:: Annual Report 2007 ::

Contents 6 Report of the Board of Directors to

34 Our Corporate Governance Update

the Shareholders

36 Industrial Outlook 8 Board of Directors, Audit Committee, and Executive Committee

9 Management Structure 10 Key Figures

38 Risk and Risk Management 39 Corporate Identity 40 Report of the Board of Directorsâ&#x20AC;&#x2122; Responsibilities for Financial Statements

11 Achievements and Milestones 41 Report of the Audit Committee 12 Vision, Mission, and Core Values 42 Consolidated Financial Statements 16 Report of the Executive Committee 43 Report of the Certified Public Accountant 19 Service Excellence Path to Sustainable Growth

20 Service & Quality Excellence 20 22 24 25 26 27

44 Balance Sheets 47 Income Statements 48 Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity

Cement Ready-mix Concrete CONWOOD

50 Statements of Cash Flows 51 Notes to Consolidated Financial Statements

Aggregates Mortar AFR

28 OH&S : Occupational Health & Safety 30 CSR : Corporate Social Responsibility 32 Summary of Major Developments and Recognitions in 2007

68 Management Discussion and Analysis 71 Related Party Transactions 72 Dividend Allocation Over Past Three Years 73 Supplemental Information 85 Customer Service Center and Distribution Centers 86 Summary of Specified Items Per Form 56-2

FASTER

service

Siam City Cement recognizes the importance of providing reliable on-time delivery and swift response in consultation and testing services. Well-trained logistic and technical teams, supported by modern equipment, are key elements in providing customers with effective and efficient solutions.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Southern Ring Road Bangkok: One of the mega projects supplied by Siam City Cement in 2007.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Report of the Board of Directors to the Shareholders Two Thousand and Seven was a challenging year for your company. Certain businesses suffered from a mild case of stagflation attributable to high energy costs and the softening of domestic demand. Your companyâ&#x20AC;&#x2122;s reliance on exports to make up for declining domestic prices and volume was negatively impacted by a strong Baht and high freight costs, contributing to overall mediocre quantitative growth. In all, your company and its management have to rely on its internal strength and resolve to overcome adverse external conditions in order to produce satisfactory results. These tasks were fulfilled in an admirable fashion with particular attention to three key aspects: service, quality and efficiency. These aspects were sustained with substantive progress while the Alternative Fuel & Raw Material policy exhibited concrete development in terms of completing ground work, infrastructure and a successful initial phase of operation. We hope over time that this programme will offer positive contributions in reducing variable costs and diversifying energy options.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

With unyielding efforts from the management and employees, the Board of Directors is pleased to report that during 2007, Siam City Cement and its subsidiaries achieved total net sales of 22,800 million Baht, down by only 4 percent from 2006. Net profit amounted to 3,230 million Baht with earnings per share of 14.05 Baht. Based on the sturdy operating performance and the solid financial position of the company, the Board of Directors decided to propose to the shareholders at the 15th Annual General Meeting the payment of a full-year dividend of 14 Baht per share representing 100 percent of net profits, compared to an 84 percent pay-out in 2006. An interim dividend of 6.50 Baht per share was paid on September 7, 2007 and so the final dividend of 7.50 Baht per share will be paid on April 30, 2008. As for 2008, we look forward with confidence to our maintaining positive results in our business operations

From Left: Mr. Veraphan Teepsuwan, Mr. Paul Heinz Hugentobler, Mr. Prakob Visitkitjakarn, Mr. Vanchai Tosomboon, Ms. Chantana Sukumanont, Mr. Chachchon Ratanarak, Mr. Prabhol Buranasiri, Mr. Marcel Smit, Mr. Thaveepol Kongseri, Mr. Urs Wolfgang Bieri, Mr. Harald Link, Mr. Chet Raktakanishta

whilst seeking to strengthen areas of weakness. We will be fully prepared to weather a turbulent economic landscape should that be the case. We believe the company is well placed to meet the countryâ&#x20AC;&#x2122;s needs when new infrastructure projects reach the execution stage and we will continue to perform for the full benefit of all our shareholders and other stakeholders as the nationâ&#x20AC;&#x2122;s cement solution provider by offering good quality combined with excellent service. The Board of Directors wishes to express its sincere gratitude to all our shareholders, customers, suppliers and employees for their continuing support and trust in the company and its management team.

Veraphan Teepsuwan Chairman

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Board of Directors, Audit Committee, and Executive Committee Board of Directors Mr. Veraphan Teepsuwan

Chairman

Mr. Paul Heinz Hugentobler

Vice Chairman

Mr. Urs Wolfgang Bieri

Director

Mr. Harald Link

Director

Mr. Ekasak Puripol

Director (Retired March 14, 2007)

Mr. Sura Sanittanont

Director (Retired March 14, 2007)

Mr. Prakob Visitkitjakarn

Director

Mr. Chet Raktakanishta

Director

Mr. Chachchon Ratanarak

Director

Mr. Prabhol Buranasiri

Director (Effective March 14, 2007)

Mr. Thaveepol Kongseri

Director (Effective March 14, 2007)

Ms.Chantana Sukumanont

Director

Mr. Vanchai Tosomboon

Director

Mr. Leo Mittelholzer

Managing Director (Resigned February 28, 2007)

Mr. Marcel Smit

Managing Director (Effective March 01, 2007)

Audit Committee Mr. Prakob Visitkitjakarn

Chairman

Mr. Harald Link

Member

Mr. Chet Raktakanishta

Member

Executive Committee Mr. Leo Mittelholzer

Chairman of the Executive Committee (Resigned February 28, 2007)

Mr. Marcel Smit

Chairman of the Executive Committee (Effective March 01, 2007)

Ms.Chantana Sukumanont

Deputy Chairman of the Executive Committee (Marketing and Sales)

Mr. Vanchai Tosomboon

Executive Committee Member Executive Vice President (Saraburi Operations)

Mr. Rungrote Soonthorn

Executive Committee Member Senior Vice President (Human Resources and Management Development)

Mr. Andreas Leutenegger

Executive Committee Member Senior Vice President (Finance and Controlling)

Mr. Nopporn Thepsithar

Executive Committee Member Senior Vice President (Logistics and Exports)

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Management Structure Audit Committee

Board of Directors

Corporate Governance

Mr. Marcel Smit Managing Director, Chairman - Executive Committee

Mr. Rungrote Soonthorn Senior Vice President Human Resources and Management Development

Mr. Vanchai Tosomboon Director, Executive Vice President Saraburi Operations

Ms. Chantana Sukumanont Director, Deputy Chairman - Executive Committee Marketing and Sales

Mr. Andreas Leutenegger Senior Vice President Finance and Controlling

Mr. Nopporn Thepsithar Senior Vice President Logistics and Exports

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Key Figures 2007

2006

2005

2004

12.3 14.5

Million tons

Clinker production capacity Cement production capacity

Million Baht

Net sales Operating EBITDA EBITDA Operating profit Net profit after minority interests Cash flow from operating activities Investments in property, plant and equipment - net Total assets Net financial debt Total shareholdersâ&#x20AC;&#x2122; equity

22,800 5,211 5,506 4,396 3,230 4,000

23,647 6,059 6,344 5,320 3,9142 4,328

22,380 6,307 6,613 5,567 4,073 4,232

20,772 7,032 7,256 6,044 4,141 5,552

1,028 21,503 771 15,890

1,177 20,8342 73 15,8802

1,021 21,029 (1,793) 16,803

877 20,109 (1,468) 15,938

Margin (%)

Operating EBITDA EBITDA Operating profit Net profit after minority interests Cash flow from operating activities

23% 24% 19% 14% 18%

26% 27% 22% 17%2 18%

28% 30% 25% 18% 19%

34% 35% 29% 20% 27%

Financial Ratios

Earnings per share (Baht) Gross dividend per share (Baht) Dividend payout ratio on net profit (%) Gearing (%) Total liabilities to total assets (%)

14.05 14.001 100% 5% 26%

16.572 14.00 84%2 0% 24%

17.15 14.00 82% (11%) 20%

17.25 13.00 75% (9%) 21%

Own Personnel

Group Cement

3,056 2,254

2,927 2,243

2,866 2,163

2,763 2,070

1. Proposed by the Board of Directors. 2. Restated due to changes in accounting policies (TAS 44, 45). More details disclosed in notes to financial statements and auditorâ&#x20AC;&#x2122;s report.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Achievements and Milestones 1969

- The Company was established in 1969 as Siam City Cement Company Limited

1972

- Siam City Cement begins producing cement

1977

- Listed on the Stock Exchange of Thailand

1981

- Imported bunker oil kiln fuel replaced with domestic lignite

1989

- Introduction of 1st waste heat recovery system in Southeast Asia

1993

- Changed its status to a public company and its name to Siam City Cement Public Company Limited

1996

- Annual production capacity exceeds 12 million tons

1997

- Awarded ISO 9002 Certification

1998

- Awarded ISO 14001 Certification - Holcim became shareholder in Siam City Cement

1999

- Introduction of Alternative Fuels and Raw Materials (AFR) programme - Debt restructuring and refinancing completed

2000

- Launch of webSALES initiative - Awarded the 2000 Best Practices on Corporate Governance - Awarded the Audit Committee of the Year 2000

2001

- Awarded TIS 18001 Certification - Government approval for commercial use of AFR

2002

- Launch of INSEE (Eagle) family of cement products - Inauguration of AFR blending plant - Siam City Cement long-term debt reduced to zero

2003

- Launch of INSEE TONG, Thailand’s 1st premium masonry cement - Voted Best Company in Thailand and Best Asian Company in the Construction Sector in Euromoney Asian company survey

2005

- Repositioning corporate and products under the “As I Wish” branding campaign - Introducing “INSEE Mortar Max”: a ready-to-use dry mortar

2006

2007

- Certificate for supporting The Water Resources Department’s Checkdam Project from the Prime Minister - Award for Outstanding Workplace 2007 (Excellent Labor Relations and Labor Welfare) from the Ministry of Labor - Certification of European standard (EN 197-1) and French standard (NF 002) for INSEE Fah cement (OPC-5)

OH&S 12 Golden Rules launch to reinforce OH&S performance INSEE concrete franchise Start-up aggregate business for Siam City Concrete Certificates from Department of Industrial Works, Ministry of Industry on pleasant and environmental friendly plant in honour of HM the King’s 60th years accession to the Throne

Supporting Thailand’s development for more than 30 years by offering innovative solutions in cement products.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Vision, Mission, and Core Values

Corporate Vision “To provide foundations for society’s future.”

Corporate Mission “To increase value to all stakeholders by providing the best cement, aggregates, and related product solutions, achieving above-industry profitability through quality, service and innovation.”

Core Values - Commitment to our customers, delivering quality, service and innovation - Consistent and sound financial performance - Socially responsible, a good citizen - An open, respectful and collaborative environment with opportunities for personal development

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Achieving above-industry profitability through quality, service and innovation.

Corporate Fundamental Goals: To be preferred... … by customers

… by employees

To provide the best solutions on cement, aggregates, and related products

Provide competitive compensation, benefits and career development opportunities with respect and recognition in a trusted and transparent working environment

… by community Be socially responsible and environmentally conscious within communities and Thai society

… by business partners Collaborate with all stakeholders to grow business opportunities together

Motto

“At Siam City Cement, We Deliver.”

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Siam City Cement supplies Ready-mix Concrete for the Ramintra Expressway.

HIGHER

quality

Siam City Cement’s objectives is not just to produce high quality products, but also to respond effectively to customers’ demands.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Mr. Vanchai Tosomboon Executive Vice President Saraburi Operations

Mr. Marcel Smit Chairman - Executive Committee

Ms. Chantana Sukumanont Deputy Chairman - Executive Committee Marketing and Sales

Report of the Executive Committee

Siam City Cement Public Company Limited faced a challenging situation in 2007. Political uncertainty in Thailand affected the consumer confidence; this resulted in lower general construction activity and delay of Mega-projects. As a consequence cement consumption decreased by approximately 4-5 percent. From June 2007 onwards a fierce competitive environment resulted in lower market prices. Because of lower domestic demand, export opportunities were used and export volumes reached record levels of over 6 million tons. But the revenues of these exports were affected by the stronger Thai Baht.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Despite the difficult market conditions Siam City Cement was able to achieve Net Sales of 22,800 million Baht, only 4 percent lower than 2006. Energy costs continued to increase strongly during 2007 and shipping costs reached record levels. As a consequence of all the negative factors, profitability decreased, especially in the 3rd quarter. Good efficiency in the plants and in logistics, however, helped to achieve reasonable profit levels. Net Profit 2007: 14 percent of Net Sales; in 2006 this was 17 percent. In the last quarter of 2007 the Executive Committee started a total performance improvement programme.

Mr. Andreas Leutenegger Senior Vice President Finance and Controlling

Mr. Rungrote Soonthorn Senior Vice President Human Resources and Management Development

Mr. Nopporn Thepsithar Senior Vice President Logistics and Exports

This included aligned improvements in relation to our customers, logistics, efficiency, and energy consumption. Also, it was decided to close the two smallest and least energy efficient kilns in Saraburi. In relation to this closure a generous Mutual Separation Programme was offered to the involved staff. As a result of all the measures, Siam City Cement was able to achieve Earnings Before Interest and Tax (EBIT) of 4,691 million Baht,16 percent lower than 2006, and a Net Profit of 3,230 million Baht,17 percent lower than 2006. Due to good “working capital” management, the Cash Flow from Operating activities declined by only 8 percent to 4,000 million Baht.

Outlook 2008: 2008 will be another challenging year for Thailand: the impact of the new government is expected to have a positive effect on business. At the same time some world economies are showing signs of difficulties. Siam City Cement with its aligned strategies, internal improvements and renewed focus on quality and service is well positioned to improve its performance. “At Siam City Cement, We Deliver.”

Our subsidiary companies, INSEE Concrete, INSEE Aggregates, CONWOOD, and Khmer Cement Industry (KCI) have all contributed positively to the overall results. Marcel Smit Chairman - Executive Committee

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

SMARTER

innovation

To meet the changing needs of increasingly diverse construction projects, Siam City Cement continually develops quality products through innovation and technology improvement. The company also customizes products to meet specific customersâ&#x20AC;&#x2122; requirements.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Service Excellence Path to Sustainable Growth At Siam City Cement, we believe that service, quality, and innovation comprise the key value differentiators that will lead to a sustainable company performance, as well as make us stand out from the competition. Our objective is not only to sell good quality products, but also to respond to our customers’ wishes and needs in term of service excellence in a way that exceeds expectations-faster, higher and smarter. Our mission a “Solution Provider” is the core key value proposition to which all employees adhere. This means that every member of our company, in every department and in all operational units, is an expert in what they do to provide stakeholders with solutions. Many resources and efforts have been injected into developing and enhancing Siam City Cement’s service in order to raise it to a higher level. Customer Technical Service was developed to provide total solutions for our customers, both the professional segment and the mass market. At the same time, the Customer Service Center is also being enhanced in terms of systems and personnel so as to offer true excellence.

“Customer-driven Supply Chain Management”, a seamless operational process, was introduced. The concept originates from customers providing demand requirements to supply management who then ensure appropriate logistics, supply chain services and solutions are generated and synchronized with customers needs. A Centralized Logistics Planning and Controlling Center has been established to take care of overall logistics planning, while assuring logistics reliability in, for example, on-time delivery and in-plant loading time. Moreover, our group companies have also adopted our belief in service excellence by continuously improving their own services, as for example CONWOOD’s Customer Solution Team, which works together with customers, to clearly define their needs and requirements in order to deliver total solutions. At Siam City Cement, we constantly monitor the changes in market conditions, consumer behavior, and customer needs in order to adjust and continue to improve both our products and our services, and so live up to our promise: “At Siam City Cemen nt, We Deliver.”

Our mission a “Solution Provider” is the core key value proposition to which all employees adhere. This means that every member of our company, in every department and in all operational units, is an expert in what they do to provide stakeholders with solutions.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Service & Quality Excellence Cement The companyâ&#x20AC;&#x2122;s cement sales volume in 2007 achieved around 14.0 million tons, 4 percent higher than 2006. Of the total, export of cement & clinker volume grew 17 percent compared to 2006. In 2007, domestic sales volume declined by 4 percent compared to the previous year mainly due to the construction slowdown, especially in the public sector. In terms of sales price, there was intense price competition during the 3rd quarter of 2007. However, a price increase at the end of November pushed the price level up again, close to the level of the beginning of the year 2007. Export sales volume, including sales to bordering countries, reached approximately 6 million tons in 2007. Vietnam remains the companyâ&#x20AC;&#x2122;s biggest export market for clinker, followed by Bangladesh and the Middle East. Singapore is the largest destination of cement. During the past couple of years, the market for construction materials has been experiencing a slow

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

but significant change in terms of the emergence of a modern trade format. With a change in consumer behavior towards a One-Stop Shop service, and the Do-It-Yourself concept, many new modern businesses have entered the market to capture and serve the needs of this growing market segment. In response to these new demands, Siam City Cement has developed a new channel concept, called “INSEE SuperPro”, to help transform our key valued strategic agents from traditional stores to a more modern look with systematic processes. Our customer and sales consultants have also been professionally trained to take care of valued dealers in all aspects, providing service, sharing knowledge, offering consultation, and most importantly, delivering solutions. To ensure product quality, our Customer Technical Support team has extended its service by increasing the number of mobile lab units. We now can serve our customers more effectively and efficiently. In addition to quality checks, mobile lab crews can also provide consultation, advice, and any technical solutions that may be needed.

The new channel concept “INSEE SuperPro”.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Ready-mix Concrete The company sold 2.08 million cubic metres of Readymix Concrete in 2007. This was an increase over the 1.98 million cubic metres sold in the previous year. A relatively modest increase, mainly due to lower volume from mega projects. At the same time concrete prices were under pressure due to a highly competitive market resulting in lower profitability. As a result of our determination to provide all-inclusive concrete products and services, the brand INSEE Concrete has been created to fulfill our ultimate goal. Under this brand, we are striving to constantly develop our products and services at all stages of production, from the selection of high-quality raw materials, through the research and development of products to meet various specifications, to providing on-time delivery, as well as offering consulting and testing services. Due to the diversity of construction projects, different kinds of concrete applications are required. INSEE Concrete, therefore, has developed different kinds of concrete to serve various customer requirements. Also included are special concretes for specific construction works and complex structures.

As service is viewed as a key to success, the whole organization is dedicated to delivering superior services, exceeding customersâ&#x20AC;&#x2122; expectations.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

INSEE Concrete further customizes its products to meet precisely the specific needs of any particular project and so ensure a superior Ready-mix Concrete for all purposes.

Siam City Cement has supplied a substantial amount of Ready-mix Concrete to the Southern Ring Road project.

As service is viewed as a key to success, the whole organization of INSEE Concrete is dedicated to delivering superior services, exceeding customersâ&#x20AC;&#x2122; expectations. Our Customer Service Center provides solutions to all concrete enquiries from order-taking to tracking delivery status, as well as offering expert consultation and after-sales service by experienced and well-trained staff. With a plant network covering Greater Bangkok, Eastern Seaboard and major cities upcountry, our Production Team is ready to serve customersâ&#x20AC;&#x2122; needs effectively and efficiently, with the service of a qualified and dedicated workforce supported by a computerized batching system. On-time delivery is ensured by our Logistics Team. In addition to Ready-mix Concrete being delivered to job sites by professional drivers and modern concrete delivery trucks, the implementation of advanced Vehicle Status Control (VSC) and a mapping system applied to delivery trucks incorporating a site survey service further fulfill the promise of problem-free logistics. Last but not least, testing assurance is provided by our Quality Control Team. Testing by experienced personnel can be conducted either at the job site or at the batching plant. Being well aware of the importance of a healthy environment and safety at work, every process at INSEE Concrete has been supervised to ensure that our business is safe and environmentally sound. The implementation of noise and dust control, water treatment and water recycling, as well as regular maintenance of delivery trucks, have also all been adopted. With our constant striving for improvement in all areas of operation, we are proud of the recognition by international standard institutions that includes ISO 9001:2000 for every batching plant, ISO 14001 for environmental management, and TIS 18001 on occupational health and safety.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

CONWOOD In 2007, CONWOOD achieved 5 percent growth, with Net Sales of 764 million Baht. The year also saw CONWOOD successfully start to expand its business into Vietnam. CONWOOD continues to manufacturing prime quality wood replacement construction materials that are practical and environmentally friendly. Its products are the result of extensive research and innovative technology, and are designed to provide solutions for commercial and residential building construction and renovation projects. The company’s standards are recognized by international certification that includes ISO 9001:2000 and ISO 14001:2004, while in 2007 it received the further qualification of ISO TIS/OHSAS 18000. CONWOOD aims to offer the best service to clients, meeting all needs reliably and efficiently. To deliver on its promise a CONWOOD Solution Team was established. This team consists of sales and marketing professionals, research and development experts, and involves architects and engineers. In all its endeavours, CONWOOD’s ultimate goal is that it wants to be not only a supplier, but a real business partner. The restaurant of “The Dome at State Tower” is decorated with CONWOOD products.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Aggregates As a member of Siam City Cement Group, INSEE Aggregates products and services have been developed based not only on knowledge and experience in Thailand, but also from building on the best practice of over 400 aggregates operations within the Holcim Group around the globe. In this way a worldwide business experience is offered to all customers. In January 2007, INSEE Aggregates commenced its operation of a limestone quarry at Suphanburi supplying high quality aggregates to Bangkok. The crushing plant at Suphanburi was upgraded in mid-year and the production capacity increased to over 1 million tons per year. Also in 2007, modifications to the sand processing plant at Ayudhya were successful, and a new RMX (Ready-mix) sand designed for concrete products was launched in mid-year. Further, a sand processing plant at Cholburi commenced production of high sand in August. In 2007, the business unit Aggregates sold 1.2 million tons in its first year of operation and has shown positive results from the start.

There is strict quality control for both internal and external supply.

INSEE Aggregates concentrates strictly on ensuring quality for all customers. An aggregates laboratory at each production site, as well as a mobile technical support unit, ensures quality control so that all outgoing aggregates are compliant with the relevant standards, by using the best equipment and experienced technical support staff. Our aggregates quality control division also coordinates with the production division in fine-tuning the processing so as to adjust aggregates properties to meet specific customers’ requirements. Reliability is another aspect of our quality & service excellence, specific arrangements can be made upon customers’ request using INSEE Logistics. Furthermore every out-going delivery truck has to pass a weighing bridge to confirm that the aggregates are of the correct weight. After this check, the truck is sealed to ensure that the contents arrive at the customer’s site in good order.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Mortar A variety of products are offered, all of the highest quality.

Since the beginning of 2007, the company signed agreements with Novoplast to operate two plants at Ekachai in Samut Sakorn, and Tha-Rue in Kanchanaburi. Mortar sales volume for the year 2007 achieved nearly 200,000 tons. The market for mortar is viewed as very important as there is a growing trend for new products over traditional methods. To serve its customers needs, Siam City Cement offers a variety of products, all of the highest quality. To develop new products, the company uses knowledge from the customer in order to meet specific requirements and to realize total satisfaction. Moreover, it also aims to improve cost effectiveness by reducing excess materials and labour costs. Improve effectiveness through reducing work procedures, thus enabling masons to work more efficiently. Product quality is matched by extensive technical support services from pre-to post-sales and the company has a technical team to demonstrate products onsite and offer total customer solutions.

INSEE Mortar Max is used in plastering work for a new Tesco Lotus in Chiangmai.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

AFR : EcoSiam – Total Waste Management Since 2005, EcoSiam, a business unit of Siam City Cement responsible for the Alternative Fuels and Raw Materials (AFR), has provided total waste management service solutions to its customers in Thailand. This business unit adheres strictly to international environmental management standards, and uses the unique access to expertise and best practice in waste management within the Holcim network worldwide. In the near future, EcoSiam will extend its services in waste management solutions by operating one of the world’s most modern Alternative Fuels Preparation Plants located next to our cement plant in Saraburi. This facility has been designed using the latest technology and world-class environmental management systems, and will cover the entire range of pre-processing activities. The project has been granted a 106 License by the Department of Industrial Works, and has obtained investment promotion from Thailand’s Board of Investment (BOI). In 2008 Eco Siam will be renamed to “Geocycle”; a waste management brand of Holcim. Geocycle is operating in more than 35 countries around the world, which provides access to best practice within this network.

Geocycle provides access to best practice through the global Holcim network.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

OH&S : Occupational Health & Safety

Pro-active Measures To Ensure Safety For All The safety and well-being of employees and the community at large have always been of paramount concern for Siam City Cement. In 2007, the company implemented a number of initiatives in its ongoing efforts to maintain the highest health and safety standards. Notable in the year was the implementation of a Hazard Reporting drive, which calls for all employees and contractors to be issued with a report booklet to assist in reporting hazards when they are spotted. This has proved most successful in changing mindsets and raising awareness of safety risks, resulting in hazard reports increasing more than 10-fold compared to the previous year.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

In 2007, Siam City Cement was present with a booth at the National Safety Exhibition held in Bangkok. The event, which attracted 40,00050,000 visitors a day, provided a valuable opportunity for both sharing and disseminating information, while each of the companyâ&#x20AC;&#x2122;s Saraburi plants were honoured with prizes in recognition of TIS (Thailand Industry Standard) 18000 (OH&S) documentation and implementation. Also in 2007, a Mobile Safety Unit was approved and will become operational in 2008. Fitted out with hightech safety equipment, the custom-designed vehicle will be used across Thailand for training employees, contractors and customers, as well as for inspections, audits, industrial hygiene monitoring and sampling.

The Company takes a proactive stance on health and safety, both in the work place and in the community at large.

The proactive stance of the company’s health and safety operations was further illustrated by the level of trainings held during the year for employees and contractors. Included in the training were courses such as advanced risk assessment techniques for engineers, focusing on plant design and hazard elimination. Beyond the workplace, Siam City Cement extends its health and safety awareness programme into the community at large. A monthly booklet highlighting different kinds of general safety issues is given to all employees to take home and share with their families. The company also goes out to schools in the Saraburi area to conduct classes in safety issues in their homes. Furthermore, a “Think Safe… Drive Safe” campaign was launched in 2007, a year that was very much dedicated to learning and awareness.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

CSR : Corporate Social Responsibility

Honouring His Majesty The King’s 80th Birthday In 2007, the whole Thai nation rejoiced in the celebration of His Majesty King Bhumibol Adulyadej’s 80th birthday. This glorious and auspicious anniversary was an occasion for the people to express their love and devotion to their revered monarch. For Siam City Cement, it was also an opportunity to honour His Majesty through support of royally initiated projects. Following HM the King’s initiative and to celebrate his 80th birthday, the company, in cooperation with the Chaipattana Foundation, launched “INSEE Check Dam Project” to build 880 check dams each year for three consecutive years, totalling 2,640 units. Total contribution to the project will be 27 million Baht. The check dams have been built in needed areas such as Chiangmai, Lamphun and Nan with a concept to block hilly streams through a series of small dams,

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

helping mountainous communities to better manage thier water resources during times of drought and prevent flooding during the rainy season. In 2007, the implementation of the project exceeded the yearly target as over 1,000 check dams were built. In addition to “INSEE Check Dam Project”, the company also cooperated with Pha Muang Task Force to build check dams along the Northern border area, where over 16,000 check dams were built Elsewhere, Siam City Cement continues to work in collaboration on projects that benefit the community. In 2007, the company extended its “Happy Toilet Healthy Life” project with the donation of 400 tons of INSEE cement for the construction of toilets at 80 schools in five central provinces. Fully supported by

Check dams improve the distribution of water in Thailand’s mountainous regions.

the Higher Education Commission, Department of Public Health, and Thailand Environment Institute, the project is part of the company’s “Living Together” concept, which aims at sustainable improvement in three areas, namely social development, environmental preservation and economic progress. Among other ongoing projects is The PhukaeChalerm Phrakiat Educational Park for Environmental Rehabilitation Project. Located in the Phukae district of Saraburi Province, the project aims to rehabilitate 1,800 rai of depleted forest reserve.

Re-planting has now been completed and schools around the Phukae Forest have given their commitment to look after the project and help fulfill its long-term objectives of creating eco-tourism sites and areas for nature studies. Siam City Cement recognizes that compassion and support are important elements of Thai culture and adopts them as part of its own culture, believing that success and prosperity for all are best achieved through responsible social and environmental practice.

Working in conjunction with the Royal Forest Department, the company has generated tremendous support from both local officials and members of the community, especially teachers and students.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Summary of Major Developments and Recognitions in 2007

Ready-mix Concrete trucks delivering low-heat concrete for the construction of the basement of a new office building at Sathorn Square

Major Developments in 2007 Managing Director’s Office 1. More than 16,000 checkdams have been built with Chaipattana Foundation and Pha Muang Task Force to honor HM The King’s 80th Birthday. 2. Redecoration of Celebrated Arch on Ratchadamnoen avenue to honor HM The King’s 80th Birthday. 3. “Happy Toilet Healthy Life” project to build toilets for 80 dream schools with Ministry of Education, Ministry of Public Health and Thailand Environment Institute. 4. 475 rais of reforestation in Saraburi were completed under the project “Phu Kae Chalerm Phrakiat Educational Park for Environmental Rehabilitation” with the Royal Forest Department. 5. Capacity expansion of INSEE Suphanburi quarry to reach 1mio.Tons / annum and establish INSEE Cholburi sandpit operation. 6. Launch of new aggregates product innovation f.e.,RMX Sand-for high performance concrete. 7. CONWOOD realized its first export into Vietnam.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

8. Ecosiam signing MOU on strategic partnership with Wongpanit, Thailand’s largest recycling company, offering integrated waste management solutions.

Marketing and Sales 1. Product portfolio management technique was adopted to ensure sustainable developmen in the company’s products and services. 2. Customer database on web-base has been developed.

Logistics and Exports 1. Streamlined Order to Cash process between all Holcim companies in the region established. 2. Implementation of INSEE Service Standard for INSEE Transporter and Logistics & Exports to realize improved service to both internal & external customers.

Human Resources and Management Development 1. Volunteer program for employee in checkdam construction project to honor HM The King 80th Birthday.

Finance and Controlling 1. Implementation of Warehouse Optimization Program to improve operational efficiency and net working capital. 2. Expansion of Contractor Management and Services sourcing program to achieve cost optimization results. 3. Implementation of Internal Control System for increased reliability of financial reporting, better awareness of financial risks and improved reporting processes.

Recognitions in 2007 1. Certificate for supporting The Water Resources Department’ s Checkdam Project from the Prime Minister. 2. Award for Outstanding Workplace 2007 (Excellent Labor Relations and Labor Welfare) from the Ministry of Labor. 3. Awarded “Best Enterprise Award concerning Safety, Occupational Health and Working Environment” from Safety and Health at Work Promotion Association (Thailand) during National Safety Week 2007. 4. Certification of European standard (EN 197-1) and French standard (NF 002) for INSEE Fah cement (OPC-5). 5. CONWOOD received TIS/OHSAS 18001:1999 certificate from AJA.

Saraburi Operations 1. Implementation of “Geotechnical Risk” assessment program to ensure safety in all areas. 2. Implementation of “ProCem+” program to certify process operation personnel. 3. Implementation of “CO2 Assurance” program for future environment and suatainable development. 4. Implementation of “Raw material optimization” to save natural resources and raw materials costs. 5. Completion and operation of new AFR feeding systems at Kiln 4 and Kiln 3 respectively. 6. BOI privilege for Alternative Fuels Preparation Plant Project was granted. 7. CONWOOD achieved 90% OEE in their operation.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Our Corporate Governance Update

During 2007 the Company focused specially on corporate governance issues. The Company communicated clearly to its stakeholders that it strives to be a good corporate governance company, and wants to be environmentally conscious within the community it operates (Saraburi) and Thai society. Key achievements in 2007 for Corporate Governance and Internal Control improvement included:

1. Adoption of Group Code of Conduct. To make it easy to understand how we will achieve the above Corporate Strategy, the Board of Directors, in May 2007 adopted the Code of Conduct, a common and consistent framework in Siam City Cement Group Companies for how we will achieve our mission and goals, and how we conduct our daily business. The Code of Conduct reflects 10 aspects, namely; corporate governance, corporate social responsibility, sustainable environmental performance, compliance, use and protection of assets and information, conflict of

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

interest avoidance, gifts and donations, records and accounting, communication, and responsibility. This policy is communicated within the group companies and among our personnel as basic principles for everyday work. Code of Conduct was communicated with employees from all levels and throughout all the group companies.

2. Reaching international control standard. The Internal Control System (ICS) project establishes, formalizes, and implements key elements of the internal control system (ICS) relating to our business activities. The ICS contributes to increased reliability of financial reporting, better awareness of financial risks, and improved reporting processes. Through our compliance with the underpinning legal requirements, ICS will improve investor confidence, the reputation of Siam City Cement and ultimately the long-term growth potential of the Company.

3. Adopting Board and Executive Manual. This manual is to facilitate members of both the board of directors and the executive committee in their supervision over the Company, especially for the new members. It contains, for example, organizational regulations (specifying roles and responsibilities of directors and executive committees), key board events and agendas (scheduling key responsibilities to be discharged by board members, Audit Committee or executive members throughout the year), manual of authorities (setting out types of responsibilities that the board, CEO and executive committee have over the various areas in the Company), the Company reporting to third parties (setting out routine types of reporting, whether financial or operational reports, to ensure that other key stakeholders are identified and considered in the companyâ&#x20AC;&#x2122;s operations, and that the company is in compliance with local regulations and made timely and adequate disclosure accordingly. The manual is subject to review by company secretary on bi-annually basis, or when data contained therein has changed.

include all personnel under supervision of MD and CFO, and all managers in all other functions across the group. Delegated assignees were all open in their declaration. Report of this activity went to the management and the Audit Committee, in order to monitor and put preventive measures for the Company if necessary. From the report, it was concluded that no executive members or managers entered into business transactions with the group for their personal benefit. In identifying activities in compliance with the Principles of Good Corporate Governance for Listed Companies, introduced by to SET, this information is put in the Annual Statements (Form 56-1), which are published on the company website (www.siamcitycement.com). The Audit Committee, commented that the internal audit system within the company is sufficient and suitable for the business operations. Report of the Audit Committee is shown in page 41.

4. Structural support on compliance. Cement business is a permit-intensive business. Our members of the Audit Committee, who are experienced in financial, accounting, and other business aspects, are competent in meeting duties and responsibilities delegated specified under the Charter of the Audit Committee. However, not only internal audit works independently and reports directly to the Audit Committee, the management has assigned the compliance function to have a secondary reporting line (dotted line) to the Audit Committee. This is to ensure full support to the Audit Committee for any inquiry on operational level. Members of executive committee who supervise different areas also deligate compliance staffs to ensure all time compliance of their functions. These compliance officers work hand-in-hand and help safeguard the Company in each area of their expertise, e.g., environment, safety, and legal.

5. Contract management system. Through teamwork with a world class cement group, Holcim Ltd., the Company implemented a system to monitor contract preparation and enforcement. This will elevate the reliability of financial reporting, better cash management of the Company, and risk minimization.

6. Routine conflict of interest declaration. To ensure the practice of the good governance concerning the conflict of interest avoidance, the Company initiated an online conflict of interest declaration. Delegated assignees for this activity

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Industrial Outlook

Business Overview of the Cement Industry in 2007 The year 2007 meant difficult times for the Thai cement industry as the country experienced an economic slowdown. Postponements of many mega-projects, lower investor / consumer confidence due to political uncertainties, and continuously rising energy prices affecting production costs had a substantial impact on the cement industry performance in Thailand. The countryâ&#x20AC;&#x2122;s domestic cement demand decreased by 4-5 percent in comparison to 2006, and at the same time, the cost of production increased.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Export The decline in domestic cement demand has affected the whole industry during 2007, so cement manufacturers focused more on their export to keep optimal efficiency in production. However, high freight costs were forcing cement exporters to focus their business on nearby countries such as Vietnam, Bangladesh and Cambodia. Thailandâ&#x20AC;&#x2122;s cement export volume in 2007 was 18.2 million tons, a 24 percent increase over the previous year. Higher production costs, together with a stronger Thai Baht have influenced Siam City Cement Public Company Limited (SCCC) to temporarily close two kilns and therefore lower its production capacity, starting early 2008. Because of this, the 2008 year-end volume will decline by several million tons.

Airport Rail Link project under construction. Siam City Cement has supplied a substantial amount of Ready-mix Concrete to this mega-project.

Business Forecast for the Cement Industry in 2008 Looking ahead, it is expected that domestic cement demand will remain approximately the same as during 2007. The newly formed government will have to restore the investor / consumer confidence and mega projects are expected only to have some positive impact on cement or concrete supplies towards the end of 2008.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Risk and Risk Management

The Executive Committee of Siam City Cement Public Company Limited established a business risk management unit to study and understand the possible risks related to the company for the upcoming 5 years. This business unit then reports to the Executive Committee on possible risk factors and recommends solutions on how to manage these risks. In this way the company is well aware of the possible risks and makes sure these risks are managed properly. Two risks are identified that can have a substantial impact on the performance of the company in the near future:

1. Risk from Increasing Oil and Coal Prices Higher oil and coal prices have an impact on costs of energy, transportation and paper. Therefore, the company has invested in alternative fuels, made long term contracts with key coal suppliers, utilized NGV instead of gasoline for transportation cost, and extended its waste heat recovery project.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Southern Ring Road project is supplied by INSEE Ready-mix Concrete.

2. Risk from Currency Exchange Rate Fluctuation between the Thai Baht and the U.S. Dollar A strong Thai Baht against a weak U.S. Dollar will result in lower export revenues. On the other hand, this has a positive impact on coal import. The company partially hedges the difference between the export and import currency-exposure.

Corporate Identity Siam City Cement has modified its corporate identity. Our brand “INSEE” is now combined with the red eagle-head on a white background, looking left. You will see our brand and logo being used very consistently by all our business units throughout Thailand.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Report of the Board of Directorsâ&#x20AC;&#x2122; Responsibilities for Financial Statements The consolidated financial statements of the Company and its subsidiaries and the separate financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Thailand, in compliance with Accountancy Act B.E. 2543. The Company has chosen with careful consideration its accounting policies, which are proper to business operations, and has always strictly adhered to these policies. All material information has been sufficiently disclosed in the notes to the financial statements. The Board of Directors of the Company is held accountable for correctness and completeness of the aforementioned financial statements, including financial data as shown in the annual report. The Board has also adopted an effective internal control which makes reasonably assure that the financial data and report are accurate, complete and adequate to protect assets and prevent possible wrongdoing or other irregularities in the operations of the Company. The Audit Committee, consisting of three independent directors performing its duties in compliance with the SET guidelines on Best Practice Guidelines for Audit Committee, assists the Board of Directors by overseeing internal and external audit matters on its behalf, and operates under a written charter adopted by the Committee and the Board of Directors. The report of the Audit Committee and the report of the certified external authorized auditors appear in this annual report.

Veraphan Teepsuwan

Marcellinus Simon Hendrikus Maria Smit

Chairman

Managing Director

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Report of the Audit Committee To the Shareholders of Siam City Cement Public Company Limited We are pleased to present our report for the financial year ended 31 December 2007. The Audit Committee is comprised solely of independent directors and operates under a written charter adopted by the Committee and the Board of Directors. In 2007, the Audit Committee held four ordinary meetings. The Committee discussed with the Company’s external auditors their plans for audits during the year and discussed the results of their examinations and evaluations of the Company’s internal controls, and the quality of financial reporting. The Management reported to the Committee that the Company’s quarterly and annual consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Committee has reviewed and discussed the consolidated financial statements and the separate financial statements of Siam City Cement Public Company Limited, including the disclosure of connected transactions and transactions of conflicts of interest, with management and the external auditor. Based on the reviews and discussions, the Committee reported to the Board of Directors that the audited consolidated financial statements for the years ended 31 December 2007 and 2006 have been prepared in compliance with generally accepted accounting principles, and reflect the financial performance of the Company and its subsidiaries. The Committee reviewed the internal auditor’s plans to assess internal controls in selected areas of the Company’s operations for 2007. The Committee also reviewed the results of these assessments with the internal auditors and management. Where improvements are required to internal controls, the Committee was satisfied that management is taking appropriate remedial action. Whilst reviewing the quarterly and annual financial statements for 2007, and the above mentioned assessments performed by the external and internal auditors, the Committee did not note non-compliance of the Company’s activities with the Securities and Exchange Act and with rules and regulations of the Stock Exchange of Thailand. The Committee recommends to the Board of Directors and the Annual General Meeting, the retention of Ms. Saifon Inkaew, Ms. Ratana Jala and Ms. Kamontip Lertwitworatep of Ernst & Young Office Limited as the Company’s external auditors for 2008 and the proposed remuneration.

January 30, 2008 For and on behalf of the Audit Committee Siam City Cement Public Company Limited

Prakob Visitkitjakarn Chairman of the Audit Committee

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Consolidated Financial Statements

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Report of CertiďŹ ed Public Accountant To The Shareholders of Siam City Cement Public Company Limited I have audited the accompanying consolidated balance sheet of Siam City Cement Public Company Limited and its subsidiaries as at 31 December 2007, and the related consolidated statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the year then ended, and the separate financial statements of Siam City Cement Public Company Limited for the same year. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Siam City Cement Public Company Limited and its subsidiaries, and the separate financial statements of Siam City Cement Public Company Limited for the year ended 31 December 2006, as presented herein for comparative purpose, were audited by another auditor of our firm who expressed an unqualified opinion on those statements, under his report dated 8 February 2007. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Siam City Cement Public Company Limited and its subsidiaries and of Siam City Cement Public Company Limited as at 31 December 2007, the results of their operations and cash flows for the year then ended, in accordance with generally accepted accounting principles. Without qualifying my opinion on the above financial statements, I draw attention to the matters as discussed in Note 4.1 to the financial statements whereby, effective 1 January 2007, the Company changed its accounting policy for recording investments in subsidiary and associated companies. The Company has thus restated the financial statements as at 31 December 2006 and for the year then end to reflect this accounting change. In my opinion, the adjustments made for the preparation of such statements are appropriate and have been properly applied.

Saifon Inkaew Certified Public Accoutat (Thailand) No.4434 Ernst & Young Office Limited Bangkok : 7 Febuary 2008

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Balance Sheets

As at 31 December 2007 and 2006

(Unit : Baht) Consolidated Financial Statements Note

2007

2006

Separate Financial Statements 2007

2006

(Restated)

ASSETS CURRENT ASSETS Cash and cash equivalents

503,148,104

710,304,130

352,466,266

545,610,844

7, 8

454,815,719

322,782,982

881,740,237

691,440,736

Trade accounts receivable Subsidiaries and related companies

2,292,241,183

2,239,385,632

1,432,658,077

1,483,869,156

Inventories - net

Other companies - net

1,578,588,098

1,672,880,938

1,385,470,191

1,563,958,077

Other debtors - subsidiary and related companies

2,317,370

7,620,461

211,251,571

160,728,029

31,971,203

170,088,002

30,997,926

144,429,478

Advance payments to suppliers - other companies Other current assets TOTAL CURRENT ASSETS

113,297,189

131,936,810

88,939,831

96,108,587

4,976,378,866

5,254,998,955

4,383,524,099

4,686,144,907

NON-CURRENT ASSETS Investments in subsidiary companies - net

700,149,097

700,148,497

Investments in associated company

927,515,316

830,283,476

483,426,543

Other investments - related company

368,119,260

Long-term loans to subsidiaries - net

7, 14

1,832,033,107

1,283,125,433

Property, plant and equipment - net

12,518,609,059

12,088,237,575

10,522,371,689

10,145,600,593

Assets not used in operations - net

824,975,079

1,128,654,987

800,144,466

1,103,678,608

Intangible assets - net

915,821,520

380,830,725

731,080,195

378,210,919

678,024,671

597,258,794

558,754,539

535,712,717

293,658,610

186,043,575

154,691,428

146,316,630

TOTAL NON-CURRENT ASSETS

16,526,723,515

15,579,428,392

15,782,651,064

14,776,219,940

TOTAL ASSETS

21,503,102,381

20,834,427,347

20,166,175,163

19,462,364,847

Other non-current assets Deferred income tax Others

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

(Unit : Baht) Consolidated Financial Statements Note

2007

2006

Separate Financial Statements 2007

2006

(Restated)

LIABILITIES AND SHAREHOLDERSâ&#x20AC;&#x2122; EQUITY CURRENT LIABILITIES Short-term loans from financial institutions

1,008,388,487

443,544,467

1,000,000,000

400,000,000

270,898,309

185,359,181

329,336,577

237,567,750 885,439,787

Trade accounts payable Subsidiaries and related companies

7, 20

1,245,084,629

1,142,904,093

934,086,505

Current portion of long-term loans

Other companies 21

54,000,000

50,000,000

Current portion of long-term liabilities for concession

32,876,946

30,870,372

32,876,946

30,870,372

Other current liabilities Accrued rebate

228,181,228

209,874,950

223,332,734

205,874,950

Accrued electricity

238,054,479

232,586,537

226,851,784

230,606,900

Corporate income tax payable

579,513,192

760,581,194

550,428,948

735,458,475

Other accrued expenses

799,648,268

618,352,488

733,594,823

549,897,900

Advances from customers

19,244,873

30,628,345

14,263,389

26,061,700

Others

35,389,933

61,008,347

24,667,514

54,254,062

4,511,280,344

3,765,709,974

4,069,439,220

3,356,031,896

212,000,000

289,000,000

280,210,086

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES Long-term loans - net of current portion Other liabilities Long-term liabilities for concession - net of current portion 22

247,333,140

280,210,086

247,333,140

Provident fund

513,608,411

471,506,658

452,615,128

417,584,602

Reserve for employee retirement benefit plan

128,589,131

148,080,972

117,119,030

137,419,521

TOTAL NON-CURRENT LIABILITIES

1,101,530,682

1,188,797,716

817,067,298

835,214,209

TOTAL LIABILITIES

5,612,811,026

4,954,507,690

4,886,506,518

4,191,246,105

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Balance Sheets

As at 31 December 2007 and 2006

(Unit : Baht) Consolidated Financial Statements Note

2007

2006

Separate Financial Statements 2007

2006

(Restated)

SHAREHOLDERS’ EQUITY Share capital Registered 287,500,000 ordinary shares of Baht 10 each (2006 : 300,000,000 ordinary shares of Baht 10 each) 26

2,875,000,000

3,000,000,000

2,875,000,000

3,000,000,000

Issued and fully paid up 237,500,000 ordinary shares of Baht 10 each (2006 : 250,000,000 ordinary shares of Baht 10 each) 26 Share premium

2,375,000,000

2,500,000,000

2,375,000,000

2,500,000,000

10,106,266,730

61,136

25,580

Translation adjustment Retained earnings Appropriated - statutory reserve - treasury stock reserve

300,000,000

1,710,643,745

4,696,067,693

1,710,643,745

4,696,067,693

3,108,794,195

2,973,254,867

2,498,401,915

2,364,852,012

Unappropriated Equity attributable to the Company’s shareholders Less : Treasury stock

17,600,765,806

20,575,614,870

16,990,312,390

19,967,186,435

(1,710,643,745)

(4,696,067,693)

(1,710,643,745)

(4,696,067,693)

15,890,122,061

15,879,547,177

15,279,668,645

15,271,118,742

EQUITY ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS - NET MINORITY INTERESTS - EQUITY ATTRIBUTABLE TO

169,294

372,480

TOTAL SHAREHOLDERS’ EQUITY

15,890,291,355

15,879,919,657

15,279,668,645

15,271,118,742

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

21,503,102,381

20,834,427,347

20,166,175,163

19,462,364,847

MINORITY SHAREHOLDERS OF SUBSIDIARIES

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

For the Years Ended 31 December 2007 and 2006

Income Statements (Unit : Baht)

Consolidated Financial Statements Note

2007

2006

Separate Financial Statements 2007

2006

(Restated)

REVENUES Net sales

Dividend income

Other income

22,800,424,169

23,647,362,689

20,045,278,327

20,975,928,019

81,873,646

54,792,364

115,367,298

149,868,825

242,499,849

230,296,849

179,105,486

164,683,904

23,094,896,953

23,961,915,418

20,369,651,822

21,261,017,232

Share of income from investment in associated company accounted for under equity method

TOTAL REVENUES EXPENSES Cost of sales

7, 27

16,372,605,252

16,270,011,849

14,007,049,969

14,056,075,005

Selling and administrative expenses

2,030,808,630

2,056,262,051

1,696,351,645

1,789,605,701

Other expenses

TOTAL EXPENSES

29,703,109

17,703,109

18,403,413,882

18,355,977,009

15,703,401,614

15,863,383,815

4,691,483,071

5,605,938,409

4,666,250,208

5,397,633,417

INCOME BEFORE INTEREST EXPENSES AND CORPORATE INCOME TAX INTEREST EXPENSES CORPORATE INCOME TAX

INCOME AFTER CORPORATE INCOME TAX

(102,193,119)

(82,272,805)

(72,075,035)

(44,756,820)

(1,359,024,836)

(1,607,744,547)

(1,365,685,044)

(1,571,823,345)

3,230,265,116

3,915,921,057

3,228,490,129

3,781,053,252

NET LOSS (INCOME) ATTRIBUTABLE

214,438

(1,746,500)

3,230,479,554

3,914,174,557

3,228,490,129

3,781,053,252

14.05

16.68

14.04

16.11

230,000,000

234,711,139

230,000,000

234,711,139

TO MINORITY INTERESTS

NET INCOME FOR THE YEAR BASIC EARNINGS PER SHARE

Net income Weighted average number of ordinary share - net (share)

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity

For the Years Ended 31 December 2007 and 2006

(Unit : Baht) Consolidated Financial Statements Retained earnings Appropriated

Minority interests equity attributable to minority shareholders of subsidiaries

Issued and fully paid up share capital

Share premium

2,500,000,000

10,106,266,730

133,936,334

32,916,893

2,500,000,000

10,106,266,730

Note

Translation adjustment

Statutory reserve

Treasury stock reserve Unappropriated

Treasury stock

Total

Balance as at 31 December 2005 - as previously reported

(149,697) 300,000,000 2,985,423,948 3,897,809,628 (2,985,423,948)

(1,406,196) 16,802,520,465

Cumulative effect of the change in accounting policy for recording investments in subsidiary and associated companies Cumulative effect of the change in accounting policy for recording deferred income tax in subsidiary company Balance as at 31 December 2005 - as restated Translation adjustment

(149,697) 300,000,000 2,985,423,948 4,064,662,855 (2,985,423,948) 175,277

- (1,710,643,745)

(1,406,196) 16,969,373,692 -

175,277

Increase in treasury stock during the year Increase in treasury stock reserve

- 1,710,643,745 (1,710,643,745)

- (1,710,643,745) -

Net income for the year (restated)

- 3,914,174,557

3,914,174,557

Increase in minority interests

1,778,676

- (3,294,938,800)

25,580 300,000,000 4,696,067,693 2,973,254,867 (4,696,067,693)

372,480 15,879,919,657

Dividend paid

Balance as at 31 December 2006 2,500,000,000

10,106,266,730

Translation adjustment

- as restated

35,556

Net income for the year

- 3,230,479,554

3,230,479,554

Decrease in minority interests

(203,186)

125,000,000

2,985,423,948

- (3,219,940,226)

61,136 300,000,000 1,710,643,745 3,108,794,195 (1,710,643,745)

169,294 15,890,291,355

Treasury stock cancellation

(125,000,000)

- (2,985,423,948)

Dividend paid

2,375,000,000

10,106,266,730

Balance as at 31 December 2007

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

(Unit : Baht) Separate Financial Statements Retained earnings

Note

Issued and fully paid up share capital

Appropriated Share premium

Translation adjustment

Statutory reserve

Treasury stock reserve Unappropriated

Treasury stock

Total

Balance as at 31 December 2005 - as previously reported

2,500,000,000

10,106,266,730

2,500,000,000

10,106,266,730

(149,697) 300,000,000 2,985,423,948 3,897,809,628 (2,985,423,948) 16,803,926,661

Cumulative effect of the change in accounting policy for recording investments in subsidiary and associated companies

149,697

(308,428,323)

(308,278,626)

Balance as at 31 December 2005 - as restated

- 300,000,000 2,985,423,948 3,589,381,305 (2,985,423,948) 16,495,648,035

Increase in treasury stock during the year

Increase in treasury stock reserve

- 1,710,643,745 (1,710,643,745)

- 3,781,053,252

3,781,053,252

- (3,294,938,800)

2,500,000,000

10,106,266,730

(125,000,000)

- (2,985,423,948)

Net income for the year (restated) Dividend paid

- (1,710,643,745) (1,710,643,745)

Balance as at 31 December 2006 - as restated Net income for the year Treasury stock cancellation

Dividend paid

Balance as at 31 December 2007

2,375,000,000

10,106,266,730

- 300,000,000 4,696,067,693 2,364,852,012 (4,696,067,693) 15,271,118,742 - 3,228,490,129 125,000,000

- (3,219,940,226)

3,228,490,129

2,985,423,948

- (3,219,940,226)

- 300,000,000 1,710,643,745 2,498,401,915 (1,710,643,745) 15,279,668,645

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Statements of Cash Flows

For the Years Ended 31 December 2007 and 2006

(Unit : Baht) Consolidated Financial Statements Note

2007

2006

Separate Financial Statements 2007

(Restated)

2006 (Restated)

Cash flows from operating activities Net income for the year Adjustments to reconcile net income to net cash provided by (paid from) operating activities : Share of income from investment in associated company accounted for under equity method Dividend received from associated company Increase (decrease) in minority interests Allowance for doubtful accounts and obsolete inventories Depreciation and amortization Allowance for loss on impairment of assets not used in operations Allowance for doubtful accounts of long-term loans to subsidiary Loss on disposals of fixed assets Allowance for provident fund and employee retirement benefit Unrealised loss (gain) on exchange Increase in deferred income tax Net income before changes in operating assets and liabilities Decrease (increase) in operating assets : Trade accounts receivable Inventories Other debtors - subsidiary and related companies Other current assets Increase (decrease) in operating liabilities :Trade accounts payable Corporate income tax payable Accrued expenses and other current liabilities Provident fund and reserve for employee retirement benefit plan Net cash from operating activities

3,230,479,554

3,914,174,557

3,228,490,129

3,781,053,252

(179,105,486) (215,038) 141,628,194 814,796,873 84,659,644 60,217,408 (9,651,790) (80,765,877) 4,062,043,482

(164,683,904) 1,746,500 3,809,655 739,414,323 28,532,707 65,441,210 101,027,852 6,007,471 (87,719,106) 4,607,751,265

(81,873,646) 40,225,413 651,840,824 27,492,326 82,481,847 51,105,534 (9,699,197) (23,041,821) 3,967,021,409

(54,792,364) 507,524 618,180,359 17,703,109 28,339,855 66,018,299 91,295,127 5,878,768 (59,089,923) 4,495,094,006

(294,160,634) 68,764,047 5,303,091 28,028,119

(604,887,220) 70,928,465 (7,620,461) (18,437,546)

(148,513,720) 154,514,827 (50,523,542) 29,085,297

(540,455,271) 94,929,997 (39,175,914) (73,073,570)

187,750,241 (181,068,002) 161,028,171 (37,607,496) 4,000,081,019

14,402,586 83,695,201 189,687,678 (7,849,449) 4,327,670,519

140,446,155 (185,029,527) 149,033,194 (36,375,499) 4,019,658,594

41,102,209 71,916,534 194,127,965 (6,819,126) 4,237,646,830

220,646,143 (1,601,734,333) (44,011,772) (105,044,151) 81,873,646 (1,448,270,467)

299,210,844 (1,475,509,642) (17,808,009) (47,514,750) 54,792,364 (1,186,829,193)

393,244,758 (1,441,528,954) (576,400,000) (13,377,510) (5,804,514) 81,873,646 (1,561,992,574)

298,633,536 (1,158,835,133) (320,300,000) (17,879,223) (27,709,760) 54,792,364 (1,171,298,216)

564,844,020 (3,219,940,226) (30,870,372) (73,000,000) (2,758,966,578) (207,156,026) 710,304,130 503,148,104

393,445,467 (3,294,938,800) (1,710,643,745) (46,000,000) (4,658,137,078) (1,517,295,752) 2,227,599,882 710,304,130

600,000,000 (3,219,940,226) (30,870,372) (2,650,810,598) (193,144,578) 545,610,844 352,466,266

400,000,000 (3,294,938,800) (1,710,643,745) (4,605,582,545) (1,539,233,931) 2,084,844,775 545,610,844

103,984,080 1,616,844,479

81,484,303 1,597,300,459

72,075,035 1,573,624,385

44,756,820 1,558,950,276

527,749,700

363,578,700

Cash flows from investing activities Proceeds from sales of fixed assets Purchase of fixed assets Increase in long-term loan to subsidiary Increase in intangible assets Increase in other non-current assets Dividend received Net cash used in investing activities

Cash flows from financing activities Increase in short-term loans from financial institutions Dividend paid Repayment of long-term liabilities for concession Increase in treasury stock Repayment of long-term loans Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year Supplemental cash flows information : Cash paid during the year for : Interest expenses Corporate income tax Non-cash related transactions : Transferred property, plant and equipment to intangible assets

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

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

For the Years Ended 31 December 2007 and 2006

Notes to Consolidated Financial Statements

1. GENERAL INFORMATION Siam City Cement Public Company Limited (“the Company”) was incorporated as a limited company under Thai laws and registered the change of the status of the Company to a public limited company under the Public Limited Company Act on 5 November 1993. The Company operates in Thailand and its principal activity is manufacturing of cement with the registered address at 199, 7th - 12th Floor, Column Tower, Ratchadapisek Road, Klongtoey, Bangkok and its factory address is at 99 Moo 9 and 219 Moo 5, Mitraparp Road Km. 129 - 131, Tabkwang, Kaengkhoi, Saraburi.

2. BASIS OF PREPARATION 2.1

The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547, except for the early adoption of Accounting Standard No. 56 “Accounting for Income Tax” which is in line with International Accounting Standard (IAS) No. 12 “Income Taxes” (revised 1996), and the adoption of International Accounting Standard (IAS) No. 19 “Employee Benefits” and International Accounting Standard (IAS) No. 39 “Financial Instruments: Recognition and Measurement”. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

2.2

Basis of consolidation a) The consolidated financial statements include the financial statements of Siam City Cement Public Company Limited and the following subsidiary companies:

Company’s name

Country of incorporation

Siam City Concrete Co., Ltd.

Thailand

Eagle Cement Holdings Co., Ltd. Conwood Co., Ltd. Khmer Cement Industry Co., Ltd.

Thailand Thailand Cambodia

Registered capital 2007 2006 Million Million Baht Baht 400 400 700 300 USD 0.005 million

700 300 USD 0.005 million

Percentage of shareholding by the Company 2007 2006 Percent Percent 99.99

99.99

99.99 99.99 75.00

Nature of business

Ready-mix concrete and aggregates Holding Construction material Cement trading

b) The financial statements of overseas subsidiary company are translated into Thai Baht at the closing average exchange rate as to assets and liabilities, and at monthly average exchange rate as to revenues and expenses. The resultant differences have been shown under the caption of “Translation adjustment” in shareholders’ equity. c) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. d) Investments in the subsidiary companies as recorded in the Company’s books of account are eliminated against the equity of the subsidiary companies. 2.3

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

3. ADOPTION OF NEW ACCOUNTING STANDARDS The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting Standards. The notifications mandate the use of the following new Accounting Standards.

3.1 Thai Accounting Standards which are effective for the current year TAS 44 (revised 2007) TAS 45 (revised 2007) TAS 46 (revised 2007)

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

These accounting standards became effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associate in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44 and 45 as discussed in Note 4.1.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

3.2 Thai Accounting Standards which are not effective for the current year TAS 25 (revised 2007) TAS 29 (revised 2007) TAS 31 (revised 2007) TAS 33 (revised 2007) TAS 35 (revised 2007) TAS 39 (revised 2007) TAS 41 (revised 2007) TAS 43 (revised 2007) TAS 49 (revised 2007) TAS 51

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

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

4. CHANGE IN ACCOUNTING POLICY 4.1 Investments in subsidiary and associated companies On 1 January 2007, the Company changed its accounting policy for recording investment in subsidiary and associated companies in the separate financial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (revised 2007) regarding “Consolidated Financial Statements and Separate Financial Statements”, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method. In this regard, the Company has restated the previous year’s financial statements for comparative purposes. In consequence to the change in this accounting policy, the Company reversed the deferred tax liability in both separate financial statements and consolidated financial statements. The effects of the change in accounting policy are as follows : (Unit : Baht) Separate financial statements 2006 2005

Consolidated financial statements 2006 2005 Balance sheet as at 31 December Increase (decrease) in retained earnings Increase (decrease) in currency translation Increase (decrease) in shareholders’ equity / total assets

163,985,953 163,985,953

Income statements for the year ended 31 December 2006 Increase in dividend income Decrease in share of income from investments accounted for under equity method Decrease in corporate income tax Increase (decrease) in net income Increase (decrease) in basic earnings per share

133,936,334 133,936,334

(382,870,911) (25,580) (382,896,491)

(308,428,323) 149,697 (308,278,626)

Consolidated financial statements

(Unit : Baht) Separate financial statements

30,049,619 30,049,619 0.13

54,792,364 (159,284,571) 30,049,619 (74,442,588) (0.32)

4.2 Deferred income tax in subsidiary company During the year 2007, a subsidiary company changed its accounting policy for recording deferred income tax. In this regard, the Company has restated the previous period’s consolidated financial statements for comparative purpose. The change has the effect of increasing net income in the consolidated income statement for the year ended 31 December 2006 by Baht 28.6 million (Baht 0.12 per share). The cumulative effect of the change in accounting policy has been presented under the heading of “Cumulative effect of the change in accounting policy for recording deferred income tax in subsidiary company” in the consolidated statements of changes in shareholders’ equity.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

5. SIGNIFICANT ACCOUNTING POLICIES 5.1 Revenue recognition a) Sales of goods Sales of goods are recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting goods returns, discounts and allowances. b) Interest income Interest income is recognised on an accrual basis based on the effective interest rate. c) Dividends Dividends are recognised when the right to receive the dividends is established.

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

5.3 Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging.

5.4 Inventories Inventories are valued at lower of cost (on an average method and first-in first-out basis) and net realisable value. Cost of finished goods and work in process comprises all production costs and attributable factory overhead. Raw materials and store supplies are charged to production costs whenever consumed. Allowance for diminution in value of inventories and obsolete inventories is made for obsolete or deteriorated inventories.

5.5 Investments in shares Investments in associated company are accounted for in the consolidated financial statements using the equity method. Investments in subsidiary and associated companies are accounted for in the separate financial statements using the cost method. Other investments in related company of a subsidiary company are accounted for using the cost method. Allowance for impairment loss will be made when the net realisable value is lower than the cost of investments.

5.6 Property, plant and equipment and depreciation Land is stated at cost less allowance for impairment (if any). Mineral reserves are stated at cost less accumulated depreciation, which are depreciated based on the physical unit-of-production method over their estimated commercial lives. Building and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of asset (if any). Depreciation of plant and equipment is calculated by reference to their costs on a straight-line basis over the estimated useful lives as follows :-

Building and structures Machinery and equipment Furniture, fixtures and office equipment Motor vehicles

5 - 30 years 5 - 30 years 3 - 5 years 5 years

No depreciation is provided on land and construction in progress. Depreciation is included in determining income.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

5.7 Intangible assets and amortisation Intangible assets are stated at cost less accumulated amortisation. Amortisation of intangible assets, except mining concession of aggregate business, is calculated by reference to cost on a straight - line basis over the expected future period of economic benefit of each type of intangible asset, as follows :Mining concession Computer software

20 - 25 years 3 years

Mining concession of aggregate business is amortised based on the physical unit-of-production method over their estimated commercial lives. The amortisation is included in determining income.

5.8 Treasury stock Treasury stock is stated at cost and presented as a reduction from shareholders’ equity. Gains on disposal of treasury stock are determined by reference to its carrying amount and are taken to premium on treasury stock, losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to premium on treasury stock and retained earnings, consecutively.

5.9 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, and key management personnel, directors and officers with authority in the planning and direction of the Company’s operations.

5.10 Operating lease Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statements over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

5.11 Foreign currencies Foreign currency transactions are translated into Baht at the rates ruling at the transactions dates. Assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the rates ruling on the balance sheet date. Gains and losses on exchange are included in determining income.

5.12 Impairment of assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company makes an estimate of the asset’s recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An asset’s recoverable amount is the higher of fair value less costs to sell or value in use.

5.13 Employee benefits The Company and its employees have jointly established a provident fund. The fund is monthly contributed to by employees and by the Company. The Company’s contributions are recognised as expenses when incurred. The Company has provided a retirement benefit plan which includes a resignation plan and a long service award for employees. The Company’s contributions are recognised as expenses when incurred.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

The provident fund liability and the reserve for retirement benefit plan are measured at the present value of estimated future cash flows using a discount rate that is similar to the interest rate on government bonds. A professionally qualified independent actuary values the fundâ&#x20AC;&#x2122;s liability and certain obligations on regular basis.

5.14 Provisions Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

5.15 Corporate Income Tax a) Current tax The Company and subsidiary companies in Thailand calculate corporate income tax in accordance with the basis regulated in the Revenue Code. Overseas subsidiary company calculates corporate income tax in accordance with tax rate regulated in tax law of that country. b) Deferred Tax Deferred income tax is calculated based on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts, by using the enacted tax rate at the balance sheet date. The Company recognises deferred tax liabilities for taxable temporary differences and recognises deferred tax assets for deductible temporary differences and tax losses carried forward. The Company recognises deferred tax assets to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilized. At each balance sheet date, the Company reviews and reduces the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

5.16 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

5.17 Financial instruments Financial instruments presented in the balance sheets consist of cash and cash at bank, accounts receivable, accounts payable and loans. The accounting policy is separately disclosed in the related notes. Forward exchange contracts Forward exchange contracts are the contracts under which the counter-parties to the contract are committed to deliver/take delivery of the pre-determined amounts of foreign currencies on the pre-determined dates. The Company records obligations under forward exchange contracts entered into for hedging foreign exchange risk at fair values. Gains or losses arising from changes in fair value of the contracts are recognised in the income statement. The Company has no policy to speculate in or engage in the trading of any financial derivative instruments.

6. CASH AND CASH EQUIVALENTS As at 31 December 2007 and 2006, cash and cash equivalents consist of the following :

Cash in hand and at banks Short-term investments in fixed deposits Cash and cash equivalents

Consolidated financial statements 2007 2006 502,903,069 710,303,099 245,035 1,031 503,148,104 710,304,130

(Unit : Baht) Separate financial statements 2007 2006 352,465,202 545,609,813 1,064 1,031 352,466,266 545,610,844

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

7. RELATED PARTY TRANSACTIONS During the years, the Company and its subsidiaries had business transactions with their related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of significant transactions. (Unit : Thousand Baht) Consolidated financial statements 2007 2006 Transactions with subsidiary companies (eliminated from the consolidated financial statements) Sales of goods Sales of assets Purchases of goods Other income (expense) Interest income

Separate financial statements 2007 2006

1,473,618 172,957 191,698 28,280 113,857

1,418,597 2,373 83,238

Transactions with associated company Purchases of goods

1,292,448

940,944

1,292,448

940,944

Transactions with related companies Sales of goods Purchases of goods Other income (expense) Service fee expenses Selling and administrative expenses

3,667,911 14,832 144,817 87,596

3,643,957 336,690 73,435 148,418 76,675

3,667,911 14,832 144,817 85,406

3,643,957 336,690 73,435 148,418 72,584

Pricing policy

Market price Cost plus margin Market price Cost plus margin MLR with reference to the rate quoted by financial institutions Market price

Market price Market price Cost plus margin Negotiated agreement Cost plus margin

The outstanding balance of the above transactions as at the end of year have been separately shown in the balance sheets.

Directorsâ&#x20AC;&#x2122; remuneration In 2007 the Company and its subsidiaries paid to their directors the remuneration totaling Baht 15.0 million (2006 : Baht 15.0 million) and for the separate financial statements totaling Baht 15.0 million (2006: Baht 15.0 million).

8. TRADE ACCOUNTS RECEIVABLES - SUBSIDIARIES AND RELATED COMPANIES As at 31 December 2007 and 2006, the outstanding balance of trade accounts receivable - subsidiaries and related companies is as follows :

Siam City Concrete Co., Ltd. Other subsidiaries and related companies Total

Consolidated financial statements 2007 2006 454,815,719 322,782,982 454,815,719 322,782,982

(Unit : Baht) Separate financial statements 2007 2006 305,779,855 254,156,491 575,960,382 437,284,245 881,740,237 691,440,736

Most of the above trade accounts receivable - subsidiaries and related companies are current. Management believes that these trade accounts receivable - subsidiaries and related companies are collectible in full. Thus no allowance for doubtful accounts has been provided.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

9. TRADE ACCOUNTS RECEIVABLE - OTHER COMPANIES The outstanding balance of trade accounts receivable - other companies as at 31 December 2007 and 2006 are aged, based on due date, as follows :

Current to 30 days Over 30 days to 60 days Over 60 days to 90 days Over 90 days Total Less : Allowance for doubtful accounts Trade accounts receivable - other companies, net

Consolidated financial statements 2007 2006 2,068,843,261 2,115,065,970 57,344,882 64,637,019 53,776,305 2,378,267 435,939,239 264,867,479 2,615,903,687 2,446,948,735 (323,662,504) (207,563,103) 2,292,241,183 2,239,385,632

(Unit : Baht) Separate financial statements 2007 2006 1,354,280,686 1,441,667,488 27,019,055 28,088,069 28,073,811 2,120,632 212,289,038 184,745,128 1,621,662,590 1,656,621,317 (189,004,513) (172,752,161) 1,432,658,077 1,483,869,156

The Company and its subsidiaries provided allowance for doubtful accounts of Baht 324 million and Baht 208 million in the consolidated financial statements, and Baht 189 million and Baht 173 million in the separate financial statements as at 31 December 2007 and 2006, respectively. Management believes that such allowances are adequate to absorb possible losses on doubtful accounts.

10. INVENTORIES

Consolidated financial statements 2007 2006 425,149,449 517,461,856 99,129,495 53,607,832 120,557,995 75,309,806 977,705,147 1,045,610,020 18,507,224 17,823,843 1,641,049,310 1,709,813,357 (62,461,212) (36,932,419) 1,578,588,098 1,672,880,938

Finished goods Work in process Raw materials Store supplies Goods in transit Total Less : Allowance for obsolete inventories Inventories - net

(Unit : Baht) Separate financial statements 2007 2006 363,276,234 472,155,308 38,798,510 33,975,227 89,219,973 57,631,453 934,640,216 1,017,371,153 18,507,224 17,823,843 1,444,442,157 1,598,956,984 (58,971,966) (34,998,907) 1,385,470,191 1,563,958,077

11. INVESTMENTS IN SUBSIDIARY COMPANIES Separate financial statements

Company’s name

Siam City Concrete Co., Ltd.

Type of business

Type of relation

Ready-mix concrete and aggregates Holding Construction Material Cement Trading

Direct Direct Direct Direct

Eagle Cement Holdings Co., Ltd. Conwood Co., Ltd. Khmer Cement Industry Co., Ltd. Total investments in subsidiary companies Less : Allowance for diminution in value of investments Investments in subsidiary companies - net

Percentage of shareholding 2007 2006 % %

99.99 99.99 99.99 75.00

Investment value under cost method 2007 2006 (Baht) (Baht) (Restated) 399,999,400 399,998,800 699,999,300 699,999,300 300,000,000 300,000,000 149,697 149,697 1,400,148,397 1,400,147,797 (699,999,300) (699,999,300) 700,149,097 700,148,497

Dividend received for the year ended 31 December 2007 2006 (Baht) (Baht)

According to the joint venture agreement, Khmer Cement Industry Company Limited (herein after called “KCI”) was incorporated under the laws of Cambodia with a registered capital of USD 1.5 million consisting of 1.5 million shares with a par value of USD 1 per share. The Company holds a 75 percent interest and so will contribute USD 1.125 million. However, at the time of its incorporation and until 31 December 2007, the registered capital was equivalent to USD 5,300. The capital will be increased from time to time when the business of the company requires. KCI commenced its operation on 1 April 2005.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

12. INVESTMENTS IN ASSOCIATED COMPANY 12.1 Detail of associated company:

Percentage of shareholding 2007 2006 % %

Country of Type of Type of business incorporation relation

Company’s name

Lanna Resources Public Co., Ltd.

Coal Mining

Thailand

Direct

44.99

Consolidated financial statements Carrying amount based on equity method 2007 2006 (Baht) (Baht)

927,515,316

830,283,476

Consolidated financial statements Share of income from investments in associate during the year 2007 2006 179,105,486 164,683,904

Company’s name Lanna Resources Public Co., Ltd.

Separate financial statements Cost 2007 (Baht)

2006 (Baht) (Restated)

483,426,543 483,426,543

(Unit : Baht) Separate financial statements Dividend received during the year 2007 2006 81,873,646 54,792,364

12.2 As at 31 December 2007, the fair value of investment in the above associated company was Baht 2,850 million (2006 : Baht 1,779 million) which was based on the closing price as quoted on the Stock Exchange of Thailand. 12.3 Summarised financial information of associated company:

Company’s name Lanna Resources Public Co., Ltd.

Paid-up capital as at 31 December 2007 2006 350 350

Total assets as at 31 December 2007 2006 3,355 3,459

Total liabilities as at 31 December 2007 2006 1,089 1,371

(Unit: Million Baht) Net income for the year ended 31 December 2007 2006 379 388

Total revenues for the year ended 31 December 2007 2006 6,045 5,495

13. OTHER INVESTMENT - RELATED COMPANY As at 31 December 2007 and 2006, investment in ordinary shares of a related company, which is accounted for under the cost method, is as follows :

Company’s name

Type of Country of Type of business incorporation relation

Holcim (Bangladesh) Co., Ltd. Cement

Bangladesh

Indirect

Consolidated financial statements Paid up Percentage of share capital shareholding Cost value Dividend received 2007 2006 2007 2006 2007 2006 2007 2006 Million Taka Million Taka % % Baht Baht Baht Baht 120

120

10.42

368,119,260

14. LONG-TERM LOANS TO SUBSIDIARIES During the year, movements of long-term loans to subsidiaries were as follows : (Unit : Baht) Separate financial statements

Eagle Cement Holdings Co., Ltd. - The principal of the loan is repayable as a lump - sum on 28 June 2008. The loan bears interest at the Minimum Lending Rate (MLR), payable semi-annually commencing in June 2003. Siam City Concrete Co., Ltd. - The principal of loan is repayable semi-annually installments of varying amounts. The loan bears interest at Minimum Lending Rate (MLR) minus 1% per annum payable quarterly commencing in March 2005. Total Less : Allowance for doubtful debt Net

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Balance as at 31 December 2006 369,119,260

During the year Increase Decrease -

Balance as at 31 December 2007 369,119,260

1,045,300,000

576,400,000

1,621,700,000

1,414,419,260 (131,293,827) 1,283,125,433

576,400,000 (27,492,326) 548,907,674

1,990,819,260 (158,786,153) 1,832,033,107

15. PROPERTY, PLANT AND EQUIPMENT (Unit : Baht)

Land and mineral reserve Cost 31 December 2006 Purchases and transfer in Disposals and transfer out 31 December 2007 Accumulated depreciation 31 December 2006 Depreciation for the year Disposals and transfer in/out 31 December 2007 Allowance for impairment 31 December 2006 31 December 2007 Net book value 31 December 2006 31 December 2007

Building and structures

Consolidated financial statements Furniture, fixtures Machinery and office and equipment equipment Motor vehicles

1,567,467,197 78,158,369 (7,500,000) 1,638,125,566

6,563,892,168 22,777,644,857 166,348,113 374,479,792 (52,042,084) (109,909,316) 6,678,198,197 23,042,215,333

983,457,557 310,936,168 (47,873,628) 1,246,520,097

227,547 10,540,685 10,768,232

3,557,580,018 17,187,642,481 177,586,013 465,108,771 (12,025,306) (95,332,386) 3,723,140,725 17,557,418,866

841,872,897 81,944,656 (40,150,672) 883,666,881

1,174,330,254 12,106,907 (4,199,395) 1,182,237,766

Construction in process

Total

1,208,625,159 1,774,530,061 34,875,616,999 119,997,604 1,763,593,586 2,813,513,632 (7,107,352) (1,563,130,495) (1,787,562,875) 1,321,515,411 1,974,993,152 35,901,567,756

25,481,053 25,481,053

245,174 245,174

1,567,239,650 1,627,357,334

2,980,831,097 2,929,576,419

5,589,757,202 5,484,551,293

141,584,660 362,853,216

34,294,905 139,277,645

- 22,761,653,197 747,287,032 - (151,707,759) - 23,357,232,470 -

25,726,227 25,726,227

1,774,530,061 12,088,237,575 1,974,993,152 12,518,609,059

Depreciation for the year

677,748,561 747,287,032

2006 (Baht 643 million included in manufacturing cost, and the remaining balance included in selling and administrative expenses) 2007 (Baht 684 million included in manufacturing cost, and the remaining balance included in selling and administrative expenses)

(Unit : Baht)

Building and structures

Separate financial statements Furniture, fixtures Machinery and office and equipment equipment Motor vehicles

Construction in process

Total

1,067,321,656 57,068,354 (7,500,000) 1,116,890,010

5,987,957,794 21,353,936,671 83,392,137 284,736,127 (24,557,324) (99,007,928) 6,046,792,607 21,539,664,870

876,251,906 302,765,659 (38,251,172) 1,140,766,393

252,422 252,422

3,431,532,169 16,661,826,920 154,363,620 364,685,270 (6,978,190) (77,621,983) 3,578,917,599 16,948,890,207

765,627,255 70,542,307 (37,645,699) 798,523,863

1,162,936,059 7,183,768 (4,130,836) 1,165,988,991

- 22,021,922,403 597,027,387 - (126,376,708) - 22,492,573,082

2,556,425,625 2,467,875,008

110,624,651 342,242,530

31,836,385 103,561,285

1,687,282,525 10,145,600,593 1,901,280,615 10,522,371,689

1,067,321,656 1,116,637,588

4,692,109,751 4,590,774,663

1,194,772,444 1,687,282,525 32,167,522,996 79,533,062 1,535,912,354 2,343,407,693 (4,755,230) (1,321,914,264) (1,495,985,918) 1,269,550,276 1,901,280,615 33,014,944,771

Depreciation for the year 2006 (Baht 530 million included in manufacturing cost, and the remaining balance included in selling and administrative expenses) 2007 (Baht 539 million included in manufacturing cost, and the remaining balance included in selling and administrative expenses)

560,384,727 597,027,387

A portion of subsidiary companiesâ&#x20AC;&#x2122; land, construction thereon and machinery with a total net book value as at 31 December 2007 of Baht 272 million is mortgaged as collateral for long-term loans from financial institutions as mentioned in Note 21. As at 31 December 2007 and 2006, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to Baht 7,923 million and Baht 7,855 million (Separate financial statements : Baht 7,519 million and Baht 7,486 million), respectively. On 19 April 2004, there was an explosion and fire at the Companyâ&#x20AC;&#x2122;s factory at Saraburi. The assessment on damaged fixed assets and facilities has been completed and the Company has received full compensation from the insurance company. However, a litigation claim for compensation of damage sustained by third party, caused by the accident, is pending.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

16. ASSETS NOT USED IN OPERATIONS (Unit : Baht)

Cost 31 December 2006 Transfer in Disposals and transfer out 31 December 2007 Accumulated depreciation 31 December 2006 Depreciation for the year Disposals and transfer in/out 31 December 2007 Allowance for impairment 31 December 2006 31 December 2007 Net book value 31 December 2006 31 December 2007

Consolidated financial statements Furniture, fixtures Machinery and office and equipment equipment

Land

Building and structures

788,571,754 (141,192,302) 647,379,452

1,024,862,331 (223,031,183) 801,831,148

56,105,091 3,236,560 (15,764,565) 43,577,086

33,243,581 (17,154,888) 16,088,693

507,800 507,800

1,903,290,557 3,236,560 (397,142,938) 1,509,384,179

424,307,243 29,762,093 (91,981,503) 362,087,833

45,680,697 977,048 (11,829,262) 34,828,483

33,243,437 23 (17,154,869) 16,088,591

507,800 507,800

503,739,177 30,739,164 (120,965,634) 413,512,707

160,448,611 160,448,611

110,447,782 110,447,782

270,896,393 270,896,393

628,123,143 486,930,841

490,107,306 329,295,533

10,424,394 8,748,603

144 102

1,128,654,987 824,975,079

Motor vehicles

Total

Depreciation for the year

29,877,162 30,739,164

2006 (included in selling and administrative expenses) 2007 (included in selling and administrative expenses)

(Unit : Baht)

Cost 31 December 2006 Disposals and transfer out 31 December 2007 Accumulated depreciation 31 December 2006 Depreciation for the year Disposals and transfer out 31 December 2007 Allowance for impairment 31 December 2006 31 December 2007 Net book value 31 December 2006 31 December 2007

Separate financial statements Furniture, fixtures Machinery and office and equipment equipment Motor vehicles

Land

Building and structures

751,753,559 (141,192,303) 610,561,256

1,021,792,382 (223,031,182) 798,761,200

41,373,512 (1,196,108) 40,177,404

33,204,354 (17,154,888) 16,049,466

507,800 507,800

1,848,631,607 (382,574,481) 1,466,057,126

421,245,516 29,754,174 (91,981,501) 359,018,189

31,098,956 972,328 (630,470) 31,440,814

33,204,334 (17,154,870) 16,049,464

507,800 507,800

486,056,606 30,726,502 (109,766,841) 407,016,267

148,448,611 148,448,611

110,447,782 110,447,782

258,896,393 258,896,393

603,304,948 462,112,645

490,099,084 329,295,229

10,274,556 8,736,590

20 2

1,103,678,608 800,144,466

Total

Depreciation for the year 2006 (included in selling and administrative expenses) 2007 (included in selling and administrative expenses)

29,860,598 30,726,502

During 2006, the Company and its subsidiary had set up an allowance for impairment of those non operating asset of Baht 30 million (Separate financial statements : Baht 18 million). Such amount has been shown as a part of â&#x20AC;&#x153;Other expensesâ&#x20AC;? in the income statements for the year. Management believes that such assets are salable in the future at prices not less than their carrying value. As at 31 December 2007 and 2006, certain non operating plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to Baht 50 million and Baht 77 million (Separate financial statements : Baht 43 million and Baht 61 million), respectively.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

17. INTANGIBLE ASSETS (Unit : Baht) Mining concession Cost 31 December 2006 Additions and transfer in 31 December 2007 Accumulated amortisation 31 December 2006 Amortisation during the year 31 December 2007 Net book value 31 December 2006 31 December 2007 Amortisation for the year 2006 2007

Consolidated financial statements Computer Other software intangible assets

Total

423,128,276 457,669,502 880,797,778

33,494,463 4,019,876 37,514,339

154,534,857 110,072,094 264,606,951

611,157,596 571,761,472 1,182,919,068

86,994,594 21,543,202 108,537,796

15,709,954 2,570,260 18,280,214

127,622,323 12,657,215 140,279,538

230,326,871 36,770,677 267,097,548

336,133,682 772,259,982

17,784,509 19,234,125

26,912,534 124,327,413

380,830,725 915,821,520

16,967,091 21,543,202

6,103,659 2,570,260

8,717,850 12,657,215

31,788,600 36,770,677 (Unit : Baht)

Mining concession Cost 31 December 2006 Additions and transfer in 31 December 2007 Accumulated amortisation 31 December 2006 Amortisation during the year 31 December 2007 Net book value 31 December 2006 31 December 2007 Amortisation for the year 2006 2007

Separate financial statements Computer Other software intangible assets

Total

423,128,276 293,498,502 716,626,778

28,923,677 2,841,692 31,765,369

138,546,265 80,616,016 219,162,281

590,598,218 376,956,210 967,554,428

86,994,594 20,255,278 107,249,872

13,758,974 1,098,263 14,857,237

111,633,731 2,733,393 114,367,124

212,387,299 24,086,934 236,474,233

336,133,682 609,376,906

15,164,703 16,908,132

26,912,534 104,795,157

378,210,919 731,080,195

16,967,091 20,255,278

4,586,325 1,098,263

6,381,618 2,733,393

27,935,034 24,086,934

Amortisation for the years ended 31 December 2007 and 2006 amounted to Baht 29 million and Baht 24 million (Separate financial statements : Baht 17 million and Baht 23 million), respectively was included in manufacturing costs and the remaining Baht 8 million and Baht 8 million (Separate financial statements : Baht 7 million and Baht 5 million), respectively was included in selling and administrative expenses.

18. CORPORATE INCOME TAX/DEFERRED INCOME TAX Corporate income tax for the years 2007 and 2006 was summarised below :

Current income tax Increase in deferred tax assets Corporate income tax recognised in income statements

Consolidated financial statements 2007 2006 (Restated) 1,439,790,713 1,695,463,653 (80,765,877) (87,719,106) 1,359,024,836 1,607,744,547

(Unit : Baht) Separate financial statements 2007 2006 (Restated) 1,388,726,866 1,630,913,268 (23,041,822) (59,089,923) 1,365,685,044 1,571,823,345

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

Deferred income tax in the balance sheets as at 31 December 2007 and 2006 consisted of the following :

Consolidated financial statements 2007 2006 (Restated) Deferred income tax calculated on temporary differences : Balance - beginning of year Add : Current year temporary difference Less : Utilised during the year Balance - end of year

597,258,794 82,325,027 (1,559,150) 678,024,671

509,539,688 94,221,684 (6,502,578) 597,258,794

(Unit : Baht) Separate financial statements 2007 2006 (Restated) 535,712,717 24,600,972 (1,559,150) 558,754,539

476,622,794 65,592,501 (6,502,578) 535,712,717

19. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS

Short-term loans from banks

Consolidated financial statements 2007 2006 1,008,388,487 443,544,467

(Unit : Baht) Separate financial statements 2007 2006 1,000,000,000 400,000,000

As at 31 December 2007, the Company and its subsidiary had obtained short-term loans of Baht 1,008 million in the consolidated financial statements and Baht 1,000 million in the separate financial statements from a local bank carrying interest at the rate of 4.0 to 5.3 percent per annum. These loans are due for repayment within 2008.

20. TRADE ACCOUNTS PAYABLE- SUBSIDIARIES AND RELATED COMPANIES As at 31 December 2007 and 2006, the balances of trade accounts payable - subsidiaries and related companies are as follows :

Lanna Resources Public Co., Ltd. Holcim Group Support Ltd. Siam City Concrete Co., Ltd. Holcim Services (Asia) Ltd. Khmer Cement Industry Co., Ltd. Holcim Trading PTE Ltd. Total

Consolidated financial statements 2007 2006 206,324,817 91,507,897 52,324,071 84,568,041 7,788,578 9,283,243 4,460,843 270,898,309 185,359,181

(Unit : Baht) Separate financial statements 2007 2006 206,324,817 91,507,897 52,324,071 84,568,041 53,163,026 423,169 7,405,042 9,283,243 5,658,778 51,785,400 4,460,843 329,336,577 237,567,750

21. LONG-TERM LOANS

Consolidated financial statements 2007 2006 Subsidiary Company Loan from a local bank, repayable in 15 semi-annual installments of varying amounts, commencing in October 2005, and carrying interest at MLR. Less : Portion due within one year Net

266,000,000 (54,000,000) 212,000,000

339,000,000 (50,000,000) 289,000,000

(Unit : Baht) Separate financial statements 2007 2006

Long-term loans from financial institutions of certain subsidiary is collateralized by a portion of the subsidiaryâ&#x20AC;&#x2122; land, construction thereon and machinery as mentioned in Note 15. The loan agreements have certain restrictive covenants pertaining to performance, dividend payments, maintenance of certain financial ratios in the financial statements and the percentage of shares held by the major shareholder.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

22. LONG-TERM LIABILITIES FOR CONCESSION

Long-term liabilities for concession Less : Portion due within one year Net

Consolidated financial statements 2007 2006 280,210,086 311,080,458 (32,876,946) (30,870,372) 247,333,140 280,210,086

(Unit : Baht) Separate financial statements 2007 2006 280,210,086 311,080,458 (32,876,946) (30,870,372) 247,333,140 280,210,086

The Company entered into various agreements to pay for in 2005 renewed mining concession which are payable in 8 equal, annual installments commencing in 2007 and carrying interest at the rate of 6.5 percent per annum, to Department of Primary Industries and Mines, the Ministry of Industry.

23. PROVIDENT FUND The Company, its subsidiaries and their permanent employees have jointly established provident funds and registered a provident fund scheme under the Provident Fund Act B.E. 2530, whereby the Company and its subsidiaries contribute to the funds as follows :

Fund 1 A contributory, unfunded provident fund for the employees of the Company and a subsidiary company. Employees who have completed at least 5 years of service are entitled to full benefits, while employees leaving before completing 5 years of service do not receive the contributions made by the Company and the subsidiary company. Under the regulations of the fund, members are required to pay, and the Company and such subsidiary company accrue, monthly contributions to the fund at 5% of the members’ basic salaries.

Fund 2 On 1 January 1989, the Company established another contributory, unfunded provident fund for employees who have completed at least 5 years of service with the Company. The Company accrues amounts matching the employees’ contribution, but the percentage of contribution by each party varies according to the length of service with the Company. The Company had closed this fund in 2007.

Fund 3 The Company, its subsidiaries and their permanent employees have jointly registered a provident fund scheme under Provident Fund Act B.E. 2530. Such fund is monthly contributed to by both the employees and the Company and its subsidiaries at rates of 3 - 5 percent of the employees’ basic salaries. The fund is managed by Ayudhya Fund Management Company Limited. During the year, the Company and its subsidiaries contributed Baht 59 million (2006 : Baht 39 million) and the Company only contributed Baht 55 million (2006 : Baht 38 million) to the fund.

24. RESERVE FOR EMPLOYEE RETIREMENT BENEFIT PLAN The Company and a subsidiary company have provided a retirement benefit plan for their employees who have completed one year or three years of continuous service with the Company and or such subsidiary company. Under the plan, employees are entitled to receive, upon retirement, early retirement benefits which were accrued according to the best estimation of the management and measured at the present value of estimated future cash flows using a discount rate that is similar to the interest rate on government bonds. A professionally qualified independent actuary values the fund’s liabilities and certain obligations on regular basis. As at 31 December 2007, the amount provided in the accounts of the Company and such subsidiary company amounted to Baht 117 million and Baht 11 million (2006 : Baht 137 million and Baht 11 million), respectively.

25. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. The Company’s statutory reserve has reached 10 percent of the registered share capital.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

26. TREASURY STOCK

Number of treasury shares (shares) Average price per share (Baht)

Consolidated financial statements 2007 2006 7,500,000 20,000,000 228.09 234.80

Separate financial statements 2007 2006 7,500,000 20,000,000 228.09 234.80

By the resolution of the meeting of the Company’s Board of Directors held on 11 December 2003, the Company approved to repurchase its shares in order to manage its excess cash, under the share repurchase scheme, with the investment not to exceed Baht 3,200 million or in term of shares repurchased not to exceed 12.5 million shares, equivalent to 5% of the total issued and paid-up shares of the Company. The period for the repurchase of the shares was from 26 December 2003 to 11 June 2004 and the resale period is from 11 December 2004 to 11 June 2007 (6 months after the completion date of the share repurchase and not later than 3 years from this time). In the event that the Company does not or is unable to dispose of all repurchased shares within the set period, when the due date has passed the Company is to reduce its paid-up capital by writing-off the remaining unsold repurchased shares. On 14 February 2005, the Securities and Exchange Commission of Thailand (SEC) imposed an official requirement for all listed companies to follow the Judicial Council deliberated the issue of treasury share schemes under Section 66/1(2) of the Public Limited Companies Act B.E. 2535, that the cost of treasury shares as acquired by a public limited company should not exceed its unappropriated retained earnings. The Council also suggested that the relevant authorities should require public limited companies to set aside within appropriated retained earnings a separate reserve account in an amount equal to the cost of the treasury shares. The reserve shall remain outstanding until either the shares are sold or paid-up capital is reduced by cancellation of any remaining unsold shares. The Annual General Meeting of Shareholders held on 28 April 2005 approved the allocation of Baht 2,985.4 million from the unappropriated retained earnings as of 1 January 2005 to reserve for treasury shares according to SEC requirement. On 28 June 2006, the meeting of the Company’s Board of Directors passed a resolution to approve a second repurchase of shares by the Company in order to manage its excess cash, under the share repurchase scheme, with the investment not to exceed Baht 1,800 million or in term of shares repurchased not to exceed 7.5 million shares, equivalent to 3% of the total issued and paid-up shares of the Company. The period for the repurchase of the shares was from 14 July 2006 to 20 December 2006 and the resale period is from 21 June 2007 to 20 December 2009 (6 months after the completion date of the share repurchase and not later than 3 years from this time). In the event that the Company does not or is unable to dispose of all repurchased shares within the set period, when the due date has passed the Company is to reduce its paid-up capital by cancellation of any remaining unsold shares. The Annual General Meeting of Shareholders held on 14 March 2007 approved the additional allocation of Baht 1,710.6 million from the unappropriated retained earnings as of 31 December 2006 to reserve for treasury shares according to SEC requirement. On 3 May 2007, the meeting of the Company’s Board of Director passed a resolution to approve the reduction in paid-up share capital by cancelling the 12.5 million treasury shares with a par value of Baht 10 each unsold under the first share repurchase scheme, or by Baht 125 million, in order to comply with the Ministerial Regulation concerning treasury stock under which the Company has to dispose all of its repurchased shares within 3 years commencing from the date of share repurchase completion (within 11 June 2007). The Company registered the reduction of its paid-up share capital from Baht 2,500 million (250 million shares with a par value of Baht 10 each) to Baht 2,375 million (237.5 million shares with a par value of Baht 10 each) with the Ministry of Commerce on 26 June 2007. In addition, the Company reversed the reserve for treasury shares of Baht 2,985.4 million to unappropriated retained earnings.

27. MUTUAL SEPARATION EXPENSES In November 2007, the Company has decided to temporary reduce the cement production capacity effective from 1 January 2008 and internal reorganize the Company and its subsidiary structure. The Company offered an early retirement scheme amounted to Baht 154 million (Separate financial statements : Baht 146 million), in the income statements for the year ended 31 December 2007, which was included in manufacturing costs of Baht 139 million (Separate financial statements : Baht 136 million) and in selling and administrative expenses of Baht 15 million (Separate financial statements : Baht 10 million).

28. EARNINGS PER SHARE Earnings per share as presented in the income statements is the basic earnings per share which is determined by dividing the net income for the year by the weighted average number of ordinary shares in issue during the year. No disclosure of diluted earnings per share for the year is required as the Company has no potential ordinary shares.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

29. DIVIDENDS The Annual General Meeting of Shareholders held on 30 March 2006 approved to pay a final dividend of Baht 7.5 per share out of 2005 income, or a total sum of Baht 1,781 million. Thus, including the interim dividend of Baht 6.5 per share, the total dividend payment out of 2005 income amounted to Baht 14.0 per share. On 10 August 2006, the Board of Directors approved the payment of an interim dividend from the Company’s income during the period of January to June 2006 of Baht 6.5 per share, or a total sum of Baht 1,514 million. The interim dividend was paid on 10 September 2006. The Annual General Meeting of Shareholders held on 14 March 2007 approved to pay a final dividend of Baht 7.5 per share out of 2006 income, or a total sum of Baht 1,725 million. Thus, including the interim dividend of Baht 6.5 per share, the total dividend payment out of 2006 income amounted to Baht 14.0 per share. On 9 August 2007, the Board of Directors approved the payment of an interim dividend from the Company’s income during the period of January to June 2007 of Baht 6.5 per share, or a total sum of Baht 1,495 million. The interim dividend was paid on 7 September 2007.

30. NUMBER OF EMPLOYEES AND RELATED COSTS

Number of own employees at end of year (Persons) Employee costs for the year (Thousand Baht)

Consolidated financial statements 2007 2006 3,056 2,927 1,970,834 1,719,706

Separate financial statements 2007 2006 2,254 2,243 1,651,453 1,446,076

31. BANK GUARANTEES As at 31 December 2007, there were outstanding bank guarantees of approximately Baht 61 million (Separate financial statements : Baht 48 million) issued by banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of their businesses.

32. COMMITMENTS 32.1

As at 31 December 2007, the Company and its subsidiaries have significant outstanding commitments as follows : 32.1.1 The Company extended the general assistance agreement with a related company for another 1 year beginning from 1 January 2007 to 31 December 2007. The Company committed to pay a fee on the basis and at the rate as stipulated in the agreement. 32.1.2 The Company entered into an agreement with a local company in respect of the Company’s computer system for a period of 3 years which is extendable under the terms specified in the agreement. The Company committed to pay the monthly fee of Baht 10.0 million. 32.1.3 The Company and its subsidiaries entered into various agreements with local companies to lease their office premises, other facilities and render service for periods ranging from 3 years to 30 years up to 2024. As at 31 December 2007, the Company and its subsidiaries have outstanding commitments payable in the future as follows :

Payable within 2008 2009 to 2010 2010 and thereafter Total

Consolidated financial statements 234 189 91 514

(Unit : Million Baht) Separate financial statements 188 135 23 346

32.1.4 The Company and its subsidiaries have commitments in respect of raw materials and fuel purchases, logistic services, lease of equipment, sales contracts as required in the normal course of their businesses. 32.1.5 The Company entered into agreements with third parties to acquire land and raw material resources. Subject to certain conditions, the Company will purchase assets at the price as specified in the agreements.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2007 and 2006

32.1.6 A subsidiary company entered into a technology license agreement with an overseas company for a period of 10 years, commencing 6 March 2002 to 5 March 2012 after this period the agreement is automatically renewed for a 1 year period. The subsidiary committed to pay licensing fee on the basis and at the rate as stipulated under the agreement. 32.1.7 The Company had outstanding capital expenditure and construction commitments of Baht 646 million (2006 : Baht 365 million). 32.2

As at 31 December 2007, the associated company had the following significant commitments. 32.2.1 The associated company had entered into several lease agreements in respect of the lease of land, office building space, motor vehicles, and other services. Future minimum rentals payable under these leases and services agreements as at 31 December 2007 amount to approximately Baht 22.9 million (2006 : Baht 15.7 million).

33. FINANCIAL INSTRUMENTS 33.1 Financial risk management The Company and its subsidiaries’s financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, loans and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Interest rate risk The Company and its subsidiaries’s exposure to interest rate risk relates primarily to their cash at banks, short-term loans and long-term borrowings. However, since most of the Company’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. The details of long-term loan to subsidiaries and short-term and long-term loans from financial institutions are set out in Note 14, 19 and 21. Foreign currency risk The Company has a foreign currency risk in respect of the purchase/ sales transactions. The Company manages its exposure to foreign currency risk by balancing net position of receipt and payment of the foreign currency transactions in each period. The Company seeks to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year. As at 31 December 2007, outstanding balances of the Company and its subsidiaries’s financial assets and liabilities denominated in foreign currencies are as follows :(Unit : Million)

Foreign currency US dollar Swiss franc Japanease yen

Consolidated financial statements Financial Financial assets liabilities 26 -

3 1 1

Separate financial statements Financial Financial assets liabilities 25 -

2 1 1

Average exchange rate as at 31 December 2007 (Baht per foreign currency unit) 33.7673 29.6292 0.2974

Foreign exchange contracts outstanding at 31 December 2007 are summarized below. Foreign currency US dollar

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Sold amount (Million) 52.80

Contractual exchange rate sold (Baht per 1 foreign currency unit) 33.6900 - 33.7150

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

33.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries’s financial assets and liabilities are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transactions. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

34. FINANCIAL INFORMATION BY SEGMENT (Unit : Million Baht) Consolidated financial statements for the years ended 31 December 2007 and 2006 Concrete and Cement aggregates Others Elimination Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 (Restated) Revenue from external customers 18,849 20,107 3,188 2,810 763 730 22,800 23,647 Inter-segment revenues 1,128 1,045 119 1 (1,248) (1,045) Total revenues 19,977 21,152 3,307 2,810 764 730 (1,248) (1,045) 22,800 23,647 Segment gross profit 6,000 6,965 150 115 278 297 6,428 7,377 Unallocated income 294 315 Unallocated expenses (2,031) (2,086) Interest expenses (102) (82) Corporate income tax (1,359) (1,608) Minority interest in net income of subsidiary (2) Net income 3,230 3,914 (Unit : Million Baht)

Cement 2007 2006 Property, plant and equipment - net Unallocated assets Total assets

10,546

10,148

Consolidated financial statements as at 31 December 2007 and 2006 Concrete and aggregates Others Elimination 2007 2006 2007 2006 2007 2006 1,307

1,235

666

705

Total 2006 (Restated) 12,519 12,088 8,984 8,746 21,503 20,834 2007

35. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS These consolidated financial statements were authorised for issuance by the Company’s Board of Directors on 7 February 2008.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Management Discussion and Analysis The Analysis of Financial Performance Unit : Million THB January – December 2007 2006 +/Net Sales- Group Net sales – Cement business Net sales – Concrete and aggregates business Sale of others business Elimination (Inter company’s sales) Net profit Operating EBITDA Operating EBITDA margin [%] Operating profit

22,800 19,977 3,307 764 -1,248 3,230 5,211 23% 4,396

23,647 21,152 2,810 730 -1,045 3,914 6,059 26% 5,320

-4% -6% 18% 5% -19% -17% -14% -17%

Net sales Group: Past year’s net sales for the group declined by THB 847 million, or 4 percent to THB 22,800 million. The cement business marked lower net sales of THB 1,175 million, or 6 percent to THB 19,977 million. The concrete and aggregates business showed a positive net sales development of THB 497 million, or 18 percent to THB 3,307 million. Net sales generated from other business amounted to THB 764 million, an increase of THB 34 million from 2006, or 5 percent. Cement business: The company’s cement sales volume in year 2007 was 14 million tons, 4 percent higher than in 2006. Higher market competition resulted in lower average prices and, as a result, net sales dropped to THB 19,977 million in 2007. The domestic sales volume in 2007 declined by 4 percent mainly due to the construction slowdown, especially in the public sector. In terms of domestic sales price, there was intense price competition during the third quarter of 2007. However, a successful price increase at end of November pushed the price level up close to the beginning of the year 2007. Of the total cement sales volume in 2007, export cement and clinker volume grew 17 percent compared to 2006. Export sales volume, including sales to bordering countries, reached 6 million tons in 2007. Vietnam remains the company’s biggest export market for clinker, followed by Bangladesh and the Middle East. Singapore is the largest destination of cement. Export sales price in 2007 was lower than in 2006 mainly due to the impact of the Baht appreciation. Concrete and aggregates business: In year 2007, the company sold 2.1 million cubic meters of ready-mix concrete. This was an increase over the 1.98 million cubic meters sold in the previous year, but not as expected mainly due to lower volume from mega projects. Prices were lower mainly due to a highly competitive market with intense price competition which started in the second quarter of 2007 and continued throughout the rest of the year. Aggregates business commenced its limestone and sand operations in 2007. The company volume sold reached 1.2 million tons in its first year of operation. Other business: In 2007, the company achieved 5 percent growth with net sales of THB 764 million for prime quality wood replacement construction materials. The past year 2007 also saw the company’s successful market expansion into Vietnam.

Net Profit Effects of sales price pressure and increased prices of solid fuels, which pushed up production and distribution cost, left its mark in the operational results in the cement and ready-mix concrete business. The net profit of the company and its subsidiaries declined THB 684 million, or 18 percent to THB 3,230 million in year 2007. Despite an environment with higher energy and transportation cost, the company improved its internal efficiency and input factor cost. As a result, costs and expenses for year 2007 amounted to THB 18,403 million, a slight rise of THB 47 million, or 0.2 percent from THB 18,356 million in 2006. Total cost of sales of THB 16,373 million for year 2007 showed a rise of THB 103 million from THB 16,270 million in 2006, mainly due to higher raw material cost. In November 2007, the Company decided to temporarily reduce its clinker production capacity effective January 1, 2008, and eventually, realign the company and its subsidiary structure. In this regard, the company offered an early retirement scheme of which THB 139 million were included in manufacturing cost.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Selling and administrative expenses were reported at THB 2,031 million, an improvement of THB 25 million, or 1 percent, from THB 2,056 million in the previous year, and was mainly achieved through an effective cost control. The ratio of selling and administrative expenses to net sales for year 2007 was 8.9 percent, slightly higher than the 8.7 percent in year 2006. Interest expenses for year 2007 amounted to THB 102 million, an increase of THB 20 million from THB 82 million in 2006, or 24 percent, which was mainly due to the Companyâ&#x20AC;&#x2122;s drawdown of additional short-term loans. Other income of total THB 115 million for year 2007 were THB 35 million, or 23 percent lower than the THB 150 million in 2006, resulting from a decline in interest income of THB 50 million. Thanks to the Baht appreciation, the company recorded a foreign exchange gain on USD accounts payables amounting to THB 29 million. In year 2007, operating EBITDA amounted to THB 5,211 million, a decline of THB 848 million from THB 6,059 million in 2006, or 14 percent, due to aforementioned reasons. While the Company and its subsidiaries had recorded a loss on impairment of assets not used in operation of THB 30 million in year 2006, no additional impairment was required for year 2007.

The Analysis of Cash Flows Unit : Million THB January â&#x20AC;&#x201C; December 2007 2006 +/Cash flow from operating activities Capital expenditure on property, plant and equipment to maintain productive capacity and to secure competitiveness Free cash flow Expansion investments Other investing activities Dividend paid Financing requirement Movements of treasury shares net Increase in financing liabilities Decrease in cash and cash equivalents

4,000

4,328

-8%

-818 3,182 -454 -176 -3,220 -668 461 -207

-528 3,800 -650 -9 -3,295 -154 -1,711 348 -1,517

-55% -16% 30% Neg 2% Neg 100% 32% 86%

Cash flow from operating activities Consolidated cash flow from operating activities for year 2007 was THB 4,000 million, a decline of THB 328 million from THB 4,328 million in 2006, or 8 percent. Lower net sales negatively impacted this cash flow. However, thanks to improvements in net working capital, mainly in inventory and accounts payable balances, a positive contribution of THB 218 million were achieved. Cash flow margin declined to 17.5 percent compared to 18.3 percent in year 2006.

Cash flow used for investing activities Consolidated cash flow used for investment activities for year 2007 was THB 1,448 million, an additional THB 261 million from THB 1,187 million in year 2006, or 22 percent, mainly for investments in the new preparation platform for alternative fuels and raw materials, a new mortar production plant and additional aggregates and resources.

Cash flow from financing activities The Annual General Meeting of Shareholders approved to pay a final dividend of THB 7.50 for year 2006 and the Board of Directors approved an interim dividend of THB 6.50 for year 2007. Therefore, the company used THB 3,220 million of its free cash flow for dividend payments and, as a balance, eventually drew down additional short-term loans of THB 461 million. In order to manage its excess cash, the company repurchased in year 2006 7.5 million shares, or THB 1,711 million, of its outstanding shares under a second share repurchase scheme.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Management Discussion and Analysis The Analysis of Financial Position Unit : Million THB 2007 Total Assets Current assets Investment in associated company Property, plant and equipment - net Assets not used in operations - net Other non-current assets Total Liabilities Current liabilities Long-term liabilities-net of current portion Other non-current liabilities Total Shareholders’ Equity

21,503 4,976 928 12,519 825 2,255 5,613 4,511 459 643 15,890

As of December 31 2006 100% 23% 4% 58% 4% 11% 26% 21% 2% 3% 74%

20,835 5,255 830 12,088 1,129 1,533 4,955 3,766 569 620 15,880

+/100% 25% 4% 58% 5% 8% 24% 18% 3% 3% 76%

3% -5% 12% 4% -27% 47% 13% 20% -19% 4% 0%

Total Assets Consolidated total assets as of December 31, 2007, were THB 21,503 million, an increase of THB 668 million from THB 20,835 million in 2006, or 3 percent. Current assets were THB 4,976 million, a decline of THB 279 million from THB 5,255 million in 2006, or 5 percent. Accounts receivable accounted for the highest proportion of current assets, representing 55 percent and 49 percent of current assets, or equal to an average collection period of 40 days and 33 days at year ended 2007 and 2006, respectively. Inventory represented 32 percent of current assets in both financial years. Consolidated other non-current assets as of December 31, 2007, were THB 2,255 million, a rise of THB 722 million from THB 1,533 million in 2006, or 47 percent, mainly from THB 535 million higher intangible assets from THB 381 million in 2006, a balance of THB 916 million as of December 31, 2007. This was a result of newly acquired aggregates mining rights and concessions.

Total Liabilities As at December 31, 2007, the Company and its subsidiaries reported total liabilities of THB 5,613 million, a growth of THB 658 million from THB 4,955 million in 2006, or 13 percent, mainly from the additional draw down of short-term loans from financial institutions in the amount of THB 565 million. At year end 2007 and 2006, consolidated trade accounts payable amounted to THB 1,516 million and THB 1,328 million, respectively. This is equal to an average payment period of 32 days and 29 days, respectively.

Total Shareholders’ Equity As at December 31, 2007, and December 31, 2006, total shareholders’ equity was THB 15,890 million (based on 237.5 million paid-up shares) and THB 15,880 million (based on 250 million paid-up shares), respectively. On May 3, 2007, the meeting of the Company’s Board of Director passed a resolution to approve the reduction in paid-up share capital by cancellation of 12.5 million treasury shares with a par value of THB 10 each unsold under the first share repurchase scheme, or by THB 125 million, in order to comply with the Ministerial Regulation concerning treasury stock under which the Company has to dispose all of its repurchased shares within 3 years commencing from the date of share repurchase completion (within June 11, 2007). The Company registered the reduction of its paid-up share capital from THB 2,500 million (250 million shares with a par value of THB 10 each) to THB 2,375 million (237.5 million shares with a par value of THB 10 each) with the Ministry of Commerce on June 26, 2007. In addition, the Company reversed the reserve for treasury shares of THB 2,985 million to unappropriated retained earnings. On June 28, 2006, the meeting of the Company’s Board of Directors passed a resolution to approve a second repurchase of shares by the Company in order to manage its excess cash, under the share repurchase scheme, with the investment not to exceed THB 1,800 million or in term of shares repurchased not to exceed 7.5 million shares, equivalent to 3 percent of the total issued and paid-up shares of the Company. The Annual General Meeting of Shareholders held on March 14, 2007 approved the additional allocation of THB 1,711 million from the unappropriated retained earnings as of December 31, 2006 to reserve for treasury shares according to the Securities and Exchange Commission (SEC) requirement.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Related Party Transactions Related parties comprise enterprises and individuals that control, or are controlled by the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, and key management personnel, directors and officers with authority in the planning and direction of the Companyâ&#x20AC;&#x2122;s operations. During the years, the Company and its subsidiaries had business transactions with their related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Information on related party transactions is specified in Note 7 of the Notes to Consolidated Financial Statements for the years ended December 31, 2007 and 2006.

Criteria for having related party transactions Where it is necessary for the Company to have a transactions with a related party, the Company will consider business necessity and armâ&#x20AC;&#x2122;s length as main criteria for decision-making. For example, product selling and purchasing is based on market price. A mark-up is included in the cost of a service fee for services rendered. All of these is to ensure benefits to the Company.

Sound approval mechanism and procedure The Company has complied with the rules of the Stock Exchange of Thailand regarding information disclosure and practices for listed companies in connected transactions. The Audit Committee also reviewed the connected transactions of the Company.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Dividend Allocation over the past three years The Board of Directors aims at optimizing wealth of its shareholders, both through dividend payments and share value, without compromising on internal growth and commitment to sustainable development. The Company has announced dividend payment 14 baht per share for each of the years 2005 to 2007. The Company’s reserve has reached 10 per-cent of its registered capital. The Board of Directors always ensures that there are enough profits to make interim payments and final dividend allocations. During 2005-2007, Siam City Cement allocated dividends as follows:

For fiscal year 2007, total dividend is 14 baht per share (Subject to shareholders’ approval at the Annual Shareholders’ Meeting on April 10, 2008) - The Board of Directors approved payment of interim dividend on August 9, 2007 of baht 6.5 per share. - The Shareholders are proposed to approve payment of dividend for the second half of 2007 on April 10, 2008 of baht 7.5 per share.

For fiscal year 2006, total dividend was 14 baht per share - The Board of Directors approved payment of interim dividend on August 10, 2006 of baht 6.5 per share. - The Shareholders approved payment of dividend for the second half of 2006 on March 14, 2007 of baht 7.5 per share.

For fiscal year 2005, total dividend was 14 baht per share - The Board of Directors approved payment of interim dividend on September 1, 2005 of baht 6.5 per share. - The Shareholders approved payment of dividend for the second half of 2005 on March 30, 2006 of baht 7.5 per share.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information 1. General Information 1.1

Siam City Cement Public Company Limited, Registration No. 0107536001346 (Formerly Registration No. was Bor Mor Jor 208) Type of business: Cement manufacturing and distribution Head office: Column Tower, 7th - 12th Fl., 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand Factory: 99, Moo 9 (Plant 1 & 3), and 219, Moo 5 (Plant 2), Mitraparp Road Km. 129 - 131 Tabkwang Subdistrict Kaengkhoi District, Saraburi 18260, Thailand Telephone: +66 2 797 7000 Fax: +66 2 797 7001 to 2 Website: www.siamcitycement.com Issued and paid-up shares: 237,500,000 ordinary shares with the par value of 10 baht per share

1.2

The companies where 10% or more of the issued and outstanding shares of their capital stock are held by the Company, as of December 31, 2007 Name

Location of Head Office

Siam City Concrete Company Limited

Bangkok

Conwood Company Limited

Bangkok

Eagle Cement Holdings Company Limited Lanna Resources Public Company Limited

Bangkok

Khmer Cement Industry Company Limited*

Phnom Penh Cambodia

Bangkok

Type of Business / Product Industrial Operation / Ready-mix Concrete and Aggregates Industrial Operation / Construction Material Share Holding Company Industrial Operation / Coal Mining and Decorative Stones Cement Trading

Registered Capital (million baht) 400

Number of % Direct issued Shareholding Shares 4,000,000 99.99

300

3,000,000

99.99

700

7,000,000

99.99

350

35,000,000

44.99

500

75.00

appx 0.2 (20 million riel)

Remark: *Regarding Khmer Cement Industry Company Limited, according to the joint venture agreement, its registered capital is fixed at USD 1.5 million. However, at the time of its incorporation, the registered capital was at the equivalent of USD 5,300. The capital will be increased form time to time as the business of the company requires.

1.3

Other references: Share Registrar

Auditors

Thailand Securities Depository Co., Ltd. The Stock Exchange of Thailand Building 62 Rachadapisek Road, Klongtoey, Bangkok 10110 Mr. Narong Puntawong, Certified Public Accountant (Thailand) No.3315 Mrs. Saifon Inkaew, Certified Public Accountant (Thailand) No.4434 Mrs. Ratana Jala, Certified Public Accountant (Thailand) No.3734 Ernst & Young Office Limited

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information 2. The Companyâ&#x20AC;&#x2122;s Businesses 2.1

The Company manufactures and sells cement primarily to the domestic market catering to market demand. The Company may export its product to overseas in the event of oversupply. Subsidiaries â&#x20AC;&#x2122;s Businesses. See Notes to the Consolidated Financial Statements, Notes 2 and 11

2.2

Business segments that generate over 10 % of the consolidated revenue. See Notes to the Consolidated Financial Statements, Note 34

2.3

Change/Important developments in business operations and management during the year 2007 See Notes to Consolidated Financial Statements, Note 2 and the Report of the Executive Committee, page 16 to 17

3. Shareholding and Management Structures 3.1 No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

The top 10 major shareholders as of August 24, 2007 are the following: Shareholders Sunrise Equity Company Limited Thai Roc-Cem Company Limited Clear Stream Nominees LTD. Parkmix Limited-JPMSAPL client A/C Nortrust Nominees LTD. Ayudhaya Insurance Public Company Limited HSBC (Singapore) Nominees PTE LTD. Vayupak Mutual Fund I by MFC Asset Management Public Company Limited Vayupak Mutual Fund I by Krungthai Asset Management Public Company Limited Mrs. Sasithorn Ratanarak

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Number of Shares Held 80,065,840 77,628,433 8,350,200 7,051,100 5,230,200 4,047,800 4,015,577 2,254,000 2,254,000 2,085,040

Percentage (%) 33.71 32.69 3.52 2.97 2.20 1.70 1.69 0.95 0.95 0.88

3.2

Members of the Board of Directors as of December 31, 2007 and their recent experience are as follows: Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Veraphan Teepsuwan Chairman of the Board of Directors2

Bachelor Degree (Economic), Boston University, USA

0.002

MBA, Northeastern University, USA

1) Listed Company Present

Position

Name / Type of Business

Chairman of the Board of Directors

Siam City Cement Public Company Limited Bank of Ayudhya Public Company Limited / Commercial Bank Ayudhya Insurance Public Company Limited / Insurance Ayudhya Alliaz C.P. Life Public Company Limited / Insurance Eastern Star Real Estate Public Company Limited / Real Estate

Chairman of the Board of Directors

Chairman of the Board of Directors Chairman of the Board of Directors

Vice Chairman of the Board of Directors

2) Non Listed Company Present Director

Bangkok Broadcasting & Television Company Limited / Television Broadcasting

Training Experience

First Nation City Bank (Presently Citigroup): Credit-Department Scholarship Masterâ&#x20AC;&#x2122;s Degree: USAID Total attendance at Board Meetings in 2007: 5/5

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Paul Heinz Hugentobler Vice Chairman of the Board of Directors2

Lic.oec.HSG, University of St. Gallen, Switzerland

0.023

1) Listed Company 2001 - Present

1999 - 2000

Position

Name / Type of Business

Vice Chairman of the Board of Directors

Siam City Cement Public Company Limited Siam City Cement Public Company Limited Holcim Ltd. / Cement

Managing Director

2002 - Present

Member of the Executive Committee 2) Non Listed Company -NoneTotal attendance at Board Meetings in 2007: 5/5

Mr. Urs Wolfgang Bieri Director2

Lic.oec.HSG, University of St. Gallen, Switzerland

1) Listed Company 1998 - Present

Director

2002 Deputy Chairman of the December 2004 Executive Committee 2) Non Listed Company -NoneTotal attendance at Board Meetings in 2007: 3/5

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Siam City Cement Public Company Limited Holcim Ltd. / Cement

Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Harald Link Directors2, Member of the Audit Committee

Lic.oec.HSG, University of St. Gallen, Switzerland

Position

Name / Type of Business

1) Listed Company 1998 - Present Director, Member of the Audit Committee 2000 - Present

Director

2) Non Listed Company 1987 - Present Managing Partner

Siam City Cement Public Company Limited True Corporation Public Company Limited / Telecommunication B.Grimm & Co., Registered Ordinary Partnership / Investment Advisory Services

Training Experience Course on Good Corporate Governance at St.Gallen, Switzerland Total attendance at Board Meetings in 2007: 2/5

Mr. Chachchon Ratanarak Director2

BSC Economics (Honors), Royal Holloway College, University of London, England

0.449

1) Listed Company November 2006 - Director Present

Siam City Cement Public Company Limited

2) Non Listed Company June 2005 Director Present

April 2006 Present

Chairman & CEO

PrimaVest Asset Management Company Limited / Asset Management Tonson Property Company Limited / Real Property Development

Total attendance at Board Meetings in 2007: 5/5 Mr. Prakob Visitkitjakarn Director2, Chairman of the Audit Committee

Bachelor Degree, in Finance (Honors), Indiana University, USA Master of Business Administration (Finance), Indiana University, USA

1) Listed Company 1999 - Present Director, Chairman of the Audit Committee 1986 - 1995

Executive Vice President

Siam City Cement Public Company Limited Bank of Ayudhya Public Company Limited / Commercial Bank

2) Non Listed Company -None-

Training Experience

The Role of Chairman Program (RCP), by Thai Institute of Directors Association Director Certification Program (DCP), by Thai Institute of Directors Association Total attendance at Board Meetings in 2007: 5/5

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Chet Raktakanishta Director2, Member of the Audit Committee

B.Sc. (Management) Brigham Young University, USA

1) Listed Company 1999 - Present

Position

Name / Type of Business

Director, Member of the Audit Committee

Siam City Cement Public Company Limited Bank of Ayudhya Public Company Limited / Commercial Bank Media of Medias Public Company Limited / Media & Publishing Ayudhya Insurance Public Company Limited / Insurance

April 2007 Present

Director

2003 - Present

Director, Member of Audit Committee

1994 - Present

Director

2) Non Listed Company 2001 - Present Chairman

Krungsriayudhya Card Company Limited / Service

Training Experience

Audit Committee Program (ACP), by Thai Institute of Directors Association in 2005 Director Certification Program (DCP), by Thai Institute of Directors Association in 2003 Finance for Non-Finance Director (FN),by Thai Institute of Directors Association in 2003 Director Financial, by Thai Institute of Directors Association in 2005 DCP Refresher Course, by Thai Institute of Directors Association, 3 / 2006 Total attendance at Board Meetings in 2007: 5/5

Mr. Thaveepol Kongseri Director2 (Since March 14, 2007)

Bachelor degree in Mechanical Engineering, Shizuoka University, Japan

0.007

1) Listed Company March 2007 Present

Director

1994 - 2003

Director

2) Non Listed Company 1979 - Present Managing Director

Training Experience Director Accreditation Program (DAP), by Thai Institute of Directors Association in 2005 Total attendance at Board Meetings in 2007: 3/5

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Siam City Cement Public Company Limited Ayudhya Allianz C.P. Life Public Company Limited Super Asset Company Limited / Real Property

Name / Position

Mr. Prabhol Buranasiri Director2 (Since March 14, 2007)

Age

Education

BSC Engineering EE, Worcester Polytechnic Institute, Mass., USA

% of Shareholding1

Working Experience Period

Position

Name / Type of Business

1) Listed Company March 2007 Present

Director

2002 - Present

Management Advisor

1996 - 2001

General Manager, Managing DirectorMarketing

Siam City Cement Public Company Limited Thai-German Ceramic Industry Plc. / Property & Construction Thai-German Ceramic Industry Plc. / Property & Construction

2) Non Listed Company -NoneTraining Experience Director Accreditation Program (DAP), by Thai Institute of Directors Association Total attendance at Board Meetings in 2007: 3/5 Mr. Vanchai Tosomboon Director3

Bachelor of Law, Thammasat University Master in Business Management (MBM) Asian Institute of Management

0.009

1) Listed Company June 2004 Present 1999 - June 2004

Director, Executive Vice President (Saraburi Operations) Executive Vice President (Subsidiaries)

Siam City Cement Public Company Limited Siam City Cement Public Company Limited

2) Non Listed Company -NoneTraining Experience

Director Certification Program (DCP), by Thai Institute of Directors Association in 2001 Director Certification Program (DCP), by Thai Institute of Directors Association in 2004 Total attendance at Board Meetings in 2007: 5/5

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information Name / Position

Ms. Chantana Sukumanont Director3

Age

Education

% of Shareholding1

Diploma in Business Studies, The Center for Economic and Political Studies, UK

Working Experience Period

Position

Name / Type of Business

1) Listed Company November 2006 Present

Deputy Chairman of the Executive Committee

Siam City Cement Public Company Limited Siam City Cement Public Company Limited

June 2004 Present

Advanced Management Program, Harvard Business School, USA

1998 - June 2004

Director, Executive Vice President (Marketing and Sales) Senior Vice President (Marketing and Sales)

2) Non Listed Company 1995 - 1997 Managing Director

Siam City Cement Public Company Limited Jalaprathan Cement Public Company Limited / Cement

Training Experience Director Accreditation Program (DAP), by Thai Institute of Directors Association Total attendance at Board Meetings in 2007: 4/5 Mr. Marcel Smit Managing Director3 (Since March 1, 2007)

Construction Engineers, HTS, The Netherlands Postacademic â&#x20AC;&#x153;MBAâ&#x20AC;&#x153; Program, Technical University Delft, The Netherlands Top Management Programs at INSEAD, France and IMD, Switzerland

1) Listed Company March 2007 Present 1995 - 2006

Managing Director, Chairman of the Executive Committee Senior Vice President and Regional Manager Asia Pacific

2) Non Listed Company 1987 - 1994 Managing Director

Siam City Cement Public Company Limited Sika AG, Switzerland / Specialty Chemicals Sika B.V., The Netherlands / Specialty Chemicals

Advanced Management Program, Harvard Business School, USA

Total attendance at Board Meetings in 2007: 5/5 Remark

1. The equity interest of the members of the Board of Directors are the information as of August 24, 2007, which are inclusive of the equity interest of their respective spouses and minor children (if any) and show in percentage of the total issued and outstanding shares amounting 230 million shares. 2. Non-executive director 3. Executive director, who is also an employee of the Company

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

3.3

Executive Committee Members of the Executive Committee are nominated by the Board of Directors. Its duties are to organize, carry out and supervise the business operations so as to achieve the target set by the Board of Directors. The following are information about the members of the Executive Committee as of December 31, 2007:

Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Marcel Smit Chairman of the Commitee (Since March 1, 2007)

1) Listed Company March 2007 Present 1995 - 2006

Position

Name / Type of Business

Managing Director, Chairman of the Executive Commitee Senior Vice President and Regional Manager Asia Pacific

Siam City Cement Public Company Limited Sika AG, Switzerland / Specialty Chemicals

2) Non Listed Company 1987 - 1994 Managing Director

Sika B.V., The Netherlands / Specialty Chemicals

Advanced Management Program, Harvard Business School, USA

Total attendance at ExCo Meetings in 2007: 17/21

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information Name / Position

Ms. Chantana Sukumanont Deputy Chairman of the Executive Committee (Marketing and Sales)

Age

Education

% of Shareholding1

Diploma in Business Studies, The Center for Economic and Political Studies, UK

Working Experience Period

Position

Name / Type of Business

1) Listed Company November 2006 Present

Deputy Chairman of the Executive Committee

Siam City Cement Public Company Limited Siam City Cement Public Company Limited Siam City Cement Public Company Limited

June 2004 Present

Advanced Management Program, Harvard Business School, USA

1998 - June 2004

Director, Executive Vice President (Marketing and Sales) Senior Vice President (Marketing and Sales)

2) Non Listed Company 1995 - 1997 Managing Director

Jalaprathan Cement Public Company Limited / Cement

Training Experience Director Accreditation Program (DAP), by Thai Institute of Directors Association Total attendance at ExCo Meetings in 2007: 17/21

Mr. Vanchai Tosomboon Executive Vice President (Saraburi Operations)

Bachelor of Law Thammasat University Master in Business Management (MBM) Asian Institute of Management

0.009

1) Listed Company June 2004 Present 1999 - June 2004

Director, Executive Vice President (Saraburi Operations) Executive Vice President (Subsidiaries)

2) Non Listed Company -None-

Training Experience

Director Certification Program (DCP), by Thai Institute of Directors Association in 2001 Director Accreditation Program (DAP), by Thai Institute of Directors Association in 2004 Total attendance at ExCo Meetings in 2007: 16/21

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Siam City Cement Public Company Limited Siam City Cement Public Company Limited

Name / Position

Age

Education

% of Shareholding1

Working Experience Period

Mr. Andreas Leutenegger Senior Vice President (Finance and Controlling)

Lic.oec.HSG University of St.Gallen, Switzerland

Position

Name / Type of Business

1) Listed Company September 2004 - Present

Senior Vice President Siam City Cement (Finance and Controlling) Public Company Limited January 1999 Assistant Vice President Holcim Ltd. / August 2004 Corporate reporting Cement 2) Non Listed Company November 1994 Auditor KPMG / Audit and December 1998 Advisory Service

Swiss Certified Public Accountant Advanced Management Program, Harvard Business School, USA

Training Experience

Responsible for corporate governance report for Holcim Ltd.Annual Report 2002 Seminar on Corporate Governance, by Stock Exchange of Switzerland Seminar on Corporate Governance, by Swiss Institute of Chartered Accountants Total attendance at ExCo Meetings in 2007: 20/21

Mr. Rungrote Soonthorn Senior Vice President (Human Resources and Management Development)

Master of Comparative Law (M.C.L) University of Miami, USA

1) Listed Company September 2003 - Present

Senior Vice President (Human Resources and Management Development) 2) Non Listed Company 1996 - August 2003 General Manager Human Resources

Siam City Cement Public Company Limited

Auto Alliance (Thailand) Co., Ltd. / Automobile Industry

Training Experience

Directorsâ&#x20AC;&#x2122; duties, liabilities & roles in corporate governance, August 2007 By-Asia Business Form (Thailand) Co., Ltd. Total attendance at ExCo Meetings in 2007: 19/21

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Supplemental Information Name / Position

Mr. Nopporn Thepsithar Senior Vice President (Logistics and Exports)

Age

Education

% of Shareholding1

Bachelor’s Degree in Electrical Engineering Chulalongkorn University

Working Experience Period

Position

Name / Type of Business

1) Listed Company January 2004 Present

Senior Vice President (Logistics and Exports)

Siam City Cement Public Company Limited Siam City Cement Public Company

2002 - December 2003 Logistics Manager 2) Non Listed Company 2000 - 2001 Executive Director

1999 - 2000

Operations Division Manager

TCC Holding Co., Ltd. / Holdings Company SCT Co., Ltd. / Import - Export Company

Training Experience

Audit Committee Program (ACP), by Thai Institute of Directors Association Director Certification Program (DCP), by Thai Institute of Directors Association Director Accreditation Program (DAP), by Thai Institute of Directors Association Good Governance,Mini MBA Course for INSEE Logistics Total attendance at ExCo Meetings in 2007: 18/21 Remark

3.4

1. The equity interest of the members of the Executive Committee are the inormation as of August 24, 2007, which are inclusive of the equity interest of their respective spouses and minor children (if any) and shown in percentage of the total issued and outstanding shares amounting 230 million shares.

Directors of Subsidiary Company as of December 31, 2007 Siam City Concrete Company Limited is the only subsidiary that generates over 10% of the Company’s consolidated revenue, as of December 31, 2007. Director Mr. Marcel Smit Mr. Paul Heinz Hugentobler Ms.Chantana Sukumanont Mr. Siva Mahasandana

Siam City Concrete Company Limited Chairman Director Director Managing Director

4. Remuneration of the Board of Directors and Executives paid in 2007 4.1

Remuneration in Cash Remuneration in Cash for 16 Board members was 15.095 million baht, included meeting per diem and bonus paid in 2007 (During this year, 3 directors resigned and 3 directors newly elected). Remuneration for 6 members of the Company’s Executive Committee was 85.98 million baht, included salary and bonus paid in 2007.

4.2

Other Remunerations Contribution to Provident Fund for its executives was 1.61 million baht. Company cars are provided to the members of the Executive Committee.

5. Auditor’s Fee In 2007 Ernst & Young Office Limited received from the Company and its subsidiaries audit fees of 4.1 million baht and no fee for non-audit services.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Customer Service Center and Distribution Centers Customer Service Center Customer Service Center is the sub-division of Group CRM Department, Siam City Cement Co., Ltd launched on September 2001 with an objective to be the one-stop Center that provides the superior service to customers. With the integration of Customer Sales Support and Customer Care units, we ensure that customers of the highest efficiency of services. In order to enhance the superior service standard and response to customer’s demands at the highest level, we have cooperated with Siam City Concrete since October 2007 in providing a one stop customer service Center. The Customer Service Center handles the customers’ ordering and responds to customers’ requests, inquiries and complaints. The Center offers 24 hours and 7 days a week to guarantee customer’s satisfaction. All of the services we provide to customers will be recorded in CRM (Customer Relationship Management) system for follow up and to ensure all customers’ requests are handled punctually. As we are now in a dynamic business environment, we also analyze the data from the CRM database to continuously improve our service standard.

Location: Head Office Column Tower, 7th Fl., 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand

Saraburi Plant Customer Service Building 99 Moo 9, Mitraparp Road, Km.129 - 131, Tabkwang Subdistrict, Kaengkhoi District, Saraburi 18260, Thailand

Contact:

Tel:

1-800-77-5555 (Free) or +66 2 797 7777 Fax: 1-800-33-5555 (Free) or +66 2 797 7788 Email: wecare@sccc.co.th

Distribution Centers Siam City Cement distributes cement from Saraburi Plants to its customer nationwide by two methods: 1. Delivery from Saraburi Plants directly to dealers or their requested destinations 2. Delivery to four regional distribution Centers 1. Lampang Warehouse Address: 208 Moo 2, Lampang - Chiangmai Road, Pong Yang Kok Subdistrict, Hang Chat District, Lampang 52190, Thailand Description: Warehouse and distribution Center of bulk cement for northern customers 2. Udon Thani Warehouse Address: 1 Railway Station Road, Mark Kaeng Subdistrict, Muang District, Udon Thani 41000, Thailand Description: Warehouse and distribution Center of bagged cement for upper northeastern customers 3. Ubon Ratchathani Warehouse Address: 23 Kong Tang Road, Varinchamrap Subdistrict, Varinchamrap District, Ubon Ratchathani 34190, Thailand Description: Warehouse and distribution Center of bagged cement for lower northeastern customers 4. Surat Thani Terminal Address: 13/29 Surat Thani - Pak Nam Road, Bang Kung Subdistrict, Muang District, Surat Thani 84000, Thailand Description: Warehouse and distribution Center of bulk and bagged cement, including Bag packing facility.

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Summary of Speciﬁed Item Per Form 56-2 Compared in accordance with Form of Annual Report for a security- issuing company (Form 56-2) issued under SEC notification Ref. Kor Jor 40/2540 regarding principles, conditions and methods in presentation of financial data and operation results of a company which issues securities Required Items in Guideline for 56-2

1. General Information

Item in this Annual Report

Page

Supplemental Information

Key Figures

Supplemental Information

1.1 Company information and outstanding shares 1.2 Investment in other company for more than 10% of that company’ s equity 1.3 Other reference

2. Financial Summary Key data from financial statements during the most recent 3 years

3. Nature of Business 3.1 Nature of business operation of company and subsidiaries, and distribution policy 3.2 Income structure 3.3 Major development in last year, and trend of industrial and competition situation

4. Risk Factors

Notes to Consolidated Financial Statements No. 34 Report of the Executive Committee, Industrial Outlook and Summary of Major Developments and Recognitions in 2007

67 16-17 36-37 32-33

Risk and Risk Management

Supplemental Information

5. Shareholding and Management Structure 5.1 Shareholders 5.2 Management 5.2.1 Management structure

5.2.2 5.2.3 5.2.4 5.2.5 5.2.6

Nomination of Directors and Executives Remuneration to Directors and Executives Compliance of SET’s CG Principles Rules on Insider Information Internal control opinion of Audit Committee

5.3 Dividend Policy

Management Structure, Our Corporate Governance Update and Supplemental Information Our Corporate Governance Update Supplemental information Our Corporate Governance Update Our Corporate Governance Update Our Corporate Governance Update and Report of the Audit Committee Dividend Allocation Over Past Three Years

6. Related Party Transactions

Related Party Transactions

7. Management Discussion and Analysis

Management Discussion and Analysis

9 34-35 73 34-35 84 34-35 34-35 34-35 41 72 71 68-70

8. Financial Statements 8.1 Audited consolidated financial statements 8.2 Auditors’ fee

SIAM CITY CEMENT PUBLIC COMPANY LIMITED ANNUAL REPORT 2007

Report of Certified Public Accountant Supplemental Information

43 84