HEMRAJ : Annual Report 2003 by Piyanuch Meechit

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Annual Report 2003

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Financial Highlights

Hemaraj Land And Development

Public Company Limited

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The performance for Hemaraj Land And Development Public Company Limited for 2003 was exceptional and reflects the success of the implementation of the business strategies pursued by the company. Hemaraj accomplished significantly improved operating results in 2003 with Operating Revenue of Baht 1,530 million, representing a growth of 43%. Total Revenue for 2003 was Baht 2,050 million versus Baht 1,653 million in 2002, representing a 24% increase. The Net Income for 2003 was Baht 1,383 million versus Net Income of Baht 625 million the prior year. The profit while substantially from operations included foreign exchange gains, the retirement of bonds, and the sale of shares as outlined further in the report. The 2003 sale and lease of industrial land of 566 rai, represented an increase of 61%, with 16 of the 27 customers being new. A portion of this revenue will be realized in 2004. There were exciting opportunities related to the continued automotive investment in Thailand as a platform for the one-ton pickup and auto parts exports reaching well beyond ASEAN. New programs were announced with the GM production of export programs for Isuzu, increased investment by Ford and Mazda, new Toyota programs, as well as expansion by Maxxis for tire production. We also witnessed a noticeable return of petrochemical investment with new and expansion programs. In 2003, Hemaraj achieved double digit revenue increases in all operating areas of its business, industrial estates sales increasing 35%, industrial estate utilities increasing by 33%, lease and sale of SME factories up 62%, and other utilities and services up 300%. With industrial estates sales at less than 60% of total operating revenue, the risk diversity and predictability of growing revenue is enhanced. The financial strength of the company was greatly improved during 2003 with Total Assets of Baht 7,061 million, Total Liabilities of Baht 2,532 million being reduced from Baht 3,593 million in 2002, and Total Shareholders Equity of Baht 4,529 million. During the year, we completed a private placement raising Baht 960 million. We further paid off, refinanced, or bought and retired substantially all $ USD debt. For 2003, Hemaraj ended the year with Baht 1,105 million in cash and Net Debt to Equity of 0.32 to 1. Hemaraj is well positioned with cash and debt capacity to fund prudent business expansion programs. Furthering strengthening our core development revenue opportunities, in 2003 Hemaraj acquired 5.5 rai in a prime downtown Bangkok residential area. “The Park Chidlom”, a high-end luxury residential condominium now under construction was launched in late February 2004 with a successful initial response. With completion in Quarter 3, 2006, the project brings over Baht 5,000 million in revenue to Hemaraj while establishing our premium reputation under The Park Residence brand in the high-end residential market.

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Annual Report 2003

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Message from the Board of Directors

Hemaraj Land And Development Public Company Limited

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Hemaraj is grateful for the continuing support of its stakeholders, namely our shareholders, management, employees, customers, creditors, business partners, and the community that we operate in. Our strategy as a developer of complementary property platform customer solutions is to achieve predictable growing revenue and profit opportunities in a controlled way in line with the practices of good corporate governance in order to optimize shareholder value. On behalf of the Management and the Board of Directors of Hemaraj Land And Development Public Company Limited, we would like to express our appreciation for entrusting us with this responsibility.

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In summary, we had a great year in 2003 and we are excited about the opportunities for Hemaraj shareholders ahead while we remain cautiously ready to meet any challenges.

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The Hemaraj strategy is to be the marker leader in Thailand as a developer of complementary property, utility, and service customer solutions, which will broaden the revenue base for the company. The new exciting opportunity with the lauch of The Park Chidlom complements this strategy further.

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Sawasdi Horrungruang Chairman of the Board of Directors 26 March 2004

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Annual Report 2003

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Devid R. Nardone President & Chief Executive Officer 26 March 2004

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Respectfully submitted,

Hemaraj Land And Development Public Company Limited

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The Thai economy continued to expand in 2003. With the higher private consumption, the increasing private investment, the export value growth, and the government’s expenditures, the 2003 Gross Domestic Production (GDP) is expected to grow 6.3% compared to 5.4% in 2002. The higher consumer confidence and the improving business sentiment being the key factors accelerated the domestic demand expansion. Inflation rate remained low with the rate at 1.8% in 2003. In 2003, the low interest rates and higher consumption of vehicles and residences boosted the Private Consumption Index by 5.1%. Manufacturing production growth was up significantly by 12.3%, while the capacity utilization rate increased to 66.2%, an 11.6% increase year over year. For the year 2003, the Private Investment Index grew by 13%. Export volumes for Thailand were increased to US$ 78.42 billion, a 17.4% increase. Imports increased by 17.1% to US$ 74.21 billion resulting from the acceleration in raw material and capital imports. The early debt repayment to IMF by the Bank of Thailand resulted in the balance of payments being US$ 143 million, compared to US$4.2 billion in 2002.

Housing and condominiums in 2003 were the most active sectors in the property market, partially accelerated from the specific tax and transfer fee incentives expiration and the expanding commercial bank consumer credits. The industrial market sector grew by 17% year over year as a result from the continued expanding economy and the increase in Foreign Direct Investment (FDI), especially in automotive and petrochemical industries. Sales of industrial land were 2,168 rai in 2003. Rayong, Chonburi and Ayutthaya were prime locations for industrial estate demand in 2003. The Board of Investment (BOI) approved projects increased by 17% to 841 projects in 2003. 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, recent expansion include the US$ 500 million investment expansion plan announced by Ford Mazda and the Isuzu export expansion program at the General Motors plant in Rayong from 2003.

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Annual Report 2003

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Economic & Competitive Conditions

Source : Global Insight Automotive, Aug 2003 CB Richard Ellis Bangkok Property Report, Quarter 3 2003 Hemaraj Land And Development Public Company Limited

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Annual Report 2003

Eastern Industrial Estate (EIE) with BOI Zone III privileges is located adjacent to the Map Ta Phut Petrochemical Complex and designed for heavy industry including steel, petrochemical and chemical industries. Providing higher end infrastructure, EIE chemical, petrochemical and steel customers include Siam Mitsui PTA, Thai Olefin, Solutia Chemical, BlueScope Steel (BHP Steel previously) and Siam United Steel. The upward trend of Petrochemical cycle continued in 2003 as supported by both a continued increase in price and in capacity utilization.

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Chonburi Industrial Estate (Bowin) in Chonburi, Eastern Industrial Estate in Map Ta Phut, Rayong, and Eastern Seaboard Industrial Estate in Rayong (ESIE) are developed by Hemaraj and located on the Eastern Seaboard of Thailand. With a combined land area of 14,652 rai, 207 industrial customers and a comprehensive infrastructure, Hemaraj is positioned as a supplier of premium industrial estates.

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Industrial Estate Development

Chonburi Industrial Estate (CIE) with BOI Zone II privileges has a customer base of steel and power industry with some auto parts, electronics, building materials and general industries. Customers are BNS Steel Group, Chonburi Steel Mill Ser vices, Nakornthai Strip Mill, Bangkok Industrial Gas, Kitagawa and Glow IPP.

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Established in 1988, Hemaraj Land And Development Public Company Limited has been a leading industrial estate and infrastr ucture developer in Thailand. Hemaraj’s core businesses are industrial estate development, industrial estate utilities, SME factories for lease and sale, and other utilities and industrial services including facilities management. The 3 industrial estates are Chonburi Industrial Estate (Bo-Win), Chonburi, Eastern Seaboard Industrial Estate (Rayong) in Pluak Daeng, Rayong, and Eastern Industrial Estate (Map Ta Phut) in Rayong. With 16 years of experiences as a leading developer, Hemaraj is now expanding its business with the very first exclusive high-rise residential development project “The Park Chidlom” with projected revenue of over Baht 5,000 Million.

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The Company’s Business Profile

Hemaraj Land And Development Public Company Limited

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All Hemaraj’s industrial estates have won the Best Environmental Management EIA Award by the Ministry of Science and are ISO 14001 certified.

Industrial Estate Utilities Industrial Estate Utility Revenue is mainly through the sale of raw water, treated potable water, gray water, waste water treatment, and general maintenance fees. This utility provision and infrastructure services are 100% operated, managed, and owned by Hemaraj to ensure the growing recurring income. The utility asset base has been amortized in cost of industrial land development; therefore, the revenue basis is mostly cost plus which provides consistent gross margin.

Revenue from Industrial Estate Utilities has been increasing significantly over the past 5 years, from Baht 109 million in 1998 to Baht 377 million in 2003. The utilities revenue is a steadier, more recurring, and more predictable income stream than industrial land sales. Hemaraj has unique exposure to petrochemical, steel, power, and major utility users with highest revenue in industr y. Increasing number of new customers as well as expanding business of the current customers significantly contributes in utilities consumption growth. Total water consumption (raw + potable) has been increasing from 5.39 million cubic meters (mcm.) in 1998 to 23.9 million cubic meters (mcm.) in 2003, representing a 344% in 5 years.

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Annual Report 2003

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Eastern Seaboard Industrial Estate (ESIE) with BOI Zone III privileges is a 60:40 joint venture with Siam Food Products. Renowned as the “Detroit of the East” for its world-class integrated industrial environment, ESIE now is home to over 83 automotive supply-line companies with 9 of the world’s top 10 automotive suppliers and 12 Toyota group companies. The ESIE leadership as an integrated automotive hub remains bright in clustering for the automotive industry in the region. Ford and Mazda (Auto Alliance) announced in quarter 3, 2003 a Baht 20 billion investment of expanding its manufacturing base. GM in 2003 started the export Isuzu program.

Hemaraj Land And Development Public Company Limited

In the foreseeable future, the utilities revenue will lead Hemaraj’s operating revenue structure to be more balance as well as more predictable.

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Other Utilities, Industrial Services and Residential Property Development

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Hemaraj also invests and extends industrial services by investing 5% in GLOW IPP, 40% in Elyo-H Facilities Management - a joint venture with Suez Tractebel, 100% in Eastern Pipeline Services, 100% in H-Construction Management and Engineering, 100% in SME Factor y Co., Ltd., and 100% in The Park Residence Co., Ltd. Over time, these services will increase the predictable revenue and profitability from the complementary business growth, particularly with the launch of The Park Chidlom project in 2004.

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Annual Report 2003

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Under the competitive market, locating in the industrial estates with a fully integrated infrastructure SME factories have advantage to the clustering of the industry for the supply chain management and ease to expand. As of December 31, 2003, 17 units or 34,536 square meters were sold and 26 units of 44,078 square meters were leased.

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The attractiveness of Hemaraj SME factories for sales or lease is continuing. Hemaraj with a concept of expandable SME factories gives more flexibility to SME customers. Sizing from 750 square meters to 6,000 square meters offers manufacturers various alternatives to fit their needs for ready or ready to build factories with a quick entry, a low investment cost and flexibility for expansion.

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SME Factories for Lease and Sales

Hemaraj Land And Development Public Company Limited

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In 2003, apart from the strengthening of the Company’s financial position and the continued growth of its operating results, Hemaraj is also expanding its current core business to residential property development.

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Major/Significant/New Projects in 2003

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The New Development at Eastern Industrial Estate (EIE)

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The development of 770 rai for Eastern Industrial Estate (EIE) Phase II commenced in Quarter 3, 2003. The project was 45% complete at the end of 2003. Siam City Bank has provided a Baht 720 million loan facility for the development.

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The New Development and the Land Bank Expansion at Eastern Seaboard Industrial Estate (ESIE)

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The development of 807 rai for Eastern Seaboard Industrial Estate (ESIE) was 77% completed at the end of 2003. In 2003, ESIE has also developed the new phase “Duty Free Zone (DFZ)”, specifically designed to serve export-oriented industrial clients. As IEAT announcement for the Duty Free Zone was granted and Customs Department approved for DFZ application, an approval for opening DFZ from Customs Department would only be granted once the construction of this Free Zone was completed. Overall the completion for DFZ was 64% at the end of 2003.

Hemaraj’s Residential Property Development Hemaraj acquired 5.5 rai at the prime residential area of Soi Chidlom and announced to develop a high-end luxury residential condominium called “The Park Chidlom”. The Park Chidlom project value will be over Baht 5,000 million. Project finance is supported by Krung Thai Bank of Baht 1,800 million. The Project will be completed in the quarter 3 of 2006. The Project details are shown as follows: PROJECT INFORMATION : Location

: Soi Somkid and Chidlom Road, Bangkok, Thailand

Land Area

: 5-1-84 Rai (8,738 square meters)

Project Sales Value

: Over Baht 5,000 million

Project Gross Area

: 87,000 square meters

Net Sellable Area

: 53,000 square meters

Total Units

: 219

Completion

: Q3 2006

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Annual Report 2003

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In addition, the land bank in Eastern Seaboard Industrial Estate (ESIE) was expanded by 980 rai in 2003.

Hemaraj Land And Development Public Company Limited

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Foreign Exchange The company has limited foreign exchange risks. In 2003, the company has prepaid US$14million of Guaranteed Bonds and retired US$24.02 million of Euro-convertible Bonds (ECD). As at December 2003, there was only US$26,000 of ECD outstanding and expected to be concluded within quarter 1, 2004. External Risks 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. Management and Funding The company is dependant on knowledge base employees and key management personnel, the access to capital, the cost of equity and debt financing, the impact of pricing level for materials and land, and the consistency of government policies for investment promotion.

Annual Report 2003

The consolidated Balance Sheet in 2003 is summarized as follows. Total Assets in 2003 were Baht 7,061 million, a 24% increase from Baht 5,680 million in 2002. Total Current Assets in 2003 were Baht 4,619 million compared to Baht 3,218 million in 2002, Land held for Real Estate development of Baht 3,057 million, increased from Baht 2,355 million in 2002. Other Assets were Baht 2,442 million in 2003. This includes Land held for commercial purposes not under development of Baht 1,085 million, assets for rent of Baht 560 million, sinking funds of Baht 323 million, and longterm investment of Baht 249 million.

Risk Factors & Others

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Financial Status

Total Liabilities in 2003 were Baht 2,532 million, reduced by Baht 1,061 million or a 30% decrease from Baht 3,593 million in 2002. The significant reductions were mainly from various debt prepayments and retirement of bonds. In October 2003, the Company fully prepaid US$14.5 million of Guaranteed Bonds. In 2003, the Company cancelled US$23.02 million of Euro-convertible bonds. At December 31, 2003, Gains from bond cancellations were Baht 724 million. Hemaraj successfully raised Baht 960 million through a private placement of 120 million new shares in Quarter 3, 2003. In 2003, 703 million units of warrants were exercised which raised another Baht 197 million in Shareholders’ Equity. The 2003 Net Debt to Equity ratio as a result of the new capital and reduced debt has improved to 0.32 times from 1.67 times in 2002. Total Shareholders Equity in 2003 was Baht 4,529 million versus Baht 2,087 million in 2002, or a 117% increase.

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The 2003 consolidated financial results show a significant improvement with Net Income of Baht 1,383 million compared to a Net Income of Baht 625 million for the year 2002, representing a 121% increase. Earning per share was Baht 0.35 compared to Baht 0.18 per share in 2002, a 94% increase. The increase in Net Profit was due to improved operating earnings of Baht 311 million and an increase in non operating earnings of net Baht 447 million realized through retired bonds, the sale of shares, foreign exchange gains, and others. Total Operating Revenue was Baht 1,530 million compared to Baht 1,069 million in 2002, representing a 43% increase. Industrial land sales for 2003, being from the sale of 566 rai and 16 new customers, were Baht 854 million. This represents an increase in sales of 35% compared to Baht 633 million in sales from 358 rai and 21 new customers in 2002. Service Income from Utilities increased to Baht 377 million in 2003, reflecting an increase of 33% compared to Baht 284 million in 2002. The Income from the Sales and Lease of Mini Factories increased to Baht 188 million in 2003, reflecting an increase of 63% compared to Baht 116 million in 2002. This reflected a more balanced and growing revenue stream from all operations. Total Revenue for 2003 were Baht 2,050 million compared with the same period of 2002 of Baht 1,653 million, representing a 24% increase.

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Operating Performance

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Management Analysis

Hemaraj Land And Development Public Company Limited

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Board of Directors 1. Mr. Sawasdi Horrungruang

Chairman of the Board of Directors

2. Mr. Thavorn Anankusri

Director

3. Mr. David Richard Nardone

Director

4. Mr. Sudhipan Charumani

Independent Director

5. Mr. Peter John Edmondson

Independent Director

6. Mrs.Punnee Worawuthichongsathit

Independent Director

7. Mr. Vivat Jiratikarnsakul

Director

8. Ms. Pattama Horrungruang

Director

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Management Structure

Executive Committee 1. Mr. Sawasdi Horrungruang

Chairman of the Board of Directors

2. Mr. Thavorn Anankusri

Vice Chairman of the Board

3. Mr. David Richard Nardone

Executive Director

4. Mr. Vivat Jiratikarnsakul

Executive Director

5. Ms. Pattama Horrungruang

Executive Director

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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.

Audit Committee 1. Mr. Sudhipan Charumani

Chairman of the Audit Committee

2. Mr. Peter John Edmondson

Member

3. Mrs.Punnee Worawuthichongsathit

Member

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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.

1. To review that the Company has correct and sufficient financial reports; 2. To review that the Company has appropriate and efficient internal control and internal audit systems; 3. 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;

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4. To consider, select and propose the appointment of the Company’s statutory auditor and to propose his professional fees;

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Annual Report 2003

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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:

Hemaraj Land And Development Public Company Limited

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9. To perform any other work as may be assigned by the Company’s Board of Directors with the consent of the audit committee.

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8. To take part in giving opinion on the appointment, removal, work performance and remuneration of the internal auditor; and

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7. To report the audit committee’s work to the Company’s Board of Directors at least on quarterly basis;

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6. To include in the Company’s annual report the result of the audit committee’s review work, inclusive of an opinion on the Company’s financial statements, information disclosure therein and the internal control system. This statement shall be signed by the audit committee chairman;

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5. 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;

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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.

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Investment & Risk Management Committee

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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 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.

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Remuneration Committee

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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

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Annual Report 2003

Good Corporate Governance Committee

Hemaraj Land And Development Public Company Limited

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Company Management 1. Mr. David Richard Nardone

President & Chief Executive Officer

2. Mr. Vivat Jiratikarnsakul

Executive Vice President

3. Ms. Pattama Horrungruang

Senior Vice President & Chief Financial Officer

4. Mr. Khamhoung Ratsamany

Director - Industrial Estate Operations

5. Mr. Tanin Subboonrueng

Director - Development

6. Mr. Sirisak Kijraksa

Director - Accounting

7. Ms. Somjai Wachiraha

Director - Finance

8. Mr. Niphone Harnpatanapanich

Director - Residential Project Planning

9. Mr. Paopitaya Smutrakalin

Director - Planning and Investor Relations

10. Ms. Jinnapat Tongviseskul

Director - Residential Customer Development

11. Mr. Apichat Trongsukson

Assistant Director - Information System & Services

12. Ms. Ladda Rojanavilaivudh

Assistant Director - Customer Development

13. Ms. Anchalee Parsertchand

Assistant Director - Customer Development

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.

Selection of Company’s Director and Management

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The recommendation of new Directors to serve on the Board shall be deliberated by the Board of Directors. A Director nominee will be proposed by, any Director, shareholder, or others for consideration. The Board of Directors proposes the candidates to the Shareholders meeting for approval. The objective in selecting Directors is to be able to attract knowledgeable 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. 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.

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Annual Report 2003

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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.

Hemaraj Land And Development Public Company Limited

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Remuneration for Director and Management

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Monetary Remuneration during the fiscal year (January-December) 2003:

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In 2003, the total remuneration for 16 Executive Committee and management was Baht 89,472,737.56

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In 2003, the total remuneration for 8 directors was Baht 9,800,000.00

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The Board of Directors are collectively 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.

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Good Corporate Governance

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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.

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1. Good Corporate Governance Policy

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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.

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2. Rights and Equitable Treatment to Shareholders

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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 Shareholder’s 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.

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3. Rights of Various Groups of Stakeholders

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Annual Report 2003

A Shareholder’s Meeting is to be held at least once a year. Prior to the meeting, not only does the company send an invitation letter along with the Shareholder’s Meeting agenda in advance, but also publish the meeting in the local media to ensure the full disclosure of the scheduled meeting.

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4. Shareholders’ Meeting

Hemaraj Land And Development Public Company Limited

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5. Leadership & Vision The company’s Board of Directors, selected to have a broad experience level, formulates the company’s vision, strategy, oversight of its business plan, and oversees a level of control and risk management of its operation. The Board of Directors objective is to maximize the return to shareholders in a controlled way. 6. Conflict of Interest * Conflict of Interest 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. 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. 8. Balance of Power for non-management Directors The company’s Board of Directors consists of 8 directors which are: * Directors

persons

* Independent Directors - Audit Committee

persons

Therefore, the company has 3 directors who are independent and are not involved in the daily operations of the company. 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. 10. Remuneration for Director and Management

○ ○ ○ ○

Annual Report 2003

○

During the meeting, the Board of Directors provides Shareholder’s information and gives opportunity to Shareholders to raise any concerns and/or issues related to the company’s operation. Meanwhile the minute recorder will record all information disclosed, questions and answers given during the meeting and the minutes of the meeting will be distributed to all Shareholders for their own benefits afterward.

Hemaraj Land And Development Public Company Limited

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.

○ ○ ○ ○ ○ ○ ○ ○

During 2003, from January to December, the company held 8 Board of Directors’ Meetings and 25 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.

○

11. Board of Directors’ Meeting

○ ○ ○ ○ ○ ○

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.

○

12. Committee

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

With a thoroughly consideration and carefully review the company’s financial statements, the Board of Directors will ensure its follow the generally accepted accounting standard. The company has regularly exercised an appropriate accounting policy and standard. In addition, the Board of Directors has had a resolution to appoint the Audit Committee and the outsiders to be the internal Auditors to observe the company’s internal control system and to verify the completeness and accuracy of the company’s financial statements.

○

14. Report from the Board of Directors on the company’s Financial Statements

○

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 relevant professionals is tasked with providing a level of control to manage the performance of the company in a controlled way.

○

13. Controlling System & Internal Audit

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

A site visit or company visit are always welcome by contacting the Investor Relations Department. The company information and press releases can also be found in the company website at www.hemaraj.com. Or email any concerns to invest@hemaraj.com.

○

Investor Relations Department has been established for individual investors or stockholders benefits and interests as the company sees the significant of their investments and values. The analyst meetings are held at least twice a year to meet with investors and analysts to provide on the updated company financial results and businesses.

○

15. Relations with Investors

○

Annual Report 2003

Hemaraj Land And Development Public Company Limited

○

The Audit Committee of Hemaraj Land and Development PLC was set up in accordance with the resolution of Extraordinary General Meeting of Shareholders NO.1/1999.

○

Audit Committee’s Report

Mr. Sudhipan Charumani

Committee Chairman and Independent Director

Mr. Peter J. Edmondson

Independent Director

○

The Committee comprises of the following members:-

The Audit Committee met formally on four occasions in 2003 to monitor the quarterly financial statements of the Company and its consolidated positions, check compliance and review internal control matters. Special attention was paid to the adequacy of provisions relating to contingent liabilities and adequacy of information disclosure in respect of related party transactions. Reports were received from and meetings held with the extenal auditors, the outsourced internal auditor, the external legal advisor and Company management. The external auditors, A.M.T. & Associates, are in their second year of appointment and have now familiarized themselves with the Company’s systems and procedures. It is gratifying to note that this year’s external Auditor’s Report is unquestionably clean with no reference to any unsolved matters. Of the two issues commented in their previous year’s Report, the status of the IEAT sinking fund has been resolved, while virtually the entire Eurodollar convertible bond has been repurchased and cancelled. At the same time, the balance sheet has been strengthened through the issue of new shares, the exercise of warrants and through the Company’s retained earnings. Debts have been reduced and foreign exchange exposure largely eliminated through the repurchase of the convertible bond and the early repayment of the guaranteed bond. No further court litigations have arisen subsequent to the 2002 year end, and progress has been made in resolving the two outstanding cases, both of which have been provided for in full. Moreover, with the Company’s significantly improved financial situation, the Management has expressed a strong intention to continue the promotion of corporate governance and transparency in a more active manner. Internal audit work for the year covered detailed reviews of the Company’s and its local subsidiaries’quarterly financial statements, in addition to a systematic test check on procedural matters, compliance with relevant law, regulations and Company accounting policy, as well as verification of control over financial and land title documents. No significant weaknesses were note, however. As from 2004 onwards, the internal audit program will become more technical and analytical, with additional time allocated to governance aspects. With regard to the Account Department, much progress was made in meeting Management and Audit Committee requirements, especially on the important issue of speeding up the preparation of quarterly and annual financial statements for reviewer’s convenience. To the best of the Committee’s knowledge, the financial statements in the Company’s Annual Report for the year 2003 are fair and accurate. The Committee has recommended to the Board of Directors, for proposal to the Annual General Meeting of Shareholders, that Professor Kesree Narongdej of A.M.T. & Associates be re-appointed as the Company’s external auditor for the Financial Year ending 31 December 2004, at the same remuneration as in 2003.

○ ○

○

(Sudhipan Charumani) Chairman of the Audit Committee

○

Annual Report 2003

○

Mrs. Punnee Worawuthichongsathit Independent Director

March 10, 2004 Hemaraj Land And Development Public Company Limited

○ ○

○

Auditor’s Report

○

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS’ REPORT

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Annual Report 2003

○

A.M.T. & ASSOCIATES Bangkok, Thailand February 20, 2004

○

(KESREE NARONGDEJ) Certified Public Accountant Registration No. 76

○

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hemaraj Land and Development Public Company Limited and its subsidiaries and of Hemaraj Land Development Public Company Limited as of December 31,2003 and 2002, the results of their operations, and cash flows for the years then ended in conformity with generally accepted accounting principles.

○

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

○

I have audited the consolidated balance sheets of Hemaraj Land and Development Public Company Limited and its subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of changes in shareholders’ equity, income and cash flows for the years then ended. I have also audited the financial statements for the same periods of Hemarej 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. My responsibility is to express an opinion on these financial statements based on my audits.

○

To the Shareholders of Hemaraj Land and Development Public Company Limited

Hemaraj Land And Development Public Company Limited

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS

BAHT CONSOLIDATED

ASSETS

NOTE

THE COMPANY ONLY

As of 31st

December, 2003

December, 2002

December, 2003

December, 2002

CURRENT ASSETS Cash and deposits at financial institutions

841,566,578.91

124,082,035.75

Deposit for investment

96,390.47

371,728,012.66

207,505,929.32

5,7 and 29

13,509,833.93

34,191,687.06

5 and 7

250,000,000.00

194,585,439.82

55,495,947.80

Trade account receivables - other parties, net

238,553,768.20

257,669,521.56

10,790,563.86

3,363,468.43

Short - term loans to related parties

2,175,015.83

101,991.00

546,998,009.16

584,514,860.23

3,057,210,654.41

2,355,724,743.58

792,310,639.91

335,268,286.81

21,069,591.95

19,487,261.16

5,558,244.62

4,855,612.93

4,618,767,273.52

3,218,481,200.57

2,007,749,828.54

1,005,121,183.76

6,773,529.44

5,816,172.47

2,827,141,645.83

2,027,374,496.28

21,096,014.89 -

Current investments Time deposits Promissory notes - financial institutions Marketable securities, net

Cost of real estate developments, net

9,29 and 30

Other current assets Total Current Assets

1,001.85 250,000,000.00 194,585,439.82

526,992.67 55,495,947.80

NON - CURRENT ASSETS Investments for using the equity method

Other long - term investments Related parties, net

22,695,000.00

21,195,000.00

Other parties

226,059,508.06

352,763,447.82

225,059,508.06

351,763,447.82

11,008,244.12

62,028,776.79

11,008,244.12

62,028,776.79

172,101,309.51

175,269,939.96

26,552,258.81

20,659,654.08

12 and 29

560,374,195.55

400,598,562.73

48,891,550.39

13 and 29

1,085,282,436.39

14 and 30

322,712,748.04

310,221,704.30

137,390,694.94

127,557,945.04

35,114,298.40

46,907,196.33

14,766,721.56

12,072,273.58

2,442,121,269.51

2,461,583,236.79

4,397,288,060.10

3,707,934,029.98

7,060,888,543.03

5,680,064,437.36

6,405,037,888.64

4,713,055,213.74

Long - term loans to other parties Property, plant and equipment, net Assets for rent, net

Other non - current assets Leasehold land and land held for commercial purposes, net Sinking fund, net Others Total Non - current Assets TOTAL ASSETS

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

BAHT CONSOLIDATED

LIABILITIES AND SHAREHOLDERS' EQUITY

NOTE

THE COMPANY ONLY

As of 31st

December, 2003

December, 2002

December, 2003

December, 2002

CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Convertible bonds

401,725,881.52

119,317.80

350,738,219.53

77,226.58

1,233,741.81

1,202,308,074.81

1,233,741.81

1,202,308,074.81

247,721,259.88

78,376,828.94

21,679,756.85

7,925,158.48

4 and 17

106,066,999.89

118,083,333.26

18, 29 and 31

17,432,531.85

217,102,957.95

15 and 21

Trade account payables Current portion of long - term loans Related person Others Current portion of guaranteed bonds

Short - term loans from related parties

32,262,788.96

14,535,859.72 39,843,524.40

137,215,160.00 -

60,576,986.30

52,000,000.00

26,726,175.86

461,043,221.51

158,741,847.83

558,387.46

1,627,578.26

5,413,758.41

220,658,643.92

4,575,402.24

220,658,643.92

Other current liabilities Income received in advance Accrued interest expenses

17 and 18

Accounts payable - the Industrial Estate Authority of Thailand

14 and 30

Others Total Current Liabilities

1,700,621.87

19,117,245.09

73,046,960.07

31,565,835.57

44,626,872.39

47,935,245.97

10,583,010.39

1,375,961,963.11

2,130,336,874.13

477,791,764.40

1,655,056,274.27

1,449,722,807.27

1,026,807,270.36

NON - CURRENT LIABILITIES Long - term loans from related party

4 and 16

Long - term loans from related person

4, 17 and 29

80,446,000.12

126,166,666.78

Other long - term loans

18, 29 and 31

494,197,381.22

216,272,578.29

Guaranteed bonds

Provisions

618,164,969.39

47,470,000.00 -

102,035,859.72 -

462,732,054.80

365,085,282.13

462,732,054.80

365,085,282.13

Retentions payable

35,318,270.90

29,931,083.13

2,319,027.38

1,152,195.49

Guaranteed received

39,120,155.25

34,903,205.25

Deferred leasehold right income

13,722,212.82

15,121,743.59

Others

30,533,651.34

57,254,853.02

27,031,178.00

21,195,000.00

1,156,069,726.45

1,462,900,381.58

1,989,275,067.45

1,516,275,607.70

2,532,031,689.56

3,593,237,255.71

2,467,066,831.85

3,171,331,881.97

Other non - current liabilities

Total Non - Current Liabilities Total Liabilities

The accompanying notes to financial statements

…/2

are an integral part of these statements.

…………………………………………………… DIRECTOR

-2HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS

BAHT CONSOLIDATED

NOTE

THE COMPANY ONLY

As of 31st

December, 2003

December, 2002

December, 2003

December, 2002

13,000,000,000.00

SHAREHOLDERS’ EQUITY Share capital - Baht 1 par value, for the year 2003

21 and 22

and Baht 10 par value, for the year 2002 Authorized share capital Common stocks 13,000,000,000 shares, for the year 2003 and Common stocks 1,300,000,000 shares, for the year 2002 Issued and paid-up share capital Common stocks 5,416,570,061 shares, for

5,416,570,061.00

3,547,423,850.00

5,416,570,061.00

3,547,423,850.00

the year 2003 and 354,742,385 shares, for the year 2002 Warrants

21 and 22

Discount on common stocks

12,158,892.80

14,126,939.80

12,158,892.80

14,126,939.80

(2,321,628,223.21)

(1,556,718,703.80)

(2,321,628,223.21)

(1,556,718,703.80)

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

103,561,581.44

3,151,430.29

103,561,581.44

3,151,430.29

(26,813,747.49)

74,237,969.85

(26,813,747.49)

74,237,969.85

Retained earnings (deficit) Appropriated - legal reserve Earnings (Deficit)

247,864,807.51 506,257,684.74

210,491,426.19

132,713,843.39

95,340,462.07

(750,989,580.56)

621,408,648.86

(635,838,616.44)

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

3,937,971,056.79 590,885,796.68

1,541,723,331.77 545,103,849.88

3,937,971,056.79 -

1,541,723,331.77 -

4,528,856,853.47

2,086,827,181.65

3,937,971,056.79

1,541,723,331.77

7,060,888,543.03

5,680,064,437.36

6,405,037,888.64

4,713,055,213.74

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, 2003 AND 2002

BAHT Issued and paid-up

Warrants

share capital

Retained earnings (deficit)

Premium (discount)

Unrealized

Currency

on common

gain (loss) from

translation

stocks

changes in

differences

carrying amount of

Minority Appropriated

Earnings

Legal reserve

(Deficit)

interest

Total

available-for-sale NOTE

Beginning balance as of January 1, 2003

securities

3,547,423,850.00

14,126,939.80

(1,556,718,703.80)

3,151,430.29

74,237,969.85

210,491,426.19

(750,989,580.56)

545,103,849.88

2,086,827,181.65

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

Currency translation differences

100,410,151.15 -

100,410,151.15

(101,051,717.34)

Net gain (loss) not recognized -

Net profit

in the income statement

Legal reserve

Minority interest

Dividend

Common stocks

1,200,000,000.00

Warrants

669,146,211.00

(1,968,047.00)

Ending balance as of December 31,2003

5,416,570,061.00

12,158,892.80

Beginning balance as of January 1, 2002

707,907,770.00

14,150,594.80

100,410,151.15

37,373,381.32 -

1,383,306,242.87 (37,373,381.32) -

(641,566.19) 1,383,306,242.87 -

83,013,973.50

(37,232,026.70)

(125,917,622.95)

(294,480,000.00)

905,520,000.00

(470,429,519.41)

196,748,644.59

(2,321,628,223.21)

997,245,113.20

103,561,581.44

343.20

(88,685,596.25)

(26,813,747.49)

247,864,807.51

96,769,229.20

210,491,426.19

506,257,684.74

(1,361,122,020.63)

590,885,796.68

4,528,856,853.47

512,104,682.38

1,177,547,138.34

Less The cummulative effect of the amortization of sinking fund

Beginning balance as of January 1, 2002, net

707,907,770.00

14,150,594.80

997,245,113.20

343.20

96,769,229.20

210,491,426.19

(14,696,846.27) (1,375,818,866.90)

512,104,682.38

(14,696,846.27) 1,162,850,292.07

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

Currency translation differences

3,151,087.09 -

(22,531,259.35)

3,151,087.09

(22,531,259.35)

Net gain (loss) not recognized in the income statement

Minority interest

(72,086,119.10)

Dividend

105,085,286.60

Net profit

Common stocks

2,831,631,080.00

Warrants

7,885,000.00

Ending balance as of December 31,2002

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

3,547,423,850.00

(23,655.00)

14,126,939.80

3,151,087.09

(22,531,259.35)

624,829,286.34

(19,380,172.26)

624,829,286.34

(2,548,467,972.00)

283,163,108.00

(5,495,845.00)

2,365,500.00

(1,556,718,703.80)

3,151,430.29

74,237,969.85

210,491,426.19

(750,989,580.56)

545,103,849.88

2,086,827,181.65

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, 2003 AND 2002

BAHT Retained earnings (deficit)

Issued and

Premium (discount)

Unrealized

Currency

paid-up

on common

gain (loss) from

translation

changes in

differences

share capital

Warrants

stocks

carrying amount of

Appropriated

Earnings

Legal reserve

(Deficit)

Total

available-for-sale NOTE

Beginning balance as of January 1,2003

securities

3,547,423,850.00

14,126,939.80

(1,556,718,703.80)

3,151,430.29

74,237,969.85

95,340,462.07

(635,838,616.44)

1,541,723,331.77

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

Currency translation differences

100,410,151.15 -

100,410,151.15

(101,051,717.34)

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

100,410,151.15 -

Dividend

Common stocks

1,200,000,000.00

Warrants

669,146,211.00

(1,968,047.00)

Ending balance as of December 31,2003

5,416,570,061.00

12,158,892.80

Beginning balance as of January 1, 2002

707,907,770.00

14,150,594.80

37,373,381.32

1,383,306,242.87 (37,373,381.32) (88,685,596.25)

(641,566.19) 1,383,306,242.87 (88,685,596.25)

(294,480,000.00)

905,520,000.00

(470,429,519.41)

196,748,644.59

(2,321,628,223.21)

997,245,113.20

103,561,581.44

343.20

(26,813,747.49)

132,713,843.39

96,769,229.20

95,340,462.07

621,408,648.86

(1,245,971,056.51)

3,937,971,056.79

665,442,455.96

Less The cummulative effect of the amortization of sinking fund

Beginning balance as of January 1, 2002, net

707,907,770.00

14,150,594.80

997,245,113.20

343.20

96,769,229.20

95,340,462.07

(14,696,846.27) (1,260,667,902.78)

(14,696,846.27) 650,745,609.69

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

Currency translation differences

3,151,087.09 -

3,151,087.09

(22,531,259.35)

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

Common stocks

2,831,631,080.00

Warrants

7,885,000.00

Ending balance as of December 31,2002

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

3,547,423,850.00

(23,655.00)

14,126,939.80

3,151,087.09 -

624,829,286.34

(19,380,172.26) 624,829,286.34

(2,548,467,972.00)

283,163,108.00

(5,495,845.00)

2,365,500.00

(1,556,718,703.80)

3,151,430.29

74,237,969.85

95,340,462.07

(635,838,616.44)

1,541,723,331.77

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT CONSOLIDATED NOTE

2003

THE COMPANY ONLY 2002

2003

2002

REVENUES Sales of land

853,836,324.19

632,589,820.40

20,734,095.86

Sales of pre-fabricated factory

4 and 32

92,784,929.49

35,529,726.10

1,067,644.94

Service income

4 and 32

564,159,814.62

401,404,137.25

146,947,380.53

288,184,492.88

160,063,559.92

288,184,492.88

66,716,902.91

Other income Profits from sales of investments Reversal of reserve on possible loss from lawsuit

Interest income

1,614,573.45

Management income

1,294,603.09

Commission income Gain on dividend Gain on exchange rate

160,063,559.92 157,212,124.03

33,333,633.49

39,081,359.31

73,799,043.84

34,052,998.53

18,108,090.75

3,243,636.00

3,093,637.00

Others

56,158,291.92

13,943,609.36

171,060,557.71

Gain on yield rate of guaranteed bonds

157,212,124.03

59,724,970.77 37,218,550.47 16,588,431.86

119,058,555.05 -

27,117,724.31 -

45,314,392.38

8,141,219.70

1,015,896,983.22

33,543,892.17

Share of profits from investments for using the equity method - subsidiary companies

2 and 4

Share of profits from investments for using the equity method - associated company Total Revenues

273,692,201.53

2,050,445,314.10

1,787,967,131.69

1,765,537,949.94

799,621,982.41

510,209,558.60

434,046,736.99

15,021,366.11

46,070,229.02

70,831,762.09

17,655,440.55

1,394,229.18

394,191,119.38

298,327,483.96

114,250,493.68

53,531,745.99

4 and 23

239,633,209.09

237,143,898.22

118,701,213.30

123,380,945.16

16,190,000.00

18,776,321.68

9,800,000.00

12,324,121.68

EXPENSES Cost of land sales Cost of pre-fabricated factory sales Cost of services Selling and administrative expenses

Other expenses Director's remuneration

Loss on possible loss from lawsuit

97,646,772.67

Loss on projects evaluation and impairment of assets evaluation

219,654,056.02

Share of losses from investments for using the equity method - associated company

2,146,643.03

Total Expenses

2,146,643.03

1,330,849,064.86

1,225,603,937.42

358,960,717.97

454,961,097.87

719,596,249.24

562,363,194.27

1,406,577,231.97

344,660,884.54

54,963,482.17

153,584,229.78

27,909,260.05

109,150,861.38

2,189,986.15

1,109,995.04

PROFIT BEFORE INTEREST AND INCOME TAX EXPENSES INTEREST EXPENSES

4, 15 and 19

INCOME TAX EXPENSES

PROFIT AFTER TAX

662,442,780.92

407,668,969.45

MINORITY INTEREST

(83,013,973.50)

(72,086,119.10)

579,428,807.42

335,582,850.35

PROFIT FROM ORDINARY ACTIVITIES EXTRAORDINARY ITEMS

1,378,667,971.92 1,378,667,971.92

235,510,023.16 235,510,023.16

- Gain from debt release agreements

195,056,870.68

162,976,667.37

- Gain from compromising debt

151,883,755.69

- Gain from convertible bond repurchases - Gain from debt settlement by transferring assets - Gain (loss) on purchase of debt and right NET PROFIT

723,877,435.45 -

22,644,147.66

4,638,270.95

51,814,692.46

80,000,000.00

(132,153,030.50)

1,383,306,242.87

624,829,286.34

1,383,306,242.87

22,644,147.66 51,814,692.46 624,829,286.34

â&#x20AC;Ś./2

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

STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT CONSOLIDATED NOTE

2003

THE COMPANY ONLY 2002

2003

2002

BASIC EARNINGS PER SHARE (BAHT) Profit from ordinary activities

0.15

0.10

0.35

0.07

Extraordinary items, net

0.20

0.08

0.11

0.35

0.18

0.35

0.18

Net profit

DILUTIVE EARNINGS PER SHARE (BAHT) Profit from ordinary activities

0.08

0.07

0.20

0.05

Extraordinary items, net

0.12

0.05

0.07

0.20

0.12

0.20

0.12

Net profit

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

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT CONSOLIDATED 2003

THE COMPANY ONLY 2002

2003

2002

CASH FLOW FROM OPERATING ACTIVITIES Net profit

1,383,306,242.87

624,829,286.34

1,383,306,242.87

6,223,039.41

(26,577,907.17)

624,829,286.34

Adjustments to reconcile net profit to net cash provided by (used in) Allowance for doubtful accounts Impairment loss of assets

(24,227,536.97) -

(219,654,056.02)

1,692,887.20 (219,654,056.02)

Share of profits from investments for using the equity method - subsidiaries companies

(1,015,896,983.22)

(33,543,892.17)

(273,692,201.53)

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

2,146,643.03

(273,692,201.53)

2,146,643.03

1,519,545.78

(18,421,226.40)

(66,618,633.17)

10,097,925.22

(37,200,000.00)

(2,089,360.00)

(37,200,000.00)

(2,089,360.00)

(5,240,134.42)

(1,331,272.42)

(550,412.61)

(635,014.74)

(288,184,492.88)

(160,063,559.92)

(288,184,492.88)

(160,063,559.92)

69,529,188.51

61,845,536.10

19,887,269.18

17,360,164.56

(723,877,435.45)

(22,533,463.94)

(4,638,270.95)

(22,533,463.94)

(Gain) loss from debt release agreement

(195,056,870.68)

(162,976,667.37)

(Gain) loss from compromising debt

(203,698,448.15)

Increase (decrease) in provision for convertible bond redemption Increase in provision for guaranteed bond redemption (Gain) loss from the yield rate of guaranteed bond

(51,900,500.56)

(37,215,649.52)

(5,694,752.01)

10,544,072.81

(37,218,550.47)

(51,900,500.56)

(37,215,649.52)

Increase in provision for possible loss from pledge of securities

97,646,772.67

(157,212,124.03)

(21,123,185.36)

1,436,232.50

Net profit of minority interests

83,013,973.50

72,086,119.10

(Increase) decrease in accounts receivable - related parties

(2,073,024.83)

871,246.42

43,343,290.33

(176,145,976.99)

19,150,811.74

(3,295,631.08)

(837,509,827.32)

188,152,598.50

(457,042,353.10)

201,467,098.73

Realization of deferred leasehold right income

(Increase) decrease in accounts receivable - other parties (Increase) decrease in cost of real estate developments

97,646,772.67

(157,212,124.03) 975,776.06

(Increase) decrease in other current assets

(1,582,330.79)

8,355,606.09

(702,631.69)

5,488,060.91

(Increase) decrease in other non - current assets

11,792,897.93

(21,475,409.28)

(2,694,447.98)

(3,741,437.57)

Increase (decrease) in trade account payables

169,344,430.94

(12,891,117.13)

13,754,598.37

2,889,937.05

Increase (decrease) in income received in advance

302,301,373.68

23,994,272.13

(1,069,190.80)

(0.12)

(211,968,499.63)

(4,836,355.37)

(212,806,855.80)

(3,751,817.13)

(17,416,623.22)

(19,357,214.20)

(10,583,010.39)

(12,345,138.42)

41,481,124.50

(90,367,132.04)

(3,308,373.58)

(6,325,542.08)

5,387,187.77

8,536,269.08

1,166,831.89

(248,645.97)

Increase (decrease ) in accrued interest expense Increase (decrease) in accounts payable - the Industrial Estate Authority of Thailand Increase (decrease) in other current liabilities Increase (decrease) in retentions payable Increase (decrease) in deferred leasehold right income Increase (decrease) in guarantee payable

19,723,654.59

4,216,950.00

Increase (decrease) in other non - current liabilities

(26,721,201.68)

31,287,685.23

5,836,178.00

Net Cash Provided by (Use in) Operating Activities

(19,966,269.02)

(615,098,024.38)

(636,878,716.15)

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

(438,221,513.69)

â&#x20AC;Ś/2

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT CONSOLIDATED NOTE

2003

THE COMPANY ONLY 2002

2003

2002

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in current investments in securities

(4,003,925.87)

(Increase) decrease in cash deposited for investment

371,631,622.19

(Increase) decrease in short - term loans to related parties

(Increase) decrease in investments for using the equity method

(3,104,000.00)

(Increase) decrease in long - term investments to related parties

(Increase) decrease in long - term investment to other parties

(50,000,000.00)

(Increase) decrease in long - term loans to related parties

(Increase) decrease in long - term loans to other parties

49,500,986.89

Dividend received from subsidiary companies

Cash received from sales of equipment

(49,974,037.51) (128,182,803.88) (3,616,000.00) (156,250,000.00) 357,821,266.34

(4,003,925.87) -

(49,974,037.51) -

37,516,851.07

(731,810.17)

5,083,517.50

(152,454,125.24)

(50,000,000.00) -

49,500,986.89

107,847,955.80

67,375,908.02 220,537,589.40

13,185,120.61

94,934,452.37

552,701.87

93,651,745.09

Cash received from sale of the investments in securities

467,413,017.64

266,989,594.87

467,413,017.64

266,989,594.87

(Increase) decrease in building and equipment

(18,745,711.47)

(11,665,826.79)

(13,369,338.37)

(6,994,105.14)

(Increase) decrease in leasehold land and land held for commercial purposes

(Increase) decrease in assets for rent

(61,307,656.88)

643,252,772.89 -

(54,296,982.00)

644,229,004.76 (264,914.57)

(Increase) decrease in advance to the Provincial Electricity Authority

(Increase) decrease in sinking fund

(30,494,935.97)

Net Cash Provided by (Used in) Investing Activities

734,074,517.14

5,501,160.90 (11,987,394.39)

1,006,823,184.80

(16,840,143.09)

529,404,641.44

(1,757,854.15)

1,080,606,995.36

CASH FLOWS FROM FINANCIAL ACTIVITIES Increase (decrease) in bank overdrafts Cash paid for convertible bond redemption Increase (decrease) in short - term loans from related parties

401,606,563.72

(39,895,676.35)

(428,572,782.87)

(15,640,007.43)

8,576,986.30

Increase (decrease) in long - term loans from related parties

Increase (decrease) in long - term loans from related person Increase (decrease) in other long - term loans Cash paid for guaranteed bond redemption

350,660,992.95 (1,147,811,947.37)

(39,741,209.80) (15,640,007.43)

52,000,000.00

13,117,348.54

(5,407,456.73)

(1,518,141.40)

491,053,715.86

(429,943,381.47)

(57,737,000.03)

(40,749,999.96)

78,254,376.83

(492,297,794.99)

(177,245,160.00)

(581,935,849.54)

(69,970,847.31)

Proceeds from increasing share capital

905,520,000.00

283,163,108.00

905,520,000.00

283,163,108.00

Proceeds from exercise of warrants

196,748,644.59

2,365,500.00

196,748,644.59

2,365,500.00

Cash paid for dividend

(88,685,596.25)

Dividend paid to minority interests

(37,232,026.70)

(30,358,444.35)

396,543,316.05

(352,902,303.79)

(163,848,874.14)

(36,506,384.79)

Net Cash Provided by (Used in) Financial Activities

Adjustments from financial statement translations

Increase (decrease) in cash and cash equivalents, Net

(425,526,252.13)

(88,685,596.25) -

543,357,998.32

(630,729,699.56)

946,802,690.03

2,316,471.84

435,883,923.61

11,655,782.11

Cash and cash equivalents, beginning of period

130,087,233.63

110,095,240.80

21,096,014.89

9,421,079.91

Cash at banks pledged as collateral, beginning of period

28,186,489.18

45,862,010.17

526,992.67

4 and 15

(13,497,450.18)

(28,186,489.18)

Cash at banks pledged as collateral, end of period

Cash and cash equivalents, end of period

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

1,091,578,962.66

130,087,233.63

457,506,931.17

546,145.54 (526,992.67)

21,096,014.89

â&#x20AC;Ś/3

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT CONSOLIDATED 2003

THE COMPANY ONLY 2002

2003

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

100,410,151.15

3,151,087.09

100,410,151.15

3,151,087.09

Increase in surplus from available-for-sale securities by above

(100,410,151.15)

(3,151,087.09)

(100,410,151.15)

(3,151,087.09)

(136,023,916.49)

(104,973,531.90)

136,023,916.49

104,973,531.90

(274,402,899.66)

274,402,899.66

Decrease in cost of real estate development by transfer to assets for rent Increase in assets for rent by above

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

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

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

66,720,453.35

127,000,704.38

11,417,796.16

15,192,060.58

3,755,388.55

6,788,539.40

1,950,063.84

3,623,669.14

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002

1. GENERAL INFORMATION On August 15, 1988, Hemaraj Land and Development Public Company Limited (“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 real estate developer as follow : 1. 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

Eastern Seaboard Industrial Estate (Rayong)

Pluak Daeng district, Rayong province

(Rayong) Co., Ltd.

2. A condominium for sale being developed under the Company's name is called "The Park of Chidlom", which located at Chidlom road, Bangkok. 3. Service business related to the said industrial estates consisting of service providing for public utilities, prefabricated factory for sale and lease, land rental, commercial plaza rental, pipe rack rental in Industrial Estates, and additional work in building construction and others. Hemaraj Group’s head office is located at 18th floor, UM Tower, 9 Ramkhamhaeng Road, Suanluang subdistrict, Suanluang district, Bangkok, Thailand 10250. As at December 31, 2003 and 2002, Hemaraj Group employs 153 and 141 staff, respectively. 2. BASIS OF CONSOLIDATED FINANCIAL STATEMENT PRESENTATION 2.1 Basis for preparation and presentation of financial statements The financial statements of the Company have been presented in accordance with the Department of Business Development’ s announcement on September 14, 2001, regarding the brief items to be presented in the financial statements B.E. 2544 and in conformity with generally accepted accounting standards. The Company’s financial statements are prepared in the Thai language as required by Thai law, and translated into English for the convenience of a reader of the financial statements. Certain amounts in the 2002 financial statements have been reclassified to conform to the 2003 financial statement presentation.

Basis of consolidated financial statement presentation (continued) 2.2 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 at December 31, are 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 The Park Residence Company Limited**

HOLDING OF INTEREST (%) 2003 2002

Real Estate Development

99.99

Real Estate Development Pipe Rack Rental Holding Company Holding Company Engineering and Construction Supervision Service Property Development and Marketing and Service Management

60.00 99.99 100.00 99.99

99.99 99.99

99.99 -

An overseas subsidiary, used information from 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 interim financial statements as a whole.

** Establish in December 2003, based on information from the financial statements, which were audited by another auditor. Significant intercompany transactions are eliminated from the consolidated financial statements. All subsidiaries were incorporated in Thailand except H-International (BVI) Company Limited and Hemaraj International Limited which were incorporated in British Virgin Islands and Cayman Islands, respectively. In addition, the consolidated and the Companyâ&#x20AC;&#x2122;s financial statements for the years ended December 31, include share of profits (losses) from associated companies, based on information from the financial statements, which were provided by the management and were not audited by an auditor, as follows: MILLION BAHT 2003 2002 (2.14) (1.81)

Elyo-H Facilities Management Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Measurement Bases Used in Preparing the Financial Statements Other than those disclosed in other topics, significant accounting policies and other notes to the financial statements, the financial statements are prepared on the historical cost basis. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and at banks, and temporary investments net of cash at banks pledged as collateral. Current Investments Available-for-sale securities consist of investments in marketable securities, which are stated at fair value net of allowance for investments revaluation. Trade Account Receivables and Allowance for Doubtful Accounts Trade account receivables represent land sale contract receivables under contract price net of installments received and deferred income. Public utilities service receivables are presented net of allowance for doubtful accounts. Allowance for doubtful accounts is based on receivables which are overdue by more than 90 days.

Summary of significant accounting policies (continued) Cost of Real Estate Developments Cost of real estate developments consists of land costs, development costs, pre-fabricated factory costs, interest expense on loans for projects development and pre-fabricated factory construction, land deposits and 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 related persons 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.

Other investments represent investments in related and other companies which are stated at net cost.

Impairment loss on investments is included in the statement of income. Loans The Company and its subsidiaries have recorded allowance for doubtful debts by using uncollectible amounts, based on a review of the current financial status and the repayment ability. The recognition of interest income is ceased when overdue of more than 180 days. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment loss. 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 and structures. Assets for Rent Assets for rent are stated at cost less accumulated depreciation. 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. Leasehold Right and Land Held for Commercial Purposes Leasehold right and land held for commercial purposes consist of land leasehold right, land costs, development costs and capitalised interest on loans for undeveloped projects and projects which were temporarily 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. Sinking Fund The Company and its subsidiaries have recorded a fund for the major maintenance and replacement of utilities systems and facilities for the customers in the industrial estate, under the joint operating agreements with the Industrial Estate Authority of Thailand (â&#x20AC;&#x153;IEATâ&#x20AC;?) to be Deferred Sinking Fund and has recorded amortization to be cost of services by the straight-line method over 20 years of useful lives.

Summary of significant accounting policies (continued) Deferred Interest Expense on Hire-Purchase Agreement Deferred interest expense on hire-purchase agreement is amortised over the period of agreements. Impairment of Assets The Company and its subsidiaries have evaluated the impairment of properties, plant and equipment and other assets when the event is occurred or there is the situational change, which indicates that the recoverable amount of assets will be lower than their book value. The Company and its subsidiaries will recognize the loss from impairment as an expense in the statement of income. Income Received in Advance Income received in advance represents the amounts received from purchase or lease contract, including utilities and rental income, over the amount of revenues, which are recognised by using the percentage of completion method. 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, the policy of the company and its subsidiaries on revenue and expense recognition are as follows: A. Recognition of Revenue and Cost of Land Sales Revenue from land sales are recognised upon signing of contract and receiving of installments by the percentage of completion method, using the ratio of actual development costs incurred to total estimated development costs for each projects excluding land cost. Cost of sales is calculated from the realised sales contracts based on the ratio of total estimated project costs to total estimated project sales. Total estimated costs and sales of each project shall be revised when there are significant changes in the estimated costs and expected sales price of each project. B. Recognition of Revenue and Cost of pre-fabricated Factory Sales Revenue and cost of pre-fabricated factory sales are recognised upon signing of sale contract. C. Recognition of Revenue and Cost of Condominium Sales Revenue and cost of condominium sales are recognised upon signing of contract and deposit receiving by using the percentage of completion method. D. Recognition of Income and Cost of Services Income and cost of services are recognised on the accrual basis. Service income represents income received from providing of public utilities, potable water, raw water and reused water, waste water treatment processing, additional work in building construction and rental services in respect of land, commercial plaza, warehouse, factory, resident and pipe rack to the Industrial Estate, training center and business center. Cost of services represents cost incurred from providing of such services. Revenue and cost from mini and micro pre-fabricated factory construction are recognised upon signing of contract and receiving of installments by the percentage of completion method. The recognition of income from public utilities service is ceased when the customers cease their business operations and has payment difficulty. E. 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 and related accrued interest expense, which have been exempted as revenue in the statement of income in full amount upon the completion of debt repayments.

Summary of significant accounting policies (continued) F. 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 accrued interest expense, which have been compromised under the Restructuring Agreements, as revenue in the statement of income in full on the signing date of the Restructuring Agreement. G. 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 accrued interest expense, which have been restructured with a higher value than the fair value of transferred assets as revenue in the statement of income in full amount on the signing date of the Restructuring Agreement. H. Gain (loss) on Purchase of 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 amount as loss from purchase of debt and right at the closing date and has recorded as profit once the repayment is settled. I. Other incomes and expenses. Other incomes and expenses are recognized on the accrual basis. Accounts in Foreign Currency A. The financial statements of our 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 of exchange rate at the end of the year.

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

Share capital is translated at the exchange rate 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 prospectus.

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 occurring 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 exchange rate commission is included in the statement of income. Corporate Income Tax Corporate income tax for each year is recognised on the accrual basis, which is based on the taxable profit for the year.

Summary of significant accounting policies (continued) Earning per Share Basic earning per share is computed by dividing net income attributable to ordinary shareholders for the year by the weighted average number of ordinary shares outstanding during the year. Diluted earning per share is computed by dividing net income 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. TRANSACTIONS WITH RELATED PARTIES The Company has certain transactions with its related parties. Intercompany terms are determined at the rate not exceeding 5% - 10% of contracted price for commission on sales of land, not exceeding 5% management fees of service income received, and 4% - 10% as the reasonable market rate at that time for interest on loans from/to related parties relating to business operation. Enterprises that directly or indirectly through one or more intermediaries, control, or are under common control with the Company by through same shareholder and management or director as at December 31 are 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 The Park Residence Company Limited Associated Company Elyo-H Facilities Management Limited Related Companies Sriracha Harbor Public Company Limited Millenium Steel Public Company Limited Nakornthai Strip Mill Public Company Limited Sun Tech Group Public Company Limited Benz BMB Company Limited 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

2003

2002

Real Estate Development

Common shareholders and management

99.99

Real Estate Development Pipe Rack Rental Holding Company Holding Company Design and Construction Supervision Service Real Estate Development and Service Management

,, ,, ,, ,, ,,

60.00 99.99 100.00 99.99 99.99

99.99

Facilities Management Service

Common shareholders and management

39.99

Port Service

9.54

Steel Manufacturer and Distributor Steel Manufacturer and Distributor Agriculture and Scrap Steel Business Automotive Sales and Service Pipe Rack Maintenance Processing Agriculture Producer Facilities Management Service Facilities Management Service

Common shareholder and/or co-directors ,, ,, ,, Common directors ,, Co-investors ,, ,,

1.39 15.00 -

0.03 1.39 15.00 -

Directors and shareholders

74.99% directly held by the Company and 25% indirectly held by Eastern Industrial Estate 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: Assets THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Short - term loans to related parties: Subsidiary companies : Eastern Industrial Estate Company Limited Eastern Seaboard Industrial Estate (Rayong) Company Limited Eastern Pipeline Services Company Limited H-Construction and Engineering Company Limited The Park Residence Company Limited

334,535

416,730

155,594

128,532

54,130

38,628

558 6

INTERCOMPANY TERMS

MLR(TFB) +1% 5% - 10% of contract price and 5% of service income received and MLR(TFB) +1% MLR(TFB) +1%

522

MLR(TFB) +1% -

Associated company : Elyo-H Facilities Management Company Limited

2,175

MLR(BBL)

Related company : Sriracha Harbor Public Company Limited Total

2,175

9 102

546,998

9 584,514

1% to MLR

Balance of Assets with related parties and its movement for the year 2003 are as follows:

THOUSAND BAHT BEGINNING

INCREASE

DECREASE

ENDING

Consolidated Short - term loans to related parties: Associated company Related companies Total Short - Term Loans to Related Parties

93 9 102

2,082 10 2,092

(19) (19)

2,175 2,175

The Company Only Short - term loans to related parties: Subsidiary companies Associated company Related company Total Short â&#x20AC;&#x201C; term Loans to Related Parties

584,412 93

217,536 2,082

(257,125) -

(19)

584,514

219,628

(257,144)

544,823 2,175

546,998

Liabilities THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002

INTERCOMPANY TERMS

Short - term loans from related parties:

Subsidiary company : Eastern Seaboard Industrial Estate (Rayong) Company Limited Related company : Siam Food Products Public Company Limited Total

39,844

26,726

60,577 60,577

52,000 52,000

39,844

26,726

1,449,723

1,026,807

106,067 80,446 186,513

118,083 126,167 244,250

Long - term loans from related party:

Subsidiary company : H-International (BVI) Company Limited Long - term loans from related person: Current portion of long-term loans Long-term loans Total

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

Transactions with related parties (continued)

Balance of Liabilities with related parties and its movement for the year 2003 are as follows:

THOUSAND BAHT BEGINNING

INCREASE

DECREASE

ENDING

Consolidated Short - term loans from related parties: Related company Loans from related person:

52,000 244,250

60,577 57,000

(52,000) (114,737)

60,577 186,513

26,726

55,563

(42,445)

39,844

1,026,807

1,163,624

(740,708)

1,449,723

The Company Only Short - term loans from related parties: Subsidiary company Long - term loans from related party: Subsidiary company

The significant transactions with related parties for the years ended December 31, are as follows: MILLION BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002

INTERCOMPANY COST POLICY

Service income

8.93

1.99

7.94

1.64

Market price

Interest income

0.17

0.11

32.32

28.09

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

Commission and management income

73.80

34.05

Other income

0.07

1.03

Cost of service

7.32

8.49

1.30

1.84

Selling and administrative expenses

0.07

Interest expenses

1.63

1.48

5% - 10% of contract price and 5% of service income received

MLR (TFB) + 1%

Transactions with related parties (continued) As at December 31, 2003 the Companyâ&#x20AC;&#x2122;s investment for using the equity method are as follows:

Company

Type of Business

Relationship

Paid-up

Holding of

Investments

Capital

Investment

Cost

Net Change in Equity

Equity

(Million Baht)

(%)

(Million Baht)

Subsidiary Companies Eastern Industrial Estate Company Limited

Real Estate Development

Co. shareholders and management

400.00

99.99

400.00

89.58

489.58

664.17

878.97

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Real Estate Development

358.00

60.00

214.80

Eastern Pipeline Services Company Limited*

Pipe Rack Rental

3.75

99.99

2.81

H-International (BVI) Company Limited

Holding Company

0.08

100.00

0.08

1,456.14

1,456.22

Holding Company

0.03

99.99

0.03

0.01

0.04

0.25

99.99

0.25

0.16

0.41

Marketing and Service Management

0.25

99.99

0.25

(0.02)

0.23

Facilities Management Services

34.00

40.00

13.60

(6.83)

6.77

631.82

2,195.32

2,827.14

Hemaraj International Limited H-Construction Management and Engineering Company Limited The Park Residence Company Limited

(7.89)

(5.08)

Design and Construction Supervision Services

Property Development and

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). In the second quarter of 2003, the Company received dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited in amount of Baht 55.85 million. In the fourth quarter of 2003, the Company received dividend from Eastern Industrial Estate Company Limited in amount of Baht 52 million.

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

Investments

Capital

Investment

Cost

Net Change in Equity

Equity

(Million Baht)

(%)

(Million Baht)

Subsidiary Companies Eastern Industrial Estate Company Limited

Real Estate Development

Co. shareholders and management

400.00

99.99

400.00

(31.40)

368.60

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Real Estate Development

358.00

60.00

214.80

596.88

811.68

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

1,390.46

2,027.37

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). In the year 2002, the Company received dividend from Eastern Seaboard Industrial Estate (Rayong) Company Limited in amount of Baht 45.54 million and from H-International (BVI) Company Limited in amounted of Baht 175 million.

Transactions with related parties (continued) Other long-term investments - related parties, net THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Investments in related parties Sriracha Harbor Public Company Limited Eastern Fluid Transport Company Limited Total Less Provision for impairment loss on investments Other Long-term Investments - Related Parties, net

75,300 1,500 76,800 (54,105)

75,300 75,300 (54,105)

22,695

21,195

Hemaraj Land and Development Public Company Limited During the period 2002, the Company purchased 449,993 ordinary shares of Eastern Pipeline Services Company Limited from Eastern Industrial Estate Company Limited at net book value of the said subsidiary as at December 31, 2001. As a result, the Company is holding 74.99% directly and 25% indirectly through Eastern Industrial Estate Company Limited. Later in September 2002, Eastern Pipeline Services Company Limited has decreased its authorized ordinary shares from 600,000 shares to 150,000 shares and in November 2003, the subsidiary has decreased its authorized ordinary shares to 37,500 shares. However, it did not affect the Companyâ&#x20AC;&#x2122;s shareholding proportion in Eastern Pipeline Services Company Limited both directly and indirectly.

5. CASH AND CASH EQUIVALENTS For the purpose of preparation of the statements of cash flows in accordance with the relevant Thai Accounting Standard, as of December 31, cash and cash equivalents consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 841,567 124,082 207,506 21,096

Cash and deposits at financial institutions Temporary investments - Time deposits - Promissory notes - financial institutions Less Cash at banks pledged as collateral and deposits with maturity dates longer than 3 months Cash and Cash Equivalents

13,510 250,000

34,192 -

1 250,000

(13,498) 1,091,579

(28,186) 130,088

457,507

527 (527) 21,096

6. DEPOSITS FOR INVESTMENT H-International (BVI) Company Limited Deposits for investment represent deposits with an overseas investment adviser 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. In the year 2003, the Company used deposits for investment to repurchase the convertible bond, for the amount of US$ 8.58 million.

7. CURRENT INVESTMENTS As at December 31, current investments consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 13,510 34,192 1 527 250,000 250,000 -

Time deposits Promissory notes - financial institutions Marketable securities Available-for-sale securities - Equity securities - Nakornthai Strip Mill Public Company - Millenium Steel Plc. - Other companies and unit trusts Total Marketable securities Add(Less) Allowance for investments revaluation Marketable securities, net Total Current Investments

85,150 51,613 136,763 57,822 194,585

82,900 2,524 49,820 135,244 (79,748) 55,496

85,150 51,613 136,763 57,822 194,585

82,900 2,524 49,820 135,244 (79,748) 55,496

458,095

89,688

444,586

56,023

In 2002, 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. In 2003, the Company has subscribed 45 millon units of warrants of Nakornthai Strip Mill Public Company Limited. The rights were issued to the existing shareholders with the offering price of Baht 0.05 per share. Since November 2003, Nakornthai Strip Mill Public Company Limited â&#x20AC;&#x2122;s securities has started for retrading in the Stock Exchange of Thailand.

8. TRADE ACCOUNT RECEIVABLES - OTHER PARTIES, NET As of December 31, trade account receivables - other parties, net consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 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 Account Receivables - Other Parties, net

412,404 (132,635) 279,769 (72,090) 207,679

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

22,972 (17,378) 5,594 5,594

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

46,423 (15,548) 30,875

42,953 (17,124) 25,829

8,710 (3,513) 5,197

9,989 (7,961) 2,028

238,554

257,669

10,791

3,363

As of December 31, the land sale contracts receivable and accrued service income classified by aging are as follows: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 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 debts Accrued service income, net

207,679 -

231,840 -

5,594 -

1,335 -

207,679

231,840

5,594

1,335

30,875 1,049 1,837 12,662 46,423 (15,548) 30,875

25,829 1,182 2,791 13,151 42,953 (17,124) 25,829

5,197 23 414 3,076 8,710 (3,513) 5,197

2,028 266 1,802 5,893 9,989 (7,961) 2,028

9. COST OF REAL ESTATE DEVELOPMENTS, NET As at December 31, cost of real estate developments, net consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 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 Assets for rent Accumulated costs transferred for Debt settlement Less Loss on projects revaluation Cost of Real Estate Developments, net

3,924,139 5,380,693 1,805,734 7,275 6,377 11,124,218

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

1,283,592 961,405 634,971 7,115 2,887,083

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

(7,404,816)

(6,848,611)

(1,912,455)

(1,897,704)

(479,873)

(343,850)

(143,838) 3,095,691 (38,480) 3,057,211

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

(143,838) 830,790 (38,480) 792,310

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

Obligation of Assets as at December 31, 2003 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 related person. Capitalisation of Borrowing Costs Consolidated For the years ended December 31, 2003 and 2002, interest expenses are capitalised to the cost of real estate developments in the approximate amounts of Baht 29.41 million and Baht 31.41 million, respectively. The Company Only The Company has ceased interest capitalisation since January 1, 1999. Debt Settlement by Transferring Assets (Hemaraj Land and Development Public Company Limited) 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 right claim over the asset from a commercial bank to settle the debt under the Restructuring Agreement as disclosed in Note 26 to the financial statements.

10. OTHER LONG-TERM INVESTMENTS THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Glow IPP Company Limited (Formerly : Bowin Power Company Limited) Glow Company Limited Other company Total

175,000 50,059 1,000 226,059

125,000 226,763 1,000 352,763

175,000 50,059 225,059

125,000 226,763 351,763

Hemaraj Land and Development Public Company Limited 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 of Glow Company Limited (“Glow”), a related company, to Tractebel. Full amount of income from such transactions were funded to Glow for Bowin Power Plant Project development 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 loan to Glow sold to Tractebel should be used to pay for paid up capital of Glow IPP Company Limited (Formerly : Bowin Power Company Limited) as stipulated by the condition made with the Electricity Generating Authority of Thailand, and the balance of unpaid up portion of the shares capital of Glow, and reserve for payment of the increase in Glow IPP share capital in the future. However, the Company have the right to proceed in selling of all of Glow’s shares to Tractebel. For the year 2002, the Company sold part of the Glow share capital about 10.65 million shares. As a result, the Company shareholding remains in Glow is 16.99%. In the first quarter of 2003, Glow had proceeded to increase its registered capital by proposing to sell new shares to all existing shareholders in the same proportion they held. In this regard, the Company waived the rights to subscribe Glow’s new shares. As a result, the Company’s shareholding proportion in Glow remains 4.55%. Subsequently, during the first and the second quarter of 2003, the Company had exercised the put option to sell a part of the shares to Tractebel, equivalent to 17.60 million shares, which results of 1.01% Glow shareholding proportion remaining.

11. PROPERTY, PLANT AND EQUIPMENT, NET As at December 31, 2003 and 2002, property, plant and equipment, net consisted of: Changes in Cost Beginning

Changes in Accumulated Depreciation

Transfer

Ending

Beginning

Depreciation

Sale

Transfer

Net Book Value

Addition

Sale

Ending

Beginning

Ending

17.28

204.20

0.18

204.38

50.12

7.91

58.03

154.08

146.35

Consolidated Land Building and structure Building improvements

4.23

0.44

4.67

2.20

0.59

2.79

2.03

1.88

70.94

5.29

(1.95)

74.28

53.73

5.73

(0.02)

59.44

17.21

14.84

Vehicles

35.17

13.92

(1.71)

47.38

16.53

6.60

(1.71)

21.42

18.64

25.96

Construction in progress

10.62

3.66

19.83

(3.66)

362.27

Office equipment and furniture and fixture

Raw water pipe Total

3.66 346.10

3.66

1.12

0.24

1.36

2.54

2.30

123.70

21.07

(1.73)

143.04

222.40

219.23

(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

(36.96)

175.27

172.10

The Company Only Land

2.93

Building and structure

45.35

11.32

Building improvements

1.42

2.93

11.32

34.03

1.42

Office equipment and furniture and fixture

38.50

4.03

(1.94)

40.59

32.13

2.07

(0.02)

34.18

6.37

6.41

Vehicles

21.20

10.42

(1.67)

29.95

9.58

4.32

(1.66)

12.24

11.62

17.71

Construction in progress

0.86

Raw water pipe

3.65

1.12

0.24

1.36

2.53

2.29

14.45

(3.61)

124.75

55.57

6.63

(1.68)

60.52

58.34

64.23

(0.72)

Total

113.91

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

(36.96)

20.66

26.55

Property, plant and equipment, net (continued) Consolidated For the year ended December 31, 2003, depreciation of building and equipment are included in selling and administrative expenses and cost of services in the amounts of Baht 11.96 million and Baht 9.11 million, respectively. The Company Only For the year ended December 31, 2003, depreciation of building and equipment are included in selling and administrative expenses and cost of services in the amounts of Baht 6.30 million and Baht 0.33 million, respectively. Hemaraj Land and Development Public Company Limited As at December 31, 2003, the Company has provided reserve for loss of the possessive right over the land and office building in the amount of Baht 36.96 million as the management of the Company viewed that the Company might not receive transfer of such possessive right.

12. ASSETS FOR RENT, NET As at December 31, 2003 and 2002, assets for rent, net consisted of: (Amounts:Million Baht) Changes in Accumulated Depreciation

Changes in Cost Beginning

Addition Sale/Written off

Transfer

Ending

Beginning Depreciation Sale/Written off

Net Book Value

Transfer

Ending

Beginning Ending

54.65

109.15

41.48

265.61

371.57

43.94

80.34

72.57

Consolidated Land

54.65*

54.50

109.15*

Building

287.79*

135.83

(10.57)

413.05*

22.18

21.93

Pipe rack

116.51

36.17

7.77

7.08

645.79

58.35

29.70

85.42

400.60

560.37

Construction in progress Total

458.95

197.41

(10.57)

(2.63)

7.08

The Company Only Land

28.06

Building

26.24

5.41

20.83

Total

54.30

5.41

48.89

Consolidated -

As at December 31, 2003 and 2002, 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 136.02* million and Baht 343.13* million, respectively.

Depreciation of building and pipe rack for the year ended December 31, 2003 is included in cost of services.

The Company Only

Depreciation of building for the year ended December 31, 2003 is totally included in cost of services.

13. LEASEHOLD LAND AND LAND HELD FOR COMMERCIAL PURPOSES, NET As at December 31, leasehold land and land held for commercial purposes, net consisted of: THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Land bank Land cost of projects suspended from development Suspended development project costs Interest capitalized Leasehold land Less Accumulated costs transferred for debt settlement Loss on projects evaluation Leasehold Land and Land Held for Commercial Purposes, net

10,201 1,135,711 266,909 556,119 77,077 2,046,017 (645,413) (315,322) 1,085,282

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, 2003 The majority of land in the projects of the Company and the subsidiary has been mortgaged as collateral for loans from local financial institutions. Assets Transfer for Debt Settlement (Hemaraj Land and Development Public Company Limited) During the year 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 26 to the financial statements. 14. SINKING FUND, NET As disclosed in the Note 30 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 major maintenance and replacement 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 transferring 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, is 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.

Sinking Fund, net (continued) As at December 31, sinking fund, net consisted of : THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Sinking Fund Less Interest Income Sinking Fund payable Sinking Fund balance Less Accumulated amortization Sinking Fund, net

380,911 (44) 380,867 (58,154) 322,713

389,234 (16,911) (21,950) 350,373 (40,151) 310,222

151,848 151,848 (14,457) 137,391

149,434 (191) (14,235) 135,008 (7,450) 127,558

Since the year 2002, the Company has recorded the cash paid and land transferred to IEAT for Sinking Fund to Sinking Fund. The amortization period of 20 years is applied on the useful future economic life of Sinking Fund under the joint contract agreements with IEAT. The Company has recorded the interest income from the said Sinking Fund to the other assets because the company has the right to withdraw these interest income for the major maintenance and replacement of the utilities systems and facilities. The Sinking Fund payable is the undue Sinking Fund, which has been recorded in full under the said agreements.

15. CONVERTIBLE BONDS On September 9, 1993, Hemaraj Land and Development Public Company Limited 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. The Company failed to redeem the convertible bonds and failed to pay the interest due commencing on September 9, 1998. Currently, the company is in the process of negotiating with the existing bondholders. During the year of 2003, the Company repurchased the convertible bonds as follows : MILLION BAHT Convertible bond balance as of January 1, 2003 Less : repurchase in the year 2003 Convertible bond balance as of December 31, 2003

1,202.31 (1,201.08) 1.23

The repurchases of the Companyâ&#x20AC;&#x2122;s convertible bonds during the year 2003 as above were handled by the Company and a 100% owned subsidiary of 23,225 units with the price of US$ 15.59 million. The repurchased convertible bonds were cancelled forthwith by the trustee. 16. LONG-TERM LOANS TO RELATED PARTIES As of December 31,2003, 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 1,449.72 million, which does not have the maturity date and interest charge.

17. LONG-TERM LOANS FROM RELATED PERSON Eastern Seaboard Industrial Estate (Rayong) Company Limited As at December 31, long-term loans from related person consisted of: Credit Line

Credit

(Million Baht)

Period

Conditions Term

Interest Payment

Total Installments

Principal Repayment

Period

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

Monthly

Rate

Balances (Million Baht)

a. Loan from director - Promissory note of with grace period of 1 year

80.00

November 2000 to

Quarterly

April 2005 10.00

August 2002 to

25.00

March 2003 to

48 months equal installments be repaid for Baht 10 million loan, after grace period.

Monthly

â&#x20AC;?

Quarterly

5 years equal installments be repaid or be fully repaid after the second year, when the lender call.

Monthly

MLR of

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

December 2007

25.33

58.67

9.17

10.00

Bank Plc.

Monthly

August 2007 - Under the agreement dated January 30, 2003

MLR+1% of Thai Farmers

20.00

Thai Farmers Bank Plc.

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

165.00

November 2000 to

Quarterly

August 2005

MLR+1% of

77.42

132.42

Thai Farmers Bank Plc.

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

20.00 10.00

May 2000 to July 2007

Quarterly Monthly

4 12

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

Monthly

MLR+1% of Thai Farmers Bank Plc.

9.33 9.17

16.00 10.00

- Under the agreement dated May 2, 2001

20.00

May 2001 to July 2005

Quarterly

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

Monthly

MLR+1% of Thai Farmers Bank Plc.

10.50

17.16

32.00

March 2003 to

Quarterly

5 years equal installments be repaid or be fully repaid after the second year, when the lender call.

Monthly

MLR of

25.60

- Under the agreement dated January 30, 2003 Total Loans from Related Person

September 2007 362.00

Thai Farmers Bank Plc. 186.52

244.25

(106.07)

(118.08)

80.45

126.17

Less Current portion of long-term loan shown under current liabilities Long-term Loans from Related Person

The said subsidiary company obtained loans from its related person for financing the construction of mini pre-fabricated factories and micro pre-fabricated factories for sale and rent. Part of land and

factories has been mortgaged as collateral for such loans.

18. OTHER LONG-TERM LOANS As at December 31, other long-term loans consisted of:

(Amounts:Million Baht)

Credit Line (Million Baht)

Credit Period

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

Interest Payment Term Rate (%)

Balances Consolidated The Company Only 2003 2002 2003 2002

Hemaraj Land and Development Public Company Limited Loans from 2 local commercial banks and 3 local finance institutions 1) Loan in the amount of Baht 150 million. Later on October 10, 2002, the latest debt restructuring is reached under repayment conditions. On December 1, 2003, the Company has made repayment in full amount of loans. 2) Loan with credit line of Baht 100 million. Later on October 10 2002, the latest debt restructuring is reached under repayment conditions. On December 1, 2003, the Company has made repayment in full amount of loans.

75.00

September 2001 to December 2005

5.36 Commencing in September 2002

Quarterly

Monthly

MLR

58.92

100.00

September 2001 to December 2005

7.14 Commencing in September 2002

Quarterly

Monthly

MLR

78.58

7.27 Commencing in September 2002

Monthly

14.54

101.75

14.54

101.75

Monthly

MRR + 3.25%

47.47

62.01

239.25

62.01

239.25

84.00

320.12

3) Loan in the amount of Baht 110 million. 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.

130.82

4) Loan with credit line of Baht 58 million for pre-fabricated factories repayment.

58.00

Total

September 2002 to March 2004 January 2003 to January 2010

0.60 - 0.90 Commencing in August 2003

363.82

Eastern Industrial Estate Company Limited 1) Loan with credit line of Baht 93 million in form of promissory note. Amendment on Debt Restructuring Agreement had been made on March 4, 2002 under repayment conditions. On November 6, 2003, the company has made repayment in full amount of loans.

93.00

2) Loan with credit line of 720 million, fully repay within 5 years and 3 months from the sign agreement date on October 14, 2003.

720.00

February 2002 to December 2004 October 2003 to January 2009

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. Under grace period for 18 months, In 2005, each not less than Baht 15 million. In 2006, each not less than Baht 30 million. In 2007, each not less than Baht 45 million. In 2008, each not less than Baht 50 million.

Quarterly

Monthly

MLR

Personal fixed Monthly Deposit 1 year rate + 3.75% 4.5% on 1st year 4.75% on 2nd year

Total

813.00

320.12

84.00

Other long-term loans (continued)

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

Credit Period

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

Balances Consolidated The Company Only 2003 2002 2003 2002

Interest Payment Term Rate (%)

Eastern Seaboard Industrial Estate (Rayong) Company Limited Loans from local commercial banks consisted of: 1) Loan with credit line of Baht 550 million, repayable 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

2) Loan in the amount of Baht 270 million, repayable within 7 years

270.00

March 2002

Minimum Baht 3.75 million per month, Commencing

Monthly

from the last working day of the month 13 and 30%

MLR-0.5%,

of the amount that already repaid.

only 1st year

MLR

19.14

MLR

2.90

31.75

59.24

106.61

20.00

1,540.00

129.51

110.13

2,716.82

511.64

433.38

62.01

239.25

(17.44)

(217.11)

(14.54)

(137.22)

494.20

216.27

47.47

102.03

from the first withdrawal.

March 2009

3) Loan in the amount of Baht 100 million, repayable within 4 years

100.00

from the first withdrawal.

May 2002 to May 2006

4) Loan in the amount of Baht 320 million, repayable within 4 years

320.00

from the first withdrawal.

5) Loan in the amount of Baht 300 million, repayable within 5 years

300.00

from the first withdrawal.

February 2003

Minimum 30% of the repayment amount.

Monthly

MLR

When no mortgage, not less than Baht 0.60 million per

MLR-0.5%,

rai by deducting from the amount that already repaid.

only 1st year

Minimum 30% of the repayment amount.

Monthly

MLR

When no mortgage, not less than Baht 0.85 million per

MLR-0.5%,

February 2007

rai by deducting from the amount that already repaid.

only 1st year

December 2003 to

Repayment on no mortgage date, not less than Baht 0.28 million per rai.

December 2008

Monthly

MLR-2%, st

on 1 -3 year. MLR-1%, on 4th-5th year.

Total Total Other Loans Less Current portions of other long-term loans shown under current liabilities Other Long-Term Loans

Other long-term loans (continued) The above loans 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 of the year 2002, the debt repayment is completed. Eastern Pipeline Services Company Limited Portions of long-term loans 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 of the year 2002, the debt repayment is completed.

19. 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, with these assets mortgaged as collateral as follows: -

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.

Subsequently, 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 certain of the terms and interest expenses of the said guaranteed bonds, which effective from April 1, 2002. On the fourth quarter of 2003, the Company had made repayment in full for the said guaranteed bonds. 20. PROVISIONS As at December 31, provisions consisted of: MILLION BAHT 2003 2002 Maximum loss reserve that may arise from 20.1 Guarantee agreement in a related company

206.46

128.40

20.2 A pledge of securities on pledged agreements, against loans to a related company

256.27

236.69

462.73

365.09

Total

21. SHARE CAPITAL 21.1

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.

21.2

The Board of Directors’ Meeting No.7/2003 held on September 15, 2003 approved the Company to allocate the 120,000,000 ordinary 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 Baht 8 per share. The allocation was approved by The Annual General Meeting of Shareholders of the Company of the year 2002 held on April 30, 2002.

21.3

The Extra-Ordinary Meeting of Shareholders of Hemaraj Land and Development Public Company Limited No. 1/2003 held on October 16, 2003, had passed the resolution to change the Company’s par value from Baht 10 each to 1 per share. As a result of this change, the Company ’s authorised share capital of Baht 13,000,000, consisting of 13,000,000 ordinary shares of Baht 1 par value. The Company completed the registration on October 24, 2003.

22. 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 Ordinary 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. Warrants (continued)

The Board of Directors’ Meeting No. 7/2003 held on September 15, 2003 had passed the resolution in accordance with the provision for the adjustments of warrant exercise ratio as stipulated by the Prospectus that would be changed from 1:1 to be one warrant exercisable to 1.05918 ordinary shares. The Company shall not adjust the exercise price, however the Company shall bring forward the adjustment to be included in the following adjustment of rights. The above adjustments would take effect upon the first date of the ordinary shares offering. Later, the Extra-Ordinary Meeting of Shareholders held on October 16, 2003 had passed the resolution of the adjustments of the Company’s par value, resulting in the exercise ratio changing from 1 : 1.05918 to be one warrant exercisable to 10.5918 ordinary shares at the exercise price of Baht 0.283 per share. According to the SEC’s Notification regarding guideline relating to adjustments of the exercise price/ratio of warrants, it permits the Company to adjust the number of warrants rather than to adjust the exercise ratio. Therefore, the Company chose to adjust the number of warrants which resulting that the number of warrants increased from 427,084,638 to 4,527,831,794. Consequently, the warrants have the same exercise ratio at one warrant exercisable to purchase one ordinary share at Baht 0.283 per share. 23. DIRECTORS’ REMUNERATION AND PERSONNEL EXPENSES For the years ended December 31, directors’ remuneration which consisting of meeting fee and annual compensation are as follows: MILLION BAHT 2003 2002 Hemaraj Land and Development Public Company Limited 9.80 12.33 Eastern Seaboard Industrial Estate (Rayong) Company Limited 6.39 6.45 Total 16.19 18.78 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: MILLION BAHT 2003 2002 120.50 91.88 66.75 53.00

Consolidated statements of income The Company’s statements of income

24. LOSS ON EVALUATION AND IMPAIRMENT LOSS OF ASSETS 24.1

Loss on projects evaluation In the year 2002, the Company has recorded the difference between the book value and the fair value of cost of development as loss on projects evaluation Baht 160.97 million .

24.2

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.

25. DIVIDEND The Board of Directors’ Meeting No. 6/2003 held on August 26, 2003 approved the distribution of interim dividends deriving from the first half operating results of the year 2003 at the rate of 0.25 per one ordinary share, totaling Baht 88.69 million.

26. EXTRAORDINARY ITEMS, NET

26.1 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 :

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

THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 302,555 249,902 (107,498) (86,925) 195,057 162,977

26.2 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, with the first installment on September 30, 2002. A related company shares had been pledged as collateral. 26.3 Gain from convertible bond repurchases During the year 2002, the Company offered to repurchase the Companyâ&#x20AC;&#x2122;s convertible bonds from the bondholders and had repurchased 764 units, resulting in Baht 22.64 million gain from convertible bond repurchases. During the year 2003, the Company and an overseas subsidiary had repurchased 23,225 units of the Companyâ&#x20AC;&#x2122;s convertible bonds at a price of US$ 15.99 million and the repurchased convertible bonds were cancelled forthwith, resulting in Baht 723.88 million gain from convertible bond repurchases which was included as extraordinary item in the statements of income. 26.4 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.

26.5 Gain(loss) on purchase of debt and right In the year 2002, Eastern Industrial Estate Company Limited, a subsidiary, has entered into a Right Transfer Agreement with 2 mutual funds to release the Company from the debt obligations and cease the court litigation. The subsidiary has paid Baht 132.15 million in order to obtain the rights over the Company, related person and including all collaterals. Consequently, the mutual funds withdrew the case and released Hemeraj Land and Development Public Company Limited, as a guarantor, from the lawsuit. Therefore, the Company has reversed a loss provision for the legal disputes in the amount of Baht 181.84 million. The loss provision from such legal dispute was recorded by the subsidiary in full amount and the Company will record as a gain if the Company receives the payment from the claims in the future. Later on June 30, 2003, the subsidiary company had entered into a Right Transfer Agreement with a company, under the terms and conditions specified, in order to transfer the right obtained from the 2 mutual funds, in the total amount of Baht 80 million. In the second and third quarter of 2003, the subsidiary company had received payment in the amount of Baht 30 million and Baht 50 million, respectively. The subsidiary company has recorded such amount of payment in full as gain on right transfer.

27. EARNINGS PER SHARE COMPUTATION Earnings per share computation in the consolidated for the years ended December 31, consisted of : Thousand Baht Net profit for the Year

2003 Number Of Share

Baht Earnings per share

Thousand Baht Net profit for the Year

(Thousand share)

Basic earnings (loss) per share Net profit 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 per share after adjustment by The effect of potential ordinary shares Net profit attributable to ordinary shareholders in case of convertible bonds being converted and all warrants being exercised

1,383,306

4,002,116 (A)

2002 Number Of Share

Baht Earnings per share

(Thousand share)

0.35 (B)

624,829

3,479,863 (A)

0.18 (B)

9,289 (10,385)

1,392,595

3,225

2,863,563

2,040,878

6,865,682

0.20

614,444

5,523,966

0.11

(A) The weighted average number of ordinary shares outstanding during the year as restated by the adjustment factor from the changing of the Companyâ&#x20AC;&#x2122;s par value from Baht 10 to 1 per share and the right issue during the year 2003. (B) Including the effects of right issue during the year 2003. (C) Conversion rate may be changed as a result of the issue of warrants and the ordinary shares as disclosed in Note 21 and 22 to the financial statements because the Company is currently under the process of giving notice to trustee and the bondholders for the new conversion rate.

28. BUSINESS SEGMENT INFORMATION As of December 31, business segment information in the consolidated balance sheets classified by domestic and overseas business are as follows: MILLION BAHT 2003 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

3,057.21

1,085.28 480.72 171.35 2,174.05 6,968.61

79.65 0.75 5.39 85.79

2002

Overseas Holding Company

Total

Domestic Industrial Estate Others

Overseas Holding Company

Total

3,057.21

2,355.73

6.49 6.49

1,085.28 560.37 172.10 2,185.93 7,060.89

1,085.28 320.25 174.57 1,207.77 5,143.60

80.35 0.70 4.82 85.87

450.59 450.59

1,085.28 400.60 175.27 1,663.18 5,680.06

Business segment information (continued) The consolidated statements of income, for the years ended December 31, operations in classified by domestic and overseas business are as follows: MILLION BAHT 2003 Domestic Sales of land Sales of pre-fabricated factory Service income Total Sales and Services income Profit (loss) from operations Other income Gain on sale of investment Gain (loss) on exchange rate Director's remuneration Share of gain (loss) from investments for using the equity method - associated companies Gain from the yield rate of Guaranteed bonds Other expenses - reserve for other possible loss - loss on evaluation and impairment loss of assets Interest expenses Income tax expenses Profit (loss) after tax

Industrial Estate 853.84 92.78 542.95 1,489.57 322.15 80.09 288.18 119.06 (16.19) (2.15) (97.65) (31.48) (2.13) 659.88

Others 21.21 21.21 (8.83) 0.31 (0.01) (0.06) (8.59)

2002 Overseas Holding Company -

Total 853.84 92.78 564.16 1,510.78

Domestic Industrial Estate 632.59 35.53 382.44 1,050.56

Others 18.96 18.96

Overseas Holding Company -

Total 632.59 35.53 401.40 1,069.52

(17.40) 0.02 52.00 -

295.92 80.42 288.18 171.06 (16.19)

78.75 30.00 160.06 27.12 (18.78)

(12.45) 0.31 -

16.07 0.22 32.60 -

82.37 30.53 160.06 59.72 (18.78)

(2.15) (97.65)

273.69 157.21

37.22 -

273.69 37.22 157.21

(23.47) 11.15

(54.96) (2.19) 662.44

(219.65) (118.34) 370.06

(0.51) (1.11) (13.76)

(34.73) 51.38

(219.65) (153.58) (1.11) 407.68

Net profit of minority interest Profit from ordinary activities Extraordinary item, net - Gain from debt release agreement - Gain from compromising debt - Gain from convertible bond repurchases - Gain from debt settlement by transferring

(83.01) 579.43

(72.09) 335.59

723.88

195.06 151.88 22.64

80.00 1,383.31

assets - Gain (loss) on purchase of debt and right Net profit

51.81 (132.15) 624.83

29. PLEDGED ASSETS As of December 31, 2003, pledged assets are as follows : Hemaraj Land and Development Public Company Limited 1) 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. 2) The majority of land and attachments have been mortgaged as collateral for loans from local commercial banks and financial institutions. Eastern Industrial Estate Company Limited 1) Time deposit of approximately Baht 13.44 million has been pledged to local banks against security given for performance under 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 local commercial banks. Eastern Seaboard Industrial Estate (Rayong) Company Limited 1) The majority of the companyâ&#x20AC;&#x2122;s land has been mortgaged as collateral for overdrafts and loans from one commercial bank. 2) Land, mini and micro pre-fabricated factories of the company have been mortgaged as collateral for loans from related person. 30. COMMITMENTS UNDER AGREEMENTS As of December 31, 2003, 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 The company has participated in the establishment project of Eastern Industrial Estate (Map Ta Phut) with the IEAT according to the joint operation agreement dated December 27, 1989. Later on October 31, 2001, the Company entered into the amendment to such joint operation agreement with IEAT. The major conditions are summarized as follows: 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.

Commitments under agreements (continued) 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 Public Company Limited and another company, that 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.

2) The company has commitment under construction contracts with 3 contractors to construct mini pre-fabricated and micro pre-fabricated factories, amounting to Baht 18.30 million. 3) The company has commitment under construction contracts with 4 contractors to construct utilities system of the Companyâ&#x20AC;&#x2122;s project, amounting to Baht 96.71 million. 4) The company has commitment under the service contract made with a company in the amount of Baht 1.27 million for the maintenance of the utilities system within the companyâ&#x20AC;&#x2122;s project. 31. COMMITMENTS AND CONTINGENT LIABILITIES As of December 31, 2003, commitments and contingent liabilities consisted of : Hemaraj Land and Development Public Company Limited 1) 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 50.97 million. 2) The Company has entered into the term loan agreement with a local commercial bank for condominium project development in the amount of Baht 1,800 million, with a 4-year term. The collateral for the loan will be land and buildings of the project. 3) The Company has the obligations under purchase and sale contract agreement in a project amounted of Baht 20 million, for the period of 3 years after the land transferred. 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. 2) The company has obligations regarding guarantee of the hire purchase agreements of its 2 related companies in the total credit line of Baht 30.89 million. 3) 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 173.51 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. 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 210.78 million.

32. 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. B. 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 A.1 On May 8, 1989, obtaining the first promotional certificate for the development area of 626 Rais. A.2 On September 23, 1992, obtaining the second promotional certificate for the development area of 1,850 Rais. A.3 On May 27, 2003, obtaining the third promotional certificate for the development area of 565 Rais. Major Privileges A.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. A.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. A.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. Eastern Seaboard Industrial Estate (Rayong) Company Limited A. Industrial Estate Business A.1 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. A.2 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. A.3 On July 25, 2001, obtaining the promotional certificate for the development area of 716 Rais.

Promotional privileges (continued) B. Industrial Factory Development Business B.1 On January 19, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 5 units for mini factories and 17 units for micro factories. B.2 On June 21, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 7 units for mini factories and 6 units for micro factories. B.3 On November 29, 2000, obtaining the promotional certificate for the development of industrial factories for sale and rent, 11 units for mini factories and 1 unit for micro factory. B.4 On January 16, 2002, obtaining the promotional certificate for the development of industrial factories for sale and rent, 1 unit for mini factory and 50 units for micro factories. B.5 On March 27, 2002, obtaining the promotional certificate for the development of industrial factories for sale and rent, 22 units for mini factories. Major Privileges A.

Exemption from corporate income tax on net income derived from the promoted business for a period of 8 and 7 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.

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:

The promoted 2003 2002 Consolidated Revenue from sales Service income Total The Company Only Revenue from sales Service income Public utilities Potable Water Raw Water Waste water treatment Rental Construction Others Total service income Total

908.65 359.29 1,267.94

MILLION BAHT The non-promoted 2003 2002

Total 2003

668.12 276.84 944.96

37.97 204.87 242.84

124.56 124.56

21.80

0.54 0.54 0.54

14.02 13.43 40.37 4.62 12.98 58.89 0.46 144.77 166.57

8.69 11.61 18.46 2.73 15.45 8.81 0.42 66.17 66.17

14.02 13.43 40.37 4.62 15.16 58.89 0.46 146.95 168.75

8.69 11.61 18.46 2.73 15.99 8.81 0.42 66.71 66.71

2.18 2.18 2.18

946.62 564.16 1,510.78

2002 668.12 401.40 1,069.52

33. 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.

34. 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, member and the Company contributes 4% - 10% of employees’ monthly salaries, depending on the working period. Members are entitled to their whole contributions plus net benefit thereon, and the Company’s contributions plus benefits thereon at the rates, depending on their working period. The provident fund is managed by a fund manager, a financial institution, and, therefore, is not shown in the balance sheets.

Shareholding & Organization Structure Top Ten of Hemaraj Land and Developmentâ&#x20AC;&#x2122;s Shareholders as at 31/12/03 No.

Major Shareholders

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

No. of Shares

% of Total Issued Share

4,204,320,371

77.62%

Miss Phenpunnee Horrungruang

347,654,000

6.42%

Mr. Sumeth Horrungruang

314,447,570

5.81%

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

179,831,200

3.32%

Sun Tech Group Public Company Limited

86,732,000

1.60%

Mr. Sawasdi Horrungruang

70,400,000

1.30%

Mr. Thongchai Srisomburananonta

53,553,350

0.99%

Mrs. Netranapit Phitukvanichudom

30,000,000

0.55%

Mr. Samrit Eahchotipanich

16,500,000

0.30%

Mr. Thavorn Anankusri

16,000,000

0.30%

Annual Report 2003

Organization Structure of Hemaraj Land And Development Public Company Limited as of January 2004

Hemaraj Land And Development Public Company Limited

General Information Name

Address

Nature of Business

Hemaraj Land 18th Floor, Industrial Estate Developer And Development UM Tower, Public Company Limited 9 Ramkhamhaeng Rd., Registration No. 141 Suanluang, Share Capital 13,000,000,000 shares Bangkok 10250, Issued 5,416,570,061 shares Thailand Tel.(662) 719-9555 Fax (662) 719-9546-7 www.hemaraj.com E-mail: invest@hemaraj.com

Paid Capital (Mil.Baht)

% of Investment

5,417

2003

Revenue (Mil. Baht) % 2002 %

2001

644.98

31%

453.02

30%

287.53

23%

Subsidiary Companies Hemaraj International Limited (1)

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

Holding Company

$1,000 ($1 = 25.29 Baht)

100

H-International (BVI) Company Limited (2)

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

Holding Company

$2,000

100

52.02

70.05

0.34

Eastern Industrial Estate Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand

Industrial Estate Developer

400

99.99

444.05

22%

206.98

13%

210.17

17%

Eastern Pipeline Service Co., Ltd. (3)

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand

Pipe Rack Retal

3.75

99.99

21.53

19.27

17.88

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

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand

Industrial Estate Developer

358

887.86

43%

787.60

51%

741.19

59%

H-Construction Management and Engineering Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand

Supervision Service

0.25

99.99

1.27

The Park Residence Co., Ltd.

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand www. theparkresidence.co.th

Property Development and Marketing and Service Management

0.25

99.99

SME Factory Co., Ltd. (4)

18th Floor, UM Tower, 9 Ramkhamhaeng Rd., Suanluang, Bangkok 10250, Thailand

SME Factory Developer

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

Facilities Management Services

(2.15)

(1.81)

(2.42)

618 Nimom Makkasan Road Makkasan, Ratchthewi Bangkok 10400, Thailand

Management and Maintenance of Pipe Rack

Associated Companies Elyo-H Facilities Management Limited

Related Companies Eastern Fluid Transport Company Limited

2,048.29 100%

1,535.11

100% 1,255.96 100%

Remark 1) Incorporated in the Cayman Islands 2) Incorporated in the Territory of the British Virgin Islands 3) Held by Hemaraj and Eastern Industrial Estate 4) In a Process of Registration

Hemaraj Land And Development Public Company Limited

Annual Report 2003

Total Revenue : Hemaraj Land And Development PLC. and Subsidiaries

Information of Board of Directors,Audit Committee and Management Name / Position

1. Mr. Sawasdi Horrungruang Chairman of the Board

Age

Graduation

Honorary Doctorate Degree

Experiences Related with the Company Organization Period Position / Company / Type of Business Since 1993

Annual Report 2003

Bachelor Degree of Since 1990 Business Administration, Humanity Faculty, Burapha University

2. Mr. Thavorn Anankusri Vice Chairman of the Board

3. Mr. David Richard Nardone President & CEO & Executive Director

4. Mr. Sudphipan Charumani Independent Director and Chairman of Audit Committee

Charter Accountant Institutes (Britian and Wales)

5. Mr. Peter John Edmondson Independent Director and Audit Committee

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

6. Mrs. Punnee Worawuthichongsathit Independent Director and Audit Committee

Thai Industrial Association T H K Real Estate

1.30

Since 1989

MBA Since 1993 Northeastern University, Boston, USA

0.54

Since 1994

Since 1999

0.05

Bachelor of Accounting Since 2000 (Honor) Chulalongkorn University

7. Mr. Vivat Jiratikarnsakul Executive Director and Executive Vice President

Bachelor of Sanitary, Since 1989 Faculty of Engineering Chulalongkorn University

0.07

8. Ms. Pattama Horrungruang Executive Director and Senior Vice President

MBA Thammasat University

Since 2003

9. Mr. Khamhoung Ratsamany Director - Industrial Estate Operations

MBA Bangkok University

Since 1995

10.Mr. Tanin Subboonrueng Director - Development

MBA, Since 1996 Business Administration Assumption University

11.Mr. Sirisak Kijruksa Director - Accounting

Bachelor of Accounting Bangkok University

Since 1990

12.Ms. Somjai Wachiraha Director of Finance

Bachelor of Business Since 1990 Administration General Affairs, Ramkhamhaeng University

13.Mr. Niphone Harnpatanapanich Director - Residential Project Planning

MBA Since 2003 Chulalongkorn University

14.Mr. Paopitaya Smutrakalin Director - Planning & Investor Relations

Since 1996

15.Ms. Jinnapat Tongviseskul Director - Residential Customer Development

MBA, Since 1998 Economic & Administration Chulalongkorn University

16.Mr. Apichat Trongsukson Assistant Director Information System & Services

MBA NIDA University

Since 1994

17.Ms. Ladda Rojanavilaivudh Assistant Director Customer Development

MBA, Bangkok University

Since 2001

18.Ms. Anchalee Parsertchand Assistant Director Customer Development

MBA Assumption University

Since 2001

Hemaraj Land And Development Public Company Limited

Chairman of The Associate Director

Stocks held by Directors/ Management (%), as of 31/12/2003

MS â&#x20AC;&#x201C; Finance Drexel University, Philadelphia, USA

0.30

Checklist to the SEC 56-2 Form

Page

1. General Information 1.1 Financial Highlights

1.2 Shareholding & Organization Structure

1.3 General Information - The Company & its Subsidiaries

1.4 Information of Board of Directors, Audit Committee and Management

1.5 Project Summary

1.6 Other References

Message from the Board of Directors

The Companyâ&#x20AC;&#x2122;s Business Profile

3.1 Nature of Business

3.2 Core and Related Business

3.3 Revenue Structure by Business Line

Economic and Competitive Conditions

Management Analysis

5.1 Operating Performance

5.2 Financial Status

5.3 Risk Factors & Others

Management Structure 6.1 Board of Directors and Executive Committee

6.2 Audit Committee

6.3 Company Management and Structure

Selection of Companyâ&#x20AC;&#x2122;s Directors and Management

Remuneration for Directors and Management

Report of Securities held by Directors / Management

10. Good Corporate Governance

11. Report of Certified Public Accountant

12. Financial Statements and Note to Financial Statements

Annual Report 2003

Hemaraj Land And Development Public Company Limited

Project Summary & Other References As of December 31, 2003 Industrial Estate

Chonburi Industrial Estate (Chunburi) Phase I, II (A,B) Phase II (C),(D) Phase III

Cumulative (Rai) Sold

1,573** 503

Total Chonburi

2,076

Eastern Industrial Estate (Map Ta Phut) Phase I Phase II

1,332 133

Total Eastern

1,465

Eastern Seaboard Industrial Estate (Rayong) Phase I 1,537 Phase II (A) 935** Phase II (B) 627** Phase IV (A,B) 68** Phase IV (C) 317 Phase V 101 Expansion:

Industrial Area

84 100

100 91 76 48 95 17

Total Area

1,870 503 200*

2,348 1,060 330

2,573

3,738

1,451 420*

2,205 503

1,871

2,708

1,537 1,032 823 142 335 601 1,470*

2,075 1,442 1,156 191 435 807 2,100***

Total Eastern Seaboard

3,585

5,940

8,206

Total Rai

7,126

10,384

14,652

* ** *** Note:

% of Completion

100 100

100

98 98 97 99 86 77

Estimate Include land lease Land in hand plus fixed option to purchase from Siam Food Products Plc. 1 Rai = 1,600 Sq. meter or approx. 0.4 acres.

Other References

Annual Report 2003

Reference Persons

Share Registrar

Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Bldg. 4th Floor, 6-7 Floor, Rachadapisek Road, Klongtoey Bangkok 10110, Thailand Tel. 0-2359-1200-1

Trustee

The Law Debenture Trust Corporation Plc. Princes House 95, Gresham Street, London EC2V 7LY, England

Auditor

A.M.T. & Associates 491/27 Silom Plaza, Silom Road, Bangruk, Bangkok 10500, Thailand Tel. 0-2234-1676, 0-2234-1678 Fax: 0-2237-2133 -Kesree Narongdej CPA No. 76

Attorney

Allen & Overy (Thailand) Co., Ltd. 130 Sindhorn Building III, 22nd Floor, Wirelees Road, Bangkok 10330, Thailand Tel. 0-2263-7600

Financial Advisor

Per Project

Advisor or Manager under contract management MCL Management Services Penthouse# 02, Ban Chang-Glas Haus Bldg.1 Sukhumvit 25, Klongtoey Bangkok 10110, Thailand Tel. 0-2260-6454 Fax: 0-2260-6301 Hemaraj Land And Development Public Company Limited