2. Nature of Business

1.  Company History

The Company was incorporated as a closely held company on May 16, 1969,
with the initial registered capital of Baht 100 million, and later
listed on The Stock Exchange of Thailand (“SET”) on April 15, 1977, and
converted to a public company limited on November 5, 1993. In 1999, the
capital was increased to Baht 3,000 million authorized capital, divided
into 300 million ordinary shares with the par value of Baht 10 per
share, and Baht 2,500 million paid up. Under 2 shares repurchase schemes
in 2003 (scheme 1) and 2006 (scheme 2), 20 million shares, equivalent to
8%, of issued shares bought back are held as treasury stock for the
purpose of financial management due to the Company’s excess liquidity.

In order to comply with the Ministerial Regulations concerning treasury
stock under which the Company has to dispose all of its repurchased
shares and not being resold within the prescribed period by reduction of
its paid-up capital. Therefore, in 2007, the company reduced its
registered and paid-up capital by disposal of all repurchased shares
under scheme 1, for 12.5 million shares, or equal to Baht 125 million.
As its results, registered capital became Baht 2,875 million, and
capital became Baht 2,375 million.

The major change in 2008 was the resignation of Mr. Marcel Smit,
Managing Director, effective on 31 December 2008

Summary of Major Developments and Recognitions in 2008

Customers:

Developments

Marketing and Sales

1.  INSEE Brand successfully strengthened to achieve recognition as one
    of the top cement

brands in Thailand.

2.  Put into operation small Ready-Mix Concrete trucks, with vibrant
    designs, in response to increasing retail demand.

3.  Continued to expand INSEE Concrete Franchise to broaden the network
    of our strategic partners.

4.  Expanded INSEE Concrete Product Manufacturer Franchise to cover more
    product lines, to provide solutions and boost product standard.

5.  Developed and implemented the Customer Information System, Siam City
    Cement’s complete customer database –a major step toward
    customer-centricity.

6.  Increased the percentage of sales through webSALES by 10% Y-O-Y to
    76%.

7.  Implemented “Compact Mobile Plan Project" aimed at construction
    projects with limited spaces that require big quantity of concrete.

Employees:

Developments

Human Resources and Management Development

1.  Continued employee volunteer program in the check dam project for
    the second consecutive year.

2.  Implemented “Individual Performance Upgrade Project” to improve
    employee performance management system.

3.  Continued to run the Assessment Center for the third consecutive
    year. Over 90 leaders in the group company have been assessed.

Occupational Health & Safety

1.  Implemented three Fatality Prevention Elements (FPEs): Vehicle and
    traffic safety, working at height, and isolation and lockout in the
    Siam City Cement Group.

2.  Conducted annual OH&S Road in across the Siam City Cement Group.

Recognitions

Human Resources and Management Development

1.  Awarded for Outstanding Workplace 2008 (Excellent Labor Relations
    and Labor Welfare) from the Ministry of Labor for the second
    consecutive year.

Occupational Health & Safety

1.  OHSAS18001:2007 certified at Geocycle

2.  OHSAS18001:2007 certified at CONWOOD

Society and Communities:

Developments

Corporate Social Responsibility and Community Relations

1.  Accelerated the “80 Years, 880 Check Dams for His Majesty the King”
    project to complete 1,550 check dams in 2008 after 1,050 dams were
    built in 2007

2.  Consolidated educational and vocational support projects to increase
    efficiency and impact.

3.  Contributed to Tabkwang Health Security System to support the public
    health service.

4.  Established Tabkwang Community and Environment Development Fund for
    social and cultural development, education support and environment
    preservation.

Recognitions

Corporate Social Responsibility and Community Relations

1.  Certified standard for Corporate Social Responsibility: “CSR-DIW” by
    the Department of Industrial Works, Ministry of Industries, as a
    precursor to the ISO26000 (CSR).

2.  Nominated as one of the top eight companies to receive CSR award in
    a program organized by the Thailand Management Association and Sasin
    Institute.

3.  Given award for Student Research Support by Her Royal Highness
    Princess Soamsawali.

4.  Given award for Forest Rehabilitation Support by the Royal Forestry
    Department.

Business partners and suppliers:

Developments

Logistics and Exports

1.  Implemented Integrated Supply & Demand Planning through a
    cross-function team (Marketing & Sales, Production, and Logistics)
    to better adapt to the market situation.

2.  Implemented “Supply Chain Capability Building” program to align with
    the supply chain management concept and improved employees’ and
    transporters’ knowledge.

3.  Implemented loading capacity & efficiency improvement project at
    Packing Plant 1 to reduce packing cost and improve reliability and
    speed of cement dispatching.

4.  Centralized dispatching management process into an “In-Plant
    Logistics Scheduling/Control” function and implemented a pilot
    radio-frequency identification (RFID) project at Plant 3.

Finance & Controlling – Procurement

1.  Enhanced the automated system to ensure most efficient, accurate and
    complete payments and reporting

2.  Implemented the Sustainability Development Review to ensure
    long-term effectiveness and development of world-class procurement
    activities.

3.  Continued to expand the scope of Contractor Management and Services
    Sourcing Program to logistic supply chain and transportation with
    the target to achieve higher efficiency but also total cost of
    ownership reductions.

4.  Implemented the cost reduction program to achieve significant and
    immediate cost benefits compared to financial year 2007.

Manufacturing Operations:

Developments

Saraburi Operations

1.  EcoSiam renamed “Geocycle”, a waste management brand of Holcim with
    access to world’s best practices.

2.  Geocycle began operation as one of the world’s most modern
    Alternative Fuels preparation plants in August, 2008, using the
    latest technology and world class environmental management systems
    which cover the entire range of pre-processing activities.

3.  Implemented the new management system for Quarry Scheduling
    Optimization (QSO) for better efficiency in raw material management
    at the quarry.

4.  Implemented the Prompt Gamma Neutron Activation Analysis (PGNAA) at
    the quarry to better utilize raw materials in the cement production
    process.

Recognitions

Saraburi Operations

1.  The quarry certified for Best Mining Practices from the provincial
    office of Ministry of Natural Resources and Environment.

Shareholders:

Developments

Rights of Shareholders

1.  The Company invited its shareholders to propose agenda for the 2009
    Annual General Meeting.

2.  The Company implement E-registration and E-voting systems for
    shareholders meeting for fast, accurate results and for convenience
    of the shareholders.

    Financial and Controlling

1.  Further strengthened and embedded the Internal Control System for
    increased reliability of financial reporting, better awareness of
    financial risks and improved reporting processes.

Recognitions

Rights of Shareholders

1.  The Company was rated “Very Good” for the quality and contents of
    its Annual General Meeting held in 2008, from AGM Assessment 2008
    project.

2.2 Nature of business of the subsidiaries and related company

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2.3 Revenue Structure

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