given for performance under sale contracts and utility services. 2) The majority of the companyâ&#x20AC;&#x2122;s land has been mortgaged as collateral for overdrafts and loans from 2 commercial banks. 3) Land, mini and micro pre-fabricated factories of the company have been mortgaged as collateral for loans from related persons.

28. COMMITMENTS UNDER AGREEMENTS As of December 31, 2002, commitments under agreements are as follows: Hemaraj Land and Development Public Company Limited The Company has participated in the establishment project of Chonburi Industrial Estate (Bor Win) in Phase 1 and Phase 2 with the Industrial Estate Authority of Thailand ("IEAT") according to the joint operation agreements dated July 5 and December 29, 1989, respectively. Later on October 31, 2001, the Company entered into the amendment to such joint operation agreements with IEAT. The major conditions are summarised as follows: 1) The Company shall provide utilities systems and facilities to the entrepreneurs in the industrial estate with payment of expenses on its participation in the procedures to the IEAT. 2) The Company shall not transfer assets, component part and equipment as well as utilities systems and facilities to the IEAT. 3) The Company shall provide a fund for the maintenance and construction of utilities systems and facilities in the industrial estate ("Sinking Fund"). Eastern Industrial Estate Company Limited

1) The Company shall provide utilities systems and facilities to the entrepreneurs in the industrial estates with payment of expenses on its participation in the procedures to the IEAT. 2) The Company shall not transfer assets, component part and equipment as well as utilities systems and facilities to the IEAT. 3) The Company shall provide a fund for the maintenance and construction of utilities systems and facilities in the industrial estate ("Sinking Fund"). Eastern Seaboard Industrial Estate (Rayong) Company Limited 1) The company has obligations, under a joint-investment agreement with Hemaraj Land and Development Company Limited and another company as of follows:

Public

- The Company has to pay commission on sale of land and management fee to Hemaraj Land and Development Public Company Limited based on revenues from sales of land, public utility service providing and lease of factory. - The Company has commitment to purchase land from a company with the first installment 50% of land prices, with no interest for balance due in 4 - 6 months. All land prices between 2002 - 2005 are at Baht 296.75 million. 2) The company has commitment under construction contracts with 2 contractors to construct micro and mini prefabricated factory, amounting to Baht 24 million. 3) The company has commitment under construction contracts with 2 contractors to construct a utilities system, amounting to Baht 33.20 million. 4) The company has commitment under service agreement with a related company in obtaining the maintenance of utility system service from such company, amounting to Baht 2.97 million.

29. COMMITMENTS AND CONTINGENT LIABILITIES As of December 31, 2002, commitments and contingent liabilities consisted of : Hemaraj Land and Development Public Company Limited 1) The Company has co-operated with 2 subsidiaries to guarantee the issue of the US$ 19.20 million Guaranteed Bonds of an overseas subsidiary company. 2) The Company has obligations, under condition of the letters of guarantee issued by the banks for its performance under the joint operation agreements with the Industrial Estate Authority of Thailand, the construction of utilities under land sale contract, and its performance under the raw water purchase agreement and others, as well as the letters of guarantee issued by the banks for the performance of its associated company under the power plant construction agreement with the Electricity Generating Authority of Thailand, in the total amount of Baht 71.20 million. Eastern Industrial Estate Company Limited 1) The company has entered into land sale and purchase contracts. Under the terms of the contracts, the company is contingently liable to repay deposits and installments in the event that buyers are unable to obtain satisfactory approval from the Board of Investment and/or the IEAT to set up operations and, consequently, obliged to cancel contracts. 2) The company has co-operated with 2 related companies to guarantee the issue of the US$ 19.20 million Guaranteed Bonds of an overseas related company. 3) The company has obligations regarding guarantee of the hire purchase agreements of its 2 related companies in the total credit line of Baht 18.39 million. 4) The company has obligations, under condition of the letters of guarantee issued by the banks for its performance under the joint operation agreement with the IEAT, the construction of utility and power substation in its industrial estate, and others in the total amount of Baht 70.25 million. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1) The company has entered into land sale and purchase contracts. Under the terms of the contracts, the company is contingently liable to repay deposits and installments in the event that buyers are unable to obtain satisfactory approval from the Board of Investment and/or the IEAT to set up operations and, consequently, obliged to cancel contracts. 2) The company has obligation, under condition of the letters of guarantee issued by banks to guarantee its performance under the joint operation agreement with the IEAT, the construction of utility, transmission lines, power station and sale of land in its industrial estate, and others in the total amount of Baht 257.48 million. Eastern Pipeline Services Company Limited The company has co-operated with 2 related companies to guarantee the issue of the US$ 19.20 million Guaranteed Bonds of an overseas related company.

30. SUBSEQUENT EVENTS On January 8, 2003, Glow Company Limited, related company, in which the Company holds 16.99% intends to increase its registered capital to all existing shareholders in proportion to the shares held by them. In this regard, the Board of Directorsâ&#x20AC;&#x2122; Meeting had approved the waiver of the rights entitlement to subscribe for right shares in the said company. The Companyâ&#x20AC;&#x2122; s shareholding proportion in Glow will be diluted from 16.99% to 4.51% of the registered capital after such capital increase.

31. PROMOTIONAL PRIVILEGES The Company and its 2 subsidiary companies have been granted promotional certificates under the Investment Promotion Act, B.E. 2520 as follows: Hemaraj Land and Development Public Company Limited A.

Industrial Estate Business A.1 On December 29, 1988, obtaining the first promotional certificate for the development area of 1,500 Rais. A.2 On February 15, 1990, obtaining the second promotional certificate for the development area of 2,000 Rais.

Industrial Factory Development Business B.1 On June 21, 2000, obtaining the third promotional certificate for the development of industrial factories for sale and rent, 11 units for micro factory.

Major Privileges A.1 Exemption from corporate income tax on net income derived from the promoted business for a period of 7 years as from the date when revenues are first earned. A.2 Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date under condition A. B.1 Exemption from corporate income tax on net income derived from the promoted business for a period of 7 years as from the date when revenues are first earned. The promotion period under condition A.1 and A.2 expired and the Company is currently in the promotion period under condition B.1 . Eastern Industrial Estate Company Limited A. Industrial Estate Business 1. On May 8, 1989, obtaining the first promotional certificate for the development area of 626 Rais; 2. On September 23, 1992, obtaining the second promotional certificate for the development area of 1,850 Rais; and 3. On May 25, 2000, obtaining the third promotional certificate for the development area of 565 Rais. Major Privileges 1. Exemption from corporate income tax on net income derived from the promoted business from the date when revenues are first earned 5 years for the first promotional certificate, currently expired. 2. Exemption from corporate income tax on net income derived from the promoted business from the date when revenues are first earned for 8 years was expired. The company is currently in the promotion period under the 50% reduction of the corporate income tax rate on net income derived from the promoted business for 5 years from the expiry date of the exemption. 3. Exemption from corporate income tax on net income derived from the promoted business from the date when revenues are first earned 8 years for the first promotional certificate.

Promotional privileges (continued) Eastern Seaboard Industrial Estate (Rayong) Company Limited A.

Industrial Estate Business - On June 21, 1995, obtaining the promotional certificate for the development area of 2,063 Rais, which subsequently, extended to be 3,595 Rais on August 9, 1995. - On October 27, 1997, obtaining the promotional certificate for the development area of 2,466 Rais, which subsequently, extended to be 2,791 Rais on August 26, 2002.

Industrial Factory Development Business -

On January 19, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 17 units for micro factory and 5 units for mini factory.

On June 21, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 6 units for micro factory and 7 units for mini factory.

- On November 29, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 1 unit for micro factory and 11 units for mini factory. - On January 16, 2002, obtaining the promotional certificate for the development of industrial factories for sale rent, 50 units for micro factory and 1 unit for mini factory. -

and

On March 27, 2002, obtaining the promotional certificate for the development of industrial factories for sale and rent, 22 units for mini factory.

Major Privileges A.

Exemption from corporate income tax on net income derived from the promoted business for a period of 8 years as from the date when revenues are first earned.

Reduction of 50% of the normal rate of corporate income tax on net income derived from the promoted business for 5 years from the expiry date of 8 years after the date when revenues of each business are first earned.

C. Double deduction of transportation expenses, electricity expenses and water supply expenses is allowed for 10 years from the date when the revenues are first earned. For the years ended December 31, domestic revenues are classified into the promoted and the non-promoted businesses as follows:

Consolidated Revenue from sales of land Revenue from sales of pre-fabricated factory Service income Total The Company Revenue from sales of land Service income Total

The promoted 2002 2001

(Amounts:Million Baht) The non-promoted 2002 2001

595.15

534.17

35.53 278.14 908.82

35.00 234.59 803.76

1.84 1.84

13.24 13.24

2002

Total

2001

0.20

595.15

534.37

123.26 123.26

133.85 134.05

35.53 401.40 1,032.08

35.00 368.44 937.81

64.87 64.87

0.20 36.82 37.02

66.71 66.71

0.20 50.06 50.26

32. FINANCIAL INSTRUMENTS Risk Management Policy Exposure to interest rate and currency risk arises in the normal course of the Hemaraj Group’s business. These are subject to the risk of market rates changing subsequent to transaction date. The Hemaraj Group’s policy on interest rate risk and currency risk hedging is as follows: -

Maintaining proportions of domestic and foreign borrowings denominated in USD currency; Borrowing loans at fixed and floating interest rates; Mobilizing fund from directors and shareholders; and Pledging assets as collateral against loans.

The Hemaraj Group has no policy to speculate on or engage in the trading of any off-balance-sheet derivative financial statements. Fair Value of Financial Instruments Except as disclosed in Note 3 to the financial statements, fair value of significant financial instruments consists of: -

Fair value of cash and cash equivalents, deposits for investment, accounts receivable, bank overdrafts and loans from financial institutions, accounts payable and accrued expenses approximates the carrying amount because of short maturity of these instruments.

Fair value of short-term investments in available-for-sale securities is equal to the carrying amount. Fair value of short-term loans and advances to related parties, loans to related parties, short-term loans and advances from related parties, due to and loans from related parties could not be determined since the repayment period is not determined. Fair value of convertible bonds, loans under debt restructuring negotiation plan and related interest payable could not be determined since the conditions of payments have not yet been determined. Fair value of the restructured domestic loans could not be determined due to uncertainty of payment under the conditions of debt restructuring agreements. Fair value of Guaranteed Bonds, which is computed by giving the discount rates to each installment, is equal to the carrying amount.

33. PROVIDENT FUND Hemaraj Land and Development Public Company Limited

Eastern Industrial Estate Company Limited

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Eastern Pipeline Services Company Limited

H - Construction Management and Engineering Company Limited The Company and the 4 subsidiaries jointly established the provident fund under the Provident Fund Act B.E. 2530, named “Hemaraj Provident Fund”, to provide membership for their employees. According to regulations of the fund, members are required to make contributions at the rate of 4% of their monthly salaries while the Company and the subsidiaries will also make contributions at the rate of 4% - 8% of such salaries, depending on the length of work. Members are entitled to the companies’ contributions plus net benefit thereon, depending on their working period. The provident fund is managed by a commercial bank as the fund manager, and therefore does not appear in the balance sheet. 34. RECLASSIFICATION OF ACCOUNTS Certain accounts in the financial statements for the year ended December 31, 2001 have been reclassified to conform with the presentation in the financial statements for the year ended December 31, 2002.