Connected Transactions

The Board of Directors accentuates the importance of considering and
granting approval for connected transactions or related transactions or
transactions that may cause conflicts of interest. In this regard, the
SCG Code of Conduct has set out a policy for determining transactions,
as follows:

Connected Transactions between the Company and its Subsidiaries

SCG comprises a large number of companies whose businesses are bound to
make transactions with one another in such manners as service providing,
trading of raw materials and products, financial support, technical or
human resource assistance, etc. In operating businesses or performing
duties related to such matters, all employees and parties concerned are
required to comply with the laws, the rules and regulations of the
government agencies as well as the rules of SCG and any criteria and
conditions prescribed by local communities.

Transactions with External Entities

In making transactions with external entities or other companies, the
company shall proceed through fair methods and comply with terms and
conditions as agreed upon honestly and openly. The company shall also
avoid making transactions that may cause troubles or damages to external
parties.

The company has specified guidelines and procedures for consideration of
granting approval for connected transactions, related transactions or
transactions with potential conflict of interests for the best interest
of the company in accordance with rules and regulations as prescribed by
law. The directors and management shall inform potential stakes to the
company in advance. The company, in turn, shall consider the
appropriateness of transactions, and in cases where such transactions
need approval in accordance with the regulations and procedures as
prescribed by law, the management shall propose such matters to the
Board of Directors or at the shareholders’ meetings and shall disclose
the information to investors in a transparent manner. Under no
circumstances shall directors or management concerned be allowed to
participate in the process of approval consideration. In any case, SCG
Code of Conduct and Corporate Governance allow the company to make
transaction decisions based on market price mechanism, which is the
company’s normal, efficient tool of effective business operation.

Future Connected Transactions

Connected transactions in the future will continue to be based on
traditional business practices and will follow the policy of the market
controlling prices in negotiated transactions, as in the past. No
special benefits will accrue either to companies or individuals from
connected transactions.

Report of the Connected Transactions in 2008 listed by Types

1.  Transactions regarding to financial assistance

    1.  Loans

        1.  Two transactions between the company and subsidiaries:

-   Production of Batching Plant for ready-mixed concrete business of
    the Concrete Products and Aggregate Co., Ltd. Credit approval and
    collateral management project for SCT Group of SCT Co., Ltd.
    amounted to 9.5 Million Baht.

-   Project to increase the production capacity of artificial woods of
    The Siam Fibre-Cement Co., Ltd. (Ta Laung plant) amounted to 1,033
    Million Baht.

    1.  One transaction between subsidiaries:

-   Project to develop the energy feeding system of the 4th, 5th, and
    6th kiln of The Siam Cement (Thung Song) Co., Ltd. amounted to 71.50
    Million Baht.

2. Transactions Relating to Assets

2.1 Investments

2.1.1 One transaction between the company and a subsidiary:

-   Project to establish Petrochemical Complex in the South of Vietnam
    of SCG Chemicals Co., Ltd. amounted to 124,410 Million Baht.

    2.  Other assets

        1.  One transaction between a subsidiary and other juristic
            person:

-   Project to sell land of Thai Polyethylene Co., Ltd. and Siam
    Paraffins Co., Ltd. to Thai MMA Co., Ltd. amounted to 127.69 Million
    Baht.

All of the above five transactions occurring in 2008, although
connected, were exempt from disclosures according to the rules on
Disclosure of Information and Other Acts of listed company of SET for
the following reasons:

  1. It is a transaction between the company and a subsidiary that
  having other connected person that holding no more than 10% of total
  shares of a subsidiary.

  2. It is a transaction between subsidiaries that having other
  connected person that holding no more than 10% of total shares of a
  subsidiary.

  3. The value of the transaction does not exceed 0.03% of the value of
  the company net tangible assets.

  4. It is a transaction between the company/subsidiary and other
  connected person which is a juristic person. An authorized person of
  the company/subsidiary, as the shareholder of the juristic person, has
  assigned that person to take care of the juristic person which the
  company/subsidiary is a shareholder.

  5. It is a fair transaction that will not lead to the transfer of
  business interests.

In 2008, the Board of Directors has approved in principle for the
transaction with arm’s length between the company/subsidiary and
director, top executives, and other connected person, according to the
guideline of SEC. SCG management is authorized to approve the
transaction. In the case that the company/subsidiary has a transaction
with director, top executives, and other connected person in the future,
if those transactions has a commercial deal in the form that other
educated person might do in same situation, and with negotiation power
that does not affected by the status of director, top executives, and
other connected person; SCG management is authorized to set a criteria
of the

transaction as appropriated with each business.

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