SCG: Annual Report 2000

Page 1

The Siam Cement Public Company Limited and subsidiaries companies

Statement of Income (Million Baht) Revenues Cost and Expenses* Income before income tax, interest expenses and financial charge, depreciation and amortization (EBITDA) Income (Loss) before effects from currency exchange and others Net profit (loss) Net cash provided by (used in) operating activities Balance Sheet (Million Baht) Assets Liabilities Shareholders' equity and minority interest Shareholders' equity Share Information Total number of shares issued (Million Shares) Book value per share (Baht) Earnings (loss) per share (Baht) Dividends per share (Baht) Payout ratio (%) Return on total revenues (%) Return on equity (%) Return on assets (%) *Exclued Loss (Gain) on exchange rate.

2


2000

1999

1998

1997

1996

Restated 128,197

101,851

105,236

122,629

110,708

123,904

99,770

107,977

116,483

103,203

30,386

27,962

23,881

28,840

27,221

5,375

1,913

(1,841)

3,745

6,788

(4,785)

19,301

(52,551)

6,788

10,963

4,669

18,979

(4,825)

18,609

260,309

266,348

290,297

350,831

180,812

195,549

202,000

214,124

273,620

138,543

64,760

64,348

76,173

77,211

42,268

54,133

50,006

57,623

57,103

32,820

120

120

120

120

120

451

417

480

476

274

(40)

161

(438)

57

41

-

-

-

10

20

-

-

-

N.A.

35

-

(5)

18

(43)

6

-

(9)

34

(117)

22

-

(2)

6

(20)

4

3


O

Chaovana NaSylvanta

Chumpol NaLamlieng

verall, the Thai economy grew 4.5% in 2000, compared to 1999, fueled by rising exports and private consumption growths. Lower lending rates and a slight rise in employment are added signs of economic recovery. However, many obstacles for all economic recovery remains, such as low agricultural product prices, high petroleum prices, and domestic political uncertainties.

Although the economy is still in a recovery period, the Siam Cement Group has achieved improved results for the year 2000. Domestic and exports sales increased, as the performance in the three main businesses - Cement, Petrochemicals, and Paper and Packaging - improved. As part of a long-term strategy to achieve higher efficiency in resource allocation and to build greater institutional strength, Siam Cement restructured into six strategic business units: Cement, Petrochemicals, Paper and Packaging, Building Products, Ceramics, and Distribution. As part of this process, Siam Cement also created two new holding companies: Cementhai Holding to oversee the Group’s investment and Cementhai Property to manage the Group’s real estate holdings. These changes became effective as of January 2001. During 2000, Siam Cement farther divested and reduced investment in its non-strategic business units by a total of approximately 13,000 million baht, including, investment in the Michelin Siam Group, the Nawaloha Foundry Bang Pakong, and Siam Compressor Industry, etc.

4


The Company’s mission on business restructuring is now near completion and Siam Cement is ready to build and grow along more focused business lines. Investors responded most favorably to Siam Cement’s debentures issues over the past two years, demonstrating strong confidence in the Group’s prospects. As year 2000, 90,000 million baht of debenture were issued to relieve foreign borrowing, reducing considerady the Group’s vulnerability to foreign exchange risk. Siam Cement has always conducted business in accordance to the principles of good corporate governance, including effective organizational control, fairness to all stakeholders, social responsibility, and transparency. In addition, the Group has continuously tried to promote good corporate governance to entrepreneurs and to people in general through various media, such as television, radio and publications. In 2000, Siam Cement formed a joint venture with Accenture (formally known as Andersen Consulting), the world leading IT consulting firm - to develop information technology and e-Commerce capabilities to a world-class level, as well as to enhance the competence of the Group’s staff. Siam Cement has its long-term commitment to continuous improvements in operations and to boosting productivity for greater competitiveness by applying the standards of Total Quality Commitment, or TQC. Total combined revenues for The Siam Cement Plc and subsidiaries in 2000 amounted to 128,197 million baht, an increase of 26 percent over 1999. However, extraordinary expenses, such as foreign exchange losses and the cost of restructuring (loss from divestitures), and employees’ early retirement programs, resulted in a net profit for The Siam Cement Plc and subsidiaries of just 41 million baht. Without such extraordinary expenses, operating profits would have been approximately 4,848 million baht. Taking into account of the operating performance and the overall financial status of the Company and subsidiaries as well as cumulative losses, the Board of Directors has decided not to pay a dividend for the year 2000. The Board would like to thank shareholders, joint-venture partners, customers, and staff, as well as domestic and foreign financial institutions, for their continuing support. We are committed to meriting your confidence by continuing to develop our management capabilities and our businesses to ensure our competitiveness and our leadership, both domestically and internationally.

Bangkok, March 1, 2001

(Chaovana NaSylvanta) Chairman

(Chumpol NaLamlieng) President

5


The Siam Cement Public Company Limited* Board of Directors

Remuneration Committee

Audit Committee Audit Office

President

Corporate Functions & Services

Management Committee

The Siam Pulp and Paper Plc.*

Siam Cement Industry Co., Ltd.

Cementhai Holding Co., Ltd.

Cementhai Chemicals Co., Ltd.

Cementhai Building Products Co., Ltd.

Cementhai Ceramics Co., Ltd.

Cementhai Distribution Co., Ltd.

Cementhai Property Co., Ltd.

* Listed Companies in the Stock Exchange of Thailand

6


The Siam Cement Public Company Limited Chaovana NaSylvanta Osot Kosin Kamthon Sindhvananda Snoh Unakul Paron Israsena Sivavong Changkasiri Sumet Tantivejkul Yos Euarchukiati Pricha Attavipach M.R. Pridiyathorn Devakula Panas Simasathien Chumpol NaLamlieng Suvit Virojanadul

Chairman Vice Chairman Director Director Director Director Director Director Director Director Director Director and President Secretary to the Board and Corporate Secretary

The Siam Cement Public Company Limited Chumpol NaLamlieng Chalaluck Bunnag Aviruth Wongbuddhapitak Pramote Techasupatkul Chaisak Saeng-Xuto Sobson Ketsuwan Apiporn Pasawat Dusit Nontanakorn Kajohndet Sangsuban Kan Trakulhoon

President and President, Cementhai Holding Co., Ltd. Vice President and President, Cementhai Property Co., Ltd. Vice President Vice President President, The Siam Pulp and Paper Plc. President, Siam Cement Industry Co., Ltd. President, Cementhai Chemicals Co., Ltd. President, Cementhai Distribution Co., Ltd. President, Cementhai Building Products Co., Ltd. President, Cementhai Ceramics Co., Ltd.

7


Business Paper and Packaging The Siam Pulp and Paper Plc.

Thai Containers Group Ltd.

Automotive Tyres Michelin Siam Group Co., Ltd.

Electrical products Thai CRT Co., Ltd. Thai Electron Gun Co., Ltd. CRT Display Technology Co., Ltd.

Siam Compressor Industry Co., Ltd.

8

Status

After making a tender offer, the Group’s shareholding in the company rose to 87 percent to increase its role in core business. In joint venture with Nippon Hi-Pack by holding 74 percent share in Nippon Hi-Pack (Thailand); and set up Thai Containers V&S Co., Ltd., with 90 percent shareholding to purchase machines, buildings, and lands from V&S Paper Boxes Co., Ltd.

The Group reduced shareholding from 50 percent to 40 percent by selling the shares to Michelin of France, present joint venture partner.

In joint venture with Sony Corporation (SONY) for collaboration agreement in production of tubes for 17-inch monitoring screens for computers manufactured by CRT Display Technology Co., Ltd. By this, SONY moved production line from Japan to install in Thailand. Production is expected to begin by the end of the second quarter of 2001. The Group will sell all stake in Siam Compressor (49%) to Mitsubishi Electric Corporation to reduce investment in compressor for airconditioners. Transaction is expected to be completed within the first quarter of 2001.


Business

Status

Metal products Siam Aisin Co., Ltd.

The Group reduced shareholding from 47 percent to only seven percent. The shares were sold to joint venture partner Aisin Seiki of Japan.

The Nawaloha Foundry Bang Pakong Agreement reached to sell assets to Toyota Group Co., Ltd. in order to improve the business operations and reduce the Group’s shareholding. Transaction is expected to be completed within the first quarter of 2001.

Iron & Steel Construction Steel

Study on merger with NTS expected to be concluded in second quarter of 2001.

Siam Industrial Wires Co., Ltd.

Negotiations under way with parties interested in buying the company in a bid to reduce investment in the business.

Others The Siam Pipe Products Co., Ltd.

Arrangement for closure under way.

Thai Wanaphan Co., Ltd.

Arrangement for closure under way.

9


T

he Siam Cement Public Company Limited conducts business with the philosophy that the company should demonstrate a keen sense of responsibility towards the best interests of its shareholders, and that the company should, at the same time, be acutely aware of all environmental considerations and of the well-being of society and the nation as a whole. Although this particular philosophy was only incorporated into the code of ethics and published about 20 years ago, it has in fact been at the very heart of how Siam Cement has operated since its establishment in 1913. This philosophy has been introduced into other companies in the group, and has now become the underlying philosophy of the entire Siam Cement Group (SCG). Recently, Corporate Governance has been receiving a lot of attention as a key managerial concept. However, it is in fact the case that acceptance of this concept produces business practices which are very much in line with the way in which SCG has long operated. Therefore, it can be argued that SCG has been carrying out its business in tune with the Corporate Governance concept since well before the term ever became fashionable. SCG intends to continue to conduct its business in accordance with the concept of Corporate Governance. Furthermore, SCG is determined to set an example for others to follow, and is resolved to encourage other corporations to adopt the practices. In this way, the benefits to society as a whole can be truly maximized. Based on the Corporate Governance concept, the role of the Board of Directors is crucial in both management and the effectiveness of the operations. The Board determines the strategy which is to be adopted in order to accomplish the set objectives through means that have been approved by the shareholders and which comply with both the law of the land and SCG’s own regulations. The Board also ensures that effective monitoring, controlling and evaluating systems are properly in place. Furthermore, the Board collectively oversees the effectiveness and the fairness of management. The Board of Directors is committed to preserving the rights and minimizing the risks to shareholders, and is determined to preserve the value of their investment. The Board is also committed to ensuring that the responsibilities that are involved in governing the corporation are set out with due transparency and disclosure, and with the proper means for verification. Preserving Rights SCG is fully aware of the rights of shareholders. Shareholders may exercise their rights to defend their investments, to vote for the Directors on the Board, and to vote in decision-making on important issues such as the authorization of additional shares. Moreover, it is a fundamental right of shareholders that they should regularly receive accurate and complete information, and that they should have the right to verify that information for themselves or to have it clarified.

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Risk Management Though corporate objectives are clearly set out and plans to achieve those objectives are carefully devised with precise control and monitoring procedures, risk management has also been regularly highlighted. Risks which may arise are identified and the priorities for controlling them are established. Then, appropriate measures and precise procedures which have been designed to minimize the risks are outlined.

Protecting Value SCG is continuously striving to achieve increased long-term returns for its shareholders. SCG has embraced the Corporate Governance concept as the basis on which it intends to continue to conduct business, secure in the knowledge that this is the best way to guarantee integrity and to promote the good image of the company. Furthermore, on this same basis, SCG oversees the practices of all companies which belong to the group to ensure that they all employ internationally accepted criteria. SCG also facilitates the effective monitoring of the use of resources and encourages the corporation to use those resources in the most efficient manner possible. In addition, SCG has devised a policy to provide fair and proper incentives for the Board and management to align their interest with those of the shareholders, thereby enhancing returns for the shareholders. Transparency, Disclosure and Verification SCG belives that transparency, disclosure, verification and management with integrity are all vital factors in maintaining SCG’s reputation and in maintaining shareholders’ trust. SCG will continue to conduct its business with transparency and to disclose information accurately, completely and on a timely basis. Furthermore, SCG will continue to provide the means to clarify and verify that information.

Social Responsibilities One of the four cardinal principles of SCG philosophy is “Concern for Social Responsibility”. SCG has always operated on the basis of a firm sense of responsibility toward society - in particular, on the issue of the environment. SCG’s concern for environment protection is widely recognized by the general public. Moreover, SCG is irrevocably committed to the pursuit of objectives that are in the long-term interests of the entire country as well as in the long-term interests of its shareholders. SCG is certain that effective monitoring and control by the Board will strengthen SCG Corporate Governance and maintain public confidence. This will in turn lead to the best long-term interest of all beneficiaries and sustainable success.

11



Consolidated Financial Information 1999

1998

Million Baht 1997 1996

8,641

3,351

4,055

4,946

4,396

Total assets

70,700

67,887

66,277

83,340

37,569

Total liabilities

55,109

56,670

47,103

65,052

24,370

Shareholders’ equity & Minority interest 15,591

11,217

19,174

18,288

13,199

2000 Balance Sheet Data Total current assets

Statements of Income Data Total revenues

22,328

22,847

25,507

31,328

35,701

Total costs and expenses*

21,635

21,385

24,734

27,631

31,569

98

861

529

3,227

3,584

(274)

(799)

9,342

(5,832)

4,166

8,839

10,517

8,375

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA

7,231

9,297

*Exclude Loss (Gain) on exchange rate

Major Companies Subsidiaries

Siam Cement Industry Co., Ltd. The Siam Cement (Lampang) Co., Ltd. The Siam Cement (Ta Luang) Co., Ltd. The Siam Cement (Kaeng Khoi) Co., Ltd. The Siam Cement (Thung Song) Co., Ltd. The Concrete Products and Aggregate Co., Ltd.

13


Operating Results

I

n the year 2000, Siam Cement Industry Co., Ltd. (SCI), earned revenues at a level close to that of the previous year. As domestic demand for grey cement declined, the company concentrated on exports and supported investment in the cement industry abroad to expand the base for exports in the future.

Marketing In the year 2000, SCI continued to hold the biggest domestic market share, with the marketing of Oil Well Cement and Tiger Brand Cement in 25-kg bags. The Concrete Products and Aggregate Co., Ltd., has pushed for a new line of business investment in ready-mixed concrete called “CPAC Franchise� to expand the manufacturing and distribution of readymixed concrete nationwide. Moreover, the company also launched new products such as CPAC Marine Concrete and concrete for agricultural projects, with the opening of a website www.cpac.co.th to accommodate customers and contractors.

14


The Siam White Cement Co., Ltd., launched a new product, white cement under “Tiger Brand” in 2-kg packing. Siam Mortar Co., Ltd., showed an increase in sales of 18 percent due to growing market demand for the product.

Exports Exports of grey cement increased 20 percent from 1999 resulted from the improvement in port and handling equipment, together with market expansion to South Asia, Africa, Europe, North and South Americas.

Production Companies operating under SCI increased efficiency in management with emphasis on operation cost control and environmental conservation through various measures, as follows: l

Use alternative fuels as substitute for bunker oil, such as petroleum coke, used lubricant and auto tyres.

l

Cooperate with leading foreign companies to provide a fully integrated engineering service to cement manufacturers locally and abroad.

l

Improve the work flow to be in line with the installation of SAP-CS, such as a linkage between cement distribution system and SAP-CS.

l

Printing of bar code on cement bags to be in accordance with international standards.

Foreign investment l

SCI in collaboration with Siam City Cement Plc., and Holderbank Financiere Glaris, bought all shares in Hyundai Cement (Bangladesh), which operates cement grinding plant in Bangladesh. SCI holds 19 percent shareholding and will benefit for expanding exports to South Asia.

l

The Siam White Cement Co., Ltd., has given the right to produce and distribute white cement under “White Elephant” brand to Siambangla Industries Ltd., in Bangladesh.

l

The Concrete Products and Aggregate Co., Ltd., has set up a ready-mixed concrete plant in Siem Reap, a third plant in Cambodia, with an annual production capacity of 40,000 cubic metres.

15



Consolidated Financial Information Million Baht 1997 1996

2000

1999

1998

Total current assets

11,628

12,251

11,483

9,759

7,870

Total assets

55,343

57,202

57,926

53,850

26,418

Total liabilities

32,987

35,858

40,645

40,609

17,840

Shareholders’ equity & Minority interest 22,356

21,344

17,281

13,241

8,578

Balance Sheet Data

Statements of Income Data Total revenues

40,086

25,059

15,853

12,959

8,112

Total costs and expenses*

36,700

21,446

14,288

11,628

7,273

3,057

2,961

1,216

768

1,558

2,133

981

7,063

6,749

2,819

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA

(4,665) 2,486

(139) (209) 1,687

*Exclude Loss (Gain) on exchange rate Figure in 1996-1999 were reclassified to conform with those in 2000.

Major Companies Subsidiaries

Cementhai Chemicals Co., Ltd. Thai Polyethylene Co., Ltd. Thai Polyethylene (1993) Co., Ltd. Thai Polypropylene Co., Ltd. Thai Polypropylene (1994) Co., Ltd. Rayong Olefins Co., Ltd. Map Ta Phut Tank Terminal Co., Ltd.

Associated

Siam Polystyrene Co., Ltd. Pacific Plastics (Thailand) Ltd. Siam Synthetic Latex Co., Ltd. Siam Styrene Monomer Co., Ltd. Siam Polyethylene Co., Ltd. Thai MMA Co., Ltd. Grand Siam Composites Co., Ltd. Siam Mitsui PTA Co., Ltd. Thai Plastic and Chemicals Plc.

17


Operating Results

I

n the year 2000, the Petrochemicals Business showed higher total sales and earning before interest, tax, and depreciation (EBITDA) than the previous year due to the full year operation of Rayong Olefins Co., Ltd., producer of ethylene. At the same time, the selling prices of ethylene, propylene and plastic resins increased correspondingly with rising oil prices. However, the higher cost of raw materials, which was based on higher oil prices, led to lower profit per unit compared with 1999.

Olefins Domestic demand for ethylene and propylene was lower than in 1999, following production cutback among the manufacturers of plastic resins due to sharp increase in the prices of raw materials. However, the Business was able to run at full capacity, with exports of ethylene and propylene to Asian and European countries.

18


Polyolefins Domestic sales rose 10 percent from the previous year in line with market expansion, accounting for 60 percent of total sales. Exports also increased 13 percent from the previous year. Major export markets are Japan, China, Indochina, and South East Asia.

Investment There was progress in investment projects for expansion of production capacity to cope with economic recovery to attain leadership position in the petrochemicals industry in the Asia-Pacific region, as follows:

Company

Product

Production (Ton/Year) Start-up Previous New (Expansion)

Siam Styrene Monomer Co., Ltd.

Styrene Monomer

240,000

300,000

Q2 Y2000

Rayong Olefins Co., Ltd.

Ethylene

600,000

800,000

Q3 Y2001

Thai Polyethylene Co., Ltd.

HDPE

300,000

500,000

Q4 Y2001

Thai Polypropylene Co., Ltd. and

Polypropylene

260,000

320,000

Q3 Y2001

PTA

400,000

800,000

Q1 Y2003

Thai Polypropylene (1994) Co., Ltd. Siam Mitsui PTA Co., Ltd. (2nd Plant)

19



Consolidated Financial Information 1999

1998

Million Baht 1997 1996

8,100

7,228

8,055

8,540

7,838

Total assets

36,416

36,325

40,482

49,431

28,286

Total liabilities

16,691

19,742

23,828

31,740

21,382

Shareholders’ equity & Minority interest 19,725

16,583

16,654

17,691

6,904

2000 Balance Sheet Data Total current assets

Statements of Income Data Total revenues

27,465

21,764

19,865

17,086

16,217

Total costs and expenses*

23,242

19,541

19,051

16,099

15,475

3,171

1,660

792

753

761

2,798

1,183

4,159

(5,735)

8,061

6,351

5,735

5,050

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA

682 4,262

*Exclude Loss (Gain) on exchange rate

Major Companies Subsidiaries

The Siam Pulp and Paper Public Company Limited Siam Cellulose Co., Ltd. The Siam Forestry Co., Ltd. Thai Paper Co., Ltd. Thai Union Paper Public Company Limited Thai Union Paper Industry Co., Ltd. Siam Kraft Industry Co., Ltd. Thai Kraft Paper Industry Co., Ltd. Thai Containers Ltd. Thai Containers Industry Co., Ltd. Thai Containers Ratchaburi (1989) Co., Ltd. Thai Containers Songkhla (1994) Co., Ltd. Thai Containers Chonburi (1995) Co., Ltd.

Associated

Siam Toppan Packaging Co., Ltd. United Pulp & Paper Co., Inc. (The Philippines)

21


Operating Results

I

n the year 2000, world market prices for paper and packaging increased. Higher domestic demand for the products led to rising sales for the business. The overall operating results of the Paper and Packaging Business was quite satisfactory and reflected the best performance ever.

Industrial paper (Kraft Paper/ Duplex Board/Gypsum Paper) In the first half of the year 2000, world market prices for pulp and waste paper rose continuously and enabled adjustments of prices for the domestic market and exports. The country’s economy and exports began to show signs of recovery together with that of other countries in the Asian region, leading to higher demand for industrial paper. Domestic

22


sales increased 43 percent and exports rose 26 percent. Major export markets are China, Hong Kong, Malaysia, Singapore, the United States and Indochina. In the same year, the business has installed SAP system and launched e-Commerce to facilitate sales and enhance services to customers.

Packaging Domestic demand for packaging products increased 38 percent due to the transfer of manufacturing base for electrical appliances and consumer goods to Thailand. The business increased production capacity by 39,000 tons, thereby enhancing the potential in customer services.

Printing/Writing Paper Demand for printing/writing paper in 2000 increased 13 percent leading to an increase in domestic sales of 30 percent while exports rose 27 percent. Major markets are Hong Kong, South East Asia and the United States. Emphasis was put on exports of coated printing and writing paper, thus increasing revenues for the business.

23



Consolidated Financial Information 1999

1998

Million Baht 1997 1996

3,339

3,287

3,038

3,258

4,342

16,190

16,842

18,230

19,380

10,868

Total liabilities

8,998

8,911

8,979

10,203

7,040

Shareholders’ equity & Minority interest

7,192

7,931

9,251

9,177

3,828

Total revenues

8,664

8,145

8,111

11,565

10,949

Total costs and expenses*

8,027

7,813

8,422

10,213

9,695

361

335

(272)

1,065

1,080

26

189

965

(1,123)

1,049

1,997

1,789

1,480

2,476

2,149

2000 Balance Sheet Data Total current assets Total assets

Statements of Income Data

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA *Exclude Loss (Gain) on exchange rate

Major Companies Subsidiaries

Cementhai Building Products Co., Ltd. The Siam Fibre-Cement Co., Ltd. Tip Fibre-Cement Co., Ltd. The CPAC Roof Tile Co., Ltd. The CPAC Roof Tile Industry Co., Ltd. Thai Ceramic Roof Tile Co., Ltd. The CPAC Concrete Products Co., Ltd. The CPAC Concrete Industry Co., Ltd. The Siam CPAC Block Co., Ltd. The CPAC Block Industry Co., Ltd. Saraburirat Co., Ltd. PT Siam-Indo Concrete Products (Indonesia)

The Siam Gypsum Industry Co., Ltd. The Siam Gypsum Industry (Saraburi) Co., Ltd. The Siam Gypsum Industry (Songkhla) Co., Ltd. The Siam Moulding Plaster Co., Ltd. PT Siam-Indo Gypsum Products (Indonesia) Siam Fiberglass Co., Ltd. The Siam Nawaphan Co., Ltd.

25


Operating Results

W

hen the Siam Cement Group embarked upon a corporate restructuring in late 2000, Roofing and Concrete Products Business, and Gypsum Business were grouped together as Building Products Business under management of Cementhai Building Products Co., Ltd. Major products are roof tiles, concrete paving blocks and gypsum boards.

The economic recovery, improving conditions in the real estate sector and declining interest rates resulted in higher sales of Cementhai Building Products Co., Ltd. Major policies enforced during the year were the strengthening of market stability, development of production efficiency, increase in exports, work system improvement, launches of new products ready for competition under the ASEAN Free Trade Area (AFTA).

26


Marketing Recovery in the real estate sector in the year 2000, with a new strategy among developers in offering furnished residential units, led to product demand in advance. The company continued to explore new market segments such as government office buildings and exports, to compensate for the falling demand in existing markets. Moreover, there were new products such as Roman tiles in bright green color, “OK” Brand corrugated roof tiles, “Neustile” roof tiles, and “Sornsila” concrete paving blocks.

Exports Though overall exports in the year 2000 declined from the previous year, shipments to the ASEAN markets continued to increase due to the consistently expanding demand for construction materials. Major markets are Laos, Malaysia, Taiwan, and Cambodia. Export products mainly were gypsum boards and roof tiles. There were efforts to boost export volume for construction materials to ASEAN countries to cope with future expansion of the manufacturing base.

Production The annual production capacity for ceramic roof tiles was expanded by 300,000 square metres, to a total of 600,000 square metres, to meet the rising demand for the product.

27



Consolidated Financial Information 1999

1998

Million Baht 1997 1996

2,435

1,726

1,787

2,417

1,453

11,245

11,075

11,870

11,897

5,405

Total liabilities

5,688

6,053

5,837

7,163

2,951

Shareholders’ equity & Minority interest

5,557

5,022

6,033

4,734

2,454

Total revenues

4,779

3,555

3,193

4,303

2,779

Total costs and expenses*

4,890

4,339

3,924

4,586

2,740

2000 Balance Sheet Data Total current assets Total assets

Statements of Income Data

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA

(221)

(750)

(578)

(81)

103

(279)

(890)

(130)

(1,186)

103

988

353

482

855

578

*Exclude Loss (Gain) on exchange rate Figure in 1996-1999 were reclassified to conform with those in 2000.

Major Companies Subsidiaries

Cementhai Ceramics Co., Ltd. Thai Ceramic Co., Ltd. Sosuco Ceramic Co., Ltd. The Sosuco Group Industries Co., Ltd. PT. Surya Siam Keramik (Indonesia) Beijing Cementhai Ceramic Co., Ltd. (China)

Associated

Siam Sanitary Ware Co., Ltd. Siam Sanitary Ware Industry Co., Ltd. The Siam Sanitary Fittings Co., Ltd. Mariwasa Manufacturing, Inc. (The Philippines) Siam Mariwasa TOTO, Inc. (The Philippines)

29


Operating Results

I

n the year 2000, overall domestic demand increased for ceramic tiles, sanitary wares, and sanitary fittings. Price competition was less severe because local manufacturers focused more on expanding export markets, thus help reducing the capacity surplus. Also, several new marketing promotion activities have been initiated to differentiate the products and avoid price cut.

Marketing and exports Total sales in the year 2000 had about 35 percent growth due to continued expansion in exports. At present, “COTTO� brand has become well known and more acceptable in world markets. Major export markets are the U.S.A., ASEAN countries, Australia and Europe.

Production There was an expansion in the production capacity for sanitary wares at Siam Sanitary Ware Industry (Nongkae) Co., Ltd. The objective of this project was mainly for exports. Commercial run is expected to start in the middle of 2001.

30


Foreign Business Operations The Philippines. Competition in domestic market became more intense than in the previous year, mainly due to surplus capacity and low import duties, leading to price competition from imported products. Domestic manufacturers also flooded the market with low-price products. However, Mariwasa Manufacturing, Inc. still maintained its leading position in terms of market share for ceramic tiles, with constant product development and marketing promotion programs. Siam Mariwasa TOTO, Inc., having 25 percent of share in domestic market, has increased its exports, with the USA as its major market. Indonesia. Surya Siam Keramik has imported COTTO ceramic tiles from Thailand to establish a market base for future expansion. The company also exported its local brand “DK� to New Zealand and Madagascar.

31



Consolidated Financial Information 2000

1999

1998

Million Baht 1997 1996

Balance Sheet Data Total current assets

5,595

4,051

6,395

3,100

5,546

Total assets

7,345

5,851

10,145

7,087

7,585

Total liabilities

5,718

4,913

8,018

5,802

6,497

Shareholders’ equity & Minority interest

1,627

938

2,127

1,285

1,088

Total revenues

46,890

45,064

47,867

63,171

62,046

Total costs and expenses*

46,723

44,555

47,738

62,937

62,371

84

364

62

159

(404)

192

207

47

298

(362)

402

1,286

677

755

989

Statements of Income Data

Income (Loss) before effects from currency exchange and others Net income (Loss) EBITDA *Exclude Loss (Gain) on exchange rate

Major Companies Subsidiaries

Cementhai Distribution Co., Ltd. Cementhai Sales and Marketing Co., Ltd. SCT Co., Ltd. Cementhai Logistics Co., Ltd.

Associated

Thai Prosperity Terminal Co., Ltd. Rayong Bulk Terminal Co., Ltd.

33


Operating Results

I

n the year 2000, the domestic construction business showed a slight growth from the previous year, with higher sales in the local markets and international trade. Major export products were cement, steel, building and decorative products of Group companies. Major import goods included energy products, waste paper and scrap iron.

The Distribution Business has installed the sophisticated System Application & Products in Data Processing (SAP) network for use in every transaction to enhance efficiency in customer service and serve as the base for other technologies required to meet new pattern of market demand and boost the competitiveness for future business expansion. Cementhai Sales and Marketing Co., Ltd., which operates domestic marketing of products,

34


has installed the SAP system and e-Commerce to replace the online system previously used in purchase orders. The system enables the company to have a fullyintegrated data system connecting with the Group manufacturers, intraGroup units concerned, and m o r e t h a n 5 0 0 distributors nationwide. The SAP system enables distributors to place orders, check inventory and track product deliveries through the Internet from their offices. SCT Co., Ltd., has connected the SAP system through the Electronic Data Interchange with the Customs Department and commercial banks. In addition, the company opened a representative office in Bangladesh during the year to increase the potential in market expansion to South Asia and developed a network of distributors in Cambodia as well. Cementhai Logistics Co., Ltd., used SAP Warehouse Management and Barcode Scanning system to enhance efficiency in storing and discharging of products at the Distribution Centre, development of product distribution for cost reduction, and set up a centre for the purpose at Rangsit, and three hubs in the North, Northeast and South.

35


Companies

Awards and Standards

Siam Cement Industry Co., Ltd. The Siam Cement (Ta Luang) Co., Ltd. Ta Luang Plant

l

l

l

Khao Wong Plant

The Siam Cement (Kaeng Khoi) Co., Ltd.

TIS 18001 Certification for occasional health and safety management Standard Certification - API Monogram for Oil Well Cement (License No. 10A-0060) Outstanding industry for total quality management

l

Certification for calibration in test and analytical laboratories according to Homologation (Spain)

l

TIS 18001 Certification for occasional health and safety management Outstanding workplace in safety, health, and environment at national level Best Manufacturer Award for environment EIA Award

l

l l

The Siam Cement (Thung Song) Co., Ltd.

l

ISO 14001 Certification for environment management l TIS 18001 Certification for occasional health and safety management

The Siam Cement (Lampang) Co., Ltd.

l l

Outstanding workplace in safety at national level ISO/IEC Guide 25 Certificate for calibration laboratories

The Concrete Products and Aggregate Co., Ltd. l TIS 18001 Certification for occasional health (Chiang Rak Yai) and safety management Siam Mortar Co., Ltd.

l

l

36

TIS Certification for general plaster mortar, fine plaster mortar, and concrete plaster mortar Outstanding workplace in safety, health and work environment at provincial level


Companies

Awards and Standards

Cementhai Chemicals Co., Ltd. Thai Polyethylene Co., Ltd.

l

l l l

Rayong Olefins Co., Ltd.

Map Ta Phut Tank Terminal Co., Ltd.

ISO/IEC Guide 25 Certificate for calibration laboratories ISO 9002 Certification for 2nd HDPE plant Outstanding workplace in safety at national level “Golden Certificate� for pleasant, hygienic workplace and safety

l

ISO 9002 Certification for quality management Outstanding Industry Award for environmental management

l

ISO 9002 Certification for quality management

l

TIS 18001 Certification for occasional health and safety management Outstanding Industry Award in environmental quality conservation

l

The Siam Pulp and Paper Plc. Siam Kraft Industry Co., Ltd.

l

Thai Containers Ltd. (Nava Nakorn Industrial Estate) Thai Containers Ratchaburi (1989) Co., Ltd. Thai Containers Chonburi (1995) Co., Ltd.

l

ISO 14001 Certification for environmental management

Thai Paper Co., Ltd.

l

Best Manufacturer Award for work safety Best Industrial Award for safety, hygiene, and work environment at national level

l

Cementhai Building Products Co., Ltd. The Siam Fibre-Cement Co., Ltd. (Saraburi Plant)

l

ISO 9002 Certification for quality management for colored tiles

The Siam Gypsum Industry (Songkhla) Co., Ltd.

l

ISO 9002 Certification for quality management

Thai Ceramic Roof Tiles Co., Ltd.

l

ISO 9002 Certification for quality management

37


Companies

Awards and Standards

Cementhai Ceramics Co., Ltd. Thai Ceramic Co., Ltd.

l

l

Prime Minister’s Export Award for company’s own brand name Prime Minister’s Export Award for best design

Siam Sanitary Ware Industry Co., Ltd.

l

ISO 14001 Certification for environmental management

The Siam Sanitary Fittings Co., Ltd.

l

Prime Minister’s Export Award for best design

l

Gold Card for international trading entrepreneur

Cementhai Distribution Co., Ltd. SCT Co., Ltd.

38


T

he Audit Committee has fulfilled its commitment assigned by the Company’s Board of Directors, which included supervision and scrutiny of the company’s financial statements and consolidated financial statements to be in full conformity with the standard accounting practices deemed appropriate for business operations, good corporate governance, in compliance with the regulations of the Stock Exchange of Thailand and all statutes concerned. The Committee has also organized efficient arrangement for internal control system for business operations as well as supervised the company’s audit system including the auditing in management, financial, operations, and information technology in accordance with generally accepted auditing standards. Moreover, the Committee also responsible for selected and proposed appointment of auditor, and carried out other Board’s assignments. In the financial year 2000, there were improvements for the rules on the Audit Committee based on the company’s Code of Ethics, the criteria of the Stock Exchange of Thailand, and good corporate governance. In the improvements thereof, there were additionally essential issues in the review of accuracy and effectiveness of information technology, with recommendations to modernize the overall system, assessment of organizational risk management system, support for development of the financial system reports to international accounting standards. The Audit Committee has reviewed the quarterly and annual financial statements for the financial year 2000 of the company, and the consolidated financial statements of the Group, with emphasis on full conformity with the new accounting standard practices, and adequate disclosure of financial statements. The Committee also received reports and questioned the auditor to utmost satisfaction that the financial statements were properly in conformity with the generally accepted standard accounting practices. To enable the users to benefit from timely and appropriate use the financial statements, the Committee presented for approval by the Board, the unaudited quarterly financial statements to be submitted to the Stock Exchange of Thailand within 30 days after the book of account was closed. In the year 2000, the Group developed the computerized system to achieve more efficiency with the installation of the SAP system for marketing and distribution of products, to be connected with the accounting and financial system to ensure a fully integrated system of performance valuation without redundancy. The system also serves as the base for technology, which facilitates e-Commerce business, enabling customers and distributors to place purchase orders through the Internet for products under the Group more promptly and accurately. In the assessment of the internal control system, the Company and subsidiaries have a system appropriate for business environment, and without significant weak points. This assessment was fully endorsed by the auditor. In addition, there was also essential valuation on risk management in relation to marketing, finance, production, personnel, legal and general business atmosphere, with reliability in the data system required by the management, and without significant risks, which might cause damage to business. This was more specific in financial management whereby foreign debts were converted into the local currency to substantially reduce risks caused by the weaker foreign exchange rates. For the year 2001, the Audit Committee has proposed to the Board to appoint Mr. Methee Rattanasrimetha or Miss Wipa Jindanuwat or Mr. Pisit Chiwaruangroch of SGV-Na Thalang & Co., Ltd., as auditor by one more year. The proposal will be presented to the shareholders’ meeting for approval. March 1, 2001 On behalf of the Audit Committee Air Vice Marshal (Kamthon Sindhavananda) Chairman of the Audit Committee

39


Report of Certified Public Accountant ........................................ 41 Consolidated Balance Sheets....................................................... 42 Consolidated Statements of Income ............................................ 45 Consolidated Statements of Changes in Shareholders’ Equity ... 46 Consolidated Statements of Retained Earnings (Deficit) ............ 48 Consolidated Statements of Cash Flows ..................................... 49 Notes to Consolidated Financial Statements ............................... 51


To the Shareholders of The Siam Cement Public Company Limited

I have audited the consolidated balance sheets of The Siam Cement Public Company Limited and subsidiaries as at December 31, 2000 and 1999, and the related consolidated statements of income, changes in shareholders’ equity, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. 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 statement 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 The Siam Cement Public Company Limited and subsidiaries as at December 31, 2000 and 1999, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. As discussed in Note 1 to the consolidated financial statements, the Company has given retroactive effect to the change in reporting entity in the consolidated financial statements.

Methee Ratanasrimetha C.P.A. (THAILAND) Registration No. 3425

Certified Public Accountants A Member Firm of Arthur Andersen 22nd Floor, Siam Tower 989 Rama I Road, Pathumwan Bangkok 10330 February 14, 2001

41


December 31, 2000 and 1999 In Thousand Baht Assets Current Assets Cash in hand and at banks Short-term investments Accounts and notes receivable - trade - net - Affiliated companies - Other companies Receivables from and loans to affiliated companies Inventories - net Other current assets Total Current Assets Long-Term Portion of Accounts Receivable - Net Investments in and long - Term Loans to Associated and Other Companies - Net Property, Plant and Equipment - at cost - Net Assets Revaluation Surplus Other Assets

Total Assets

Notes

1, 4 3 1, 4 5

6 7 7 8

2000

3,230,400 342,244

7,765,117 691,468

1,700,960 10,924,600 316,365 23,998,117 2,533,165 43,045,851

1,768,352 10,114,819 1,505,789 21,166,899 3,137,262 46,149,706

1,188,505

667,485

25,835,759 98,219,228 65,724,140 26,295,663

28,134,926 103,799,802 62,709,858 24,886,719

260,309,146

266,348,496

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

42

1999 (Restated)


In Thousand Baht Liabilities and Shareholders’Equity

Notes

Current Liabilities Bank overdrafts and loans from financial institutions 9 Accounts payable - trade - Affiliated companies 1, 4 - Other companies Current portion of long-term debt 11 Payables to and loans from Affiliated companies - net 1, 4 Accrued expenses Income tax payable Other current liabilities Total Current Liabilities Provident Fund 10 Long - Term Debt - Net of current portion 11 Debentures 12 Other Liabilities 10 Total Liabilities Shareholders’ Equity Share capital - common stock, Baht 10 par value Authorized shares - 160,000,000 shares issued and fully paid share capital - 120,000,000 shares Premium on share capital Revaluation surplus in property 7 Unrealized gain (loss) on investment on securities 6 Accumulated foreign currency translation adjustments Equity in associated companies - From change in percentage of holdings - From unrealized gain on investment on securities - From accumulated foreign currency translation adjustments Retained earnings (Deficit) Appropriated Reserve fund General reserve Unappropriated (Deficit) - From operations of the company and subsidiaries - From operations of associated companies Total Shareholders’ Equity

13

2000

1999 (Restated)

17,840,225

24,613,362

1,252,020 7,365,483 11,418,342

1,217,367 7,192,766 15,181,392

1,045,932 4,086,543 286,887 1,310,987 44,606,419 690,930 62,497,254 86,519,110 1,235,695 195,549,408

1,914,213 3,415,364 205,098 1,663,341 55,402,903 697,061 95,750,647 49,028,000 1,121,732 202,000,343

1,200,000 10,752 63,592,163 ( 87,174) (109,153)

1,200,000 10,752 58,281,990 1,159,391 (314,302)

488,412 40,909

613,331 -

(98,824) 430,497

613,331

120,000 10,062,000

120,000 10,062,000

(16,217,677) (4,868,501) (21,086,178) 54,132,907

(16,183,537) (4,943,843) (21,127,380) 50,005,782

43


(Continued) December 31, 2000 and 1999

In Thousand Baht Liabilities and Shareholders’Equity Minority Interest in Subsidiaries - From capital and operations - From assets revaluation surplus Total minority interest in subsidiaries Total Shareholders’ Equity and Minority Interest

Total Liabilities and Shareholders’ Equity

Notes

7

2000

1999 (Restated)

8,494,854 2,131,977 10,626,831 64,759,738

9,914,503 4,427,868 14,342,371 64,348,153

260,309,146

266,348,496

For and on behalf of the Board of Directors Chaovana NaSylvanta Chairman

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

44

Chumpol NaLamlieng President


For the years ended December 31, 2000 and 1999 In Thousand Baht

Revenues Net sales Other income Total Revenues Costs and Expenses Cost of sales Selling expenses Administrative expenses Director fee Interest expense and financial charges Loss on exchange rate Total Costs and Expenses Income (Loss) Before Income Tax Income tax Income (Loss) from Operations Minority interest in income (loss) of subsidiaries - net Income (Loss) Before Equity in income of Associated Companies Equity in Income (Loss) of associated companies- net Income (Loss) Before Investments and Assets Sold for Restructuring, Provision for Decline in Value of Investments and Mutual Separation Plan Expense Loss on investments and assets sold for restructuring and provision for decline in value of investments - net of income tax Mutual separation plan expense - net of income tax Net Income (Loss) Earnings (Loss) per Share (In Baht)

Notes

2000

1999 (Restated)

14

126,217,521 1,979,834 128,197,355

99,987,116 1,864,010 101,851,126

96,890,239 6,125,917 6,833,247 23,987 14,030,418 2,954,651 126,858,459 1,338,896 (596,514) 1,935,410 (943,854)

75,618,363 4,968,583 6,410,748 22,133 12,750,115 5,954,117 105,724,059 (3,872,933) (598,788) (3,274,145) (1,075,335)

15 16

17

6, 7 18

991,556 901,877

(4,349,480) 1,612,169

1,893,433

(2,737,311)

(1,271,443) (580,788) 41,202 0.34

(964,408) (1,083,424) (4,785,143) ( 39.88)

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

45


For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Common share Beginning balance Addition Deduction Ending balance Premium on share Beginning balance Addition Deduction Ending balance Revaluation surplus in property Beginning balance Addition Deduction Ending balance Unrealized gain (loss) on investment on securities Beginning balance Addition Deduction Ending balance Accumulated foreign currency translation adjustments Beginning balance Addition Deduction Ending balance Equity in associated companies - From change in percentage of holdings - From unrealized gain on investment on securities - From accumulated foreign currency translation adjustments Total Equity in associated companies

46

1999 (Restated)

1,200,000 1,200,000

1,200,000 1,200,000

10,752 10,752

10,752 10,752

58,281,990 5,310,173 63,592,163

60,474,566 2,192,576 58,281,990

1,159,391 1,246,565 (87,174)

1,159,391 1,159,391

(314,302) 205,149 (109,153)

(626,218) 311,916 (314,302)

488,412 40,909 (98,824) 430,497

613,331 613,331


(Continued) For the years ended December 31, 2000 and 1999 In Thousand Baht 2000

1999 (Restated)

Appropriated Retained earnings Reserve fund Beginning balance Addition Deduction Ending balance General reserve Beginning balance Addition Deduction Ending balance Unappropriated (Deficit) - From operations of the Company and subsidiaries Beginning balance Adjustments As adjusted Addition Deduction Ending balance - From operations of associated companies Total Shareholders’ equity Minority interest in subsidiaries - From capital and operations - From assets revaluation surplus Total minority interest in subsidiaries Total Shareholders’ equity and Minority Interest

120,000 120,000

120,000 120,000

10,062,000 10,062,000

10,062,000 10,062,000

(15,990,569) (192,968) (16,183,537) 34,140 (16,217,677) (4,868,501) (21,086,178) 54,132,907

(10,750,818) (106,210) (10,857,028) 5,326,509 (16,183,537) (4,943,843) (21,127,380) 50,005,782

8,494,854 2,131,977 10,626,831 64,759,738

9,914,503 4,427,868 14,342,371 64,348,153

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

47


For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Deficit at beginning of year Adjustment on prior years Interest in subsidiaries and associated companies As adjusted Net income (loss) for the year Deficit Appropriated retained earnings Reserve fund General reserve Total appropriated retained earnings Total Deficit

(20,751,494)

(14,978,609)

(375,886) (21,127,380) 41,202 (21,086,178)

(1,363,628) (16,342,237) (4,785,143) (21,127,380)

120,000 10,062,000 10,182,000 (10,904,178)

120,000 10,062,000 10,182,000 (10,945,380)

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

48

1999 (Restated)


For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Unrealized loss on foreign currency exchange Depreciation and amortization Provision for decline in value of Investments - net Impairment loss in assets and diminution in investments Cumulative operating results of subsidiaries disposed - net Gain on sales of fixed assets Loss (Gain) on sales of investments - net Equity in income of associated companies Minority interest in income of subsidiaries Provision for provident fund - net Deferred income tax - net Changes in operating assets and liabilities: Accounts and notes receivable - trade - net Receivables from affiliated companies Inventories - net Other current assets Other assets Accounts payable - trade Payables to affiliated companies Other current liabilities Net Cash Provided by Operating Activities

41,202

1999 (Restated) (4,785,143)

3,141,900 11,949,496 (108,474) 777,096 (27,254) 602,821 (901,877) 943,854 (6,131) (1,290,508)

2,684,783 13,043,414 2,101,483 ( 75,898) (128,176) (1,061,177) (1,612,169) 1,075,335 (209,239) (948,721)

(556,908) 373,038 (2,831,219) 604,097 (1,629,465) 117,492 (135,271) (100,554) 10,963,335

(875,250) 8,930 (3,526,232) (640,913) (1,261,625) 958,217 174,640 (253,428) 4,668,831

49


(Continued) For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Cash flows from investing activities: Investments in associated and other companies Dividend income from associated companies Property, plant and equipment Proceeds from sales of investments Net assets of the disposal subsidiaries Proceeds from sales of fixed assets Loans to affiliated companies Accumulated foreign currency translation adjustments Net Cash Used in Investing Activities Cash flows from financing activities: Bank overdrafts and loans from financial institutions Long-term debt Loans from affiliated companies Minority interest in subsidiaries Debentures Other liabilities Net Cash Used in Financing Activities Net increase (decrease) in cash and cash equivalent Cash and cash equivalent at beginning of year Cash and Cash Equivalent at End of Year Supplemental Disclosures of Cash Flows Information Cash and cash equivalent This consists of Cash in hand and at banks Short-term investments Total

5,793 1,024,589 (6,684,383) 1,730,460 540,784 (52,489) 205,147 (3,230,099)

(2,868,104) 1,076,249 (4,067,262) 5,255,012 (913,757) 399,433 126,860 105,849 (885,720)

(6,988,500) (40,137,242) (733,008) (2,363,503) 37,491,110 113,965 (12,617,178) (4,883,942) 8,456,586 3,572,644

(24,273,698) (25,170,805) (1,373,898) (772,494) 49,028,000 68,291 ( 2,494,604) 1,288,507 7,168,079 8,456,586

3,230,400 342,244 3,572,644

7,765,117 691,469 8,456,586

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

50

1999 (Restated)


December 31, 2000 and 1999 1. Basis for Financial Statements and Principles of Consolidation 1.1 Nature of Operations The Siam Cement Public Company Limited (“The parent company”) is a Thai public company limited, listed on the Stock Exchange of Thailand (stock code “SCC”). SCC was incorporated in 1913, and is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand. SCC is Thailand’s largest industrial group, with leading market positions in each of its businesses of cement, petrochemicals and paper. The Company’s other operations included Building Products, Ceramics, Distribution, Cementhai Holding and Cementhai Property. 1.2 Basis of Financial Statement Presentation The Company owns substantial portion of the capital shares of the companies in The Siam Cement Group. A substantial portion of the Company’s business is represented by transactions with subsidiaries, associated and other companies and the financial statements reflect the effects of these transactions on the basis determined by the companies concerned which are in the normal course of business. The consolidated financial statements include the accounts of The Siam Cement Public Company Limited and subsidiaries which the Company has controlling power and/or significant influence in identifying financial management policies and operations. Subsidiaries included in the consolidated financial statements (only those with significant operations) are as follows: Direct/Indirect

Direct/Indirect

Holding (%)

Holding (%)

Cement Business The Siam Cement Industry Co., Ltd. The Siam Cement (Lampang) Co., Ltd. The Siam Cement (Ta Luang) Co., Ltd. The Siam Cement (Kaeng Khoi) Co., Ltd. The Siam Cement (Thung Song) Co., Ltd. The Concrete Products and Aggregate Co., Ltd. Petrochemicals Business Cementhai Chemicals Co., Ltd. Rayong Olefins Co., Ltd. Thai Polyethylene Co., Ltd. Thai Polyethylene (1993) Co., Ltd. Thai Polypropylene Co., Ltd. Thai Polypropylene (1994) Co., Ltd. Map Ta Phut Tank Terminal Co., Ltd. Paper Business The Siam Pulp and Paper Plc. Siam Cellulose Co., Ltd. Thai Paper Co., Ltd.

100 100 100 100 100 100 100 51 100 100 100 100 78 87 87 87

Thai Union Paper Plc. 87 Thai Union Paper Industry Co., Ltd. 87 Siam Kraft Industry Co., Ltd. 87 Thai Kraft Paper Industry Co., Ltd. 87 Thai Containers Co., Ltd. 61 Thai Containers Ratchaburi (1989) Co., Ltd. 61 Thai Containers Songkhla (1994) Co., Ltd. 61 Thai Containers Chonburi (1995) Co., Ltd. 61 Building Products Business Cementhai Building Products Co., Ltd. 100 The Siam Fibre-Cement Co., Ltd. 100 The CPAC Roof Tile Co., Ltd. 75 Thai Ceramic Roof Tile Co., Ltd. 75 The Siam CPAC Block Co., Ltd. 100 The CPAC Block Industry Co., Ltd. 100 The CPAC Concrete Products Co., Ltd. 100 The Siam Gypsum Industry Co., Ltd. 100 The Siam Gypsum Industry (Saraburi) Co., Ltd. 100

51


Direct/Indirect Holding (%) Ceramics Business Cementhai Ceramics Co., Ltd. Thai Ceramic Co., Ltd. Sosuco Ceramic Co., Ltd. The Sosuco Group Industries Co., Ltd. Distribution Cementhai Distribution Co., Ltd. SCT Co., Ltd. Cementhai Sales and Marketing Co., Ltd. Cementhai Logistics Co., Ltd. Cementhai Holdings Cementhai Holdings Co., Ltd. The Siam Iron and Steel Co., Ltd.

100 100 51 90 100 100 100 100 100 100

Direct/Indirect Holding (%) The Siam Construction Steel Co., Ltd. 100 The Siam Industrial Wire Co., Ltd. 100 The Siam Nawaloha Foundry Co., Ltd. 60 The Siam Refractory Industry Co., Ltd. 100 Thai CRT Co., Ltd. 47 Siam Tyre Public Company Limited 99 Siam Furukawa Co., Ltd. 59 Cementhai Property Industrial Land Holding Co., Ltd. 100 Rayong Industrial Land Co., Ltd. 100 SIL Industrial land Co., Ltd. 100 SCG Car Services Co., Ltd. 100

Most of the above subsidiaries are established in Thailand. Starting in the first quarter of 1999, the Company accounted for its investments in another nine associated companies and added another two associated companies in the second quarter of 1999, by the equity method because the Company does have significant influence in management of these Companies. Prior to 1999, these investments (listed below) were accounted for by the cost method. The Siam United Steel (1995) Co., Ltd. Siam Aisin Co., Ltd. Siam Styrene Monomer Co., Ltd. The Deves Insurance Public Co., Ltd. Thai Plastic and Chemical Public Co., Ltd. Siam Mariwasa TOTO, Inc.

Thai Carbon Product Co., Ltd. Thai Kayaba Co., Ltd. Thai MMA Co., Ltd. Siam Polyethylene Co., Ltd. Grand Siam Composites Co., Ltd.

The Company applied the above change retroactively to the periods in which the investments were acquired. Furthermore, during 1999, the Company increased the percentage of holding in CPAC Monier Phillippines, Inc. until it changed from associated company to be a subsidiary. Prior years, this investment was accounted for by the equity method. Moreover, the Company changed / decrease its participation in 13 subsidiaries listed below until the percentage of holding decreased to be associated companies. Siam Yamato Steel Co., Ltd. Thai Engineering Products Co., Ltd. Siam NGK Technocera Co., Ltd. The Nawaplastic Industries (Saraburi) Co., Ltd. Siam Toppan Packaging Co., Ltd. Cementhai Machinery (Singapore) Pte, Ltd. Nawa Plastic Industry Co., Ltd.

Siam Compressor Industry Co., Ltd. CRT Display Technology Co., Ltd. Siam Lemmerz Co., Ltd. Sichuan Cementhai Machinery Co., Ltd. Michelin Siam (Singapore) Holding Pte, Ltd. MSF Tire & Rubber, Inc.

As a result, the consolidated financial statements for the year ended December 31, 1999 did not include those companies. However, the Company accounted these investments by the equity method.

52


During 1999, the Company sold or had agreed to sell its investments for all or substantial portion of its investment in 6 companies as follows: Siam Guardian Glass Co., Ltd. Tianjin Cementhai Gypsum Products Co., Ltd. Lamosa Revestimientos S.A. de C. V.

Siam Magotteaux Co., Ltd. TileCera, Inc. TileCera Distributing, Inc.

As a result, the consolidated financial statements did not include these companies’ financial statements. The loss on investments sold and provision for loss on decline in value of those investments amounted by approximately Baht 964 million which was presented as part of “Gain (Loss) on investments and assets sold for restructuring and provision for decline in value of investments - net of income tax” in 1999. Furthermore, starting in second quarter of 2000, the management of the Company agreed to change the reporting entity by including the results of operation of its associated companies - Thai CRT Co., Ltd. and subsidiaries in the consolidated financial statements starting January 1, 2000, due to the Company has controlling power and/or substantial influence in identifying the financial management policies and operation. Accordingly, the consolidated financial statements for the year ended December 31, 2000 included the financial statements of these companies. In prior years, the Company accounts for these investments by equity method. In 2000, the Company sold a portion of its investments in Michelin Siam Co., Ltd. and its subsidiaries and Tianjin Plastic Products Co., Ltd. and decreased its participation in management of SMH Co., Ltd. and Siam Mitsui PTA Co., Ltd. As a result, the consolidated financial statements for the year ended December 31, 2000 did not included those companies. However, the Company accounted those investments by the equity method. The Company adopted the change retroactively to the consolidated financial statements for the year ended December 31, 1999. As a result of the change, the consolidated total assets as of December 31, 1999 decreased Baht 5,133 million. In the first quarter of 2000, the Company started to accounts for its investments in another 25 associated companies by the equity method. Prior to 2000, these investments were accounted for by the cost method. The Company did not adopted the change retroactive to the periods in which the investments were acquired due to the effect is immaterial. All significant intercompany transactions with subsidiaries included in the consolidated financial statements have been eliminated. The Company maintains its official accounting records in Thai Baht and prepares its statutory financial statements in the Thai language in conformity with financial accounting standards in Thailand and may differ from generally accepted accounting principles in other countries. Accordingly, the users of these financial statements should have sufficient knowledge about Thai accounting principles and practices. For the convenience of the reader, an English translation of financial statements has been prepared from the statutory Thai language financial statements which are issued for domestic reporting purposes. The accompanying consolidated financial statements for the years 2000 and 1999, include the effects of the economic crisis to the extent they are known and can be estimated. The operations of the Company and subsidiaries have been affected and may continue to be affected for the foreseeable future by the country’s crisis. The accompanying consolidated financial statements do not include any adjustment that might result from these uncertainties. Related effects will be reported in the financial statements as they become known and estimable.

53


2. Significant Accounting Policies Revenue Recognition The Company recognizes revenue from the sale of goods when the Company has transferred to the buyer the significant risks and reward of ownership of the goods. Divedends are recognized when declared. Service fee income is recognized on an accrual basis in accordance with the terms of agreement. Interest income is recognized on a time proportion basis that reflects the effective yield on the asset. Allowance for Doubtful Accounts The Company provides an allowance for doubtful accounts equal to the estimated collection losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience coupled with a review of the current status of existing receivables. Investments in Shares The Company accounts for its investments in shares in associated companies by equity method. Investments in other companies are valued at cost and provision is taken up in the accounts for possible loss on decline in value of the investments. Investments in marketable securities are valued at market. Inventory Valuation The Company values its inventories at cost or net realizable value, whichever is lower by the following methods: Finished goods

- at standard cost which approximates current production cost - at average cost. Merchandise - at average cost Goods in process - at standard cost which includes raw materials and variable labor and manufacturing overhead costs. Raw materials, spare parts, - at average cost stores, supplies and others Property, Plant and Equipment and Depreciation and Amortization Depreciation of property, plant and equipment has been computed by the straight-line method at the maximum rates allowed by law or the rates which approximate the economic useful life of the assets as follows:

Period (Years) Land improvements Building and structures Plant machinery and equipment Furniture, fixtures and office equipment Transportation equipment

10 - 40 20 5 - 10 5 5

Other assets recorded as deferred charges are amortized over one (1) to twenty (20) years. Development costs of products are deferred and amortized by the straight-line method over five (5) and fifteen (15) years.

54


Income Tax The Company and subsidiaries provide for deferred income tax resulting from temporary differences in reporting expenses for financial reporting purposes compared to income tax reporting purposes e.g. allowance for doubtful accounts, loss carry forwards up to 5 years. The deferred income tax is amortized as the temporary differences later reverse. Deferred income tax is recognized to the extent that it is probable that the future taxable profit will be available against which the temporary difference can be utilized. Foreign Currency Transactions and Translation of Foreign Currencies Financial Statements Foreign currency transactions are recorded at the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the year - end exchange rates unless hedged by forward foreign exchange contracts in which case they are translated at the rates specified in the forward contracts. Gains or losses on translation are recognized in the statement of income. Fees on hedging contracts are amortized over the life of the contract. The financial statements of the foreign subsidiaries have been translated into Baht at the rates prevailing at the balance sheet date for assets and liabilities. Revenues and expenses accounts are translated at average rates of exchange prevailing during the year. Translation adjustments that arise from the translation of foreign subsidiaries’ financial statements are accumulated as a separate component of shareholders’ equity. Financial instruments Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, marketable securities, trade and other accounts receivable and payable, long-term receivables, loans, borrowings, investments, and bonds receivable and payable. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in this Note. The Company and subsidiaries operates internationally and is exposed to market risks from changes in interest and foreign exchange rates. The Company and certain subsidiaries use derivative financial instruments to mitigate those risks. All other gains and losses on hedge transactions are recognized in the income statement in the same period as the exchange differences on the items covered by the hedge. Costs on such contracts are amortized over the life of the contracts. Earnings (Loss) per share Earnings (loss) per share is determined by the net income (loss) by the weighted average number of shares outstanding during the year (120,000,000 shares for 2000 and 1999).

3. Accounts and Notes Receivable - Trade 2000 Accounts receivable-trade Less: Allowance for doubtful accounts Net Notes receivable Total

10,717 757 9,960 965 10,925

In Million Baht 1999 9,660 701 8,959 1,155 10,114

55


As at December 31, 2000 and 1999, the Company and subsidiaries have long outstanding account receivable aged as follows:

Over 3 to 6 months Over 6 to 12 months Over 1 year Total

2000

In Million Baht 1999

76 93 876 1,045

157 71 997 1,225

The Company and subsidiaries provided the allowance for doubtful accounts amounted to approximately Baht 757 million in 2000 and Baht 701 million in 1999 which is adequate to absorb possible losses and comply with accounting policy for allowance for doubtful accounts.

4. Related Company Transactions

Accounts receivable - trade Siam Polyethylene Co., Ltd. Thai Plastic and Chemical Public Co., Ltd. HMC Polymers Co., Ltd. Bangkok Synthetic Co., Ltd. Siam Chemical Trading (China) Co., Ltd. Siam Styrene Monomer Co., Ltd. Grand Siam Composites Co., Ltd. Cementhai Trading (M) SDN. BSD. NEC Australia PTY. Ltd. Other companies Total Receivables and loans Current accounts Mariwasa Holding, Inc. Siam Michelin Marketing and Sales Co., Ltd. Siam Compressor Industry Co., Ltd. Siam Asahi Technoglass Co., Ltd. Other companies Notes receivable TOTO Siam Mariwasa Inc. Siam Lemmerz Co., Ltd. Grand Siam Composites Co., Ltd. Other companies Total

56

2000

In Million Baht 1999

321 319 282 141 124 117 78 75 244 1,701

379 180 197 142 90 78 35 280 387 1,768

74 68 2 1 111 256

80 24 73 80 377 634

39 21 60 316

29 550 115 178 872 1,506


Accounts payable - trade Siam Yamato Steel Co., Ltd. Siam Asahi Technoglass Co., Ltd. National Petrochemical Public Co., Ltd. Siam Polyethylene Co., Ltd. Siam Sanitary Ware Industry Co., Ltd. Other companies Total Payables and loans Current accounts PT. Trans-Pacific Polyethylene Indonesia Other companies Notes payable The Siam Kubota Industry Co., Ltd. Siam Yamato Steel Co., Ltd. The Siam Sanitary Fittings Co., Ltd. Siam Aisin Co., Ltd. Siam Compressor Industry Co., Ltd. Other companies Total

2000

In Million Baht 1999

321 302 260 182 97 90 1,252

129 352 188 81 70 397 1,217

98 33 131

88 178 266

680 180 55 915 1,046

1,173 30 165 95 65 120 1,648 1,914

2000

In Million Baht 1999

5. Inventories

Finished goods Goods in process Raw materials Spare parts Stores, supplies and others Raw materials and spare parts in transit Total Less: Allowance for obsolescence and slow moving items Inventories - Net

11,811 1,415 5,040 3,931 1,244 622 24,063

11,064 979 3,878 3,899 969 512 21,301

65 23,998

134 21,167

57


6. Investments in Shares and Long-Term Loans to Associated and Other Companies - Net Percentage of Direct and Indirect Holdings In Million Baht 2000 A. Subsidiaries Companies (Sold in 2000) - At Cost TileCrea Distributing, Inc. TileCera, Inc. B. Associated Companies - At Equity Siam Yamato Steel Co., Lltd. Siam Mitsui PTA Co., Ltd. Siam Styrene Monomer Co., Ltd. Thai Plastic and Chemical Public Company Limited Michelin Siam Group Co., Ltd. Siam Compressor Industry Co., Ltd. United Pulp and Paper Co., Ltd. The Siam Kubota Industry Co., Ltd. Siam Asahi Technoglass Co., Ltd. Thai MMA Co., Ltd. Siam Polyethylene Co., Ltd. Mitsubishi Electric Consumer Products (Thailand) Co., Ltd. Siam Toyota Manufacturing Co., Ltd. Nava 84 Co., Ltd. The Deves Insurance Public Co., Ltd. The Siam United Steel (1995) Co., Ltd. Mariwasa Manufacturing, Inc. Pacific Plastics (Thailand) Co., Ltd. Siam Aisin Co., Ltd. Thai Carbon Product Co., Ltd. Siam Synthetic Latex Co., Ltd. Michelin Siam (Singapore) Holding Pte., Ltd. Siam Polystyrene Co., Ltd. PT Trans - Pacific Petrochemical Indotama Musashi Auto Parts Co., Ltd. Siam Toppan Packaging Co., Ltd. Other companies

58

1999

2000

1999

-

100 100

-

926 4,198 5,124

46 50 50 26 39 49 37 42 27 46 50

46 50 50 26 49 49 37 42 27 46 50

2,161 1,820 1,681 1,547 1,384 1,342 977 970 949 837 765

2,051 1,634 1,092 1,423 1,447 934 1,021 970 796 616 1,291

20 20 25 21 29 46 48 47 22 50 27 50 20 21 49

20 20 25 21 29 46 48 47 22 50 27 50 20 21 49

726 492 303 303 3 271 225 215 159 184 136 174 203 154 1,064 19,045

481 385 301 307 1,362 471 195 213 131 153 206 133 174 160 146 1,721 19,814


Percentage of Direct and Indirect Holdings In Million Baht

C. Other Companies - At Cost Asia Cement Public Co., Ltd. Thai Olefins Co., Ltd. Toyota Motor Thailand Co., Ltd. Bangkok Synthetic Co., Ltd. Asia Industrial Park (Map Ta Phut) Co., Ltd. Finfloor S.R.L. Others companies - At Market Thai Farmers Bank Public Company Limited Siam Commercial Bank Public Company Limited National Petrochemical Public Company Limited The Aromatics (Thailand) Public Company Limited Thai Industrial Gases Public Co., Ltd. Thai Gypsum Product Public Co., Ltd.

2000

1999

2000

1999

10 17 10 18 13 10

10 17 10 18 19 10

1,255 1,133 581 352 333 299 341 4,294

1,255 1,133 581 352 333 299 383 4,336

N.A. N.A. 17 15 8 4

N.A. N.A. 17 15 8 -

39 39 1,478 181 105 74 1,916 25,255 710 24,545

327 89 2,090 604 105 3,215 32,489 5,171 27,318

1,129 162

677 140

1,291

817

25,836

28,135

Total Less: Allowance for decline in value of investments Investment in associated and other companies - net Long-term loans to associated company and other company The Aromatic (Thailand) Public Company Limited United Pulp and Paper Co., Inc. Total long-term loans to associated company and other companies Total Investment in and Long-Term Loans to Related and Other Companies

The aggregate values of the above investments in shares of other companies, based on the latest available audited/reviewed financial statements or the quoted market prices in the Stock Exchange as at December 31, 2000, is as follows: In Million Baht Net Book

Cost Non-marketable Marketable Total

4,294 2,003 6,297

Allowance for Unrealized

Value/ Decline Loss on Quoted In value of Investments Market Price Investments In securities 3,733 1,916 5,649

710 710

(87) (87)

59


7. Property, Plant and Equipment Balance as of December 31, 1999 At Cost Land and Land improvements Quarries Buildings and structures Plant machinery and equipment Transportation equipment Furniture, fixtures and office equipment Other depreciable assets Construction in progress Advances for purchases of land, machinery and equipment Total Less: Accumulated depreciation and depletion Property, Plant and Equipment - Net

Increase

In Million Baht Balance as of December 31, Decrease 2000

13,437 5 25,916 139,086 4,795

1,178 648 3,830 570

358 5 388 2,473 524

14,257 26,176 140,443 4,841

4,311 760 7,663

413 5 3,745

254 661 2,139

4,470 104 9,269

10 195,983

41 10,430

28 6,830

23 199,583

92,183

101,364

103,800

98,219

Portion of the interest and other related financial charges incurred in 2000 and 1999 amounting to Baht 163 million and Baht 579 million, respectively, were capitalized as part of the cost of constructing new plant facilities. Depreciation and amortization expenses amounted to Baht 11,352 million in 2000 and Baht 12,540 million in 1999. The Company and subsidiaries entered into agreements with various companies in connection with the expansion of its plant and the acquisition of machinery. As at December 31, the Company and subsidiaries had outstanding commitments under these agreements totalling approximately Baht 2,296 million in 2000 and Baht 1,310 million in 1999. Revaluation Surplus In 1997 accounting period, the Company and certain consolidated subsidiaries adopted a policy to present 3 class of assets which carrying values are substantially lower than the replacement costs. This includes land, buildings and machinery and equipment. The Company engaged American Appraisal Company (Thailand) Limited, as independent appraiser to appraise the value of buildings, machinery and equipment. The Company also has a policy to revaluate the valuation of assets every year without presenting the revaluation surplus in the consolidated statement of income. The revaluation surplus will be presented in the consolidated balance sheet as Assets Revaluation Surplus, and under the shareholders’ Equity caption as Revaluation surplus in property and the minority interest in consolidated subsidiaries - assets revaluation surplus. Summarize below are basis for the revaluation: As at December 31, 1999, the Company and subsidiaries appraised their property, plant and equipment as follows:

60


- Land - at appraised value of the Land Department has revaluation surplus of Baht 10,149 million. - Buildings, machinery and equipment - at appraised value reported by an independent appraiser dated January 14, 2000, have revaluation surplus of Baht 52,561 million as at December 31, 1999, consisting of Baht 5,209 million for buildings and Baht 47,352 million for machinery and equipment. As at December 31, 2000, the Company and subsidiaries appraised their property, plant and equipment as follows: - Land - at appraised value of the Land Department has revaluation surplus of Baht 10,149 million. - Buildings, machinery and equipment - at appraised value reported by an independent appraiser dated January 10, 2001, have revaluation surplus of Baht 55,575 million as at December 31, 2000 consisting of Baht 5,511 million for buildings and Baht 50,064 million for machinery and equipment.

8. Other Assets 2000 Deferred income tax - net Deposits, claims and deferred charges - net Land, building and land improvements not used in operations - net of accumulated depreciation on improvements Excess of cost over net book value of investments in net assets - net Development costs of products Others Total

In Million Baht 1999

19,886 1,803

19,508 2,187

1,472

1,519

2,085 375 675 26,296

527 421 725 24,887

9. Bank Overdrafts and Loans from Financial Institutions 2000 Bank overdrafts Loans Notes payable Acceptances payables and liabilities under trusts receipts Total

1,379 9,120 7,286 55 17,840

In Million Baht 1999 902 15,459 8,181 71 24,613

Under the terms of the agreements covering the Company’s liabilities under trust receipts, certain raw materials, finished goods, spare parts, machinery and equipment have been released to the Company in trust for the banks. The Company is accountable to the banks for the trusteed raw materials, finished goods, spare parts, machinery and equipment or their sales proceeds.

10. Provident Fund The Company and certain subsidiaries have provident fund plans to provide retirement and gratuity benefits to employees. For most of the plans, the benefits made solely by the companies are payables to the employees upon resignation at 5% to 10% of the employees’ salaries depending on the length of employment. In addition to the above provident fund, since April, 1995, the Company and subsidiaries had established contributory funded provident fund covering substantially all employees. This fund was registered with the Ministry of

61


Finance under the Provident Fund Act B.E. 2530. Membership is voluntary upon attaining permanent status. Under the regulations of the fund, members are required to make monthly contribution to the fund at 3% to 10% of the members’ basic salaries and the Company is required to make monthly contribution to the fund at 5% to 10% of the members’ basic salaries, depending on the length of employment. Total provision and contribution to the above funds amounted to approximately Baht 414 million and Baht 494 million in 2000 and 1999, respectively.

11. Long-Term Debt In Million Baht 1999

2000 Deferred payment plans Foreign loans Local loans Total Less: Portion due within one year Long-Term Debt - Net

7,638 20,165 46,112 73,915 11,418 62,497

11,646 45,572 53,714 110,932 15,181 95,751

The above liabilities arising from the expansion projects and for the Company’s working capital bear interest at the rates ranging from 2.17% to 10.75% per annum and extend up to June, 2009. The repayments of liabilities amounting to approximately Baht 1,705 million in 2000 and Baht 2,554 million in 1999 arising from purchases of certain machinery and equipment and foreign loans are guaranteed by a group of local banks and certain foreign financial institutions. The Company and subsidiaries hedges part of its foreign exchange risk by entering into Currency SWAP Agreements with foreign banks, whereby the company will repay the loans by other foreign currencies as specified in the agreements.

12. Debentures As at December 31, 2000, the Company issued unsubordinated and unsecured debentures totalling of Baht 90,000 million by issuance in 8 placements, the details are as follows: Debentures In Million Baht

62

No. 1/1999

5,200

No. 2/1999 No. 3/1999 No. 4/1999 No. 5/1999 No. 6/1999 No. 1/2000

8,800 12,000 12,000 6,000 6,000 25,000

No. 2/2000

15,000 90,000

Interest rate

Term

*floating rate+ 5 years 3.50% p.a. 10.5% p.a. 5 years 8.0% p.a. 3.5 years 9.50% p.a. 5.5 years 8.0% p.a. 4 years 8.75% p.a. 5 years 7.75% p.a. for first 6 years 4 years and *floating rate+2.00% p.a. for last 2 years 5.75% p.a. 2 years

Maturity date

Fair Value**

April 1, 2004

1,022

April 1, 2004 April 1, 2003 April 1, 2005 November 1, 2003 November 1, 2004 March 31, 2006

1,113 1,035 1,080 1,050 1,070 1,006

October 1, 2002

1,015

* Floating rate is equal average rate of 12 month fixed deposit of 4 banks. ** Latest price (Baht per unit) as at December 31, 2000.


13. Reserve Fund As at December 31, 2000 and 1999, the Company’s reserve fund is equivalent to the 10% of the authorized share capital as required by the Limited Public Company Act B.E. 2535. The reserve is not available for dividend distribution.

14. Other Income 2000 Gain on scrap sold and others Interest income from financial institutions Management fee income Gain on fixed assets sold Rental Income Import service income Income from delay payment Dividend income from other companies Others Total

310 304 250 119 116 99 96 75 611 1,980

In Million Baht 1999 285 279 195 204 128 72 130 44 527 1,864

15. Administrative Expenses 2000 Salary and wages Depreciation expense Amortization of excess of cost Outside wages Perdium and travellings Communication and transportation License fees and other fees Staff welfare Professional fee Employee training and development Repair and maintenance Bad debt Others Total

3,524 661 431 286 283 282 250 192 179 163 161 101 320 6,833

In Million Baht 1999 3,288 716 207 140 240 294 279 216 157 134 170 351 219 6,411

63


16. Interest Expense and Financial Charges In Million Baht 2000

1999

Interest - loans local Interest - loans abroad Interest - provident fund

10,753 3,194 83

7,444 5,215 91

Total

14,030

12,750

17. Income Tax Provision for income tax for the year ended December 31, are as follows: In Million Baht 2000 Corporate income tax payable for the year Deferred income tax - net Provision for Income Tax

1999

535 (1,132)

188 (787)

(597)

(599)

18. Mutual Separation Plan Expense The Company and subsidiaries had established the Mutual Separation Plan which is presented this mutual separation plan expense net of income tax of Baht 581 million in 2000 and Baht 1,083 million in 1999, are presented as seperate component of operations in the consolidated statement of income.

19. Agreements As at December 31, 2000: A. Certain subsidiaries had entered into agreements with several foreign companies for the latter to provide technical information, technical know-how and technical assistance to manufacture licensed products in the manufacture of certain products. As at December 31, 2000, the subsidiaries are committed to pay technical know-how fee for a lump sum amount and royalty fee based on certain percentage of net sales of products as indicated in the agreements. B. A subsidiary jointly with certain local companies, had entered into raw materials sales agreement with a local company for the latter to be the sole supplier of the raw materials. The sale prices of such raw materials would be committed from time to time for the agreed period. The agreement shall continue in force at least 15 years from the date of commercial operations and is renewable.

64


20. Segment Information Information relating to industry segment for the year 2000 as compared with 1999 are as follows: In Million Baht Income (loss) before the effect exchange rate Net income Total Assets 2000 Total consolidated 260,309 Business group Cement 70,700 Petrochemicals 55,343 Paper 36,416 Building Products 16,190 Ceramics 11,245 Distribution 7,345 Cementhai Holding 38,239 Cementhai Property 7,371

1999

Total Sales 2000

1999

266,348 126,218

99,987

67,887 57,202 36,325 16,842 11,075 5,851 41,036 7,518

22,098 39,820 27,350 8,596 4,726 46,498 17,436 733

22,685 24,703 21,629 7,921 3,489 44,812 15,042 794

EBITDA (1) 2000

and others

(loss)

1999

2000

1999

2000

1999

30,386 27,962

5,375

1,913

41

(4,785)

98 3,057 3,171 361 (221) 84 1,285 (76)

861 2,961 1,660 335 (750) 364 1,638 33

(274) 1,558 2,798 26 (279) 192 (332) (82)

(799) 2,133 1,183 189 (890) 207 744 (31)

7,231 7,063 8,061 1,997 988 402 2,460 477

9,297 6,749 6,351 1,789 353 1,286 2,428 471

(1) represents income before income tax, interest expense and financial charges, depreciation and amortization and mutual seperation plan expense.

65


21. Operations of Group Business

Information from Balance Sheets Current Assets Property, Plant and Equipment - Net Asset Revaluation Surplus Other Assets Total Assets Short Term Loan Current Liabilities Long Term Loan Other Liabilities Total Liabilities Total Shareholders’ Equity and Minority Interest in subsidiaries Total Liabilities and Shareholders’ Equity Information from Statement of Income Net sales Cost of sales Gross margin Operating expenses Income from operation before interest expense and income tax Interest expense Loss from exchange rate Other income Income before income tax Income tax Income (loss) from operation Minority Interest in income Equity in income (loss) of associated companies Income (loss) before extraordinary items Extraordinary items Net income (loss) Additional Information Depreciation and Amortization

66

Cement 2000 1999

Business Group (In Million Baht) Petrochemicals Paper 2000 1999 2000 1999

8,641

3,351

11,628

12,251

8,100

7,228

3,339

3,287

50,205

52,922

28,144

28,007

15,137

15,691

5,668

6,557

4,764 7,090 70,700 50,362 4,534 213 55,109

4,163 7,451 67,887 48,956 7,486 228 56,670

2,342 13,229 55,343 7,836 2,710 21,597 844 32,987

2,484 14,460 57,202 7,376 3,490 24,144 848 35,858

10,575 2,604 36,416 6,188 1,693 8,767 43 16,691

10,353 3,053 36,325 8,078 1,354 10,272 38 19,742

5,947 1,236 16,190 6,531 1,307 939 221 8,998

5,791 1,207 16,842 4,828 2,727 1,114 242 8,911

15,591

11,217

22,356

21,344

19,725

16,583

7,192

7,931

70,700

67,887

55,343

57,202

36,416

36,325

16,190

16,842

Building Products 2000 1999

22,098 22,685 39,820 24,703 27,350 21,629 8,596 (15,498) (16,531) (33,837) (19,190) (20,043) (16,201) (6,275) 6,600 6,154 5,983 5,513 7,307 5,428 2,321 (2,458) (1,405) (1,414) (995) (1,893) (1,786) (1,239)

4,142 4,749 4,569 4,518 5,414 3,642 (3,679) (3,449) (1,449) (1,261) (1,306) (1,554) (220) (1,562) (1,459) 230 162 266

7,921 (6,153) 1,768 (1,066)

1,082 (513)

702 (594)

(871) 356

(529) 115

(628) 135

(292) 68

(121) 224

473 (542)

(100) (375)

1,927 (6)

2,742 (13)

3,694 (819)

1,595 (257)

345 (295)

211 (36)

(69)

(475)

1,921

2,729

2,875

1,338

50

175

(581)

(971)

(30)

(42)

164

47

277

371

(47)

(48)

-

-

1,617 (59) 1,558

2,129 4 2,133

2,798 2,798

1,248 (65) 1,183

214 (188) 26

222 (33) 189

2,157

1,831

2,532

2,574

787

879

3 (66) (208) (274)

2,857

6 (469) (330) (799)

4,383


Information from Balance Sheets Current Assets Property, Plant and Equipment - Net Asset Revaluation Surplus Other Assets Total Assets Short Term Loan Current Liabilities Long Term Loan Other Liabilities Total Liabilities Total Shareholders’ Equity and Minority Interest in subsidiaries Total Liabilities and Shareholders’ Equity Information from Statement of Income Net sales Cost of sales Gross margin Operating expenses Income from operation before interest expense and income tax Interest expense Gain (loss) from exchange rate Other income Income before income tax Income tax Income (loss) from operation Minority Interest in income Equity in income (loss) of associated companies Income (loss) before extraordinary items Extraordinary items Net income (loss) Additional Information Depreciation and Amortization

Ceramics 2000 1999

Business Group (In Million Baht) Distribution Cementhai Holding Cementhai Property 2000 1999 2000 1999 2000 1999

2,435

1,726

5,595

4,051

6,460

7,831

5,069

5,434

4,299

4,279

1,334

1,442

15,529

16,919

1,379

1,085

2,759 1,752 11,245 3,031 975 1,631 51 5,688

2,890 2,180 11,075 3,120 1,150 1,739 44 6,053

11 405 7,345 826 4,796 41 55 5,718

358 5,851 2,429 2,395 67 22 4,913

4,319 11,931 38,239 11,980 9,665 4,939 150 26,734

3,407 12,879 41,036 10,475 9,667 6,129 143 26,414

923 7,371 1,644 205 1,849

999 7,518 1,134 784 1 1,919

5,557

5,022

1,627

938

11,505

14,622

5,522

5,599

11,245

11,075

7,345

5,851

38,239

41,036

7,371

7,518

4,726 3,489 46,498 44,812 17,436 15,042 (3,584) (3,110) (42,337) (40,655) (15,326) (13,269) 1,142 379 4,161 4,157 2,110 1,773 (967) (904) (4,280) (3,416) (1,614) (1,508)

733 (563) 170 (108)

794 (586) 208 (115)

175 (339)

(525) (325)

(119) (106)

741 (484)

496 (824)

265 (952)

62 (88)

93 (122)

4 53

(163) 66

115 392

(16) (1,253) 252 389

(789) 502

(5) 80

(81) 32

(107) (113)

(947) 159

282 (86)

493 (1,192) (168) (332)

(974) 215

49 (131)

(78) 54

(220)

(788)

196

325

(1,524)

(759)

(82)

(24)

56

114

(6)

7

(272)

207

-

(103)

(210)

(24)

16

1,842

1,483

(267) (12) (279)

(884) (6) (890)

166 26 192

348 (141) 207

46 (378) (332)

931 (187) 744

744

769

128

253

1,539

1,656

4 3

-

(79) (3) (82)

(20) (11) (31)

335

346

67


22. Disclosure of Financial Instrument Credit risk Credit risk arises from the possibility that customers may not be able to settle obligation to the Company as contracts which caused to have financial loss. The Company and subsidiaries have a policy to protect this risk by assessing the credit of customers, defining the credit limit, asking for bank guarantees and/or personnel guarantees, credit term, controlling for using credit and reviewing collections. Fair value of receivables which are presented in the balance sheet are the balances net of allowance for doubtful accounts which are provided as a policy. The Managements believe that they are adequate. Interest risk Interest rate risk arises from the changing of interest rate in the market which it effects to net interest expense. The Company and subsidiaries manage debt by using both fixed interest rate and float interest rate depending on the market circumstance. Foreign exchange risk Foreign exchange risk arises from the fluctuation of foreign exchange rates. Shown below are the composition of Baht and foreign currency loans as of December 31, 2000 and 1999. In Million Baht Short-term Currency

Long-term

Total

2000

1999

2000

1999

2000

1999

Baht Foreign

24,723 5,451

19,817 21,626

126,778 22,238

97,915 46,864

151,501 27,689

117,732 68,490

Total

30,174

41,443

149,016

144,779

179,190

186,222

The Company and subsidiaries use derivative instruments as part of its managing risk on foreign debt. This is in compliance with the policy and guideline agreed and approved by the Board of Directors and there are controls on operating procedures for compliance with the policy. The financial derivatives are forward exchange contracts and cross currency SWAP etc. As of December 31, 2000, the Company and subsidiaries have the financial derivative aged as follows: In Million Baht

US. Dollars Japanese Yen Others Total

Less than

More than

1 Year

1 Year

Total

1,882 6,814 282 8,978

10,889 5,174 655 16,718

12,771 11,988 937 25,696

Fair values of the above financial instruments are valued at approximately the contract amounts. In managing foreign exchange risk, the Company and subsidiaries obtained more Baht loans up to 85% of total borrowings as at the end of 2000. Furthermore, the Company and subsidiaries also have adequate export and other income in foreign currencies to reduce impact of exchange rates.

68


23. Commitments and Contingent Liabilities As at December 31, the Company and subsidiaries had: In Million Baht

a) Contingent liabilities for - guaranteed on loans of related companies - bank guarantee issued by banks to government agencies b) Unused letter of credit c) Commitment for purchase of raw material contracts

2000

1999

11,282 869 7,639 715

14,669 1,134 918 1,931

24. Reclassification of Accounts Certain accounts in 1999 were reclassified to conform with those in the 2000 financial statements.

69


Report of Certified Public Accountant ........................................ 71 Balance Sheets ............................................................................. 72 Statements of Income .................................................................. 74 Statements of Changes in Shareholders’ Equity ......................... 75 Statements of Retained Earnings (Deficit) .................................. 76 Statements of Cash Flows ........................................................... 77 Notes to Financial Statements ..................................................... 79


To the Shareholders of The Siam Cement Public Company Limited

I have audited the balance sheets of The Siam Cement Public Company Limited as at December 31, 2000 and 1999, and the related statements of income, changes in shareholders’ equity, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. 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 statement 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 The Siam Cement Public Company Limited as at December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. As discussed in Note 2 to the financial statements, the Company have given retroactive effect to the change in the accounting for investments in shares of subsidiaries and associates in accordance with the Accounting Standard Nos. 44 and 45.

Methee Ratanasrimetha C.P.A. (Thailand) Registration No. 3425

Certified Public Accountants A Member Firm of Arthur Andersen 22nd Floor, Siam Tower 989 Rama I Road, Pathumwan Bangkok 10330 February 14, 2001

71


December 31, 2000 and 1999 In Thousand Baht Assets Current Assets Cash in hand and at banks Short-term investments Accounts and notes receivable - trade - net - Affiliated companies - Other companies Receivables from and loans to affiliated companies Advance for share subscription - subsidiaries Other current assets Total Current Assets Long-Term Portion of Accounts Receivable - Net Investments in and Long-Term Loans to Subsidiaries, Associated and Other Companies - Net Property, Plant and Equipment- at cost - Net Assets Revaluation Surplus Other Assets

Total Assets

Notes

2000

1,079,947 -

5,789,160 131,400

1, 4 3

174

717,837 606,621

1, 4

73,473,806 268,581 75,700 74,898,208

78,844,071 414,680 642,183 87,145,952

1,054,598

625,289

102,480,518 3,082,105 8,412,552 6,216,739

87,724,405 3,455,547 8,287,217 3,355,300

196,144,720

190,593,710

5 6 6 7

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

72

1999 (Restated)


In Thousand Baht Liabilities and Shareholders’Equity Current Liabilities Bank overdrafts and loans from financial institutions Accounts payable - trade - Affiliated companies - Other companies Current portion of long-term debt Payables to and loans from affiliated companies - net Accrued expenses Other current liabilities Total Current Liabilities Provident Fund Long-Term Debt - Net of current portion Debentures Other Liabilities Total Liabilities Shareholders’ Equity Share capital - common stock, Baht 10 par value Authorized shares - 160,000,000 shares, issued and fully paid share capital - 120,000,000 shares Revaluation surplus in property Unrealized gain (loss) on investment on securities Equity of subsidiaries and associated companies - From revaluation surplus in property - From accumulated foreign currency translation adjustments Retained earnings Appropriated Reserve fund General reserve Unappropriated - From operation of the Company - From operations of subsidiaries and associated companies Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity

Notes

2000

1999 (Restated)

8

4,282,365

11,426,699

1, 4

8,107 75,885 2,236,761

1,109,810 390,642 6,598,235

5,407,088 2,334,863 189,620 14,534,689 14,632 37,428,056 90,000,000 334,846 142,312,223

6,108,828 1,885,360 256,517 27,776,091 35,561 62,724,929 50,000,000 216,081 140,752,662

10 1, 4

9 10 12 9

6 5

13

1,200,000 8,412,552 ( 87,209)

1,200,000 8,287,217 1,159,391

55,179,612

49,994,773

31,720 55,211,332

145,047 50,139,820

120,000 10,062,000

120,000 10,062,000

2,027,330

2,826,196

(23,113,508) (21,086,178) 53,832,497 196,144,720

(23,953,576) (21,127,380) 49,841,048 190,593,710

For and on behalf of the Board of Directors Chaovana NaSylvanta Chairman

Chumpol NaLamlieng President

73


For the years ended December 31, 2000 and 1999

In Thousand Baht

Notes Revenues Net sales Other income Total Revenues Costs and Expenses Cost of sales Selling expenses Administrative expenses Director fee Interest expense and financial charges Loss on exchange rate Total Costs and Expenses Loss Before Income Tax Income tax Loss From Operations Equity in income (loss) of subsidiaries and associated companies - net Income (Loss) Before Investments and Assets sold for Restructuring, Provision for Decline in Value of Investments and Mutual Separation Plan Expense Gain (Loss) on investments and assets sold for restructuring and provision for decline in value of investments - net of income tax Mutual separation plan expense - net of income tax Net Income (Loss) Earnings (Loss) per Share (In Baht)

74

2000

1999 (Restated)

1,612,004 1,612,004

35,283,923 604,555 35,888,478

168,491 15,073 6,898,266 284,518 7,366,348 (5,754,344) (2,149,551) (3,604,793)

28,816,650 339,511 2,094,983 15,517 6,938,616 2,604,571 40,809,848 (4,921,370) (815,720) (4,105,650)

4,000,514

(18,123,912)

395,721

(22,229,562)

5, 6

(222,786)

18,036,331

18

(131,733) 41,202 0.34

( 591,912) (4,785,143) (39.88)

14

15 16

17

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


For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Common share Beginning balance Addition Deduction Ending balance Revaluation surplus in property Beginning balance Addition Deduction Ending balance Unrealized gain (loss) on investment on securities Beginning balance Addition Deduction Ending balance Equity in subsidiaries and associated companies - From accumulated foreign currency translation adjustments - From revaluation surplus in property Total Equity in subsidiaries and associated Appropriated retained earnings Reserve fund Beginning balance Addition Deduction Ending balance

1999 (Restated)

1,200,000 1,200,000

1,200,000 1,200,000

8,287,217 125,335 8,412,552

33,008,695 24,721,478 8,287,217

1,159,391 1,246,600 (87,209)

1,159,391 1,159,391

31,720 55,179,612 55,211,332

145,047 49,994,773 50,139,820

120,000 120,000

120,000 120,000

75


(Continued) For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 General reserve Beginning balance Addition Deduction Ending balance Unappropriated (Deficit) - From operation of the company Beginning balance Adjustment As adjusted Addition Deduction Ending balance - From operations of subsidiaries and associated companies Total Deficit Total Shareholders’ equity

1999 (Restated)

10,062,000 10,062,000

10,062,000 10,062,000

160,455 2,665,741 2,826,196 798,866 2,027,330 (23,113,508) (21,086,178) 53,832,497

(15,347,213) 5,392,844 (9,954,369) 12,780,565 2,826,196 (23,953,576) (21,127,380) 49,841,048

For the years ended December 31, 2000 and 1999 In Thousand Baht 2000 Unappropriated retained earnings (Deficit) at beginning of year Adjustment on prior years interest in subsidiaries and associated companies As Adjusted Net income (loss) for the year Deficit Appropriated retained earnings Reserve fund General reserve Total appropriated retained earnings Total Deficit

76

160,455

1999 (Restated) (15,347,213)

( 21,287,835) ( 21,127,380) 41,202 ( 21,086,178)

(995,024) (16,342,237) (4,785,143) (21,127,380)

120,000 10,062,000 10,182,000 ( 10,904,178)

120,000 10,062,000 10,182,000 (10,945,380)

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


For the years ended December 31, 2000 and 1999

In Thousand Baht 2000 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Unrealized loss on foreign currency exchange Depreciation and amortization Provision for decline in value of investments - net Diminution in investments Gain on sales of fixed assets Gain on sales of investments - net Equity in loss (income) of subsidiaries and associated companies Provision for provident fund - net Deferred income tax - net Income recognized from service fee receivable in advance Changes in operating assets and liabilities: Accounts and notes receivable - trade - net Receivables from affiliated companies Inventories - net Other current assets Other assets Accounts payable - trade Payables to affiliated companies Other current liabilities Net Cash Used in Operating Activities

1999 (Restated)

41,202

( 4,785,143)

378,986 439,824 (136,792) 480,379 (5,777) (120,802)

463,648 3,426,349 1,361,074 (26,821,516) (622,343)

(4,000,514) ( 34,266) (2,691,879) 132,104

18,123,912 (275,220) 6,157,889 (68,655)

1,324,284 3,603,549 566,483 (74,081) (1,416,460) 17,364 56,810 (1,439,586)

3,231,405 (6,813,839) 2,356,576 68,683 (6,702) (58,211) (1,886) 56,654 (4,207,325)

77


(Continued) For the years ended December 31, 2000 and 1999

In Thousand Baht 2000 Cash flows from investing activities: Investments in subsidiaries, associated and other companies Dividend income from subsidiaries and associates Advance for shares subscription in subsidiaries companies Property, plant and equipment Proceeds from sales of investments Proceeds from sales of fixed assets Loans to affiliated companies Net Cash Provided by (Used in) Investing Activities Cash flows from financing activities: Bank overdrafts and loans from financial institutions Long-term debt Loan from affiliated companies Debentures Net Cash Provided by Financing Activities Net increase (decrease) in cash and cash equivalent Cash and cash equivalent at beginning of year Cash and Cash Equivalent at End of Year Supplemental Disclosures of Cash Flows Information Cash and cash equivalent This consists of Cash in hand and at banks Short-term investments Total Cash paid during the year Interest expense Income tax

(8,921,044) 3,915,059

(15,676,928) 2,887,014

146,099 (70,129) 2,395,244 9,524 (2,577,869) (5,103,116)

(171,289) (583,457) 11,979,911 45,757,663 (41,679,792) 2,513,122

(7,144,334) (30,373,943) (779,634) 40,000,000 1,702,089 ( 4,840,613) 5,920,560 1,079,947

(18,098,535) (21,184,305) ( 8,274,907) 50,000,000 2,442,253 748,050 5,172,510 5,920,560

1,079,947 1,079,947

5,789,160 131,400 5,920,560

9,777,610 -

8,459,729 -

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

78

1999 (Restated)


December 31, 2000 and 1999 1. Basis for Financial Statements 1.1 Nature of Operations The Siam Cement Public Company Limited is a parent company of The Siam Cement Group, listed on the Stock Exchange of Thailand (stock code “SCC�). The Company is incorporated in 1913, and is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand. 1.2 Basis for financial statement presentation All significant intercompany transactions with subsidiaries and associated companies included in the consolidated financial statements have been eliminated. In Million Baht

Purchases Sales Service income and others Interest income - net of interest expense

2000

1999

1,612 3,927

17,506 6,869 604 2,081

The Company maintains its official accounting records in Thai Baht and prepares its statutory financial statements in the Thai language in conformity with financial accounting standards in Thailand and may differ from generally accepted accounting principles in other countries. Accordingly, the users of these financial statements should have sufficient knowledge about Thai accounting principles and practices. For the convenience of the reader, an English translation of financial statements has been prepared from the statutory Thai language financial statements which are issued for domestic reporting purposes. The accompanying financial statements for the years 2000 and 1999, include the effects of the economic crisis to the extent they are known and can be estimated. The operations of the Company have been affected and may continue to be affected for the foreseeable future by the country’s crisis. The accompanying financial statements do not include any adjustment that might result from these uncertainties. Related effects will be reported in the financial statements as they become known and estimable. 2. Significant Accounting Policies Revenue Recognition The Company recognises revenue from the sale of goods when the Company has transferred to the buyer the significant risks and reward of ownership of the goods. Divedends are recognised when declare. Service fee income is recognised on an accrual basis in accordance with the terms of agreement. Interest income is recognised on a time proportion basis that reflects the effective yield on the asset.

79


Allowance for Doubtful Accounts The Company provides an allowance for doubtful accounts equal to the estimated collection losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience coupled with a review of the current status of existing receivables. Investments in Shares The Company accounts for its investments in shares in subsidiaries and associated companies by the equity method. Investments in other companies are valued at cost and provision in taken up in the accounts for possible loss on decline in value of the investments. These investments in marketable securities are valued at market. In accordance with the Accounting Standard Nos. 44 and 45 issued by The Institute of Certified Accountants and Auditors of Thailand, the Company has given retroactive effect to the change in accounting for investments in shares of subsidiaries and associates, from the cost method to the equity method. The change has affected as follows: Increase (Decrease) : In Million Baht

Unappropriated retained earnings, as of January 1, Net income for the year ended December 31,

2000

1999

(21,288) 4,001

( 995) (18,124)

Property, Plant and Equipment and Depreciation and Amortization Depreciation of property, plant and equipment has been computed by the straight-line method at the maximum rates allowed by law or the rates which approximate the economic useful life of the assets as follows:

Period (Years) Land improvements Building and structures Plant, machinery and equipment Furniture, fixtures and office equipment Transportation equipment

10 - 20 20 5 - 10 5 5

Other assets recorded as deferred charges are amortized over five (5) twenty (20) years. Income Tax The Company provided for deferred income tax resulting from temporary differences in reporting expenses for financial reporting purposes compared to income tax reporting purposes e.g. allowance for doubtful accounts, loss carryforwards up to 5 years. The deferred income tax is amortized as the temporary differences later reverse. Deferred income tax is recognized to the extent that it is probable that the future taxable profit will be available against, which the temporary difference can be utilized.

80


Foreign Currency Transactions All foreign currency transactions are recorded at the rates prevailing on the dates of the transactions. Assets and Liabilities denominated in foreign currencies at the balance sheet date are translated to Baht at the prevailing rates at that date. Liabilities covered by forward exchange contracts are recorded at the forward contract rates. Gains or losses on translation are credited or charged to operations. Earnings (Loss) per Share Earnings (loss) per share is determined by dividing the net income (loss) by the weighted average number of shares outstanding during the year (120,000,000 shares for 2000 and 1999). 3. Accounts and Notes Receivable - Trade In Million Baht

Accounts receivable-trade Less Allowance for doubtful accounts Net Notes receivable Total

2000

1999

142 142 -

156 156 607 607

As at December 31, 2000 and 1999, the Company has long outstanding account receivable aged as follows: In Million Baht

Over 1 year Total

2000

1999

142 142

156 156

The Company provided the allowance for doubtful accounts amounted to approximately Baht 142 million in 2000 and Baht 156 million in 1999 which is adequate to absorb possible losses and comply with the accounting policy for allowance for doubtful accounts. 4. Related Company Transactions In Million Baht 2000 Accounts receivable - trade Receivable and loans Current accounts Cementhai Holdings Co., Ltd. The Siam Cement Industry Co., Ltd. Cementhai Sales and Marketing Co., Ltd. SCT Co., Ltd. The Siam Cement (Taluang) Co., Ltd. The Siam Cement (Thungsong) Co., Ltd. The Siam Cement (Kaeng Khoi) Co., Ltd. Cementhai Building Products Co., Ltd. Others

-

6,396 1,347 525 213 151 146 144 112 436 9,470

1999 717

4,939 1,257 633 6,270 13,099

81


In Million Baht Notes receivable The Siam Cement Industry Co., Ltd. Bangsue Management Co., Ltd. The Siam Fibre - Cement Co., Ltd. Cementhai Ceramics Co., Ltd. Siam Nawaloha Foundry Co., Ltd. The Siam Gypsum Industry Co., Ltd. SCG Car Services Co., Ltd. Cementhai Building Products Co., Ltd. Rayong Industrial Land Co., Ltd. The Siam Refractory Industry Co., Ltd. The Nawaloha Foundry Bangpakong Co., Ltd. The CPAC Roof Tile Co., Ltd, Siam Tyre Public Company Limited Cementhai Distribution Co., Ltd. Siam Nawaphan Co., Ltd. RIL 1996 Co., Ltd. Siam Fibreglass Co., Ltd. Thai Ceramic Holding Co., Ltd. The Siam Cement (Thung Song) Co., Ltd. The Siam Cement (Kaeng Khoi) Co., Ltd. The Siam Cement (Ta Luang) Co., Ltd. The Concrete Products and Aggregate Co., Ltd. The Siam Cement (Lampang) Co., Ltd. Cementhai Steel Co., Ltd. Cementhai Sales and Marketing Co., Ltd. Other companies Short - term loans to subsidiaries Siam Fiberglass Co., Ltd. Other companies Total Accounts payable Payables and loans Current accounts Notes payable Cementhai Holdings Co., Ltd. The Siam Kubota Industry Co., Ltd. Cementhai Gypsum (singapore) Pte., Ltd. Others Short - term loans - subsidiaries Tuban Petrochemicals Pte., Ltd. Cementhai Gypsum (Singapore) Pte., Ltd. Other companies Total

82

2000

1999

50,309 3,573 2,143 1,415 1,283 1,005 913 829 547 464 290 277 250 231 155 102 88 60 63,934

769 996 1,160 1,742 1,613 1,110 690 264 654 231 165 88 45 14,318 11,843 9,900 6,450 5,116 3,940 2,291 1,625 65,010

70 70 73,474 8

70 665 735 78,844 1,110

237

220

2,773 680 167 631 4,251

600 4,115 4,715

651 268 919 5,407

566 608 1,174 6,109

-


5. Investments in Shares and Long-Term Loans to Subsidiaries, Associated and Other Companies-Net Investments in Shares

Percentage of Direct and Indirect Holdings In Million Baht 2000 1999 2000 1999 A. Subsidiaries Companies (sold in 2000) - At Cost TileCera Distributing, Inc. TileCera, Inc. B. Subsidiaries and Associated Companies - At Equity Siam Cement Industry Co., Ltd. and Subsidiaries Cementhai Chemicals Co., Ltd. and Subsidiaries The Siam Pulp and Paper Public Company Limited and Subsidiaries Cementhai Building Products Co., Ltd. and Subsidiaries Cementhai Ceramics Co., Ltd. and Subsidiaries Cementhai Distribution Co., Ltd. and Subsidiaries Cementhai Holdings Co., Ltd. and Subsidiaries Cementhai Property Co., Ltd. and Subsidiaries Total Subsidiaries and Associated - At Equity C. Other Companies - At Cost Cementhai Chemicals Group Thai Olefins Co., Ltd. Cementhai Holdings Group Toyota Motor Thailand Co., Ltd. Other Companies Cementhai Ceramics Group Finfloor S.R.L. Cementhai Property Group Asia Industrial Park (Map Ta Phut) Co., Ltd. Total Other Companies - At Cost - At Market Thai Farmers Bank Public Company Limited Siam Commercial Bank Public Company Limited Cementhai Chemicals Group National Petrochemical Public Company Limited The Aromatics (Thailand) Public Company Limited Cementhai Holdings Group Thai Industrial Gases Public Company Limited Total Other Companies - At Market Total Other Companies Total Investments in Shares Less Allowance for decline in value of investments

-

100 100

-

926 4,198 5,124

100 100

100 100

23,478 23,336

17,102 22,434

87

63

19,114

10,923

100 100 100 100 100

100 100 100 100 100

9,836 4,649 2,228 4,941 5,316 92,898

10,633 4,253 1,562 7,824 5,259 79,990

17

17

1,133

1,133

10

10

581 6

581 100

10

10

299

299

13

19

333 2,352

333 2,446

N.A. N.A.

N.A. N.A.

39 39

327 89

17 15

17 15

1,478 181

2,090 604

8

8

105 1,842 4,194 97,092 541

105 3,215 5,661 90,775 5,027

83


Percentage of Direct and Indirect Holdings In Million Baht 2000 1999 2000 1999 Investments in Subsidiaries, Associated and Other Companies - net Long-Term Loans to Subsidiaries and Other Companies Siam Pulp and Paper Public Company Limited Cementhai Ceramics Co., Ltd. Cementhai Chemicals Co., Ltd. The Aromatics (Thailand) Public Company Limited Total Long-Term Loans to Subsidiaries and Other Companies Total Investments in Shares and Long-Term Loans to Subsidiaries, Associated and Other Companies

96,551

85,748

4,300 300 200 1,129

1,300 677

5,929

1,977

102,480

87,725

Allowance of Baht 5,302 million for the year ended December 31, 1999 have been provided for the possible losses on the decline in book value of investments in subsidiaries and other companies mainly in TileCera, Inc. and TileCera Distributing, Inc. for the possible losses on the decline in book value of investments in associated and other companies which mainly are Joint - Venture in Petrochemical projects in Indonesia and listed companies. Management believes that such allowance is adequate to absorb possible losses on the decline. The Company presented loss from these joint-venture companies as a separate component of operations under the caption of “Gain (Loss) on investments and assets sold for restructuring and provision for decline in value of investments - net of income tax� in the statement of income. The aggregate values of the above investments in shares of other companies, based on the latest available audited/ reviewed statements or the quoted market prices in the Stock Exchange as at December 31, 2000 is as follows: In Million Baht

Non Marketable Marketable Total

84

Cost

Net Book value/ Quoted Market Price

Allowance for decline in value of investments

Unrealized loss on investments in securities

2,352 1,929 4,281

2,039 1,842 3,881

541 541

(87) (87)


6. Property, Plant and Equipment In Million Baht Balance as of December 31, 1999 At Cost Land and land improvement Building and structures Plant and machinery and equipment Transportation equipment Furniture, fixtures and office equipment Other depreciable assets Construction in progress Advances for purchase of Land, machinery and equipment Total Less Accumulated Depreciation and depletion Property, plant and equipment - Net

Increase

Decrease

Balance as of December 31,2000

1,601 2,162 1,863 75 1,061 20 89

10 3 1 79 1

3 24 14 23 20 -

1,608 2,141 1,864 61 1,117 90

2 6,873

94

2 86

6,881

3,417

3,799

3,456

3,082

Depreciation and amortization expenses amounted to Baht 440 million in 2000 and Baht 3,426 million in 1999. The Company, entered into agreements with various companies in connection with the expansion projects. As at December 31, the Company had outstanding contracted commitments totalling approximately Baht 855 million in 2000 and Baht 1,207 million in 1999. Following to the corporate restructuring of the Siam Cement Group, the Company, on December 31, 1999, sold out its cement business includes trade receivables, stock, fixed assets, trade payable and others to several subsidiaries within cement business and distribution business at book value except land, building and machinery which were transferred at appraised value. The Company presented gain on these net assets sold amounted approximately Baht 18,775 million net of income tax as part of gain (loss) on investment and assets sold for restructuring and provision for decline in value of investments net of income tax. Revaluation Surplus In 1997 accounting period, the Company adopted a policy to present 3 class of assets which carrying values are substantially lower than the replacement costs. This includes land, buildings and machinery and equipment. The Company engaged American Appraisal Company (Thailand) Limited, as independent appraiser, to appraise the value of buildings and machinery. The Company also has a policy to revaluate the valuation of assets every year without presenting the revaluation surplus in the statement of income. The revaluation surplus will be presented in the balance sheet as Assets Revaluation Surplus, and under the Shareholders’ Equity capital as Revaluation surplus in property. Summarize below are basis for the revaluation:

85


As at December 31, 1999, the Company appraised its property, plant and equipment as follows: - Land - at appraised value of the Land Department has revaluation surplus of Baht 6,591 million. - Buildings, machinery and equipment - at appraised value reported by an independent appraiser dated January 14, 2000 have revaluation surplus of Baht 1,696 million as at December 31, 1999 consisting of Baht 689 million for buildings and Baht 1,007 million for machinery and equipment. As at December 31, 2000, the Company appraised its property, plant and equipment as follows: - Land - at appraised value of the Land Department has revaluation surplus of Baht 6,591 million. - Buildings, machinery and equipment - at appraised value reported by an independent appraiser dated January 10, 2001, have revaluation surplus of Baht 1,822 million as at December 31, 2000 consisting of Baht 692 million for building and Baht 1,130 million for machinery and equipment.

7. Other Assets In Million Baht

Deferred income tax - net Deposits, claims and deferred charges - net Land, building and land improvements not used in operations - net of accumulated depreciation Others Total

2000

1999

5,788 121

3,000 315

40 268 6,217

40 3,355

8. Bank Overdrafts and Loans from Financial Institutions In Million Baht

Bank overdrafts Loans Notes payable Total

2000

1999

16 4,267 4,283

4,919 6,508 11,427

9. Provident Fund The Company has provident fund plans to provide retirement and gratuity benefits to employees. For most of the plans, the benefits made solely by the companies are payables to the employees upon resignation at 5% to 10% of the employees’ salaries depending on the length of employment. In addition to the above provident fund, since April, 1995, the Company had established contributory funded provident fund covering substantially all employees. This fund was registered with the Ministry of Finance under the Provident Fund Act B.E. 2530. Membership is voluntary upon attaining permanent status. Under the regulations of the fund, members are required to make monthly contribution to the fund at 3% to 10% of the members’ basic salaries and the Company is required to make monthly contribution to the fund at 5% to 10% of the members’ basic salaries, depending on the length of employment.

86


Total provision and contribution to the above funds amounted to approximately Baht 40 million and Baht 174 million in 2000 and 1999, respectively.

10. Long - Term Debt In Million Baht 2000 Deferred payment plans Foreign loans Local loans Total Less: Portion due within one year Long-Term Debt - Net

6,780 99 32,786 39,665 2,237 37,428

1999 8,801 26,916 33,606 69,323 6,598 62,725

The above liabilities arising from the expansion projects and for the Company’s working capital bear interest at the rates ranging from 2.17% to 8.5% per annum and extend up to June, 2009. The repayments of liabilities amounting to approximately Baht 1,705 million in 2000 and Baht 2,554 million in 1999 arising from purchases of certain machinery and equipment are foreign loans are guaranteed by a group of local banks and certain foreign financial institutions. Foreign and local long-term loans are guaranteed by 4 subsidiaries. The Company hedges part of its foreign exchange risk by entering into Currency SWAP Agreements with foreign banks, whereby the Company will repay the loans by other foreign currencies as specified in the agreements.

11. Composition of Loans As at December 31, 2000, the composition of loans of the Company are as follows: In Million Baht Currency Baht Foreign Total

Short-Term

Long-Term

Total

10,468 1,205 11,673

123,737 3,691 127,428

134,205 4,896 139,101

87


12. Debentures As at December 31, 2000, the Company issued unsubordinated and unsecured debentures totalling of Baht 90,000 million by issuance in 8 placements, the details are as follows:

Debentures In Million Baht Interes rate

Term

No. 1/1999

5,200

5 years

No. 2/1999 No. 3/1999 No. 4/1999 No. 5/1999 No. 6/1999 No. 1/2000

8,800 12,000 12,000 6,000 6,000 25,000

No. 2/2000

15,000 90,000

*floating

rate+ 3.50% p.a. 10.5% p.a. 8.0% p.a. 9.50% p.a. 8.0% p.a. 8.75% p.a. 7.75% p.a. for first 4 years and *floating rate+2.00% p.a. for last 2 years 5.75% p.a.

5 years 3.5 years 5.5 years 4 years 5 years 6 years

2 years

Maturity date Fair Value** April 1, 2004

1,022

April 1, 2004 April 1, 2003 April 1, 2005 November 1, 2003 November 1, 2004 March 31, 2006

1,113 1,035 1,080 1,050 1,070 1,006

October 1, 2002

1,015

Floating rate is equal average rate of 12 month fixed deposit of 4 banks. ** Latest price (Baht per unit) as at December 31, 2000. *

The above debentures are guaranteed by 4 subsidiaries.

13. Reserve Fund As at December 31, 2000 and 1999, the Company’s reserve fund is equivalent to the 10% of the authorized share capital as required by the Limited Public Company Act B.E. 2535. The reserve is not available for dividend distribution.

14. Other Income In Million Baht

Dividend from other companies Interest income from bank/finance institution Gain on scrap sold and others Refunded duty Gain on fixed assets sold Penalty income Management & intellectual property fee Others Total

88

2000

1999

73 83 4 6 1 1,238 207 1,612

24 163 30 57 54 276 604


15. Administrative Expenses In Million Baht

Salary and wages Depreciation Bad debt Communication and transportation License fees and other Rent Perdium and travellings Staff benefit Professional fees Repair and maintenance Outside wages Reimbursed amount Others Total

2000

1999

440 226 ( 9) 69 23 105 18 16 42 66 27 (1,075) 220 168

1,084 485 126 160 162 112 80 101 71 101 55 (1,005) 563 2,095

The numbers of the Company’s employees at the end of years is 523 persons in 2000 and 4,557 persons in 1999.

16. Interest Expense and Financial Charges In Million Baht

Interest - loans abroad Interest - loans local Interest - provident fund Total

2000

1999

1,505 5,377 16 6,898

2,722 4,177 40 6,939

17. Income Tax Provision for income tax of 2000 and 1999 are as follows: In Million Baht

Corporate income tax payable for the year Deferred income tax - net Provision for income tax

2000

1999

(2,150) (2,150)

6,353 (7,168) (815)

89


18. Mutual Separation Plan Expense The Company has established the Mutual Separation Plan which is presented this mutual separation plan expense net of income tax of Baht 132 Million in 2000 and Baht 592 Million in 1999 million as separate component of operations in the statement of income.

19. Commitments and Contingent Liabilities As at December 31, 2000 the Company had: In Million Baht

a) Contingent liabilities for - guaranteed on loans of related companies - bank guarantee issued by banks to government agencies b) Unused letter of credit

2000

1999

32,645 273 -

28,541 496 18

20. Reclassification of Accounts Certain accounts in 1999 were reclassified to conform with those in the 2000 financial statements.

90


1. Investment in subsidiaries, associated, and other companies of which their operations are significant. Location Name

(Head Office)

Principal Telephone

Business

Registered

Direct/Indirect

Indirect

Shares

Holding

Holding

(Million Baht)

(%)

(%)

Cement Business Subsidiaries 1. Siam Cement Industry Co., Ltd.

Bangkok

586-3333

Holding company

12,236

100

100

2. The Siam Cement (Lampang) Co., Ltd.

Lampang

(054) 228266

Cement

2,427

100

100

3. The Siam Cement (Ta Luang) Co., Ltd.

Bangkok

586-3333

Cement

2,300

100

100

4. The Siam Cement (Kaeng Khoi) Co., Ltd.

Bangkok

586-3333

Cement

2,500

100

100

5. The Siam Cement (Thung Song) Co., Ltd.

Bangkok

586-3333

Cement

3,500

100

100

6. The Siam White Cement Co., Ltd.

Bangkok

586-3333

Cement

200

100

100

7. Siam Mortar Co., Ltd.

Bangkok

555-5000

Dry mortar

163

100

100

8. The Concrete Products and

Bangkok

555-5000

Ready-mixed

460

100

100

7,800

10

10

Aggregate Co., Ltd.

Concrete

Associated and Other Companies 9. Asia Cement Plc.

Bangkok

375-4540

Cement

Petrochemicals Business Subsidiaries 10. Cementhai Chemicals Co., Ltd.

Bangkok

586-4865

Holding company

7,108

100

100

11. Rayong Olefins Co., Ltd.

Bangkok

586-3882

Raw materials for

7,700

51

51

12. Thai Polyethylene Co., Ltd.

Bangkok

586-4750

Plastic resins

1,100

100

100

13. Thai Polyethylene (1993) Co., Ltd.

Bangkok

586-4750

Plastic resins

450

100

100

14. Thai Polypropylene Co., Ltd.

Bangkok

586-4750

Plastic resins

700

100

100

15. Thai Polypropylene (1994) Co., Ltd.

Bangkok

586-4750

Plastic resins

16. Map Ta Phut Tank Terminal Co., Ltd.

Bangkok

586-3333

Warehouse and

plastic resins

600

100

100

1,500

78

78

transportation service Associated and Other Companies 17. Siam Mitsui PTA Co., Ltd.

Bangkok

586-5281

Product PTA

2,800

50

50

18. Siam Polystyrene Co., Ltd.

Bangkok

381-1038

Plastic resins

1,015

50

50

19. Pacific Plastics (Thailand) Ltd.

Bangkok

381-1038

Plastic resins

539

48

48

20. Siam Synthetic Latex Co., Ltd.

Bangkok

381-1038

Synthetic latex

325

49

50

21. Siam Styrene Monomer Co., Ltd.

Bangkok

381-1038

Raw materials for

3,500

49

50

3,300

49

50

60

46

46

200

45

45

1,300

45

46

polystyrene 22. Siam Polyethylene Co., Ltd.

Bangkok

381-1038

Plastic resins

23. Grand Siam Composites Co., Ltd.

Bangkok

586-2515

Raw materials for plastic resins

24. Thai MFC Co., Ltd.

Bangkok

586-3333

Melamine

25. Thai MMA Co., Ltd.

Bangkok

586-3882

Raw materials for coating resins

91


Location Name

(Head Office)

Principal Telephone

Business

26. Thai Plastic and Chemicals Plc.

Bangkok

676-6000

Plastic resins

27. Bangkok Synthetic Co., Ltd.

Bangkok

679-5120

Raw materials for

Registered

Direct/Indirect

Indirect

Shares

Holding

Holding

(Million Baht)

(%)

(%)

875

26

26

1,173

18

18

3,100

16

17

8,483

13

17

4,000

15

15

1,563

87

87

plastic resins 28. National Petrochemical Plc.

Bangkok

260-1311

Raw materials for plastic resins

29. Thai Olefins Co., Ltd.

Bangkok

537-5400

Raw materials for plastic resins

30. The Aromatics (Thailand) Plc.

Bangkok

537-5700

Raw materials for plastic resins

Paper and Packaging Business Subsidiairies 31. The Siam Pulp and Paper Plc.

Bangkok

586-3333

Bleached pulp and holding company

32. Siam Cellulose Co., Ltd.

Bangkok

586-3333

Bleached pulp

33. Thai Paper Co., Ltd.

Bangkok

586-3333

Printing and

Samut Prakan

394-0622

750

100

87

2,280

100

87

430

100

87

400

100

87

writing paper 34. Thai Union Paper Plc.

Printing and writing paper

35. Thai Union Paper Industry Co., Ltd.

Bangkok

586-3333

Printing and writing paper

36. Siam Kraft Industry Co., Ltd.

Bangkok

586-3333

Kraft paper

250

100

87

37. Thai Kraft Paper Industry Co., Ltd.

Bangkok

586-3333

Kraft paper

4,200

100

87

38. Thai Containers Ltd.

Pathum Thani

529-3370-3

Corrugated boxes

110

70

61

39. Thai Containers Industry Co., Ltd.

Samut Prakan

324-0761

Corrugated boxes

160

70

61

40. Thai Containers Ratchaburi (1989) Co., Ltd.

Bangkok

586-3333

Corrugated boxes

100

70

61

41. Thai Containers Songkhla (1994) Co., Ltd.

Bangkok

586-3333

Corrugated boxes

280

70

61

42. Thai Containers Chonburi (1995) Co., Ltd.

Chon Buri

(038) 338500-1 Corrugated boxes

380

70

61

500

49

43

1

100

100

Associated and Other Companies 43. Siam Toppan Packaging Co., Ltd.

Samut Prakan

324-0592

Offset-printed cartons

Building Products Business Subsidiaries 44. Cementhai Building Products Co., Ltd. 45. The Siam Fibre-Cement Co., Ltd.

Bangkok

586-3333

Holding company

Bangkok

586-3333

Roofing sheets

200

100

100

Samut Prakan

526-8761

Roofing sheets

50

100

100

47. The CPAC Roof Tile Co., Ltd.

Bangkok

586-3333

Concrete roof tiles

211

75

75

48. The CPAC Roof Tile Industry Co., Ltd.

Bangkok

586-3333

Concrete roof tiles

60

75

75

49. Thai Ceramic Roof Tile Co., Ltd.

Bangkok

586-5081

Ceramic roof tiles

200

75

75

50. The Siam CPAC Block Co., Ltd.

Nonthaburi

526-1981

Concrete paving

60

100

100

40

100

100

46. Tip Fibre-Cement Co., Ltd.

blocks 51. The CPAC Block Industry Co., Ltd.

Nonthaburi

526-1981

Concrete paving blocks

92


Location Name

(Head Office)

Telephone

52. Saraburirat Co., Ltd.

Nonthaburi

526-1981

53. The CPAC Concrete Products Co., Ltd.

Nonthaburi

526-1981

Principal

Registered

Direct/Indirect

Indirect

Business

Shares

Holding

Holding

(Million Baht)

(%)

(%)

Concrete floor tiles

148

83

83

Ready-to-use

80

100

100

160

100

100

concrete products 54. The CPAC Concrete Industry Co., Ltd.

Nonthaburi

526-1981

Ready-to-use concrete products

55. Cementhai Gypsum Co., Ltd.

Bangkok

586-3987

Holding company

690

100

100

56. The Siam Gypsum Industry Co., Ltd.

Bangkok

586-3987

Gypsum boards

150

100

100

57. The Siam Gypsum Industry

Bangkok

586-3987

Gypsum boards

470

100

100

Bangkok

586-3987

Gypsum boards

120

100

100

(Saraburi) Co., Ltd. 58. The Siam Gypsum Industry (Songkhla) Co., Ltd. 59. The Siam Moulding Plaster Co., Ltd.

125

70

70

Samut Prakan

394-2146

Steel doors

168

100

100

Saraburi

(036) 373441-4

Glass wools

350

83

83

62. Cementhai Ceramics Co., Ltd.

Bangkok

586-3333

Holding company

475

100

100

63. Thai Ceramic Co., Ltd.

Bangkok

586-4094-9

Ceramic tiles

450

100

100

64. Sosuco Ceramic Co., Ltd.

Bangkok

913-2156-62

Ceramic tiles

260

51

51

65. The Sosuco Group Industries Co., Ltd.

Bangkok

913-2156-62

Ceramic tiles

960

90

90

66. PT. Surya Siam Keramik

Indonesia

(6221) 5380811

Ceramic tiles

87

66

66

China

(8610) 82912233

Ceramic tiles

767

69

69

68. Siam Sanitary Ware Co., Ltd.

Bangkok

973-5040-54

Sanitary wares

80

36

36

69. Siam Sanitary Ware Industry Co., Ltd.

Bangkok

973-5040-54

Sanitary wares

200

-

36

70. The Siam Sanitary Fittings Co., Ltd.

Bangkok

973-5101-7

Sanitary fittings

200

33

45

71. Mariwasa Manufacturing, Inc.

Philippines

(632) 655-0281

Ceramic tiles

909

40

46

72. Siam Mariwasa TOTO, Inc.

Philippines

(632) 655-0281

Sanitary wares

430

21

30

73. Cementhai Distribution Co., Ltd.

Bangkok

586-3333

Holding company

825

100

100

74. SCT Co., Ltd.

Bangkok

586-3333

International

400

100

100

545

100

100

60. The Siam Nawaphan Co., Ltd. 61. Siam Fiberglass Co., Ltd.

Saraburi

(036) 373578-82 Moulding plaster

Ceramics Business Subsidiaries

67. Beijing Cementhai Ceramic Co., Ltd.

Associated and Other Companies

Distribution Subsidiaries

trading 75. Cementhai Sales and Marketing Co., Ltd.

Bangkok

586-3333

Trading

76. Cementhai Logistics Co., Ltd.

Bangkok

586-3333

Transportation

40

100

100

Samut Prakan

384-7591

Ports

100

50

50

and distribution

Associated and Other Companies 77. Thai Prosperity Terminal Co., Ltd.

93


Location Name

(Head Office)

Principal Telephone

Business

Registered

Direct/Indirect

Indirect

Shares

Holding

Holding

(Million Baht)

(%)

(%)

Cementhai Holding Subsidiaries 78. Cementhai Holding Co., Ltd.

Bangkok

586-3333

Holding company

1

100

100

79. Cementhai Steel Co., Ltd.

Bangkok

586-2617

Holding company

5,000

100

100

80. The Siam Iron and Steel Co., Ltd.

Bangkok

586-4072

Construction steel

1,000

100

100

81. The Siam Construction Steel Co., Ltd.

Bangkok

586-3333

Construction steel

1,750

100

100

82. The Siam Industrial Wire Co., Ltd.

Bangkok

586-4065

Construction steel

260

100

100

83. The Siam Nawaloha Foundry Co., Ltd.

Saraburi

(036) 336531-45

Cast iron

308

65

65

Chon Buri

(038) 214969-70

Cast iron

570

100

100

85. The Siam Refractory Industry Co., Ltd.

Bangkok

586-3333

Refractory

300

100

100

86. The Siam Research and Development

Bangkok

585-9677

Product research

100

100

100

87. Thai CRT Co., Ltd.

Chon Buri

(038) 490232

TV tubes

1,700

47

47

88. CRT Display Technology Co., Ltd.

Bangkok

586-3333

Cathode ray tubes

2,000

47

47

120

47

47

84. The Nawaloha Foundry Bang Pakong Co., Ltd.

(Bangkok) Co., Ltd.

for computer monitors 89. Thai Electron Gun Co., Ltd.

Chon Buri

(038) 954756-63 Electron guns in picture tubes

90. Siam Tyre Plc. 91. Siam Furukawa Co., Ltd.

Samut Prakan

615-0177-9

Holding company

72

99

99

Saraburi

(036) 373570

Automotive and

240

59

59

40

29

29

720

49

49

7,000

46

46

motorcycle batteries

Associated and Other Companies 92. Siam NGK Technocera Co., Ltd.

Bangkok

586-3333

Processing apparatus electronic components

93. Siam Compressor Industry Co., Ltd.

Chon Buri

(038) 490900

Compressors for air-conditioners

94. Siam Yamato Steel Co., Ltd.

Bangkok

95. The Siam Kubota Industry Co., Ltd. 96. The Nawaloha Industry Co., Ltd. 97. Siam AT Industry Co., Ltd.

586-3333

Structural steel

Bangkok

909-0300

Agricultural diesel

208

42

42

Saraburi

(036) 336531-45

Cast iron

300

30

30

Chon Buri

(038) 215011-9

Automotive

240

30

30

Pathum Thani

529-3518-22

Automotive

85

29

30

Bangkok

586-3333

Cold-rolled steel

6,000

29

29

Chon Buri

(038) 490680

TV glass bulbs for

1,600

27

27

Pathum Thani

529-1753

200

21

21

850

20

20

spare parts 98. Thai Engineering Products Co., Ltd.

spare parts 99. The Siam United Steel (1995) Co., Ltd. 100. Siam Asahi Technoglass Co., Ltd.

color picture tubes 101. Musashi Auto Parts Co., Ltd.

Motorcycle spare parts

102. Siam Toyota Manufacturing Co., Ltd.

Chon Buri

(038) 213421

Automotive engines

94


Location Name

103.Mitsubishi Electric Consumer

(Head Office)

Telephone

Principal

Registered

Direct/Indirect

Indirect

Business

Shares

Holding

Holding

(Million Baht)

(%)

(%)

Chon Buri

(038) 214870

Air conditioners

1,200

20

20

104.Toyota Motor Thailand Co., Ltd.

Samut Prakan

386-1000

Automotives

4,520

10

10

105. Siam Tyre Phra Pradaeng Co., Ltd.

Samut Prakan

384-4171

Automotive tyres

200

39

39

Saraburi

(036) 373276

Truck tyres

Products (Thailand) Co., Ltd.

106. Siam Tyre Industry Co., Ltd.

400

39

39

107.Michelin Siam Co., Ltd.

Chon Buri

(038) 490534 Automotive tyres

500

39

39

108. Michelin Siam Marketing and Sales Co., Ltd.

Bangkok

619-3000-19

Automotive tyres

200

39

39

109. The Siam Steel Cord Co., Ltd.

Rayong

(038) 892100

Tyre bead wires

1,260

39

39

and steel tyre cords Chon Buri

(038) 490534

Tyre moulds

15

39

39

111. Siam Lemmerz Co., Ltd.

110. Thai Tyre Mould Co., Ltd.

Saraburi

(036) 373311

Meg wheels

428

29

29

112. Thai Carbon Products Co., Ltd.

Bangkok

-

Carbon black

800

20

22

113. The Deves Insurance Plc.

Bangkok

280-0985

Insurance

120

21

21

114. Cementhai Property Co., Ltd.

Bangkok

586-2059

Holding company

1

100

100

115. Rayong Industrial Land Co., Ltd.

Bangkok

586-2059

Industrial sites

2,220

100

100

Cementhai Property Subsidiaries

116. SIL Industrial Land Co., Ltd.

Bangkok

586-2059

Industrial sites

2,000

100

100

117. RIL 1996 Co., Ltd.

Bangkok

586-2059

Industrial sites

1,100

100

100

118. SCG Car Services Co., Ltd.

Bangkok

586-3333

Car rental

60

100

100

Note:

Registered share is ordinary share only.

95


2. Summary of significant information 1. General information 1.1 Company’s name and location 1.2 Investment in companies with 10 percent or more equity 1.3 Other reference Registrars

Debentureholder’s representative Auditors

Legal advisors Financial advisors Advisors/Managers Financial institutions with established relations 2. Summary of financial data 2.1 Financial Statements 2.2 Financial ratio

96

(front and back covers) (pp.91-95) Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Rachadapisek Road, Klongtoey, Bangkok 10110 Tel. 359-1200-1 Fax. 359-1259 National Finance Public Company Limited SGV-Na Thalang & Co., Ltd. 989 Siam Tower Building 20th-23rd Floors, Rama 1 Road, Pathumwan, Bangkok 10330 Mr. Thavach Phusitphoykai or Mr. Teerapong Kaewratanapatma or Mr. Methee Ratanasrimetha Tel. 658-0658 Fax. 658-0060-3 None None None Domestic and foreign commercial banks and finance companies number approximately 60 institutions (pp.2-3) (pp.2-3)


3. Principal activities 3.1 Summary of significant information 3.2 Ratio of revenues from each business group

(pp.13-35) (pp.13-35)

4. Risk Factors The Company has credit risks as well as foreign currency risks, and taken steps to manage those risks with due care in credit extension, setting credit limits and appropriate levels of guarantee, and engaging in transactions of financial derivatives. These measures represent the preparedness of the Company to cope with possible risks, as disclosed in No. 22 of the notes on consolidated financial statements. 5. Shareholders and management 5.1 Shareholders First 10 major shareholders as at March 9, 2000 No.

Name

No. of Shares

% of total Shares

42,720,000

35.60

1.

Bureau of the Crown Property

2.

Thailand Securities Depository Co., Ltd. for Depositors

7,623,719

6.35

3.

HSBC Bank Plc.

3,129,824

2.61

4.

Chase Nominees Limited 1

3,113,575

2.59

5.

HSBC (Singapore) Nominees Pte Ltd.

2,575,955

2.15

6.

The Siam Commercial Bank Public Company Limited

2,391,490

1.99

7.

State Street Bank and Trust Company

1,872,249

1.56

8.

Littledown Nominees Limited 5

1,633,856

1.36

9.

Office of the Privy Purse

1,547,300

1.29

Randery Burahmakan Co., Ltd.

1,481,040

1.23

10.

97


5.2 Management Structure (1) Group’s Management Chart (pp.6-7) Directors

Name

No.

Position

Experience

1.

Chaovana NaSylvanta

Chairman

Privy Councillor

2.

Osot Kosin

Vice Chairman and

Former Chairman of

Independent Director

Siam Tyre Plc.

3.

Kamthon Sindhvananda

No. of No. of Annual Shares Shares Income as at increased received December (decreased) from the 31, 2000 during the Company fiscal year (Baht) 400

-

1,296,000

-

-

864,000

-

-

1,044,000

-

-

864,000

-

-

984,000

-

-

864,000

-

-

984,000

25,000

25,000

864,000

-

-

864,000

-

-

864,000

-

-

864,000

150,100

-

864,000

Director and Chairman Privy Councillor of Audit Committee

4.

Snoh Unakul

Director

Former Deputy Prime Minister

5.

Paron Israsena

Director, Chairman of

Chairman of

Remuneration Committee Shin Satellite Plc. and Audit Committee 6.

Sivavong Changkasiri

Director, Independent

Chairman of

Director and

Krung Thai Bank Plc.

Remuneration Committee 7. 8.

Sumet Tantivejkul Yos Euarchukiati

Director and

Director and Secretary,

Audit Committee

Chai Pattana Foundation

Director and

Chairman of Thai Plastics

Remuneration Committee and Chemicals Plc. 9.

Pricha Attavipach

Director

Former Industry Permanent Secretary

10.

M.R. Pridiyathorn Devakula Director and

President of Ex-Im

Remuneration Committee Bank of Thailand 11.

Panas Simasathien

Director

Former Minister of Finance

12.

Chumpol NaLamlieng

Director and President

Director and President

Suvit Virojanadul Secretary to the Board Remark:

- Nos. 1 and 2 with a company car. - Nos. 3,5 and 10 hold 33,000 units, 33,000 units and 70,000 units in The Siam Cement Plc’s debentures respectively, which increased by 20,000 units, 13,000 units and 20,000 units respectively during the fiscal year. - No. 10 hold 86,424 shares in The Siam Pulp and Paper Plc., without change during the fiscal year. No. 12 sold 1,700 shares in The Siam Pulp and Paper Plc during the fiscal year.

98


Directors who are authorized to sign their names on behalf of the Company Two directors of the Company jointly sign their names, with the corporate seal affixed. Scope of authority of the Board of Directors of the Company The Board of Directors essentially has the following authorities. 1. The Board is authorized to manage and direct the Company’s operations in line with the objectives, the Articles of Association and the resolution of shareholders’ meetings. 2. The Board shall authorize directors, the Board of Executive Directors, sub-committees, individuals or juristic persons to perform jointly or separately any duty in accordance with the objectives and Articles of Association of the Company in return for remuneration as determined by the Board. The Board has the right to change or revoke the authority given to such persons, or remove such persons from duty, and appoint other individuals for replacement, as deemed appropriate. The authorized or appointed persons must perform their duties in accordance with the regulations, orders and policies set by the Board. 3. The Board must have a meeting once every three months. 4. The Board must hold the annual general meeting of shareholders within four months after the end of the Company’s fiscal year. The Board shall hold an extraordinary meeting of shareholders anytime as deemed appropriate; or a number of shareholders with at least one-fifth of the shares sold, or at least 25 shareholders with a total of at least one-tenth of the shares sold, can jointly submit a request in writing, with adequate reasons, for the Board to hold an extraordinary meeting of shareholders anytime. In this case, the Board must organize a shareholders’ meeting within one month after the receipt of the written request from the said shareholders. 5. The Board must arrange to have the balance sheet and the profit and loss statement at the end of the fiscal year, the annual report, for the shareholders’ meeting as required by law. 6. The Board has the authority to propose dividend payment to shareholders based on the profit made in any year, or accumulated from previous years, or propose that the profit should be arranged for any other objectives. The Board may consider interim dividend payments to shareholders from time to time, when the Company earns sufficient profits for the purpose, and after the dividends have been paid, such dividend payment shall be reported to the shareholders in the following shareholders’ meeting.

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The Audit Committee The Audit Committee of the Company has the following members: 1. Kamthon Sindhvananda Chairman 2. Paron Israsena Member 3. Sumet Tantivejkul Member Scope of Authority The Audit Committee is authorized to fulfill the following duty. 1. Supervise and review that the Company has appropriate system in financial reports in accordance with the legally defined accounting principle with transparency and adequacy. 2. Support establishment of financial report development to compliance with the accounting standards set by GAAP. 3. Review and ensure that the Company has appropriate and effective internal control and internal audit systems. 4. Review on corporate risk management. 5. Review and ensure that the Company is in full compliance with the laws on securities and the Stock Exchange, and other laws relating to the Company’s business. 6 Review the internal audit system on corruption. 7. Review the internal control system, plans, and guidelines for inspection including assessment of the result of inspection, and all proceedings of the Company in accordance with the generally accepted standard and principle. 8. Review the righteous and effectiveness of the information technology system relating to internal control system, financial reports and risk management and suggest an up to date improvement occasionally. 9. Consider disclosure of corporate data in cases of, or in relation to probable conflicts of interest and ensure full propriety. 10. Supervise, review and comment on the operation of the Internal Audit Office also cooperate with the Company’s auditor. 11. Prepare reports on supervision of activities of the Audit Committee with disclosure in the Company’s annual report which is duly signed by the Chairman of the Audit Committee. 12. Consider, select, propose appointment and remuneration of Company’s auditor. 13. Appoint, remove, transfer or terminate the employment of the Director of the Internal Audit Office. 14. Consider budgets and manpower of the Internal Audit Office. 15. Take other actions in compliance with laws or assignments by the Board of Directors. Inactions thereof, the Audit Committee is authorized to summon or order management, unit heads, or employees concerned to present opinions, attend meetings or submit necessary documents. The Audit Committee performs duty within the authority and responsibility under the order of the Board of Directors. The Board is responsible for company’s operations and is directly accountable to shareholders, stakeholders and any person.

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Remuneration Committee The Remuneration Committee comprises of 1. Paron Israsena Chairman 2. Sivavong Changkasiri Member 3. Yos Euarchukiati Member 4. M.R. Pridiyathorn Devakula Member Scope of Authority 1. Propose guidelines and methods of payment of remuneration to the Board of Directors, and committees appointed by the Board. 2. Propose policy on management incentives in line with the Company’s operating results, and the performance of each management executive, and whenever it deems appropriate, the committee shall consider hiring of consulting firms to advise on project implementation. 3. Consider the annual remuneration for each member of the management team prior to further submission to the Board for approval. 4. To consider, before presenting to the Board of Directors, the budget for the salary increase, change of wage/remuneration and bonus of the senior executives.

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Management (As at December 31, 2000) Management No.

Name

1.

Chumpol NaLamlieng

2. 3.

Wirash Krittaphol Chaisak Saeng-Xuto

4.

Sobson Ketsuwan

5.

Dusit Nontanakorn

6.

Chalaluck Bunnag

7.

Apiporn Pasawat

8.

Aviruth Wongbuddhapitak

9.

Kajohndej Sangsuban

10.

Pramote Techasupatkul

11.

Kan Trakulhoon

Position

Experience

President

Corporate planning, financial planning and marketing management Vice President Manufacturing management President, The Siam Pulp and Paper Plc. Manufacturing management, marketing and computer President, Siam Cement Industry Co., Ltd. Corporate planning, manufacturing management and marketing President, Cementhai Distribution Co., Ltd. Marketing and manufacturing management Vice President Marketing and manufacturing management President, Cementhai Chemicals Co., Ltd. Corporate planning and business management in Petrochemicals Vice President Corporate planning, manufacturing management, financial planning and human resources management President, Cementhai Gypsum Co., Ltd. Manufacturing management and marketing President, Cementhai Roofing and Manufacturing management and Concrete Products Co., Ltd. marketing President, Cementhai Ceramics Co., Ltd. Manufacturing management and marketing

Related Managers No. 1. 2.

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Name Padungdej Indralak Amphol Raungturakit

Position Corporate Treasurer Corporate Accounting Division Manager

Experience Marketing and finance Business management, accounting management and information system


(2) Election of Executives and Directors The election of Directors shall be carried out in accordance with the following rules and procedures. 1. In case the number of candidates nominated for Directors does not exceed the number of Directors required for that election, the meeting shall elect all of them as Directors. 2. In case the number of candidates nominated for Directors exceeds the number of Directors required for that election, it shall be decided by votes of the shareholder meeting. The shareholders may elect the candidates nominated for Directors, but not exceeding the number of Directors required for that election and the Directors shall be individually elected. Each shareholder of proxy shall have one vote for each share he holds or represents for the election of each Director. The candidates shall be ranked in order descending from the highest number of votes received to the lowest, and shall be appointed as Directors in that order until all of the Director positions are filled. Where the votes cast for candidates in descending order are tied, which would otherwise cause the number of Directors to be exceeded, the remaining appointment shall be made by the chairman of meeting who shall have a casting vote. (3) Remuneration for Executives (1) Financial remuneration In the year 2000, the 12 directors earned cash remuneration from being directors totalling 10,800,000 Baht. The 3 members of Audit Committee earned cash remuneration from being audit committee totalling 420,000 Baht. The 11 executives (management team) earned salaries and cash benefits from the company totalling 78,777,500 Baht. (2) Remuneration in kind Company’s Contribution to the provident fund for directors or the management executives (management team) as being Company’s employees totalling 7,111,200 Baht. (4) Supervision The Company has abided by the Code of Best Practices set by the Stock Exchange of Thailand for directors of listed companies. (5) Supervision on the use of internal information The Company has defined as a Code of Ethics of the Siam Cement Group that no employees shall exploit any company’s information for the interest of self or others despite the fact that the Siam Cement Group may lose no benefits . (6) Internal Control The Company has an Internal Audit with the responsibility to conduct audit, evaluation, and improve the internal control system to ensure efficiency and effectiveness under consistent supervision of the Audit Committee (according to the Audit Committee’s Report on page 39) Moreover, there are also outside auditors, who have studied and assessed the efficiency of the internal control on the Company’s accounts. A report of SGV - Na Thalang & Co., Ltd., which serves as the Company’s auditor, mentioned in its study and assessment on the Company’s accounts that “We have not found any flaw in the internal control system relating to accounting practices which could have substantial impact on the opinions on the financial statements of each year ended at December 31, 2000 and 1999.”

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6. Inter-company accounts Disclosures of inter-company accounts are listed clearly in Notes on Financial Statements No. 1 and No. 4. Transactions of goods comprise of the trading of raw materials or products, whereby sales of goods to outside individuals, subsidiaries through the channels of trading firms, such as Cementhai Sales and Marketing Co., Ltd., SCT Co., Ltd., and Cementhai Chemicals Co., Ltd. Transactions between Group companies under normal business terms and conditions as those concluded with others not related to the Group, and in accordance with market prices with discount in line with prevailing competition in the market. Setting the credit term between 30-45 days for transactions of goods and services. The Company has defined the scope of authority and procedure for inter-company transactions based on traditional trading practices, in accordance with the Company’s operational authority with approval of the Board of Directors. 7. Explanation and analysis on financial status and operating results. Previous operations and financial status In the year 2000, the consolidated financial statements of The Siam Cement Plc., and subsidiaries showed total revenues of 128,197 million baht, compared with 101,851 million baht in the previous year, representing an increase of 26,346 million baht, or 26 percent. Domestic sales revenues increased 21 percent, while export sales revenues increased 43 percent. The increases from total sales were mainly from the Petrochemicals and Paper and Packaging Businesses. In conclusion, the Company and subsidiaries earned a net income of 41 million baht in the year 2000, which included foreign exchange losses of 2,955 million baht, and 601 million baht losses in the sales of investment in various businesses. Besides, the Company has included a reserve of 670 million baht for impairment and diminution of assets of ceramics business in China, natural rubber business in the Philippines, and Nawaloha Bang Pakong, which may be sold in the year 2001, 581 million baht of expenses for mutual separation plan. Prior to the accounting of these items, the Company had an operating profit of 4,848 million baht. Total consolidated assets of the Company and subsidiaries at December 31, 2000 amounted to 260,309 million baht, compared with 266,348 million baht at the end of the previous year, representing a decrease of 6,039 million baht, or two percent. 8. Financial Statements (pp.40-90)

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