:: Annual Report 2009 ::

Contents>> 04 06 08 09 11 12

Report of the Board of Directors Board of Directors, Audit Committee, and Executive Committee Key Figures Achievements and Milestones Vision, Mission, and Core Values Report of the Executive Committee

14 17 19 21 23

40 Years of Achievements Customers - Always First and Foremost Community Development - Firm Commitment to Society Employees - Pride in the ‘INSEE Family’ Business Partners - Growing Together

24 28 30 32

Major Developments in 2009 Industry Outlook Risk and Risk Management Report of the Board of Directors’ Responsibilities for Financial Statements

33 34 35

70 75 76

Report of the Audit Committee Consolidated Financial Statements Report of Independent Auditor Balance sheets Income statements Statements of changes in shareholders’ equity Statements of cash flows Notes to consolidated financial statements Management Discussion and Analysis Related party transactions Dividend Policy and Allocation

77 85 105 106

Corporte Governance Update Supplemental Information Customer Service Center and Distribution Centers Summary of Specified Items Per Form 56-2

Siam City Cement Public Company Limited ANNUAL REPORT 2009

40 Years Strength. Performance. Passion.>>

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Report of the Board of Directors >>

By early 2009, it became apparent that the emergence of financial innovative products and encouragement of market forces to determine business activities were detrimental to orderly growth in advanced economics and have pushed Capitalism to the brink. The voice of deregulation began to ebb away throughout the year which was marked with governmentsâ&#x20AC;&#x2122; rescue programs containing stimulus packages and remedial measures aimed at arresting the downward global spiral but which had only limited and illusive successes. Much is needed to be done! In reality, a return to more regulation, hard work, patience, sufficient philosophy are the order of the new era. Given the depressing economic environment during year 2009, Siam City Cement Plc has relied on its four pillars of strength: customers, communities, employees and business partners to weather through the turbulence. In the process, your company has exhibited resiliency and agility. A marketing campaign in target areas helped to alleviate weak demand. Strong cost controls were intensified and gained acceptance and support in every department of the company. Everyone recognized the need to fully cooperate and work together. We were successful in issuing medium term debentures which were way oversubscribed. Although profit declined slightly, the financial structure of our company has become more solid and well balanced.

1. Mr. Veraphan

Teepsuwan

5. Mr. Prakob

Visitkitjakarn

9. Mr. Philippe

Arto

2. Mr. Paul Heinz

Hugentobler

6. Mr. Chet

Raktakanishta

10. Ms. Chantana

Sukumanont

3. Mr. Chachchon

Ratanarak

7. Mr. Harald

Link

11. Mr. Vanchai

Tosomboon

4. Mr. Thaveepol

Kongseri

8. Mr. Prabhol

Buranasiri

Report of the Board of Directors

The year 2009 experienced a slowdown in the private sector combined with the simmering government instability and a global economic recession. This resulted in the Thai economy contracting by approximately. 2.3 percent which translated into a decline in construction spending for SCCC in both price and volume. Now your company looks toward the challenging year 2010 with optimism and determination to deliver strong performance. Timely implementation of Thai Governmentâ&#x20AC;&#x2122;s investments in infrastructures, both mega projects and local community improvements will be significant factors for Thailand to achieve the declared return to GDP growth of over 3 percent. Your company plans to seize this opportunity and avail ourselves of the efficiency of our operations in order to improve our sales revenue and net profits. The developing political situation will be viewed as politics as usual on the road to democracy. Again this year, the Board of Directors is highly respectful of our shareholders and has resolved on another appropriate dividend payout with a view to provide the highest possible return to our valued shareholders. The Board thereby proposes a full year dividend of 11 baht per share. Our interim dividend of 6 baht per share was paid on 31 August, 2009 and subject to the upcoming shareholdersâ&#x20AC;&#x2122; consideration and approval, a final dividend of 5 baht per share will be paid on 7 May 2010. The Board of Directors would like to take this opportunity to thank the shareholders, customers, suppliers, employees and all stakeholders for their supports and trust extended to Siam City Cement Plc.

Veraphan Teepsuwan Chairman

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Board of Directors, Audit Committee and Executive Committee >>

>> Management Structure Board of Directors

Audit Committee

Internal Audit

Mr. Philippe Arto Chairman of the Executive Committee

Ms. Chantana Sukumanont

Mr. Vanchai Tosomboon

Mr. Andreas Leutenegger

Deputy Chairman of the Executive Committee (Marketing and Sales)

Executive Vice President (Saraburi Operations)

Senior Vice President (Finance and Controlling)

Mr. Nopporn Thepsithar

Mr. Siva Mahasandana

Mr. Tasporn Chantree

Senior Vice President (Logistics)

Senior Vice President (Ready-Mixed Concrete and Aggregates)

Senior Vice President (People and Organizational Performance)

Board of Directors, Audit Committee and Executive Committee

>> Board of Directors Non-Executive Directors Mr. Veraphan Teepsuwan Mr. Paul Heinz Hugentobler Mr. Chachchon Ratanarak Mr. Thaveepol Kongseri Mr. Prakob Visitkitjakarn Mr. Chet Raktakanishta Mr. Harald Link Mr. Prabhol Buranasiri

Chairman Vice Chairman Director Director Independent Director Independent Director Independent Director Independent Director

Executive Directors Mr. Philippe Arto Ms. Chantana Sukumanont Mr. Vanchai Tosomboon

Managing Director Director Director

Audit Committee Mr. Prakob Visitkitjakarn Mr. Prabhol Buranasiri Mr. Chet Raktakanishta

Chairman Member Member

Executive Committee Mr. Philippe Arto Ms. Chantana Sukumanont Mr. Vanchai Tosomboon Mr. Andreas Leutenegger Mr. Nopporn Thepsithar Mr. Siva Mahasandana Mr. Tasporn Chantree

Managing Director/Chairman of the Executive Committee Deputy Chairman of the Executive Committee (Marketing and Sales) Executive Vice President (Saraburi Operations) Senior Vice President (Finance and Controlling) Senior Vice President (Logistics) Senior Vice President (Ready-Mixed Concrete and Aggregates) Senior Vice President (People and Organizational Performance)

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Key Figures>> 2009 Million tons Clinker production capacity Cement production capacity

2008

2007

2006

12.3 14.5

19,971 4,897 5,221 3,933 2,946 4,128 1,662 24,350 2,311 16,379

21,305 5,054 5,461 4,176 3,173 3,099 1,729 23,503 2,534 15,845

22,800 5,227 5,521 4,412 3,230 4,000 1,028 21,503 771 15,890

23,647 6,059 6,344 5,320 3,914 4,328 1,177 20,834 73 15,880

25% 26% 20% 15% 21%

24% 26% 20% 15% 15%

23% 24% 19% 14% 18%

26% 27% 22% 17% 18%

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

12.81 11.001 86% 14% 33%

13.79 11.00 80% 16% 33%

14.05 14.00 100% 5% 26%

16.57 14.00 84% 0% 24%

Owned Personnel Group Cement

2,807 1,973

2,876 2,039

3,056 2,254

2,927 2,243

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 Margin (%) Operating EBITDA EBITDA Operating profit Net profit after minority interests Cash flow from operating activities

1 Proposed by the Board of Directors.

Key Figures > Achievements and Milestones

Achievements and Milestones >> 1969 1972 1977 1989 1993 1996 1997 1998 2000

2001 2002 2003

2005 2006 2007 2008

2009

> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

The Company was established in 1969 as Siam City Cement Company Limited Siam City Cement began cement production Listed on the Stock Exchange of Thailand Pioneered the Introduction of 1st waste heat recovery system in Southeast Asia on Kiln 4 Changed its status to a public company and its name to Siam City Cement Public Company Limited The company’s annual production capacity exceeds 12 million tons Awarded ISO 9002 Certification Awarded ISO 14001 Certification Holcim became shareholder in Siam City Cement Launch of webSALES initiative Awarded the 2000 Best Practices in Corporate Governance Awarded the Audit Committee of the Year 2000 Awarded TIS 18001 Certification Received Government approval for use of AFR in cement kiln (EIA & 101 License) Lanunched INSEE (Eagle) family of cement products Siam City Cement’s long-term debt reduced to zero Lanunched 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 Introduced “INSEE Mortar Max”: a ready-to-use dry mortar Commenced INSEE concrete franchise Start-up of aggregates business for Siam City Concrete Received certificate for supporting The Water Resources Department’s Check Dam Project from the Prime Minister Received certification of European standard (EN 197-1) and French standard (NF 002) for INSEE Fah cement (OPC-5) Certified Standard for Corporate Social Responsibility: CSR-DIW from the Department of Industrial Works The quarry certified for Best Mining Practices from the provincial office of Ministry of Natural Resources and Environment Geocycle platform received Integrated Management System (ISO 9001, ISO 14001 and OHSAS 18001) Award for Outstanding Workplace 2009 (Excellent Labor Relations and Labor Welfare) from the Ministry of Labor for the third consecutive year Award for Outstanding Workplace 2009 (Excellent Employee Training) from Ministry of Labor CONWOOD was awarded for Zero Accident Campaign and Occupational Health & Safety Management from Department of Labor Protection and Welfare, Saraburi Office Awarded the Carbon Label for continual reduction in carbon emissions in the manufacture process of INSEE Dang, INSEE Petch, INSEE Dam & INSEE Fah Wall Street Journal ranked Siam City Cement one of the top 10 companies in Thailand for Quality Wall Street Journal ranked Siam City Cement one of the top 3 companies in Thailand for Corporate Reputation The Company was evaluated as “Very Good”, by the AGM assessment 2009 project, organized by Thailand Investors Association.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Motto : At Siam City Cement, We Deliver

Vision, Mission and Core Values

Vision, Mission and Core Values >> Corporate Vision “To Provide Foundations for Thailand’s Future.”

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

Core Values Strength. Performance. Passion.

Corporate Fundamental Goals To be preferred… …by customers: To provide the best solutions on cement, aggregates and related products …by community: To be socially responsible and environmentally conscious within communities and Thai society … by business partners: To collaborate with all stakeholders to grow business opportunities together … by employees: To provide competitive compensation, benefits and career development opportunities with respect and recognition in a trusted and transparent working environment

Motto “At Siam City Cement, We Deliver.”

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Report of the Executive Committee >>

In the aftermath of the financial crisis and with yet another year of shrinking demand, Siam City Cement managed in 2009 to preserve its sales volume and to improve its operating margin, thanks to constant customer focus, tight cost control and continuous improvement. In 2009, the global economy was still in crisis while the political situation in Thailand continued to simmer. In this environment, the countryâ&#x20AC;&#x2122;s gross domestic product (GDP) shrunk by 2.3%. During the first half of the year, construction and real estate contracted significantly. However, during the second half, housing demand improved, as a result of real estate stimulus measures, such as tax deduction for home buyers and the one-year extension of reduced transaction fees for real estate transfers. Similarly the Governmentâ&#x20AC;&#x2122;s second stimulus package (Thai Khem Kaeng) started to have a positive impact on large-scale projects during the second semester.

Report of the Executive Committee

Overall, the domestic cement market declined by 2 percent from year 2008 to 24.2* million tons. SCCC maintained its market share at around 27 percent, while total net sales at 19,971 million baht dropped by 6 percent, as a result of lower selling prices, driven by intense competition. Thanks to very tight cost control and increased efficiency in all operations, SCCC was able to deliver an annual operating EBITDA of 4,897 million baht, only 3 percent lower than in 2008 and to even increase its operating EBITDA margin to 24.5 percent compared to 23.7 percent in the previous year. SCCC also produced a remarkable 4,128 million baht of operating cash flow, a 33 percent increase from 2008, thanks to its good operating performance and net working capital reduction. At the same time, the Company continued to maintain its assets with a strong 1,662 million baht of maintenance and rationalization investments for property, plant and equipment and to implement its key efficiency initiatives, such as its Alternative Fuels and Raw Materials (AFR) program and its two new Waste Heat Recovery (WHR) plants for its two largest kilns, to be completed by July 2010. Pursuing its long-term strategy, SCCC continued to develop and improve its various businesses – cement, mortar, ready-mixed concrete, aggregates, wood-replacement products with Conwood and waste management solutions with Geocycle. The Company also kept its emphasis on Health and Safety, improving its performance further in 2009, and on CSR initiatives such as “80 years, 880 Check Dams for His Majesty the King” and “Habitat for Humanity: Jimmy & Rosalynn Carter Work Project” in Chiang Mai. Outlook for 2010 The global economy will gradually improve, it is expected that Thai exporters should benefit from the recovery underway in Asia. Subject to the political risk and the consequences of the Map-Ta-Put situation, the economy should return to growth in 2010. The National Economic and Social Development Board short-term GDP projections, published on 22 February 2010, forecast a growth of 3 to 4 percent. As a result of the government stimulus package we expect that the cement industry will benefit from new infrastructure projects and that overall demand will grow about 3 percent. The Company is aiming at further improving its operational performance this year, focusing on value adding solutions for its customers and on efficiency improvement along the supply chain. Dedicated to the well-being of the entire society, SCCC will launch, in 2010, a new “Growing Green Together” initiative, by developing new environmentally friendly products and promoting environmental awareness among all key stakeholders, whom we recognize as the key pillars of our long-term success. * Source: BOT

Philippe Arto Managing Director

Siam City Cement Public Company Limited ANNUAL REPORT 2009

40 Years of Achievements >>

In 2009, Siam City Cement Public Company Limited, one of Thailand’s leading cement manufacturers and distributors, celebrated its 40th anniversary with deep pride and a strong sense of achievement. Throughout the years, the Company has been providing the market with highquality products under the “INSEE” brand, a name that has become synonymous with quality to customers. The name INSEE has today become a leading brand of cement that is well trusted by customers, a fact that has helped the Company maintain its position in the market through the various peaks and troughs that the Thai economy has experienced over the 40 years since establishment in 1969. Siam City Cement was listed on the Stock Exchange of Thailand (SET) in 1977 and has since shown to all its stakeholders the value of being a good corporate citizen. Over the years, it has excelled in giving its stakeholders the best in quality and this has been evident from the continuous research and development effort over the years to improve and innovate products to meet customers’ demand and expectation.

Throughout its 40 years of operations, the Company has played a part in creating the foundations for Thai society by progressively developing technologies with an aim of being a “Solution Provider”. During 2009, when the overall cement and concrete market was in a downturn, the widely recognized INSEE brand helped the Company gain market share in the concrete and aggregates segment. The rise in market share came at a time when the overall market shrank, thus giving the Company the optimism of seeing the business further growing in 2010. Among other reasons, it is clear that the customization of products to meet each customer’s demand and the trust that customers have in the INSEE brand will help Siam City Cement achieve more successes in the years to come.

40 Years of Achievements

Innovation – Foundation for a secured future Siam City Cement’s stated vision is to “Provide Foundations for Thailand’s Future.” Achieving such a lofty aim requires the Company to be farsighted and, above all, highly innovative. Throughout the past 40 years, Siam City Cement has led the industry in terms of innovation, creating new products and services, manufacturing the best products to meet customer requirements, and striving to continuously make customers and all stakeholders of the Company happy and satisfied. New breakthroughs in cement products were made with the launch of the INSEE range of cement products, including the first premium masonry cement, INSEE Tong. The Company’s Research & Development Division is tasked with the development of new products and services. The division aims to create improved quality and more effective products and develop solutions to fulfill customer expectations. The partnership with Swiss-based Holcim gives the Company a cutting edge over its competitors as Siam City Cement can tap into the innovative contributions of its experienced partner. This, coupled with the Company’s dynamism, is a strong recipe for future development which goes further to benefit the Thai society as a whole. Green Products – The result of environmentally friendly processes Being “Green” seems to be the current trend, but at Siam City Cement. “Green” has been a natural way of life for a good number of years. The fact that we want to be environmentally friendly has been in our hearts, and various investments and projects have been undertaken towards that direction. Addressing climate change, Siam City Cement was among the first few Thai companies to obtain the Carbon Label, which stipulates that the manufacturing process must show a reduction in CO2 emissions by at least 20 percent over the past five years. So far, four of its cement products, INSEE Dang, INSEE Petch, INSEE Dum and INSEE Fah, have won this recognition. Siam City Cement is also a pioneer in Waste Heat Recovery by using heat recovered from the cement production process to generate electricity for use within the plant. It is expected that after the system’s completion within 2010, Siam City Cement plants would be able to replace up to 25 percent of its electricity requirement – thus saving precious natural resources for the Company as well as for the national power grid. Siam City Cement is also active in the field of alternative fuels and raw materials through Geocycle, a world-class processing platform for waste preparation, allowing the recovery of materials, which would otherwise be sent to landfills, trash incinerators or illegal dumps, to be co-processed in cement kilns as fuel and raw materials in place of traditional natural materials, reducing dependency on fossil fuels and natural resources. Towards more successes – with care, dynamism and innovation Those, in a nutshell, are Siam City Cement’s proud achievements throughout its 40 years of eventful history. At the same time, they also show the caring, dynamic and innovative side that the Company is confident will lead us towards more successes in the years to come.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Customers - Always First and Foremost >>

Customers - Always First and Foremost

Customers - Always First and Foremost >>

Siam City Cement is a modern cement and construction specialist that provides fairly priced, reliable cement and concrete solutions in a time-efficient manner. We are strongly focused on making the right high-quality products supported by services aimed to satisfy the most discerning customers. The company has purposefully introduced a “customer-centric” approach into its strategic planning and throughout all operational levels. Siam City Cement’s range of INSEE products are manufactured using state-of-theart processes and quality control technology, resulting in standardized, application-fit products. Customized logistic services ensure that the product always arrives at the customer in the right condition, at the right place and the right time. During 2009, our strong customer and solutions focus led to the introduction of a wide range of new value-added cement and concrete products to address the more specific requirements of each customer group and enhance SCCC’s competitiveness. These are: > INSEE Ngan Lor, bag cement specifically tailored to the concrete product manufacturers’ needs, giving a fast drying time and a smooth finish > INSEE TileFix Pro, a superior tile fixing adhesive > INSEE FloorCrete, a self leveling ready-mixed concrete formula > INSEE FreezeCrete, perfect for low temperature applications, moist situations and environments subject to wide changes in temperature > INSEE ThruCrete, an innovative ready-mixed concrete that allows water to pass though into the soil below > INSEE Interlock Block, a wall block that is both quick to assemble and uses less mortar than competing products > Baan U Sabai, an innovative low-cost and energy-efficient house package > Slag Cement (Slag - a by-product from steel production) is used to produce a sulfate/chloride resistant cement that releases less CO2 into the atmosphere > Small concrete mixer trucks with playful themes to serve the retail market. These trucks were designed to be environmentally friendly and to attract attention Siam City Cement is always on the lookout for more efficient and cost-effective ways to support our customers. Going forward into our fifth decade of successful operation, we can say with pride that, to us, our customers are always first and foremost.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Community Development - Firm Commitment to Society >>

Community Development - Firm Commitment to Society

Community Development - Firm Commitment to Society >>

Siam City Cement takes to heart its broader responsibilities and is determined to carry on its role as a good corporate citizen by providing support and fostering sustainable development and social responsibility in three major areas: Education, Society and Environment. In doing so, we strive to be a good corporate citizen, in our own immediate neighborhood, as well as across the country. Where our community is concerned, we have committed our full support. We have initiated the SCCC Community Fund managed by the people in the community themselves with our assistance. Classes were arranged for housewives and others so they can learn marketable skills. The needs for proper school facilities within the community were addressed so parents could rest assured that their children could have proper access to education in a conducive environment. We believe that success and prosperity are best achieved through a commitment to sustainable development based on responsible social and environmental practices and therefore we have gone beyond our economic responsibilities along the path to become a good corporate citizen. Realizing the significance of fostering and maintaining ecological balance, Siam City Cement continued its well-recognized “80 Years, 880 Check Dams INSEE Builds for HM the King” into its third year in 2009. After more than 4,000 dams have been built within the past three years, we aim to proceed with this project in a sustainable manner by producing educational tools on the proper construction and location of check dams. These booklets and CDs will be distributed to schools, government agencies and villagers who recognize the needs for the check dams. In the same breadth, the construction of check dams will also be continued on an as-needed basis. It has been proven that the check dams have been very beneficial to local ecosystems as they help slow down water run-offs, sustain local flora and fauna and help prevent wild fires. As a leading Cement Solutions Specialist, Siam City Cement intends to fully utilize its technology and construction expertise to promote the development of vocational education, a crucial incubator for a skilled workforce. The INSEE Awards, presented for outstanding construction projects, is one of the company’s educational support schemes designed to encourage vocational students and teachers to raise the level of their skills and make greater contributions to community development. Co-existing symbiotically with our communities and environment while supporting their specific needs has always been the overriding desire at Siam City Cement – and that is the direction that we will take forward into the next year and the next decade.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Employees - Pride in the ‘INSEE Family’ >>

Employees - Pride in the ‘INSEE Family’

Employees - Pride in the ‘INSEE Family’ >>

Over the past four decades, Siam City Cement has always recognized the value of its own family members, the employees. Our people are the most important link in the chain that has built Siam City Cement into what it is today. To further enhance the fact that employees are our greatest assets, we have restructured our Human Resources function. The new department is named People and Organizational Performance (P&OP). This is to emphasize that our people are our key competitive advantage. P&OP has an important role in building internal capability for the sustainable success of the Company. Its new structure includes: > Organizational Effectiveness works closely with Line Managers to ensure that individual competencies, organization structures, a processes and culture are aligned to the business purpose and direction. They are the core team that delivers organization design, job analysis, reward and remuneration strategy, career development and employee engagement. > Talent Pool and Performance Management architects the performance management system that effectively links individual competencies and goals to those of the organization. This team also play a critical role in designing and facilitating the succession management process to ensure that the Company has quality leaders throughout leadership pipeline for its sustain growth. > Talent Acquisition put emphasis of their work on searching for qualified and competent applicants. Their works includes workforce planning, sourcing, screening and selecting potential candidate. One of the most important roles is to define the employee value proposition that effectively attract potential candidates to the company. > Service Center standardizes and simplifies the complexity of all administrative tasks that are mostly operational and transactional through automation and outsourcing. Its ultimate goal is to free P&OP team members from doing administrative tasks and consequently have more time to focus on strategic work that adds smore value to line function. > Business Partner are the first point of contact to Line Managers in providing consultation regarding people management and development. Each business partner will have a high understanding of business and functional operation of the unit under their responsibility. This team will have an important role in bridging P&OP focuses to each functional objective effectively. > INSEE Academy the main task of this team is to develop and manage the training in the corporate calendar. They also play a key role in developing functional development plans that align with business strategy. The team also follow up and evaluate learning, behavior changing, and benefits from training development. In addition, Holcim training and seminars are provided to promote and build world class capability in our employees.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Business Partners Growing Together >>

Business Partners - Growing Together

Business Partners Growing Together >>

For any business, one of the major factors that contributes to success is its “Business Partners” and Siam City Cement is proud to say that in the past four decades, we have been fortunate to have some of the industry’s best suppliers and business partners. Our business partners, be they equipment suppliers, transporters or service providers, have been working closely with us. Their efforts and dedication have helped our company grow through good times and bad times. The company is in process of implementing a Supplier Relationship Management Program with the objective to maintain strong relationships with our key suppliers. This will deliver long-term competitive advantage and total overall better values to our business. Alongside our relationship program, we are continuing to expand the scope of Contractor Management Program and Strategic Sourcung for Services Program focusing on Logistics with the target to achieve higher efficiency, reliability and also reductions in total cost of ownership. Additional management tools also include Procurement Excellence Program and Procurement Sustainability Development Review which combine into a world-class supply management system.

Although our business partners are not our direct employees, we do expect the utmost from them where business is concerned while also making sure that they adhere to our very high health and safety standards as well as follow the same strict work ethics in all aspects of our business relationship. Transportation is a key element of our cement operation ensuring products are shipped to the customers on time, in good condition and in a safe manner. As such, INSEE transporters are an integral part of Siam City Cement. This year we have continued our driver safety training program and vehicle maintenance reviews. In addition, we have implemented “Transportation Safety Program” for the whole transportation network and “Environment Care at Port” for clinker export. These programs ensure superior safety for our transporters, the general public and the environment.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Major Developments in 2009 >> Customers Marketing & Sales 1. Siam City Cement introduced small concrete mixer trucks with playful themes to serve the retail market. These trucks were designed to be environmentally friendly and to attract attention. The retail operation started in October 2008 and has consistently grown ever since. In order to ensure the highest possible coverage, the expansion plan is being undertaken to cover up-country provinces. 2. Continued to expand the INSEE Concrete Franchise to extend our strategic partnership network and market coverage. 3. The INSEE Brand has achieved strong recognition as one of the top cement brands in Thailand through a focused visibility strategy. This effect was further enhanced with the 40th Anniversary celebrations in the latter half of the year.

4. Broadened the INSEE product line and enhanced the manufacturing standard of our valued customers, INSEE CPM (Concrete Product Manufacturer) franchise offering includes concrete block, slab, pipe and pile. 5. Focusing on innovation that meets both customers’ needs and being environmental friendly, the company launched “INSEE Interlock Block” (patent registry No. 0902001956) and the housing solution called “Baan U Sabai”. INSEE CPM franchisees serve as producers and distribution channels for both products. 6. A cement substitute material was introduced as a basis to develop new products that are aimed at specialized applications. For example, “Slag” (a byproduct from steel production) is used to produce a sulfate/chloride resistant cement that releases less CO2 into the atmosphere. 7. Customer Relationship Management enhancement through the sub-dealer channels has been implemented in order to ensure the accuracy of our information and maintain a competitive edge in the market. The information is fully utilized to formulate marketing and sales strategies.

Major Developments in 2009

8. Introduced a wide range of new value-added cement and ready-mixed concrete products to address the specific requirements of each customer group and enhance SCCC’s competitiveness, for example INSEE Ngan Lor, INSEE TileFix Pro, INSEE FloorCrete, INSEE FreezeCrete and INSEE ThruCrete. Logistics 1. Provided differentiated services to Mono-Brand Platinum customers to improve logistics efficiency and increase customer satisfaction. 2. Implemented First Class Fleet Management Project to improve delivery lead time and on time delivery.

Employees People and Organization Performance 1. Reorganized and transformed the HR function to be able to support SCCC’s continued growth more effectively. 2. Established INSEE Academy as an integrated unit responsible for employee development in all dimensions from functional, managerial and leadership capabilities. 3. Launched the INSEE Excellence Award aiming to motivate and reward employees who demonstrated creative thinking and innovation. Nominated were 291 initiatives/projects with 1,391 employees involved. 4. Structured and implemented leadership identification and development process as part of company effort to strengthen the leadership pipeline. Recognition 1. Award for Outstanding Workplace 2009 (Excellent Labor Relations and Labor Welfare) from the Ministry of Labor for the third consecutive year. 2. Award for Outstanding Workplace 2009 (Excellent Employee Training) from Ministry of Labor.

Occupational Health & Safety 1. Adopted and implemented new Five Cardinal Rules to prevent the most critical incidents within the Group and achieve the OH&S goal of “Zero harm to people”. 2. Implemented Fatality Prevention Elements (FPE) on Electrical Safety, Confined Space, Lifting & Supporting Loads for all relevant business units within the SCCC Group. 3. Launched Contractor Safety Management (CSM) OH&S Directive to enable safe management of contractor-related activities in high risk operational units. 4. Carried out Fatality Prevention Element Audits on Vehicle & Traffic Safety, Isolation & Lockout and Working at Height for all relevant business units within the SCCC Group. 5. Promoted & communicated “Passion for Safety” within the Group and launched INSEE Safety Junior Camp for employees’ children by using ‘Stop and Think about Me’ theme. Recognition 1. CONWOOD was awarded for Zero Accident Campaign and Occupational Health & Safety Management from Department of Labor Protection and Welfare, Saraburi.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Society and Communities 1. Carried out many educational, environmental or community-improvement projects such as the “80 years, 880 Check Dams INSEE Builds for His Majesty the King”, achieving more than 3,000 check dams completed to date. 2. Established Tabkwang Community and Environment Development Fund for social and culture development, education support and environment preservation. The fund is managed by the villagers themselves. 3. Continued the INSEE Awards program, presented for outstanding construction projects. This is one of the company’s educational support schemes designed to encourage vocational students and teachers to raise the level of their skills and make greater contributions to community development. 4. Continued its financial contribution to the Tabkwang Health Security System to support public health services.

Business Partners and Suppliers Logistics 1. Implemented “Transportation Safety Program” for the whole transportation network and “Environment Care At Port” for clinker export. 2. Completed “Centralized Dispatching Management Process” by using Radio Frequency Identification (RFID) for all three plants to improve in-plant logistics visibility and increase efficiency in dispatching process. 3. Increased use of waterway transportation of cement bags to the southern region using containerization to increase reliability and speed, and also reduce fossil fuel consumption. 4. Pre-loaded bag cement on pallets to reduce loading time and better utilize packing machines. 5. Extended Integrated Supply & Demand Planning to solid fuel and Kraft paper supply and demand planning for better control of inventory and working capital and more productive operations. Procurement 1. The company is in process of implementing a Supplier Relationship Management with the objective to increase relationship with its key suppliers for long-term competitive advantage and total overall better values to its business and partners. 2. The company has implemented a Procurement Excellence Program to develop long-term plans and organizational renewal to implement best practices, skills and capabilities for future growth. 3. The company implemented a Procurement Sustainability Development Review to ensure longterm development and effectiveness of its world-class procurement activities. 4. The company has continued to expand the scope of Contractor Management and Services Sourcing Program to Logistics Supply Chain and transportation services with the target to achieve higher efficiency, reliability and also reductions in total cost of ownership. 5. The company enhanced the automated payment system to ensure most efficient, accurate and complete payments.

Major Developments in 2009

Manufacturing Operations Production 1. Implemented Maintenance Transformation for improved Overall Equipment Efficiency or OEE to targeting global best performance. 2. Installed the Waste Heat Recovery system at K5 and K6 to use hot gas from kiln and clinker cooler to generate 25 mW of electricity. 3. Optimized fuel cost through process improvement and improved mixing facilities to handle low grade fuels. 4. Proceeded with Alternative Fuels & Raw Materials platfom expansion. 5. Implemented Product Quality Management to comply with global Holcim Quality Standard. Recognition 1. Awarded the Carbon Label for continual reduction in carbon emission in the manufacturing process of INSEE Dang, INSEE Petch, INSEE Dam and INSEE Fah. 2. Wall Street Journal ranked Siam City Cement one of the top 10 companies in Thailand for Quality.

Shareholders Finance & Controlling 1. Successfully issued 4,000-million-baht Senior Unsecured Debentures with a period of four years at an interest rate of 4.50 percent per annum. 2. Made substantial progress towards International Financial Reporting Standards (IFRS) convergence to ensure highest quality reporting. 3. Executed a cost reduction program to achieve immediate and significant cash cost benefits compared to financial year 2008. Compliance 1. Implemented dividend payment policy to be used in 2010. 2. Invited shareholders to nominate a person to be elected as a director at AGM. 3. Conducted shareholders’ visit to the Saraburi Plant. 4. Implemented legal assessment in order to improve legal awareness and compliance. 5. Implemented automatic warning system for all users to ensure that reports for government authorities are prepared and submitted timely and completely. 6. Conducted training on Code of Conduct awareness across the company. Recognitions 1. Wall Street Journal ranked Siam City Cement one of the top three companies in Thailand for Corporate Reputation. 2. The Company was evaluated as “Very Good”, by the AGM assessment 2009 project, organized by Thailand Investors Association.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Industry Outlook >> Domestic In 2009, Thai cement industry experienced the lowest domestic cement consumption over the past six years at 24.2 million tons. Consumption contracted by 2 percent from the previous year. This contraction was due to the global economic crisis that extended into the domestic economy, together with domestic political unrest that undermined both investors’ and consumers’ confidence. Although the Government has released Economic Stimulus Packages 1 and 2 during the year, the benefits of boosting construction activities will largely occur in the years 2010 and 2011. 2010 cement consumption is projected to increase approximately 3 percent from 2009 as a result of the Government’s injection under the Stimulus Package 2 worth THB 1.4 trillion. Fifty percent of the budget is planned to be invested in water resources, logistics and social well-being sectors, with approximately THB 300 billion to be spent on construction-related materials including iron, steel, cement and gravel. Investor confidence is likely to pick up due to the recovering economic conditions and public transportation development projects such as the extension of the mass transit system and road constructions in suburban areas. These projects are likely to spur on the development of real estate projects along the new transportation routes.

Industry Outlook

Export The global economic downturn continuing from 2008 caused contracted demand in the first half of 2009. From the middle of 2009, however, the recession had bottomed out and the demand in key developing markets, i.e. Vietnam and Bangladesh, had started to rise. This reflected in the increase in volume in the second half, allowing Thailandâ&#x20AC;&#x2122;s 2009 export volume to reach approximately 14.4 million tons, an 8-percent decline over the previous year, yet bouncing up from a previous forecast of 13.8 million tons. In 2010, despite the impetus of the Governmentâ&#x20AC;&#x2122;s stimulus packages, the domestic cement market growth is projected at a modest level only, causing cement manufacturers to put more emphasis on exports in order to optimize their production cost. A worldwide excess of cement is anticipated to create increased competition whilst putting more pressure on selling prices. Notwithstanding, some upside is still seen in the emerging markets, i.e. Vietnam, Cambodia and Bangladesh. The trading pattern is also anticipated to shift more toward this region. Consequently, we anticipate some upward growth, with the national forecast for 2010 cement export at 16.2 million tons or an approximately 9 percent increase.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Risk and Risk Management >> The Executive Committee of Siam City Cement Public Company Limited (SCCC) established the Business Risk Management unit to study and understand the possible risks related to the Company on a 5-year horizon. 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. 2009 Risk Lower cement consumption, fierce competition in the market and high energy cost have been identified as risks that may have substantial impact on the performance of the company: 1. Lower cement consumption Due to the global economic crisis and domestic political instability that has weakened investorsâ&#x20AC;&#x2122; and consumersâ&#x20AC;&#x2122; confidence, SCCCâ&#x20AC;&#x2122;s domestic cement demand experienced a drop due mainly to slowdown in the construction of residential and government projects. Therefore, an export push for cement and clinker was one important mitigation that has assisted to maintain the production level at full capacity.

Risk and Risk Management

2. Fierce competition The Thai cement industry was affected by lower demand that led to more intense competition, especially pressure on pricing in Ready-Mixed Concrete (RMX) business due largely to the delay of government mega projects. In order to maintain the market share, we have launched initiatives, products and innovations to cope with the competition as follows: > Slag cement (Slag - a by-product of the iron and steel industry) is increasingly being used in the manufacture of blended Portland cement. Due to its high durability and strength, slag cement can be used in general construction and high-compressive projects such as sea ports and offshore platforms. > â&#x20AC;&#x153;INSEE Ngarn Lorâ&#x20AC;? is conceived through relentless research and development to be particularly suitable for dry cast concrete applications. The quality of INSEE Ngarn Lor conforms to ASTM C1157 type GU (Hydraulic Cement for General Construction) standard. > In order to promote INSEE brand and enhance sales channels for customers, SCCC initiated Baan U Sabai house (low-cost housing) with the concept of Green and energy saving by bundling sales of SCCC products, other construction materials from selected dealers and labor from certified contractors.

> INSEE InterLock Block is an SCCC innovative CPM product. A patent was granted for this innovation in June 2009. Its key feature is much thinner cement used in the laying process, thus reducing the overall amount of cement used. In addition, the laying work is faster as the blocks have fins that assist in vertical and horizontal alignments. As a result, total construction cost decreases due to lower cement usage, and reduced labor cost from shorter construction time. 3. High energy cost With the euer increasing cost of traditional fuel, hence, the company has implemented measures and projects such as Waste Heat Recovery (electricity generation), Alternative Fuels & Raw Materials, diversified fuel types, fuel-mix optimization and overall operational efficiency improvement in order to minimize and optimize energy cost.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

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 effective internal controls which provides reasonable 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.

(Mr. Veraphan Teepsuwan) Chairman

(Mr. Philippe Paul Alexandre Arto) Managing Director

Report of the Board of Directors’ Responsiblities for Financial Statements > Report of the Audit Committee

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 2009. The Audit Committee is comprised solely of three independent directors and operates under a written charter adopted by the Committee and the Board of Directors. In 2009, 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 2009 and 2008 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 2009. 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. The Committee also reviewed and approved the internal audit plan for year 2010 and the budget to support the plan, which were both prepared in cooperation with Group Internal Audit. Whilst reviewing the quarterly and annual financial statements for 2009, 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 2010 and the proposed remuneration of 4 million Baht.

January 29, 2010 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 2009

Consolidated Financial Statements>>

Report of Independent Auditor

Report of Independent Auditor >> To the Shareholders of Siam City Cement Public Company Limited I have audited the accompanying consolidated balance sheets of Siam City Cement Public Company Limited and its subsidiaries as at 31 December 2009 and 2008, the related consolidated statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended, and the separate financial statements of Siam City Cement Public Company Limited for the same periods. These financial statements are the responsibility of the Companyâ&#x20AC;&#x2122;s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide 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 2009 and 2008, and the results of their operations and cash flows for the years then ended, in accordance with generally accepted accounting principles.

Saifon Inkaew Certified Public Accountant (Thailand) No. 4434 Ernst & Young Office Limited Bangkok: 11 February 2010

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Balance sheets>> Siam City Cement Public Company Limited and its subsidiaries As at 31 December 2009 and 2008 (Unit: Baht) Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Assets Current assets Cash and cash equivalents Trade accounts receivable Related parties Unrelated parties - net Inventories - net Other debtors - related parties Advance payments to suppliers Related party Unrelated parties Other current assets Total current assets Non-current assets Investments in subsidiary companies - net Investment in associated company Other investment - related company Long-term loans to related parties - net Property, plant and equipment - net Assets not used in operations - net Intangible assets - net Other non-current assets Deferred income tax Others Total non-current assets Total assets

6, 7

1,767,315,847

1,108,496,630

1,504,308,369

826,407,539

7 8 9 7

436,683,743 1,829,186,991 1,829,108,723 2,748,472

234,676,521 2,401,309,014 1,900,107,796 7,777,450

863,354,983 1,185,865,373 1,630,019,948 257,176,381

793,535,976 1,478,885,398 1,675,292,256 273,547,272

134,069,200 22,633,934 182,627,248 6,204,374,158

140,327,200 65,716,445 125,443,451 5,983,854,507

134,069,200 18,616,933 143,682,202 5,737,093,389

140,327,200 48,827,939 88,877,563 5,325,701,143

10 11 12 7 13 14 15

1,174,950,643 368,119,260 14,240,474,217 168,942,908 1,163,213,871

1,081,546,228 368,119,260 13,423,563,380 328,880,128 1,189,002,293

711,758,497 483,426,543 2,028,182,356 12,314,549,569 144,117,009 992,183,188

711,757,897 483,426,543 2,126,893,493 11,388,225,590 304,052,025 1,021,295,376

824,584,081 204,960,920 18,145,245,900 24,349,620,058

852,179,119 276,051,311 17,519,341,719 23,503,196,226

608,506,155 91,148,503 17,373,871,820 23,110,965,209

660,077,426 149,664,425 16,845,392,775 22,171,093,918

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

Balance Sheets

Balance sheets (continued)>> Siam City Cement Public Company Limited and its subsidiaries As at 31 December 2009 and 2008 (Unit: Baht) Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Liabilities and shareholdersâ&#x20AC;&#x2122; equity Current liabilities Short-term loans from financial institutions Trade accounts payable Related parties Unrelated parties Current portion of long-term loans from related financial institution Current portion of long - term liabilities for concession Other current liabilities Accrued rebate Accrued electricity Corporate income tax payable Other accrued expenses Advances from customers Others Total current liabilities

7, 17

28,489,708

3,429,819,571

3,400,000,000

46,620,718 1,172,753,739

146,540,722 1,110,122,962

68,528,652 904,438,963

253,091,007 770,903,770

60,000,000

52,000,000

37,289,855

35,013,948

37,289,855

35,013,948

374,933,546 414,294,677 488,028,615 460,953,019 10,236,954 109,428,777 3,203,029,608

479,664,820 125,831,495 636,852,762 457,632,269 34,030,597 116,098,935 6,623,608,081

370,010,256 403,058,801 457,373,133 407,136,800 8,634,260 85,762,516 2,742,233,236

475,564,307 117,385,242 616,615,369 394,437,380 32,338,528 93,896,236 6,189,245,787

160,000,000

175,029,336 3,990,241,544

212,319,191 -

175,029,336 3,990,241,544

212,319,191 -

602,590,000 4,767,860,880 7,970,890,488

661,907,647 1,034,226,838 7,657,834,919

527,652,107 4,692,922,987 7,435,156,223

583,504,545 795,823,736 6,985,069,523

Non-current liabilities Long-term loans from related financial institution - net of current portion 7 Long-term liabilities for concession - net of current portion 18 Debentures 19 Other non-current liabilities Reserve for employee benefits 20 Total non-current liabilities Total liabilities

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

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Balance sheets (continued)>> Siam City Cement Public Company Limited and its subsidiaries As at 31 December 2009 and 2008 (Unit: Baht) Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Shareholders’ equity Share capital Registered 287,500,000 ordinary shares of Baht 10 each Issued and fully paid up 237,500,000 ordinary shares of Baht 10 each Share premium Translation adjustment Retained earnings Appropriated - statutory reserve 21 - treasury stock reserve 22 Unappropriated Equity attributable to the Company’s shareholders Less: Treasury stock 22 Equity attributable to the Company’s shareholders - net Minority interests - equity attributable to minority shareholders of subsidiaries Total shareholders’ equity Total liabilities and shareholders’ equity

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

2,875,000,000

2,375,000,000 10,106,266,730 (1,743,568)

2,375,000,000 10,106,266,730 (1,029,582)

2,375,000,000 10,106,266,730 -

300,000,000 1,710,643,745 3,593,015,484 18,083,182,391 (1,710,643,745)

300,000,000 1,710,643,745 3,061,608,260 17,552,489,153 (1,710,643,745)

300,000,000 1,710,643,745 2,894,542,256 17,386,452,731 (1,710,643,745)

300,000,000 1,710,643,745 2,404,757,665 16,896,668,140 (1,710,643,745)

16,372,538,646

15,841,845,408

15,675,808,986

15,186,024,395

6,190,924 16,378,729,570 24,349,620,058

3,515,899 15,845,361,307 23,503,196,226

15,675,808,986 23,110,965,209

15,186,024,395 22,171,093,918

Income Statements

Income statements>> Siam City Cement Public Company Limited and its subsidiaries For the year ended 31 December 2009 and 2008 (Unit: Baht) Note

Revenues Net sales Dividend income Other income Total revenues Expenses Production cost of goods sold Selling and distribution expenses Administrative expenses Loss (gain) on exchange Total expenses

10, 11

Income before share of income from investment, finance cost and corporate income tax Share of income from investment in associated company 11 Income before finance cost and corporate income tax Finance cost Income before corporate income tax Corporate income tax 16 Net income for the year Net income attributable to: Equity holders of the parent Minority interests of the subsidiaries

Basic earnings per share Net income attributable to equity holders of the parent Weighted average number of ordinary shares - net (shares)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

19,970,608,227 102,159,379 20,072,767,606

21,304,822,857 78,737,629 21,383,560,486

16,969,017,577 192,704,388 238,192,895 17,399,914,860

18,207,720,518 118,086,990 222,343,254 18,548,150,762

11,272,068,812 3,843,118,172 922,841,048 13,053,135 16,051,081,167

11,602,883,781 4,343,011,536 1,182,436,521 (55,687,487) 17,072,644,351

9,248,969,540 3,137,181,294 840,444,444 12,575,504 13,239,170,782

9,465,297,559 3,534,347,455 1,066,349,448 (55,321,932) 14,010,672,530

4,021,686,439

4,310,916,135

4,160,744,078

4,537,478,232

235,108,803

272,117,902

4,256,795,242 (195,834,369) 4,060,960,873 (1,111,672,564) 2,949,288,309

4,583,034,037 (167,014,973) 4,416,019,064 (1,243,501,995) 3,172,517,069

4,160,744,078 (176,682,184) 3,984,061,894 (1,079,310,138) 2,904,751,756

4,537,478,232 (143,555,620) 4,393,922,612 (1,267,704,436) 3,126,218,176

2,946,374,389 2,913,920 2,949,288,309

3,172,676,491 (159,422) 3,172,517,069

2,904,751,756

3,126,218,176

12.81

13.79

12.63

13.59

230,000,000

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

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Statements of changes in shareholdersâ&#x20AC;&#x2122; equity >> Siam City Cement Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008 (Unit: Baht)

Consolidated financial statements Equity attributable to the Companyâ&#x20AC;&#x2122;s shareholders Retained earnings Issued and fully paid up share capital

Share premium

Translation adjustment

Appropriated

Unappropriated

statutory Reserve

treasury stock reserve

Treasury stock

Total equity Minority atributable to interests the Companyâ&#x20AC;&#x2122;s equity shareholders - attributable net to minority shareholders of subsidiaries

Note Balance as at 31 December 2007

(1,710,643,745) 15,890,122,061

Total

2,375,000,000

10,106,266,730

61,136

300,000,000

1,710,643,745

3,108,794,195

169,294

15,890,291,355

(1,090,718)

(363,573)

(1,454,291)

3,172,676,491

3,869,600

(159,422)

3,172,517,069

(3,219,862,426)

Balance as at 31 December 2008

2,375,000,000

10,106,266,730

(1,029,582)

300,000,000

1,710,643,745

3,061,608,260

(1,710,643,745) 15,841,845,408

3,515,899

15,845,361,307

Balance as at 31 December 2008

2,375,000,000

10,106,266,730

(1,029,582)

300,000,000

1,710,643,745

3,061,608,260

(1,710,643,745) 15,841,845,408

3,515,899

15,845,361,307

(713,986)

(238,895)

(952,881)

2,946,374,389

2,913,920

2,949,288,309

(2,414,967,165)

2,375,000,000

10,106,266,730

(1,743,568)

300,000,000

1,710,643,745

3,593,015,484

Income (expenses) for the year recognised directly in equity: - Foreign currency translation Increase in minority interest from capital increase of subsidiary Net income for the year Dividend paid

Income (expenses) for the year recognised directly in equity: - Foreign currency translation Net income for the year Dividend paid

Balance as at 31 December 2009

(1,710,643,745) 16,372,538,646

6,190,924

(2,414,967,165) 16,378,729,570

(Unit: Baht)

Separate financial statements Retained earnings Issued and fully paid up share capital

Share premium

Unappropriated

Treasury stock

2,375,000,000

10,106,266,730

300,000,000

1,710,643,745

2,498,401,915

(1,710,643,745)

3,126,218,176

(3,219,862,426)

Balance as at 31 December 2008

2,375,000,000

10,106,266,730

300,000,000

1,710,643,745

2,404,757,665

(1,710,643,745)

15,186,024,395

Balance as at 31 December 2008

2,375,000,000

10,106,266,730

300,000,000

1,710,643,745

2,404,757,665

(1,710,643,745)

15,186,024,395

2,904,751,756

(2,414,967,165)

2,375,000,000

10,106,266,730

300,000,000

1,710,643,745

2,894,542,256

(1,710,643,745)

15,675,808,986

Note Balance as at 31 December 2007 Net income for the year Dividend paid

Net income for the year Dividend paid Balance as at 31 December 2009

Appropriated treasury stock reserve

statutory reserve

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

Total

15,279,668,645

Statements of cash flows

Statements of cash flows >> Siam City Cement Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008 (Unit: Baht) Consolidated financial statements 2009 2008

Cash flows from operating activities Net income before tax Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Share of income from investment in associated company Dividend received from subsidiary and associated companies Allowance for doubtful accounts and diminution in inventory value Depreciation and amortisation Allowance for impairment of property, plant and equipment Allowance for doubtful accounts of longterm loans to subsidiary Net loss on disposals/write-off of fixed assets and intangible assets Employee benefit expenses and other provision Unrealised gain on exchange Interest income Interest expenses Income from operating activities before changes in operating assets and liabilities Decrease (increase) in operating assets: Trade accounts receivable Inventories Other debtors - related parties Other current assets Increase (decrease) in operating liabilities: Trade accounts payable Accrued expenses and other current liabilities Reserve for employee benefits Cash flows from operating activities Cash received from interest income Cash paid for interest expenses Cash paid for corporate income tax Net cash from operating activities The accompanying notes are an integral part of the financial statements.

Separate financial statements 2009 2008

4,060,960,873

4,416,019,064

3,984,061,894

4,393,922,612

(235,108,803)

(272,117,902)

(192,704,388)

(118,086,990)

77,093,914 964,028,174

59,155,817 878,079,144

48,125,399 775,198,815

52,799,759 689,755,268

40,000,000

15,491,900

23,711,137

27,139,614

37,603,075 115,784,726 (10,017,732) (40,018,671) 172,273,759

160,178,277 75,826,705 (16,256,376) (40,559,625) 152,993,377

20,678,701 103,445,372 (9,788,419) (158,166,625) 163,087,995

159,821,204 65,690,343 (15,892,804) (167,294,856) 131,899,634

4,757,649,881

5,235,245,684

5,182,599,315

5,428,810,381

367,232,054 15,378,737 5,028,978 (23,501,851)

74,345,744 (338,570,237) (5,460,080) (176,108,258)

250,215,309 (9,074,693) 33,248,219 (36,186,474)

19,094,215 (305,444,380) (40,043,570) (156,899,686)

(36,794,615) 162,776,344 (170,330,077) 5,502,388,885 40,039,946 (181,961,247) (1,232,901,673) 4,127,565,911

(259,500,895) (111,250,741) (56,116,600) 4,556,149,314 40,594,168 (137,985,587) (1,360,316,873) 3,098,441,022

(50,532,551) 169,737,684 (158,790,171) 4,956,267,204 141,310,572 (171,080,083) (1,186,981,101) 3,739,516,592

(239,609,944) (114,124,961) (51,919,956) 4,346,297,402 133,468,468 (115,845,388) (1,302,840,902) 3,061,079,580

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Statements of cash flows (continued) >> Siam City Cement Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008 (Unit: Baht) Note

Cash flows from investing activities Proceeds from disposals of fixed assets Purchase of fixed assets Net decrease (increase) in long-term loan to subsidiary Increase in intangible assets Decrease in other non-current assets Dividend received from subsidiary and associated companies Net cash used in investing activities Cash flows from financing activities Increase (decrease) in short-term loans from financial institutions Dividend paid Net cash received from issuance of debentures Repayment of long-term loans Payment of long-term liabilities for concession Net cash used in financing activities Decrease in translation adjustments Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of change in foreign exchange rate on cash at banks Cash and cash equivalents at end of year 6 Supplemental disclosures of cash flows information: Non-cash related transactions: Transferred property, plant and equipment to intangible assets

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

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

167,366,121 (1,829,444,718)

377,541,766 (2,108,204,977)

172,657,660 (1,697,510,251)

377,167,934 (1,899,410,605)

(10,737,847) 71,090,391

(16,260,745) 17,723,953

75,000,000 (8,301,701) 58,515,322

(322,000,000) (13,936,834) 5,143,657

141,704,388 (1,460,021,665)

118,086,990 (1,611,113,013)

192,704,388 (1,206,934,582)

118,086,990 (1,734,948,858)

(3,401,329,863) (2,414,967,165) 3,988,969,248 (152,000,000) (35,013,948) (2,014,341,728) (713,986) 652,488,532 1,108,496,630

2,425,300,684 (3,219,862,426) (54,000,000) (32,876,947) (881,438,689) (1,090,718) 604,798,602 503,148,104

(3,400,000,000) (2,414,967,165) 3,988,969,248 (35,013,948) (1,861,011,865) 671,570,145 826,407,539

2,400,000,000 (3,219,862,426) (32,876,947) (852,739,373) 473,391,349 352,466,266

6,330,685 1,767,315,847

549,924 1,108,496,630

6,330,685 1,504,308,369

549,924 826,407,539

7,586,968

311,515,664

Notes to consolidated financial statements

Notes to consolidated financial statements>> Siam City Cement Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

1. General information 1.1 Corporate 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. 1.2 Economic crisis The financial crisis experienced over the past year has had a far reaching adverse effect on the global economy as evidenced by sharp falls in share prices worldwide, a tight squeeze on credit including interbank lending, failures of large financial institutions and reduced consumer confidence. At present, the economic crisis has eased. However, it continues to substantially affect the business and financial plans of Thailand enterprises and asset value, and there remains uncertainty as to when the global economy will return to normalcy. These financial statements have been prepared on the bases of facts currently known to the Company, and on estimates and assumptions currently considered appropriate.

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. 12 “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”. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 30 January 2009, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements. 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 (“the Company”) and the following subsidiary companies (“the subsidiaries”):

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Company’s name

Country of incorporation

Registered capital

2009 2008 Million Baht Million Baht

Percentage of shareholding by the Company 2009 Percent

2008 Percent

Siam City Concrete Co., Ltd.

Thailand

400

99.99

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

Thailand Thailand Cambodia

700 300 USD 0.405 million

99.99 99.99 75.00

Nature of business

Ready-mixed concrete and aggregates Holding Construction material Cement trading

b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. c) The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent significant accounting policies. d) 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 are shown under the caption of “Translation adjustment” in shareholders’ equity. e) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. f) Minority interests represent the portion of net income and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet. 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 In June 2009, the Federation of Accounting Professions has issued Notification No. 12/2552, regarding the renumbering of Thai Accounting Standards to match the corresponding International Accounting Standards. Therefore the numbers of Thai Accounting Standards as used in these financial statements are corresponded to those per this notification. The Federation of Accounting Professions has issued Notification No. 86/2551 and 16/2552, mandating the use of the following new accounting standards, financial reporting standard and accounting treatment guidance. 3.1 Accounting standards, financial reporting standard and accounting treatment guidance which are effective for the current year Framework for Preparation and Presentation of Financial Statements (revised 2007) TAS 36 (revised 2007) Impairment of Assets TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations Accounting Treatment Guidance for Leasehold right Accounting Treatment Guidance for Business Combination under Common Control These accounting standards, financial reporting standard and accounting treatment guidance became effective for the financial statements for fiscal year beginning on or after 1 January 2009. These accounting standards, financial reporting standard and accounting treatment guidance do not have any significant impact on the financial statements for the current year.

Notes to consolidated financial statements

3.2 Accounting standards which are not effective for the current year TAS 20 TAS 24 (revised 2007) TAS 40

Accounting for Government Grants and Disclosure of Government Assistance Related Party Disclosures Investment Property

Effective date 1 January 2012 1 January 2011 1 January 2011

However, TAS 24 (revised 2007) and TAS 40 allow early adoption by the entity before the effective date. The management has assessed the effect of these standards and believes that TAS 20 is not relevant to the business of the Company, while TAS 24 (revised 2007) and TAS 40 will not have any significant impact on the financial statements for the year in which it is initially applied.

4. Significant accounting policies 4.1 Revenue recognition a) Sales of goods Sales of goods are recognised 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. 4.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at bank, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 4.3 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 debt aging. 4.4 Inventories Inventories are valued at lower of cost on an average method 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. 4.5 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.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

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. 4.6 Property, plant and equipment and depreciation Land is stated at cost less allowance for loss on 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, and allowance for loss on impairment (if any). 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 5 - 30 3-5 5

years years years years

No depreciation is provided on land and construction in progress. Depreciation is included in determining income. 4.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.8 Intangible assets and amortisation Intangible assets acquired from other than business combination are measured on the date of acquisition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to the income statement. A summary of the intangible assets with finite useful lives is as follows: Mining concession Computer software

20 - 25 3

years years

Mining concession of aggregate business is amortised based on the physical unit-of-production method over their estimated commercial lives. 4.9 Treasury stock Treasury stock is stated at cost and presented as a reduction from shareholdersâ&#x20AC;&#x2122; 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.

Notes to consolidated financial statements

4.10 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 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. 4.11 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. 4.12 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the balance sheet date. Gains and losses on exchange are included in determining income. 4.13 Impairment of assets At each reporting date, the Company performs impairment reviews in respect of the property, plant and equipment and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in the income statement. 4.14 Employee benefits Employee benefits - Defined contribution plans The Company, the subsidiaries and their employees have jointly established a provident fund. The fund is monthly contributed to by employees and by the Company and the subsidiaries. The Company and the subsidiaries’ contributions are recognised as expenses when incurred. Employee benefits - Defined benefit plans The Company, the subsidiary and their employees have jointly established a contributory, unfunded provident fund. The fund is monthly contributed to by employees and by the Company and the subsidiary. The Company and the subsidiary’ contributions are recognised as expenses when incurred. The Company and the subsidiaries have provided a retirement benefit plan which includes a resignation plan and a long service award for employees.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

The obligation and costs of pension benefits are determined using the projected unit credit method. A professionally qualified independent actuary values the fundâ&#x20AC;&#x2122;s liability and certain obligations on a regular basis. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognise on a straight-line basis over the average period until the amended benefits become vested. Gains or losses on the curtailment or settlement of pension benefits are recognised when the curtailment or settlement occurs. Actuarial gains or losses are recognised immediately to the income statement. The pension obligations are measured at the present value of estimated future cash flows using a discount rate that is similar to the interest rate on high quality corporate bonds. 4.15 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. 4.16 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 utilised. 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. 4.17 Financial instruments Financial instruments presented in the balance sheets consist of cash and cash equivalents, trade accounts receivable, trade accounts payable, loans, short-term and long-term loans and debentures. The accounting policy is separately disclosed in the related notes. Accounting for derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss is dependent on the nature of the item being hedged. On the date a derivative contract is entered into, the Company designates certain derivatives as either 1) a hedge of the fair value of a recognised asset or liability (fair value hedge) or 2) a hedge of a particular risk associated with a recognised asset or liability, such as future interest payments on floating rate debt (cash flow hedge) or 3) a hedge of a foreign currency risk of a firm commitment (cash flow hedge)

Notes to consolidated financial statements

Changes in the fair value of derivatives that are designated and qualify as fair value hedges and that are highly effective are recorded in the income statement, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective are recognised in equity. Where the firm commitment results in the recognition of an asset or a liability, the gains or losses previously deferred in equity are transferred from equity and included in the initial measurement of the non-financial asset or liability. Otherwise, amounts deferred in equity are transferred to the income statement and classified as revenue or expense in the same periods during which the cash flows, such as interest payments, or hedged firm commitments, affect the income statement. Certain derivative transactions, while providing effective economic hedges under the Companyâ&#x20AC;&#x2122;s risk management policies, may not qualify for hedge accounting under the specific rules in International Accounting Standard on the same topic. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under International Accounting Standard on the same topic are recognised immediately in the income statement. When a hedging instrument is sold, or when a hedge no longer meets the criteria for hedge accounting under International Accounting Standard on the same topic, any cumulative gain or loss existing in equity at that time remains in equity until the committed transaction occurs. However, if a committed transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. In the case of a fair value hedge, however, the adjustment to the carrying amount of the hedged item is amortised to net profit or loss from the moment it ceases to be adjusted for in changes to fair value, with it being fully amortised by maturity date. The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific firm commitments. The Company also documents its assessment, both at hedge inception and on an ongoing . basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

5. Use of accounting estimates The 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. These estimates are based on managementâ&#x20AC;&#x2122;s best knowledge of current events and actions that the Company may undertake in the future. However, actual results could differ from those estimates. Critical accounting estimates and assumptions Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have a risk of causing an adjustment to the carrying amounts of assets within the next financial year relate primarily to allowance for doubtful accounts, allowance for impairment of assets not used in operation, deferred tax assets and defined benefit plans at the balance sheet date. The cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty (note 20). All other estimates mentioned above are further detailed in the corresponding disclosures. Litigation The Company has contingent liabilities as a result of litigation. The Companyâ&#x20AC;&#x2122;s management has used judgment to assess the results of the litigation and believes that the provision made would be sufficient. However, actual results could differ from the estimates.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

6. Cash and cash equivalents As at 31 December 2009 and 2008, cash and cash equivalents consist of the following:

Consolidated financial statements 2009 2008 Cash and cash at banks Short-term investments in bill of exchange Short-term investments in fixed deposits Cash and cash equivalents Of which at related financial institution Bank of Ayudhaya Public Co., Ltd.

(Unit: Baht) Separate financial statements 2009 2008

1,167,073,421 600,000,000 242,426 1,767,315,847

1,108,243,414 253,216 1,108,496,630

904,307,268 600,000,000 1,101 1,504,308,369

826,406,453 1,086 826,407,539

642,934,519

541,927,783

508,119,714

356,738,695

7. Related party transactions During the years, the Company and its subsidiaries had business transactions with its related parties. Such transactions were concluded on commercial terms and bases agreed upon between the Company and those related parties and were in ordinary course of business. The significant transactions are summarised below. (Unit: Thousand Baht)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Pricing policy

Transactions with subsidiary companies (eliminated from the consolidated financial statements) Sales of goods Sales of assets Purchase of goods Other income Interest income

1,134,936 9,241 30,615 20,866 130,460

1,441,546 723 181,101 20,289 141,403

Selling and distribution expenses and administrative expenses

174,072 217,395

653,047 192,272

174,072 217,395

653,047 192,272

Market price Negotiated agreement

3,451,671 2,222 726,093 1,986 137,313

3,153,324 483,562 1,800 190,716

3,448,198 2,222 726,093 1,986 137,313

3,153,324 483,562 1,800 135,249

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

162,989 3,050 35,740

280,844 3,598 81,772

120,719 2,513 26,092

232,964 2,540 65,108

Transactions with associated company Purchases of goods Service fee expenses Transactions with related companies Sales of goods Sales of assets Purchases of goods Other income Service fee expenses Selling and distribution expenses and administrative expenses Interest income Interest expenses

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

Cost plus margin Market interest rate Market interest rate

Notes to consolidated financial statements

The balances of the accounts as at 31 December 2009 and 2008 between the Company and those related parties are as follows: (Unit: Baht) Consolidated financial statements 2009 2008

Deposits at related financial institution Bank of Ayudhaya Public Co., Ltd. Total deposits at related financial institution Trade accounts receivable - related parties Subsidiaries Siam City Concrete Co., Ltd. Khmer Cement Industry Co., Ltd. Others Related companies Total trade accounts receivable - related parties

Separate financial statements 2009 2008

642,934,519 642,934,519

541,927,783 541,927,783

508,119,714 508,119,714

356,738,695 356,738,695

436,683,743 436,683,743

234,676,521 234,676,521

289,313,478 104,833,755 32,524,007 426,671,240 436,683,743 863,354,983

357,574,864 176,843,690 24,440,901 558,859,455 234,676,521 793,535,976

Most of the above trade accounts receivable - related parties are not yet due. Management has assessed and believes that these trade accounts receivable - related parties are collectible in full. Thus, no allowance for doubtful accounts has been provided. (Unit: Baht) Consolidated financial statements 2009 2008

Other debtors - related parties Subsidiaries Eagle Cement Holdings Co., Ltd. Siam City Concrete Co., Ltd. Others Related companies Total other debtors - related parties Advance payment to suppliers - related party Related companies Total advance payment to suppliers - related party

Separate financial statements 2009 2008

2,748,472 2,748,472

7,777,450 7,777,450

208,772,041 45,663,459 1,849,126 256,284,626 891,755 257,176,381

185,146,892 79,073,130 2,152,822 266,372,844 7,174,428 273,547,272

134,069,200 134,069,200

140,327,200 140,327,200

134,069,200 134,069,200

140,327,200 140,327,200

Siam City Cement Public Company Limited ANNUAL REPORT 2009

(Unit: Baht) Consolidated financial statements 2009 2008

Long-term loans to related parties Subsidiaries Eagle Cement Holdings Co., Ltd. - The principal of the loan is repayable as a lump - sum on 28 June 2010. 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 at 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 accounts Total long-term loans to related parties - net

Separate financial statements 2009 2008

369,119,260

1,868,700,000

1,943,700,000

2,237,819,260 (209,636,904) 2,028,182,356

2,312,819,260 (185,925,767) 2,126,893,493

During the year ended 31 December 2009, movement of long-term loans to related parties are as follows: (Unit: Baht)

Separate financial statements

Long-term loans to subsidiaries Eagle Cement Holdings Co., Ltd. Siam City Concrete Co., Ltd. Total Less: Allowance for doubtful accounts Total long-term loans to subsidiaries - net

Balance as at 31 December 2008

Increase

Decrease

Balance as at 31 December 2009

369,119,260 1,943,700,000 2,312,819,260 (185,925,767) 2,126,893,493

55,000,000 55,000,000 (23,711,137) 31,288,863

(130,000,000) (130,000,000) (130,000,000)

369,119,260 1,868,700,000 2,237,819,260 (209,636,904) 2,028,182,356

During the year

(Unit: Baht) Consolidated financial statements 2009 2008

Short-term loans from related financial institution Bank of Ayudhaya Public Co., Ltd. Total short-term loans from related financial institution

2,400,000,000 2,400,000,000

Separate financial statements 2009 2008

2,400,000,000 2,400,000,000

Notes to consolidated financial statements

Movements in short-term loans from related financial institution - Bank of Ayudhya Public Co., Ltd. during the year ended 31 December 2009 are summarised below. (Unit: Baht) Consolidated financial statement

Short-term loans from related financial institution Balance as at 31 December 2008 Less: Decrease during the year Balance as at 31 December 2009

Separate financial statement

2,400,000,000 (2,400,000,000) -

(Unit: Baht) Consolidated financial statements 2009 2008

Trade accounts payable - related parties Subsidiaries Siam City Concrete Co., Ltd. Khmer Cement Industry Co., Ltd. Associated company Lanna Resources Public Co., Ltd. Related companies Holcim Group Support Ltd. PT. Lanna Harita Indonesia Others Total trade accounts payable - related parties

Separate financial statements 2009 2008

846,516 21,214,545 22,061,061

71,361,770 35,824,448 107,186,218

42,019,161

41,738,487 4,882,231 46,620,718 46,620,718

37,690,894 65,724,211 1,106,456 104,521,561 146,540,722

41,585,360 4,882,231 46,467,591 68,528,652

37,690,894 65,724,211 470,523 103,885,628 253,091,007 (Unit: Baht)

Consolidated financial statements 2009 2008

Long-term loans from related financial institution Bank of Ayudhaya Public Co., Ltd. Long-term loans from related financial institution - Repayable in 15 semi-annual installments of varying amounts, commencing in October 2005, and carrying interest at MLR. Less: Portion due within one year Long-term loans from related financial institution - net of current portion

Separate financial statements 2009 2008

60,000,000 (60,000,000)

212,000,000 (52,000,000)

160,000,000

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Movements in long-term loans from related financial institution - Bank of Ayudhya Public Co., Ltd. during the year ended 31 December 2009 are summarised below.

(Unit: Baht) Consolidated financial statement

Long-term loans from related financial institution Balance as at 31 December 2008 Less: Decrease during the year Balance as at 31 December 2009

Separate financial statement

212,000,000 (152,000,000) 60,000,000

These long-term loans of a subsidiary are collateralised by a portion of the subsidiaryâ&#x20AC;&#x2122;s land, construction thereon and machinery. The loan agreements have certain restrictive covenants pertaining to the performance, dividend payments, maintenance of certain financial ratios in the financial statements and percentage of shares held by the major shareholder. Directorsâ&#x20AC;&#x2122; and managementâ&#x20AC;&#x2122;s remuneration In 2009, the Company and its subsidiaries paid salaries, bonus, meeting allowances and gratuities to their directors and management totaling Baht 124 million (2008: Baht 113 million) and for separate financial statements totaling Baht 124 million (2008: Baht 113 million).

8. Trade accounts receivable - unrelated parties The outstanding balance of trade accounts receivable - unrelated parties as at 31 December 2009 and 2008, aged on the basis of due dates, are summarised below. (Unit: Baht) Consolidated financial statements 2009 2008

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 - unrelated parties, net

1,656,181,760 29,430,985 41,821,088 483,126,141 2,210,559,974 (381,372,983) 1,829,186,991

2,175,265,555 40,053,848 43,369,937 504,701,772 2,763,391,112 (362,082,098) 2,401,309,014

Separate financial statements 2009 2008

1,105,253,353 3,607,812 1,707,468 284,186,723 1,394,755,356 (208,889,983) 1,185,865,373

1,407,949,242 5,151,162 1,117,254 281,962,017 1,696,179,695 (217,294,277) 1,478,885,398

The Company and its subsidiaries provided allowance for doubtful accounts of Baht 381 million and Baht 362 million in the consolidated financial statements, and Baht 209 million and Baht 217 million in the separate financial statements as at 31 December 2009 and 2008, respectively. Management has assessed and believes that such allowances are adequate to absorb possible losses on doubtful accounts.

Notes to consolidated financial statements

9. Inventories

(Unit: Baht)

Consolidated financial statements Allowance for diminution in value of inventory Cost 2009 Finished goods Work in process Raw materials Store supplies Goods in transit Total

Inventories - net

Inventory obsolescence 2008

2009

437,174,529 379,966,562 88,724,030 68,436,889 117,050,098 158,813,623 1,220,806,770 1,317,103,328 100,485,383 55,299,145 1,964,240,810 1,979,619,547

2008

(38,475) (135,093,612) (135,132,087)

2009

2008

437,174,529 88,724,030 117,011,623 (79,511,751) 1,085,713,158 100,485,383 (79,511,751) 1,829,108,723

379,966,562 68,436,889 158,813,623 1,237,591,577 55,299,145 1,900,107,796 (Unit: Baht)

Separate financial statements Allowance for diminution in value of inventory Cost 2009 Finished goods Work in process Raw materials Store supplies Goods in transit Total

2008

2009

362,566,403 285,665,433 34,407,991 41,825,210 83,308,541 92,744,379 1,178,192,913 1,274,352,371 100,485,383 55,299,145 1,758,961,231 1,749,886,538

2008

(128,941,283) (128,941,283)

Inventories - net

Inventory obsolescence

2009

2008

362,566,403 34,407,991 83,308,541 (74,594,282) 1,049,251,630 100,485,383 (74,594,282) 1,630,019,948

285,665,433 41,825,210 92,744,379 1,199,758,089 55,299,145 1,675,292,256

10. Investments in subsidiary companies Companyâ&#x20AC;&#x2122;s name

Siam City Concrete Co., Ltd. Eagle Cement Holdings Co., Ltd. Conwood Co., Ltd.

Type of business

Ready-mixed concrete and aggregates

Type of relation

Direct holding Direct holding Direct holding Direct holding

Holding Construction material Khmer Cement Cement Industry Co., Ltd. trading Total investments in subsidiary companies Less: Allowance for diminution in value of investments Investments in subsidiary companies - net

Separate financial statements Percentage of Investment value under shareholding cost method 2008 (Baht)

Dividend received for the year ended 31 December

2009 %

2008 %

2009 (Baht)

2008 (Baht)

99.99

399,999,800

399,999,400

99.99

699,999,700

699,999,300

99.99

299,999,800

300,000,000

51,000,000

75.00

11,758,497 1,411,757,797 (699,999,300) 711,758,497

11,758,497 1,411,757,197 (699,999,300) 711,757,897

51,000,000

Siam City Cement Public Company Limited ANNUAL REPORT 2009

11. Investment in associated company 11.1 Detail of associated company:

Companyâ&#x20AC;&#x2122;s name

Lanna Resources Public Co., Ltd.

Type of Country of business incorporation

Coal Mining

Thailand

Type of relation

Direct holding

Consolidated financial statements

Separate financial statements

Percentage of shareholding

Carrying amount based on equity method

2008 %

2008 (Baht)

2008 %

2008 (Baht)

44.99 44.99 1,174,950,643 1,081,546,228 483,426,543

483,426,543

11.2 Share of income and dividend received During the year, the Company has recognised its share of net income from investment in associated company in the consolidated financial statements and dividend income in the separate financial statements as follows:

(Unit: Baht) Separate financial statements Dividend received during the year

Consolidated financial statements Share of income from investments in associated company during the year

Companyâ&#x20AC;&#x2122;s name

2009 Lanna Resources Public Co., Ltd.

2008

235,108,803

2009

272,117,902

2008

141,704,388

118,086,990

11.3 Fair value of investment in listed associated company As at 31 December 2009, the fair value of investment in the above associated company was Baht 2,535 million (2008: Baht 976 million) which was based on the closing price as quoted on the Stock Exchange of Thailand. 11.4 Summarised financial information of associated company Financial information of the associated company is summarised below.

(Unit: Million Baht) Companyâ&#x20AC;&#x2122;s name

Lanna Resources Public Co., Ltd.

Paid-up capital as at 31 December

Total assets as at 31 December

Total liabilities as at 31 December

Total revenues for the year ended 31 December

Net income for the year ended 31 December

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

350

4,171

3,878

1,494

1,366

5,430

7,484

680

628

Notes to consolidated financial statements

12. Other investment - related company As at 31 December 2009 and 2008, the subsidiary had investment in ordinary shares of a related company, which is accounted for by the cost method, as follows: Consolidated financial statements Companyâ&#x20AC;&#x2122;s name

Type of Country of Type of business incorporation relation

Holcim (Bangladesh) Co., Ltd. Cement

Bangladesh

Indirect holding

Paid up share capital

2009

2008

Milion Taka

120

Percentage of shareholding

Cost value

Dividend received

2009 %

2008 %

2009 Baht

2008 Baht

2009 Baht

2008 Baht

10.42

368,119,260

13. Property, plant and equipment (Unit: Baht) Consolidated financial statements Land and mineral reserve Cost: 31 December 2008 Purchases Disposals and write-off Transfer in (out) 31 December 2009 Accumulated depreciation: 31 December 2008 Depreciation for the year Disposals and write - off 31 December 2009 Allowance for impairment: 31 December 2008 Increase during the year 31 December 2009 Net book value: 31 December 2008 31 December 2009

Building and structures

Machinery and equipment

Furniture, fixtures and office equipment

Motor vehicles

Construction in process

1,633,413,224 6,699,798,894 23,136,895,236 1,304,956,821 1,442,704,690 12,325,991 1,513,013 (3,000,000) (48,478,500) (248,936,771) (150,779,236) (82,006,001) 30,738,281 485,524,701 1,038,371,080 216,882,337 119,628,014 1,661,151,505 7,136,845,095 23,938,655,536 1,371,059,922 1,481,839,716 25,334,472 3,766,259,864 17,549,478,139 26,895,320 197,487,176 531,492,616 (34,317,285) (227,563,619) 52,229,792 3,929,429,755 17,853,407,136 40,000,000 40,000,000

25,481,053 25,481,053

2,703,089,556 36,920,858,421 1,815,605,714 1,829,444,718 (4,905,088) (538,105,596) (1,898,731,379) (7,586,966) 2,615,058,803 38,204,610,577

915,261,158 1,199,743,281 112,898,564 41,835,755 (150,266,924) (71,620,284) 877,892,798 1,169,958,752

15,298,728 15,298,728

438,346 438,346

1,608,078,752 2,908,057,977 5,572,118,369 1,568,921,713 3,181,934,287 6,069,949,672

389,257,317 492,728,778

242,961,409 311,880,964

Total

- 23,456,076,914 910,609,431 (483,768,112) - 23,882,918,233 -

41,218,127 40,000,000 81,218,127

2,703,089,556 13,423,563,380 2,615,058,803 14,240,474,217

Depreciation for the year 2008 (Baht 639 million included in manufacturing cost, and the remaining balance included in selling and distribution expenses and administrative expenses) 2009 (Baht 734 million included in manufacturing cost, and the remaining balance included in selling and distribution expenses and administrative expenses)

802,633,546 910,609,431

Siam City Cement Public Company Limited ANNUAL REPORT 2009

(Unit: Baht) Separate financial statements Land and mineral reserve Cost: 31 December 2008 Purchases Disposals and write-off Transfer in (out) 31 December 2009 Accumulated depreciation: 31 December 2008 Depreciation for the year Disposals and write-off 31 December 2009 Allowance for impairment: 31 December 2008 31 December 2009 Net book value: 31 December 2008 31 December 2009

Building and structures

Machinery and equipment

Furniture, fixtures and office equipment

Motor vehicles

Construction in process

1,101,190,255 5,990,556,249 21,608,417,055 1,195,067,133 1,343,650,891 12,325,991 (45,807,806) (241,813,832) (148,703,896) (76,939,044) 20,605,281 420,057,020 931,538,024 214,716,216 100,518,515 1,121,795,536 6,364,805,463 22,310,467,238 1,261,079,453 1,367,230,362 853,129 3,596,751,460 16,847,846,544 2,090,826 167,410,826 422,212,223 (33,099,893) (220,145,116) 2,943,955 3,731,062,393 17,049,913,651 -

819,193,581 1,176,969,507 107,280,967 29,486,780 (147,985,091) (69,329,828) 778,489,457 1,137,126,459

15,053,554 15,053,554

438,346 438,346

1,100,337,126 2,393,804,789 4,745,516,957 1,118,851,581 2,633,743,070 5,245,500,033

375,435,206 482,151,650

Total

2,606,450,128 33,845,331,711 1,685,184,260 1,697,510,251 - (513,264,578) (1,687,435,056) 2,604,199,332 35,029,577,384 - 22,441,614,221 728,481,622 - (470,559,928) - 22,699,535,915 -

15,491,900 15,491,900

166,681,384 2,606,450,128 11,388,225,590 230,103,903 2,604,199,332 12,314,549,569

Depreciation for the year: 2008 (Baht 477 million included in manufacturing cost, and the remaining balance included in selling and distribution expenses and administrative expenses) 2009 (Baht 560 million included in manufacturing cost, and the remaining balance included in selling and distribution expenses and administrative expenses)

633,670,498 728,481,622

During 2009, the Company capitalised borrowing costs of Baht 26 million as cost of construction in progress. The capitalisation rate is 3.2 to 4.5 percent per annum. During the current year, a subsidiary recorded allowance for impairment of mineral reserve of Baht 40 million as a result of the decrease of remaining mineral reserve after the new survey. A portion of subsidiary companyâ&#x20AC;&#x2122;s land, construction thereon and machinery with a total net book value as at 31 December 2009 of Baht 197 million is mortgaged as collateral for long-term loans from financial institutions as mentioned in Note 7. As at 31 December 2009 and 2008, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to Baht 7,371 million and Baht 7,577 million (Separate financial statements: Baht 6,908 million and Baht 7,129 million), respectively.

Notes to consolidated financial statements

14. Assets not used in operations

(Unit: Baht) Consolidated financial statements

Land

Cost: 31 December 2008 Disposals and write-off 31 December 2009 Accumulated depreciation: 31 December 2008 Depreciation for the year Disposals and write-off 31 December 2009 Allowance for impairment: 31 December 2008 Decrease during the year 31 December 2009 Net book value: 31 December 2008 31 December 2009

Building and structures

355,021,980 355,375,063 (142,351,565) (169,787,707) 212,670,415 185,587,356

Furniture, fixtures and office equipment

Machinery and equipment

Motor vehicles

Total

43,306,586 (37,265) 43,269,321

10,522,608 (7,448,331) 3,074,277

507,800 764,734,037 (507,800) (320,132,668) - 444,601,369 507,800 221,293,311 10,117,060 (507,800) (90,057,024) - 141,353,347

174,656,272 9,182,364 (82,063,630) 101,775,006

35,606,709 934,670 (37,265) 36,504,114

10,522,530 26 (7,448,329) 3,074,227

157,120,020 (53,355,625) 103,764,395

57,440,578 (26,899,859) 30,540,719

214,560,598 (80,255,484) 134,305,114

197,901,960 108,906,020

123,278,213 53,271,631

7,699,877 6,765,207

78 50

328,880,128 168,942,908

Depreciation for the year 2008 (included in administrative expenses) 2009 (included in administrative expenses)

20,849,962 10,117,060

(Unit: Baht) Separate financial statements Land

Building and structures

318,203,784 352,305,115 (142,351,565) (169,787,707) 175,852,219 182,517,408

Machinery and equipment

Furniture, fixtures and office equipment

Motor vehicles

Total

39,906,904 (37,265) 39,869,639

10,483,381 (7,448,331) 3,035,050

507,800 721,406,984 (507,800) (320,132,668) - 401,274,316 507,800 214,794,361 10,114,856 (507,800) (90,057,024) - 134,852,193

171,586,322 9,182,366 (82,063,630) 98,705,058

32,216,860 932,490 (37,265) 33,112,085

10,483,379 (7,448,329) 3,035,050

145,120,020 (53,355,625) 91,764,395

57,440,578 (26,899,859) 30,540,719

202,560,598 (80,255,484) 122,305,114

173,083,764 84,087,824

123,278,215 53,271,631

7,690,044 6,757,554

2 -

304,052,025 144,117,009

20,847,453 10,114,856

Siam City Cement Public Company Limited ANNUAL REPORT 2009

During 2009, the Company had reversed allowance for impairment of assets not used in operations that were disposed during the year, amounting to Baht 80 million (2008: Baht 56 million). Such amount has been shown as a part of â&#x20AC;&#x153;Administrative expensesâ&#x20AC;? in the income statements for the years. Management has assessed the allowance for impairment of assets not used in operation and believes it to be adequate and that such assets are saleable in the future at prices not less than their carrying value.

15. Intangible assets (Unit: Baht) Consolidated financial statements

Mining concession Cost 31 December 2008 Additions and transfer in Write-off 31 December 2009 Accumulated amortisation 31 December 2008 Amortisation during the year Write-off 31 December 2009 Net book value 31 December 2008 31 December 2009 Amortisation for the year 2008 2009

Computer software

Other intangible assets

Total

1,194,939,644 209,860 1,195,149,504

53,680,906 6,528,940 60,209,846

262,074,927 11,586,015 (47,898,951) 225,761,991

1,510,695,477 18,324,815 (47,898,951) 1,481,121,341

131,900,997 21,918,376 153,819,373

41,712,051 6,481,249 48,193,300

148,080,136 14,902,058 (47,087,397) 115,894,797

321,693,184 43,301,683 (47,087,397) 317,907,470

1,063,038,647 1,041,330,131

11,968,855 12,016,546

113,994,791 109,867,194

1,189,002,293 1,163,213,871

23,363,201 21,918,376

7,443,244 6,481,249

23,789,191 14,902,058

54,595,636 43,301,683 (Unit: Baht)

Separate financial statements

Computer software

Other intangible assets

Total

1,030,768,643 209,860 1,030,978,503

31,885,369 4,092,793 35,978,162

230,352,914 3,999,049 (17,344,139) 217,007,824

1,293,006,926 8,301,702 (17,344,139) 1,283,964,489

128,820,475 20,498,477 149,318,952

20,895,649 6,070,349 26,965,998

121,995,426 10,033,511 (16,532,586) 115,496,351

271,711,550 36,602,337 (16,532,586) 291,781,301

901,948,168 881,659,551

10,989,720 9,012,164

108,357,488 101,511,473

1,021,295,376 992,183,188

21,570,603 20,498,477

6,038,412 6,070,349

7,628,302 10,033,511

35,237,317 36,602,337

Notes to consolidated financial statements

Amortisation for the years ended 31 December 2009 and 2008 amounted to Baht 35 million and Baht 44 million (Separate financial statements: Baht 29 million and Baht 25 million), respectively, was included in manufacturing costs and the remaining Baht 8 million and Baht 11 million (Separate financial statements: Baht 8 million and Baht 10 million), respectively, was included in selling and distribution expenses and administrative expenses.

16. Corporate income tax/deferred income tax 16.1 The income tax for the year 2009 and 2008 consist the following:

(Unit: Baht) Consolidated financial statements 2009 2008 Current income tax Decrease (increase) in deferred tax assets Income tax as included in income statements

1,084,077,526 27,595,038 1,111,672,564

1,417,656,443 (174,154,448) 1,243,501,995

Separate financial statements 2009 2008 1,027,738,867 51,571,271 1,079,310,138

1,369,027,323 (101,322,887) 1,267,704,436

16.2 Reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rate for the years is as follows: (Unit: Baht)

Consolidated financial statements 2009 2008 Accounting profit Income tax based on applicable tax rate Tax effect of non-deductible expenses Tax effect of income not subject to tax Income tax as included in income statements Effective income tax rate

Separate financial statements 2009 2008

4,060,960,873 4,416,019,064 3,984,061,894 1,218,822,824 1,330,131,232 1,195,218,568 29,413,975 11,900,536 8,424,053 (136,564,235) (98,529,773) (124,332,483) 1,111,672,564 1,243,501,995 1,079,310,138 27.4% 28.2% 27.1%

4,393,922,612 1,318,176,784 1,848,151 (52,320,499) 1,267,704,436 28.9%

16.3 As at 31 December 2009 and 2008, the components of deferred tax assets and movement of deferred tax can be summarised as follows: (Unit: Baht) Consolidated financial statements

As at 31 December 2008 Deferred tax assets Investment in subsidiary company Property, plant and equipment and assets not used in operations Employee benefit liabilities Accrued rebate Tax loss carry forward Others Total

209,999,790 79,198,121 158,692,484 152,004,234 116,211,916 136,072,574 852,179,119

Increase (decrease)

120 (21,692,170) (4,669,460) (35,206,383) 9,128,686 24,844,169 (27,595,038)

As at 31 December 2009

209,999,910 57,505,951 154,023,024 116,797,851 125,340,602 160,916,743 824,584,081

Siam City Cement Public Company Limited ANNUAL REPORT 2009

(Unit: Baht) Separate financial statements

As at 31 December 2008 Deferred tax assets Investment in subsidiary company Property, plant and equipment and assets not used in operations Employee benefit liabilities Accrued rebate Others Total

209,999,790 65,415,749 140,891,186 152,004,234 91,766,467 660,077,426

Increase (decrease)

As at 31 December 2009

120 (24,076,645) (5,216,583) (35,206,383) 12,928,220 (51,571,271)

17. Short-term loans from financial institutions

(Unit: Baht)

Consolidated financial statements 2009 2008 Short-term loan from related financial institution - Bank of Ayudhya Public Co., Ltd. Short-term loan from other financial institutions Total short-term loans from financial institutions

28,489,708 28,489,708

209,999,910 41,339,104 135,674,603 116,797,851 104,694,687 608,506,155

2,400,000,000 1,029,819,571 3,429,819,571

Separate financial statements 2009 2008 -

2,400,000,000 1,000,000,000 3,400,000,000

As at 31 December 2009, a subsidiary had obtained short-term loans of Baht 28 million from a commercial bank which carries interest at the rate of 3.8 - 4.1 percent per annum. These loans are due for repayment within 2010.

18. Long-term liabilities for concession

(Unit: Baht)

Consolidated financial statements 2009 2008 Long-term liabilities for concession Less: Portion due within one year Long-term liabilities for concession net of current portion

Separate financial statements 2009 2008

212,319,191 (37,289,855)

247,333,139 (35,013,948)

212,319,191 (37,289,855)

247,333,139 (35,013,948)

175,029,336

212,319,191

175,029,336

212,319,191

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.

19. Debentures On 10 April 2009, the Annual General Meeting of the Companyâ&#x20AC;&#x2122;s shareholders approved the issuance and sale of all types of debentures in the principal amount not exceeding Baht 10,000 million depending upon the market suitability at each time of offering. The Board of Directors were authorised to determine the details, terms and conditions in relation to the issuance and sale of the debentures. On 16 June 2009, the Company had issued unsubordinated, unsecured and no discount debentures with a nameregistered debenture certificate for the total number of 4,000,000 units, at the price of Baht 1,000 per unit, totaling Baht 4,000 million. The debenture is 4-year tenor at the coupon rate of 4.5% per annum with interest payable semiannually. Debenture agreement contains a covenant which the Company must comply with on maintaining financial ratio.

Notes to consolidated financial statements

20. Reserve for employee benefits 20.1 Employee benefits - Defined contribution plans 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 5 - 10 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 60 million (2008: Baht 56 million) and the Company only contributed Baht 52 million (2008: Baht 50 million) to the fund. 20.2 Employee benefits - Defined benefit plans 20.2.1 Provident fund The Company, a subsidiary and their permanent employees have jointly established a contributory, unfunded provident fund. 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. 20.2.2 Reserve for employee retirement benefit plan The Company and a subsidiary company have provided a retirement benefit plan for their employees. Under the plan, employees are entitled to receive, upon retirement, benefits which were accrued according to the best estimation of the management. 20.2.3 Other employee benefits The Company and a subsidiary company have provided a resignation plan and a long service award for employees. The defined benefit liabilities were measured at the present value of estimated future cash flows using a discount rate that is similar to the interest rate on high quality corporate bonds. A professionally qualified independent actuary values the fund’s liabilities and certain obligations on a regular basis. During the year, the Company and its subsidiaries recognised costs related to defined benefit plan in the income statement totaling Baht 95 million (Separate financial statements: Baht 83 million) and paid benefits of Baht 154 million (Separate financial statements: Baht 139 million). The principal assumptions used in determining reserve for employee benefit plan are a discount rate of 6.25% (Separate financial statements: 6.25%) and future salary increases of 5% (Separate financial statements: 5%).

21. 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.

22. Treasury stock Consolidated financial statements 2009 2008 Number of treasury shares (shares) Average price per share (Baht)

7,500,000 228.09

Separate financial statements 2009 2008 7,500,000 228.09

7,500,000 228.09

Siam City Cement Public Company Limited ANNUAL REPORT 2009

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 20 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 allocation of Baht 1,710.6 million from the unappropriated retained earnings as of 31 December 2006 to reserve for treasury shares according to the requirement of the Securities and Exchange Commission of Thailand (SEC). On 12 November 2009, the meeting of the Company’s Board of Directors passed a resolution to approve the reduction in paid-up share capital by cancelling the 7.5 million treasury shares with a par value of Baht 10 each unsold under the second share repurchase scheme, or by Baht 75 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. Subsequently on 14 January 2010, the Company registered the reduction of its paid-up share capital from Baht 2,375 million (237.5 million shares with a par value of Baht 10 each) to Baht 2,300 million (230 million shares with a par value of Baht 10 each) with the Ministry of Commerce.

23. Expenses by nature Significant expenses by nature are as follows:

(Unit: Baht) Consolidated financial statements 2009 2008

Raw materials and supplies used Other production expenses Salary, wages and other employee benefits Depreciation and amortisation Directors’ and management’s remuneration Change in inventories of finished goods and work in process Other expenses Total expenses

6,014,447,228 4,423,279,262 1,666,151,495 964,028,174 124,284,864 (77,495,108) 2,936,385,252 16,051,081,167

5,265,506,464 5,417,147,135 1,704,739,198 878,079,144 113,051,302

Separate financial statements 2009 2008 4,924,906,463 3,879,498,029 1,316,336,059 775,198,815 124,284,864

4,744,671,100 4,120,796,162 1,418,544,766 689,755,268 113,051,302

75,875,493 (69,483,751) 3,618,245,615 2,288,430,303 17,072,644,351 13,239,170,782

74,584,101 2,849,269,831 14,010,672,530

24. Summary of depreciation and amortisation

(Unit: Baht) Consolidated financial statements

2009

Property, plant and equipment Assets not used in operations Intangible assets Total depreciation and amortisation

Manufacturing Selling and distribution cost expenses and administrative expenses 734,013,990 176,595,441 10,117,060 34,918,679 8,383,004 768,932,669 195,095,505

2008 Total

910,609,431 10,117,060 43,301,683 964,028,174

Manufacturing Selling and cost distribution expenses and administrative expenses 638,935,633 163,697,913 20,849,962 43,695,283 10,900,353 682,630,916 195,448,228

Total

802,633,546 20,849,962 54,595,636 878,079,144

Notes to consolidated financial statements

(Unit: Baht) Separate financial statements 2009 Manufacturing Selling and cost distribution expenses and administrative expenses Property, plant and equipment Assets not used in operations Intangible assets Total depreciation and amortisation

560,070,500 28,521,317 588,591,817

168,411,122 10,114,856 8,081,020 186,606,998

2008 Total

Manufacturing Selling and cost distribution expenses and administrative expenses

728,481,622 476,807,519 10,114,856 36,602,337 25,004,375 775,198,815 501,811,894

156,862,979 20,847,453 10,232,942 187,943,374

Total

633,670,498 20,847,453 35,237,317 689,755,268

25. 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, net of treasury stock. No disclosure of diluted earnings per share for the year is required as the Company has no potential ordinary shares.

26. Dividends On 10 April 2008, the Annual General Meeting of the Company’s shareholders approved to pay a final dividend of Baht 7.5 per share out of 2007 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 2007 income amounted to Baht 14.0 per share. On 7 August 2008, the Company’s Board of Directors approved the payment of an interim dividend from the Company’s income during the period of January to June 2008 of Baht 6.5 per share, or a total sum of Baht 1,495 million. The interim dividend was paid on 5 September 2008. On 10 April 2009, the Annual General Meeting of the Company’s shareholders approved to pay a final dividend of Baht 4.5 per share out of 2008 income, or a total sum of Baht 1,035 million. Thus, including the interim dividend of Baht 6.5 per share, the total dividend payment out of 2008 income amounted to Baht 11.0 per share. On 6 August 2009, the Company’s Board of Directors approved the payment of an interim dividend from the Company’s income during the period of January to June 2009 of Baht 6.0 per share, or a total sum of Baht 1,380 million. The interim dividend was paid on 31 August 2009.

27. Financial information by segment The Company and its subsidiaries current main operations involve manufacturing of cement, concrete and aggregate which is carried on in Thailand. Information of the Company and its subsidiaries by segment is as follows:

Siam City Cement Public Company Limited ANNUAL REPORT 2009

(Unit: Million Baht) Consolidated financial statements for the years ended 31 December Cement 2009

Revenue from external customers 16,168 Inter-segment revenues 832 Total revenues 17,000 Segment gross profit 7,733 Unallocated income and expenses: Other income Selling and distribution expenses Administrative expenses Gain (loss) on exchange Share of income from investment in associated company Finance cost Corporate income tax Net income

2008

Concrete and aggregates 2009

2008

Others 2009

Elimination

2008

2009

Total

2008

2009

2008

17,201

3,039

3,361

764

743

19,971

21,305

1,025 18,226 8,932

119 3,158 652

237 3,598 477

764 314

743 294

(951) (951) -

(1,262) (1,262) -

19,971 8,699

21,305 9,703

102

(3,843)

(4,343)

(923)

(1,182)

(13)

235 (196) (1,112) 2,949

272 (167) (1,244) 3,173

(Unit: Million Baht) Consolidated financial statements as at 31 December Cement

Property, plant and equipment - net Unallocated assets Total assets

2009

2008

11,908

11,437

Concrete and aggregates 2009

1,736

2008

1,351

Others 2009

596

Elimination

2008

636

2009

Total

2008

2009

2008

14,240 10,110 24,350

13,424 10,079 23,503

28. Bank guarantees As at 31 December 2009, there were outstanding bank guarantees of approximately Baht 71 million (Separate financial statements: Baht 48 million) issued by banks on behalf of the Company and its subsidiaries in respect of electricity usage and other guarantees as required in the normal course of their businesses.

Notes to consolidated financial statements

29. Commitments 29.1 As at 31 December 2009, the Company and its subsidiaries have significant outstanding commitments as follows: 29.1.1 The Company extended the general assistance agreement with a related company for another 1 year beginning from 1 January 2010 to 31 December 2010. The Company committed to pay a fee on the basis and at the rate as stipulated in the agreement. 29.1.2 The Company entered into an agreement with a related 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 an annual fee of Baht 76 million. 29.1.3 The Company and its subsidiaries entered into various agreements with local companies in respect of the lease of land, office building space, motor vehicles and other services for periods ranging from 3 years to 30 years. As at 31 December 2009, the Company and its subsidiaries have outstanding commitments payable in the future as follows:

Payable within Less than 1 year 1 to 5 years More than 5 years Total

Consolidated financial statements 216 228 19 463

(Unit: Million Baht) Separate financial statements 141 106 1 248

29.1.4 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. 29.1.5 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. 29.1.6 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. 29.1.7 The Company and its subsidiaries had outstanding capital expenditure and construction commitments of Baht 760 million (Separate financial statements: Baht 760 million). 29.2 As at 31 December 2009, the associated company had the following significant commitments. 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 2009 amount to approximately Baht 30 million.

30. Financial instruments 30.1 Financial risk management The Company and its subsidiaries’s financial instruments, as defined under Thai Accounting Standard No. 32 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, loans, short-term and long-term loans and debentures. The financial risks associated with these financial instruments and how they are managed is described below.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

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 do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have 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. Interest rate risk The Company and its subsidiariesâ&#x20AC;&#x2122;s exposure to interest rate risk relates primarily to their cash at banks, shortterm loans, debentures and long-term borrowings. However, since most of the Companyâ&#x20AC;&#x2122;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. Significant financial assets and liabilities that are subject to interest as at 31 December 2009 classified by type of interest rate are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

Consolidated financial statements Fixed interest rates

1-5 Total Interest rate Within Floating Non- interest years bearing 1 year interest rate (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (% p.a.) Financial Assets Cash and cash equivalents

Financial liabilities Short-term loans Long-term loans Debentures Long-term liabilities for concession

603 603

1,024 1,024

140 140

1,767 0.05% - 1.12% 1,767

28 37 65

3,990 175 4,165

60 60

28 3.79% - 4.06% 60 MLR 3,990 4.5% 212 6.5% 4,290

Separate financial statements Fixed interest rates

1-5 Total Interest rate Floating Non- interest Within years bearing interest rate 1 year (Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht) (% p.a.) Financial Assets Cash and cash equivalents Long term loans to related parties Financial liabilities Debentures Long-term liabilities for concession

600 600

803 2,028 2,831

101 101

37 37

3,990 175 4,165

1,504 0.05% - 1.12% 2,028 MLR - 1% to MLR 3,532 3,990 212 4,202

4.5% 6.5%

Notes to consolidated financial statements

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 balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2009 are summarised below.

(Unit: Million)

Foreign currency

Consolidated financial statements Financial Financial assets liabilities

Separate financial statements Financial Financial assets assets

Exchange rate as at 31 December 2009 (Baht per foreign currency unit) Buying rate

US dollar Euro

68 -

8 2

68 -

7 2

33.2207 47.4583

Selling rate 33.5168 48.1284

>> As at 31 December 2009, there was no outstanding foreign exchange contract. 30.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, 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 transaction. 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.

31. Capital management The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern.

32. Approval of financial statements These financial statements were authorised for issuance by the Company’s Board of Directors on 11 February 2010.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Management Discussion and Analysis >> 1. Executive Summary Thailand has experienced a cement consumption decline of 2% in comparison to last year’s figures. This decline was far less than what was anticipated at the beginning of 2009. This improvement was largely due to a rebound in the construction sector driven by consumers & investor’s confidence and an increase in public spending in the forth quarter of 2009. Siam City Cement Public Company Limited and its subsidiaries achieved an operating profit margin of 19.7% in 2009. This was slightly up from 19.6% recorded in 2008. Consolidated net profit for this period was recorded at THB 2,946 million with earnings per share of THB 12.81 in comparison to THB 3,172 million and earnings per share of THB 13.79 in 2008 Significant new working capital reduction contributed to a 33.2% rise in cash flow from operating activities and reached THB 4,128 million by year end compared to THB 3,099 million in 2008. The company fully recognizes the importance of shareholder’s returns and places emphasis on the need to consistently compensate shareholders for their loyal investment participation. The dividend payment ratio was 85.9% in 2009 compared to 79.7% in 2008.

2. Report and Analysis of Operating Performance (Unit : Million THB)

January-December Net sales - Group Net sales - Cement business Net sales - Concrete and aggregates business Sale of other business Elimination (Inter company’s sales) Net profit Operating EBITDA Operating EBITDA margin (%) Operating profit Earnings par share

2009

2008

+/-

19,971 17,000 3,158 764 -951 2,946 4,897 25% 3,933 12.81

21,305 18,226 3,598 743 -1,262 3,173 5,054 24% 4,176 13.79

-1,334 -1,226 -440 21 311 -227 -157 0 -243 -1

+ / - (%) -6% -7% -12% 3% 25% -7% -3% -6% -7%

Revenues Total net sales for 2009 were THB 19,971 million, a decline of THB 1,334 million or 6.3% compared to 2008. Net sales in the cement business decreased by THB 1,226 million compared to 2008 due to a reduction in domestic consumption and political uncertainty. Concrete and aggregate net sales also decreased by THB 440 million, whereas business in other segments slightly increased by THB 21 million. Income from other areas, gain on disposal of assets not used in operations, of THB 102 million rose by 23 million or 29.1% compared to 2008.

Management Discussion and Analysis

Expenses Cost of sales totaled THB 11,272 million, a decrease of THB 331 million or 2.9% from the previous year. This was largely the result of the company’s determination to reduce fixed cost, increase production efficiency and optimize fuel mix to reduce fuel cost. Selling and distribution expenses of THB 3,843 million were reduced by THB 500 million or 11.5% compared to THB 4,343 million recorded in 2008. This result was achieved through more selective advertising and promotions. Administration expenses of THB 923 million were reduced by THB 259 million or 21.9% compared to THB 1,182 million recorded in 2008. This was mainly due to a reduction in consulting costs. In addition, the company revised its allowance for assets not used in operations which resulted in a gain of THB 80 million in 2009. The loss due to a change of foreign exchange rate was THB 13 million in comparison to a gain of THB 56 million in 2008. The difference of THB 69 million was due to the transfer of net assets and liabilities denominated in foreign currencies into the THB equivalent amount using the foreign exchange rate at the end of this accounting period (31 December 2009 of 33.5168 THB/USD) and the previous period (31 December 2008 of 35.0824 THB/USD). Share of income from investment in LANNA Resources Public Co., Ltd. was recorded on the consolidated financial statements using the equity method amounted to THB 235 million, a decrease of THB 37 million or 13.6% compared to THB 272 million recorded in 2008. Major changes in this investment were a lower share of profit of THB 61 million but a higher dividend received of THB 24 million. Financial cost rose to THB 196 million for 2009, an increase of THB 29 million or 17.4% compared to THB 167 million recorded in 2008. These higher expenses were the result of debenture issuance in June 2009 in the amount of THB 4.0 billion with a 4-year tenure and a 4.50% coupon rate. The fully-subscribed debenture will ensure the company’s liquidity into the foreseeable future. Corporate income tax was THB 1,112 million, a decline of THB 132 million or 10.6% compared to THB 1,244 million recorded in 2008.

3. Report and Analysis of Financial Position (Unit : Million THB)

As of December 31 2009 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 Shareholder’s Equity

24,350 6,204 1,175 14,240 169 2,562 7,971 3,203 4,165 603 16,379

2008 100% 25% 5% 58% 1% 11% 33% 13% 17% 2% 67%

23,503 5,984 1,082 13,424 329 2,684 7,658 6,624 372 662 15,845

+/100% 25% 5% 57% 1% 11% 33% 28% 2% 3% 67%

847 220 93 816 -160 -122 -313 3,421 -3,793 59 534

+/- (%) 4% 4% 9% 6% -49% -5% 4% -52% Pos -9% 3%

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Assets As of 31 December 2009, assets totaled THB 24,350 million, an increase of THB 847 million or 3.6% compared to THB 23,503 million in 2008. Breakdowns of changes in assets are described below: Cash and cash equivalents were THB 1,767 million or 7.3% of total assets which were THB 659 million or 59.5% higher than the balance, THB 1,108 million, at the beginning of the period. This higher balance resulted mainly from cash receipts of THB 4,128 million from operating activities, cash receipts of THB 167 million from sales of assets not used in operation, dividends of THB 142 million received from the associate company LANNA Resources Public Co., Ltd. and net cash of THB 4.0 billion received from debenture issuance. Total investments were THB 1,840 million, loan repayments were THB 3,553 million and dividend payments to shareholder were THB 2,415 million in 2009. Trade accounts receivable of THB 2,266 million or 9.3% of total assets stood lower by THB 370 million or 14%. This change was mainly due to the proportion of sales conditions at year end. The average collection period improved slightly from 45 days in 2008 to 44 days by the end of 2009. Inventories amounted to THB 1,829 million or 7.5% of total assets, a slight decline of THB 71 million or 3.7% from lower levels store supplies. Investment in associate and related company recorded using the equity method on the consolidated financial statements amounted to THB 1,543 million or 6.4% of the total assets, up by THB 93 million or 8.6% compared to 2008. Total property, plant and equipment net value was THB 14,240 million or 58.5% of the total assets, an increase of THB 816 million or 6.1% which was due to the purchase of property, plant and equipment which totaled THB 1,816 million, including a significant investment in two new waste heat recovery plants with a spend of THB 657 million during financial year 2009.

Liabilities Total liabilities as of 31 December 2009, stood at THB 7,971 million which were higher by THB 313 million or 4.1% than the balance recorded in 2008. Please see details below: Short-term loans from financial institutions were THB 28 million, a reduction of THB 3,402 million or 99.2%. This reduction was mainly due to the full refinancing and repayment of all short-term credit facilities and interest during 2009. The outstanding debenture was THB 3,990 million or 51.1% of total liabilities. On 16 June 2009, the company issued 4,000,000 units of unsubordinated, unsecured non discounted debentures with name-registered debenture certificates at the price of THB 1,000 per unit totaling THB 4.0 billion. The debenture carries a 4-year tenor at a coupon rate of 4.50% per annum with interest payable semi annually. Other liabilities totaling THB 3.953 million or 49.6% of total liabilities, a decline of THB 115 million or 2.8%, largely due to lower income tax payables of THB 149 million and trade accounts payables of THB 37 million.

Management Discussion and Analysis

Shareholders’ Equity Total shareholder’s equity as of 31 December 2009 was THB 16,379 million, up by THB 534 million or 3.4%. This was due to the following: Unappropriate retained earnings rose by THB 2,946 million due to operating results in 2009, and: Profit distributions during the year 2009 with details as follows; >

On 10 April 2009, the Annual General Meeting of the company’s shareholders approved to pay a final dividend of THB 4.50 per share from the 2008 received income totaling THB 1,035 million which was paid on 4 May 2009.

On 6 August 2009, the company’s Board of Directors approved the payment of an interim dividend from the company’s accumulated net profits during the period from January to June 2009 of THB 6 per share. A total sum of THB 1,380 million was paid to shareholders on 31 August 2009.

Minority interest increased by THB 3 million and currency translation differences of THB 1 million.

4. Report and Analysis of Liquidities (Unit : Million THB)

January-December 2009 Cash flow operating activities Capital expenditure on property, plant and equipment to maintain productive capacity and to secure competitiveness Free cash flow Expansion investments Decrease (Increase) in other investing activities Dividend paid Financing requirement Increase in financing liabilities Translation adjustments Increase (Decrease) in cash and cash equivalents

2008

+/-

+ / - (%)

4,128

3,099

1,029

33%

-1,478 2,650 -184 201 -2,415 252 400 -1 652

-1,069 2,030 -658 116 -3220 -1,732 2,337 -1 605

-409 620 474 85 805 1,984 -1,937 47

-38% 31% 72% 73% 25% 115% -83% 8%

As of 31 December 2009, net increase in cash and cash equivalents for SCCC and its subsidiaries were THB 652 million. Cash and cash equivalents at the beginning of this period were THB 1,108 million together with THB 7 million in foreign exchange gains. This resulted in cash and cash equivalents of 1,767 million at the end of this period. Please see cash flow details by activity as follows: Net cash from operating activities were THB 4,128 million, an increase of THB 1,030 million or 33.2% compared to 2008. This was mainly due to reduced net working capital although earnings before tax were down by THB 355 million from 2008.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Net cash from payments for maintenance, expansion and other investing activities were THB 1,461 million or THB 150 million, 9.3%, lower than in 2008. The lower capital expenditures were mainly due to postponement of projects which contributed THB 279 million while proceeds from disposals of assets not used in operations declined by THB 211 million. Net cash received from financing activities of THB 400 million resulted mainly from net repayments of short-term loans from financial institutions in the amount of THB 3,401 million and cash received from the issuance of debentures of THB 4,000 million. Total dividend payments to shareholders were THB 2,415 million and THB 805 million less than the dividends paid in 2008.

5. Significant Key Financial Ratio

Current ratio Quick ratio Days receivable outstanding Days inventory outstanding Days payable outstanding Debt-equity ratio Interest coverage ratio Operting profit margin Net profit after minority interests margin Return on sharesholdersâ&#x20AC;&#x2122; equity Return on fixed assets Earning per share Dividend payout ratio

Times Times Days Days Days Times Times % % % % Baht %

2009 1.94 1.26 44 60 40 0.49 31.47 20% 15% 18% 28% 12.81 86%

2008 0.90 0.57 45 54 43 0.48 29.38 20% 15% 20% 31% 13.79 80%

2007 1.10 0.72 42 47 41 0.35 53.54 19% 14% 20% 32% 14.05 100%

2006 1.40 0.87 34 38 29 0.31 73.38 22% 17% 24% 39% 16.57 84%

Related party transactions

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 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, 2009 and 2008. Criteria for having related-party transactions Where it is necessary for the Company to have a transaction 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 2009

Dividend Policy and Allocation >> The Board of Directors fully recognizes the importance of shareholders’ return and places emphasis on the need to faithfully compensate shareholders for their loyal investment participation. Over the past three years dividend payments have been in the range of 11 – 14 Baht per share. The Company’s reserve has reached 10 percent of its registered capital. During 2007-2009, Siam City Cement allocated dividends as follows: For fiscal year 2009, total dividend is 11 Baht per share > The Board of Directors approved payment of interim dividend on August 6, 2009 of 6.00 Baht per share. > The Board of Directors proposes the Shareholders to approve payment of dividend for the second half of 2009 on April 9, 2010 for 5.00 Baht per share. > Dividend payout THB 2,530 million, 85.9% For fiscal year 2008, total dividend is 11 Baht per share > The Board of Directors approved payment of interim dividend on August 7, 2008 of 6.50 Baht per share. > The Shareholders approved payment of dividend for the second half of 2008 on April 10, 2009 for 4.50 Baht per share. > Dividend payout THB 2,530 million, 79.7% For fiscal year 2007, total dividend was 14 Baht per share > The Board of Directors approved payment of interim dividend on August 9, 2007 of 6.50 Baht per share. > The Shareholders approved payment of dividend for the second half of 2007 on April 10, 2008 for 7.50 Baht per share. > Dividend payout THB 3,220 million, 100% Dividend Policy The Board will propose the following addition to the Dividend Policy to the 17th AGM: “Dividend payments will be at least 60 percent of net profit on its Consolidated Financial Statement. In case of negative financial situation, the Board may propose a lower percentage of dividend payment as it considers appropriate under such circumstance.”

Dividend Policy and Allocation > Corporate Governance Update

Corporate Governance Update >> Siam City Cement promotes Corporate Governance (CG) at every level of the organization from the Board of Directors, the Executive Committee and down all the way to the operational level. We reflected our respect for society and the environment, our commitment to communicate in an open and transparent manner and act in accordance with legal, regulations, our alignment with the principles of Good Corporate Governance stipulated by the Stock Exchange of Thailand, and with the guidelines set down by the Organization for Economic Cooperation and Development (OECD) through the Companyâ&#x20AC;&#x2122;s Code of Conduct and through our managing responsibly. Our Code of Conduct is the solid foundation for corporate governance. It has been deployed to become a commitment of each and every employee. This is a guarantee that the policy is implemented by both the Company and its personnel. Ten elements of CG identify how we operate and manage or set our achievement, together with how we involve stakeholders, i.e.

Corporate Governance. Our CG aims at protecting the legitimate interests of our stakeholders i n an appropriate and effective way. CG considerations are consistently reflected in our evolving organizational structure and procedures. Corporate Social Responsibility. We recognize our social responsibility and aim to improve the quality of life of our workforce, their families and the communities around our operations. We pursue a clear policy dealing with employment practices, occupational health and safety, community involvement as well as customer and supplier relations. Sustainable Environmental Performance. We strive to preserve the environment for future generations by striking a balance between economic growth and continuously improving environmental performance.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Compliance. Appropriate measures are put in place to assist in complying with applicable laws and regulations in business and the Kingdom of Thailand. In particular with regard to: n Insider Trading. Each of us who has access to insider information, likely to result in substantial movements in the price of the stock or any other financial instruments of any involved company, shall comply with applicable insider trading laws. n Bribery and corruption. We will not utilize bribery and corruption in conducting our business. We will not offer or provide, either directly or indirectly, any undue pecuniary or other advantage for the purpose of obtaining, retaining, directing or securing any improper business advantage. n Fair Competition. We respect the principles and rules of fair competition. Use and Protection of Assets and Information. n Each of us, entrusted with property belonging to or controlled by the Group, is responsible for the careful use, protection, expenditure and administration of such assets. n We use and protect confidential proprietary information, except to the extent we are required to disclose such information in the proper course of our duties. n We pay particular attention to IT aspects such as data protection and data security. Conflict of Interest. n In situations in which our personal or financial interests may conflict materially with those of Group, we are expected to fully disclose them. n We shall not take part in any business activities of Group where we may be influenced by our personal relations that are, or may be, construed as a hindrance to objective decision taking. n If we see ourselves in a potential conflict of interest, we shall seek advice from line management or from our legal counsel so that an appropriate solution can be found. Gifts and Donation. We are prohibited from offering, soliciting or accepting gifts and donations related to our business. However, entertainment and gifts of insignificant monetary value arising out of ordinary corporate hospitality or appropriate gifts of insignificant monetary value under our culture are acceptable. Records and Accounting. All business transactions are recorded in a true, fair and timely fashion. In accordance with established procedures, appropriate accounting systems, controls and audits, we ensure the reliability and accuracy of our accounts, records, and reports. Communication. We have a clear communications policy with our shareholders, employees and other stakeholders. We commit ourselves to prouide open, transparent, impartial and timely information. Responsibility. Each of SCCC personnel is responsible to know the relevant laws and regulations including this Code of Conduct. All of them are expected to adhere to this Code of Conduct in both the letter and the spirit. Violations against this Code of Conduct will not be tolerated and disciplinary sanctions will be applied. In the year 2009, we implimented a number of initiatives to ensure our employees fully adopt the code of conduct. We believed that our good corporate culture will help not only to sustain our commitment to Code of Conduct but to lead the industry and community into a better society in the future. As a listed company of the Stock Exchange of Thailand (SET), our update here is therefore categorized into 5 chapters as those recognized by SET. Detailed in the following are descriptions of the initiatives and actions that were taken throughout the course of the year:

Corporate Governance Update

Chapter 1: Rights of shareholders Siam City Cement is committed to protect the rights and benefits of all our shareholders. Siam City Cement always realizes and respects the rights of the shareholders as follow: 1. The right to attend shareholders meetings and to assign proxies to attend meeting and vote on their behalf 2. The right to vote for agenda required for shareholders approval, such as, election of directors, director remuneration appointment of auditors, etc. 3. The right to be provided with sufficient information in a timely manner 4. The right to expressing their opinions 5. The right to receive dividends 6. The right to buy, sell or transfer shares. Our commitments are elaborated in the practice that we describe below.

Chapter 2: Equitable treatment of shareholders Siam City Cement treats all shareholders equitably and transparently. This reflects in the Company’s continual practice of quick and efficient dissemination of information to shareholders. In the year 2009, the Company made 18 disclosures via the SET electronic publication (www.set.or.th). The shareholders may also access records of the Company’s notifications retroactively for two years which may be found on our website at www.siamcitycement.com. Apart from the foregoing, the Company publicizes information from time to time via press and analysts’ conferences and invitations can be obtained by contacting us at: Tel : +66 2 797 7060 Fax : +66 2 663 1847 Email : nasikarn.ongsakulwat@sccc.co.th To ensure equal treatment for all shareholders, Siam City Cement has effective meeting procedures, including giving shareholders an opportunity to propose agenda items Siam City Cement also determines that any shareholders not being able to attend the meeting in person, he/she may appoint any person or Siam City Cement director as proxy to attending the meeting and vote on his/ her behalf. If Siam City Cement director who is selected as proxy has interest in any agenda, item Siam City Cement will inform the shareholders of the same in the notice of the Meeting. In this case, such Siam City Cement director shall abstain from voting in such agenda for correctness, transparency and fairness. Before calling for a vote on each agenda, the Chairman opens the floor to shareholders’ comment, suggestions or question on each agenda item or related to Siam City Cement. The Chairman of the Board and relevant executives respond to questions and consider comments and proposals for further possible action, as appropriate Voting is conducted in strict compliance with the law. Shareholders are free to approve, reject or abstain from voting on each item on the agenda. Usually, the shareholders or proxies that attend the meeting represent the majority of Company share holdings. Each share shall be counted as one vote. In case of an equal amount of votes, the Chairman shall have an additional casting vote. The Company was rated “Very Good” (a grade of between 80% to 89%) for the quality and contents of its Annual General Meeting held in 2009 in the “AGM Assessment 2009” project organized by Thai Investors Association. For the convenience of shareholders, E-registration and E-voting systems were used at the AGM for fast and accurate registration and voting. We have invited shareholders to propose agenda items and send question for the General Meeting of Shareholders (year 2010) and now also invite shareholders to nominate a representative to be elected as a director.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Key actions to ensure shareholders rights include: Shareholder Right

Key legal requirement and our compliance

What we did more than the law

Substance

Proxy

Used standard proxy

We put efforts in making telephone We encouraged and supported the calls to shareholders and encourage shareholders to participate at AGM. them to either attend themselves or by proxy. Our form of proxy added the choice of independent directors as their proxy-holders. Our proxy review procedure attempts to remove obstacles for proxy-holders. For example, if they forgot to affix the duty stamp, we made stamps available at the meeting.

Voting

Guaranteed that shareholders can vote according to legal requirements and on one-share-one-vote principle

Set clear voting procedure in the notice of meeting and used bar-code for accuracy and timeliness. We had independent lawyer and volunteers from shareholders to supervise casting and vote counting. Ballots were collected for each separate agenda to encourage thorough consideration before vote casting.

Our voting was done transparently as shareholders witnessed ballot collection and vote counting.

Information

Sufficient information in the annual report, SET disclosure, notice of shareholders

SCCCâ&#x20AC;&#x2122;s website is an additional channel to provide detailed information, with at least 2 years data history. Such information included video of AGM 2009. We invited shareholders to send inquiry of their interest and to propose agenda if needed.

Interest from shareholders at AGM 2009 allowed SCCC to arrange shareholder visits to the at Saraburi Plants. In late 2009, we also invited shareholders to propose director nominations for AGM 2010.

Dividend

Provided sufficient information on retain earnings and reserves

Although our business requires investments in maintenance, we still try to maximize shareholder dividends. Our payout ratio has shown good record during many years. We also expedited dividend payment quickly as possible.

Shareholders however should be aware that procedure for dividend payment requires involvement from many parties, such as, Thailand Securities Depository, banks, post office. It is unlikely that shareholders not subscribed to e-dividend will receive pay-check as fast as those with e-dividend. Therefore, we encourage that all shareholders should apply for e-dividend service.

Transfer

Set transfer procedure in Articles of Association

We did not create any obstacle to prevent shareholders in trading SCCC shares at will. In 2010, we will set â&#x20AC;&#x153;Insider Policyâ&#x20AC;?, or policy preventing insider trading, to help safeguard shareholders.

All shareholders are treated equally.

Corporate Governance Update

Chapter 3: Roles of stakeholders Our stakeholders are recognized in our Code of Conduct and in our corporate fundamental goals. Detailed in the following are a summary of the activities relating to our stakeholders throughout the course of the year: Customers: Not only recognized customers in the pay slip that “customers pay our salary”, SCCC has championed a customer-centric focus throughout the organization. Each function has identified its external and internal customers in order to improve solution and service which contributed to customer satisfaction. Customers have access to information they need for their business, e.g., WebSales to monitor real time order or account status and GPS on delivery trucks to monitor real time delivery status. Making customers happy is our business. Employees: We praise our employees who are the most valuable assets of the company. We: n Reorganized HR into the “People & Organizational Performance (P&OP) Function”, to maximize the potential of our employees. n Using our “Employee Satisfaction & Engagement Survey”, and “Employee Choice Survey” we obtain feedback from employees on how the Company should improve and to achieve one of our fundamental goals of being a preferred employer. n Paid attention to hardship and economic impact on employees. Both direct and indirect support were given, e.g., facilitate with the Government Saving to provide special interest rate loan, helped with cost of living expense during economic crisis. n We elevated a high spirit of team work and innovation by implementing “INSEE Excellence Awards”. This bottom up contest was very successful in providing significant cost saving and efficiency for the company in 2009. n In return, employees play an important role in both gearing the Company to better performance and provide better management control. Communities: Understanding our Corporate Responsibilities, the Company involves communities both near and far. Two key elements always considered in our selection of activities are community engagement, and transparency. n Our “SCCC Community Fund” has been operated under shared control of the Company, nearby communities, and local authorities. n Mobile health-check from SCCC is well-known among communities surrounding our plants. n Many employees live near the plants, while many local people in the communities have become part of SCCC. With this entrusted environment, SCCC strived to better living quality for the communities. n We allowed shareholders and public to gain first hand insight of our operations through company visits. n Our high regard for the lives and safety of people who work for us has been reflected in our very strict safety rules. Devotion and support from the Management is always guaranteed when it comes to safety issues. Business Partners: We recognize that strong and ethical business partners are a key success criteria in achieving the Company’s business objectives of sustainability and good governance. Our Code of Conduct, therefore lays out the framework of how we work with them, e.g., we shall not allow our employees to have any conflict of interest in negotiation, selection and conclusion of a transaction; we shall not offer, solicit or accept gifts arising out of ordinary corporate hospitality, etc. We are pleased to report that we have tremendous cooperation from our business partners also in regards to developing quality of work and better safety standard. We believe that this guideline will lead the whole SCCC supply chain to sustainability.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Chapter 4: Disclosure and transparency Siam City Cement made full, timely and transparent disclosure of financial and non-financial information pursuant to the standards and regulations as mandated by the Office of SET and SEC. In addition to disclosing information as specified in relevant regulations and the Principles of Good Corporate Governance through the channel of the SET, annual statement (Form 56-1), and annual reports, Siam City Cement disclose information, both in Thai and English, via other channels such as the companyâ&#x20AC;&#x2122;s web site and maintain disclosed information in an up-to-date form on our website, www.siamcitycement.com. We consider stakeholders thoughtfully and make sufficient disclosure to such groups. For example, our employees receive information on company performance on quarterly basis. If our actions involve surrounding communities, we distribute pamphlets on new projects and environmental information to keep them informed. From a financial perspective, we provided many channels to update the press and media. For example, half yearly press conferences, and press and analysts interview with Corporate Communication function throughout the year. Our Company Visits have hosted more than 100 groups of visitors, from students, shareholders, academics, NGO, government officers, communities, or international experts.

Chapter 5: Responsibilities of the Board of Directors Currently, the Board of Directors consists of 11 members, 4 of which are independent directors. Our Board of Directors appointed the Audit Committee, and the Executive Committee. In the Board, there are 3 executive directors who are also members of the Executive Committee. Both the Board and Executive Committee have Organizational Regulations which embraced roles and responsibilities from the Articles of Association, the laws, and expectation of shareholders as their framework, while the Audit Committee has a Charter as their framework. Structure, role and responsibilities of those committees are described in detail below:

(1) Board of Directors Role and Responsibilities Board of Directors considers and approves important matters concerning company operations. Siam City Cement has specified the policy and regulations of practice, responsibilities and operations of the Board of Directors, chairman and deputy chairman including those of the Executive Committee in a document called â&#x20AC;&#x153;Organisatianal Regulations The duties and responsibilities of the Board and the management are separated clearly. The Board of Directors has the duty to specify the important issues on the operation of Siam City Cement such as the vision, mission, strategies, financial target, risk, plan, and budget, and the Executive Committee has the duty to carry out the vision, mission and strategies and provide good management and controlling system. The Board of Directors then consider and approve so as the practice can be performed and achieve effective results. Members of Board of Directors are appointed by shareholder meeting, or by Board of Directors meeting, in case of replacement of vacancy other than of retirement by rotation. At present there are 8 non-executive directors among total of 11 Board of Directors members. Please see Supplemental Information item of this Annual Report for the biographical of Member of Board of Directors and Executives. According to good governance principles at Siam City Cement, the function of Chairman of the Board of Directors and Managing Director are separate, in order to keep balance and transparent management in the company.

Corporte Governance Update

The Board of Directors implemented plans for CG, improvements, such as the dividend policy and remuneration policy. We are proud to present that our initiative on Conflict of Interest Declaration provides good awareness among employees. All personnel under functions of MD and CFO, and personnel with position of division managers up, inclusive of members of Executive Committee, are required to do this exercise twice a year. Results are reviewed and discussed by The Executive Committee and Audit Committee. At the level of the Board and Executive Committee, the Board also approved the principles, procedure and form relate to “Report on Interest of directors and executive” to support the fiduciary duties of the Directors and Executives where they shall make decisions without interest, either directly or indirectly. The Board of Directors meeting is conducted regularly to allow all members of the board to consider the company performance and solve any problem they may have. At the Board Meeting, the CFO is present, to provide information to the Board. Other Executives join according to relevancy of the agenda. The process of giving remuneration for Board of Directors and Executives is done in a transparent manner and the process has been approved by the shareholders annually which be comparable to the industry level. Detail of Remuneration of the Board of Directors and Executives paid in 2009 is provided on Supplemental Information item of this annual report. Board of Directors encouraged and facilitated training for all internal parties related to corporate governance. For this year the Board organized “People & Organizational Performance (P&OP)” to act in area of executive development and succession planning.

(2) Audit Committee Audit Committee comprises 3 independent directors, appointed by Board of Directors. 2 of them have experience in reviewing financial statement of the Company. All of them understand business well and have management experience with reputable companies in Thailand. Please see details of their experience in Supplemental Information. Qualification of an audit committee member 1. Be an independent director; 2. Not be a director of the parent company, subsidiary, associated company; 3. Has sufficient experience to be audit committee member. At least one of the members has sufficient experience in reviewing the financial statements. 4. Must comply with the rules prescribed under the requirements of the SEC, SET or the other authorities. Independent Director (qualifications and nomination process) “Independent Director” of the Company must meet the qualifications as required by the Securities and Exchange Act, and the rules, notifications, and regulations thereof including the rules and regulations of the SET, and any other relevant laws. The Company does not have a nominating committee. Potential independent directors including directors and executives are selected by Board of Directors from a field of qualified and experienced professionals. At present there are 4 independent directors among 11 Board of Directors members. In the year 2009, the Board of Directors set the definition of independent directors as per requirements specified by the SEC and the SET. Definition of independent directors may be found on annual statements (Form 56-1) disclosed on our website at www.siamcitycement.com.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

On November 12, 2009, the 97th Meeting of the Board of Directors approved to appoint Mr. Prabhol Buranasiri, independent director to be a new member of Audit Committee in replacement of Mr. Harald Link who has resigned from the Audit Committee. Members of the Audit Committee are introduced in detail to the duties and responsibilities of the Audit Committee including the business overview. Role and Responsibility of the Audit committee (in summary) 1. To review the Company’s financial reporting process. 2. To review the internal control systems and internal audit system. 3. To review compliance with the Securities and Exchange Act and any other relevant laws. 4. To consider, select, nominate and recommend remuneration of the Company’s external auditors. 5. To review the connected transactions or transactions that may lead to conflicts of interests, 6. including the accuracy and completeness of the Company’s disclosure of such information. 7. To prepare a report on the activities of the Audit Committee for the Company’s annual report. The Chairman of the Audit Committee shall sign this report 8. To perform other duties as required by the Securities and Exchange Act, and the rules, notifications, and regulations thereof including the rules and regulations of the SET, and any other relevant laws. In the area of duty concerning conflicts of interests, upon receiving the Reports on Interest from the Company Secretary, the Audit Committee shall scrutinize per the regulations on Duties and Responsibilities of Directors and Executives under the Securities and Exchange Act, and advise the Board of Directors for any issue or concern they deem appropriate.

(3) Executive Committee The Executive Committee meets on regular basis approximately twice a month and it often meets additionally as the Company’s business requires. The business considered at Executive Committee meetings are those related to the production, business administration, financial and accounting management, risk management, important financial transactions, Company’s plans, Company’s budgets and to consider and further propose to the Board of Directors for matters required Board approval, as stipulated in the Company ‘s Articles of Association or to consider and approve matters delegated to the Executive Committee under the Organizational Regulations. In our practice, these Organizational Regulations are to be reviewed and updated at least every 2 years. In general, Executive Committee has to report and propose to Board of Directors in relation to important matters. For more information of the responsibilities of the Board and other committee, training and meetings of directors and executives please see the annual statement (Form 56-1) disclosed on our website at www.siamcitycement.com.

Supplemental Information

Supplemental Information >> 1. General Information 1.1 Siam City Cement Public Company Limited, Registration No. 0107536001346 (Formerly Bor Mor Jor 208)

Stock Code

SCCC (Listed on the Stock Exchange of Thailand)

Type of business: Head office:

Cement manufacturing and distribution Column Tower, 7th-12th Floors, 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand 99 Moo 9 (Plant 1 & 3), and 219 Moo 5 (Plant 2 & Mortar Plant), Mitraparp Road Km. 129-131, Tabkwang Subdistrict, Kaengkhoi District, Saraburi 18260, Thailand 301 Moo 5 (AFR Platform), Mitraparp Road Km.133, Tabkwang Subdistrict, Kaengkhoi District, Saraburi 18260, Thailand + 66 2 797 7000 + 66 2 797 7001 to 2 www.siamcitycement.com

Factory:

Telephone: Fax: Website: The Companyâ&#x20AC;&#x2122;s securities 1) Ordinary shares Issued and paid-up shares:

2) Debentures Issued Amount: Issued Date: Debenture Name:

237,500,000 ordinary shares with the par value of 10 baht per share. Among them, 7.5 million shares were bought back by the Company and presently held in treasury. (For more information, please refer to Note No. 22 of Notes to Consolidated Financial Statements on page 63) Baht 4,000 million, 4 million units, par value 1,000 baht per unit 16 June 2009 Unsubordinated and Unsecured Debentures of Siam City Cement Public Company Limited No. 1/2552 due B.E. 2556

Credit Rating of Debentures Rated A by Fitch Ratings (Thailand) Tenor: 4 Years from date of issuance Coupon Rate: 4.50% per annum

Siam City Cement Public Company Limited ANNUAL REPORT 2009

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, 2009. Name

Location of Head Office

Type of Business / Product

Bangkok1

Siam City Concrete Company Limited

Conwood Company Limited Bangkok2

Eagle Cement Holdings Company Limited

Bangkok3

Lanna Resources Public Company Limited

Bangkok4

Khmer Cement Industry Company Limited*

Registered Number of Capital Issued & Paid-up (million baht) Ordinary Shares

% Direct Shareholding

Industrial Operation / Ready-mix Concrete and Aggregates Industrial Operation / Construction Material

400

4,000,000

99.99

300

3,000,000

99.99

Share Holding Company

700

7,000,000

99.99

350

35,000,000

44.99

USD 0.405 million

500

75.00

Industrial Operation / Coal Production and Distribution Phnom Penh Cement Trading Cambodia5

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 from time to time as the business of the company requires and in the year 2009, the registered capital was at the equivalent of USD 405,000 (or 1,620 million riel) 1. 2. 3. 4. 5.

Column Tower, 7th - 12th Floor, 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel.+66 2 797 7555 Fax.+66 2 797 7005 Column Tower, 7th - 12th Floor, 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel.+66 2 797 7444 Fax.+66 2 797 7004 Column Tower, 7th - 12th Floor, 199 Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel.+66 2 797 7000 Fax.+66 2 663 1628 Mahathun Plaza Bldg., 9th Floor, 888/99 Ploenchit Road, Bangkok 10330, Thailand Tel.+66 2 253 8080 Fax.+66 2 253 5014 Hourse No.9, Corner Street 75 & 80, Sangkat Shrah Chak, Khan Daun Penh, Phnom Penh, Combodia Tel.+855 23 430 902-3 Fax.+855 23 430 897

1.3 Other references Share Registrar:

Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. +66 2 229 2800 Fax.+66 2 359 1259 Call Center. +66 2 229 2888

Debenture Registrar:

Bank of Ayudha Public Company Limited 1222 Rama III Road, Bang Phongphang Yan Nawa, Bangkok 10120, Thailand Tel. +66 2 296 4494 Fax. +66 2 683 1389

Debenture Representative:

Thai Military Bank Public Company Limited 3000 Phaholyotin Rd., Jormpol, Jatuchak, Bangkok 10900 Thailand Tel. +66 2 230 5449 Fax. +66 2 266 9779

Auditors:

Mrs. Saifon Inkaew, Certified Public Accountant (Thailand) No.4434 Ernst & Young Office Limited Lake Ratchada Building, 33rd Floor, 193/136-137 Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. +66 2 264 0773 Fax. +66 2 264 0789-90

Supplemental Information

2. The Companyâ&#x20AC;&#x2122;s Businesses 2.1 The Company produees 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. Subsidiariesâ&#x20AC;&#x2122;s Business (See Notes to Consolidated Financial Statement, Note 2 and 11 on page 43 and 56) 2.2 Siam City Concrete Company Limited is the only subsidiary that generates over 10% of the consolidated revenue. See Notes to the Consolidated Financial Statements, Note 27 on page 65. 2.3 Change/Important developments in business operations and management during the year 2009. See the Report of the Executive Committee on page 12, and Major Developments in 2009 on page 24.

3. Shareholding and Management Structures 3.1 The top 10 major shareholders1 as of August 21, 2009 are the following: No. Shareholders 1 2 3 4 5 6

Sunrise Equity Company Limited Thai Roc-Cem Company Limited CLEARSTREAM NOMINEES LTD. JPMSSPL NORTRUST NOMINEES LTD. Vayupak Mutual Fund by MFC Asset Management Public Company Limited 7 Vayupak Mutual Fund by Krungthai Asset Management Public Company Limited 8 Mrs. Sasithorn Ratanarak 9 HSBC (Singapore) Nominees PTE LTD. 10 Miss Pilanuch Ratanarak

Number of Shares Held

Percentage (%)2

80,065,840 77,628,433 8,350,200 7,051,100 6,819,300

33.71 32.69 3.52 2.97 2.87

2,419,900

1.02

2,419,900 2,085,040 1,921,993 1,439,742

1.02 0.88 0.81 0.61

Remark: 1. The above top 10 major shareholders did not include 7.5 million treasury stock held by the Company. 2. The proportion of the equity interest of each top 10 major shareholder is based on the total issued and outstanding of 237.5 million shares.

Siam City Cement Public Company Limited ANNUAL REPORT 2009

3.2 Members of the Board of Directors as of December 31, 2009 and their recent experiences are as follows: Name/Position Education

Age

Work Experience Duration

Position

Organization/ Company/Business Type

Non-Executive Directors2 1 Mr. Veraphan Teepsuwan Chairman of the Board of Director

Master Degree: MBA, Northeastern University, USA Bachelor Degree: Economics, Boston University, USA

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009: Training experience:

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2006-Present

Chairman

2007-Present

Chairman

Bank of Ayudhya Public Company Limited/ Commercial Bank

1999-Present

Chairman

Ayudhya Insurance Public Company Limited/ General Insurance

1995-Present

Chairman

Ayudhya Allianz C.P.Life Public Company Limited/Life Insurance

2003-Present

Vice Chairman

Eastern Star Real Estate Public Company Limited/ Real Estate

1983-Present

Director

2) Non Listed Company Bangkok Broadcasting & T.V. Co., Ltd./ Television Broadcasting

0.002% Nil 4/4 Thai Institute of Directors (IOD)’s Course - The Role of Chairman Program (RCP) Class 18/2008

Supplemental Information

Name/Position Education

Age

Work Experience Duration

2 Mr. Paul Heinz Hugentobler Vice Chairman of the Board of Directors

Position

Certificate: International Senior Management Program, Harvard Business School , USA Lic.oec.HSG, Graduate School of Economic and Business of St.Gallen, Switzerland Bachelor Degree: B.Sc. in Civil Engineering, Swiss Federal Swiss Federal Institute of Technology, Zurich

Companyâ&#x20AC;&#x2122;s shareholding ratio1: Companyâ&#x20AC;&#x2122;s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2001-Present

Vice Chairman

2002-Present

Member of the Executive Committee

Holcim Limited/ Cement Producer

2000-Present

Director

Lanna Resources Public Company Limited/ Coal Production & Distribution

1999-2000

Managing Director Siam City Cement Public Company Limited/ Cement Producer

2004-Present

Director

2001-Present

Director

Holcim Services (Asia) Company Limited/ Services

1998-Present

Director

Thai Roc-Cem Company Limited/ Holdings Company

1998-Present

Director

Holcim Capital (Thailand) Company Limited/ Holdings Company

2001-Present

Director

Siam City Concrete Company Limited (Subsidiary)/ Ready-mixed concrete and aggregates

2001-Present

Director

Conwood Company Limited (Subsidiary)/ Construction Material

2001-Present

Chairman

Eagle Cement Holding Company Limited (Subsidiary)/ Holding

0.022% Nil 4/4

2) Non Listed Company Holcim Participation Company Limited/ Holdings Company

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

3 Mr. Chachchon Ratanarak Director

Age

Work Experience Duration

Position

2006-Present

Director

Bachelor Degree: B.Sc. Economics (Honors), University of London, England

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009:

4 Mr. Thaveepol Kongseri Director

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer 2) Non Listed Company

2006-Present

Name/Position Education

Organization/ Company/Business Type

Chairman & CEO

0.435% Nil 4/4

Age

Work Experience

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009:

Organization/ Company/Business Type

Duration

Position

2007-Present

Director

Present

Director

Eastern Star Real Estate Public Company Limited/ Real Estate

1994-2003

Director

Ayudhya Allianz C.P.Life Public Company Limited/ Life Insurance

1979-Present

Executive Director

1999-Present

Director

Sunrise Equity Company Limited/ Investment Advisor

1998-Present

Director

Koakeaw Country Club Company Limited/ Golf Course

1999-Present

Director

Siam Phurimongkol Company Limited/ Real Estate

2004-2004

Director and Independence Director

Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer

Bachelor Degree: Mechanical Engineering, Shizuoka University, Japan

Tonson Property Company Limited/ Real Property Development

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2) Non Listed Company Super Asset Company Limited/ Real Property

0.007% Nil 4/4 Training Experience: Thai Institute of Directors (IOD)’s Course(s) - Director Accreditation Program (DAP), 2005

Supplemental Information

Name/Position Education

Age

Work Experience Duration

5 Mr. Prakob Visitkitjakarn Independent Director Chairman of Audit Committee

69 1999-Present

Position

Organization/ Company/Business Type

1) Listed Company Director, Chairman Siam City Cement Public Company Limited/ of the Audit Cement Producer Committee

Master Degree: MBA-Finance, Indiana University, USA

2008-Present

Chairman of the Audit Committee

Sri Trang Agro Industry Public Company Limited/ Agribusiness

Bachelor Degree: Finance (Honors), Indiana University, USA

1999-2007

Member of Audit Committee

Sri Trang Agro Industry Public Company Limited/ Agribusiness

1993-Present

Independent Director

Sri Trang Agro Industry Public Company Limited/ Agribusiness

1986-1995, 1997-2002

Executive Vice President

Bank of Ayudhya Public Company Limited/ Commercial Bank

2006-Present

Director

2) Non Listed Company Lease IT Company Limited/ Leasing

2006-2008

Independent Director and Member of Audit Committee

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2008: Total attendance at Audit Committee Meeting in 2008: Training Experience:

Ayudhya Auto Lease Public Company Limited/ Auto Leasing

Nil 4/4 12/12 Thai Institute of Directors (IOD)’s Course - The Role of Chairman Program (RCP) Class 5/2001 - Director Certification Program (DCP) Class 33/2003 - Audit Committee Program (ACP) Class 27/2009 - Monitoring the Quality of Financial Reporting (MFR) Class 8/2009

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

Age

6 Mr. Chet Raktakanishta 68 Independent Director and Member of the Audit Committee

Work Experience Position

1999-2010

Independent Director, Member of the Audit Committee

2007-2010

Director

Bank of Ayudhya Public Company Limited/ Commercial Bank

2003-2010

Audit Committee and Chairman of Nomination and Remuneration Committee

Media of Medias Public Company Limited/ Media & Publishing

1994 - 2010

Director and Member of Nomination and Remuneration Committee

Ayudhya Insurance Public Company Limited/ General Insurance

Deceased January 2010 Bachelor Degree: Management, Brigham Young University, USA

Organization/ Company/Business Type

Duration

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship Among Executives: Total attendance at Board Meetings in 2009: Total attendance at Audit Committee Meeting in 2009: Training Experience:

Listed Company Siam City Cement Public Company Limited/ Cement Producer

Nil 4/4 7/12 Thai Institute of Directors (IOD)’s Courses - Financial for Non-Finance Director (FN), 2003 - Directors Certificate Program (DCP), 2003 - Audit Committee Program (ACP), 2005 - Director Financial, 2005 - DCP Refresher Course Class 3/2006 - Monitoring Fraud Risk Management (MFM) Class 1/2009

Supplemental Information

Name/Position Education

Age

Work Experience Duration

7 Mr. Prabhol Buranasiri Independent Director Member of Audit Committee Since November 2009

Resigned from the member of Audit Committee November 2009 Lic.oce.HSG, University of St. Gallen, Switzerland

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

Independent Director, Member of the Audit Committee

2008 - 2009

Independent Director

Siam City Cement Public Company Limited/ Cement Producer

2007 - 2008

Director

Siam City Cement Public Company Limited/ Cement Producer

2001-Present

Management Consultant

Inter Pacific Development Company Limited/ Machine Distributor

1996-2001

General Manager Thai-German Ceramic Industry Public and Managing Company Limited/ Director-Marketing Property & Construction Nil 4/4 2/2 Thai Institute of Directors (IOD)’s Course - Director Accreditation Program (DAP)

Age

Work Experience Duration

8 Mr. Harald Link Independent Director

Organization/ Company/Business Type

2009 - Present

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009: Total attendance at Audit Committee Meeting in 2009: Training Experience:

Name/Position Education

Position

Bachelor Degree: Engineering EE, Worcester Polytechnic Institute, USA

Position

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2009 - Present

Independent Director

1998 - 2009

Director, Member of the Audit Committee

Siam City Cement Public Company Limited/ Cement Producer

2000-Present

Director

True Corporation Public Company Limited/ Telecommunication

1987-Present

Managing Partner

2) Non Listed Company B. Grimm & Co., Registered Ordinary Partnership

Nil 3/4 0/10 Course on Good Corporate Governance at St. Gallen, Switzerland

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

Age

Work Experience Organization/ Company/Business Type

Duration

Position

2006-Present

Deputy Chairman of the Executive Committee

2004-Present

Director, Executive Siam City Cement Public Company Limited/ Vice President Cement Producer (Customer Relationship)

1998-2004

Senior Vice President (Marketing and Sales)

Siam City Cement Public Company Limited/ Cement Producer

2010-Present

Independent Director and Member of Audit Committee

Minor International Public Company Limited/ Hospitality and leisure

Present

Vice Chairman

Present

Director

Thai Listed Companies Association/ Non-profit Organization

2004-Present

Director

Siam City Concrete Company Limited (Subsidiary)/ Ready-mixed Concrete and Aggregates

2002-Present

Director

Conwood Company Limited (Subsidiary)/ Construction Material

2009-Present

Director

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Executive Directors3 9 Ms. Chantana Sukumanont Director

Certificate: Advanced Management Program, Harvard Business School, USA Diploma in Business Studies, The Center for Economics and Political Studies, UK

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009: Training Experience:

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2) Non Listed Company Thai Cement Manufacturers Association/ Non-profit Organization

Nil 4/4 Thai Institute of Directors (IOD)’s Course - Director Accreditation Program (DAP) Capital Market Academy’s Course(s) - Leader Program (2008)

Supplemental Information

Name/Position Education

Age

Work Experience Duration

10 Mr. Vanchai Tosomboon Director

60 2009-Present

Position

Organization/ Company/Business Type

1) Listed Company General Manager, Siam City Cement Public Company Limited/ Geocycle, a Business Cement Producer unit of the Company

Master Degree: MBA, Asian Institute of Management, Manila

2004-Present

Bachelor Degree: Law, Thammasat University

Director, Executive Siam City Cement Public Company Limited/ Vice President Cement Producer (Saraburi Operations)

1999-2004

Executive Vice President (Subsidiaries)

Siam City Cement Public Company Limited/ Cement Producer

1999-Present

Director

Lanna Resources Public Company Limited/ Coal Production & Distribution

1999-2004

Managing Director Diamond Roofing Tiles Public Company Limited/Construction Materials

2005-Present

Director

2004-2005

Chairman of Executive Committee

1999-2004

Managing Director Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer

1999-2005

Chairman

Karat Faucet Company Limited/ Bathroom Fittings and Accessories

2002-Present

Director

Conwood Company Limited (Subsidiary)/ Construction Material

2004-Present

Director

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009: Training Experience:

2) Non Listed Company Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer

0.013% Nil 4/4 Thai Institute of Directors (IOD)’s Course(s) - Director Certificate Program (DCP), 2001 - Director Accreditation Program (DAP), 2004

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

Age

Work Experience Duration

11 Mr. Philippe Arto Managing Director

Master Degree: Public Administration, Harvard Kennedy School, Boston, USA Master Degree: Civil Engineering, Ecole Nationale Des Ponts Et Chaussees, Paris Bachelor Degree: Science and Engineering, Ecole Polytechnique, Paris

Companyâ&#x20AC;&#x2122;s shareholding ratio1: Companyâ&#x20AC;&#x2122;s debenture holding ratio Family relationship among executives: Total attendance at Board Meetings in 2009:

2009-Present

2003-2008

2002-2003

Position

Organization/ Company/Business Type

1) Listed Company Managing Director, Siam City Cement Public Company Limited/ Chairman of the Cement Producer Executive Committee President and Chief of Executive Officer

ST.Lawrence Cement, Holcim Group, Canada/ Cement Producer

2) Non Listed Company Managing Director Queensland Cement Limited, Holcim Group, Australia/Cement Producer

1999-2001

General Manager French Market

Obourg-Origny, Holcim Group, French-Benelux/Cement Producer

2009-Present

Chairman

Siam City Concrete Company Limited (Subsidiary)/Ready-mixed Concrete and Aggregates

2009-Present

Chairman

Conwood Company Limited (Subsidiary)/ Construction Material

2009-Present

Director

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Nil 4/4

Supplemental Information

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, 2009:

Name/Position Education

Age

Work Experience Duration

1 Mr. Philippe Arto Managing Director Chairman of the Executive Committee Master Degree: Public Administration, Harvard Kennedy School, Boston, USA Master Degree: Civil Engineering, Ecole Nationale Des Ponts Et Chaussees, Paris Bachelor Degree: Science and Engineering, Ecole Polytechnique, Paris

53 2009-Present

2003-2008

2002-2003

Position

Organization/ Company/Business Type

1) Listed Company Managing Director, Siam City Cement Public Company Limited/ Chairman of the Cement Producer Executive Committee President and Chief of Executive Officer

ST.Lawrence Cement, Holcim Group, Canada/ Cement Producer

2) Non Listed Company Managing Director Queensland Cement Limited, Holcim Group, Australia/Cement Producer

1999-2001

General Manage French Market

Obourg-Origny, Holcim Group, French-Benelux/Cement Producer

2009-Present

Chairman

Siam City Concrete Company Limited (Subsidiary)/ Ready-mixed Concrete and Aggregates

2009-Present

Chairman

Conwood Company Limited (Subsidiary)/ Construction Material

2009-Present

Companyâ&#x20AC;&#x2122;s shareholding ratio1: Companyâ&#x20AC;&#x2122;s debenture holding ratio Family relationship among executives: Total attendance at Executive Committee Meetings in 2009:

Director

Nil 23/23

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

2 Ms. Chantana Sukumanont Director

Age

Work Experience Organization/ Company/Business Type

Duration

Position

2006-Present

Deputy Chairman of the Executive Committee

2004-Present

Director, Executive Siam City Cement Public Company Limited/ Vice President Cement Producer (Customer Relationship)

1998-2004

Senior Vice Siam City Cement Public Company Limited/ President Cement Producer (Marketingand Sales)

2010-Present

Independent Director and Member of Audit Committee

Deputy Chairman of the Executive Committee Certificate: Advanced Management Program, Harvard Business School, USA Diploma in Business Studies, The Center for Economics and Political Studies, UK

1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

Minor International Public Company Limited/ Hospitality and leisure

2) Non Listed Company Thai Cement Manufacturers Association/ Non-profit Organization

Present

Vice Chairman

Present

Director

Thai Listed Companies Association/ Non-profit Organization

2004-Present

Director

Siam City Concrete Company Limited (Subsidiary)/Ready-mixed Concrete and Aggregates

2002-Present

Director

Conwood Company Limited (Subsidiary)/ Construction Material

2009-Present

Director

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Executive Committee Meetings in 2009: Training Experience:

Nil 22/23 Thai Institute of Directors (IOD)’s Course(s) - Director Accreditation Program (DAP) Capital Market Academy’s Course(s) - Leader Program (2008)

Supplemental Information

Name/Position Education

Age

Work Experience Duration

3 Mr. Vanchai Tosomboon Director

Position

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2009-Present

General Manager, Geocycle, a Business unit of the Company

Master Degree: MBA, Asian Institute of Management, Manila

2004-Present

Director, Executive Siam City Cement Public Company Limited/ Vice President Cement Producer (Saraburi Operations)

Bachelor Degree: Law, Thammasat University

1999-2004

Executive Vice President (Subsidiaries)

Siam City Cement Public Company Limited/ Cement Producer

1999-Present

Director

Lanna Resources Public Company Limited/ Coal Production & Distribution

1999-2004

Managing Director Diamond Roofing Tiles Public Company Limited/ Construction Materials

2005-Present

Director

2004-2005

Chairman of Executive Committee

1999-2004

Managing Director Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer

1999-2005

Chairman

Karat Faucet Company Limited/ Bathroom Fittings and Accessories

2002-Present

Director

Conwood Company Limited (Subsidiary)/ Construction Material

2004-Present

Director

Eagle Cement Holding Company Limited (Subsidiary)/Holding

Executive Vice President (Saraburi Operations)

Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Executive Committee Meetings in 2009: Training Experience:

2) Non Listed Company Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer Royal Porcelain Public Company Limited/ Ceramic Tableware Manufacturer

0.013% Nil 21/23 Thai Institute of Directors (IOD)’s Course(s) - Director Certificate Program (DCP), 2001 - Director Accreditation Program (DAP), 2004

100

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

Age

Work Experience Duration

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

Position

Certificate: Advanced Management Program, Harvard Business School, USA

2004-Present

Senior Vice President (Finance and Controlling)

1999 -2004

Assistant Vice President Corporate Reporting

1994-1998

Auditor

Lic.oec.HSG University of St.Gallen, Switzerland Swiss Certified Public Accountant Company’s shareholding ratio1: Company’s debenture holding ratio Family relationship among executives: Total attendance at Executive Committee Meetings in 2009: Training Experience:

Name/Position Education

5 Mr. Nopporn Thepsithar Senior Vice President (Logistics) Bachelor Degree: Electrical Engineering, Chulalongkorn University

Age

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

Holcim Limited/ Cement Producer

2) Non Listed Company KPMG/ Audit and Advisory Services

0.001% Nil 23/23 - 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 Work Experience

Organization/ Company/Business Type

Duration

Position

2004-Present

1) Listed Company Senior Vice Siam City Cement Public Company Limited/ President (Logistics) Cement Producer

2002-2003

Logistics Manager

2000-2001

Executive Director

2) Non Listed Company TCC Holding Company Limited / Holdings Company

1999-2000

Operations Division Manager

SCT Company Limited / Import-Export Company

Company’s shareholding ratio1: Company’s debenture holding ratio Femily relationship among executives: Total attendance at Executive Committee Meetings in 2008: Training Experience:

Siam City Cement Public Company Limited/ Cement Producer

Nil 23/23 Thai Institute of Directors (IOD)’s Course(s) - Audit Committee Program (ACP) - Director Accreditation Program (DAP) - Director Certificate Program (DCP) Good Governance, Mini MBA Course for INSEE Logistics

Supplemental Information

Name/Position Education

Age

Work Experience Duration

6 Mr. Siva Mahasandana Senior Vice President (RMX & Aggregates) Master Degree: MBA, Finance and Investment (Beta Gamma Sigma), The George Washington University, USA Bachelor Degree: Mechanical Engineering, Chulalongkorn University

101

Position

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2009-Present

Senior Vice President (RMX & Aggregates)

2007-2009

Vice President Professional Customers

Siam City Cement Public Company Limited/ Cement Producer

2001-2004

National Sale Manager

Siam City Cement Public Company Limited/ Cement Producer

1999-2001

Business Risk Management/ Internal Audit Manager

Siam City Cement Public Company Limited/ Cement Producer

2004-Present

Managing Director

Companyâ&#x20AC;&#x2122;s shareholding ratio1: Companyâ&#x20AC;&#x2122;s debenture holding ratio Family relationship among executives: Total attendance at Executive Committee Meetings in 2009: Training Experience:

2) Non Listed Company Siam City Concrete Company Limited (Subsidiary)/Ready-mixed Concrete and Aggregates

0.112% Nil 22/23 Senior Leadership Program by Holcim Limited, Switzerland

102

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Name/Position Education

Age

Work Experience Duration

7 Mr. Tasporn Chantree Senior Vice President People & Organizational Performance P&OP) Master Degree: Human Resources, National Institute of Development Administration Master Degree: Master of Art, Communication Research, Thammasat University

Position

Organization/ Company/Business Type 1) Listed Company Siam City Cement Public Company Limited/ Cement Producer

2009-Present

Senior Vice President People & Organizational Performance (P&OP)

2009

Deputy Regional HR Director

Holcim Group Support Ltd. South Asia & Asean/Management Services

2004-2007

Learning & Development Manager

Siam City Cement Public Company Limited/ Cement Producer

2000-2004

Recruitment and Siam City Cement Public Company Limited/ Employee Relation Cement Producer Manager

2000

Human Resources Development Manager

1999-2000

Senior Training Specialist

Master Degree: Bachelor of Social Work-Social Administration, Thammasat University

2) Non Listed Company Sony Technology (Thailand) Ltd./ Electrical Appliance Manufacturer

General Motors (Thailand) Ltd./ Automobile Manufacturer

Nil 15/15 - Management of People Program, by INSEAD, France, 2008 - Executive Management Program, by University of St, Gallen, Switzerland, 2005

Remark: 1. The equity interest of the members of the Directors/Executive Committee are the information as of 21 August 2009, 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 237.5 million shares. 2. Non-executive directors 3. Executive directors

Supplemental Information

103

3.4 Directors of Subsidiary Company as of December 31,2009 Siam City Concrete Company Limited is the only subsidiary that generates over 10% of the Companyâ&#x20AC;&#x2122;s consolidated revenue, as of 31 December 2009. Director Mr. Philippe Arto 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 2009 4.1 Cash remuneration Cash remuneration for 13 Board members was 14.050 million baht, included meeting per diem and bonus paid in 2009.

List of Directors

Allowance

Bonus (for year 2008)

Total amount (Baht)

500,000 400,000 325,000 325,000 100,000

2,900,000 1,600,000 1,165,000 1,165,000 100,000

480,000 360,000 360,000 -

325,000 325,000 325,000 325,000

1,285,000 1,165,000 1,165,000 805,000

300,000 300,000 300,000

840,000 780,000 780,000 300,000

1,200,000

3,850,000

Board of Directors

Audit Committee

2,400,000 1,200,000 840,000 840,000

Non-Executive Directors 1 2 3 4 5

Mr. Veraphan Teepsuwan Mr. Paul Heinz Hugentobler Mr. Chachchon Ratanarak Mr. Thaveepol Kongseri Mr. Wolfgang Bieri*

Independent Directors 6 7 8 9

Mr. Prakob Visitkitjakarn Mr. Chet Raktakanishta Mr. Harald Link Mr. Prabhol Buranasiri

480,000 480,000 480,000 480,000

Executive Directors 10 11 12 13

Total

Mr. Philippe Arto Mr. Chantana Sukumanont Mr. Vanchai Tosomboon Mr. Marcel Smit*

840,000 480,000 480,000

9,000,000

14,050,000

Remark: * Resigned in 2008, and received partial bonus of 2008 based on performance basic Remuneration for 7 members of the Companyâ&#x20AC;&#x2122;s Executive Committee was 98.515 million baht, includeding 2009 salary and 2008 bonuses.

104

Siam City Cement Public Company Limited ANNUAL REPORT 2009

4.2 Other Remunerations Contribution to Provident Fund for its executives was 5.107 million baht. Company cars are provided to the members of the Executive Committee. The Board of Directors will propose the Shareholders to approve the Director’s Remuneration Principle at 17th AGM on April 9, 2010 as following; “Remuneration of directors consist of, director fees, payable on monthly basis, and yearly bonus. Payment of remuneration of directors shall be made in accordance with following principle from the day the resolution is passed by a vote of the shareholders onwards and until the shareholders’ meeting determined otherwise Director Fees: The Board shall receive director fees on monthly basis, at the aggregated amount of not more than Baht 1.5 million per month. The Chairman and Vice-Chairman of the Board are authorized to allocate amongst the Directors in such manner they consider appropriate. Bonuses: The Board shall receive the annual bonuses at the amount not exceeding Baht 5 million. The Chairman and Vice-Chairman of the Board are authorized to allocate amongst the Directors in such manner they consider appropriate. The provisions of the foregoing paragraphs shall not affect the right of any officers or employees of the Company who are elected as directors to receive their remuneration and benefits as officers or employees of the Company.”

5. Auditor’s Fee In 2009 Ernst & Young Office Limited received from the Company and its subsidiaries audit fees of 3.914 million baht. There is no fee for other services.

Customer Service Center and Distribution Centers

105

Customer Service Center and Distribution Centers >> Customer Service Center Customer Service Center is the sub-division of Group CRM Department, Siam City Cement Public Company Limited, launched in September 2001 with an objective to be the one-stop service center that provides superior services to customers. With the integration of Customer Sales Support and Customer Care units, we ensure that customers receive the most efficient services. In order to further enhance the superior service standard and response to customers’ demands at the highest level, we have integrated Siam City Concrete and Conwood as from October 2007 and June 2009 respectively, 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 service to guarantee customer’s satisfaction. All of the activities we provide to customers will be recorded in the CRM (Customer Relationship Management) system to facilitate follow-ups and ensure that all customers’ requests are handled punctually. As we are 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 Center Building 99 Moo 9, Mitraparp Road, Km.129 - 131, Tabkwang Subdistrict, Kaengkhoi District, Saraburi 18260, Thailand Contact:

Tel: Fax: Email:

1732 or +66 2 797 7777 1-800-33-5555 (Free) or +66 2 797 7788 wecare@sccc.co.th

Distribution Centers Siam City Cement distributes cement from Saraburi Plants to its customer nationwide in two methods: 1. Delivery from Saraburi Plants directly to dealers or their requested destinations 2. Delivery to two regional distribution centers ; Lampang and Surat Thani Provinces. Lampang Warehouse Address: 208 Moo 2, Lampang - Chiangmai Road, Pong Yang Kok Subdistrict, Hang Chat District, Lampang 52190, Thailand Description: Wa rehouse and distribution Center of bulk cement for northern customers Surat Thani Terminal Address: 13/29 Surat Thani - Pak Nam Road, Bang Kung Subdistrict, Muang District, Surat Thani 84000, Thailand Description: Warehouse and distr ibution Center of bulk and bagged cement, including Bag packing facility

106

Siam City Cement Public Company Limited ANNUAL REPORT 2009

Summary of Specified Items Per Form 56-2 >> Compared in accordance with Form of Annual Report for a security- issuing company (Form 56-2) issued under notification of the Capital Market Supervisory Board No. Tor Chor. 11/2552 regarding Rules, Conditions and Procedures for Disclosure of Information Relating to Financial Status and Operating Result of Issuing Company Required Items in Guideline for 56-2 1. 1.1 1.2

Item in this Annual Report

Page

General Information Supplemental Information Company information and outstanding shares Investment in other company for more than 10% of that company’ s equity Other reference

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

Key Figures

3. 3.1

Nature of Business Nature of business operation of company and subsidiaries, and distribution policy Income structure Major developments in last year, and trend of industrial and competition situation

Supplemental Information

Note to Consolidated Financial Statements No. 27 Report of the Executive Committee, Major Developments in 2009 Industry Outlook

65 12 24 28

Risk and Risk Management

5. Shareholding and Management Structure 5.1 Shareholders 5.2 Management 5.2.1 Management structure 5.2.2 Nomination of directors and executives 5.2.3 Remuneration to directors and executives 5.2.4 Compliance of SET’s CG Principles 5.2.5 Rules on insider information 5.2.6 Internal control opinion of Audit Committee 5.3 Dividend Policy

Supplemental Information Corporate Governance Update Management Structure Corporate Governance Update Supplemental Information Corporate Governance Update Corporate Governance Update Report of the Audit Committee Dividend Poticy and Allocation

87 82 06 83 85 77 78 33 76

Related Party Transaction

Related Party Transactions

Management Discussion and Analysis

8. 8.1 8.2

Financial Statements Audited consolidated financial statements Auditors’ fee

Report of Independent Auditor Supplemental Information

35 104

1.3

3.2 3.3

Risk Factors