Background and Core Business

Background and Core Businesses

Background

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

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

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

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

Starting in 2007, the Company resumed its normal business operation with the management’s vision to enhance business potential in the future. The Company began to reorganize the Company’s shareholding structure and management team as well as entered into business alliances with partners from Dubai, Hong Kong and China who have investments in various countries around the world to invest in the Company.

During 2007-2008, the Company and companies in the group invested in properties for future development by acquiring freehold land at Kamala beach in Phuket, Sukhumvit Rd. in Bangkok, Kanchanaburi and Khao Yai, and leasehold land in Chiang Mai.

In 2008, the Company launched the first boutique hotel which is managed by Absolute Hotel Services Co., Ltd., a company in the group under the name ‘U Chiang Mai’. The Company also signed a contract with the project owner on a turnkey basis to design and construct a hotel project ‘Four Points by Sheraton’ in Bangkok.

In 2008, to further enhance efficiency of business management, the Company and companies in the group implemented the ‘PROMIS’, the property management information system which is an enterprise resource planning (ERP) based software. The software allows detailed financial control, assessment and planning in all aspects of the business operations that will contribute to superior competitive advantages for the Company.

In 2009, Tanayong’s business partner from Dubai sold its shares to Singaporean company.

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

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

2002 - 2006 • The Company went through the debt restructuring and business rehabilitation process.

2005 • Decreased registered paid-up capital from 4,684,557,000 baht to 3,677,468,400 baht.
.Split par value from 10 baht per share to 1 baht per share and reduced registered paid-up capital from 3,677,468,400 baht to 533,33,33 baht in compliance with the business rehabilitation plan as approved by the Central Bankruptcy Court.
• Increased registered capital from 533,33,33 baht to 5,33,33,33 baht by issuing 4,800,000,000 shares.

2006 • Allotted 4,800,000,000 shares to creditors and new investors and increased registered paid-up capital from 533,33,33 baht to 5,33,33,33 baht in compliance with the business rehabilitation plan as approved by the Central Bankruptcy Court.
• The Central Bankruptcy Court ordered the termination of the business rehabilitation on November 14, 2006.
• The Stock Exchange of Thailand allowed the trading of the Company’s securities in the property development sector since December 28, 2006.
2007 • Increased registered paid-up capital to 5,813,33,33 baht by issuing 480,000,000 shares and allotted to business alliance by a private placement method.
• Increased registered capital from 5,813,33,33 baht to 8,056,923,076 baht by issuing 2,243,589,743 shares to be allotted for the conversion of convertible debentures.
• Established a joint venture company, Kamala Beach Resort & Hotel Management Co., Ltd. to operate the hotel business and develop property in Phuket.
• Established a joint venture company, Hip Hing Construction (Thailand) Co., Ltd. to operate the construction business.

2008 • Established a joint venture company, Absolute Hotel Services Co., Ltd. to operate the hotel management business.
• Cancelled the issuance of convertible debentures and re-allotted 2,243,589,743 shares for the purposes of offering to the existing shareholders and to investors on a private placement method and/or institution investors.
• Increased registered and paid-up capital in Kamala Beach Resort & Hotel Management Co., Ltd. from 850,000,000 baht to 859,000,000 baht.

2009 • On May 28, 2009, the Board of Directors’ Meeting of the Company approved the Company to purchase from Winnington Capital Limited 22,334,000 ordinary shares and 5,154,000 preference shares representing 32% of the registered capital in Kamala Beach Resort & Hotel Management Co., Ltd.,or 50% economic interest in Kamala Beach Resort & Hotel Management Co., Ltd., at the purchase price of 648,444,000 baht, paid by two portions, i.e. in form of money in the amount of 100,000,000 baht,and the rest of 548,444,000 baht in form of the issuance of 1,034,800,000 Company’s new ordinary shares at the price of 0.53 baht per share. The Company will propose to the Annual General Meeting of Shareholders for the year 2009 which will be held on July 24, 2009 to amend Clause 6. of the Company’s Articles of Association to enable the Company to receive the share payment in form of assets other than money and to increase the registered capital and allocate 1,034,800,000 newly issued ordinary shares to Winnington Capital Limited for the purchase of shares in Kamala Beach Resort & Hotel Management Co., Ltd.

Core Businesses

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

1 Property Development

The Company’s policy is to develop properties by emphasizing on the diversity of products and project locations across Bangkok and theirs vicinity in order to serve clients in diverse areas. Presently, the Company has a full range of products as follows:

Project	Operator	Type of Project
1. Thana City Bangna-Trad Road Km. 14	Tanayong Pcl.	Vacant land plots, condominium units, single-detached houses, and townhouses

2 Hotel, Hospitality, Property Management and Services

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

Projects	Operators	Types of Project
Hotels 1. Eastin Lakeside Hotel 2. U Chiang Mai	Muangthong Assets Co., Ltd. Muangthong Assets Co., Ltd.	3 star hotel 4 star hotel
Residential Apartments 1. The Royal Place 1 2. The Royal Place 2 3. The Grand	Tanayong Pcl. Tanayong Pcl. Tanayong Pcl.	Residential Apartments for rent Residential Apartments for rent Residential Apartments for rent
Office Building 1. TST Tower*	DNAL Co., Ltd. and Tanayong Property Management Co., Ltd.	Office Building for rent
Service 1. Thana City Golf & Country Club	Thana City Golf & Country Club Co., Ltd.	Sports Club

* TST Tower and Yongsu Apartment are part of the security assets under the business rehabilitation plan. The Central Bankruptcy Court ordered the auction sales of these assets and the sale proceeds will be shared among creditors pro-rata to their debt proportion. The Company held the auction sale on May 14, 2009 which resulted in the awarded bidder.

3 Project Management

1 Baan Aur-Arthorn Project

The Company has been selected by the National Housing Authority to construct the Baan Aur-Arthorn Project, totaling 20,000 units. The project consists of 3-storey and 4-storey residential condominiums with utility systems and infrastructure in accordance with the standards of the National Housing Authority. At present, the Company has been approved to construct 8,084 units of Baan Aur-Arthorn out of the total 20,000 units in several locations as follows:

Project	Operator	Type of Project
Baan Aur-Arthorn
1. Baan Aur-Arthorn (Na Jomtien)	Tanayong Pcl.	3-storey residential condominiums
2. Baan Aur-Arthorn Prajuabkirikhan (Hua Hin 3)	Tanayong Pcl.	4-storey residential condominiums
3. Baan Aur-Arthorn Saraburi (Kok Yae)	Tanayong Pcl.	3-storey residential condominiums

2 Four Points by Sheraton

Project management of a 4 star 32 storey hotel, with 427 rooms on a turnkey basis (a design and build contract) such that the services include design, construction and selection of hotel management. The project is located in the Central Business District on Sathorn Road adjacent to Surasak BTS skytrain station. Project value is approximately 2,200 million baht and the project is expected to be completed in 2011.