Management

(1) Management Structure

Names of Management or Controlling Persons

Board of Directors comprises

1. H.E. Dr. Chaovana NaSylvanta Chairman

2. Air Vice Marshal Kamthon Sindhvananda Director

3. Mr. Paron Israsena Director

4. Mr. Snoh Unakul Director

5. Mr. Sivavong Changkasiri Director

6. Mr. Sumet Tantivejkul Director

7. Mr. Yos Euarchukiati Director

8. Mr. Pricha Attavipach Director

9. Mr. Panas Simasathien Director

10. Mr. Arsa Sarasin Director

11. Mr. Chumpol NaLamlieng Director

12. Mr. Kan Trakulhoon Director and President

Mr. Worapol Jennapar Secretary of the Board and

Corporate Secretary

Top Executives of Siam Cement Group (SCG) comprises

  1. Mr. Kan Trakulhoon President and CEO

  Siam Cement Group (SCG)

  2. Mr. Roongroote Rangsiyopash Vice President and CFO

  Siam Cement Group (SCG)

  3. Mr. Cholanat Yanaranop President

  SCG Chemicals

  4. Mr. Chaovalit Ekabut President

  SCG Paper

  5. Mr. Pramote Techasupatkul President

  SCG Cement

  6. Mr. Pichit Maipoom President

  SCG Building Materials

  7. Mr. Kajohndet Sangsuban President

  SCG Distribution

8. Mr. Damri Tunshevavong President

Joint Venture Business

The Attendance of the Directors in Relevant Committee Meetings in 2006

Unit: Time

+------------------+---------+---------+---------+---------+---------+
| Directors        | Board   | The     | The     | The     | The     |
|                  | of      | Audit   | Gov     | Remun   | Share   |
|                  | Di      | Co      | ernance | eration | holders |
|                  | rectors | mmittee | and     | Co      | O       |
|                  |         |         | Nom     | mmittee | rdinary |
|                  |         |         | ination |         | General |
|                  |         |         | Co      |         | Meeting |
|                  |         |         | mmittee |         | 2006    |
+------------------+---------+---------+---------+---------+---------+
|                  | Total   | Total   | Total   | Total   | Total   |
|                  | (12     | (4      | (4      | (3      | (12     |
|                  | Dir     | M       | M       | M       | Dir     |
|                  | ectors) | embers) | embers) | embers) | ectors) |
|                  |         |         |         |         |         |
|                  | Total 9 | Total 6 | Total 4 | Total 7 | on      |
|                  | Tim     | Tim     | Tim     | Tim     | March   |
|                  | es/Year | es/Year | es/Year | es/Year | 22,     |
|                  |         |         |         |         | 2006    |
+------------------+---------+---------+---------+---------+---------+
| 1. H.E. Dr.      | 8/9     |         |         |         | 1       |
| Chaovana         |         |         |         |         |         |
| Nasylvanta       |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 2. AVM Kamthon   | 9/9     | 6/6     |         |         | 1       |
| Sindhvananda     |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 3. Mr. Paron     | 7/9     | 6/6     | 2/2*    |         | 1       |
| Israsena         |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 4. Mr. Snoh      | 9/9     |         | 4/4     |         | 1       |
| Unakul           |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 5. Mr. Sivavong  | 9/9     | 4/6**   |         | 7/7     | 1       |
| Changkasiri      |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 6. Mr. Sumet     | 7/9     | 6/6     | 4/4     |         | 1       |
| Tantivejkul      |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 7. Mr. Pricha    | 9/9     | 6/6     |         |         | 1       |
| Attavipach       |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 8. Mr. Panas     | 9/9     |         | 4/4     |         | 1       |
| Simasatien       |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 9. Mr. Yos       | 9/9     |         |         | 7/7     | 1       |
| Euarchukiati     |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 10. Mr. Arsa     | 7/9     |         | 3/4     |         | 1       |
| Sarasin          |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 12. Mr. Chumpol  | 7/9     |         |         | 5/7     | 1       |
| NaLamlieng       |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| 13. Mr. Kan      | 9/9     |         |         |         | 1       |
| Trakulhoon       |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+

Notes:

* Resigned from his directorship of the Governance and Nomination,
effective on August 26, 2006, without a replacement (Between January 1 –
August 26, 2006, the Governance and Nomination met two times.)

** Resigned from his membership of the Audit Committee, effective on
December 27, 2006, without a replacement.

-   The five Independent Directors are number 2, 3, 6, 7, and 10

-   The four Audit Committee members are number 2, 3, 6 and 7

-   The four Governance and Nomination Committee members are number 4,
    6, 8 and 10

-   The three Remuneration Committee members are number 5, 9 and 11

    Independent Directors’ Training

    Conducted by Thai Institute of Directors Association (IOD)

+----------------------------+---------------------+------------------+
|                            | Training Courses    |                  |
+----------------------------+---------------------+------------------+
| Independent Directors of   | Directors           | Directors        |
| the company                | Certification       | Accreditation    |
|                            |                     |                  |
|                            | Program (DCP)       | Program (DAP)    |
+----------------------------+---------------------+------------------+
| 1. AVM Kamthon             | -                   | Class 18/2004    |
| Sindhavananda              |                     |                  |
+----------------------------+---------------------+------------------+
| 2. Mr. Paron Israsena      | -                   | Class 4/2003     |
+----------------------------+---------------------+------------------+
| 3. Mr. Sumet Tantivejkul   | Class 30/2003       | -                |
+----------------------------+---------------------+------------------+
| 4. Mr. Pricha Attavipach   | Class 39/2004       | -                |
+----------------------------+---------------------+------------------+
| 5. Mr. Arsa Sarasin        | -                   | Class 5/2003     |
+----------------------------+---------------------+------------------+

The Board of Directors and Top Executives of Siam Cement Group (SCG)

Duly authorized directors

Two of the six company directors, namely, H.E. Dr. Chaovana Nasylvanta,
or Mr. Snoh Unakul, or Mr. Yos Euarchukiati, or Mr. Panas Simasathien,
or Mr. Chumpol NaLamlieng, or Mr. Kan Trakulhoon jointly signed their
names.

Scope of authority of the Board of Directors and Subcommittees

The Board of Directors of the Company

The number of directors is currently limited to twelve. The Board of
Directors consists of eleven non-executive directors, which included
five independent directors, and one executive director to ensure
effective and efficient performance. The Board holds eight regular
scheduled meetings per year. Board members receive the agenda and all
supporting documents for each meeting well in advance to allow adequate
time for preparation. The Board considers all matters with due regard
for the interests of the shareholders and stakeholders. The chairman
ensures that there is sufficient time for a thorough discussion of each
agenda item with a full exchange of views.

Directors' Term on Board

  At the annual general meeting each year, one third of the total
  directors must retire from the office. If it is not possible to divide
  the total number of directors evenly by 3, the number closest to
  one-third must retire from the office. In choosing those directors who
  retire, length of service on the board should be considered with those
  longest serving most eligible to retire. Nevertheless, a retiring
  director is eligible for re-election.

  The selection of candidates to be directors will select the persons
  who are highly qualified and experienced professionals from various
  fields, showing great leadership, breadth of vision, a proven record
  of ethical standards and integrity, and ability to express opinions
  freely.

Scope of authority of the Board of Directors

The Board of Directors essentially has the following authorities:

1.  Fiduciary Duty: act in a fiduciary capacity to administer the
    corporate affairs for the best interests of the shareholders by
    closely observing the following.

    1.  Duty of Care: cautiously and carefully perform its duties.

    2.  Duty of Loyalty: perform its duties with faithfulness and
        honesty.

    3.  Duty of Obedience: strictly observe the laws, the objectives,
        the Articles of Association and the resolution of shareholders’
        meeting.

    4.  Duty of Disclosure: disclose accurate, complete and transparent
        information to the shareholders.

2.  The Board is responsible for establishing corporate vision, the
    mission statement as well as the policy and strategy to align and
    sustain the interests of all stakeholders and create long-term
    shareholders’ value.

3.  The Board is responsible for reviewing the operating plan and
    ensuring maximum competitiveness in global level.

4.  The Board shall oversee and review the performance of all group
    companies as well as evaluating the performance of the management
    committee.

5.  The Board maintains proactive risk management systems as well as
    overseeing and reviewing corporate governance to ensure compliance
    with internationally accepted practice.

6.  The Board must devote their time and efforts to the Company without
    seeking personal benefits, and shall not act in conflict with the
    interests of or in competition with the Company or the Group.

7.  The Board manages and directs the Company’s operations in compliance
    with all laws, the objectives, the Articles of Association and the
    resolution of shareholders’ meetings in good faith and with care to
    preserve the interests of the Company.

8.  The Board conducts the Company’s business in line with Siam Cement
    Group Corporate Governance as well as the SET Code of Best Practice
    for Directors of Listed Companies and Guidelines of Securities and
    Exchange Commission in pursuit of business excellence.

9.  The Board is responsible for overseeing and monitoring the
    performance of each business unit and for the overall performance of
    SCG. The Board ensures that the Group’s operations reporting conform
    to an agreed standard while establishing a corporate policy for the
    development of the Company’s operations and personnel development.

10. The Board promotes awareness of the importance of business ethics
    among employees at all levels. It also promotes internal controls
    and internal auditing to ensure corporate integrity is maintained
    and to prevent any fraudulent practices.

11. The Board treats all shareholders equally with regard to information
    and protects those right equitably. Shareholders can actively
    exercise their rights and access to corporate information with full
    disclosure and transparency.

12. Being fully aware of its duties and responsibilities, the Board
    shall respect the rights of shareholders, fairly and equally treat
    the shareholders and stakeholders, transparently manage the
    business, and disclose accurate and adequate information.

13. The Board’s performance shall be annually assessed in two
    categories: assessment of the entire Board as a whole and
    self-assessment of each individual Director. The results of both
    shall be reviewed by the Board.

14. Directors must attend all meetings of the Board and Shareholders.
    Under the unavoidable circumstances that the Directors are not able
    to attend the meeting, they must notify the Chairman of the Board or
    the Secretary to the Board in advance.

\

  The Board may seek external consultation or professional advice from
  independent consultants or specialists, as deemed appropriate.

The Audit Committee

The Audit Committee of the Company comprises the following four members:

  1. AVM Kamthon Sindhvananda Chairman

  2. Mr. Paron Israsena Member

  3. Mr. Sumet Tantivejkul Member

  4. Mr. Pricha Attavipach Member

Scope of authority

The Audit Committee is authorized to fulfill the following duties:

1.  Supervise and review that the Company has appropriate financial
    reporting system and that the Company regularly disclosed its
    financial statements in accordance with the legally defined
    accounting principle with transparency and adequacy.

2.  Support the establishment of financial report development in
    compliance with the international accounting standard.

3.  Review and ensure that the Company has appropriate and effective
    internal control and internal audit systems that comply with
    international accepted approaches and standards.

4.  Supervise and ensure that the Company has in place proactive
    operation systems to enhance operating effectiveness and efficiency.

5.  Review corporate risk management system.

6.  Review and ensure that the Company is in full compliance with the
    laws on Securities and the Stock Exchange, and other laws relating
    to the Company’s business.

7.  Review the report on dishonesty and establish preventive measures.

8.  Review the righteousness and effectiveness of the information
    technology system relating to the internal control system, financial
    reports and risk management and suggest an up-to-date improvement
    occasionally.

9.  Review disclosure of corporate data in case there is a connected
    transaction or item that may lead to conflicts of interest to ensure
    accurateness and completeness.

10. Oversee, review and ensure that the assessment of the entire Audit
    Committee’s performance and the self-assessment of each individual
    member’s performance take place annually.

11. Supervise, review and comment on the operation of the Audit Office
    and also cooperate with the Company’s auditor.

12. Prepare reports on the supervision of activities of the Audit
    Committee with disclosure in the Company’s annual report which is
    duly signed by the chairman of the Audit Committee.

13. Consider, select, propose the appointment and remuneration of the
    Company’s auditor, and assess the auditor’s independence and
    performance.

14. Supervise the evaluation of the Audit Office in compliance with
    international standards.

15. Consider the budgets and manpower of the Audit Office.

16. Appoint, remove, transfer or terminate the employment of the
    Director of the Audit Office.

17. Take other actions in compliance with the law or assignments by the
    Board of Directors.

In actions thereof, the Audit Committee is authorized to summon or order
management, head offices, or employees concerned to present opinions,
attend meetings or submit the necessary documents, and to seek
independent advice from other external consultants as deemed appropriate
at the Company’s expenses.

  The Audit Committee performs duties within the authority and
  responsibility under the order of the Board of Directors. The Board is
  responsible for the Company’s operations and is directly accountable
  to shareholders, stakeholders and the public.

The Governance and Nomination Committee

The Governance and Nomination Committee of the company comprises the
following four members:

  1. Mr. Sumet Tantivejkul Member

  2. Mr. Snoh Unakul Member

  3. Mr. Panas Simasathien Member

  4. Mr. Arsa Sarasin Member

Scope of Authority

The Governance and Nomination Committee is authorized to fulfill the
following duties.

1.  Draw up a policy on SCG corporate governance and present it to the
    Board of Directors.

2.  Make recommendations, give advice to the Board of Directors
    regarding the best practices in corporate governance.

3.  Oversee and monitor the effectiveness of the Company's Board and
    Management with reference to SCG Corporate Governance.

4.  Review the Company's corporate governance affairs and compare them
    with those of the leading international companies. The Committee
    also recommends plans for further improvement of the Company's
    corporate governance from time to time.

5.  Review independency of the Board of Directors and the issues of
    conflicts of interest.

6.  Should there be a few alterations made to the directors’
    qualifications, the Committee shall review the appropriateness for
    directorship.

7.  Recommend and implement a process of assessing the performance of
    the Board of Directors and the Subcommittees, and report the results
    to the Board of Directors for the improvement of performance
    efficiency.

8.  Annually review the process of assessing the performance of the
    Board of Directors and the Subcommittees.

9.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Governance and Nomination Committee.

10. Specify qualifications of a person to be nominated for directorship
    and lay down the director nomination process to replace the retiring
    director, considering an eligible candidate with skills, experiences
    and expertise.

11. Identify qualified candidates to replace directors retiring at the
    end of their terms, or for other reason, and submit a list of
    nominees to the Board of Directors’ and/or Shareholders’ meeting for
    resolution.

12. Recommend succession plans for the succession of the company’s
    president and senior executives.

13. Review and give some advice on the structure, roles and
    responsibilities and practices of the Board of Directors and the
    Subcommittees. Should there be any alterations to the Charter of the
    Board of Directors and the Subcommittees, the Governance and
    Nomination Committee shall review and make appropriate
    recommendations in keeping it up-to-date.

14. Perform other duties as assigned by the Board of Directors.

  To fulfill its duties under the scope of authority, the Governance and
  Nomination Committee is authorized to call for and order management,
  head of offices or employees concerned to give opinions, attend the
  meetings submit the necessary documents. In addition, the Committee
  may seek external consultations and professional advice from
  independent consultants or specialists, as deemed appropriate, at the
  Company’s expenses.

The Remuneration Committee

The Remuneration Committee of the company comprises the following three
members:

1. Mr. Sivavong Changkasiri Chairman

2. Mr. Yos Euarchukiati Member

3. Mr. Chumpol NaLamlieng Member

Scope of Authority

The Remuneration Committee is authorized to fulfill the following
duties.

1.  Propose guidelines and methods of payment of remuneration, including
    bonus and attendance fee, to the Board of Directors and the
    Subcommittees appointed by the Board.

2.  Propose policy on management incentives, including salary and bonus,
    in line with the Company’s operating results, and the performance of
    each executive, and whenever it deems appropriate, the committee
    shall consider the hiring of consulting firms to advise on project
    implementation.

3.  Prior to the submission of the president’s remuneration for the
    Board of Directors’ approval, the Remuneration Committee shall
    assess the president’s performance on an annual basis.

4.  Prior to the submission of top executives’ remuneration for the
    Board of Directors’ approval, the Remuneration Committee shall
    assess the performance of each individual executive on an annual
    basis, based on the president’s recommendations.

5.  Consider, before presenting to the Board of Directors, the budget
    for the salary increase, change of wage/remuneration and bonus of
    the senior executives.

6.  Regularly review, study and track the changes and trends in
    remuneration for the Board of Directors and the executives and
    report its findings to the Board for approval.

7.  Consider the annual remuneration for the Board of Directors and the
    executives, as compared to the remuneration offered by other listed
    companies operating in the same business, to ensure that SCG retains
    its leadership in that industry and to motivate them to foster the
    continuing development of the Company.

8.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Remuneration Committee.

9.  Assess the Remuneration Committee’s performance and report the
    results to the Board of Directors.

10. Should there be any alterations to the Charter, the Remuneration
    Committee shall review and recommend appropriate improvements,
    revisions to the Board of Directors for its resolution in keeping it
    up-to-date and applicable.

11. Perform other duties as assigned by the Board of Directors.

To fulfill its duties under the scope of authority, the Remuneration
Committee is authorized to call for and order the management, head of
offices or related employees concerned to give opinions, attend the
meetings or submit the necessary documents. In addition, the Committee
may seek external consultations and professional advice from independent
consultants or specialists, as deemed appropriate, at the Company’s
expenses.

Executives (SCG Management Committee)

SCG Management Committee is comprised eight members: President of The
Siam Cement Public Company Limited together with seven other executives
including the Vice President of the Company and Presidents responsible
for each business unit, namely, SCG Chemicals, SCG Paper, SCG Cement,
SCG Building Materials, SCG Distribution, and joint venture business.
These seven executives report directly to the President. SCG Management
Committee is authorized to manage and direct the Group’s operations in
accordance with policies set by the Board; to take responsibility for
the Group’s operating results; to control expenses and capital
expenditure limits as approved by the Board and as stated in the Annual
Operating Plan; to manage personnel in line with the Group’s policy; to
resolve problems or conflicts that may affect the Group; and to maintain
effective communication with the stakeholders.

(2) Election of executives and Directors

The Governance and Nomination Committee is responsible for nominating
candidates to replace directors who are retired by rotation, or whatever
the case may be. The Committee then makes recommendations to the Board
for ultimate shareholder approval. Candidates come from a diversity of
backgrounds and experience. Personal qualities sought include
leadership, vision, ethical integrity, clean work records, and
independence of opinions.

Rules and procedures for the election of directors are as follows:

1.  The Governance and Nomination Committee proposes the names of
    persons to replace directors who are retired by rotation to the
    Board for consideration prior to the ordinary general shareholders’
    meeting for election during the meeting. All shareholders have an
    equal right to propose other candidates, since the authority to
    choose directors rests with the shareholders.

2.  In case the number of candidates nominated for directors does not
    exceed the number of directors required for that election, the
    meeting shall elect all of them as directors.

3.  In case the number of candidates nominated for directors exceeds the
    number of directors required for that election, it shall be decided
    by vote at the shareholders’ meeting. The shareholders may elect the
    candidates nominated for director, but not exceeding the number of
    directors required for that election and the directors shall be
    individually elected. Each shareholder or proxy shall have one vote
    for each share he holds or represents for the election of each
    director. The candidates shall be ranked in descending order from
    the highest number of votes received to the lowest, and shall be
    appointed as directors in that order until all of the director
    positions are filled. If the votes cast for candidates in descending
    order are tied, which would otherwise cause the number of directors
    to be exceeded, the remaining appointment shall be made by the
    chairman of the meeting who shall cast the deciding vote.

  Neither the President, nor any of the five independent directors can
  be related to any major shareholders.

Selecting senior executive replacements

The senior executive selection process for Siam Cement Group (SCG)
starts with talented and ethical people. The Group seeks young talent
with the potential to develop into senior management. Selection includes
a number of stages, each with an assessment of such considerations as
integrity, leadership qualities, and management capabilities. The
outstanding employees who demonstrate high potential will each have an
individualized development plan that includes challenging job
assignments and job rotation throughout the organization to ensure they
gain a broad knowledge and understanding as a result they are properly
prepared to replace the positions at all level that may become vacant.
The Board of Director will select employees who show the greatest
potential and have the appropriate credentials for the placement in
senior executive positions.

(3) Board Member and Executive Remuneration in 2006

1. Director Remuneration

  In the eleventh ordinary general meeting of shareholders held on March
  24, 2004, a resolution passed concerning the remuneration and bonus of
  directors. Monthly remuneration for all directors was set at Baht
  1,800,000 and shall be distributed amongst the directors in such
  manner they may themselves consider appropriately. Regarding bonuses,
  permission was granted that the board itself would determine the
  appropriate amount, but that amount cannot exceed 0.5 percent of total
  dividends paid to shareholders and shall be distributed amongst the
  directors in such manner they may themselves consider appropriately.
  This will be in effect from the day the resolution was passed by a
  vote of the shareholders onwards until the shareholders’ meeting
  determined otherwise.

The Appointment of Board Remuneration and Bonuses

Monthly Remuneration

  The Board of Directors passed a resolution to pay the chairman a 1.5
  portion, or Baht 216,000 per month, and the other eleven board members
  1 portion, or Baht 144,000 per month.

Director Bonuses

  The Board of Directors passed a resolution to pay the chairman a bonus
  of 1.5 portion and each of the other eleven board members bonuses of 1
  portion of total bonuses.

2. Remuneration for the Subcommittees

  The Board of Directors passed a resolution to remunerate members of
  the Subcommittees on the basis of fixed fee and attendance fee, as
  follows:

Audit Committee

Annual fixed fee (Baht) Attendance fee (Baht)

Chairman 96,000 24,000

Director 64,000 16,000

The Governance and Nomination Committee

Annual fixed fee (Baht) Attendance fee (Baht)

Chairman 72,000 18,000

Director 48,000 12,000

The Remuneration Committee

Annual fixed fee (Baht) Attendance fee (Baht)

Chairman 72,000 18,000

Director 48,000 12,000

The chairman of the Subcommittees’ remuneration gets 1.5 portion while
each member of the Committee gets 1 portion.

The Remuneration for the Board of Directors and the Subcommittees in
2006

  (Baht)

  -------------------- -------------- ----------- ------------ -------------- ------------ ------------
  Directors            Remuneration                                           Bonus of     Total
                       for 2006                                               2006         

                       Director       The Audit   The          The                         
                                      Committee   Governance   Remuneration                
                                                  and          Committee                   
                                                  Nomination                               
                                                  Committee                                

  1. H.E. Dr. Chaovana 2,592,000      -           -            -              7,200,000    9,792,000
  NaSylvanta¹                                                                              

  2. AVM Kamthon       1,728,000      240,000     -            -              4,800,000    6,768,000
  Sindhvananda²                                                                            

  3. Mr. Paron         1,728,000      160,000     82,957       -              4,800,000    6,770,957
  Israsena*                                                                                

  4. Mr. Snoh Unakul   1,728,000      -           96,000       -              4,800,000    6,624,000

  5. Mr. Sivavong      1,728,000      128,000     -            198,000        4,800,000    6,854,000
  Changkasiri⁴                                                                             

  6. Mr. Sumet         1,728,000      160,000     116,349      -              4,800,000    6,804,349
  Tantivejkul³**                                                                           

  7. Mr. Pricha        1,728,000      160,000     -            -              4,800,000    6,688,000
  Attavipach                                                                               

  8. Mr. Panas         1,728,000      -           96,000       -              4,800,000    6,624,000
  Simasathien                                                                              

  9. Mr. Yos           1,728,000      -           -            132,000        4,800,000    6,660,000
  Euarchukiati                                                                             

  10. Mr. Arsa Sarasin 1,728,000      -           84,000       -              4,800,000    6,612,000

  11. Mr. Chumpol      1,728,000      -           -            108,000        4,800,000    6,636,000
  NaLamlieng                                                                               

  12. Mr. Kan          1,728,000      -           -            -              4,155,000    5,883,000
  Trakulhoon                                                                               

  Total                21,600,000     848,000     475,306      438,000        59,355,000   82,716,306
  -------------------- -------------- ----------- ------------ -------------- ------------ ------------

  * Resigned his membership of the Corporate Governance and Nomination
  Committee, effective on August 26, 2006.

  ** Resolved by the Board meeting on August 26, 2006 to replace Mr.
  Paron Israsena as the Chairman of the Governance and Nomination
  Committee, effective August 26, 2006.

1.  Chairman

2.  Chairman of the Audit Committee

3.  Chairman of the Governance and Nomination Committee

4.  Chairman of the Remuneration Committee

3. Executive Remuneration

The total remuneration for 8 top executives in the form of salaries and
other compensation such as bonuses and variable payment amounted to Baht
104,837,000. For 2006, the company made the contributions of Baht
5,426,400 to the provident fund for the executives, being the company’s
employees.

Remuneration for the directors and executives of subsidiaries, which are
the SCG’s core businesses (as at the year ended December 31, 2005)

1.  Director Remuneration listed accordingly to the core businesses:

  Directors of the core businesses, which encompass SCG Chemicals, SCG
  Paper, SCG Cement, SCG Building Materials and SCG Distribution, are
  the executives who are not subject to remuneration paid for being the
  directors. Names of the directors in each business are listed here.

+--------------------------------+-------------------------------------+
| SCG Chemicals Co., Ltd.        | The Siam Pulp and Paper Public      |
|                                | Company Limited                     |
| (Formerly “Cementhai Chemicals |                                     |
| Co., Ltd.”)                    |                                     |
+--------------------------------+-------------------------------------+
| 1)  Mr. Kan Trakulhoon *       | 1)  Mr. Kan Trakulhoon *            |
|                                |                                     |
| 2)  Mr. Pramote Techasupatkul  | 2)  Mr. Kajohndet Sangsuban         |
|                                |                                     |
| 3)  Mr. Roongrote Rangsiyopash | 3)  Mr. Pramote Techasupatkul       |
|                                |                                     |
| 4)  Mr. Chonlanat Yanaranop ** | 4)  Mr. Damri Tunshevavong          |
|                                |                                     |
| Siam Cement Industry Co., Ltd. | 5)  Mr. Pichit Maipoom              |
|                                |                                     |
| 1)  Mr. Kan Trakulhoon *       | 6)  Mr. Chonlanat Yanaranop         |
|                                |                                     |
| 2)  Mr. Kajohndet Sangsuban    | 7)  Mr. Roongrote Rangsiyopash      |
|                                |                                     |
| 3)  Mr. Pichit Maipoom         | 8)  Mr. Chaovalit Ekabut **         |
|                                |                                     |
| 4)  Mr. Damri Tunshevavong     | Cementhai Building Products Co.,    |
|                                | Ltd.                                |
| 5)  Mr. Roongrote Rangsiyopash |                                     |
|                                | 1)  Mr. Kan Trakulhoon *            |
| 6)  Mr. Pramote Techasupatkul  |                                     |
|     **                         | 2)  Mr. Kajohndet Sangsuban         |
|                                |                                     |
| SCG Distribution Co., Ltd.     | 3)  Mr. Pramote Techasupatkul       |
|                                |                                     |
| (Formerly “Cementhai           | 4)  Mr. Roongrote Rangsiyopash      |
| Distribution Co., Ltd.”)       |                                     |
|                                | 5)  Mr. Pichit Maipoom **           |
| 1)  Mr. Kan Trakulhoon *       |                                     |
|                                | Remark * Chairman                   |
| 2)  Mr. Pramote Techasupatkul  |                                     |
|                                | ** President                        |
| 3)  Mr. Damri Tunshevavong     |                                     |
|                                |                                     |
| 4)  Mr. Chonlanat Yanaranop    |                                     |
|                                |                                     |
| 5)  Mr. Pichit Maipoom         |                                     |
|                                |                                     |
| 6)  Mr. Roongrote Rangsiyopash |                                     |
|                                |                                     |
| 7)  Mr. Kajohndet Sangsuban ** |                                     |
+--------------------------------+-------------------------------------+

4.2 The total remuneration for executives of subsidiaries which are the
SCG’s core business

1)  Remuneration paid as money such as monthly salary, bonus and
    variable payment

2)  Other compensation such as provident fund contributions. Details of
    remuneration are as follows:

+---+---------------------------+-------+---------------+--------------+
|   | Subsidiaries which are    | N     | Total         | Other        |
|   | core businesses           | umber | remuneration  | compensation |
|   |                           | of    | in the form   | (Baht)       |
|   |                           | execu | of money      |              |
|   |                           | tives | (Baht)        |              |
+---+---------------------------+-------+---------------+--------------+
| 1 | SCG Chemicals Co.,Ltd.    | 5     | 15,078,920    | 987,240      |
| . |                           |       |               |              |
|   | (Formerly “Cementhai      |       |               |              |
|   | Chemicals Co., Ltd.)      |       |               |              |
+---+---------------------------+-------+---------------+--------------+
| 2 | The Siam Pulp and Paper   | 5     | 12,925,000    | 919,920      |
| . | Public Company Limited    |       |               |              |
+---+---------------------------+-------+---------------+--------------+
| 3 | Siam Cement Industry      | 6     | 26,868,900    | 1,662,780    |
| . | Co.,Ltd.                  |       |               |              |
+---+---------------------------+-------+---------------+--------------+
| 4 | Cementhai Building        | 4     | 11,161,615    | 784,800      |
| . | Products Co.,Ltd.         |       |               |              |
+---+---------------------------+-------+---------------+--------------+
| 5 | Cementhai Distribution    | 4     | 10,734,350    | 766,320      |
| . | Co.,Ltd.                  |       |               |              |
|   |                           |       |               |              |
|   | (Formerly “Cementhai      |       |               |              |
|   | Distribution Co., Ltd.”)  |       |               |              |
+---+---------------------------+-------+---------------+--------------+

Remarks: Number of executives and remuneration for the abovementioned executives, excluding the Presidents of subsidiaries that are the SCG’s core businesses, included the number and remuneration of the executives of the Siam Cement Public Company Limited, as appeared on page 136-137 of the annual report 2006. 

(4) Principles of Good Corporate Governance

“Quality and Fairness” is the Philosophy of doing the business of Siam
Cement Group (SCG).

SCG treat all related parties concerned with utmost fairness and
produces quality products and services to caters to the real needs of
the consumers.

In the ongoing administration and management, SCG adheres strictly to
the principles of good corporate governance where its transactions are
done with transparency, while striving for increased efficiency and the
ability to compete in the international arena. At the same time, SCG
also utilizes its Code of Ethics as guidelines for the best practices of
the directors and employees.

The following lists SCG’s 2006 corporate governance policy reported in
five separate categories, as mandated by the Stock Exchange of Thailand.

1. The Rights of Shareholders

The rights of shareholders include all basic rights: the rights as an
investor in the Stock Exchange of Thailand, and the rights as an owner
of the company, for instance, the rights to buy new shares, sell or
transfer owned shares, the rights to receive dividends from the company,
the rights to attend the Shareholders’ Meetings, the rights to express
opinions freely, the rights to make decision on important affairs of the
company e.g. nomination of directors, approval on important transactions
influenced directions of the company, amendment of memorandum of
association and regulations of the company, etc.

In 2006, besides the above-mentioned rights of the shareholders, SCG
proceeded to carry out the necessary work, which encourages shareholders
to exercise their rights.

1.  Release the detailed information on agendas of the Shareholders’
    Meetings and post it on SCG’s website 2 month before sending the
    documents, clarifying the shareholders’ rights to attend the
    meetings and the rights to vote on resolutions.

2.  Shareholders who are unable to attend the meetings are entitled to
    appoint a representative e.g. an independent director or a person,
    to act as their proxy, using any proxy forms sent to them along with
    the notice of the meeting. These forms can also be downloaded from
    SCG’s website.

3.  Prior to the meetings, shareholders are allowed to submit their
    opinions, suggestions and questions via e-mails to the Investors
    Relations Department and to the Secretary of the Board of Directors.

4.  The Company allows the shareholders, who own shares for at least 12
    consecutive months, to suggest agendas for the Annual General
    Meeting of the Shareholders or propose the name of a person for
    directorship of the Company by making contact with the Company’s
    Independent Directors via e-mail at ind_dir@cementhai.co.th.

5.  At the meetings, shareholders are allowed to express their opinions
    freely, give suggestions or raise questions on any agendas before
    calling for a vote on a resolution, providing that sufficient
    detailed information are given to the shareholders. Should
    shareholders have questions on any agenda items, the experts or
    specialists in certain fields are available to answer those
    questions under the responsibilities of the Board.

2. The Equitable Treatment of Shareholders

Providing the equitable treatment to every individual shareholder, every
group of shareholders, major or minor shareholders, institutions or
foreign investors is considered as great challenge. SCG realizes its
significance and makes every effort to find tools to enhance equality,
particularly, in minor shareholders. For instance:

1.  Fix the rights to vote at the meetings according to the number of
    shares owned by each shareholder, allowing one share for one vote.

2.  The Company has assigned responsibilities to the independent
    directors in the areas of minority shareholders interests. The
    minority shareholders are allowed to contact the independent
    directors directly to give suggestions, express opinions or make
    complains. The independent directors are responsible for
    investigating the matters and finding proper methods to handle the
    situations. The independent directors shall present the issue
    affected the stakeholders and the business operations to the
    Shareholders’ Meetings for consideration and set it as the agenda
    for the meetings of shareholders.

3.  The Board of Directors has established measures to control the usage
    and prevent the misuse of internal information (insider trading) for
    personal benefit of a person concerned, namely the Board of
    Directors, the Management and personnel working in the related
    department (including spouses and minor children).

  3.1) Prohibit all persons concerned from trading the Company shares
  for a 2-week
  period prior to and a 24-hour period after the release of the
  Company’s quarterly
  and annual financial statements (blackout period).

  3.2) Should the Board members, the Management and personnel (including
  spouses
  and minor children) have knowledge of confidential information that
  could have
  any impact on the Company’s share price, they would be prohibited from
  trading
  the Company shares until after a 24-hour period of the public
  disclosure.

  In addition, should the Board members or the top executives sell or
  buy the Company shares, they are required to report the shareholdings
  to SEC within a 3-working day period for public disclosure.

4.  For the election of directors, SCG clarifies the shareholders’
    rights to propose the name of a person for directorship nomination.
    Clause 30 of the Company’s regulations stipulates that if the number
    of candidates does not exceed the number of directors required for
    that election, Shareholders’ meeting shall elect all of them as
    directors. On the other hand, if the number of candidates exceeds
    the number of directors up for election, each candidate is then
    elected individually. The shareholders are allowed to propose the
    candidates freely.

Moreover, for shareholders’ convenience, SCG offers an electronic system
for registration and attendance record of the participants, the details
of which can be obtained after the Shareholders’ meeting.

3. The Role of Stakeholders

SCG conducts business responsibly to ensure mutual benefits to all
stakeholders, providing that the corporate administration or business
operations of the Company shall not have an impact on the rights of
stakeholders or damage the stakeholders concerned. In case of damage,
SCG shall draw up appropriate and mutually benefited measures.

-   Shareholders: Besides the basic rights of shareholders and the
    rights, stipulated by the laws and the Company’s regulations, such
    as the rights to request a determination of the number of shares,
    the rights to receive share certificates, the rights to attend the
    shareholders’ meetings, the rights to vote at the meetings, the
    rights to freely express opinions at the shareholders’ meetings, and
    the rights to receive an appropriate return, SCG gives shareholders
    the rights, as being the owner of the Company, to make suggestions
    and comments on the Company’s affairs to the independent directors.
    Each comment and suggestion will be carefully considered and
    presented to the Board of Directors.

-   Customers: Dedicate to provide customers with maximum benefit in
    terms of quality at a given price. Moreover, the support office has
    been set for providing product information, problem solving, and
    receiving complaints to assure customers’ satisfaction.

-   Trading partners: Operate within a competitive context by strictly
    honoring promises and commitments to trading partners including
    quality products and on-time delivery.

-   Commercial competitors: SCG considers commercial competitors as the
    key to the Company’s dedication to develop the best quality products
    and services to meet the customers’ satisfaction. SCG operates its
    business within a competitive context by being fair and closely
    following the laws. SCG shall not take advantage of its commercial
    competitors, as attested by not a single dispute arising during
    2006.

-   Creditors: SCG realizes that by keeping good relations with the
    creditors, they can gain trust and confidence. This must be carried
    out together with the practices under the terms of loans and
    obligations.

-   Employees: SCG believes that employees are the most valuable assets.
    SCG continues to develop competence and integrity of the employees
    working in the areas where it operates for implementation of the
    corporate policy on expanding the business into the regions.
    Furthermore, SCG treats its employees’ in such a way that they feel
    happy to perform their assigned tasks, providing that workplace is
    improved through ergonomics scheme to ensure safe, modern and
    healthy work environment. SCG shall provide its employees with
    excellent benefits and proper facilities for healthy mind and body.
    SCG shall set working units and channels for employees, thus
    enabling them to express opinions, file complains or report
    misconducts. SCG shall also set measures to prevent any damage that
    might occur to the persons concerned, thus ensuring the employees’
    confidence in expressing their opinions and filing complains.

-   Society: SCG continuously organizes a range of activities and
    programs for the benefit and improvements of the communities,
    especially those that increase opportunities for better education
    and development of young people’s capabilities for sports,
    innovations, sciences, technology and arts. In addition, the Group
    pledges to contribute considerably to the public welfare of the
    societies where it operates. Significant programs organized in 2006
    are as follows.

-   Surrender the rights of landowner and donate a 900 rai (360 acre)
    plot of land to His Majesty the King for the Royal initiative
    concerning solving the problem of flooding, involving the creation
    of flood-retardation ponds known as “monkey’s cheek” or the water
    retention basins to prevent run-off flooding from the North, while
    further utilized for agricultural purpose during the dry season;
    donate packages of survival kits to the flooding victims.

-   Create “Musical Tribute to the King” project which highlighted the
    musical genius of H.M. the King.

-   Create a musical documentary “the Water is Life”, honoring the
    King’s aptitude in water management.

-   Set up a competition known as “Thailand Rescue Robot Championship”:
    For 2006, a team called “Independent” from King Mongkut’s Institute
    of Technology North Bangkok won first prize at the World Robocop
    Rescue competition held in Bremen, Germany.

-   Sponsor SCG Badminton program to promote an integrated game of
    badminton for sporting excellence.

-   SCG Young Thai Artist Award: to encourage young Thai people to
    create works of arts.

-   SCG Excellent Internship Program: to instill a sense of good
    governance.

-   SCG Drawing the Future Program: give financial donations to
    charitable organizations committed to the public welfare; encourage
    SCG’s employees to actively participate in social development.

-   Environment: The Group has invested heavily in preserving the
    environment and has drawn up a definite policy on environmental
    conservation with a regular monitoring and assessment system. In
    2006, the Group carried out a project called “SCG Conservation Water
    for Tomorrow”, aiming to promote the construction of over 10,000
    check-dams for replenishment of natural resources and balanced
    ecosystem. The Group has disseminated information relating to this
    concept in order to encourage the communities to actively
    participate in the environmental conservation. Furthermore, the
    Group has campaigned to urge all employees to strictly follow the
    policy on sustainable development, and instill a sense of natural
    resources and environmental conservation, starting with the
    surroundings. The Group supported any approach to minimize emissions
    of greenhouse gases, thus contributing to the reduction of global
    warming effect. Information on SCG activities and programs on
    environmental and social responsibilities and safety are included in
    SCG Sustainability Report, which has been disseminated since 2001,
    and also posted on website at www.siamcement.com.

4. Disclosure and Transparency

Apart from disclosure of financial statements or the Company’s
information to the public through various channels and media under the
conditions stipulated by the laws on a complete, accuracy and timely
basis, SCG shall disclose the following information to ensure
transparency of the business operations.

1.  Reveal the performance and attendance records of each individual
    member of the Subcommittees.

2.  Reveal the nomination and assessment methods and the results of
    performance assessment of the Board of directors.

3.  Disclose the policy on remuneration for the Directors and the
    Management, including forms, types and amount of remuneration for
    each member of the Subcommittees.

4.  Disclose the policy on environmental and social responsibilities,
    including the operating results.

5.  Prepare a report on corporate governance policy, including the
    operating results.

6.  Allow persons to ask questions through the Investors Relations
    Department.

Apart from disclosing the abovementioned information to the public
through SEC or SET, SCG has also prepared and released additional
information in both Thai and English on the Company’s website
(www.siamcement.co.th).

5. The Responsibilities of the Board, Structure, and the Subcommittee

Structure of the Board of Directors

  The Board of Directors comprises nationally accepted knowledgeable and
  competent persons who are responsible for drawing up corporate policy
  and collaborating with the Management in making the operating plans
  both short-term and long-term plans. The Board shall have the
  responsibilities to draw up financial policy, risk management policy
  and the organization overview. The Board shall play an important role
  in overseeing, monitoring and assessing the performance of the Company
  and the Management on an independence basis.

  The number of directors is currently limited to twelve. The Board of
  directors comprises 11 non-executive directors, inclusive of 5
  independent directors and 1 executive director, being the Company’s
  President. The independent directors must be independent of others and
  have qualifications as stated in the Company’s regulations, which are
  more rigorous than those required by SEC.

  The Board has further established the following committees, Audit
  Committee, Corporate Governance and Nomination Committee and
  Remuneration Committee, to be responsible to their specific areas and
  report directly to the Board for its consideration. Subcommittees
  shall have the responsibilities as stated in the Committees’ rules and
  regulations.

  The Company has made the unambiguous separation of the roles and
  responsibilities of the Board of Directors and the Management. The
  Board shall be responsible for establishing the policies and
  overseeing the Management’s implementation of those policies. The
  Management, on the other hand, shall be responsible for implementing
  the policies formulated by the Board, and ensuring that these are
  carried out as planned. Therefore, the Chairman and the President of
  the Company shall not be the same person, providing that both are
  nominated and elected by the Board. Furthermore, the Board is
  responsible for establishing a plan on the succession of the
  Management, which is subjected to annually reviewing.

Board of Directors Meetings

  It is the duty of a member of the Board to constantly attend the
  Board’s meetings to acknowledge and make decisions on the corporate
  operations. The Board holds eight scheduled meetings per year,
  providing that the agendas are set clearly in advance prior to each
  meeting. The Board members may be summoned to specific meetings to
  consider and determine on the urgent matters.

  At the meetings, Chairman and the President of the Company jointly
  determine on which items on the agendas are relevant to the meetings.
  Every individual member of the Board is entitled to propose at the
  agenda items.

  In 2006, the Board held nine meetings, eight scheduled meetings and
  one special meeting. Prior to each meeting, all members received the
  agendas and supporting documents well in advance to allow adequate
  time for preparation.

  When considering the matters presented to the Board, Chairman of the
  Board presides over and duly conducts the meetings. All members of the
  Board are allowed to express their opinions freely. Resolutions are
  passed with a majority vote, providing that one director is eligible
  for one vote. The director with any interests in the issue under
  consideration or the director ineligible to vote is excused and to be
  absent during voting. In case of a tie vote, Chairman of the meeting
  will vote and give the binding result.

  Top executives are invited to attend the Board’s meetings to provide
  updated information to the Board, and to learn directly about the
  Board’s initiatives and policies for effective implementation. The
  only exceptions are certain Board’s session which required
  independence and uninhibited discussion among non-executive directors.

  After the meeting, the secretary to the Board is responsible for
  preparing the minutes, and sending the certified copies to the
  directors. The minutes must then be approved at the following Board’s
  meeting, where the directors may make comments, corrections, or
  additions to ensure the greatest accuracy and completeness.

  After approval, minutes of the meeting are stored securely in the
  corporate secretary office together with all related documents backed
  up electronically to facilitate data searches.

Remuneration for the Board and Top executives

  SCG sets remuneration for members of the Board and top executives at
  rates comparable to the listed companies or other top companies in the
  same industries. Remuneration for top executive is set by the Board of
  directors, based on their responsibilities, performance, and the
  operating results of the Company.

  In addition to basis salary, SCG sets bonuses and variable payment for
  the directors according to guidelines approved by the Shareholders’
  meeting, and the payment for top executive is based on their
  performance and the operating results of each business. The
  remuneration payment method correlates with the employees’
  performance, thus reflecting the Company’s operating results.

  Details of remuneration for the Board of directors, both monthly
  payment and annual bonuses, as approved by the Shareholders’ meeting,
  including the remuneration for specific subcommittees in 2006 are
  reported on an individual basis on page 136 of the annual report.

Internal Information Controls

  The Company transparently follows the regulations covering conflict of
  interest, as per the SEC and SET, in a strict, comprehensive, and fair
  manner. Any connected transaction must be considered carefully,
  openly, and in a timely manner to protect the overall interests of the
  Group.

  SCG has an established policy governing the use of internal
  information, including oversight and employee regulations with
  specific penalties for management and staff in the event whereby
  internal information is divulged to the public or used for personal
  benefit. In addition, the purchase and sale of Company shares is
  prohibited during specified “blackout” periods as further means of
  protecting shareholder interests and preventing conflicts of interest.

  SCG’s shareholding structure is clear and transparent without any
  cross-holdings with the major shareholders, thus, ensuring that there
  are no conflicts of interest. In addition, the roles of the Board, top
  executives, and shareholders are carefully defined to minimize
  interference. If any member of the Board or Management has a stake in
  any item which is on the Board’s meeting agenda, they will either
  abstain themselves from the meeting, or be excluded from voting to
  ensure decisions always benefit shareholders.

  Company shareholder structure is clearly stated in the annual report,
  as are Board member common share and debenture holdings in the Company
  and subsidiaries.

Internal Controls

  SCG is aware of the importance of internal controls. SCG has
  accordingly established a system that is in consonance with the
  concept of internal controls under international standards. The
  guidelines of this system are regularly updated in order to keep
  abreast with the rapid changes taking place in the present
  environment. Apart from guidelines on five following areas, namely
  internal operating environment, risk assessment, control practices,
  information and communication, and monitoring and assessment, SCG has
  also encouraged the different practices of internal controls,
  including the development of guidelines for such controls to be in
  line with current situations in order to ensure creditability and
  achievement of objectives, details of which are as follows:

-   Internals Operating Performance This is a critical feature in the
    creation of awareness and environment for the development of good
    internal control. SCG has placed special emphasis on this by
    establishing the organizational structure appropriate to its
    business plan with explicit duties and responsibilities, carefully
    selecting high-quality people for employment, encouraging continual
    development of the employees in consistent with the change of
    businesses, organizing adequate training programs to enhance
    employees’ knowledge, boosting the employees’ participation and
    understanding, instilling a sense of responsibilities for minimizing
    the risk, creatively improving the achievements and expediting the
    development of learning organization. SCG has also focused
    especially on ethics and instilling a sense of leadership and an
    awareness of internal controls into parts of daily duties. In
    addition, SCG has published and amended work manuals for
    effectiveness and precision to minimize a repetition of work. SCG
    has also amended SCG Code of Ethics in accordance with the current
    change of socio-economic situations to meet the international
    standards.

-   Risk Assessment The rapid change of business atmosphere contributes
    to greater chance of running the risk. To establish a systematic
    risk management, SCG has concentrated on risk management applied
    throughout the organization, thus enabling the Management to
    speculate about a chance of running the risk and the consequent
    damages, formulate appropriate strategies to limit a chance of
    running the risk to an acceptable standard, or to transform crisis
    into opportunity. SCG has set a warning signal to prevent or
    minimize the risk in conducting the business, and disseminated
    knowledge of risk management system to the employees in all levels
    of the organization based on knowledge management system that
    promotes sharing of knowledge.

-   Control Practices SCG has fixed the control practices applicable to
    the effective business operations with explicit duties and
    responsibilities for interconnecting controls, made some adjustments
    to the managing authority in conformity with duties and
    responsibilities, made some revisions to a handbook of recording and
    keeping the organization’ s assets on a systematic and timely basis,
    made the use of computer system in checking and reviewing the
    information, continually improved the control self-assessment system
    in keeping with the Group’s managing tools.

-   Information and Communication Systems At the present day, times of
    news and information, the information and communication system plays
    a vital role in internal controls of the organization, of which
    authorities and responsibilities are transformed to the local
    management in different levels. SCG deems it appropriate to arrange
    the correct and advanced information system for the Management and
    the related personnel. SCG has, therefore, invested in a modern and
    sophisticated computer system to be used for administering the
    information in planning, controlling, performing and monitoring on
    an accurate, complete and timely basis.

-   Monitoring and Assessment Monitoring and assessment are the key
    constituents ensuring the Management that measures and internal
    controls system is effective and efficient. The system is regularly
    updated in accordance with the changing situations. SCG demands a
    regular assessment and a constant development of internal controls
    system to keep it evolving with the prevailing business environment.
    SCG requires that useful information is gathered and necessary
    knowledge is disseminated correctly for an increase in effectiveness
    and efficiency. SCG also demands that the monitoring results are
    reported to the Board of Directors, the Audit Committee and the
    Management on a systematic and regular basis. The Management and the
    related personnel use the Control Self-Assessment as guidelines on
    monitoring and assessment to measure and control the performance, to
    analyze the causes and procure sufficient information for decision
    making.

Internal Audit

  The Audit Office is responsible to the Audit Committee for its
  confidence in supervising and reviewing the accuracy of financial
  statements, the sufficiency of information disclosure, and the
  transparency of information, the internal controls and risk
  management. The Audit Office has concentrated on preventive and
  proactive audit policy by closely following the guidelines on the
  international audit standards and the concept of good corporate
  governance. The Audit Office has expedited the development of audit in
  compliance with the prevailing business conditions that require some
  adjustments to the new environment for the image of transparent,
  accountable and creditable business operations.

-   Intermediate Planning To reach the international accepted standards
    of audit under the quality assurance, the Audit Office is
    responsible to ensure that the corporate vision is achieved by
    applying the creative audit practice in accordance with the quality
    assurance. The Audit Office focuses specially on the establishment
    of preventive audit policy, contributing to concrete benefits, by
    utilizing the modern tools and sophisticated technology, publishing
    handbooks and developing guidelines on internal audit to meet the
    international standards, setting particular forms for the
    application of computer system, supporting audit, setting the
    principles and warning signal, establishing a center to give advice
    and suggest guidelines on solving the problems arisen from breaking
    the rules and regulations as well as the law.

-   Setting Principles on Measuring the Internal Audit Performance To
    set the standards of consideration in line with the auditor’s
    competency development for easy assessment and practices, SCG has
    set the principles on measuring the audit performance by fixing the
    objectives, targets and the measuring rules to assess the risks that
    affect the targets by setting the Key Risk Indicator or KRI for the
    development of innovations in audit.

-   Quality Assurance Set the principles and guidelines on the
    preparation for quality assessments, both the internal assessments
    and the external assessments, to ensure effectiveness and efficiency
    of the operations according to the objectives.

-   Development of Innovations in Audit In consonance with the corporate
    policy on becoming an innovative organization in services and
    working process, SCG has developed a concept of audit to keep it
    evolving with the modernization by applying the sophisticated
    technology information system to expedite the adoption of useful
    practices by various units in operating and administering under the
    innovative organization and international investment policies.

-   Development of IT System IT system plays a significant role in
    making the effective controls and audit systems useful to the SCG’s
    businesses. SCG deems it appropriate to develop it into more
    preventive system under the concept of making it right the first
    time, by developing web application of different systems, for
    instance, the deferred income tax system securing compliance with a
    draft of Thai accounting standards and the international accounting
    standards, the consultations system providing various units with
    useful information and guidelines, and providing a useful channel
    for the SCG’s businesses to operate correctly, thus contributing to
    the establishment of a concept of preventive audit to minimize
    unintentional mistakes.

Risk Management

  The Audit Committee sets policies and establishes a system for
  preventing and managing risk. The system is applied throughout the
  organization along with follow-ups or monitoring, analysis,
  specification, and assessment of risk management for each business in
  the Group. The Committee regularly reports to the Board the progress
  of implementation of risk management system.

Knowledge Enhancement

  For enhancement of capabilities of the Board’s and the Committees’
  members, the Company requires continuous assessment of performance of
  the entire Board as a whole and the individual director, involving 2
  kinds of assessment, self-assessment by each individual director and
  assessment of the entire Board as a whole. The results of assessment
  are reviewed with the intention of finding ways for continual
  improvement of the Board’s performance.

  In 2006, SCG prepares a booklet for members of the Board, which
  includes the laws, rules and regulations related to the directors. The
  booklet is distributed to all current and new directors with the
  intention to enable the directors to understand the scope of their
  roles and responsibilities, the principles and guidelines on the best
  practices.

  Moreover, SCG encourages all members of the Board and top executive to
  attend various seminars and courses benefited to their
  responsibilities, allowing them to constantly meet and exchange
  opinions with members of the Board and top executive of different
  organizations. Some of these courses are organized by SCG’s training
  center, and some are by the governmental agencies or by the
  independent organizations, such as Thai Institute of Directors
  Association. SEC requires the directors of all listed companies to
  complete at least one of the following training courses: Directors
  Certification Program (DCP), Directors Accreditation Program (DAP) or
  Audit Committee Program (ACP). Experiences gained from these courses
  are useful for SCG’s growth and development.

  To support the Board’s responsibilities, SCG has appointed the
  secretary to the Board to work in coordination with the Board and the
  Management. In addition, the corporate secretary is responsible for
  overseeing legal matters, relevant standard practices and activities
  of the Board to ensure the implementation of the Board’s resolutions.

Nomination of Board Members

  The Governance and Nomination Committee is responsible for selecting
  qualified candidates to replace the directors retiring on rotation at
  the end of their terms, or for other reason, and proposing a list of
  nominees to the Board for resolution at the following shareholders’
  meeting. The Governance and Nomination Committee selects the
  candidates with credentials in wide range of professions, great
  leadership, breadth of vision, a proven record of ethical and
  integrity, and ability to express opinions freely.

  Clause 30 of the Company’s regulations stipulates that if the number
  of candidates does not exceed the number of directors required for
  that election, Shareholders’ meeting shall elect all of them as
  directors. On the other hand, if the number of candidates exceeds the
  number of directors up for election, each candidate is then elected
  individually. The shareholders are allowed to propose the candidates
  freely.

  SCG believes that the competence and business expertise of a director
  does not depend on age, or the numbers of directorship held.
  Therefore, SCG neither fixes the required age, nor the numbers of
  Boards each candidate can serve. As long as the director is capable,
  able to devote efforts and dedicate to the Company, able to draw up
  policy and able to give advice on solving the problems related to the
  business operations based on the standards aspired by the Company, he
  is eligible for reelection. Regarding terms of office, the Company
  believes that the shareholders shall have the rights to select and
  nominate a candidate for the directorship to act on their behalf to
  lay down policy and oversee the Company’s business operations

Assessing the President’s Performance

  The Board works in conjunction with the Remuneration Committee to
  assess the performance of the President, based on the Company’s
  operating results and on implementing Board policies, taking into
  account economic and social circumstances as a whole. The Remuneration
  Committee will then consider the appropriate compensation
  corresponding to his performance for the President to the Board.

 (5) Controlling the usage of internal data (Page 102)

 (6) Human Resource 

Throughout it’s over 90 years of operation, SCG consistently steps up to
the front line of the business while continuously generates attractive
return to shareholders. With the current rigid competition circumstance
and the way to get competitive advantages has been changed from focusing
on cost saving to differentiate products and services, SCG arranges
strategies to achieve goal for the incoming 5 years as follows.

1.  Expand the investment to other countries.

2.  Products and services development which generate value added to SCG.

According to the strategies, Human resource is a critical factor in the
organizational success. Therefore, SCG has improved the Human resource
management by drawing up tactics to foster the success by planning for
the next 5 years as described below.

1.  Human resource preparedness to support the future investment

  SCG has prepared the quantity, skills and also the human resource
  management system to support operations abroad by the way of;

1.  Arrange manpower to serve an expansion

  While SCG expands to other countries, it requires planning its staff
  both for going to the other countries and for replacing the former
  group and also organized home staff from our invested country. It has
  built data bank for interested employees who yearn for overseas
  working, meanwhile it has recruited foreign staff to come to join SCG
  for readiness.

2.  Employee capability development

  SCG has planned to encourage instilling international working
  capability to its employees in many ways such as culture, language,
  skills, special expertise and knowledge on international business. In
  addition, it has prepared to transfer technologies and has developed
  home country staff’s capability.

3.  Modification on human resource management to encourage for going
    overseas

  Aims to have same standard for human resource management as Group’s in
  bound companies and also suitable for the culture, the oversea
  companies implement Group’s e-HR to ensure the Group human resource
  management and comparable with the other multinational companies.
  Furthermore, staff benefits and care taking for oversea staff is
  viewed as the importance in order to motivate the current interested
  employees as well as external ones to join SCG as its international
  staff.

2.  Encourage new culture lead to innovative organization

    1.  Change the culture to have new employee styles; Open Mined,
        Think Out of the Box, Assertive, Risk Taking and Eager to learn.

  SCG designs 5 employees’ characters for revolution to innovative
  organization which are Open Mined, Think Out of the Box, Assertive,
  Risk Taking and Eager to learn. Also, leaders would have 3
  qualifications which are change leader, change support and change
  management role model. To foster changing, various activities convened
  to exchange their knowledge and opinions through the year, for
  example, e-learning, constructionism and Sharing for Best Practices.
  Moreover, SCG implement IT to gather knowledge as Knowledge Management
  database system.

2.  Develop employees’ specialized skills, knowledge and capability

  SCG changes its human resource development approach to learn and work
  together such as cross functional work, learning through working
  project, constructionism learning, etc.

3.  Modify human resource management to enhance innovative organization

  SCG set the People System Committee to oversee human resource
  management in four vital ways that are comprised of;

-   Selection process: Strengthen corporate image as international firm
    to motivate high caliber, capable people to involve working with the
    Group. Moreover, The Group operates a Competency-Based Management
    system that applies to be the criteria on employee selection.

-   Revise performance evaluation and compensation system to associate
    with innovation indicators.

-   Different Career Management match to each working group such as
    management expert and research and development.

-   Human resource development emphasized on Innovation Competency via
    training program to boost Creative Thinking and Coaching Skill for
    managers.

  SCG believes that concerning on human resource development, capable
  and ethical employees will guide to international innovation
  organization. Furthermore, it will lead the Group growing
  consistently, crating benefit to stakeholder and being core
  organization of the country in the long-run.

  As at December 31, 2006, The Siam Cement Public Company Limited had
  353 employees with a compensation of Baht 484 million. Total employees
  of the Group were 23,630 with a compensation of Baht 12,604 million.
  (Compensation includes salary, bonuses, and provident fund)

Number of Employees in Each Business of the Siam Cement Group

As at December 31, 2006 and 2005

  ---------------------------------- ------------------ ------------------
  Company/Business Unit              Number of          
                                     Employees          

                                     2006               2005

  The Siam Cement Public Company     353                338
  Limited                                               

  Chemicals Business                 3,414              1,249

  Paper Business                     6,831              6,123

  Cement Business                    4,521              4,198

  Building Products Business         6,364              5,555

  Distribution Business              1,275              1,055

  Others                             872                2,348

  Total                              23,630             20,866
  ---------------------------------- ------------------ ------------------