hemraj 03

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Hemaraj Land And DevelopmentPublic Company Limited

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Financial Highlights

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Message from the Board of Directors

The performance for Hemaraj Land And Development Public Company Limited for2003 was exceptional and reflects the success of the implementation of the business strategiespursued by the company. Hemaraj accomplished significantly improved operating resultsin 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 625million the prior year. The profit while substantially from operations included foreignexchange gains, the retirement of bonds, and the sale of shares as outlined further in thereport.

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 inThailand as a platform for the one-ton pickup and auto parts exports reaching well beyondASEAN. New programs were announced with the GM production of export programs forIsuzu, increased investment by Ford and Mazda, new Toyota programs, as well as expansionby Maxxis for tire production. We also witnessed a noticeable return of petrochemicalinvestment with new and expansion programs.

In 2003, Hemaraj achieved double digit revenue increases in all operating areas of itsbusiness, 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%. Withindustrial estates sales at less than 60% of total operating revenue, the risk diversity andpredictability of growing revenue is enhanced.

The financial strength of the company was greatly improved during 2003 with TotalAssets of Baht 7,061 million, Total Liabilities of Baht 2,532 million being reduced fromBaht 3,593 million in 2002, and Total Shareholders Equity of Baht 4,529 million. Duringthe 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 endedthe year with Baht 1,105 million in cash and Net Debt to Equity of 0.32 to 1. Hemaraj iswell positioned with cash and debt capacity to fund prudent business expansion programs.

Furthering strengthening our core development revenue opportunities, in 2003Hemaraj acquired 5.5 rai in a prime downtown Bangkok residential area. “The ParkChidlom”, a high-end luxury residential condominium now under construction was launchedin 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 establishingour premium reputation under The Park Residence brand in the high-end residential market.

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Devid R. NardonePresident & Chief Executive Officer

26 March 2004

Sawasdi HorrungruangChairman of the Board of Directors

26 March 2004

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

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

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

Respectfully submitted,

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Economic & Competitive Conditions

The Thai economy continued to expandin 2003. With the higher private consump-tion, the increasing private investment, theexport value growth, and the government’sexpenditures, the 2003 Gross DomesticProduction (GDP) is expected to grow 6.3%compared to 5.4% in 2002. The higherconsumer confidence and the improvingbusiness sentiment being the key factorsaccelerated the domestic demand expansion.Inflation rate remained low with the rate at1.8% in 2003.

In 2003, the low interest rates andhigher consumption of vehicles andresidences boosted the Private ConsumptionIndex by 5.1%. Manufacturing productiongrowth was up significantly by 12.3%, whilethe capacity utilization rate increased to66.2%, an 11.6% increase year over year. Forthe year 2003, the Private Investment Indexgrew by 13%. Export volumes for Thailandwere increased to US$ 78.42 billion, a 17.4%increase. Imports increased by 17.1% to US$74.21 billion resulting from the accelerationin raw material and capital imports. The earlydebt repayment to IMF by the Bank ofThailand resulted in the balance of paymentsbeing US$ 143 million, compared to US$4.2billion in 2002.

Housing and condominiums in 2003were the most active sectors in the propertymarket, partially accelerated from the specifictax and transfer fee incentives expiration andthe expanding commercial bank consumercredits. The industrial market sector grewby 17% year over year as a result from thecontinued expanding economy and theincrease in Foreign Direct Investment (FDI),especially in automotive and petrochemicalindustries. Sales of industrial land were 2,168rai in 2003. Rayong, Chonburi andAyutthaya were prime locations for industrialestate demand in 2003. The Board ofInvestment (BOI) approved projectsincreased by 17% to 841 projects in 2003.

Thailand remains a growing regionalproduction hub in the ASEAN automotiveindustry, particularly for one-ton pickups,with a capacity approaching one millionvehicles per year. The industry has grownfrom being one based on import substitutionto becoming an export-oriented industry,recent expansion include the US$ 500 mill-ion investment expansion plan announcedby Ford Mazda and the Isuzu exportexpansion program at the General Motorsplant in Rayong from 2003.

Source : Global Insight Automotive, Aug 2003CB Richard Ellis Bangkok Property Report, Quarter 3 2003

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The Company’s Business Profile

Established in 1988, Hemaraj Land AndDevelopment Public Company Limited hasbeen a leading industrial estate andinfrastructure developer in Thailand.Hemaraj’s core businesses are industrialestate development, industrial estate utilities,SME factories for lease and sale, and otherutilities and industrial services includingfacilities management. The 3 industrialestates are Chonburi Industrial Estate(Bo-Win), Chonburi, Eastern SeaboardIndustrial Estate (Rayong) in Pluak Daeng,Rayong, and Eastern Industrial Estate(Map Ta Phut) in Rayong. With 16 years ofexperiences as a leading developer, Hemarajis now expanding its business with the veryfirst exclusive high-rise residential develop-ment project “The Park Chidlom” withprojected revenue of over Baht 5,000 Million.

Industrial Estate Development

Chonburi Industrial Estate (Bowin) inChonburi, Eastern Industrial Estate in MapTa Phut, Rayong, and Eastern SeaboardIndustrial Estate in Rayong (ESIE) aredeveloped by Hemaraj and located on theEastern Seaboard of Thailand. With acombined land area of 14,652 rai, 207industrial customers and a comprehensiveinfrastructure, Hemaraj is positioned as asupplier of premium industrial estates.

Eastern Industrial Estate (EIE) with BOIZone III privileges is located adjacent to theMap Ta Phut Petrochemical Complex anddesigned for heavy industry including steel,petrochemical and chemical industries.Providing higher end infrastructure, EIEchemical, petrochemical and steel customersinclude Siam Mitsui PTA, Thai Olefin,Solutia Chemical, BlueScope Steel (BHPSteel previously) and Siam United Steel. Theupward trend of Petrochemical cyclecontinued in 2003 as supported by both acontinued increase in price and in capacityutilization.

Chonburi Industrial Estate (CIE) withBOI Zone II privileges has a customer baseof steel and power industry with some autoparts, electronics, building materials andgeneral industries. Customers are BNS SteelGroup, Chonburi Steel Mill Services,Nakornthai Strip Mill, Bangkok IndustrialGas, Kitagawa and Glow IPP.

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Eastern Seaboard Industrial Estate(ESIE) with BOI Zone III privileges is a60:40 joint venture with Siam FoodProducts. Renowned as the “Detroit of theEast” for its world-class integrated industrialenvironment, ESIE now is home to over 83automotive supply-line companies with 9 ofthe world’s top 10 automotive suppliers and12 Toyota group companies. The ESIEleadership as an integrated automotive hubremains bright in clustering for theautomotive industry in the region. Ford andMazda (Auto Alliance) announced in quarter3, 2003 a Baht 20 billion investment ofexpanding its manufacturing base. GM in2003 started the export Isuzu program.

All Hemaraj’s industrial estates have wonthe Best Environmental Management EIAAward by the Ministry of Science and areISO 14001 certified.

Industrial Estate Utilities

Industrial Estate Utility Revenue ismainly through the sale of raw water, treatedpotable water, gray water, waste watertreatment, and general maintenance fees.This utility provision and infrastructureservices are 100% operated, managed, andowned by Hemaraj to ensure the growingrecurring income. The utility asset base hasbeen amortized in cost of industrial landdevelopment; therefore, the revenue basis ismostly cost plus which provides consistentgross margin.

Revenue from Industrial Estate Utilitieshas been increasing significantly over the past5 years, from Baht 109 million in 1998 toBaht 377 million in 2003. The utilitiesrevenue is a steadier, more recurring, andmore predictable income stream thanindustrial land sales. Hemaraj has uniqueexposure to petrochemical, steel, power, andmajor utility users with highest revenue inindustry. Increasing number of newcustomers as well as expanding business ofthe current customers significantly contri-butes in utilities consumption growth. Totalwater consumption (raw + potable) has beenincreasing from 5.39 million cubic meters(mcm.) in 1998 to 23.9 million cubic meters(mcm.) in 2003, representing a 344% in 5years.

In the foreseeable future, the utilitiesrevenue will lead Hemaraj’s operatingrevenue structure to be more balance as wellas more predictable.

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SME Factories for Lease and Sales

The attractiveness of Hemaraj SMEfactories for sales or lease is continuing.Hemaraj with a concept of expandable SMEfactories gives more flexibility to SMEcustomers. Sizing from 750 square metersto 6,000 square meters offers manufacturersvarious alternatives to fit their needs for readyor ready to build factories with a quick entry,a low investment cost and flexibility forexpansion.

Under the competitive market, locatingin the industrial estates with a fully integratedinfrastructure SME factories have advantageto the clustering of the industry for thesupply chain management and ease toexpand. As of December 31, 2003, 17 unitsor 34,536 square meters were sold and 26units of 44,078 square meters were leased.

Other Utilities, Industrial Services andResidential Property Development

Hemaraj also invests and extendsindustrial services by investing 5% in GLOWIPP, 40% in Elyo-H Facilities Management- a joint venture with Suez Tractebel,100% in Eastern Pipeline Services, 100%in H-Construction Management andEngineering, 100% in SME FactoryCo., Ltd., and 100% in The Park ResidenceCo., Ltd. Over time, these services willincrease the predictable revenue and profit-ability from the complementary businessgrowth, particularly with the launch ofThe Park Chidlom project in 2004.

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Major/Significant/New Projects in 2003

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

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 millionProject Gross Area : 87,000 square metersNet Sellable Area : 53,000 square metersTotal Units : 219Completion : Q3 2006

The New Development at Eastern Industrial Estate(EIE)

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

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

The development of 807 rai for Eastern SeaboardIndustrial Estate (ESIE) was 77% completed at the end of2003. In 2003, ESIE has also developed the new phase“Duty Free Zone (DFZ)”, specifically designed to serveexport-oriented industrial clients. As IEAT announcementfor the Duty Free Zone was granted and CustomsDepartment approved for DFZ application, an approvalfor opening DFZ from Customs Department would onlybe granted once the construction of this Free Zone wascompleted. Overall the completion for DFZ was 64% atthe end of 2003.

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

Hemaraj’s Residential Property Development

Hemaraj acquired 5.5 rai at the prime residential area of Soi Chidlom and announcedto 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 supportedby Krung Thai Bank of Baht 1,800 million. The Project will be completed in the quarter3 of 2006. The Project details are shown as follows:

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Management Analysis

Operating PerformanceThe 2003 consolidated financial results

show a significant improvement with NetIncome of Baht 1,383 million compared to aNet Income of Baht 625 million for the year2002, representing a 121% increase. Earningper share was Baht 0.35 compared to Baht 0.18per share in 2002, a 94% increase.

The increase in Net Profit was due toimproved operating earnings of Baht 311million and an increase in non operatingearnings of net Baht 447 million realizedthrough retired bonds, the sale of shares,foreign exchange gains, and others.

Total Operating Revenue was Baht 1,530million compared to Baht 1,069 million in2002, representing a 43% increase. Industrialland sales for 2003, being from the sale of 566rai and 16 new customers, were Baht 854million. This represents an increase in sales of35% compared to Baht 633 million in salesfrom 358 rai and 21 new customers in 2002.Service Income from Utilities increased to Baht377 million in 2003, reflecting an increase of33% compared to Baht 284 million in 2002.The Income from the Sales and Lease of MiniFactories increased to Baht 188 million in2003, reflecting an increase of 63% comparedto Baht 116 million in 2002. This reflected amore balanced and growing revenue streamfrom all operations.

Total Revenue for 2003 were Baht 2,050million compared with the same period of 2002of Baht 1,653 million, representing a 24%increase.

Financial StatusThe 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 millionin 2002.

Total Current Assets in 2003 were Baht4,619 million compared to Baht 3,218 millionin 2002, Land held for Real Estate develop-ment of Baht 3,057 million, increased fromBaht 2,355 million in 2002.

Other Assets were Baht 2,442 million in2003. This includes Land held for commercialpurposes not under development of Baht 1,085million, assets for rent of Baht 560 million,sinking funds of Baht 323 million, and long-term investment of Baht 249 million.

Total Liabilities in 2003 were Baht 2,532million, reduced by Baht 1,061 million or a30% decrease from Baht 3,593 million in 2002.The significant reductions were mainly fromvarious debt prepayments and retirement ofbonds. In October 2003, the Company fullyprepaid US$14.5 million of GuaranteedBonds. In 2003, the Company cancelledUS$23.02 million of Euro-convertible bonds.At December 31, 2003, Gains from bondcancellations were Baht 724 million.

Hemaraj successfully raised Baht 960million through a private placement of 120million new shares in Quarter 3, 2003. In2003, 703 million units of warrants wereexercised which raised another Baht 197million in Shareholders’ Equity. The 2003 NetDebt to Equity ratio as a result of the newcapital and reduced debt has improved to 0.32times from 1.67 times in 2002. Total Share-holders Equity in 2003 was Baht 4,529 millionversus Baht 2,087 million in 2002, or a 117%increase.

Risk Factors & OthersForeign Exchange

The company has limited foreign exchangerisks. In 2003, the company has prepaidUS$14million of Guaranteed Bonds andretired US$24.02 million of Euro-convertibleBonds (ECD). As at December 2003, therewas only US$26,000 of ECD outstanding andexpected to be concluded within quarter 1,2004.External Risks

The company faces investment risksassociated with the external political andeconomic environment. The company isdependent on the attraction of the investmentlevels in Thailand as opposed to other countriescompeting for foreign direct investment,particularly China. In addition, the companyoperates in a highly competitive marketplacewith established competitors, some withresources greater than the company.Management and Funding

The company is dependant on knowledgebase employees and key managementpersonnel, the access to capital, the cost ofequity and debt financing, the impact of pricinglevel for materials and land, and the consistencyof government policies for investmentpromotion.

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Management Structure

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

The Board of Directors has the authority to formulate the strategy of the company tomeet the objectives of the return of its shareholders of the company in accordance withthe laws, objects and Articles of Association, and the principles of good governanceincluding the resolutions of the shareholders’ meeting.

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

The Executive Directors shall have the duty as assigned by the Board of Directors informulating and reviewing specific strategic or policy issues in lieu of committees ormore frequent meeting for the business activities of the company.

Audit Committee

1. Mr. Sudhipan Charumani Chairman of the Audit Committee

2. Mr. Peter John Edmondson Member

3. Mrs.Punnee Worawuthichongsathit Member

The Audit Committee of the company has the scope of duties and responsibilities asoutlined below, and shall report to the company’s Board of Directors as follows:

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 internalaudit systems;

3. To review that the Company complies with laws relating to securities and securitiesmarkets, as well as with SET’s rules and regulations and any other law relating to theCompany’s business;

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

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5. To consider the Company’s correct and adequate disclosure of information with regardsto third party transactions or any other transactions with a conflict-of-interest tendency;

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

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

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

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

Investment & Risk Management Committee

The Company has not appointed a specific Investment and Risk ManagementCommittee. 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 Directorsuses a number of safeguards in this risk scope with the Audit Committee, the outsourcedinternal auditor, the external auditor in terms of compliance with GAAP, and the use ofprofessional legal advisors to safeguard the legal and regulatory compliance in Thailandthat the Company is subject to. The Company fully utilizes, outside professionalmanagement and financial advisers in the assessment of alternative strategies and courses ofaction including financial, the diversity wisdom and experience level of the Board of Directors,and the professional management experience and qualifications of the Companymanagement.

Remuneration Committee

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

Good Corporate Governance Committee

The Company fully embraces the principles of Good Corporate Governance and this isthe responsibility of the Board of Directors specifically to ensure its full adherence within

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the organization. The underlying principles of good corporate governance relies on theprinciples of equitable treatment and fairness of all stakeholders, the full and meaningfuldisclosure, and the transparency of the Company its operations and information. Thestakeholders beyond all sizes of shareholders include management and employees, customers,suppliers, external organizations and businesses, joint venture partners and the businesscommunity, regulatory bodies, creditors, and the communities where we operate in.

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 strategiesand policies as specified by the Board of Directors of the company.

Selection of Company’s Director and Management

The recommendation of new Directors to serve on the Board shall be deliberated bythe 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 theShareholders meeting for approval. The objective in selecting Directors is to be able toattract knowledgeable experienced members to the Board of the Company and thecommittees including independent Directors and the Audit Committee, who can assist thecompany in strategic initiatives to strengthen the company, maximize the return to allshareholders in a controlled way, in compliance with good corporate governance practices.The objective further is to provide a balance between the management of the Companyrepresented on the Board with the Independent Directors and significant Directorshareholder representatives. The Directors of the Company are provided with Directorsliability insurance. The position of Chairman of the Board is separate from the Presidentand CEO in order to safeguard the interests of the Shareholders and the management ofthe Company. The executive management appointment and selection is the responsibilityof the President & CEO. The President is the Chief Executive Officer appointed by theBoard of Directors.

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Remuneration for Director and Management

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

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

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

Good Corporate Governance

The Board of Directors are collectively responsible for the Good Corporate Governanceof the Company, and in their role to direct monitor and supervise the strategy policy andcontrol of the Company provide this direction to the Management of the Company to beadhered to. Good Corporate Governance is developed in conformity with the 15 guidelinesof the SET’s Code of Best Practices.

1. Good Corporate Governance Policy

The Company policy is to fully embrace the principles of Good Corporate Governanceand this is the responsibility of the Board of Directors specifically to ensure its fulladherence within the organization and by practice within the management andorganization of the Company. The underlying principles of good corporate governancerelies on the principles of equitable treatment and fairness of all stakeholders, the fulland meaningful disclosure, and the transparency of the Company its operations andinformation.

2. Rights and Equitable Treatment to Shareholders

All shareholders are invited to the annual shareholder’s meeting. The company wouldsend out an invitation letter and agenda of each meeting to the shareholders prior tothe meeting for their consideration. Shareholders have voting rights equal to the numberof shares owned and must exercise all eligible votes to safeguard their investment invoting 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 proxyrepresentation may appoint any person or may elect to appoint the Independent Directorand Chairman of the Audit Committee as recommended by the SEC.

3. Rights of Various Groups of Stakeholders

The company realizes and respects the rights of various groups of stakeholders, includingshareholders, minority shareholders, employees, customers, creditors, vendors, the publicand communities through various procedures such as the Shareholder’s Meeting,providing information on employee’s rights concerning welfare benefits, receiving allinquiries from customers and nearby communities, environmental education andcommunity programs in the areas where we operate, contracts with customers andongoing dialogue, and contracts entered with vendors and suppliers.

4. Shareholders’ Meeting

A Shareholder’s Meeting is to be held at least once a year. Prior to the meeting, notonly does the company send an invitation letter along with the Shareholder’s Meetingagenda in advance, but also publish the meeting in the local media to ensure the fulldisclosure of the scheduled meeting.

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

5. Leadership & Vision

The company’s Board of Directors, selected to have a broad experience level, formulatesthe company’s vision, strategy, oversight of its business plan, and oversees a level ofcontrol and risk management of its operation. The Board of Directors objective is tomaximize 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 andethical conflict of interest and related transactions guidelines. The company hasdisclosed, in accordance with the regulations of Stock Exchange of Thailand, suchinformation, detail and reason/necessity, if any in the company’s Annual Report andthe 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 theNotification of SET concerning Rules, Procedures, and Disclosure of securities holdings.

7. Business Ethics

The Company policy from the Board of Directors, communicated to both managementand employees in the employee handbook is to conduct business with sound ethicstoward 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 5 persons

* Independent Directors - Audit Committee 3 persons

Therefore, the company has 3 directors who are independent and are not involved inthe 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 thePresident & CEO and the structure of the Board of Directors consists of IndependentDirectors comprising 1/3 of the Board. This creates a balance between the interestsand representation of the shareholders and the management as well as independentpersons whom could review the company’s business plans, controls, and create a balancedview.

10. Remuneration for Director and Management

The remuneration of the company’s Directors and Management has been consideredand approved as outlined. This is in order to be competitive in the market in attractinghighly qualified individuals, to reflect the contributions and performance of the

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individuals in meeting the company objectives, and consistent with the performance ofthe Company.

11. Board of Directors’ Meeting

During 2003, from January to December, the company held 8 Board of Directors’Meetings and 25 Executive Committee Meetings. There were calls for regular meetingsand/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 directorsand committee.

12. Committee

The authority and responsibility of the Board and its committees are clearly defined.The report of the committees’ quarterly meeting as well as any items for furtherconsideration are reviewed by the Board of Directors and Management of the companyas appropriate for further action.

13. Controlling System & Internal Audit

The Board of Directors Audit Committee controls the work of the external auditor,the outsourced internal audit function, the review of management information,reporting, risk controls, and systems, and the performance of the management specificto 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 alevel of control to manage the performance of the company in a controlled way.

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

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 Committeeand the outsiders to be the internal Auditors to observe the company’s internal controlsystem and to verify the completeness and accuracy of the company’s financial statements.

15. Relations with Investors

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

A site visit or company visit are always welcome by contacting the Investor RelationsDepartment. The company information and press releases can also be found in thecompany website at www.hemaraj.com. Or email any concerns to [email protected].

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Audit Committee’s Report

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

The Committee comprises of the following members:-

Mr. Sudhipan Charumani Committee Chairman and Independent Director

Mr. Peter J. Edmondson Independent Director

Mrs. Punnee Worawuthichongsathit Independent Director

The Audit Committee met formally on four occasions in 2003 to monitor the quarterlyfinancial statements of the Company and its consolidated positions, check compliance andreview internal control matters. Special attention was paid to the adequacy of provisionsrelating to contingent liabilities and adequacy of information disclosure in respect of relatedparty 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 appointmentand have now familiarized themselves with the Company’s systems and procedures. It isgratifying to note that this year’s external Auditor’s Report is unquestionably clean with noreference to any unsolved matters. Of the two issues commented in their previous year’sReport, the status of the IEAT sinking fund has been resolved, while virtually the entireEurodollar convertible bond has been repurchased and cancelled. At the same time, thebalance sheet has been strengthened through the issue of new shares, the exercise of warrantsand through the Company’s retained earnings. Debts have been reduced and foreignexchange exposure largely eliminated through the repurchase of the convertible bond andthe early repayment of the guaranteed bond.

No further court litigations have arisen subsequent to the 2002 year end, and progresshas been made in resolving the two outstanding cases, both of which have been providedfor in full. Moreover, with the Company’s significantly improved financial situation, theManagement has expressed a strong intention to continue the promotion of corporategovernance and transparency in a more active manner.

Internal audit work for the year covered detailed reviews of the Company’s and itslocal subsidiaries’quarterly financial statements, in addition to a systematic test check onprocedural matters, compliance with relevant law, regulations and Company accountingpolicy, as well as verification of control over financial and land title documents. No significantweaknesses were note, however. As from 2004 onwards, the internal audit program willbecome more technical and analytical, with additional time allocated to governance aspects.With regard to the Account Department, much progress was made in meeting Managementand Audit Committee requirements, especially on the important issue of speeding up thepreparation of quarterly and annual financial statements for reviewer’s convenience.

To the best of the Committee’s knowledge, the financial statements in theCompany’s Annual Report for the year 2003 are fair and accurate.

The Committee has recommended to the Board of Directors, for proposal to theAnnual 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 Yearending 31 December 2004, at the same remuneration as in 2003.

(Sudhipan Charumani)

Chairman of the Audit Committee

March 10, 2004

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Auditor’s Report

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS’ REPORT

To the Shareholders of Hemaraj Land and Development Public Company Limited

I have audited the consolidated balance sheets of Hemaraj Land and Development PublicCompany Limited and its subsidiaries as of December 31, 2003 and 2002, and the related consolidatedstatements 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 DevelopmentPublic Company Limited. These financial statements are the responsibility of the Company’smanagement as to their correctness and completeness of the presentation. My responsibility is toexpress an opinion on these financial statements based on my audits.

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

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 subsidiariesand 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 generallyaccepted accounting principles.

(KESREE NARONGDEJ)Certified Public Accountant

Registration No. 76

A.M.T. & ASSOCIATESBangkok, ThailandFebruary 20, 2004

As of 31st As of 31st As of 31st As of 31st

NOTE December, 2003 December, 2002 December, 2003 December, 2002

CURRENT ASSETS

Cash and deposits at financial institutions 5 841,566,578.91 124,082,035.75 207,505,929.32 21,096,014.89

Deposit for investment 6 96,390.47 371,728,012.66 - -

Current investments

Time deposits 5,7 and 29 13,509,833.93 34,191,687.06 1,001.85 526,992.67

Promissory notes - financial institutions 5 and 7 250,000,000.00 - 250,000,000.00 -

Marketable securities, net 7 194,585,439.82 55,495,947.80 194,585,439.82 55,495,947.80

Trade account receivables - other parties, net 8 238,553,768.20 257,669,521.56 10,790,563.86 3,363,468.43

Short - term loans to related parties 4 2,175,015.83 101,991.00 546,998,009.16 584,514,860.23

Cost of real estate developments, net 9,29 and 30 3,057,210,654.41 2,355,724,743.58 792,310,639.91 335,268,286.81

Other current assets 21,069,591.95 19,487,261.16 5,558,244.62 4,855,612.93

Total Current Assets 4,618,767,273.52 3,218,481,200.57 2,007,749,828.54 1,005,121,183.76

NON - CURRENT ASSETS

Investments for using the equity method 4 6,773,529.44 5,816,172.47 2,827,141,645.83 2,027,374,496.28

Other long - term investments

Related parties, net 4 22,695,000.00 22,695,000.00 21,195,000.00 21,195,000.00

Other parties 10 226,059,508.06 352,763,447.82 225,059,508.06 351,763,447.82

Long - term loans to other parties 11,008,244.12 62,028,776.79 11,008,244.12 62,028,776.79

Property, plant and equipment, net 11 172,101,309.51 175,269,939.96 26,552,258.81 20,659,654.08

Assets for rent, net 12 and 29 560,374,195.55 400,598,562.73 48,891,550.39 -

Other non - current assets

Leasehold land and land held for

commercial purposes, net 13 and 29 1,085,282,436.39 1,085,282,436.39 1,085,282,436.39 1,085,282,436.39

Sinking fund, net 14 and 30 322,712,748.04 310,221,704.30 137,390,694.94 127,557,945.04

Others 35,114,298.40 46,907,196.33 14,766,721.56 12,072,273.58

Total Non - current Assets 2,442,121,269.51 2,461,583,236.79 4,397,288,060.10 3,707,934,029.98

TOTAL ASSETS 7,060,888,543.03 5,680,064,437.36 6,405,037,888.64 4,713,055,213.74

The accompanying notes to financial statements

are an integral part of these statements.

…………………………………………………… DIRECTOR …………………………………………………… DIRECTOR

HEMARAJ LAND AND DEVELOPMENT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

BALANCE SHEETS

BAHT

CONSOLIDATED THE COMPANY ONLY

ASSETS



CURRENT LIABILITIES

Bank overdrafts and short-term loans

from financial institutions 29 401,725,881.52 119,317.80 350,738,219.53 77,226.58

Convertible bonds 15 and 21 1,233,741.81 1,202,308,074.81 1,233,741.81 1,202,308,074.81

Trade account payables 247,721,259.88 78,376,828.94 21,679,756.85 7,925,158.48

Current portion of long - term loans

Related person 4 and 17 106,066,999.89 118,083,333.26 - -

Others 18, 29 and 31 17,432,531.85 217,102,957.95 14,535,859.72 137,215,160.00

Current portion of guaranteed bonds 19 - 32,262,788.96 - -

Short - term loans from related parties 4 60,576,986.30 52,000,000.00 39,843,524.40 26,726,175.86

Other current liabilities

Income received in advance 461,043,221.51 158,741,847.83 558,387.46 1,627,578.26

Accrued interest expenses 17 and 18 5,413,758.41 220,658,643.92 4,575,402.24 220,658,643.92

Accounts payable - the Industrial

Estate Authority of Thailand 14 and 30 1,700,621.87 19,117,245.09 - 10,583,010.39

Others 73,046,960.07 31,565,835.57 44,626,872.39 47,935,245.97

Total Current Liabilities 1,375,961,963.11 2,130,336,874.13 477,791,764.40 1,655,056,274.27

NON - CURRENT LIABILITIES

Long - term loans from related party 4 and 16 - - 1,449,722,807.27 1,026,807,270.36

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 47,470,000.00 102,035,859.72

Guaranteed bonds 19 - 618,164,969.39 - -

Provisions 20 462,732,054.80 365,085,282.13 462,732,054.80 365,085,282.13

Other non - current liabilities

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

Total Non - Current Liabilities 1,156,069,726.45 1,462,900,381.58 1,989,275,067.45 1,516,275,607.70

Total Liabilities 2,532,031,689.56 3,593,237,255.71 2,467,066,831.85 3,171,331,881.97

The accompanying notes to financial statements …/2




BALANCE SHEETS

BAHT


LIABILITIES AND SHAREHOLDERS' EQUITY

- 2 -



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 13,000,000,000.00 13,000,000,000.00 13,000,000,000.00 13,000,000,000.00

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 12,158,892.80 14,126,939.80 12,158,892.80 14,126,939.80

Discount on common stocks (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 103,561,581.44 3,151,430.29 103,561,581.44 3,151,430.29

Currency translation differences (26,813,747.49) 74,237,969.85 (26,813,747.49) 74,237,969.85

Retained earnings (deficit)

Appropriated - legal reserve 247,864,807.51 210,491,426.19 132,713,843.39 95,340,462.07

Earnings (Deficit) 506,257,684.74 (750,989,580.56) 621,408,648.86 (635,838,616.44)

Total Equity of Parent

Company’s Shareholders 3,937,971,056.79 1,541,723,331.77 3,937,971,056.79 1,541,723,331.77

Minority interest 590,885,796.68 545,103,849.88 - -

Total Shareholders’ Equity 4,528,856,853.47 2,086,827,181.65 3,937,971,056.79 1,541,723,331.77

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY 7,060,888,543.03 5,680,064,437.36 6,405,037,888.64 4,713,055,213.74





BALANCE SHEETS

BAHT


Issued and Premium (discount) Unrealized Currency

paid-up Warrants on common gain (loss) from translation Minority

share capital stocks changes in differences Appropriated Earnings interest Total

carrying amount of Legal reserve (Deficit)

available-for-sale

NOTE securities

Beginning balance as of January 1, 2003 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 - - - 100,410,151.15 - - - - 100,410,151.15

Currency translation differences - - - - (101,051,717.34) - - - (101,051,717.34)

Net gain (loss) not recognized

in the income statement - - - 100,410,151.15 (101,051,717.34) - - - (641,566.19)

Net profit - - - - - - 1,383,306,242.87 - 1,383,306,242.87

Legal reserve - - - - - 37,373,381.32 (37,373,381.32) - -

Minority interest - - - - - - - 83,013,973.50 83,013,973.50

Dividend 25 - - - - - (88,685,596.25) (37,232,026.70) (125,917,622.95)

Common stocks 21 1,200,000,000.00 - (294,480,000.00) - - - - - 905,520,000.00

Warrants 22 669,146,211.00 (1,968,047.00) (470,429,519.41) - - - - - 196,748,644.59

Ending balance as of December 31,2003 5,416,570,061.00 12,158,892.80 (2,321,628,223.21) 103,561,581.44 (26,813,747.49) 247,864,807.51 506,257,684.74 590,885,796.68 4,528,856,853.47

Beginning balance as of January 1, 2002 707,907,770.00 14,150,594.80 997,245,113.20 343.20 96,769,229.20 210,491,426.19 (1,361,122,020.63) 512,104,682.38 1,177,547,138.34 Less The cummulative effect of the amortization

of sinking fund - - - - - - (14,696,846.27) - (14,696,846.27)

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 (1,375,818,866.90) 512,104,682.38 1,162,850,292.07


available-for-sale securities - - - 3,151,087.09 - - - - 3,151,087.09

Currency translation differences - - - - (22,531,259.35) - - - (22,531,259.35)


in the income statement - - - 3,151,087.09 (22,531,259.35) - - - (19,380,172.26)

Net profit - - - - - - 624,829,286.34 - 624,829,286.34

Minority interest - - - - - - - (72,086,119.10) (72,086,119.10)

Dividend - - - - - - - 105,085,286.60 105,085,286.60

Common stocks 21 2,831,631,080.00 - (2,548,467,972.00) - - - - - 283,163,108.00

Warrants 22 7,885,000.00 (23,655.00) (5,495,845.00) - - - - - 2,365,500.00

Ending balance as of December 31,2002 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




STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED

FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

BAHT


Issued and Premium (discount) Unrealized Currency

paid-up on common gain (loss) from translation

share capital Warrants stocks changes in differences Appropriated Earnings Total

carrying amount of Legal reserve (Deficit)

available-for-sale

NOTE securities

Beginning balance as of January 1,2003 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


available-for-sale securities - - - 100,410,151.15 - - - 100,410,151.15

Currency translation differences - - - - (101,051,717.34) - - (101,051,717.34)


in the income statement - - - 100,410,151.15 (101,051,717.34) - - (641,566.19)

Net profit - - - - - - 1,383,306,242.87 1,383,306,242.87

Legal reserve - - - - - 37,373,381.32 (37,373,381.32) -

Dividend 25 - - - - - (88,685,596.25) (88,685,596.25)

Common stocks 21 1,200,000,000.00 - (294,480,000.00) - - - - 905,520,000.00

Warrants 22 669,146,211.00 (1,968,047.00) (470,429,519.41) - - - - 196,748,644.59

Ending balance as of December 31,2003 5,416,570,061.00 12,158,892.80 (2,321,628,223.21) 103,561,581.44 (26,813,747.49) 132,713,843.39 621,408,648.86 3,937,971,056.79

Beginning balance as of January 1, 2002 707,907,770.00 14,150,594.80 997,245,113.20 343.20 96,769,229.20 95,340,462.07 (1,245,971,056.51) 665,442,455.96 Less The cummulative effect of the amortization

of sinking fund - - - - - - (14,696,846.27) (14,696,846.27)

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 (1,260,667,902.78) 650,745,609.69


available-for-sale securities - - - 3,151,087.09 - - - 3,151,087.09

Currency translation differences - - - - (22,531,259.35) - - (22,531,259.35)


in the income statement - - - 3,151,087.09 (22,531,259.35) - - (19,380,172.26)

Net profit - - - - - - 624,829,286.34 624,829,286.34

Common stocks 21 2,831,631,080.00 - (2,548,467,972.00) - - - - 283,163,108.00

Warrants 22 7,885,000.00 (23,655.00) (5,495,845.00) - - - - 2,365,500.00

Ending balance as of December 31,2002 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



BAHT



STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE COMPANY ONLY


NOTE 2003 2002 2003 2002

REVENUES

Sales of land 32 853,836,324.19 632,589,820.40 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 66,716,902.91

Other income

Profits from sales of investments 4 288,184,492.88 160,063,559.92 288,184,492.88 160,063,559.92

Reversal of reserve on possible loss from lawsuit - 157,212,124.03 - 157,212,124.03

Interest income 4 1,614,573.45 13,943,609.36 33,333,633.49 39,081,359.31

Management income 4 1,294,603.09 - 73,799,043.84 34,052,998.53

Commission income 18,108,090.75 - 18,108,090.75 -

Gain on dividend 3,243,636.00 - 3,093,637.00 -

Gain on exchange rate 171,060,557.71 59,724,970.77 119,058,555.05 27,117,724.31

Gain on yield rate of guaranteed bonds - 37,218,550.47 - -

Others 56,158,291.92 16,588,431.86 45,314,392.38 8,141,219.70

Share of profits from investments for using

the equity method - subsidiary companies 2 and 4 - - 1,015,896,983.22 33,543,892.17


the equity method - associated company 2 and 4 - 273,692,201.53 - 273,692,201.53

Total Revenues 2,050,445,314.10 1,787,967,131.69 1,765,537,949.94 799,621,982.41

EXPENSES

Cost of land sales 510,209,558.60 434,046,736.99 15,021,366.11 46,070,229.02

Cost of pre-fabricated factory sales 70,831,762.09 17,655,440.55 1,394,229.18 -

Cost of services 4 394,191,119.38 298,327,483.96 114,250,493.68 53,531,745.99

Selling and administrative expenses 4 and 23 239,633,209.09 237,143,898.22 118,701,213.30 123,380,945.16

Other expenses

Director's remuneration 23 16,190,000.00 18,776,321.68 9,800,000.00 12,324,121.68

Loss on possible loss from lawsuit 97,646,772.67 - 97,646,772.67 -

Loss on projects evaluation and

impairment of assets evaluation 24 - 219,654,056.02 - 219,654,056.02

Share of losses from investments for using

the equity method - associated company 2,146,643.03 - 2,146,643.03 -

Total Expenses 1,330,849,064.86 1,225,603,937.42 358,960,717.97 454,961,097.87

PROFIT BEFORE INTEREST AND

INCOME TAX EXPENSES 719,596,249.24 562,363,194.27 1,406,577,231.97 344,660,884.54

INTEREST EXPENSES 4, 15 and 19 54,963,482.17 153,584,229.78 27,909,260.05 109,150,861.38

INCOME TAX EXPENSES 2,189,986.15 1,109,995.04 - -

PROFIT AFTER TAX 662,442,780.92 407,668,969.45 1,378,667,971.92 235,510,023.16

MINORITY INTEREST (83,013,973.50) (72,086,119.10) - -

PROFIT FROM ORDINARY ACTIVITIES 579,428,807.42 335,582,850.35 1,378,667,971.92 235,510,023.16

EXTRAORDINARY ITEMS 26

- Gain from debt release agreements - 195,056,870.68 - 162,976,667.37

- Gain from compromising debt - 151,883,755.69 - 151,883,755.69

- Gain from convertible bond repurchases 723,877,435.45 22,644,147.66 4,638,270.95 22,644,147.66

- Gain from debt settlement by transferring assets - 51,814,692.46 - 51,814,692.46

- Gain (loss) on purchase of debt and right 80,000,000.00 (132,153,030.50) - -

NET PROFIT 1,383,306,242.87 624,829,286.34 1,383,306,242.87 624,829,286.34

…./2




STATEMENTS OF INCOME


BAHT


NOTE 2003 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

Net profit 27 0.35 0.18 0.35 0.18

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

Net profit 27 0.20 0.12 0.20 0.12



STATEMENTS OF INCOME


BAHT


2003 2002 2003 2002

CASH FLOW FROM OPERATING ACTIVITIES

Net profit 1,383,306,242.87 624,829,286.34 1,383,306,242.87 624,829,286.34

Adjustments to reconcile net profit to net cash

provided by (used in)

Allowance for doubtful accounts (24,227,536.97) 6,223,039.41 (26,577,907.17) 1,692,887.20

Impairment loss of assets - (219,654,056.02) - (219,654,056.02)


the equity method - subsidiaries companies - - (1,015,896,983.22) (33,543,892.17)

Share of (profits) losses from investments for using

the equity method - associated companies 2,146,643.03 (273,692,201.53) 2,146,643.03 (273,692,201.53)

(Gain) loss exchange rate 1,519,545.78 (18,421,226.40) (66,618,633.17) 10,097,925.22

(Gain) loss marketable securities (37,200,000.00) (2,089,360.00) (37,200,000.00) (2,089,360.00)

(Gain) loss from sales of equipment (5,240,134.42) (1,331,272.42) (550,412.61) (635,014.74)

(Gain) loss from sales of investments (288,184,492.88) (160,063,559.92) (288,184,492.88) (160,063,559.92)

Depreciation and amortisation 69,529,188.51 61,845,536.10 19,887,269.18 17,360,164.56

(Gain) loss on convertible bond redemption (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) - (203,698,448.15)

Increase (decrease) in provision for convertible bond redemption (51,900,500.56) (37,215,649.52) (51,900,500.56) (37,215,649.52)

Increase in provision for guaranteed bond redemption (5,694,752.01) 10,544,072.81 - -

(Gain) loss from the yield rate of guaranteed bond - (37,218,550.47) - -

Increase in provision for possible loss

from pledge of securities 97,646,772.67 (157,212,124.03) 97,646,772.67 (157,212,124.03)

Realization of deferred leasehold right income (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 - 975,776.06

(Increase) decrease in accounts receivable - other parties 43,343,290.33 (176,145,976.99) 19,150,811.74 (3,295,631.08)

(Increase) decrease in cost of real estate developments (837,509,827.32) 188,152,598.50 (457,042,353.10) 201,467,098.73

(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)

Increase (decrease ) in accrued interest expense (211,968,499.63) (4,836,355.37) (212,806,855.80) (3,751,817.13)

Increase (decrease) in accounts payable - the Industrial

Estate Authority of Thailand (17,416,623.22) (19,357,214.20) (10,583,010.39) (12,345,138.42)

Increase (decrease) in other current liabilities 41,481,124.50 (90,367,132.04) (3,308,373.58) (6,325,542.08)

Increase (decrease) in retentions payable 5,387,187.77 8,536,269.08 1,166,831.89 (248,645.97)

Increase (decrease) in deferred leasehold right income 19,723,654.59 - - -

Increase (decrease) in guarantee payable 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) (438,221,513.69)




STATEMENTS OF CASH FLOWS


BAHT


NOTE 2003 2002 2003 2002

CASH FLOWS FROM INVESTING ACTIVITIES

(Increase) decrease in current investments in securities (4,003,925.87) (49,974,037.51) (4,003,925.87) (49,974,037.51)

(Increase) decrease in cash deposited for investment 371,631,622.19 (128,182,803.88) - -

(Increase) decrease in short - term loans to related parties - - 37,516,851.07 (731,810.17)

(Increase) decrease in investments for using the equity method (3,104,000.00) (3,616,000.00) 5,083,517.50 (152,454,125.24)

(Increase) decrease in long - term investments to related parties - (156,250,000.00) - -

(Increase) decrease in long - term investment to other parties (50,000,000.00) - (50,000,000.00) -

(Increase) decrease in long - term loans to related parties - 357,821,266.34 - 67,375,908.02

(Increase) decrease in long - term loans to other parties 49,500,986.89 - 49,500,986.89 -

Dividend received from subsidiary companies - - 107,847,955.80 220,537,589.40

Cash received from sales of equipment 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 - 643,252,772.89 - 644,229,004.76

(Increase) decrease in assets for rent (61,307,656.88) - (54,296,982.00) (264,914.57)

(Increase) decrease in advance to the Provincial

Electricity Authority - 5,501,160.90 - -

(Increase) decrease in sinking fund (30,494,935.97) (11,987,394.39) (16,840,143.09) (1,757,854.15)

Net Cash Provided by (Used in) Investing Activities 734,074,517.14 1,006,823,184.80 529,404,641.44 1,080,606,995.36

CASH FLOWS FROM FINANCIAL ACTIVITIES

Increase (decrease) in bank overdrafts 401,606,563.72 (39,895,676.35) 350,660,992.95 (39,741,209.80)

Cash paid for convertible bond redemption (428,572,782.87) (15,640,007.43) (1,147,811,947.37) (15,640,007.43)

Increase (decrease) in short - term loans from related parties 8,576,986.30 52,000,000.00 13,117,348.54 (5,407,456.73)

Increase (decrease) in long - term loans from related parties - (1,518,141.40) 491,053,715.86 (429,943,381.47)

Increase (decrease) in long - term loans from related person (57,737,000.03) (40,749,999.96) - -

Increase (decrease) in other long - term loans 78,254,376.83 (492,297,794.99) (177,245,160.00) (425,526,252.13)

Cash paid for guaranteed bond redemption (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) - (88,685,596.25) -

Dividend paid to minority interests (37,232,026.70) (30,358,444.35) - -

Net Cash Provided by (Used in) Financial Activities 396,543,316.05 (352,902,303.79) 543,357,998.32 (630,729,699.56)

Adjustments from financial statement translations (163,848,874.14) (36,506,384.79) - -

Increase (decrease) in cash and cash equivalents, Net 946,802,690.03 2,316,471.84 435,883,923.61 11,655,782.11

Cash and cash equivalents, beginning of period 4 130,087,233.63 110,095,240.80 21,096,014.89 9,421,079.91

Cash at banks pledged as collateral, beginning of period 4 28,186,489.18 45,862,010.17 526,992.67 546,145.54

Cash at banks pledged as collateral, end of period 4 and 15 (13,497,450.18) (28,186,489.18) - (526,992.67)

Cash and cash equivalents, end of period 4 1,091,578,962.66 130,087,233.63 457,506,931.17 21,096,014.89



BAHT





2003 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)

Decrease in cost of real estate development by

transfer to assets for rent (136,023,916.49) (104,973,531.90) - -

Increase in assets for rent by above 136,023,916.49 104,973,531.90 - -

Decrease in leasehold land and land held for

commercial purposes by transfer to cost of real estate

development (274,402,899.66) - -

Increase in cost of real estate development by above 274,402,899.66 - -

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

INFORMATIONCash paid during the period for :

Interest expenses 66,720,453.35 127,000,704.38 11,417,796.16 15,192,060.58

Income tax expenses 3,755,388.55 6,788,539.40 1,950,063.84 3,623,669.14






BAHT


1

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 Industrial Estate Site Location

Hemaraj Land and Development Plc. 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.

2

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:

HOLDING OF INTEREST (%) TYPE OF BUSINESS 2003 2002 Eastern Industrial Estate Company Limited Real Estate Development 99.99 99.99 Eastern Seaboard Industrial Estate (Rayong) Company Limited Real Estate Development 60.00 60.00 Eastern Pipeline Services Company Limited Pipe Rack Rental 99.99 99.99 H-International (BVI) Company Limited Holding Company 100.00 100.00 Hemaraj International Limited* Holding Company 99.99 99.99 H-Construction Management and Engineering and Construction Engineering Company Limited Supervision Service 99.99 99.99 The Park Residence Company Limited** Property Development and 99.99 - Marketing and Service Management

* 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 Company’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 Elyo-H Facilities Management Limited (2.14) (1.81)

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.

3

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 (“IEAT”) 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.

4


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.

5


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 shareholders’ 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.

6


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 TYPE OF BUSINESS RELATIONSHIP 2003 2002 Subsidiary Companies Eastern Industrial Estate Company Limited Real Estate Development Common shareholders 99.99 99.99 and management Eastern Seaboard Industrial Estate

(Rayong) Company Limited Real Estate Development ,, 60.00 60.00 Eastern Pipeline Services Company Limited* Pipe Rack Rental ,, 99.99 99.99 H-International (BVI) Company Limited Holding Company ,, 100.00 100.00 Hemaraj International Limited Holding Company ,, 99.99 99.99 H-Construction Management and Design and Construction ,, 99.99 99.99

Engineering Company Limited Supervision Service The Park Residence Company Limited Real Estate Development and ,, 99.99 -

Service Management

Associated Company Elyo-H Facilities Management Limited Facilities Management Service Common shareholders 39.99 39.99

and management

Related Companies Sriracha Harbor Public Company Limited Port Service Common shareholder 9.54 9.54 and/or co-directors Millenium Steel Public Company Limited Steel Manufacturer and Distributor ,, - 0.03 Nakornthai Strip Mill Public Company Limited Steel Manufacturer and Distributor ,, 1.39 1.39 Sun Tech Group Public Company Limited Agriculture and Scrap Steel Business ,, - - Benz BMB Company Limited Automotive Sales and Service Common directors - - Eastern Fluid Transport Company Limited Pipe Rack Maintenance ,, 15.00 15.00 Siam Food Products Public Company Limited Processing Agriculture Producer Co-investors - - Teo Hong Silom Company Limited Facilities Management Service ,, - - Elyo South East Asia PTE. LTD. Facilities Management Service ,, - - Related Person - Directors and shareholders - -

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

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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 INTERCOMPANY 2003 2002 2003 2002 TERMS Short - term loans to related parties: Subsidiary companies :

Eastern Industrial Estate Company Limited - - 334,535 416,730 MLR(TFB) +1% Eastern Seaboard Industrial Estate (Rayong) 5% - 10% of contract

Company Limited - - 155,594 128,532 price and 5% of service income received

and MLR(TFB) +1% Eastern Pipeline Services Company Limited - - 54,130 38,628 MLR(TFB) +1% H-Construction and Engineering Company

Limited - - 558 522 MLR(TFB) +1% The Park Residence Company Limited - - 6 - -

Associated company : Elyo-H Facilities Management Company

Limited 2,175 93 2,175 93 MLR(BBL) Related company :

Sriracha Harbor Public Company Limited - 9 - 9 1% to MLR Total 2,175 102 546,998 584,514

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 93 2,082 - 2,175 Related companies 9 10 (19) -

Total Short - Term Loans to Related Parties 102 2,092 (19) 2,175 The Company Only Short - term loans to related parties:

Subsidiary companies 584,412 217,536 (257,125) 544,823 Associated company 93 2,082 - 2,175 Related company 9 10 (19) -

Total Short – term Loans to Related Parties 584,514 219,628 (257,144) 546,998

Liabilities THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY INTERCOMPANY 2003 2002 2003 2002 TERMS Short - term loans from related parties: Subsidiary company :

Eastern Seaboard Industrial Estate (Rayong) Company Limited - - 39,844 26,726 -

Related company : Siam Food Products Public Company Limited 60,577 52,000 - - 8%

Total 60,577 52,000 39,844 26,726

Long - term loans from related party: Subsidiary company :

H-International (BVI) Company Limited - - 1,449,723 1,026,807 - Long - term loans from related person: MLR (TFB) +1%

Current portion of long-term loans 106,067 118,083 - - and MLR (TFB) Long-term loans 80,446 126,167 - - Total 186,513 244,250 - -

8


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 52,000 60,577 (52,000) 60,577 Loans from related person: 244,250 57,000 (114,737) 186,513 The Company Only Short - term loans from related parties:

Subsidiary company 26,726 55,563 (42,445) 39,844 Long - term loans from related party:

Subsidiary company 1,026,807 1,163,624 (740,708) 1,449,723

The significant transactions with related parties for the years ended December 31, are as follows:

MILLION BAHT CONSOLIDATED THE COMPANY ONLY INTERCOMPANY 2003 2002 2003 2002 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 5% - 10% of

management income - - 73.80 34.05 contract price and 5% of service income received

Other income 0.07 1.03 - - - Cost of service 7.32 8.49 1.30 1.84 - Selling and

administrative expenses 0.07 0.07 - - - Interest expenses 1.63 1.48 - - MLR (TFB) + 1%

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As at December 31, 2003 the Company’s investment for using the equity method are as follows:

Paid-up Holding of Investments

Company Type of Business Relationship Capital Investment Cost Net Change in Equity Equity

(Million Baht) (%) (Million Baht) (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

Eastern Seaboard Industrial Estate

(Rayong) Company Limited Real Estate Development ,, 358.00 60.00 214.80 664.17 878.97

Eastern Pipeline Services Company Limited* Pipe Rack Rental ,, 3.75 99.99 2.81 (7.89) (5.08)

H-International (BVI) Company Limited Holding Company ,, 0.08 100.00 0.08 1,456.14 1,456.22

Hemaraj International Limited Holding Company ,, 0.03 99.99 0.03 0.01 0.04

H-Construction Management and Engineering Design and Construction

Company Limited Supervision Services ,, 0.25 99.99 0.25 0.16 0.41

The Park Residence Company Limited Property Development and

Marketing and Service Management ,, 0.25 99.99 0.25 (0.02) 0.23

Associated Company

Elyo-H Facilities Management Limited Facilities Management Services ,, 34.00 40.00 13.60 (6.83) 6.77

Total 631.82 2,195.32 2,827.14


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.

10


As at December 31, 2002 the Company’s investment for using the equity method are as follows:

Paid-up Holding of Investments

Company Type of Business Relationship Capital Investment Cost Net Change in Equity Equity

(Million Baht) (%) (Million Baht) (Million Baht) (Million Baht)


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

Hemaraj International Limited Holding Company ,, 0.03 99.99 0.03 0.01 0.04

H-Construction Management and Engineering Design and Construction

Company Limited Supervision Services ,, 0.25 99.99 0.25 0.70 0.95

Associated Company

Elyo-H Facilities Management Limited Facilities Management Services ,, 26.29 39.99 10.50 (4.68) 5.82

Total 636.91 1,390.46 2,027.37


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.

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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 75,300 75,300 75,300 75,300 Eastern Fluid Transport Company Limited 1,500 1,500 - -

Total 76,800 76,800 75,300 75,300 Less Provision for impairment loss on investments (54,105) (54,105) (54,105) (54,105)

Other Long-term Investments - Related Parties, net 22,695 22,695 21,195 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 Company’s shareholding proportion in Eastern Pipeline Services Company Limited both directly and indirectly.

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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 Cash and deposits at financial institutions 841,567 124,082 207,506 21,096 Temporary investments - Time deposits 13,510 34,192 1 527 - Promissory notes - financial institutions 250,000 - 250,000 - Less Cash at banks pledged as collateral and deposits with maturity dates longer than 3 months (13,498) (28,186) - (527)

Cash and Cash Equivalents 1,091,579 130,088 457,507 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 Time deposits 13,510 34,192 1 527 Promissory notes - financial institutions 250,000 - 250,000 - Marketable securities Available-for-sale securities - Equity securities - Nakornthai Strip Mill Public Company 85,150 82,900 85,150 82,900

- Millenium Steel Plc. - 2,524 - 2,524 - Other companies and unit trusts 51,613 49,820 51,613 49,820

Total Marketable securities 136,763 135,244 136,763 135,244 Add(Less) Allowance for investments revaluation 57,822 (79,748) 57,822 (79,748)

Marketable securities, net 194,585 55,496 194,585 55,496

Total Current Investments 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 Limited’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 ’s securities has started for retrading in the Stock Exchange of Thailand.

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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 412,404 381,515 22,972 1,987 Less Installments received (132,635) (109,899) (17,378) (652) Installments receivable 279,769 271,616 5,594 1,335 Less Deferred income (72,090) (39,776) - - Land Sale Contracts Receivable, net 207,679 231,840 5,594 1,335 Service receivables Accrued service income 46,423 42,953 8,710 9,989 Less Allowance for doubtful accounts (15,548) (17,124) (3,513) (7,961) Service Receivables, net 30,875 25,829 5,197 2,028

Trade Account Receivables - Other Parties, net 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 207,679 231,840 5,594 1,335 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 207,679 231,840 5,594 1,335

Accrued service income Less than 3 months 30,875 25,829 5,197 2,028 Over 3 months to 6 months 1,049 1,182 23 266 Over 6 months to 12 months 1,837 2,791 414 1,802 Over 12 months 12,662 13,151 3,076 5,893

46,423 42,953 8,710 9,989 Less Allowance for doubtful debts (15,548) (17,124) (3,513) (7,961)

Accrued service income, net 30,875 25,829 5,197 2,028

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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 3,924,139 3,076,675 1,283,592 845,411 Development project costs 5,380,693 4,865,863 961,405 927,723 Interest capitalised 1,805,734 1,776,321 634,971 634,971 Additional utility cost 7,275 7,340 7,115 7,185 Advance for construction costs 6,377 4,305 - -

11,124,218 9,730,504 2,887,083 2,415,290 Less Accumulated costs transferred to

cost of land sales

(7,404,816)

(6,848,611)

(1,912,455)

(1,897,704)Accumulated costs transferred to

Assets for rent

(479,873)

(343,850)

-

- Accumulated costs transferred for

Debt settlement (143,838) (143,838) (143,838) (143,838) 3,095,691 2,394,205 830,790 373,748 Less Loss on projects revaluation (38,480) (38,480) (38,480) (38,480)

Cost of Real Estate Developments, net 3,057,211 2,355,725 792,310 335,268


Eastern Industrial Estate Company Limited

Eastern Seaboard Industrial Estate (Rayong) Company Limited

Valuation Stated in the Financial Statements

Cost of real estate developments is stated at the lower of aggregate cost and net realisable value for the projects in the same area of each company. During the year 2002, the Company and the 2 subsidiaries had obtained an appraisal by the appraisal specialist. Additionally, the company has included the market selling price of each project in the cost of real estate development consideration. The Company had recognised loss from each projects revaluation 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 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.

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10. OTHER LONG-TERM INVESTMENTS

THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002

Glow IPP Company Limited (Formerly : Bowin Power Company Limited)

175,000

125,000

175,000

125,000

Glow Company Limited 50,059 226,763 50,059 226,763 Other company 1,000 1,000 - -

Total 226,059 352,763 225,059 351,763


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.

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11. PROPERTY, PLANT AND EQUIPMENT, NET

As at December 31, 2003 and 2002, property, plant and equipment, net consisted of:

Changes in Cost Changes in Accumulated Depreciation Net Book Value

Beginning Addition Sale Transfer Ending Beginning Depreciation Sale Transfer Ending Beginning Ending

Consolidated

Land 17.28 - - - 17.28 - - - - - 17.28 17.28

Building and structure 204.20 0.18 - - 204.38 50.12 7.91 - - 58.03 154.08 146.35

Building improvements 4.23 0.44 - - 4.67 2.20 0.59 - - 2.79 2.03 1.88

Office equipment and furniture and fixture 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 - - - 10.62 - - - - - 10.62 10.62

Raw water pipe 3.66 - - - 3.66 3.66 1.12 0.24 - - 1.36 2.54 2.30

Total 346.10 19.83 (3.66) - 362.27 123.70 21.07 (1.73) - 143.04 222.40 219.23

Less Reserve for impairment loss of assets (10.17) (10.17)

Less Reserve for possible loss of title

of land and office building (36.96) (36.96)

Property, Plant and Equipment, net 175.27 172.10

The Company Only

Land 2.93 - - - 2.93 - - - - - 2.93 2.93

Building and structure 45.35 - - - 45.35 11.32 - - 11.32 34.03 34.03

Building improvements 1.42 - - - 1.42 1.42 - - - 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 - - - 0.86 - - - - - 0.86 0.86

Raw water pipe 3.65 - - - 3.65 1.12 0.24 - - 1.36 2.53 2.29

Total 113.91 14.45 (3.61) - 124.75 55.57 6.63 (1.68) - 60.52 58.34 64.23

Less Reserve for impairment loss of assets (0.72) (0.72)

Less Reserve for possible loss of title

of land and office building (36.96) (36.96)

Property, Plant and Equipment, net 20.66 26.55

17

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.


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.

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12. ASSETS FOR RENT, NET

As at December 31, 2003 and 2002, assets for rent, net consisted of: (Amounts:Million Baht)

Changes in Cost Changes in Accumulated Depreciation Net Book Value

Beginning Addition Sale/Written off Transfer Ending Beginning Depreciation Sale/Written off Transfer Ending Beginning Ending

Consolidated

Land 54.65* 54.50 - - 109.15* - - - - - 54.65 109.15

Building 287.79* 135.83 (10.57) - 413.05* 22.18 21.93 (2.63) - 41.48 265.61 371.57

Pipe rack 116.51 - - - 116.51 36.17 7.77 - - 43.94 80.34 72.57

Construction in progress - 7.08 - - 7.08 - - - - - - 7.08

Total 458.95 197.41 (10.57) - 645.79 58.35 29.70 (2.63) - 85.42 400.60 560.37

The Company Only

Land - 28.06 - - 28.06 - - - - - - 28.06

Building - 26.24 - - 26.24 - 5.41 - - 5.41 - 20.83

Total - 54.30 - - 54.30 - 5.41 - - 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.

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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 10,201 10,201 10,201 10,201 Land cost of projects suspended from development 1,135,711 1,135,711 1,135,711 1,135,711 Suspended development project costs 266,909 266,909 266,909 266,909 Interest capitalized 556,119 556,119 556,119 556,119 Leasehold land 77,077 77,077 77,077 77,077

2,046,017 2,046,017 2,046,017 2,046,017 Less Accumulated costs transferred for debt settlement (645,413) (645,413) (645,413) (645,413)

Loss on projects evaluation (315,322) (315,322) (315,322) (315,322) Leasehold Land and Land Held for Commercial Purposes, net 1,085,282 1,085,282 1,085,282 1,085,282




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.

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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 380,911 389,234 151,848 149,434 Less Interest Income (44) (16,911) - (191) Sinking Fund payable - (21,950) - (14,235) Sinking Fund balance 380,867 350,373 151,848 135,008 Less Accumulated amortization (58,154) (40,151) (14,457) (7,450) Sinking Fund, net 322,713 310,222 137,391 127,558

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 1,202.31 Less : repurchase in the year 2003 (1,201.08) Convertible bond balance as of December 31, 2003 1.23

The repurchases of the Company’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.

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17. LONG-TERM LOANS FROM RELATED PERSON


As at December 31, long-term loans from related person consisted of:

Credit Line Credit Conditions Interest Payment Balances (Million Baht) Period Term Total Principal Repayment Period Rate (Million Baht) Installments

a. Loan from director - Promissory note of with grace period of 1 year 80.00 November 2000 to Quarterly 4 Monthly MLR+1% of 25.33 58.67 April 2005 Thai Farmers Bank Plc. 10.00 August 2002 to Monthly 12 Monthly ” 9.17 10.00 August 2007 - Under the agreement dated 25.00 March 2003 to Quarterly 4 Monthly MLR of 20.00 - January 30, 2003 December 2007 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 4 Monthly MLR+1% of 77.42 132.42 August 2005 Thai Farmers Bank Plc. - Under the agreement dated 20.00 May 2000 to Quarterly 4 Monthly MLR+1% of 9.33 16.00 October 31, 2000 and July 24, 2002 10.00 July 2007 Monthly 12 Thai Farmers 9.17 10.00 Bank Plc. - Under the agreement dated 20.00 May 2001 to Quarterly 4 Monthly MLR+1% of 10.50 17.16 May 2, 2001 July 2005 Thai Farmers Bank Plc. - Under the agreement dated 32.00 March 2003 to Quarterly 4 Monthly MLR of 25.60 -

January 30, 2003 September 2007 Thai Farmers Bank Plc. Total Loans from Related Person 362.00 186.52 244.25

Less Current portion of long-term loan shown

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

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

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.

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.

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.

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

under current liabilities (106.07) (118.08)

Long-term Loans from Related Person 80.45 126.17

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

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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) Current Repayment Condition Balances Credit Line Credit Principal Repayment Interest Payment Consolidated The Company Only (Million Baht) Period Installment Term Total Term Rate 2003 2002 2003 2002 Amount Installments (%) (Million Baht)


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, September 2001 5.36 the latest debt restructuring is reached under repayment conditions. to Commencing in On December 1, 2003, the Company has made repayment in full 75.00 December 2005 September 2002 Quarterly 14 Monthly MLR - 58.92 - 58.92 amount of loans. 2) Loan with credit line of Baht 100 million. Later on October 10 2002, September 2001 7.14 the latest debt restructuring is reached under repayment conditions. to Commencing in On December 1, 2003, the Company has made repayment in full 100.00 December 2005 September 2002 Quarterly 14 Monthly MLR - 78.58 - 78.58 amount of loans.

3) Loan in the amount of Baht 110 million. Subsequently, debt claim right of lender had been transferred to a mutual fund, which the September 2002 7.27 Company had entered into a Debt Compromising Agreement, to Commencing in

dated September 5, 2002 under current repayment conditions. 130.82 March 2004 September 2002 Monthly 18 - - 14.54 101.75 14.54 101.75

4) Loan with credit line of Baht 58 million for pre-fabricated factories January 2003 0.60 - 0.90 repayment. 58.00 to Commencing in Monthly 78 Monthly MRR + 3.25% 47.47 - 47.47 - January 2010 August 2003

Total 363.82 62.01 239.25 62.01 239.25

Eastern Industrial Estate Company Limited 1) Loan with credit line of Baht 93 million in form of promissory note. Payment is made, when no mortgage, at the rate Amendment on Debt Restructuring Agreement had been made on February 2002 of 70% of the transferred land price and at the March 4, 2002 under repayment conditions. On November 6, 2003, to minimum annual rate as specified in the the company has made repayment in full amount of loans. 93.00 December 2004 agreement, commencing in 2002. Monthly MLR - 84.00 - - 2) Loan with credit line of 720 million, fully repay within 5 years and October 2003 Under grace period for 18 months, Personal fixed 3 months from the sign agreement date on October 14, 2003. 720.00 to In 2005, each not less than Baht 15 million. Quarterly Monthly Deposit 1 year rate 320.12 - - - January 2009 In 2006, each not less than Baht 30 million. + 3.75% In 2007, each not less than Baht 45 million. 4.5% on 1st year In 2008, each not less than Baht 50 million. 4.75% on 2nd year

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Total 813.00 320.12 84.00 - -

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Other long-term loans (continued) (Amounts:Million Baht) Current Repayment Condition Balances Credit Line Credit Principal Repayment Interest Payment Consolidated The Company Only (Million Baht) Period Installment Term Total Term Rate 2003 2002 2003 2002 Amount Installments (%) (Million Baht)


Loans from local commercial banks consisted of:

1) Loan with credit line of Baht 550 million, repayable within March, 2000 Repayable as titles are transferred at 50% of land March, 2003. 550.00 to contract price and the outstanding amount Monthly MLR - 19.14 - - March, 2003 repayable within March, 2003.

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 MLR 2.90 31.75 - - from the first withdrawal. to from the last working day of the month 13 and 30% MLR-0.5%,

March 2009 of the amount that already repaid. only 1st year

3) Loan in the amount of Baht 100 million, repayable within 4 years 100.00 May 2002 Minimum 30% of the repayment amount. Monthly MLR - 59.24 - - from the first withdrawal. to When no mortgage, not less than Baht 0.60 million per MLR-0.5%,

May 2006 rai by deducting from the amount that already repaid. only 1st year

4) Loan in the amount of Baht 320 million, repayable within 4 years 320.00 February 2003 Minimum 30% of the repayment amount. Monthly MLR 106.61 - - - from the first withdrawal. to 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

5) Loan in the amount of Baht 300 million, repayable within 5 years 300.00 December 2003 Repayment on no mortgage date, not less than Baht Monthly MLR-2%, 20.00 - - - from the first withdrawal. to 0.28 million per rai. on 1st-3rd year.

December 2008 MLR-1%,

on 4th-5th year.

Total 1,540.00 129.51 110.13 - -

Total Other Loans 2,716.82 511.64 433.38 62.01 239.25

Less Current portions of other long-term loans shown under

current liabilities (17.44) (217.11) (14.54) (137.22)

Other Long-Term Loans 494.20 216.27 47.47 102.03

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Other long-term loans (continued)

The above loans are variously collateralised.


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 Directors’ 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

Total 462.73 365.09

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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)

27

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 Consolidated statements of income 120.50 91.88 The Company’s statements of income 66.75 53.00

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

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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 :

THOUSAND BAHT CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Debt under debt release agreement - 302,555 - 249,902 Less Repayment - (107,498) - (86,925)

Gain from debt release agreement - 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 Company’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 Company’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.

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27. EARNINGS PER SHARE COMPUTATION

Earnings per share computation in the consolidated for the years ended December 31, consisted of :

2003 2002 Thousand Baht Number Baht Thousand Baht Number Baht Net profit for the Year Of Share Earnings per share Net profit for the Year Of Share Earnings per share (Thousand share) (Thousand share) Basic earnings (loss) per share

Net profit attributable to ordinary shareholders 1,383,306 4,002,116 (A) 0.35 (B) 624,829 3,479,863 (A) 0.18 (B)

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%) 9,289

1.2 Deducting the revenues that will not be Recognized upon the conversion of Convertible bonds (net of income tax 25%) (10,385)

1.3 Increase in ordinary shares under Conversion of convertible bonds (C) 3 3,225

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 2,863,563 2,040,878

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 1,392,595 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 Company’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.

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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:


Domestic Overseas Domestic Overseas Industrial Estate Others Holding Company Total Industrial Estate Others Holding Company Total Cost of real estate developments, net 3,057.21 - - 3,057.21 2,355.73 - - 2,355.73 Leasehold land and land held for

Commercial purposes, net 1,085.28 - - 1,085.28 1,085.28 - - 1,085.28 Assets for rent, net 480.72 79.65 - 560.37 320.25 80.35 - 400.60 Property, plant and equipment, net 171.35 0.75 - 172.10 174.57 0.70 - 175.27 Other assets 2,174.05 5.39 6.49 2,185.93 1,207.77 4.82 450.59 1,663.18 Total Assets 6,968.61 85.79 6.49 7,060.89 5,143.60 85.87 450.59 5,680.06

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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:


Domestic Overseas Total Domestic Overseas Total Holding Holding

Industrial Estate Others Company Industrial Estate Others Company Sales of land 853.84 - - 853.84 632.59 - - 632.59 Sales of pre-fabricated factory 92.78 - - 92.78 35.53 - - 35.53 Service income 542.95 21.21 - 564.16 382.44 18.96 - 401.40

Total Sales and Services income 1,489.57 21.21 - 1,510.78 1,050.56 18.96 - 1,069.52

Profit (loss) from operations 322.15 (8.83) (17.40) 295.92 78.75 (12.45) 16.07 82.37 Other income 80.09 0.31 0.02 80.42 30.00 0.31 0.22 30.53 Gain on sale of investment 288.18 - - 288.18 160.06 - - 160.06 Gain (loss) on exchange rate 119.06 - 52.00 171.06 27.12 - 32.60 59.72 Director's remuneration (16.19) - - (16.19) (18.78) - - (18.78) Share of gain (loss) from investments for using

the equity method - associated companies (2.15) - - (2.15) 273.69 - - 273.69 Gain from the yield rate of Guaranteed bonds - - - - - - 37.22 37.22 Other expenses - reserve for other possible loss (97.65) - - (97.65) 157.21 - - 157.21 - loss on evaluation and impairment loss of assets - - - - (219.65) - - (219.65) Interest expenses (31.48) (0.01) (23.47) (54.96) (118.34) (0.51) (34.73) (153.58) Income tax expenses (2.13) (0.06) - (2.19) - (1.11) - (1.11) Profit (loss) after tax 659.88 (8.59) 11.15 662.44 370.06 (13.76) 51.38 407.68

Net profit of minority interest (83.01) (72.09) Profit from ordinary activities 579.43 335.59 Extraordinary item, net - Gain from debt release agreement - 195.06 - Gain from compromising debt - 151.88 - Gain from convertible bond repurchases 723.88 22.64 - Gain from debt settlement by transferring assets - 51.81 - Gain (loss) on purchase of debt and right 80.00 (132.15) Net profit 1,383.31 624.83

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29. PLEDGED ASSETS

As of December 31, 2003, pledged assets are as follows :


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.


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 company’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.


1) The majority of the company’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").


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.

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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").


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 Company’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 company’s project.

31. COMMITMENTS AND CONTINGENT LIABILITIES

As of December 31, 2003, commitments and contingent liabilities consisted of :


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.


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.


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.

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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:


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 .


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.


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.

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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.

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

C. Double deduction of transportation expenses, electricity expenses and water supply expenses is allowed for 10 years from the date when the revenues are first earned.

For the years ended December 31, domestic revenues are classified into the promoted and the non-promoted businesses as follows:

MILLION BAHT

The promoted The non-promoted Total 2003 2002 2003 2002 2003 2002 Consolidated Revenue from sales 908.65 668.12 37.97 - 946.62 668.12 Service income 359.29 276.84 204.87 124.56 564.16 401.40 Total 1,267.94 944.96 242.84 124.56 1,510.78 1,069.52 The Company Only Revenue from sales - 21.80 - 21.80 - Service income Public utilities - - 14.02 8.69 14.02 8.69 Potable Water - - 13.43 11.61 13.43 11.61 Raw Water - - 40.37 18.46 40.37 18.46 Waste water treatment - - 4.62 2.73 4.62 2.73 Rental 2.18 0.54 12.98 15.45 15.16 15.99 Construction - - 58.89 8.81 58.89 8.81 Others - - 0.46 0.42 0.46 0.42 Total service income 2.18 0.54 144.77 66.17 146.95 66.71 Total 2.18 0.54 166.57 66.17 168.75 66.71

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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




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.

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Top Ten of Hemaraj Land and Development’s Shareholders as at 31/12/03

Shareholding & Organization Structure

No. Major Shareholders No. of Shares % of Total Issued Share

1 Thailand Securities Depository Co., Ltd. 4,204,320,371 77.62%for Depositor (Thai)

2 Miss Phenpunnee Horrungruang 347,654,000 6.42%

3 Mr. Sumeth Horrungruang 314,447,570 5.81%

4 Thailand Securities Depository Co., Ltd. 179,831,200 3.32%for Depositor (Foreigner)

5 Sun Tech Group Public Company Limited 86,732,000 1.60%

6 Mr. Sawasdi Horrungruang 70,400,000 1.30%

7 Mr. Thongchai Srisomburananonta 53,553,350 0.99%

8 Mrs. Netranapit Phitukvanichudom 30,000,000 0.55%

9 Mr. Samrit Eahchotipanich 16,500,000 0.30%

10 Mr. Thavorn Anankusri 16,000,000 0.30%

Organization Structure of Hemaraj Land And Development Public Company Limitedas of January 2004

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Name Address Nature of Business Paid Capital % of Revenue (Mil. Baht)(Mil.Baht) Investment 2003 % 2002 % 2001 %

General Information

Hemaraj Land 18th Floor, Industrial Estate Developer 5,417 644.98 31% 453.02 30% 287.53 23%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) 719-9555Fax (662) 719-9546-7

www.hemaraj.comE-mail:

[email protected]


Hemaraj International Limited (1) Scotia Centre, Holding Company $1,000 1004th Floor ($1 = 25.29 Baht)

P.O.Box 2804,George Town,Grand Cayman,Cayman Islands

H-International (BVI) Romasco Place, Holding Company $2,000 100 52.02 3% 70.05 5% 0.34 0%Company Limited (2) Wickhams Cay 1,

P. O. Box 3140,Road Town, Tortola

British VirginIslands.

Eastern Industrial Estate 18th Floor, Industrial Estate 400 99.99 444.05 22% 206.98 13% 210.17 17%Co., Ltd. UM Tower, Developer

9 Ramkhamhaeng Rd.,Suanluang,

Bangkok 10250,Thailand

Eastern Pipeline Service 18th Floor, Pipe Rack Retal 3.75 99.99 21.53 1% 19.27 1% 17.88 1%Co., Ltd. (3) UM Tower,



Eastern Seaboard 18th Floor, Industrial Estate 358 60 887.86 43% 787.60 51% 741.19 59%Industrial Estate UM Tower, Developer(Rayong) Co., Ltd. 9 Ramkhamhaeng Rd.,

Suanluang,Bangkok 10250,

Thailand

H-Construction Management 18th Floor, Supervision Service 0.25 99.99 0 0% 0 0% 1.27 0%and Engineering Co., Ltd. UM Tower,



The Park Residence Co., Ltd. 18th Floor, Property Development 0.25 99.99 0 0%UM Tower, and Marketing

9 Ramkhamhaeng Rd., and Service ManagementSuanluang,


www.theparkresidence.co.th

SME Factory Co., Ltd. (4) 18th Floor, SME FactoryUM Tower, Developer



Associated Companies

Elyo-H Facilities 107/1 Moo 4, Facilities Management 34 40 (2.15) 0% (1.81) 0% (2.42) 0%Management Limited Eastern Seaboard Services

Industrial Estate(Rayong),

Pluakdeang, Rayong,Thailand

Related Companies

Eastern Fluid Transport 618 Nimom Management 10 15Company Limited Makkasan Road and Maintenance

Makkasan, Ratchthewi of Pipe RackBangkok 10400,

Thailand

Total Revenue : Hemaraj Land And Development PLC. and Subsidiaries 2,048.29 100% 1,535.11 100% 1,255.96 100%

Remark1) Incorporated in the Cayman Islands2) Incorporated in the Territory of the British Virgin Islands3) Held by Hemaraj and Eastern Industrial Estate4) In a Process of Registration

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Information of Board of Directors,Audit Committee and Management

1. Mr. Sawasdi Horrungruang 63 Honorary Since 1993 Chairman Thai Industrial 1.30Chairman of the Board Doctorate Degree of The Association

Associate T H K Real EstateBachelor Degree of Since 1990 Director

Business Administration,Humanity Faculty,Burapha University

2. Mr. Thavorn Anankusri 62 - Since 1989 - 0.30Vice Chairman of the Board

3. Mr. David Richard Nardone 48 MBA Since 1993 - - 0.54President & CEO Northeastern University,& Executive Director Boston, USA

4. Mr. Sudphipan Charumani 60 Charter Since 1994 - - -Independent Director and Accountant InstitutesChairman of Audit Committee (Britian and Wales)

5. Mr. Peter John Edmondson 53 Bachelor of Science Since 1999 - - 0.05Independent Director in Chemistry (Honor)and Audit Committee University of Sheffield,

England

6. Mrs. Punnee Worawuthichongsathit 52 Bachelor of Accounting Since 2000 - - -Independent Director (Honor)and Audit Committee Chulalongkorn University

7. Mr. Vivat Jiratikarnsakul 48 Bachelor of Sanitary, Since 1989 - - 0.07Executive Director and Faculty of EngineeringExecutive Vice President Chulalongkorn University

8. Ms. Pattama Horrungruang 41 MBA Since 2003 - - -Executive Director and Thammasat UniversitySenior Vice President

9. Mr. Khamhoung Ratsamany 37 MBA Since 1995 - - -Director - Industrial Estate Bangkok UniversityOperations

10.Mr. Tanin Subboonrueng 40 MBA, Since 1996 - - -Director - Development Business Administration

Assumption University

11.Mr. Sirisak Kijruksa 43 Bachelor of Accounting Since 1990 - - -Director - Accounting Bangkok University

12.Ms. Somjai Wachiraha 43 Bachelor of Business Since 1990 - - -Director of Finance Administration

General Affairs,Ramkhamhaeng University

13.Mr. Niphone Harnpatanapanich 47 MBA Since 2003 - - -Director - Residential Project Chulalongkorn UniversityPlanning

14.Mr. Paopitaya Smutrakalin 33 MS – Finance Since 1996 - - -Director - Planning & Drexel University,Investor Relations Philadelphia, USA

15.Ms. Jinnapat Tongviseskul 34 MBA, Since 1998 - - -Director - Residential Customer EconomicDevelopment &

AdministrationChulalongkorn University

16.Mr. Apichat Trongsukson 39 MBA Since 1994 - - -Assistant Director - NIDA UniversityInformation System & Services

17.Ms. Ladda Rojanavilaivudh 36 MBA, Since 2001 - - -Assistant Director - Bangkok UniversityCustomer Development

18.Ms. Anchalee Parsertchand 34 MBA Since 2001 - - -Assistant Director - Assumption UniversityCustomer Development

Name / Position Age Graduation Experiences Related with the CompanyOrganization

Period Position / Company /Type of Business

Stocks held byDirectors/

Management (%),as of 31/12/2003

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P a g e

1. General Information

1.1 Financial Highlights 3

1.2 Shareholding & Organization Structure 60

1.3 General Information - The Company & its Subsidiaries 61

1.4 Information of Board of Directors, Audit Committee and Management 62

1.5 Project Summary 64

1.6 Other References 64

2. Message from the Board of Directors 4

3. The Company’s Business Profile

3.1 Nature of Business 7

3.2 Core and Related Business 7

3.3 Revenue Structure by Business Line 3

4. Economic and Competitive Conditions 6

5. Management Analysis

5.1 Operating Performance 11

5.2 Financial Status 11

5.3 Risk Factors & Others 11

6. Management Structure

6.1 Board of Directors and Executive Committee 12

6.2 Audit Committee 12

6.3 Company Management and Structure 14

7. Selection of Company’s Directors and Management 14

8. Remuneration for Directors and Management 15

9. Report of Securities held by Directors / Management 62

10. Good Corporate Governance 15

11. Report of Certified Public Accountant 19

12. Financial Statements and Note to Financial Statements 20

Checklist to the SEC 56-2 Form

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Project Summary & Other ReferencesAs of December 31, 2003

Chonburi Industrial Estate(Chunburi)Phase I, II (A,B) 1,573** 84 1,870 2,348 100Phase II (C),(D) 503 100 503 1,060 100Phase III 200* 330

Total Chonburi 2,076 2,573 3,738

Eastern Industrial Estate(Map Ta Phut)Phase I 1,332 92 1,451 2,205 100Phase II 133 420* 503

Total Eastern 1,465 1,871 2,708

Eastern Seaboard Industrial Estate(Rayong)Phase I 1,537 100 1,537 2,075 98Phase II (A) 935** 91 1,032 1,442 98Phase II (B) 627** 76 823 1,156 97Phase IV (A,B) 68** 48 142 191 99Phase IV (C) 317 95 335 435 86Phase V 101 17 601 807 77Expansion: 1,470* 2,100***

Total Eastern Seaboard 3,585 5,940 8,206

Total Rai 7,126 10,384 14,652

Industrial Estate Cumulative (Rai) Sold % Industrial Area Total Area % of Completion

Other References

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

Share Registrar Thailand Securities Depository Co., Ltd.62 The Stock Exchange of Thailand Bldg. 4th Floor,6-7 Floor, Rachadapisek Road, KlongtoeyBangkok 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. & Associates491/27 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 ServicesPenthouse# 02, Ban Chang-Glas Haus Bldg.1 Sukhumvit 25,Klongtoey Bangkok 10110, ThailandTel. 0-2260-6454 Fax: 0-2260-6301

Reference Persons

hemraj 03

Documents

operating revenue of

hemaraj land

total revenue

totalassets of baht

hemaraj iswell

total operating revenue

total liabilities of

net income of baht