12. Financial Statements and Operating Results

    12. Financial Statements

  (A) Report of Independent Auditor and Opinions

  The report of the independent auditor of Ernst & Young Office Limited
  on the Company’s consolidated financial statement (including balance
  sheet, income statement, statement of changes in shareholders’ equity
  for the past three years (2004, 2005 and 2006) show unqualified
  opinion that the Company’s consolidated financial statement are fairly
  prevented, in all material respects, in conformity with the 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

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Managements Discussion and Analysis

The analysis of financial performance for the year 2006 and 2005

Total Revenues

[]SCCC and its subsidiaries generated consolidated total revenues of THB
23,962 million in 2006, an increase of THB 1,250 million or 6% when
compared to 2005.

Net Sales

In 2006, consolidated net sales were recorded at THB 23,647 million or
98% of its total revenue, an increase of THB 1,267 million or 6% from
the year before mainly due to higher sales in all business segments.

From the total revenues, 88% of the company’s net sales were achieved in
the cement business. In 2006, net sales both cement and clinker
increased approximately 6% from the prior year mainly due to the
increase in export sales volume. Net sales of other business decreased
in the amount of THB 86 million or equivalent to 11% only due to the
deconsolidation of Karat Faucet Co., Ltd. before the end of 2005.

Other Income

In 2006, consolidated other income was THB 315 million, a decrease of
THB 17 million from the prior year. The consolidated income statement
for year 2005 included gain on sales of investments in shares of Royal
Porcelain Public Company Limited of THB 11.6 million.

Cost and Expenses

[] Consolidated cost and expenses were THB 18,438 million in 2006, an
increase of 9% from 2005. Cost and expenses are summarized as follows: -

Cost of sales increased as a result of an increase in sales, and higher
fuel and electricity prices.

Main reason for the decline of selling and administrative expenses by
THB 45 million or 2% from the prior year was effective cost control.

Net Profit

Based on increased net sales and cost and expenses, the company recorded
its consolidated net profit in 2006 at THB 3,855 million, a decrease of
6% compared to 2005 at THB 4,037 million.

[]The analysis of cash flows for the year 2006 and 2005

Main factor for the decrease in cash and cash equivalents for year 2006
is the share buy back scheme in the amount of THB 1,711 million. In
addition, the Company purchased fixed assets for new aggregate and
mortar businesses as well as invested in assets to improve product
quality, alternative fuel consumption and rationalization projects.

[]The analysis of financial status as of December 31, 2006 and 2005

 Total Assets

There was a decline in total assets, primarily in cash and cash
equivalents due to the resolution to repurchase 7.5 million shares or 3%
of its shares in order to manage its excess cash.

 Total Liabilities

As at December 31, 2006, the company and its subsidiaries reported total
liabilities of THB 4,955 million, an increase of THB 729 million from
the prior year, due to aforementioned capital investment in maintenance,
rationalization, improvement and expansion.

 Shareholders’ Equity

At the end of December 31, 2006, total shareholders’ equity was THB
15,654 million, a decrease of THB 1,149 million from the prior year.

On June 28, 2006, the meeting of the Company’s Board of Directors passed
a resolution to approve a second repurchase of shares by the Company in
order to manage its excess cash, under the share repurchase scheme, with
the investment not to exceed Baht 1,800 million or in term of shares
repurchased not to exceed 7.5 million shares, equivalent to 3% of the
total issued and paid-up shares of the Company. The Company allocated
additional Baht 1,711 million from the unappropriated retained earnings
as of 31 December 2006 to reserve for treasury shares which will be
proposed for the shareholders ratification in the forthcoming annual
general meeting.

3.  Remuneration of the Auditors

  In 2006 Ernst & Yong Office Limited, received from Siam City Cement,
  the auditing fee for 3.5 million baht and no other service fee.