9. Management

  9.1 Management Structure

Board of Directors

  Board of Directors is the top management of the Company, having the
  authority to direct and control the way the Company is managed.

Members of the Board of Directors are elected by shareholders at a
shareholder meeting by majority vote. The candidates who receive highest
votes in descending order are appointed as directors of the Company to
fill in the vacancies in the Board.

Board of Directors generally has the duty to direct and control the
overall management of the Company, and is subject to the provisions of
the objectives and Articles of Association of the Company. The
activities need to be approved by the Board are set forth in Clause 18
of the Articles of Association. Basically, they are activities or
transactions whose Values are over Baht 100 million, except for the
activities which are required to be approved by the Board exclusively.
The Board of Directors has to meet regularly at least once per quarter.
In 2004, the Board of Directors met 6 times.

According to Article 11 of the Articles of Association, the Board of
Directors comprises not less than five and not over thirteen members.
Normally, the number of members of the Board is twelve. At present, the
twelve members of the Board are as follows:

  1. Mr. Krit Ratanarak Chairman

  2. Mr. Paul Heinz Hugentobler Vice Chairman

  3. Mr. Veraphan Teepsuwan Vice Chairman

  4. Mr. Harald Link Independent Director

  5. Mr. Prakob Visitkitjakarn Independent Director

  6. Mr. Chet Raktakanishta Independent Director

  7. Mr. Urs Wolfgang Bieri Director

  8. Dr. Jamlong Atikul Director

  9. Dr. Sura Sanittanont Director

  10. Mr. Leo Mittelholzer Managing Director

  11. Mr. Vanchai Tosomboon Executive Director

  12. Ms. Chantana Sukumanont Executive Director

  Mr. Reinhard Krieg, Mr. Vincent Bichet, and Mr. Somboon Phuvoravan
  resigned from office during the year 2004 and Mr. Leo Mittelholzer,
  Mr. Vanchai Tosomboon and Ms. Chantana Sukumanont were appointed to
  fill in the vacancies according to Article 14 of the Articles of
  Asociation of the Company.

Please refer to the Annex 1 attached hereto for brief background
information of the members of the Board of Directors.

The information about the Company’s Corporate Secretary is as follows:

Name: Staporn Phettongkam Ph.D.

Position: Secretary General & Corporate Communications

Tel: (66) 0-2685-8000 Ext. 1100

Fax: (66) 0-263-0559

  The Board of Directors delegates its power to two committees, i.e.
  Audit Committee and Executive Committee.

Audit Committee

  The Audit Committee (“AC”) reports directly to the Board of Directors,
  comprising three members who are independent directors, and appointed
  by the Board of Directors. The role, duties and responsibilities of
  the Audit Committee are in accordance with the Best Practice
  Guidelines for Audit Committee provided by the SET, which are
  incorporated in the Company’s Charter of the Audit Committee.

  In 2004, the Audit Committee comprises 3 members as follows:

  1. Mr. Prakob Visitkitjakarn Chairman

  2. Mr. Harald Link Member

  3. Mr. Chet Raktakanishta Member

  Audit Committee meets ordinarily on a quarterly basis, i.e. 4 times a
  year. In addition, the chairman of the Audit Committee call Audit
  Committee meetings when he think fit, usually once every one or two
  months. This type of meeting took place 8 times in 2004. Therefore,
  the Audit Committee met 12 times in 2004.

Executive Committee

  The Executive Committee reports directly to the Board of Directors.
  The Executive Committee and its members are, in general, subject to
  the Company’s Organizational Regulations. The Executive Committee
  meets regularly once a month. The main duty and responsibility of the
  Executive Committee is to run the day-to-day business of the Company
  according to the direction set by the Board of Directors and under the
  control of the Board of Directors. The Executive Committee delegates
  its duties to its members, while all members remain jointly
  responsible to the Board of Directors with respect to the performance
  of their duties. Basically, the Executive Committee has the power to
  approve any activities whose values are not over Baht 100 million.

The Executive Committee is chaired by the Managing Director. Its members
are appointed by the Board of Directors. The present Executive Committee
members are six persons as follows:

  1. Mr. Leo Mitelholzer Managing Director

  2. Mr. Vanchai Tosomboon Executive Vice President (Saraburi
  Operations)

  3. Ms. Chantana Sukumanont Executive Vice President (Marketing and
  Sales)

  4. Mr. Nopporn Thepsithar Senior Vice President (Logistics and Export)

  5. Mr. Rungrote Soonthorn Senior Vice President (Human Resources and
  Management Development)

  6. Mr. Andreas Leutenegger Senior Vice President (Finance and
  Controlling)

  Mr. Vincent Bichet, Mr. Somboon Phuvoravan and Mr. Beat Malagarne
  resigned from office during the year 2004 and Mr. Leo Mittelholzer,
  Mr. Vanchai Tosomboon and Mr. Andreas Leutenegger were appointed to
  fill in the vacancies

  9.2 Directors and Members of Executive Officer Selection Procedure

  As described above members of the Board of Directors are elected by
  shareholders by majority vote according to Clause 12 of the Company’s
  Articles of Association. The Board of Directors nominates the
  candidates for the election.

Members of the Audit Committee and Executive Committee are appointed by
the Board of Directors.

  9.3 Compensation to Management

Monetary Compensation

  The monetary remuneration payable of the members of the Board of
  Directors for the year 2004 totaled Baht 15 million, including the
  meeting allowance and bonus.

The aggregate monetary compensation paid to all Executive Committee
members (including those 3 remaining in the office through the year,
those 3 retired during the year and those 3 assuming the office during
the year) was Baht 83.22 million.

Other Compensation

  Compensation to Executive Committee members other than the
  above-mentioned monetary compensation includes: 1) the Company’s
  contribution to the provident fund to match the portion contributed by
  them was Baht 0.83 million, in aggregate; and 2) company cars.

  9.4 Corporate Governance

The Company has realized importance of good corporate governance and law
compliance for a long time.

  The Company adopts good corporate governance, including those provided
  by the Stock Exchange of Thailand, in supervising and controlling its
  business operations, which can be briefly described as follows:

  9.4.1 Corporate Governance Policy

  The Company promotes corporate governance at every level of the
  organization from the Board of Directors, the Executive Committee and
  down all the way to the operational level. The Company has the policy
  to improve and promote the good governance practice continually in
  order to achieve the ultimate goal of creating sustainable
  shareholders’ value added while taking into consideration the
  interests of all stakeholders.

  The Board of Directors direct and control overall management in
  general.

  The Executive Committee direct and control the Company’s day-to-day
  business according to the direction set by and control of the Board of
  Directors. In particular, the Executive Committee set the internal
  control system and risk management process in order to prevent
  occurrence of detrimental matters in the course of business
  operations, emphasizing in the following issues:

a)  Compliance with laws as well as the policies and standards of the
    Company;

b)  Adequate risk management;

c)  Credibility and adequacy of financial reportings; and

d)  Transactions having conflict of interest are appropriately dealt
    with.

  The Company has the following principles supplement to the above major
  principles:

1.  participation of all employees;

2.  decentralization of management power;

3.  transparency, information disclosure, responsibility to the result
    of the duty performance through the monitoring and assessment
    systems;

4.  enhancement of the added value to shareholder other stakeholders;
    and

5.  adherence to the best practice of the corporate governance.

  The Company received the year 2000’s winner award for good corporate
  governance after it had introduced the 5 corporate governance
  principles namely:

  The Company keeps promoting and improving the good corporate
  governance practice. The Audit Committee has been vested by the Board
  of Directors with the prime responsibility to ensure that the Company
  is good governance compliant, particularly in the four major areas as
  follows:

1)  Compliance with laws as well as the policies and standard of
    practices of the Company;

2)  Adequate risk management processes to prevent bad things or events
    from happening, i.e. “internal control”

3)  Credibility and sufficiency of financial reporting; and

4)  Transactions which conflict of interest is involved are
    appropriately dealt with.

  Board of Directors comprises members who possess knowledge,
  experience, expertise in the fields of technique, finance, business
  management, both domestically and internationally. Board of Directors
  has regular duties according to the laws and the Directors’ Best
  Practice, which include 1) approval of important strategies of the
  Company; 2) supervision of the Company’s operations to ensure that
  they are in line with the approved plans and strategies; 3) Assurance
  of the existence of good and reliable internal control and risk
  management. In addition Board of Directors has seriously perform its
  duties in closely supervising the performance of the Executive
  Committee, promoting the open-minded corporate culture of
  participation of all employees to express their opinion and
  information to higher management for decision-making.

  9.4.2 Shareholders’ Rights

  One of the Company’s targets in connection with corporate governance
  is to protect the benefit of the shareholders. The Company recognizes
  the importance of the equality among shareholders in the sense that
  they are entitled to receive fair treatment from the Company,
  including the various procedures related to share registration, share
  transfer, access to information from the Company, equal opportunity
  related to shareholder meetings and voting at the meetings, dividend
  distribution.

  The Company’s treatment to all shareholders equitably and
  transparently. This reflects in the Company’s practice such as the
  disclosure of significant information to the shareholders and
  investors. In 2004, the Company made 18 disclosures via the SET
  electronic publication.

  The Company publicizes information on its website which the public may
  access to it at www.siamcitycement.com/investor.

  Apart from the foregoing, the Company publicizes information from time
  to time via press and analysts conference.

  9.4.3 Other Stakeholders’ Interest

  The Company recognizes the existence and the interest of all
  stakeholders, such as government, employees, community, creditors,
  trading counterparties, government, and communities. The Company’s
  success is attributable to the contribution from those stakeholders,
  e.g. skill and diligence of employees, support from customers,
  cooperation from business partners, infrastructure provided by the
  government.

  The Company always recognizes the interest of the said stakeholders
  and assures that their interests are reasonably protected. The Company
  promotes collaboration with the said stakeholders in order to sustain
  the business success.

  9.4.4 Shareholder Meetings

  One of the Company’s intentions in holding shareholder meetings is to
  promote the cooperation and communication between the BOARD OF
  DIRECTORS and the shareholders. Annual general meetings (“AGM”) are,
  therefore, regarded as an importance regular event of the Company at
  which directors and management are usually present.

  The essence principles for the organization of a shareholder meeting
  are the following:

-   Equality among all shareholders, including minority and foreign
    shareholders, in term of the opportunity to attend the meeting,
    access to the adequate information about the meeting for the purpose
    of their decision-making.

-   The meeting notice and materials are given to all shareholders in
    advance in accordance with the requirement of the Company’s Articles
    of Association.

  At AGM, directors and members of the Audit Committee are present.
  Shareholders are granted with adequate opportunity and time to express
  their opinion and asked their questions according to the meeting
  agenda.

  9.4.5 Leadership and Vision

  In 2004, a new corporate vision has been set that, for the period of
  few years down the road, the Company is “to be the preferred
  application-tailored cement solution provider, through effective
  internal and external collaboration along the value chain, achieving
  above industry profitability.”

  9.4.6 Conflict of Interest

  For the best benefit of the Company, members of the Board of Directors
  and the Executive Committee and major shareholders are all carefully
  play their respective roles in order to avoid potential conflict of
  interest as well as any thing that may lead to such problem. The
  Company has a clear policy in dealing with conflict of interest.
  Evidently, no director of the Company is also a director or hold
  executive position in other cement manufacturing company that is the
  Company’s competitor. In the event that there is a conflict of
  interest, the interested director has to inform other directors about
  the existence of such conflict of interest and refrain from
  participation in the consideration and making decision on such matter.

  Members of the Board of Directors and the Executive Committee are
  required to notify the Board of Directors or designated person(s) and
  all personnel concerned of the existence of the conflict of interest
  so that care can be exercised and necessary actions can be taken in
  dealing with the matter, including those required by law and
  regulatory body’s requirements such as the SET regulation governing
  connected transactions.

  9.4.7 Business Ethics

  The Company has set policies for various related parties such as
  subsidiary companies, affiliated companies, directors, executive
  officers and employees to follow in performing their duties. There are
  internal controlling system and etiquettes for the management and
  supervisors to use as tools to determine whether the directions, goals
  and standards of the Company have been followed by the persons
  involved. This is also to ensure that the benefits of the shareholders
  are protected.

  9.4.8 Balance of Power for Non-Executive Directors

  Members of Board of Directors are appointed by shareholder meeting,
  comprising executive and non-executive directors. At present there are
  12 Board of Directors members, 3 of which are executive directors. The
  rest of 9 are non-executive. This is regarded as a suitable
  composition of the Board of Directors in term of the fairness between
  various interested parties in the Company.

  Three non-executive directors are also members of the Audit Committee,
  being responsible for the management and regulation of the Company’s
  internal audit, assessment of the efficiency and effectiveness of the
  audit work, the accuracy, completeness and reliability of the
  financial and operational information. The Audit Committee presently
  comprises three members whose qualifications meet the requirements set
  by the SET.

  9.4.9 Aggregation versus Segregation of Positions

  To prevent unlimited power of any party, the Company has a clear
  policy on the segregation of responsibilities of the Chairman of the
  Board of Directors, the Managing Director, Board of Directors and
  Executive Committee.

  Main duties of the Chairman and Managing Director are as follows:

  Chairman:

-   Handling all activities responsible by Board of Directors, setting
    meeting agenda, providing information about the Board of Directors,
    proceeding the meetings at which opportunity is granted for
    discussion and expression of opinion. (At present, the
    responsibility of organization meetings is entrusted to the
    Secretary to the Board of Directors);

-   In making decision, the Chairman has a deciding vote in the event of
    tie votes;

  Managing Director:

-   Managing Director, appointed by Board of Directors, holds the
    position for a specified term, and may be rotated. Managing Director
    chairs the Executive Committee;

-   Managing Director is responsible for management of the Company in
    general.

  9.4.10 Compensation to Management

  Please see Point 9.3 hereof.

  9.4.11 Board of Directors Meetings

  The time schedule of Board of Directors meetings in each year is set
  in advance. In the past, Board of Directors met regularly on a
  quarterly basis. The purpose of the Board of Directors meetings is to
  consider the Company’s business operation and the operating results.
  The Secretary to the Board of Directors is responsible for arranging
  Board of Directors meeting, giving meeting notices to members of the
  Board of Directors before the meetings. Normally, all directors are
  present at every meeting unless they have unavoidable necessity. At
  all meeting, the Chairman always encourages participation of all
  members of the Board of Directors to ensure that all matter in
  question are deliberately considered. The executive directors are
  granted with opportunity to give their explanation to the questions
  related to the Company’s management. Occasionally, executive officers
  may be invited to give their explanation in the matters they are
  involved.

  Board of Directors is responsible for the following:

-   establishment of good and effective internal control system with an
    aim to attain the good corporate governance;

-   Making decision in the event of: 1) conflict of interest between the
    parties concerned, including shareholders and directors; 2)
    acquisition or disposition of the Company’s property; 3) any
    investment, borrowing, delegation of power, financial policy, risk
    management policy, human resource management, etc.

  9.4.12 Committees

  Board of Directors has delegate its power to committees to help
  supervise the Company’s operation in the areas of financial
  management, the performance of the auditors, both internal and
  external. At present, there two committees namely Audit Committee and
  Executive Committee whose composition and responsibilities are as
  follows:

Audit Committee

  Audit Committee comprises 3 independent directors, appointed by Board
  of Directors. Audit Committee meets on a regular basis, at least once
  every quarter before Board of Directors meeting. Audit Committee’s
  responsibility is as described in Item 10 below.

-   
-   
-   

  Audit Committee reports its findings and giving its suggestions to the
  Board of Directors. Chairman of the Audit Committee may sometimes call
  a special meeting of the Audit Committee or invite any management of
  the Company to join and consider in certain particular financial
  matters or other matters.

Executive Committee

  Executive Committee meets on a monthly basis. It may meet as an
  extraordinary session as the Company’s business requires. The business
  considered at Executive Committee meetings are those related to the
  production, business administration, financial and accounting
  management, risk management, important financial transactions,
  Company’s plans, Company’s budgets, property acquisition, investment
  activities, etc. In general, Executive Committee has to report and
  propose to Board of Directors in relation to important matters.

  9.4.13 Internal Control and Audit Systems

  Please see Points 10 hereof.

  9.4.14 Board of Directors’ Reports

  It is an aim of the Company to establish the clarity and balance in
  the financial position of the Company. Board of Directors supervises
  the accounting work to ensure that the accuracy of the Company’s
  accounts which represent the financial position of the company and its
  subsidiaries. Financial reports are published on a quarterly basis.
  Financial reporting for the full year is made within 60 days after the
  end of each fiscal year.

  For the benefit of general investors and the public, the Company’s
  quarterly and annual financial reportings are considered by Board of
  Directors. Those financial reports are shown on the Company’s and
  SET’s websites.

  The essence of annual financial reports is the auditor’s report to
  shareholders expressing the auditor’s opinion on the information
  contained in the financial statements based on her/his audit. The
  Company as a SET listed company, is required to report its financial
  and operational information to the SET.

  9.4.15 Investor Relation

  To ensure that important information is communicated to shareholders,
  investors and all stakeholders accurately, timely and transparently,
  the Company has established a business relation to represent the
  Company in communicating the information about the Company to
  investors, securities analysts, financial institutions, and concerning
  governmental agencies. The contact information for this business
  relation unit is as follows:

  Name: Business Relation & Corporate Secretary (investor relation
  affairs)

  Tel: 0-2685-8000

  Website: www.siamcitycement.com (Investor Relation)

  E-mail: pr@sccc.co.th

  9.5 Inside Information

The management and the parties involved have been informed about the
regulations on the shareholding reports, inside information, and the
sanctions related thereto. For the monitoring reason, provision of the
information related to the operating results of the Company is set to be
the exclusive authority of the Managing Director.

  9.6 Personnel

Consolidated number of employees of the Company and its subsidiaries as
of the end of 2004:

+----------------------------------------+-----------------------------+
|                                        | Number of employees         |
+----------------------------------------+-----------------------------+
| Production                             | 1,747                       |
+----------------------------------------+-----------------------------+
| Logistic                               | 389                         |
+----------------------------------------+-----------------------------+
| Marketing and Sales                    | 350                         |
+----------------------------------------+-----------------------------+
| Finance and Controlling                | 127                         |
+----------------------------------------+-----------------------------+
| Others                                 | 185                         |
+----------------------------------------+-----------------------------+
| Total                                  | 2,789                       |
+----------------------------------------+-----------------------------+

  In the past 3 years, there was no significant change in the number of
  employees. Consolidated personnel expense in the year 2004 was Baht
  1,852,487 million.

  Major policy on the personnel development:

A Company’s major policy on the human resources development is to create
“an organization of learning” according to the “Competency” scheme
designed by the Company. A sufficient budget has been allocated to the
Human Resources Management and Development for the activities under this
policy. The activities covered include the following:

-   Trainings, both locally and overseas;

-   Employees’ competency development focusing on employees’ ability in
    performing their job successfully;

-   The project of the center for measurement of management potential
    for HR development;

-   The project of the managerial and administration capability to get
    employee be prepared for promotion to management level;

-   The project of “e-learning/Virtual Classroom”;

-   The project of selection of in-house trainers;

-   The project of the new hire orientation;

-   The project of the buddies for the new hires;

-   The project of SCCC Core Values;

-   The project of the job profile identification;

-   Aiming to be the outstanding organization in term of change
    management;

-   The project of monitoring and assessment of the learning to ensure
    that the trainings provided are consistent with the requirements of
    the business.

  The above trainings are aimed to develop the Company’s human resource
  so that they are prepared to the full extent of their capability to
  help the Company to grow to be the real leader in the cement industry.