2.11 Transaction and Connected Parties

2.11.1 Necessary and Reason of Transaction

The connected transactions were financial assistance for the Company’s
working capital because of low liquidity. Terms and conditions of
transaction benefit the Company. For example, the Company pays interest
charges directly to a bank at the rate charged by the bank and if the
Company pays directly to the lender, the Company will pay interest at
the same rate as render borrowing rate without charge. Thus, the lender
requested the Company to provide a secondary land mortgage registration.

Above said transactions were approved by the Company’s Board of
Director, and reported to the Stock Exchange of Thailand (SET) following
SET’s regulations of connected transaction disclosure.

2.11.2 Policy of Connected Transaction Approval

The Company minimizes or avoids further financial assistance from
connected and/or related parties. The transactions below provide the
Company with credit facilities in case of unplanned working capital
shortages to meet immediate financial commitments. Upon entering such
transactions, controls are in effect pursuant to the Board of Director’s
resolution (meeting No. 2/2009, February 26, 2009) stating as follow:

1. On receiving or granting finance assistance transactions between
related parties, do as follows concerning amounts and procedures for
each transaction (Note:(1):

1.1 Between THB 1 M and THB 20 M; notify the SET immediately and obtain
approval from the BOD.

1.2 THB 20 M (approximately USD 0.57 M) or more; notify the SET
immediately, and obtain approval from the BOD and shareholders.

2. On purchasing goods or services, or entering into any kind of
contracts or agreements, such as purchase, service, joint venture, or
agent contract etc. do as follows concerning amounts and procedures
(Note: (2):

2.1 Between THB 1 M. and THB 20 M (approximately USD 28,000 to USD 0.57
M.); notify the SET immediately. Also, BOD approval may be needed in
certain cases, such as in transactions where the terms are not normal
commercial terms (except in the lease of immovable assets where the
lease period is not over 3 years), or in an asset/ service transaction.

2.2 THB 20 M (approximately USD 0.57 M) or more; notify the SET
immediately and obtain approval from BOD. Also, shareholders’ approval
may be needed in certain transactions such as in cases where the terms
are not normal commercial terms, or in an asset/ service transaction.

(1) The amount is referred to in the financial statement and/or SET or
SEC’s announcement and can be changed as appropriate.

(2) There is no need to inform or send the reports as mentioned above to
the secretary if the transaction is an ordinary and normal business
transaction with normal commercial term e.g. purchase of raw materials,
purchase of supplies used in processing, purchase-selling inventories.
However, if the transaction is done between the related parties, normal
commercial terms have to be applied, otherwise the procedure- as in 2.1
or 2.2 above, must be applied regardless of the value involved.

In the latter case, any involved parties must abstain from voting on the
transaction(s); and said transaction(s) must be scrutinized by the Audit
Committee and reported to the SET pursuant to SET regulations relating
to the disclosure of related parties transactions.

2.11.3 Connected Parties

+------------+--------------------------+-----------------------------+
|   Company  | Aspac Cons               | Sino Pac Developme          |
|            | truction Limited (ASPAC) | nt (Thailand) Limited (SPD) |
+============+==========================+=============================+
|   T        |   Overdraft (OD)         |   The bank had released the |
| ransaction |   facility of Baht 14    |   mortgage that THL         |
|   Type     |   million was extended   |   provided to SPD on May    |
|            |   by Aspac to THL as     |   15, 2008.                 |
|            |   working capital and    |                             |
|            |   the 2^(nd) mortgage    |   Therefore, no more        |
|            |   was released in May    |   related parties           |
|            |   2008.                  |   transaction.              |
|            |                          |                             |
|            |   Therefore, no more     |                             |
|            |   related parties        |                             |
|            |   transaction.           |                             |
+------------+--------------------------+-----------------------------+
|   T        |   There is no balance of |   Baht 12 million land      |
| ransaction |   short term loan as at  |   mortgage. (released on    |
|   Value &  |   December 31, 2008      |   May 15, 2008)             |
|   Criteria |   (fully repaid since    |                             |
|   on Net   |   2007)                  |   This value represents     |
|   Tangible |                          |   less than 3% of the       |
|   Assets   |                          |   latest audited net        |
|            |                          |   tangible assets of THL as |
|            |                          |   per the Stock Exchange of |
|            |                          |   Thailand (SET)’s          |
|            |                          |   regulation (ref: Bor Jor: |
|            |                          |   52-2-01, clause 9 (1) and |
|            |                          |   (2), page 122). The       |
|            |                          |   Transaction Value divided |
|            |                          |   by THL’s Net Tangible     |
|            |                          |   Assets                    |
|            |                          |   (12,000,000/793,431,000)  |
|            |                          |   derives a percentage of   |
|            |                          |   1.51%.                    |
+------------+--------------------------+-----------------------------+
|   Reason   |   In 1999 THL accepted   |   To provide working        |
|   for      |   financial assistance   |   capital for THL and its   |
|   T        |   from AsPac due to      |   controlled entities.      |
| ransaction |   severe cash flow       |                             |
|            |   restraints brought on  |                             |
|            |   by the extremely tight |                             |
|            |   credit market. The     |                             |
|            |   financial assistance   |                             |
|            |   rendered was used      |                             |
|            |   primarily to support   |                             |
|            |   the high strength      |                             |
|            |   aggregate quarry       |                             |
|            |   operations and as      |                             |
|            |   THL’s working capital. |                             |
+------------+--------------------------+-----------------------------+
|   Terms    |   1) The facility was    |   When THL no longer        |
|   and      |   made exclusively for   |   utilised the Baht 14      |
|            |   THL and its controlled |   million OD facility, the  |
| Conditions |   entities for working   |   Baht 12 million secondary |
|   of       |   capital.               |   registration will be      |
|   T        |                          |   released.                 |
| ransaction |   2) THL pays the        |                             |
|            |   monthly interest       |   (The bank had released    |
|            |   charge directly to a   |   the mortgage on May 15,   |
|            |   bank at the prevailing |   2008)                     |
|            |   rate.                  |                             |
|            |                          |                             |
|            |   3) THL provided        |                             |
|            |   collateral consisting  |                             |
|            |   of land at Saraburi    |                             |
|            |   province in the amount |                             |
|            |   of Baht 4 million. The |                             |
|            |   remaining Baht 10      |                             |
|            |   million of the         |                             |
|            |   facility is secured by |                             |
|            |   AsPac’s group          |                             |
|            |   collateral.            |                             |
|            |                          |                             |
|            |   4) The OD facility by  |                             |
|            |   Aspac is allocated to  |                             |
|            |   THL and its controlled |                             |
|            |   entities without other |                             |
|            |   charges.               |                             |
+------------+--------------------------+-----------------------------+
|   Scope of |   THL and AsPac are      |   THL and SPD are connected |
|            |   connected to the       |   to the extent that Mr. R. |
|  Connected |   extent that Mr. Ronald |   Ng, the late Mr. W.       |
|   Persons/ |   Ng and the late Mr. W. |   Sukasem, and Dr. J.P.     |
|   Rel      |   Sukasem were directors |   Mills were directors of   |
| ationships |   of both THL and AsPac  |   both THL and SPD at the   |
|            |   at the time of the     |   time of the transaction.  |
|            |   transaction. Per THL   |   As per THL policy, these  |
|            |   policy, these persons  |   persons abstained from    |
|            |   abstained from voting  |   voting in connection with |
|            |   in connection with     |   these transactions.       |
|            |   this transaction.      |                             |
+------------+--------------------------+-----------------------------+
|   T        |   This transaction was   |   This transaction was      |
| ransaction |   reported in THL’s      |   reported in THL’s annual  |
|   Tr       |   annual and quaterly    |   and quaterly financial    |
| ansparency |   financial statements   |   statements and submitted  |
|   and      |   and submitted          |   quarterly to the SET.     |
|   approval |   quarterly to the SET.  |   This transaction was      |
|   process  |   This transaction was   |   reviewed by an external   |
|            |   reviewed by an         |   auditor, legal counsel,   |
|            |   external auditor,      |   THL’s Audit Committee,    |
|            |   legal counsel, THL’s   |   and Board of Directors    |
|            |   Audit Committee, and   |   who deemed the said       |
|            |   Board of Directors who |   transaction to be fair,   |
|            |   deemed the said        |   reasonable, and in        |
|            |   transaction to be      |   compliance with generally |
|            |   fair, reasonable, and  |   acceptable accounting     |
|            |   in compliance with     |   procedures.               |
|            |   generally acceptable   |                             |
|            |   accounting procedures. |                             |
+------------+--------------------------+-----------------------------+

2.11.4 CONNECTED TRANSACTIONS WITHIN THE GROUP

The transactions within the Group relate mainly to inter-company loans
from Tongkah Harbour Public Company Limited to the subsidiaries. The
terms of agreement between the parent entity and the subsidiaries are
mainly as follows:

Transaction type : Long term loan

Reason for loan : To provide long term capital for the subsidiary’s
projects.

Terms : Interest charged on the average banking interest cost.

Disclosure : Reported to the SET and shareholders, quaterly and

  annually as incurred.

Approval Process : Reviewed by auditors, legal counsel, Tongkah Harbour
Public Company Limited’s Audit Committee and Board of Directors who
deemed said transaction to be fair, reasonable, and in compliance with
generally acceptable accounting procedures.

+-----------+-------------+-------------+-------------+--------------+
|   Company | Tungkum Li  | Cholsin Li  |   Sky Cliff | Se           |
|   Name    | mited (TKL) | mited (CSL) |   Limited   | a Minerals L |
|           |             |             |   (SCL)     | imited (SML) |
+-----------+-------------+-------------+-------------+--------------+
|   Tr      |   Baht      |   Baht      |   Baht      |   Baht       |
| ansaction |             |             |             |              |
|   Value   |  34,365,105 |  70,128,521 | 125,244,565 | (33,972,000) |
|           |             |             |             |              |
|           |   Baht      |   Baht      |   Baht      |   Baht       |
| Principal |             |             |             |   (821,414)  |
|   due     |  19,071,616 |  43,253,378 |  23,511,555 |              |
|   from    |             |             |             |              |
|   (due    |             |             |             |              |
|   to)     |             |             |             |              |
|           |             |             |             |              |
|   Acc.    |             |             |             |              |
|           |             |             |             |              |
|  Interest |             |             |             |              |
|           |             |             |             |              |
|   R       |             |             |             |              |
| eceivable |             |             |             |              |
|           |             |             |             |              |
| (payable) |             |             |             |              |
+-----------+-------------+-------------+-------------+--------------+
|           |   0.00      |   Baht      |   0.00      |   0.00       |
| Provision |             |             |             |              |
|           |             |  93,608,000 |             |              |
+-----------+-------------+-------------+-------------+--------------+
|   Scope   |   Share     |   Share     |   Share     |   Share      |
|   of      |   holders   |   holders   |   holders   |   holders    |
|           |   98.86%    |   72.10%    |   75.00%    |   99.99%     |
| Connected |             |             |             |              |
|           |   Joint     |   Joint     |   Joint     |   Joint      |
|  Persons/ |   directors |   directors |   directors |   directors  |
|   Relat   |   and       |   and       |   and       |   and        |
| ion-ships |   s         |   s         |   s         |              |
|           | hareholders | hareholders | hareholders | shareholders |
+-----------+-------------+-------------+-------------+--------------+

2.11.5 Future of Connected Transactions

The Company operates business based on Company benefit. Connected
transactions with related companies or parties (financial assistance)
will occur in significant circumstance. In future, the Company has no
intent to do connected transactions, except where the Company encounters
severe circumstances. However, the Company follows the policy of
connected transaction approval as stated in clause 2.11.2 In addition,
the Company will report connected transactions to SET.