12. Financial Statements and Operating Results

    12. Financial Statements

  (A) Report of Independent Auditor and Opinions

  Report of independent auditor certified by Ernst & Young Office
  Limited of the Company and its subsidiaries for the years ended
  December 31, 2005, 2004 and 2003 to the consolidated financial
  statement and the separate financial statements was expressed and
  unqualified opinion on the financial position and the results of
  operations and cash flow for the year then ended in accordance with
  generally accepted accounting principles.

  (B) Financial Statements

-   Consolidated Balance Sheet

-   Consolidated Statements of Earnings

-   Consolidated Statements of Cash Flows

-   Consolidated Financial Ratios

  Certain amounts in the financial statements for the year ended
  December 31, 2004 have been reclassified to conform to the current
  year’s classification, with no effect on previously reported net
  earnings or shareholders’ equity.

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[]12.2 Financial Analysis and Operating Results

Revenues

SCCC and its subsidiaries had generated a total combined income of THB
22,712 million in 2005, an increase of THB 1,501 million or 7% when
comparing to 2004’s.

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 Net Sales

[] In 2005, net sales were recorded at THB 22,380 million or 99% of its
total income, an increase of THB 1,608 million from the year before or
8% increase mainly due to higher sales volume.

From the income structure displayed in the table above, 89% of company’s
income was directly attributed from company’s core business in cement
production. In 2005, net sales both cement and clinker had increased
approximately 17% from the prior year mainly due to the increase in the
sales volume of the export. In term of the sales volume cement export
sales had increased by 53% when comparing to the prior year. Other
subsidiaries’ net sale was increased in amount of THB 1,211 million or
equivalent to 27%.

Other Income

In 2005, the Company had recorded other income of THB 332 million, a
decrease of THB 107 million from the prior year. The decrease was mainly
due to the consolidated statement of earnings for the year ended
December 31, 2004 had included the gain on sales of investments in
shares of Royal Porcelain Public Company Limited, a 53.43 percent-owned
subsidiary, to third parties THB 180 million which increased by 93.5%
from year 2005.

Costs and Expenses

[] Company had recorded total costs and expenses in 2005 of THB 16,839
million, an increase of 13% from 2004’s. Costs and expenses are
summarized as the following: -

From the increase in costs were mainly due to increase in sales volume,
higher fuel and electricity prices. In addition, electricity consumption
increased due to higher export volume, which consumed more electric
energy for additional milling.

Main reason for the increase of selling and administrative expenses were
due to higher consulting fee and customer service expenses from the
prior year by THB 201 million or 11% increase.

From the increase in net sales and costs, company had recorded its net
income in 2005 at THB 4,073 million, a decrease of 2% when comparing to
2004’s THB 4,141 million.

The following table highlighted the comparison of consolidated financial
status at the end of []December 31, 2005 and 2004.

Total Assets and their Components

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 Total Assets

 There was an increase in total assets, primarily in cash and cash equivalents.

On 30 December 2004 and 11 April 2005, the Company sold its investment
in Royal Porcelain Public Company Limited, a 53.43 percent-owned
subsidiary, to third parties which the Company sold proportionately own
at 51.73 percent and 1.7 percent, respectively.

On 29 December 2005, the Company sold its investment in Karat Faucet
Company Limited, a 99.99 percent-owned subsidiary, to a third party.

 Total Liabilities

As at December 31, 2005, the company had reported total liabilities of
THB 4,226 million, an increase of THB 55 million from the prior year.

During 2005, the Company entered into various agreements to pay for in
2005 renewed mining concession which are payable in 8 equal, annually
installments commencing in 2007 and carrying interest at the rate of 6.5
percent per annum, to Department of Primary Industries and Mines, the
Ministry of Industry.

 Shareholders’ Equity

At the end of December 31, 2005, total shareholders’ equity was reported
at THB 16,803 million, an increase of THB 865 million from the prior
year.

By the resolution of the meeting of the Company’s Board of Directors
held on 11 December 2003, the Company approved to repurchase its shares
in order to manage its excess cash, under the share repurchase scheme,
with the investment not to exceed Baht 3,200 million or in term of
shares repurchased not to exceed 12.5 million shares, equivalent to 5%
of the total issued and paid-up shares of the Company. The period for
the repurchase of the shares was from 26 December 2003 to 11 June 2004
and the resale period is from 12 December 2004 to 11 June 2007 (6 months
after the completion date of the share repurchase and not later than 3
years from this time). In the event that the Company does not or is
unable to dispose of all repurchased shares within the set period, when
the due date has passed the Company is to reduce its paid-up capital by
writing-off the remaining unsold repurchased shares.

Changes in financial ratios of 2005 comparing to 2004’s and 2003’s,
which were presented in table C)