12. Financial Statements and Operating Results

  12.1 Financial Statements

  (A) The Auditors’ Reports and Opinions

  Based on the un-qualified opinion of the certified public accountant
  of Ernst & Young Office Limited in connection with the financial
  statements of the Company and its subsidiaries for the years ended 31
  December 2004 and 2003 and the opinion of the certified public
  accountant of SGV – NA Thalang & Co., Ltd. in connection with the
  financial statements of the Company and its subsidiaries for the years
  ended 31 December 2002 contained in their respective reports, the said
  financial statements reasonably illustrate the true and fair view of
  the material financial position and operating results of the Company
  in accordance with the generally accepted accounting principles.

  (B) Summary of the Financial Statements

-   Table illustrating the Consolidated Balance Sheet figures

-   Table illustrating the Consolidated Statements of Earnings

-   Table illustrating the Consolidated Statements of Cash Flows

-   Table illustrating the Consolidated Financial Ratios

  Certain items in the financial statements for the year ended 31
  December 2002 have been reclassified to conform to the current year’s
  classification without effect on the previously reported net earnings
  or shareholders’ equity.

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[]12.2 Financial Analysis and Operating Results

Revenues

The Company and its subsidiaries had generated a total combined income
of Baht 21,211 million in 2004, an increase of Baht 3,645 million or
21%, compared to those of 2003.

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Net Sales

  []In 2004, net sales were recorded at Baht 20,772 million or 98% of
  its total income, an increase of Baht 3,303 million or 19% from the
  year before.

Based on the income structure displayed in the table above, 82% of
company’s income was directly from company’s core business of cement
production. In 2004, net sales of both cement and clinker increased
approximately 18% from the year before. This increase was a result of
the increase in the sales volume, both domestic and export. In term of
the sales volume, domestic sales increased by 11%, and cement export
sales decreased by 14%, compared to those of the year before.
Subsidiaries’ net sale increased by Baht 933 million or 27%.

  Other Income

  In 2004, the Company recorded other income of Baht 439 million, an
  increase of Baht 342 million from the year before, due mainly to the
  capital gain from a sale of its shares of capital stock of
  subsidiaries amounting to Baht 179 million.

Costs and Expenses

  The Company recorded total costs and expenses in 2004 of Baht 15,015
  million, an increase of 18% from 2003. The breakdown of the said costs
  and expenses are as follows: -

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  The increase in costs was mainly due to an increase in variable costs
  resulting from an increase in the sales volume and higher energy cost,
  compared to those of the year before by Baht 1,789 million or 16%.

  The main reason for the increase in selling and administrative
  expenses were due to higher consulting fee and customer service
  expenses from the year before by Baht 327 million or 21%.

  Despite the higher costs, the net sales sufficiently increased to
  inflate the net income in 2004 to Baht 4,141 million, 26% over the
  2003’ s figure of Baht 3,288 million.

  The following tables highlight the comparison of consolidated
  financial status at the end of December 2004 and December 2003

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Total Assets and their Components

Total Assets

There was a decrease in total current assets, primarily in cash and cash equivalents, and disposals of non-operating assets.

Total Liabilities

  As at December 31, 2004, the company had a total liabilities of Baht
  4,171 million, an increase of Baht 715 million from the year before.
  This increase was mainly due to an increase in trade accounts payables
  and other current liabilities.

Shareholders’ Equity

  At the end of December 31, 2004, total shareholders’ equity was Baht
  15,938 million, a decrease of Baht 1,861 million.

  By the resolution of the Board of Directors passed at the Board
  meeting on 11 December 2003, the Company during the period between 26
  December 2003 and 11 June 2004 had repurchased a total of 12.5 million
  ordinary shares, equivalent to 5% of the total issued shares. The
  reason for this repurchase was financial management due to excess
  liquidity. The shares purchased were currently held in treasury.
  According to the law and regulations concerned, the Company is
  required to sell all those treasury shares within the period from 12
  December 2004 to 11 June 2007, otherwise it must cancel the remaining
  treasury shares and reduce the registered capital by the corresponding
  amount.

  Changes in financial ratios of 2004 comparing to 2003’s and 2002’s,
  which were presented in table (C)