Connected Transactions

Data for the Siam Cement Group (SCG) subsidiaries, associated and other
companies can be found on pages 19-24. Transactions between the Group
and a company or a person which/who may have a potential conflict are
based on traditional business practice to optimize benefits to each
company, based on a policy of market-mediated trading with prices being
comparable to prevailing market rates or rates in similar industries
with appropriate negotiation.

Details of connected transactions between the Group and a company or a
person which/who may have a potential conflict are presented on pages
117-120

Permission to connected transactions

Each company has defined a clear authority, which is approved by the
Board of Directors of the Company. This authority is reviewed and
renewed on a regular basis, to monitor inter-company activities using an
internal system adequate to prevent transgressions or abuses. In
addition, the Group has established a performance assessment system at
the company and business unit levels, as well as at the Group level,
that keeps all levels cognizant of what is happening and serves as a
strict oversight tool for monitoring transactions to ensure they
accurately reflect true markets conditions.

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 Connected Transactions in 2006 listed by types

1.  Transactions regarding of financial assistance to cut back on new
    projects or project improvements spending.

    1.  Twelve transactions between the Company and subsidiaries
        amounted to Baht 1,416.8 million. :

        -   TMS Enhancement Phase 2 of Cementhai Logistics Co., Ltd.
            (worth Baht 66 million).

        -   Establishment of an associated company, Cementhai SCT (UAE)
            LLC, United Arab Emirates, of SCT Co., Ltd.

        -   Establishment of an associated company for baling plant in
            the Philippines of SCT Co., Ltd. (worth Baht 53.3 million).

        -   Installation of Batching Plant in Saraburi of the Concrete
            Products and Aggregate Co., Ltd. (worth Baht 6.2 million).

        -   Installation of Concrete Conveyor Belt of the Concrete
            Products and Aggregate Co., Ltd. (worth Baht 7.1 million).

        -   Installation of Batching Plant in Srimahapo of the Concrete
            Products and Aggregate Co., Ltd. (worth Baht 8.6 million).

        -   Installation of Batching Plant in Nakhon-Nayok of the
            Concrete Products and Aggregate Co., Ltd. (worth Baht 12.2
            million).

        -   Installation of Batching Plant in Aran-Pratate of the
            Concrete Products and Aggregate Co., Ltd. (worth Baht 12.3
            million).

        -   Establishment of a retail store selling paints and chemicals
            in Bangbuoathong of Cementhai Marketing Co., Ltd. (worth
            Baht 5.2 million).

        -   Stablishment of a retail store selling electrical products
            and lightings in Bangbuoathong of Cementhai Marketing Co.,
            Ltd. (worth Baht 7.9 million).

        -   Roject to increase the production capacity for corrugated
            roof sheets of the Siam Fiber-Cement (Saraburi) Co., Ltd.
            (worth Baht 370 million).

        -   Project to increase the production capacity for wood plank
            and “SmartBoard” of the Siam Fiber-Cement (Thung-Song) Co.,
            Ltd. (worth Baht 868 million).

    2.  Two transactions between the Company and subsidiaries amounted
        to Baht 121.9 million.

        -   Installation of Biomass Dryer in kilns 5-6 of the Siam
            Cement (Thung Song) Co., Ltd. (worth Baht 69 million).

        -   Installation of Cement Cooler in Cement Mill 2-3 of Khao
            Wong Plant of the Siam Cement (Ta Luang) Co., Ltd. (worth
            Baht 52.9 million).

2.  Transactions relating to assets for value creation and more
    efficient use of SCG’s assets.

    1.  Two transactions between subsidiaries and subsidiaries amounted
        to Baht 16.1 million.

1)  De-bottleneck project (worth Baht 10 million) to produce corrugated
    box for City Pack Co., Ltd.

2)  Baling Station project (worth Baht 6.1 million) in Poy Pet, Cambodia
    of Cementhai SCT (Cambodia).

    1.  One transaction amounted to Baht 7.3 million between subsidiary
        and a juristic person.

  1) Installation of Production Planning and Purchase Order Management
  Systems worth Baht 7.3 million for the Packaging Paper Business: IT
  One is hired to implement the systems.

Although all of the above 17 transactions occurring in 2006 were
connected, they were exempted from disclosure according to rules on
Disclosure of Information and Other Acts of listed Acts of listed
company, for the following reasons:

1.  It is a transaction between the Company/subsidiary with subsidiary
    that having other connected person that holding no more than 10
    percent of total shares of the subsidiary.

2.  The value of the transaction does not exceed 0.03 percent of value
    of the Company net tangible assets.

3.  It is a transaction between subsidiaries and other juristic persons
    when the Company/subsidiaries have sent connected personnel to
    oversee the other juristic person in the status of a shareholder.

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

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