CONTENTS PAGE Company Profile 1 Report of the Board of Directors 2 - 3 Board of Directors 4 Dividend Payment Policy 5 Financial Information 6 Business Activities 7 Significant Changes in the Past Year 7 Revenue Structure 8 Industry Trends and Competition 9 - 24 Risk Factors 25-30 Future Projects 30 Statement of the Board of Directors’ Responsibilities 31 to the Financial Report Report of the Audit Committee 32 Audit Report of Certified Public Accountant and 33-58 Financial Statements Audit Fees of the Company 59 Financial Analysis and Operating Results 60-66 Shareholding Structure and Management 67-86 Corporate Governance 87-91 Related Transactions 92-93

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COMPANY PROFILE Background Diamond Roofing Tiles Public Company Limited first started production of roofing tiles in 1985. The company was formerly known as the Siam City Tiles and Pipes Company Limited and was a subsidiary of the Siam City Cement Public Company Limited. On December 26, 2002 the company was sold to Myriad Materials Company Limited and six other private shareholders. An objective of the new management was to list the company on the Stock Exchange of Thailand. Thus the Company was incorporated as a public company on December 2, 2004. Consequently, on November 9, 2005, the Company was given permission by the Securities and Exchange Commission (SEC) to register its ordinary shares for trading on the Stock Exchange of Thailand and its shares were first traded on November 29, 2005 under the stock trading acronym of “DRT”. Head Office

69-70 Moo 1, Mitraphap Road, km. 115, Talingchan, Muang, Saraburi 18000 Tel.: 0-3622-4001-8 Fax: 0-3622-4015-7 Website: www.diamondtile.com E-mail Address: Marketing@diamondtile.com Registered and Paid-up Capital 200,000,000 shares at par value of 5 Baht per share, for a total paid-up registered capital of 1,000,000,000 Baht. Type of Business Production and wholesale of roofing tiles and roofing materials under the brand names Diamond, Roof, Adamas and Jearanai Registrar Thailand Securities Depository Co., Ltd., 62 Stock Exchange of Thailand Building, Rajadapisek Road, Klongtoey, Bangkok 10110 Tel.: 0-2229-2000, Fax: 0-2564-5649. Auditor KPMG Phoomchai Audit Ltd., represented by Mr. Winid Silamongkol, certified public accountant no. 3378, or Mr. Thirdthong Thepmongkorn, certified public accountant no. 3787 or Ms. Bongkot Umsangeam, certified public accountant no. 3684, with address at 195 South Sathorn Road, Bangkok 10120, Tel.: 0-2677-2000, Fax: 0-2677-2222. Legal Adviser Allen & Overy (Thailand) Co., Ltd., 22 Sinthorn Tower, 130-132 Wireless Road, Pathumwan, Bangkok 1030, Tel.: 0-263-7600, Fax: 0-2263-7699. (Acted as legal advisor during initial listing phase)

2

REPORT OF THE BOARD OF DIRECTORS On behalf of the Board of Directors of Diamond Roofing Tiles Public Company Limited, I would like to take this opportunity to report to the shareholders on the financial status and operating results of the Company for the past year, 2005, which is considered satisfactory. The Company experienced continued growth, albeit minor, with total revenues obtained from the sale and transport of our products for total revenue of 2,061.31 million Baht in 2004 up to 2,085.87 million Baht in 2005, an increase of 1.19 percent, having transport revenue increase from 67.57 million Baht in 2004 to 85.29 million Baht in 2005, or an increase of 26.23 percent. This increase was principally due to the Company’s policy of pricing transport costs in line with increasing fuel costs. Revenue from the production and sale of our products increased from 1,993.74 million Baht in 2004 to 2,000.58 million Baht in 2005, an increase of only 0.34 percent. This could be considered a low growth rate due to the slowing down in growth of the real estate sector which had previously experience high demand since year 2000 to 2004. At the beginning of 2005, the Thai economy began to experience several factors that had negative effect on the economy. The real estate sector was affected by high oil prices, increasing interest rates and inflation, thus slowing down growth. Nevertheless, in terms of price, product prices rose slightly due to demand and limited supply due insufficient production. Therefore, in 2005 the Company had a net profit of 201.13 million Baht, a decrease of 14.34 million Baht from 2004.

The Company has a satisfactory financial status. Our liquidity or current ratio as of year ended 2005 is 1.60 times. Our total debt to total assets ratio is only 28.26 percent and our total debt to equity ratio is 39.40 percent. Since listing and trading in the Stock Exchange of Thailand in 2005, our Company has been able to increase our investments in production line equipment for our concrete and jearanai roofing tiles than will enable the Company to meet predicted higher demands in the future. The production line equipment and facilities have been implemented since the second quarter of 2005.

The Board of Directors will manage the business with prudence and care to ensure the Company’s continued growth and stability by adhering to the Principles of Good Corporate Governance. We will give priority to transparency in the operations and management to ensure the appropriate risk and control for the rights and equitable treatment of all the stakeholders and shareholders.

The Board of Directors would like to report that for operating year ended December 31, 2005, the Company had a total net profit of 201.13 million Baht or a profit of 1.22 Baht per share (calculated by the number of average weighted shares) priced at 5 Baht per share. We would therefore like to propose the following appropriation of earnings for dividend payment to shareholders as follows:

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Details of Appropriation Amount (Baht)

Retained Earnings (Loss) from previous year

Plus Net Earnings (Loss) for Year 2005

19,656,004.06

201,133,655.41

Retained Earnings (Loss) which have not been appropriated for 2005 Less A Legal Reserve for 2005

Appropriation for Interim Dividend Payment No.1/2005 at Baht 0.60 paid on September 29, 2005

(Calculated from 160 million ordinary shares) Appropriation for Dividend Payment No. 2/2005 at Baht 0.40 to be paid on May 19, 2006 (Calculated from 160 million ordinary shares plus 40 million increased capital shares for a total of 200 million ordinary shares)

220,789,959.47

11,000,000.0096,000,000.00

80,000,000.00

Earnings (Loss) Carried Forward 33,789,959.47 Therefore, shareholders will receive dividend payments for Year 2005 in two payments, the first payment of 0.60 Baht per share was paid on September 29, 2005 and the second payment of 0.40 Baht per share is expected to be paid on May 19, 2006 for a total of 1.00 Baht per share amounting to 176 million Baht. The Board of Directors wishes to express its thanks to all the shareholders for their continuing support of the Company and their contributions to the Company’s development and success. Mr. Prakit Pradipasen Chairman

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BOARD OF DIRECTORS

Mr. Prakit Pradipasen Mr. Chaiyut Srivikorn Mr. James Patrick Rooney

Chairman

Director

Director

Mr. Phaitoon Kijsamlej Mr. Sakda Maneeratchatchai Mr. Satid Sudbuntad

Director and Executive Director Chairman

Director and Managing Director

Director and Vice President Sales and Marketing

Mr. Somboon Phuvoravan Mr. Suvit Nardwangmuang Mr. Anun Louharanoo

Director, Audit Committee Chairman and Independent

Director

Director, Audit Committee and Independent Director

Director, Audit Committee and Independent Director

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DIVIDEND PAYMENT POLICY

Comparison of Dividend Payments

0.75 1.25 1.00

2.12

1.221.35

0.000.50

1.001.50

2.002.50

2003 2004 2005Year

Baht per share

Dividend Profit per share

Dividend Payment Policy to Shareholders : The Company has a policy of payment of yearly dividend of not less than 50 percent of total net profits for that year less deductions for legal reserves as stipulated by the regulations and Articles of Association of the Company and on the condition that there are no other necessary use of the monies or that the payment of said dividend would affect the regular operations of the Company.

The Company has started to pay dividends to shareholders since it has earned profits and deducted accumulated net losses. The following are details of the dividend payments of the Company:

- In 2003 the Company paid a dividend per share of 0.75 Baht for a total number of 160* million shares for a total amount of 120 million Baht. This amounted to 35 percent of the total net profit in 2003 (the Company had carried over an accumulated net loss of 173 million Baht)

- In 2004, the Company paid a dividend per share of 1.25 Baht for a total number of 160 million shares or 200 million Baht. This amounted to 93 percent of total profit in 2004.

- In 2005, the Company paid an interim dividend of 0.60 Baht per share (a total of 160 million shares amounting to 96 million Baht) and will be paid a further dividend of 0.40 Baht per share (a total of 200 shares amounting to 80 million Baht). Therefore, the total dividend payment for 2005 will be 1.00 Baht per share, for a total amount of 176 million Baht. This is equal to 88 percent of total net profits in 2005. (or equal to 82% of net profit per share in the weighted average method) *The total number of shares used to calculate dividends for 2003 were calculated from 8 million shares at par value 100 Baht, split to 160 million shares at par value 5 Baht comparable to the par value per share of 2004 and 2005.

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FINANCIAL INFORMATION

Description Financial Information For The Past 3 Years

(Unit: Million Baht) 2003* 2004* 2005 Financial Status

Total Assets

Total Liabilities

Issued and Paid-up Share Capital

Share Premium

Total Shareholder Equity

Book Value per Share (Baht per share)

1,228

263

800

965

6.03

1,354

373

800

981

6.13

1,768

500

1,000

102

1,286

6.34

Operating Results

Sales Revenue

Total Revenue

Gross Profit

EBIT (Earnings before interest and tax)

Net Profit (Loss)

Number of Ordinary Shares (million)

Earnings (Loss) per share (Baht per share)**

Dividend per share (Baht per share)***

1,798

1,911

628

403

339

160

2.12

0.75

1,994

2,074

616

304

215

160

1.35

1.25

2,001

2,108

605

299

201

164

1.22

1.00

* Data has been adjusted in line with current accounting practice ** The number of shares used to calculate the dividend for 2003 was calculated from 8 million

shares at par value 100 Baht per share and split to 160 million shares at par value 5 Baht per share, for comparison of share value in 2004 and 2005. (For 2005 to calculate the number of shares, the average weighted method was used to calculate 160 million ordinary shares plus increase capital shares of 40 million shares)

*** Please see method of calculation to determine dividend under section titled “Dividend Payment Policy”

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BUSINESS ACTIVITIES The Company’s core business is the production and sales of roofing tiles, siding board and other roofing materials under the brand name of Diamond, Roof, Adamas and Jearanai. The Company’s main production facility is located in Saraburi province and the facility covers an area of over 147 rai of land. The Company currently employs over 650 employees and its main products may be categorized as follows:

• Fiber Cement Tile such as Roman Tile, Small Corrugated Tile and Flat Sheet and other materials used in the roofing process of varied sizes, types and colors.

• Concrete Tile such as Gran Onda and Adamas and other materials used for roofing of varied sizes, types and colors.

• Siding Board, Laths and Eaves

• Jearanai products such as Jearanai shingle roof tile, Jearanai board, Jearanai laths and eaves.

The Company has achieved the ISO 9001:2000 certification for both its production facility and offices and has received the TIS Standards from the Thai Industrial Standards Institute, Ministry of Industry for all roofing tiles products. SIGNIFICANT CHANGES IN THE PAST YEAR January : At the Extraordinary General Shareholders Meeting (No. 1/2548) on

January 10, 2005 it was proposed and approved to reduce the par value of the ordinary shares from 10 Baht per share to 5 Baht per share and to allow the Company to offer shares for increase capital of 40,000,000 Baht to a limited group of individuals and/or the public both in or out of the country. The Company was instructed to proceed with the registration of the increased capital with the Stock Exchange of Thailand.

March : Start of construction of additional production facilities for concrete tiles (CT5) line and for Jearanai (NT8) line.

April : The Company received the Accreditation for occupational and environmental safety (OHASAS18001:1999) from SGS.

September : The Company started production and sales of Jearanai products. : Start of marketing campaign for new Jearanai products including

roofing tiles, wall board, laths and eaves. November : The Securities and Exchange Commission approved the Company’s

securities as registered securities on the Stock Exchange of Thailand on November 9, 2005. The Company’s public offering of increased capital shares of 40 million shares was held on November 16-18, 2005. The shares were traded in the Stock Exchange of Thailand starting from November 29, 2005

December : Registration of increased capital with Department of Business Development

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REVENUE STRUCTURE Revenue Structure of the Company according to the financial statements year 2003, 2004, and 2005, can be summarized as follows:

2003* 2004* 2005 Products Amount % Amount % Amount %

1. Domestic Sales Revenue

Fiber Cement Tiles 1,269.90 66.46 1,267.08 61.09 1,154.38 54.76

Concrete Tiles 387.22 20.26 432.15 20.83 433.57 20.57

Siding Board 106.04 5.55 193.10 9.31 265.10 12.58

Jearanai Products 9.06 0.43

Accessory Products 20.86 1.01 40.68 1.93

Total Domestic Sales Revenue 1,763.16 92.27 1,913.20 92.24 1,902.79 90.26

Exports

Fiber Cement Tiles 33.19 1.74 69.84 3.37 80.02 3.80

Concrete Tiles 1.49 0.08 10.70 0.52 17.18 0.82

Siding Board 0.40 0.02

Jearanai Products

Accessory Products 0.19 0.01

Total Exports 34.68 1.81 80.54 3.88 97.79 4.64

Total Sales Revenue

Fiber Cement Tiles 1,303.09 68.19 1,336.92 64.45 1,234.40 58.56

Concrete Tiles 388.71 20.34 442.85 21.35 450.75 21.38

Siding Board 106.04 5.55 193.10 9.31 265.51 12.60

Jearanai Products 9.06 0.43

Accessory Products 20.86 1.01 40.87 1.94

Total Revenue 1,797.84 94.09 1,993.74 96.12 2,000.58 94.90

2. Delivery and Transport Revenue

67.34 3.52 67.57 3.26 85.29 4.05

3. Special Revenue ** 42.12 2.20 0.00 0.00 14.85 0.70

4. Other Revenue *** 3.54 0.19 12.91 0.62 7.29 0.35

Total Revenue 1,910.84 100.00 2,074.22 100.00 2,108.02 100.00 * Data has been adjusted in line with current accounting practices ** Refers to the sale of fixed assets *** Refers to interest revenue from bank, gains from currency exchange rate, sale of salvage

materials

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INDUSTRY TRENDS AND COMPETITION Operating Business for Each Product Line

1. Product Characteristics

The Company manufactures and sells roofing tiles such as Fiber Cement Tiles, Concrete Tiles and Siding Board. In 2005, the Company started producing Non-Asbestos roofing tiles for the first time and introduced the product to market as a new alternative for consumers. Additionally, the Company also sells accessory products used in the roofing process. The Company is currently in the process of registering for patents, 16 of its products and registering for trademarks another 6 of its products.

1. Fiber Cement Tile

Currently, the Company’s sales of Fiber Cement Tiles make up the bulk of the Company’s revenue. This amounted to approximately 67.06 percent of the total revenue for 2004 and 61.70 percent in 2005. Fiber Cement Tiles are primarily sold domestically and comprised 94.78 percent and 93.52 percent of domestic sales in 2004 and 2005 respectively.

Fiber Cement Tiles are tiles that are produced by using Portland cement and mixing it with Asbestos Fiber and water. This type of tile is very heat resistant, thin and light weight, but is very durable due to the process of mixing cement with the asbestos fiber.

Additionally, Fiber Cement Tiles are relatively inexpensive and have a lifespan of over 10 years. Consequently, since the majority of older Thai homes are made out of wood, the light weight of the fiber cement tiles makes them appropriate for the structure of the homes. The roofing process using fiber cement tiles is also relatively easy, making this type of tile a popular choice for home construction for the past 40 years. Nevertheless, the popularity of fiber cement tiles is decreasing due to the use of Concrete Tiles that are gaining popularity.

2. Concrete Tiles

Concrete Tiles make up the next largest portion of sales for the Company. This amounted to approximately 22.21 percent of the total revenue for 2004 and 22.53 percent in 2005. Concrete Tiles are primarily sold domestically and comprised 97.58 percent and 96.19 percent of domestic sales in 2004 and 2005 respectively.

The raw materials that are used in the production of Concrete Tiles are similar to fiber cement tiles such as Portland cement, rough sand and dust colorant. The only difference is the use of asbestos fiber or other synthetic fibers, which are not used in the production of Concrete Tiles. Concrete Tiles are naturally heavier than fiber cement tiles, thus the use of these tiles are limited to mainly structures that can support the weight of this type of tile. Also, the roofing process using this type of tile is somewhat more complicated, requiring some level of expertise. However, since Concrete Tiles allow for more variation and styling, it is popular for use in the newer, more stylish and modern constructed homes and buildings.

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The company currently produces and sells two main types of Concrete Tiles:

1) CT Diamond concrete tile or the Gran Onda product line 2) Smooth concrete tiles or the Adamas product line

3. Siding Board

Siding board is a construction material composed of Portland cement, cellulose and other components similar to that of fiber cement tiles. An advantage of siding board is that is does not rot and is not susceptible to termite damage and it also has uses and styling similar to real wood. Siding board has been increasing in popularity as a substitute for real wood, which is becoming more difficult and costly to obtain. In addition, siding board is also being used to replace wood board and can be used in a variety of methods such as for ceilings, eaves and laths. Revenue from the sales of siding board made up approximately 9.69 percent of the Company’s total sales in 2004 and 13.27 percent of total sales in 2005. Siding board is only sold domestically.

4. Jearanai Products Jearanai products are a new line of products of the Company for 2005. They are made of Portland cement, cellulose, synthetic fibers and other components similar to fiber cement tiles but do not contain asbestos fibers. The principle products in this line include:

• Jearanai tiles

• Jearanai board

• Laths and eaves

Revenue from the sales of Jearanai products made up 0.45 percent of total revenue in 2005.

Other Products: In addition to the aforementioned products, the Company also sells accessory products related to roofing such as foil, batten, valley through and Tile fixers as self drilling screw, eaves clip and tiles clip etc and tools used in the Dry Fix System. The sales of these accessory products made up 1.05 percent of total sales revenue in 2004 and 2.04 percent in 2005. Accessory products were mostly sold domestically.

Roofing Tile Products

1. FIBER CEMENT TILE Product Description

Roman Tile

Small Corrugated Tile

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Flat Sheet

Louver Sheet

Hand Mould

2. CONCRETE TILE Product Description

Gran Onda Tile

Concrete Fitting

Adamas Tile

3. SIDING BOARD Product Description

Siding Board

4. JEARANAI PRODUCTS Product Description

Shingle roof tile

Jearanai Board

Laths & Eaves

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2. Marketing and Competitive Strategy 2.1 Current Industry Situation and Competition The current market for roofing tiles, siding board and other roofing materials is subject to the local demand for housing by the population. Consequently, housing demand is affected by economic factors and interest rates which have affect on the buying power of consumers. All of these factors directly affect the growth of the roofing tile industry.

A. Current Industry Competition

The current roofing tile industry is not considered a large one, with most of the companies producing several lines of products in order to position their products to match consumers (brand positioning). Marketing strategy is different for each product line. Our Company is also considered a major player in the market because it has been effective in utilizing its production facilities and marketing strategies in order to produce and sell quality products that are widely accepted and competitive with other brands.

The following is a list of companies in the industry:

Trademarks

Trademarks

Producers Fiber Cement Tiles

Concrete Tiles Siding Board

Siam Fiber Cement Co.,Ltd. The CPAC Roof Tile Co.,Ltd. Tip Fibre-Cement Co.,Ltd. (The Siam Cement Group)

Elephant, Tiger, Umbrella, Sun, Prema Tree

CPAC Monier, Neustile, Prestige

Elephant Tree

Mahaphant Fibre Cement PCL Mahaphant Fibre Concrete PCL (The Mahaphant Group)

Ha-huang, Twin-axe Magma

Shera

Diamond Roofing Tiles PCL Diamond, Roof CT-Diamond, Adamas Diamond Kiternit Fibre Cement Co.,Ltd. Oranvanich Co.,Ltd. Bangkok Cement Co.,Ltd. (The Kiternit Group)

Kangaroo, Bee Bear Globe

Skandia

Globe

Thai Ceramic Roofing Tiles Co.,Ltd. Excella Srikungdhonburi Co.,Ltd. V-con Conwood Co.,Ltd. (The Siam City Cement Group)

Conwood

Reference: Master plan of Roofing & Accessories Industry Club, The Federation of Thai Industries

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Production Capacity and Production Share by product for 2005 is as follows: Production Capacity

Fiber Cement Tiles

Concrete Tiles Siding Board Producer

1000 ton/yr. % Mil.

Sheet/yr. % 1000 ton/yr. %

1. The Siam Cement Group 1,658 62.7 105 41.6 36 18.2

2. The Mahaphant Group 432 16.3 45 17.8 96 48.2

3. Diamond Roofing Tiles PCL 253 9.6 40 15.9 35 17.6

4. The Kiternit Group 300 11.4 18 7.1 16 8.0 5. Thai Ceramic Roofing Tiles Co.,Ltd. 0 0.0 9 3.7 0 0.0

6. Srikungdhonburi Co.,Ltd 0 0.00 35 13.9 0 0.0

7. Conwood Co.,Ltd. 0 0.00 0 0.00 16 8.0

Total 2,643 100.0 252 100.0 199 100.0Reference: Master plan of Roofing & Accessories Industry Club, The Federation of Thai Industries B. Competitive Conditions in Thailand The varying production capacities of producers coupled with the undifferentiated products, makes the competition in the roofing tile market high. This competition is seen not only in pricing strategies but also in value added strategies such as color, design, accessory products and after sales service.

The roofing tile industry, while a competitive one, is not considered high technology because production method is relatively simple. However, it is a highly capital intensive industry requiring the use of raw materials. Therefore, competition is high and usually concentrated in the areas of marketing rather than development of technology. Sales must remain at high levels in order to benefit from economies of scale and keep production costs low.

Also, the competitiveness differs for each product line as the various types of products have varying demands. In the fiber cement tile market, the industry has experienced saturation due to limited growth of demand, although it still can be considered a major market for producers and profitable since there is a large enough demand to make producing it take advantage of economies of scale. Nevertheless, the fact that this market has reached saturation has made many producers aware of the need to protect their markets and join forces in pricing strategy for their products, especially in the area of natural color roofing tiles, resulting in an increase in market share.

In the roofing tile industry, even though it is found that there is still a demand, although it has decreased in 2005, the demand for natural color roofing tiles has gained more acceptances. Where traditionally, fiber cement tiles were used, we can now see more use of natural color tiles.

Due to the varied uses of siding board, it has become more popular and demand has increased for this product. Thus, in 2005, there was an increase in demand for this product. It has begun to be typed as a mass product. Although there is fierce competition in pricing, the variable uses of this product make it popular for various marketing strategies.

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Wood Index and Wood Products Index

110.5

100

111.5 114.1 112.6116.5

121.1 123.3127.8

135.1

80

90

100

110

120

130

140

1995 1996 1997 1998 1999 2000 2001 2002 2003 JUL-2004

Reference : Trade and Economic Index Division, Department of Business Economic Compiled by : Housing information center, Government Housing Bank As for market share, if looking at the total sales of the major producers of roofing tiles, the Company is ranked among the five largest producers in Thailand. The total market share of the five largest companies in the industry was 95 percent of total market share. Diamond Roofing Tile Public Company made up 12.16 percent of this share.

Producers Total Sales 2004 (Million Baht) Market Share

1. The Siam Cement Group 8,769.29 52.79% 2. The Mahaphant Group 3,231.80 19.45% 3. Diamond Roofing Tiles PCL 2,020.79 12.16% 4. The Kiternit Group 1,365.38 8.22% 5. Thai Ceramic Roofing Tiles Co.,Ltd. 508.29 3.06% 6. Srikungdhonburi Co.,Ltd 334.14 2.01% 7. Conwood Co.,Ltd. 383.60 2.31% Total 16,613.29 100.00%

Reference: Department of Business Development, Ministry of Commerce Consequently, if one looks a the value of import of both fiber cement tiles and Concrete Tiles from abroad, the portion is much smaller when compared to the total overall value of domestic sales, as can be seen in the following table. Therefore, most of the competition in the roofing tile industry is among domestic producers.

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Total Value of Imports of Roofing Tiles Year 2003 Year 2004 Year 2005 Fiber Cement Tiles

Total Value (mil. Baht) 0.00 0.00 0.00 Growth Rate 0.00% 0.00% 0.00%

Concrete Tiles Total Value (mil. Baht) 13.65 16.62 15.12 Growth Rate 1,151.04% 21.78% -9.03%

Total Value Imports (mil. Baht) 13.65 16.62 15.12

Growth Rate 1,151.04% 21.79% -9.03% Source: Customs Department C. Competition in Foreign Markets In the past, the export of roofing tiles has been limited. In 2005, the total value of roofing tiles and materials exported amounted to only 424.39 million baht. The characteristics of the product, being somewhat fragile and the cost of transport and shipping being high, has limited the export of this product to neighboring countries within close vicinity. Fiber cement tiles comprise the bulk of exports of roofing tiles from Thailand. In 2005, the export of fiber cement tiles made up 72.73 percent of the total revenue of roofing tile exports. Fiber cement tiles are popular with neighboring countries due the low cost, light weight and durability and heat resistance obtained by mixing asbestos fibers with the tiles. Thus, there is an increasing upward trend for the export of fiber cement tiles as seen from 2003 to 2005, where there has been an average increase of 34.59 percent per year.

Value of Exports of Roofing Tiles Year 2003 Year 2004 Year 2005 Fiber Cement Tiles

Total Value (mil. Baht) 253.48 274.91 308.66 Growth Rate -3.99% 8.46% 12.28%

Concrete Tiles Total Value (mil. Baht) 63.89 93.46 115.73 Growth Rate 8.77% 46.28% 23.83%

Total Value Imports (mil. Baht) 317.37 368.38 424.39

Growth Rate -1.67% 16.07% 15.20% Source: Customs Department The majority of exports of roofing tiles and roofing materials have been to neighboring countries such as Laos, Cambodia, Malaysia and Myanmar. In 2005, exports to these countries accounted for 93.26 percent of the total export of roofing tiles. These markets are significant for the industry in the fact that there are minimum transport problems. In addition, Thai producers of roofing tiles have an advantage in that Thai roofing tiles are well accepted in these countries’ markets and have a reputation for quality beyond their own domestic production. Therefore, competition in these markets is mostly among the leading Thai producers of roofing tiles and materials instead of among Thai producers and local country producers.

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Trading Countries Trading Countries Fiber Cement Tiles Concrete Tiles

(Million Baht) Value of Exports % Value of Exports % Laos 172.91 56.02 30.71 26.54 Cambodia 114.52 37.10 13.28 11.47 Malaysia 12.56 4.07 38.67 33.41 Myanmar 8.64 2.80 4.49 3.88 Others 0.03 0.01 28.58 24.70 Total 308.66 100.00 115.73 100.00

Source: Customs Department

As for exports to other countries, especially those in the West, fiber cement tiles have not been popular due to a couple of factors. Concrete Tiles are more suitable to their home construction and preferred for its more styles and options. Also, an important factor is that in Western countries, the use of asbestos fibers in the production of fiber cement tiles is a deterrent because of the widespread fear that the asbestos in the roofing tiles may be absorbed into the lungs and respiratory tract causing health problems. Additionally, due to the weather conditions and housing styles in the west, Concrete Tiles are more suitable for their use.

As for developed countries in Asia, the asbestos content in the fiber cement tiles are also a deterrent for export, however, in the future we can see that Taiwan and Japan may become a large market for fiber cement tiles that do not have asbestos content. D. Future trends in competition

As for the future trends in competition, even though there has been an increase in exports to neighboring countries, competition will most probably be centered in the domestic market as the bulk of sales remains in the domestic market.

The domestic competition is expected to increase as we see producers introducing new products and styles into the market to meet the needs and wants of customers who are demanding more individuality and styling in roofing products. As a whole, there is still a demand for housing, albeit not as great as before.

The Company strongly believes that the traditional demand for fiber cement tiles will remain the major product as it is highly accepted and has been widely used for over 40 years. The low price, ease of use, heat resistance, and light weight still make it one of the most popular roofing materials available. Nevertheless, we will see a development of new colors for fiber cement roofing tiles in the future from the current natural color of light grey. Domestic producers will probably continue to produce the product to keep their market share, however we will probably see as stated, a variety of more colors and there will be fierce marketing strategy to add value to the product in a variety of ways as the market nears saturation and newer replacement products such as metal sheets that can be used to roof factories and more use of Concrete Tiles to roof homes. Thus, there is a trend for a slight increase of sales.

As for Concrete Tiles, the Company strongly believes that there will indeed be fierce competition in this area as demand increases and buying power rises for homebuyers who prefer this type of roofing tile. As we see total household income increase, we also see an increase in the preference of the more stylish and variable, Concrete Tiles. This looks to be a gradual increase in the future.

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As for siding board, the competition is also expected to increase due to its being a new product that has many uses as a wall material for both indoor and outdoor use due to its characteristics like real wood but that it also is more durable and cheaper. It is expected that producers of siding board will introduce newer versions of the siding board that do not contain asbestos into the market.

Additionally, the increase in demand for new products in the upper market segment is expected to act as catalyst for producers of roofing tiles to come up with newer products to satisfy the demands of consumers who prefer other types of fiber cement tiles. Indeed, the Diamond Roofing Tile Public Company is planning to produce a synthetic fiber cement and a non-asbestos cement tile for both domestic and export markets such as Taiwan, where there is a preference for non-asbestos cement tiles among the middle segment market who have become more discerning consumers. 2.2 Characteristics of the customers, target market, sales and distribution

channels The Company currently has both domestic and international sales. However, domestic sales which accounted for 96 percent of the total sales in 2004 and 95 percent of total sales in 2005 are still the major market. Domestic sales in the Northeastern region, Bangkok and nearby provinces and the North comprise the 3 major markets. As for international sales markets, which accounted for 4 percent of total sales in 2004 and 5 percent of sales in 2005, Laos, Cambodia, Myanmar and Taiwan make up the major markets.

2003 2004 2005 Sales

(mil. Baht) % Sales

(mil. Baht) % Sales

(mil. Baht) %

Domestic Market Bangkok and nearby areas 292 16 365 18 392 20 Central Region 230 13 253 13 308 15 Northeastern Region 467 26 466 23 440 22 Northern Region 412 23 406 20 369 18 Southern Region 184 10 234 12 195 10 Eastern Region 84 5 88 4 98 5 Western Region 94 5 102 5 101 5 Total Domestic Market 1,763 98 1,913 96 1,903 95 Foreign Market Taiwan 12 1 23 1 21 1 Laos 1 0 7 0 27 2 Cambodia 1 0 25 1 24 1 Myanmar 21 1 25 1 21 1 China 0 0 1 0 5 0 Total Foreign Market 35 2 81 4 98 5 Total 1,798 100 1,994 100 2,001 100

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In 2004 and 2005, the total amount of sales was 1,913 million Baht and 1,903 million baht respectively. Customers were comprised of two major types: wholesale distributors and housing estate contractors. In 2005, total sales for these two segments were 89.7 percent and 5.4 respectively. The remaining 4.9 percent were sales to the international markets. Nonetheless, the Company did not sell to any one particular buyer or group for more than 30 percent of its total sales. This can be seen from the listing of the Company’s 10 biggest customers, who comprise only 18.2 percent of the total sales for 2005.

Wholesale distributors make up the largest portion of the Company’s customers. The majority of these wholesale distributors are stores that sell construction materials and are mostly located in the larger districts of various provinces. These distributors have a good relationship with the Company and have been our distributors on average for more than five years and usually buy all of our products for sale in their shops. The Company gives priority in maintaining a good relationship with these distributors by sending out sales representatives to maintain contact with over 600 of these distributors all over Thailand. In addition, the Company also has a Customer Service Division that does a routine Morning Call to our customers to inquire if they require any products. Not only does this serve to increase sales, it also helps to facilitate delivery and transportation schedules.

Housing estate contractors, who are the other major type of customer, are usually located in Bangkok and the surrounding region. This group of customers is important for increasing sales and building brand recognition and acceptance of our products or for Project Reference. Therefore, the Company has established a marketing and customer service team to look after this group in particular because of the high price and specialty of the products such as special concrete tiles and premium and metallic colored tiles. The use of these products by housing estate contractors acts as a good promotion for the Company’s products and even though this group currently makes up only 5.4 percent of total domestic sales, the Company expects to increase sales in this group in the future.

As for the international market, the Company has customers in Cambodia, Myanmar and Laos and transports the products to these customers by truck and by ship to Taiwan. The bulk of the products sold to these countries are fiber cement tiles which are of low cost, light, durable and heat resistant thereby making them popular with this market. In 2005, sales to international markets accounted for 4.9 percent of total revenue. One of the reasons why exports to international markets still remained low was due to the Company’s operating at full production capacity for domestic demand and therefore unable to fill export orders. Thus, the Company did not give priority to international sales in the past. Nevertheless, in the future, the Company plans to increase its production capability in order to increase its international sales. 2.3 Competitive Strategy

The Company has the following competitive strategies:

1. To offer the most satisfactory service to all our customers

The Company has established a marketing team to meet with our customers to ascertain their needs and to solve their problems in a timely manner. Additionally, the Company plans to hold instructional seminars for customer’s employees and technicians to instruct them on installment techniques and product information so that they can better service their own customers. Also, the Company

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will set up sales services through the internet (Web Sales) and a Call Center to facilitate and increase orders and provide information for the customers. It is expected that these services will be made available around the second quarter of 2006.

2. To ensure reliable, timely and correct delivery of products

A reliable, timely and correct delivery of products is one of the essential factors of good service that a customer desires. Being able to provide this service can increase customer satisfaction and trust in the Company’s products because the customer can control costs and make timely decisions on stocking products. The Company has a policy of making delivery of products within 24 hours of order (with exceptions in the case of extremely long distance or receipt of order after midday). To ensure that this policy is met, the Company has improved and upgraded the delivery process to increase coordination in all related areas such as production, warehousing and customer service. This also includes order processing, transport of products onto delivery trucks and proper planning of delivery routes.

3. To continuously develop and introduce new products to the market

The Company has a policy of continuously developing new products for the market to meet the needs of its customers. It has plans to develop new products not only in the area of roofing tiles, but also in its accessory product lines. For instance, the Company plans to develop products related to side boards such as laths and eaves made of the same materials as the siding board. It also plans to develop new colors and textures for roofing tiles such as metallic tiles and smooth concrete tiles (Adamas brand) and fiber concrete tiles that do not contain asbestos.

4. To maintain current pricing levels to remain competitive in the industry

The Company has a policy of maintaining competitive prices in line with current competitors in the market. To add value or distinguish the Company’s products, our strategy is to increase product diversity and after sales service. The Company does not use price cutting in trying to obtain market share. The Company prefers to fix a price and offer appropriate discounts when applicable, whereas the discount strategy will differ according to the various customer groups or markets. Nonetheless, in the current environment of high fuel prices and high cost of raw materials, the Company’s discount policy will be in line with the competitor’s pricing and attention to maintaining the appropriate profit margins of the Company.

5. To develop further product distribution channels

Currently, the Company has over 600 wholesale distributors around the country and considered this the most effective distribution channel. Nevertheless, the Company has a strategy to further develop other distribution channels to reach different groups of customers such as both private and public housing projects. In the past, sales to this group have not been very high, therefore the Company plans to increase sales to this group by introducing new products to professionals such as architects and housing project developer to build familiarity with the Company’s projects and act as a reference. The Company also plans to increase its distribution channels in neighboring countries such as Laos, Cambodia and Myanmar.

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3. Product Sourcing and Service 3.1 Production

The Company currently has one production facility occupying approximately 147 rai of land in Muang District, Saraburi Province. In 2004, the Company had a production capacity for production of the following: fiber cement tiles, 253,000 tons; Concrete Tiles, 148,500 tons; siding board, 35,000 tons. The Company has plans to increase production capability for Concrete Tiles and siding board, and expects to be able to construct additional facilities and install equipment by the 3rd quarter and 4th quarter of 2006, respectively. Past production output can be seen in the following graph as follows: 2003 2004 2005 Fiber Cement Tiles Production Capacity (tons/yr.)* Actual Production (tons) Production Rate

262,000 225,393

86%

253,000 250,761

99%

253,000 251,513

99% Concrete Tiles Production Capacity (tons/yr.)** Actual Production (tons)*** Production Rate

108,000 135,295 125%

135,000 169,199 125%

148,500 181,460 122%

Siding Board Production Capacity (tons/yr.)* Actual Production (tons) Production Rate

18,000 13,145 73%

27,000 24,283 90%

35,000 32,465 93%

Jearanai Products Production Capacity (tons/yr.)* Actual Production (tons) Production Rate

- - -

- - -

9,000 2,247 25%

* Production capacity for fiber cement tiles was calculated based on average number of production days of 26 days per month, 12 months per year and 24 hours per day. The production decreased due to shifting the use of the machinery to produce siding board (equipment is able to be used for both types of production). In 2005, an upgrade of the equipment to produce siding board was carried out resulting in an increased production capacity of siding board of 8,000 tons per year. ** Production capacity for Concrete Tiles was calculated based on average number of production days of 22 days per month, 12 months per year, and 8 hours per day. In 2005, the Company purchased aluminum palette and upgraded its machinery to increase production capacity by 10%. *** Production capacity was calculated based on standard working day (Monday – Friday from 8:00-16:00 hrs.) but actual production capacity was calculated based on actual total working hours which included overtime and Saturdays (overtime was 16:00-18:00 hrs.). Currently, the Company’s policy is to utilize full production capacity to maintain production volume for the year and to lower costs of production by making use of economies of scale and for stockage of products during high season or demand. 3.2 Sourcing of Raw Materials

The main raw material components used in making roofing tiles can be categorized into three types; cement asbestos fiber and colorant.

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Portland cement

Portland cement is the main raw material used by the Company and comprised 46.10 percent and 42.19 percent of the total cost of raw materials in 2004 and 2005 respectively. From 2001 to 2005, the cost of purchasing cement has been as illustrated in the following graph:

100 87104

112 104

-

20

40

60

80

100

120

2001 2002 2003 2004 2005

Cement Purchase Price Index

In the past until last year, 2005, the Company purchased all of its cement from one supplier. This supplier was conveniently located near the production facility of the Company necessitating the Company store the cement in our silos or warehouse to await production for only one day because cement trucks were available to deliver cement on a daily basis. This enabled the company to save on operating cash flow because a high inventory was not needed. The Company purchased cement at the going market price. Nevertheless, even though the Company has never had problems with supply in the past, it began purchasing cement from one other supplier in January 2005 to lower the risk of supply of raw materials in the future. The Company purchases cement using cash in order to receive discounts from the supplier.

Asbestos Fiber

Asbestos fiber is obtained from mineral rock and processed to have the characteristic which makes a strong fiber. The characteristics of this material are high heat resistance, toughness and resistance to decay. It is used to reinforce the strength of the concrete in tiles. By its characteristics, it is better suited for mixing with concrete than metal. Currently, asbestos fiber is an important component in the production of fiber cement tiles and siding board. It is also used to produce other products such as brake pads and clutch pads for automobiles. In 2004 and 2005, the cost of asbestos for the Company was 30.61 percent and 32.52 percent of total raw materials respectively.

Asbestos is necessarily imported from other countries such as Canada, Brazil, Zimbabwe and Russia. Because there are only a few countries that export asbestos fiber and due to the varying quality of the asbestos, it is necessary for the Company to have proper planning for purchasing each quarter and each year to properly meet production schedules. Thus, the Company maintains a 2 months’ supply of asbestos in the warehouses, which is considered somewhat high in comparison to other raw materials. The Company confirms its purchasing orders and prices with the asbestos suppliers every quarter. It purchased asbestos fibers from 8 suppliers in 2005. Additionally, the cost of asbestos in the world market and the cost of oil also have an effect due to the fact that oil is used in the production process and used in transport of the products.

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100.079.9 81.6

74.486.7

-

20.0

40.0

60.0

80.0

100.0

120.0

2001 2002 2003 2004 2005

Asbestos Purchase Price Index

Color

Another component in the production of roofing tiles that is becoming more and more important is the color because the Company is using increasing amounts of water colorant due to the Company’s promotion of the use of colored roofing tiles. The cost of colorant was 9.99 percent and 9.70 percent of total raw materials in 2004 and 2005 respectively. The Company currently has 3 suppliers of this colorant and orders similar amounts from each supplier. Most of these suppliers are local agents of international producers of colorant. The Company has agreements to purchase colorant with each supplier for around three years, whereas in the agreement there is stipulation as to the quality, guarantee and price of the colorant: The responsibilities of the suppliers are clearly stipulated in the agreements such as the price based on date of agreement; the quality and standard of the colorant to be delivered; the delivery process; and return process if colorant is sub-standard. The colorant supplier must present a result of testing or Certificate Analysis to the Company each time and must guarantee the colorant for a period of 5 years. The Company currently stocks colorant for approximately 30 days. The current 3-year contracts that the Company has with suppliers specify a fixed price for the period of the contract, however there may be changes if both parties are in agreement.

As for other raw materials such as sand, paper fiber and others, which comprise a total of 13.30 percent and 15.59 percent of cost of raw materials in 2004 and 2005 respectively, the Company minimizes risk by buying from several domestic suppliers and receives a credit term of approximately 30 – 60 days.

Total value and percentage of raw materials used:

Year 2003 Year 2004 Year 2005

Mil. Baht Percent Mil. Baht Percent Mil. Baht Percent Cement 323.23 43.60 415.08 46.10 398.57 42.19 Asbestos Fiber 255.66 34.49 275.55 30.61 307.22 32.52 Water Colorant 73.32 9.89 89.95 9.99 91.60 9.70 Sand 24.25 3.27 31.41 3.49 34.85 3.69 Cellulose 5.90 0.80 7.46 0.83 12.74 1.35 Others 58.97 7.95 80.88 8.98 99.69 10.55 Total Cost 741.33 100.00 900.33 100.00 944.67 100.00

Comparison of cost of domestic and imported raw materials: Year 2003 Year 2004 Year 2005

Mil. Baht Percent Mil. Baht Percent Mil. Baht Percent

Domestic 477.20 64.37 610.81 67.84 618.29 65.45 Imported 264.13 35.63 289.52 32.16 326.38 34.55 Total Cost 741.33 100.00 900.33 100.00 944.67 100.00

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3.3 Problems with sourcing raw materials In the past, the Company has not had a problem with supply of raw materials used in production. This is due to the Company’s efficient planning and purchasing schedules for raw materials. Additionally, because the Company purchases from several suppliers and has a good operating cash flow, the Company has good relations with its various suppliers and receives good credit terms from the suppliers. As for Portland cement, even though the ratio of purchase of cement is 42.19 percent of total raw materials, the Company does not have a policy of entering into a long-term agreement with the supplier because the Company does not want to be limited to buying from a single supplier. The Company does not foresee a problem with this policy due to the fact that the Company purchases its cement with cash and in large volume, thus cement suppliers are eager to do business with the Company. Nevertheless, as to price, there is some risk if the price of cement should change, but as for other raw materials, the Company has not had a problem with changes in cost.

Price Index of Cement

160.8160.6

138.4

163.8

146.6146.1141.7

107.8100.0 100.9

80.0

100.0

120.0

140.0

160.0

180.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 JUL-2004

Reference: Trade and Economic Index Division, Department of Business Economic Compiled by: Housing Information Center, Government Housing Bank 3.4 Environmental Impact The Company strictly abides by the rules and regulations set out by governmental regulatory agencies concerning the environment, including the Ministry of Industry and the Environmental Protection Agency, Health Ministry and Interior Ministry. Regular audits are carried out and in the past three years, the Company has been able to comply with all regulations without fault.

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Concerning the use of asbestos fibers in production, the Company abides by the regulations set forth by the Interior Ministry concerning health and safety in the workplace which regulates the amount of asbestos fiber in the air to not more than 5 fibers per cubic centimeter of air. The appendix to this regulation also states that regulation for factories is not more than 2 fibers per cubic centimeter of air (Ror.Ngor.4) Results of asbestos testing for factory as of November 20, 2004

(Asbestos Content in Air) Work / Area

(Fiber/cc)

Tile Polishing 0.43

Mold Polishing 0.13

Sorting Grade R 0.17

Sorting Grade R 0.15

Asbestos Polishing Area 0.18

Cleaning of Asbestos Warehouse 0.14 The results for the asbestos testing on November 20, 2004 confirmed that the Company was within and had complied with safety regulations in all six areas tested. The Company has also installed additional water treatment systems to ensure that water from the factory is properly treated before being released. As for air pollution, which may occur from dust and particles being released in the tile cutting and polishing process, the Company has installed dry air treatment systems and an air treatment room to control the emissions from production. Investment in equipment to lower environmental pollution over the past 3 years:

Year Description/Type Amount (mill. Baht)

2002 - -

2003 Air treatment system 0.50

2004 Air and water treatment systems 0.21

2005 Air and water treatment systems 1.72

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RISK FACTORS 1. Risk from Business Activities 1.1 Risk due to regulation and limitations in the use of asbestos as a component of roofing tiles The current regulations imposed by many developed countries such as in the European Union prohibit the use and sale of products that contain asbestos fiber in the content. This is due to strong pressure from society and various agencies that are concerned about the health affects on the lungs and respiratory system that are caused by the possible leakage of asbestos from products that have deteriorated over time or the leakage of asbestos into the air during the production process. Consequently, many countries, such as in the United States, while they do not prohibit the use of products with asbestos content, do have strong regulations regarding the safety and use. While it does pose a health risk, many countries believe that if closely monitored and regulated, the minute amounts that may be emitted are not sufficient cause to prohibit their use altogether. If the Thai government chooses to issue regulatory statutes or prohibitions on the use of asbestos in roofing tiles, it will have a great impact on both producers and consumers of roofing tiles because fiber cement roofing tiles are the most widely produced and sold due to their low price and popularity. In 2005, the total number of fiber cement tiles sold domestically was 78.60 percent of the total market for roofing tiles. As for the Company, which has the majority of its revenue from the sales of fiber cement tiles and siding board which contains asbestos, 76.75 percent of revenue in 2004 and 74.97 percent of revenue in 2005 was from the sales of these types of products alone. Nevertheless, the Company feels that the risk is still low in the short term because there have been several studies done in other countries and by the World Health Organization that have concluded that the health risks due to Chrysotile asbestos fibers, which are the components of fiber cement tiles, can still be considered low if emissions are strictly controlled during the production process.1 Nevertheless, the Company is strongly aware of the concerns of consumers for their health and monitors closely various studies and research concerning this topic in order to correctly impart the proper information to be of use to governmental agencies in drafting regulations concerning this matter. The Company is a member of Roofing & Accessories Industry Club of the Federation of Thai Industries and has proposed information and informative research results to local agencies in order to vote in the meeting of the Intergovernmental Negotiating Committee which was held by the United Nations Environment Program (UNEP) on September 18, 2004 in Geneva, Switzerland. It was agreed upon by this committee to remove the component of Chrysotile Asbestos from the list of dangerous materials (Prior Informed Consent or PIC list). Furthermore, the Company has plans to produce new products that will not contain asbestos fiber (non-asbestos) under the brand name “Jearanai” to increase variety in roofing tile materials to meet the needs and wants of consumers.

1 The Interior Ministry of Thailand has prohibited an employer from allowing an employee to work in an area where the amount of asbestos fiber in the air is more than 5 fibers per cubic centimeter. As per testing by the Company on November 20, 2004, the amount of asbestos was found to be well below the regulation.

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1.2 Risk from Competitive Pricing The Company is well aware of the risks to business due to pricing strategies implemented by other producers, especially for fiber cement tiles which make up 61.70 percent of the total sales in 2005. Pricing has a major effect, especially with this type of tile because its characteristics do not vary much from brand to brand. Also, the major producers of this tile still have extra production capacity and are able to meet demand. Thus, it can be seen that the price of fiber cement tiles has decreased. The price of fiber cement tiles was 5,567 Baht per ton in 2003, 5,377 Baht per ton in 2004 and 5,391 Baht per ton in 2005. This has in effect also narrowed the Company’s profit margin. The Company’s policy to minimize this risk has been to emphasis service such as in the areas of timely delivery and after sales service to distinguish our products. Other than that, the Company has been introducing new products from time to time and has promoted the use Concrete Tiles as an alternative. It has also promoted sales of siding board which has a lower production cost but higher profit margin. All of these strategies have been implemented in order to maintain the Company’s profit levels. 1.3 Risk from increased transport and delivery costs Due to the inherent characteristics of roofing tiles being heavy and easily broken or chipped and due to the fact that the Company has only one production facility and must transport the products throughout Thailand, the cost of transport and delivery is necessarily high in comparison to the cost of the product. In addition, the Company is also exposed to the risk of high oil prices thus increasing delivery costs that in turn affect the profit margins of the Company. To reduce such risks, the Company has adjusted the delivery process to assure maximum efficiency such as by requiring trucks to be loaded to capacity for each delivery or coordinating delivery to include as many orders as possible within the same area. This has resulted in the Company’s having a total delivery cost in 2005 of 143.38 million Baht or equal to 6.80 percent of the revenue from delivery. This is a slight decrease from 144.20 million Baht or 6.95 percent in 2004. As for revenue charged for delivery to customers, the Company policy has been to charge delivery costs in keeping in line with current fuel prices and the distance traveled for delivery. This has resulted in an increase in total delivery revenue of 3.28 percent in 2004 and 4.90 percent in 2005. Additionally, due to increased fuel prices, the Company has also closely managed its discount policy in keeping in line with policy and competitor’s prices. 1.4 Risk from changes in consumer behavior and tastes Past changes in consumer behavior in developed countries has seen a trend in the transition from use of fiber cement tiles to Concrete Tiles in the homes and an increased use of metal sheets for roofing materials for factories and warehouses. The major factor in this change has been increased economic development enabling an increase in household income, making these materials more affordable. If this trend continues in Thailand, we should see the increased use of these newer materials. This would have a major effect on the Company since the bulk of revenue is from the sales of fiber cement tiles which made up 61.70 percent of total tile sales in 2005. This is a decrease from 67.06 percent in 2004. To minimize this risk, the Company has a strategy of increasing the sales of Concrete Tiles. In 2005, the sale of Concrete Tiles made up for 22.53 percent of all tile sales, an increase from 22.21 percent in 2004. The Company also

27

increased the variety of tiles available such as smooth concrete tiles (Adamas brand), non-asbestos tiles (Jearanai brand) and siding board. Nevertheless, the Company still plans to continue the production of fiber cement tiles to meet the needs of the market. The sales of fiber cement tiles are considered the staple of the Company’s sales and even though growth may be slowing, the use of these tiles is still very popular due to its cost, light weight and durability. Additionally, the Company still plans to produce fiber cement tiles for export to neighboring countries where its use is still popular. 1.5 Risk from changes in household income for consumers in the agriculture sector due to seasonal risks. The Company’s sales of fiber cement tiles, which accounted for 61.70 percent of total sales in 2005, is mostly to consumers in the agriculture sector. Income for this type of consumer mostly comes from sales of agricultural products which are affected by seasonal changes and calamities. Seasonal changes such a weather, water supply or other calamities, including low prices for crops, all have an effect on their income. Traditionally, agriculture sector consumers have often built their homes during the non-farming season or dry season. This factor also plays a part in the availability of materials or the limited production capacity when demand is high. The Company realizes that there could be a problem of short supply during the dry season or the underutilization of production capacity during the farming season. Thus, the Company has started the Diamond Warehouse Project since 2002. The objective of this project is to increase production capacity during the farming season for sales during the dry season to meet demand. The project enables the Company to sell its products to distributors during off season by offering discounts and longer credit terms. Revenue from the sales through the Diamond Warehouse Project was 148.10 million Baht in the 4-month period from September to December 2005 or 23.96 percent of total sales for the period. To offset low sales during the low season, the Company also plans to increase export sales, sales to housing and construction products and increase product variety for general consumer sales. In addition the Company is developing a type of siding that will be able to be used both inside and outside the home, which should minimize or lower the seasonal risk due to low sales from consumers in the agricultural sector and even out sales volume in each quarter. 1.6 Risks of sourcing for raw materials and cost of raw materials Of the raw materials used in making roofing tiles, cement is considered the major component and also the most costly. The cost of cement made up 42.19 percent of the total materials used in making roofing tiles in 2005. In the past until last year, 2005, the Company purchased all of its cement from one supplier. This supplier was conveniently located near the production facility of the Company. This method had exposed the Company to risk from possible shortage of materials in the supplier had production or delivery problems. To ensure that this risk is minimized and because the Company does not have any concession agreement with any one supplier, the Company started to purchase cement from an additional company since January 2005. This resulted in a decrease of the cost of cement for 2005 of 7.10 percent, down from 2004. As for other raw materials, the Company has used several local suppliers without problems. Asbestos is imported from other countries, however, the supply has been dependable and the Company has not had any problems sourcing this raw material. Also, because the Company has adequate planning, timely order and stocking of raw materials have enabled the Company’s production schedules to run smoothly without problem. Additionally, the Company has also continuously

28

researched and developed new materials to be used as replacement to further enhance the quality and standard of the products. 1.7 Risk from depreciation of value of unused land

The Company currently has several parcels of that land that it had purchased in several provinces such as Lampang, Chonburi, Khonkaen, and Suratthani. The Company had previously planned to expand production facilities at these areas, but due to the economic crisis that occurred, the Company had to shelve the plans. The total worth of this unused land had a book value of 95.06 million Baht as of year ended December 31, 2005 and accounted for 5.38 percent of the total assets or 9.60 percent of fixed assets. The unused land is comprised of 29 parcels of land making up a total of 247 rai, 3 ngarn, and 92.25 sq. wah. The value of the land was last appraised in July 2004 and the appraisal value was mostly higher than the book value. Because the land us currently unused and because it makes up a significant portion of the Company’s fixed assets, it in turn has an effect on the Company’s Return on Total Assets, making it somewhat low in comparison and since the book value is lower than the actual value, it has necessitated the Company set aside a reserve to cover depreciation of the said land.

Nevertheless, there are no current plans to sell these lands as the Company’s land at the current production facility is being used at maximum capacity. In the future, the Company may need to expand production to another site or the Company may decide to use the lands for other business activities or as a regional product distribution center. 1.8 Risk due to the transport and delivery process

The Company has a responsibility to distribute and deliver its products in a reliable and timely manner and must deliver its products in accordance with the customer’s orders and specifications. Since the Company has customers throughout Thailand, the delivery process is very important and being unable to deliver as scheduled is to be considered a risk. Factors affecting delivery include heavy rain, flooding and insufficient availability of delivery trucks. The company hires an outside company to transport the products and this can affect the customer’s trust in the Company if products are not delivered on time. Nevertheless, in the past, the Company has not had any major problems with delivery as the Company has an efficient scheduling and delivery process.

Although there have not been any major delivery problems in the past, to

prevent possible problems that could occur, the Company has an aggressive marketing strategy. The Customer Service Department makes phone calls to customers every morning (Morning Call) to ascertain if customers want to place orders. It does not wait for the customer to call the Company. By this method, each morning it is possible for the efficient scheduling of delivery to be made and the Company is also able to more efficiently control its inventory (Inventory Management). The Production Division, Customer Service and Inventory Division meet each week to check on order levels. The Inventory Division is able to determine which products are stored the longest or do not have sufficient supply or those products that are stored in sufficient amounts. An efficient logistics system is in place to assure customers that their products will be delivered within 24 hours.

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1.9 Risk from foreign producers The ASEAN Free Trade Area: AFTA has lowered the duty fee that once

acted as an effective barrier for imports into the country. The reduction of import duty by 5 percent may result in the increase of low cost products to the market. In 2005, Thailand imported roofing tiles from Italy, which made up the largest share or 25.79 percent of total roofing tile imports. The total value of these imports was 15.12 million Baht. Additionally, the Thai government’s tendency to lower import duty in the future, especially for those countries participating in the Free Trade Area (FTA) will have a strong effect on competition, thus forcing domestic producers to pay attention to increasing quality, product variety and control of production costs and marketing strategy if they are to remain competitive in the market.

Nevertheless, although a risk, it is still considered not a high one due to the nature of the roofing tile products. The overall value, fragileness of the product and high cost of transport make it a product that is not cost effective when having to transport it for long distances. Therefore, it is unlikely that foreign producers of roofing tiles will be entering the market. In 2005, the value of imports of Concrete Tiles was only 15.12 million Baht and there were no imports of fiber cement tiles at all. On the other hand, the Company sees that the Free Trade Area may provide an opportunity for the Company to increase its sales. In 2005, the total value of export of both fiber cement tiles and Concrete Tiles was 424.39 million Baht, 93.26 percent of these exports were to neighboring countries alone.

2. Management Risk 2.1 Management risks of major shareholder

As the Company is considered a subsidiary of the Myriad Materials Co., Ltd.,

which is the major shareholder of the Company with a total of 91.66 percent of total shares. After listing publicly, Myriad’s total shareholding in the Diamond Roofing Tiles Public Company was reduced to 73.33 percent of total shares; however it still remained the Company’s major shareholder. If combined with the director who holds personal shares in the Company, this would increase to 75 percent of the Company’s total shares. This in effect makes Myriad able to fully control the Company through shareholder voting, including the appointment of Company directors because of the legal requirement that all motions proposed through shareholder meetings must be passed by no less than three-fourths (3/4) of total shareholders. Consequently, the remaining shareholders would not be able to propose motions for checks and balances of the Company. Nevertheless, the Company’s has a current related transaction with an individual that may have a conflict of interest in the sum of 500,000 Baht. At the Board of Directors’ Meeting No. 158 on July 26, 2005 it was approved to pay expenses for the Greenshoe Option for the lender of shares (Myriad) and if profit occurred from the buyback of the shares in the stock market, it would charge the expense back. In this matter the Company had abided by the Code of Best Practices of the Stock Exchange of Thailand by managing the Company with Good Corporate Governance and fully disclosing the transaction.

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2.2 Financial risk The Company has an exposure to risk due to its usual purchase of raw materials and Spare part from abroad including its machinery and equipments from abroad. Thus, the Company may be affected by foreign exchange risk. The Company does not have a policy of obtaining foreign loans. In addition, even though the Company does import raw materials for the production process and equipment, in comparison to the total costs incurred, this portion is considered low and therefore the Company’s exposure to foreign exchange risk can be considered low. Also, the Company’s exports of products, which are transacted in foreign currency can also act as an offset to the risk (natural hedge) if there should occur a drastic change in the currency exchange rate. FUTURE PROJECTS

Production Capacity Increase Project for Concrete Tiles (CT-5)

The Company plans to install equipment for the production line of Concrete Tiles at the current production facility of the Company. Whereas, this new production line will have the capacity to produce approximately 45,000 tons of Concrete Tiles per year. As of December 31, 2005, the Company has invested more than 49 million Baht or 35 percent of the total investment budget of 140 million Baht for this project and has initiated contact with the foreign supplier of the technology used for the machinery. The Company expects that the installation of machinery and commencement of production should take place around the 3rd quarter of 2006. The return on investment period is 3.8 years.

Production Capacity Increase Project for Siding Board ( NT-8)

The Company plans to install equipment for another line to produce siding board at the current production facility of the Company. This new production line will have the capacity to produce 42,000 tons of siding board per year. The siding board to be produced by this line will not contain asbestos. The total investment for this production line is approximately 200 million Baht and as of December 31, 2005, the Company has spent 101 million Baht on the project thus far. This is a total of 51 percent of the total investment budget for this project. The Company expects that installation will be complete and commencement of production should begin in the 4th quarter of 2006. The return on investment period is 4.9 years.

Future Projects Approximated

Budget Completion Date Percent of

Completion*

1. CT-5 Project 140.00 3rd quarter 2006 35%

2. NT-8 Project 200.00 4th quarter 2006 51% * Refers to the total amount of investment budget spent to date.

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STATEMENT OF THE BOARD OF DIRECTORS’ RESPONSIBILITIES TO THE FINANCIAL REPORT The consolidated financial statements for 2005 of the Diamond Roofing Tile Public Company Limited have been prepared in accordance with the regulations in the notification of the Department of Business Development, regarding the consolidated financial statements, complying with the accounting standards established by the Institute of Certified Accountants and Auditors of Thailand, effective under the Accounting Act B.E. 2543. The Board of Directors is responsible for the preparation of the financial reports of Diamond Roofing Tile Public Company Limited, assuring that the report of the financial status, operating results and cash flows are true and accurate and represent a fair accounting of the Company’s financial records. These financial statements have been prepared in accordance with the generally accepted accounting standards and principles by using accounting policies that are appropriate and in line with the corresponding business operations. The Company has also considered and maintains adequate provision for future uncertainties or items that may have a significant effect on future operations by disclosure of important information in the Notes to the Financial Statements and the Certified Public Accountant’s opinion in the Report of the Independent Auditor. For this purpose, the Board of Directors has appointed the Audit Committee, comprised of independent and non-executive directors with necessary qualifications as specified by the Stock Exchange of Thailand, to review the financial statements for compliance with the accounting standards; to review internal controls and internal audit systems for appropriateness and efficiency; to review that business operations have been conducted in accordance with the Company’s regulations and relevant laws without conflict of interest; as well as to consider and propose the appointment of the Company’s auditors. The Audit Committee has also submitted the Report of the Audit Committee, included within the Annual Report Year 2005.

March 27, 2006 On behalf of the Board of Directors of

Diamond Roofing Tiles Public Company Limited

(Mr. Prakit Pradipasen) (Mr. Paitoon Kijsamlej)

Chairman Executive Committee Chairman

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REPORT OF THE AUDIT COMMITTEE The Audit Committee has functioned in accordance with the roles and responsibilities assigned to it by the Company’s Board of Directors. For this purpose, the Board of Directors has appointed the Audit Committee to review the financial statements for compliance with the accounting standards and to comply with disclosure regulations; to review internal controls and internal audit systems for appropriateness and efficiency; to ensure compliance with the principles of good corporate governance; and to prevent any conflict of interest and ensure full and correct disclosure; and to propose and consider the appointment of the external auditor. For the past year of 2005, the Audit Committee has met a total of 10 times to consider the following important issues:

1. Review of the Company’s' quarterly and annual financial statements to ensure that they were prepared in compliance with generally accepted accounting standards and disclosure regulations, and in a timely manner.

2. Regular review and audit of compliance with laws and regulations. 3. Review and assessment of the Company’s internal controls and it was agreed

that the Company had sufficient and proper internal controls and was suggested that management give priority to appropriate risk management controls.

4. Suggestion to the Management to give priority to operating the Company within the principles of good corporate governance to enhance transparency and build confidence among all relevant parties.

5. Review of the related transactions and transactions involving sales of assets and found that all were carried out with good faith and within normal business parameters and were fully disclosed in accordance to the regulations put forth by the Stock Exchange of Thailand.

6. Suggestion to the Board of Directors that for the Annual Meeting of Shareholders, the following persons be appointed as external auditors for 2006: Mr. Winid Silamongkol, certified public accountant license no. 3378; or Mr. Thirdthong Thepmongkorn, certified public accountant license no. 3787; or Ms. Bongkot Umsangeam, certified public accountant license no. 3684, all of KPMG Phoomchai Audit Co., Ltd., with an annual audit fee of 940,000 Baht.

The Audit Committee is fully independent and has functioned in accordance to the roles and responsibilities assigned to it by the Board of Directors. The Audit Committee has received full cooperation from the Management and has met with the external auditors to discuss and comment on the financial statements and accounting and financial controls and found no irregularities or relevant errors. On behalf of the Audit Committee Mr. Somboon Phuvoravan Chairman of the Audit Committee February 27, 2006

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AUDIT REPORT OF CERTIFIED PUBLIC ACCOUNTANT

To the shareholders of Diamond Roofing Tiles Public Company Limited I have audited the balance sheets of Diamond Roofing Tiles Public Company Limited as at 31 December 2005 and 2004, and the related statements of income, changes in shareholders’ equity and cash flows for each of the years then ended. The management of Diamond Roofing Tiles Public Company Limited is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Diamond Roofing Tiles Public Company Limited as at 31 December 2005 and 2004, and the results of its operations and its cash flows for each of the years then ended in conformity with generally accepted accounting principles.

Winid Silamongkol Certified Public Accountant Registration number 3378 KPMG Phoomchai Audit Ltd. Bangkok 20 February 2006

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Diamond Roofing Tiles Public Company Limited

Balance sheets

As at 31 December 2005 and 2004

Assets Note 2005 2004

(in Baht)

Current assets

Cash and cash equivalents 5 69,686,146 34,280,051

Current investments in fixed deposits 859,844 854,954

Trade accounts receivable, net 6 305,075,173 290,212,927Other account receivable from related party 4 500,000 -

Inventories, net 7 378,753,570 223,632,704

Other current assets 8 22,872,016 11,193,599

Total current assets 777,746,749 560,174,235

Non-current assets

Property, plant and equipment, net 9, 12 868,179,644 664,341,522

Land not used in operations, net 10, 12 95,058,413 101,760,500Deferred know-how and technical assistance fees, net 11 25,846,656 25,525,078

Other non-current assets, net 832,914 1,840,983

Total non-current assets 989,917,627 793,468,083

Total assets 1,767,664,376 1,353,642,318

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Diamond Roofing Tiles Public Company Limited

Balance sheets

As at 31 December 2005 and 2004

Liabilities and shareholders' equity Note 2005 2004

(in Baht)

Current liabilities Bank overdrafts and short-term loans from

financial institutions 12 241,496,742 133,870,995

Trade accounts payable 13 152,010,452 139,011,409Current portion of finance lease liabilities 12 5,956,789 5,279,835

Income tax payable 35,338,601 36,982,555

Other current liabilities 14 52,131,063 47,289,466

Total current liabilities 486,933,647 362,434,260

Non-current liability

Finance lease liabilities 12 12,692,969 10,552,054

Total liabilities 499,626,616 372,986,314

Shareholders' equity

Share capital

Authorised share capital 15 1,000,000,000 800,000,000

Issued and paid-up share capital 15 1,000,000,000 800,000,000

Share premium 15, 16 102,247,800 -

Retained earnings

Appropriated for legal reserve 16 41,000,000 30,000,000

Unappropriated 124,789,960 150,656,004

Total shareholders' equity 1,268,037,760 980,656,004

Total liabilities and shareholders' equity 1,767,664,376 1,353,642,318

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Diamond Roofing Tiles Public Company Limited

Statements of income

For the years ended 31 December 2005 and 2004

Note 2005 2004

(in Baht)

Revenues

Revenue from sales of goods and transportation 2,085,870,589 2,061,305,110

Other income 4, 10, 18 22,145,326 12,912,341

Total revenues 2,108,015,915 2,074,217,451

Expenses Cost of sales of goods and transportation 19 1,480,748,639 1,445,315,468

Selling and administrative expenses 4, 20 328,112,611 310,961,114

Loss on impairment of assets 10 - 14,000,000

Total expenses 1,808,861,250 1,770,276,582

Profit before interest and income tax expenses 299,154,665 303,940,869

Interest expense 22 -11,596,685 -3,927,987

Income tax expense 23 -86,424,024 -84,538,117

Net profit 201,133,956 215,474,765

Basic earnings per share 24 1.22 1.35

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Diamond Roofing Tiles Public Company Limited

Statements of changes in shareholders' equity

For the years ended 31 December 2005 and 2004

Issued and Retained earnings Total

paid-up Share shareholders'

Note share capital premium Legal reserve Unappropriated equity

(in Baht)

Balance at 1 January 2004 800,000,000 - - 165,181,239 965,181,239

Net profit - - - 215,474,765 215,474,765

Dividends 25 - - - -200,000,000 -200,000,000

Appropriated for legal reserve 16 - - 30,000,000 -30,000,000 -

Balance at 31 December 2004 800,000,000 - 30,000,000 150,656,004 980,656,004

Share capital increase 15 200,000,000 - - - 200,000,000

Share premium increase 16 - 102,247,800 - - 102,247,800

Net profit - - - 201,133,956 201,133,956

Dividends 25 - - - -216,000,000 -216,000,000

Appropriated for legal reserve 16 - - 11,000,000 -11,000,000 -

Balance at 31 December 2005 1,000,000,000 102,247,800 41,000,000 124,789,960 1,268,037,760

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Diamond Roofing Tiles Public Company Limited

Statements of cash flows For the years ended 31 December 2005 and 2004

2005 2004

(in Baht)

Cash flows from operating activities

Net profit 201,133,956 215,474,765

Adjustments for

Depreciation and amortisation 82,689,728 61,475,022

Interest income -172,810 -197,855

Interest expense 11,596,685 3,927,987Loss (gain) from disposal of property, plant and equipment -14,854,871 3,543,294

Allowance for doubtful accounts 6,627,000 2,000,000

Allowance (reversal of allowance) for obsolete

inventories and decline in value of inventories 3,332,687 -990,866Allowance (reversal of allowance) for impairment of assets - 14,000,000

Unrealized loss (gain) on foreign exchange rate 831,062 -1,997,554

Income tax expense 86,424,024 84,538,117

Profit provided by operating activities before

changes in operating assets and liabilities 377,607,461 381,772,910

Changes in operating assets and liabilities

Trade accounts receivable -21,489,246 -63,823,702

Other account receivable from related party -500,000 -

Inventories -158,453,553 10,931,427

Other current assets -11,678,417 -2,275,534

Other non-current assets 352,936 4,936,161

Trade accounts payable 12,806,377 -29,997,730

Other current liabilities 4,609,714 7,665,113

Income taxes paid -88,067,978 -84,576,262

Net cash provided by operating activities 115,187,294 224,632,383

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Diamond Roofing Tiles Public Company Limited

Statements of cash flows

For the years ended 31 December 2005 and 2004

2005 2004 (in Baht)

Cash flows from investing activities

Interest received 172,810 197,855

Purchases of property, plant and equipment -277,398,202 -179,216,862

Deferred know-how and technical assistance fees -1,192,536 -25,525,078

Sales of property, plant and equipment 22,398,261 2,657,606

Net cash used in investing activities -256,019,667 -201,886,479

Cash flows from financing activities

Interest paid -11,364,802 -3,902,302

Dividends paid -216,000,000 -200,000,000

Increase in bank overdrafts and short-term loans

from financial institutions 106,987,351 127,679,151

Finance lease payments -5,626,991 -6,726,938

Increase in share capital and share premium 302,247,800 - Net cash provided by (used in) financing activities 176,243,358 -82,950,089

Net increase (decrease) in cash and cash equivalents 35,410,985 -60,204,185

Cash and cash equivalents at beginning of year 35,135,005 95,339,190

Cash and cash equivalents at end of year 70,545,990 35,135,005

Supplemental Disclosures of cash flow information:

Cash and cash equivalents consisted of:

Cash and deposits at financial institutions 69,686,146 34,280,051

Current investments in fixed deposits 859,844 854,954

Total 70,545,990 35,135,005

Non-cash transactions In 2005, the Company acquired fixed assets with total costs of Baht 285.8 million (2004 : 192.8 mil.) of which Baht 277.4 million (2004 : Baht 179.2 million) were made by cash payments and Baht 8.4 million (2004 : Baht 13.6 million) were made by finance lease agreements.

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Note Contents 1 General information 2 Basis of preparation of financial statements 3 Significant accounting policies 4 Related party transactions and balances 5 Cash and cash equivalents 6 Trade accounts receivable, net 7 Inventories, net 8 Other current assets 9 Property, plant and equipment, net 10 Land not used in operation, net 11 Deferred know-how and technical assistance fees, net 12 Interest-bearing liabilities 13 Trade accounts payable 14 Other current liabilities 15 Share capital 16 Reserves 17 Segment information 18 Other income 19 Cost of sales of goods and transportation 20 Selling and administrative expenses 21 Provident fund 22 Interest expense 23 Income tax expense 24 Basic earnings per share 25 Dividends 26 Financial instruments 27 Agreements 28 Commitments 29 Reclassification of accounts

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These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the directors on 14 February 2006.

1 General information Diamond Roofing Tiles Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office and factory addresses at 69-70 Moo 1, Mitraphab Road (Km.115), Tambol Talingchan, Amphur Muang, Saraburi Province, Thailand. The Company’s status was changed to a public company on 2 December 2004 and the Company was listed on the Stock Exchange of Thailand on 9 November 2005. The principal activities of the Company are manufacturing of roof tiles and side board.

The Company employs 656 employees as of 31 December 2005 (2004: 651 employees). The employee costs of the Company for the year ended 31 December 2005 amounted to Baht 182.4 million (2004: Baht 165.6 million).

2 Basis of preparation of financial statements The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language. The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand. In 2005, the Company adopted the following new TAS which are relevant to its operations: TAS 52 Events after the Balance Sheet Date TAS 53 Provisions, Contingent Liabilities and Contingent Assets The adoption of these new TAS has no material effect on the financial statements. The financial statements are presented in Thai Baht. They are prepared on the historical cost basis. The preparation of financial statements in conformity with TAS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources.

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The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

3 Significant accounting policies (a) Foreign currencies

Foreign currency transactions Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognized in the statement of income.

(b) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

(c) Trade and other accounts receivable Trade and other accounts receivable (including balances with related parties) are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(d) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows: Finished goods and work in progress - average method Raw materials - moving average cost method Supplies - at cost first-in, first-out method Starting from 1 June 2005, the Company has changed its accounting policy for the valuation of inventories (raw materials) from the first-in, first-out method to the moving average cost method. The change in accounting policy has no material effect on the financial statements for each of the years ended 31 December 2005 and 2004. The change was approved by the Revenue Department on 2 June 2005.

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Cost comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

(e) Property, plant and equipment

Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Leased assets Leases in terms of which the Company substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalized at the lower of its fair value or the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the statement of income. Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of assets. The estimated useful lives are as follows: Buildings and structures 5-20 years Machinery and equipment 5-20 years Furniture, fixtures and office equipment 5 years Transportation equipment 5 years No depreciation is provided on land or assets under construction.

(f) Intangible assets Intangible assets are stated at cost less accumulated amortisation. Amortisation Amortisation is charged to the statement of income on a straight-line basis from the date that intangible assets are available for use over the estimated useful lives of the assets. The estimated useful lives are as follows: Deferred know-how and technical assistance fees 10 years Software program 5 years

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(g) Impairment The carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income. Calculation of recoverable amount The recoverable amount is the greater of the asset’s net selling price or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Reversals of impairment An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. All reversals of impairment losses are recognized in the statement of income.

(h) Interest-bearing liabilities

Interest-bearing liabilities are recognised initially at cost less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of income over the period of the borrowings on an effective interest basis.

(i) Trade and other accounts payable Trade and other accounts payable are stated at cost.

(j) Revenue Revenue excludes value added taxes or other sales taxes and is arrived at after deduction of trade discounts. Sale of goods and transportation income Revenue is recognised in the statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognized if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods.

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Transportation income is recognised as income based on service rendered on an accrual basis. Interest and rental income Interest and rental income are recognised in the statement of income on an accrual basis.

(k) Expense Operating leases Payments made under operating leases are recognised in the statement of income on a straight line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income in the accounting period in which they are incurred. Financial costs Interest expense and similar costs are charged to the statement of income in the period in which they are incurred. The interest component of finance lease payments is recognised in the statement of income using the effective interest rate method.

(l) Income tax

Income tax on the profit for the year is current tax. Income tax is recognised in the statement of income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

4 Related party transactions and balances

Related parties are those parties linked to the Company by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices. The pricing policies for particular types of transactions are explained further below: Pricing policies Consultancy and business developmentfees

At agreed price

Gain from disposal of land At agreed price which is equal to appraisal value

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Transactions for the years ended 31 December 2005 and 2004 with related parties are summarised as follows: 2005 2004

(in thousand Baht) Other income

Gain from disposal of land Royal Porcelain Public Company Limited 670 - Expenses Consultancy and business development fees Myriad Materials Co., Ltd. - 6,360 Balance as at 31 December 2005 and 2004 with related party is as follow: 2005 2004

(in thousand Baht) Other account receivable Myriad Materials Co., Ltd. 500 - Other account receivable represents reimbursable expenses from Myriad Materials Co., Ltd. incurred in respect of the Company’s Initial Public Offering. Significant agreements with related party Consultancy and business development agreement The Company entered into the Consultancy and Business Development Agreement with Myriad Materials Co., Ltd., a major shareholder of the Company, whereby the latter will provide the Company consultancy in business development and technical knowledge as indicated in the agreement. In consideration thereof, the Company is committed to pay an annual fee at the amount indicated in the agreement. This agreement has been in effect for a period of two (2) years commencing from 3 January 2003. After the expiry date, this agreement may be extended for a further period of two (2) years upon terms and conditions as mutually agreed. The termination of the agreement can be effective by written notice to the other party three (3) months before the expiry date. However, such agreement expired on January 2, 2005 with no renewal of the agreement.

5 Cash and cash equivalents

2005 2004 (in thousand Baht) Cash at banks and on hand 16,641 6,880 Call deposits 53,045 27,400 Total 69,686 34,280

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6 Trade accounts receivable, net 2005 2004 (in thousand Baht) Trade accounts receivable from other parties 326,302 304,813 Less allowance for doubtful accounts (21,227) (14,600) Total 305,075 290,213 2005 2004 (in thousand Baht) Within credit terms 287,432 277,838 Over due: Less than or equal to 30 days 10,943 8,005 Over 30 days up to 60 days 424 - Over 60 days up to 120 days 942 - Over 120 days up to 360 days 8,337 - Over 360 days 18,224 18,970 Total 326,302 304,813 Less allowance for doubtful accounts (21,227) (14,600) Net 305,075 290,213 The normal credit term granted by the Company is 30 to 120 days.

7 Inventories, net

2005 2004 (in thousand Baht) Raw materials 108,896 60,950 Work in progress 40,796 37,298 Finished goods 159,474 65,961 Supplies 39,883 31,606 Goods in transit 34,037 28,818 Total 383,086 224,633 Less allowance for obsolete and decline in value of inventories (4,332) (1,000) Net 378,754 223,633

8 Other current assets

2005 2004 (in thousand Baht) Prepayment for purchase of goods 11,933 5,541 Prepaid expenses 3,389 1,126 Others 7,550 4,527 Total 22,872 11,194

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9 Property, plant and equipment, net

Furniture, Machinery fixtures Building and and and office Transportation Under Land structures equipment equipment equipment construction Total (in thousand Baht) Cost At 1 January 2004 18,118 315,226 1,286,641 27,750 32,024 214,985 1,894,744 Additions - 3,371 16,801 1,955 21,087 149,635 192,849 Transfers, net - 1,991 111,947 - - (113,938) - Disposals - - (12,310) (1,033) (4,545) (26,163) (44,051) At 31 December 2004 18,118 320,588 1,403,079 28,672 48,566 224,519 2,043,542 Additions - 4,724 16,078 3,219 11,417 250,405 285,843 Transfers, net - 1,237 215,282 - - (216,519) - Disposals - - (7,676) (627) (8,279) - (16,582) At 31 December 2005 18,118 326,549 1,626,763 31,264 51,704 258,405 2,312,803 Accumulated depreciation

At 1 January 2004 - 200,269 1,094,136 18,433 14,495 - 1,327,333 Depreciation charge for the year - 11,885 37,021 3,057 8,431 - 60,394 Disposals - - (12,298) (967) (3,131) - (16,396) At 31 December 2004 - 212,154 1,118,859 20,523 19,795 - 1,371,331 Depreciation charge for the year - 13,194 55,263 3,203 9,504 - 81,164 Disposals - - (7,628) (590) (7,523) - (15,741) At 31 December 2005 - 225,348 1,166,494 23,136 21,776 - 1,436,754

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9 Property, plant and equipment, net (continued)

Furniture, Machinery fixtures Building and and and office Transportation Under Land structures equipment equipment equipment construction Total (in thousand Baht) Allowance for loss on impairment of assets At 1 January 2004 - - - - - 29,323 29,323 Reversal of allowance for loss on impairment of assets - - - - - (21,454) (21,454) At 31 December 2004 - - - - - 7,869 7,869 At 31 December 2005 - - - - - 7,869 7,869 Net book value At 31 December 2004 18,118 108,434 284,220 8,149 28,771 216,650 664,342 At 31 December 2005 18,118 101,201 460,269 8,128 29,928 250,536 868,180

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LEASED ASSETS

The Company entered into finance lease agreements for machinery with various local leasing companies with the fair value amounting to approximately Baht 28.2 million as at the initial date of the lease agreements. The agreements are for the period of 4 years. As at 31 December 2005, the carrying amount was Baht 19.2 million (2004: Baht 15.9 million). Fiber Cement Tile Plant The Company’s management estimated that the economic benefits of fiber cement tile plants were less than originally expected because of the decrease in the market demand. Hence, these plant and related assets were written down to their recoverable value. As at 31 December 2003, allowance for loss on impairment of such assets was Baht 29.3 million. In December 2004, the Company wrote off a portion of assets representing machinery and equipment under installation of fiber cement tile plant by offsetting against the book value with allowance for loss on impairment of such assets amounting to Baht 21.4 million. As at 31 December 2005, the gross carrying amounts of certain fully depreciated fixed assets which are still in active use totalling approximately Baht 1,054.7 million (2004: Baht 1,058.6 million) in the financial statements. The Company’s land, a portion of buildings and structures and machinery and equipment were used as collaterals for long-term loans and working capital facilities obtained from a local bank as discussed in Note 12.

10 Land not used in operations, net

2005 2004 (in thousand Baht) Land not used in operations 109,058 115,760 Less allowance for loss on impairment (14,000) (14,000) Net 95,058 101,760 The Company purchased land not used in operations at cost and associated expenses totalling approximately Baht 115.8 million. In 2004, the Company recorded allowance for loss on impairment of such land of Baht 14.0 million which was presented as a separate item in the statement of income for the year ended 31 December 2004. As at 31 December 2005 and 2004, the Company is in the process of consideration to generate future economic benefits from such land.

In 2005, a portion of land not used in operations at cost of approximately Baht 6.7 million has been expropriated by the Department of Highways. The Company received compensation for the expropriation exceeding book value by approximately Baht 10.1 million, which has been recorded as part of other income.

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A portion of land title deed for land not used in operations, which has net book value as at 31 December 2005 and 2004 totalling Baht 25.4 million, was jointly owned with two other companies.

A portion of the Company’s land not used in operations was used as collaterals for long-term loans and working capital facilities obtained from a local bank as discussed in Note 12.

11 DEFERRED KNOW-HOW AND TECHNICAL ASSISTANCE FEES, NET

(in thousand Baht)Cost At 1 January 2004 - Additions 25,525 At 31 December 2004 25,525 Additions 1,193 At 31 December 2005 26,718 Accumulated amortisation At 1 January 2004 - Amortisation charge for the year - At 31 December 2004 - Amortisation charge for the year 871 At 31 December 2005 871 Net book value At 31 December 2004 25,525 At 31 December 2005 25,847

12 Interest-bearing liabilities

2005 2004 (in thousand Baht) Current Bank overdrafts - secured - 10,348- unsecured 1,445 12,695 1,445 23,043 Short-term loans from financial institutions - secured 15,052 110,828- unsecured 225,000 - 240,052 110,828Total 241,497 133,871

52

Secured interest-bearing liabilities are secured on the following assets: Note 2005 2004 (in thousand Baht) Land 9 18,118 18,118Building and structures 9 72,347 82,859Machinery 9 39,982 61,847Land not used in operations 10 65,760 65,760Total 196,207 228,584 The currency denomination of interest-bearing liabilities is as follows: 2005 2004 (in thousand Baht) Thai Baht 226,445 123,043United States Dollars 15,052 10,828Total 241,497 133,871 As at 31 December 2005, the Company has short-term loans from various financial institutions which bear interest at the rates ranging from 3.875% to 6.5% per annum (2004 : 3.125% to 4.560% per annum). As at 31 December 2005, the Company had unutilised credit facilities totalling Baht 322.2 million (2004 : Baht 354.3 million). Such loans, overdraft and other credit facility lines are collateralized by the mortgage of land, a portion of buildings and the structures and machinery and equipment and a significant portion of land not used in the operations. Finance lease liabilities Finance lease liabilities are payable as follows: 2005 2004 Principal Interest Payments Principal Interest Payments (in thousand Baht) Within one year 5,957 1,083 7,040 5,280 965 6,245

After one year but within five years 12,693 1,040 13,733 10,552 876 11,428 Total 18,650 2,123 20,773 15,832 1,841 17,673 Under the terms of lease agreements, no contingent rents are payable.

13 Trade accounts payable 2005 2004 (in thousand Baht) Trade accounts payable to other parties 152,010 139,011

53

14 Other current liabilities 2005 2004 (in thousand Baht) Accrued operating expenses 25,484 34,871 Payables for purchases of fixed assets and others

19,065 3,388

Withholding tax payable 3,420 1,719 Deposits and advances received 3,268 2,307 Other 894 5,004 Total 52,131 47,289

15 Share capital 2005 2004 Par value Number Baht Par value Number Baht (in Baht) (in thousand) (in Baht) (in thousand) Authorised At 1 January - Ordinary shares 10 80,000 800,000 100 8,000 800,000 Split shares 5 160,000 800,000 10 80,000 800,000 Creation of new shares

5 40,000 200,000 - -

At 31 December - ordinary shares 5 200,000 1,000,000 10 80,000 800,000 Issued and fully paid At 1 January - Ordinary shares 10 80,000 800,000 100 8,000 800,000 Split shares 5 160,000 800,000 10 80,000 800,000 Issue of new shares 5 40,000 200,000 - - At 31 December - ordinary shares 5 200,000 1,000,000 10 80,000 800,000

At the extraordinary shareholders’ meeting held on 3 September 2004, the shareholders passed a resolution to change the par value of the Company’s shares from Baht 100 per share, totalling 8,000,000 shares to Baht 10 per share, totalling 80,000,000 shares. The Company registered the change in share capital with the Ministry of Commerce on 24 January 2005. At the extraordinary shareholders’ meeting held on 10 January 2005, the shareholders passed a resolution to change the par value of the Company’s shares from Baht 10 per share, totalling 80,000,000 shares, to Baht 5 per share, totalling 160,000,000 shares. In addition, the shareholders unanimously approved the resolution to increase the share capital from Baht 800 million (160,000,000 shares, Baht 5 par value) to Baht 1,000 million (200,000,000 shares, at Baht 5 par value). The newly created common shares (40,000,000 shares, Baht 5 par value) were offered to the public based on terms and conditions and detail information relating to the offering as prescribed by the Board of Directors. The Company registered the change in share capital with the Ministry of Commerce on 27 January 2005.

54

In November 2005, the Company received cash contributions toward the increase in share capital totalling Baht 312.0 million which included premium on common shares of Baht 102.2 million (net of share issuance expenses of Baht 9.8 million).

16 Reserves

Share premium

The share premium account is set up under the provisions of Section 51 of the Public Companies Act B.E. 2535, which requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). The account is not available for dividend distribution. Legal reserve

The legal reserve is set up under the provisions of Section 116 of the Public Companies Act B.E. 2535. Section 116 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

17 Segment information

The Company’s operations are manufacturing of roof tiles and side board. Management considers this as an integrated and complementary line of products. For this reason, the management determines that the Company has only one industry segment. Moreover, the Company operates mainly in the domestic market, consequently, management determines that the Company has only one geographical segment.

18 Other income

2005 2004 (in thousand Baht) Gain on disposal of property, plant and equipment 14,855 - Income from sales of scraps 5,563 7,674Gain on exchange rate - 2,390Others 1,727 2,848Total 22,145 12,912

55

19 Cost of sales of goods and transportation 2005 2004 (in thousand Baht) Raw materials 978,447 918,575 Personnel expenses 91,141 86,317 Overheads 508,173 450,552 Others (97,012) (10,129) Total 1,480,749 1,445,315

20 Selling and administrative expenses

2005 2004 (in thousand Baht) Distribution 68,608 66,022 Marketing 104,342 102,353 Personnel 91,303 79,317 Administrative 63,860 63,269 Total 328,113 310,961

21 Provident fund

The Company has established contributory provident funds for its employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at rates ranging from 3% to 5% of their basic salaries and by the Company from 3% to 5% of the employees’ basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by a licensed Fund Manager.

22 Interest expense

2005 2004 (in thousand Baht) Interest paid and payable to: - financial institutions 10,389 2,250 - others 1,208 1,678 Total 11,597 3,928

23 Income tax expense 2005 2004 (in thousand Baht) Current tax expense Current year 86,424 84,538 Total 86,424 84,538

56

24 Basic earnings per share

The calculation of basic earnings per share at 31 December 2005 was based on the profit attributable to ordinary shareholders of Baht 201.1 million (2004: Baht 215.5 million) and the weighted average number of shares outstanding during the year ended 31 December 2005 of 164.4 million shares. Basic earnings per share in 2004 is determined by the number of common shares outstanding adjusted for the proportionate change in the number of common shares outstanding as if the stock split (see Note 15) had occurred at the beginning of the earliest period reported (160 million shares) as follows: Profit attributable to ordinary shareholders 2005 2004 (in thousand Baht) Profit attributable to ordinary shareholders 201,134 215,475 Weighted average number of ordinary shares 2005 2004 (in thousand shares) Issued ordinary shares at 1 January 160,000 160,000 Effect of shares issued during the year 4,384 - Weighted average number of ordinary shares at 31 December 164,384 160,000

25 Dividends At the general shareholders’ meeting of the Company, held on 12 March 2004, dividends of Baht 15 per share were approved from net profit of 2003 (total sum of Baht 120.0 million). The dividend was paid to shareholders during 2004. The general shareholders’ meeting also approved appropriation for legal reserve amounting to Baht 17.0 million. At the Board of Directors’ meeting of the Company, held on 19 August 2004, interim dividends of Baht 10 per share were approved from earnings for the period ended 31 August 2004 (total sum of Baht 80.0 million). The dividend was paid to shareholders during 2004. At the general shareholders’ meeting of the Company, held on 12 April 2005, dividends of Baht 0.75 per share were approved from net profit of 2004 (total sum of Baht 120.0 million). The dividend was paid to shareholders during 2005. The general shareholders’ meeting also approved appropriation for legal reserve amounting to Baht 11.0 million.

57

At the Board of Directors’ meeting of the Company, held on 29 August 2005, interim dividends of Baht 0.60 per share were approved from earnings for the period ended 30 June 2005 (total sum of Baht 96.0 million). The dividend was paid to shareholders during 2005.

26 Financial instruments

Financial assets and financial liabilities carried on the balance sheets include cash and cash equivalents, account receivables - trade and others, account payables - trade and others, overdrafts and short-term loans from financial institutions. FINANCIAL RISK MANAGEMENT POLICIES The Company is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Company does not issue derivative financial instruments for speculative or trading purposes. INTEREST RATE RISK Interest rate risk is the risk that future movements in market interest rates will affect the results of the Company’s operations and its cash flows. Management believes that the interest rate risk is minimal, hence, the Company has no hedging agreement to protect against such risk. FOREIGN CURRENCY RISK The Company is exposed to foreign currency risk relating to purchases and sales which are denominated in foreign currencies. Management believes that the interest rate risk is minimal, hence, the Company has no hedging agreement to protect against such risk. Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or a counter party to settle its financial and contractual obligations to the Company as and when they fall due. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. However, management does not anticipate material losses from its debt collection. Liquidity risk The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.

58

Fair values The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. In determining the fair value of its financial assets and liabilities, the Company takes into account its current circumstances and the costs that would be incurred to exchange or settle the underlying financial instrument.

27 Agreements 27.1 Service agreement

The Company entered into the Service Agreement relating to the center for online database with a company, whereby the latter will provide online database and other facilities as prescribed in the agreement. In consideration thereof, the Company is committed to pay fee as indicated in the agreement. This agreement has been in effect for a period of three years commencing from 5 October 1999, and can be automatically renewed for a successive period of one year each unless written notice of termination is given by either party ninety days before the expiry date. However, such agreement expired on 30 November 2005. The Company entered into a new agreement which is for a period of three years commencing from 1 December 2005, and can be renewed for one year to three years unless written notice of termination is given by either party ninety days before the expiry date. Service fee amounted to approximately Baht 6.2 million in 2005 (2004 : Baht 12.0 million).

27.2 Know-How and technical assistance agreement The Company entered into the Know-How and Technical Assistance Agreement with a foreign company, whereby the latter will provide technical assistance for manufacturing of certain products. This agreement has been in effect for a period of five years commencing from February 2004 and can be terminated under the conditions indicated in the agreement. The Company is committed to pay fee as prescribed in the agreement.

28 Commitments

As at 31 December 2005, the Company had: 28.1 outstanding commitments for construction of building and installation of

machinery and equipment amounting to approximately Baht 120.8 million and Euro 0.3 million.

28.2 unused letter of credit totalling approximately Baht 22.8 million.

29 Reclassification of accounts Certain accounts in the 2004 financial statements have been reclassified to conform with the presentation in the 2005 financial statements.

59

AUDIT FEES OF THE COMPANY FOR YEAR ENDED DECEMBER 31, 2005

The appointed certified public accountant for the Company was Mr. Winid Silamongkol, certified public accountant no. 3378 of KPMG Phoomchai Audit Co., Ltd. with its address at Floor 22, Empire Tower, 195 South Sathorn Road, Bangkok 10120, Tel.: 0-2677-2000, Fax: 0-2677-2222. The following are the details of the audit fees for 2005:

Item Amount (Baht) Yearly Audit Fee Quarterly Audit Fee Other Audit Expenses

490,000.00 360,000.00 216,348.72

Total 1,006,348.72

60

FINANCIAL ANALYSIS AND OPERATING RESULTS (Based on the Consolidated Financial Statements Year 2005) Earning Ability

Total Revenue: The Company’s total revenue for 2005 was 2,108.02 Million Baht, an increase from 2004 by 33.80 Million Baht or 1.63 percent. Revenue was comprised of the following:

1. Revenue from Sales of Products: The Company had a revenue from sales of fiber cement tiles, Concrete Tiles, siding board, Jearanai products and other accessory products for a total of 2,005.58 million Baht in 2005. This was an increase of 6.85 million Baht or 0.34% from 2004. This is considered a very slight increase due to the real estate sector situation in 2005 which experienced a slowing down after its continuous steady growth from 2000 – 2004. At the beginning of 2005, the economy was affected by several factors and the real estate sector was affected by high oil prices, interest rates and inflation rates the rose quickly contributing to the downward adjustment of the market.

2. Revenue from Transport: The Company had a total revenue made from

the transport or delivery of its goods of 85.57 million Baht in 2005. This was an increase of 17.72 million Baht or 26.23% in 2004. This was due to fluctuating oil prices and the Company’s policy of adjusting delivery prices in line with the actual cost of fuel and distance traveled.

3. Other Revenue: The Company had Other Revenue for a total of 22.14

million Baht in 2005. This was an increase of 9.23 million Baht or 71.49% from 2004. This was due to the Company’s making a profit from the sale of land and building in Suratthani province(9.89 million Baht); the sale of the Company’s automobiles (3.92 million Baht); sales of other assets (1.04 million Baht); and sales of salvageable materials and other saleable materials (7.29 million Baht).

Description Year 2005 Year 2004 In(De)crease (Unit: Million Baht) Amount % Amount % Amount %

Revenue from product sales 2,000.58 94.90 1,993.74 96.12 6.85 0.34Revenue from transport 85.29 4.05 67.57 3.26 17.72 26.23Other revenue 22.14 1.05 12.91 0.62 9.23 71.49Total Revenue 2,108.02 100.00 2,074.22 100.00 33.80 1.63

61

Description Year 2005 Year 2004 Increase(Decrease)

(Unit: Million Baht) Amount % Amount % Amount %

FC 1,234.40 61.70 1,336.92 67.06 (102.52) (7.67)CT 450.75 22.53 442.85 22.21 7.90 1.78DSB 265.51 13.27 193.10 9.69 72.41 37.50

NT 9.06 0.45 0.00 0.00 9.06 100.00

Accessories 40.87 2.04 20.86 20.86 20.01 95.87

Total Sales 2,000.58 100.00 1,993.74 100.00 6.84 0.34

Sales of Products by Type: Total sales value for 2005 was 2,000.58 Million Baht, an increase from 2004 by 6.84 Million Baht or 0.34 percent. Sales value was comprised of the following:

1. Fiber Cement Tiles (FC): The Company had a revenue from the sale of fiber cement tiles in 2005 of 1,234.40 million Baht or 61.70 percent of total revenue. This was a decrease from 2004 of 102.51 million Baht or 7.67 percent due to the Company’s shifting of production line 1, fiber cement tiles (FC1) to production of siding board for the whole year, thus decreasing production capacity for this product.

2. Concrete Tiles (CT): The Company had a revenue from the sale of Concrete Tiles in 2005 of 450.75 million Baht or 22.53 percent of total revenue. This was an increase of 7.9 million Baht or 1.78 percent from 2004.

3. Siding Board (DSB): The Company had a revenue from the sale of siding board in 2005 of 265.51 million Baht or 13.27 percent of total revenue. This was an increase of 72.41 million Baht or 37.50 percent from 2004. This was due the continued increase in demand of siding board. With a limited production capacity, the Company therefore has increased the production capacity of production line 1 (FC1) for fiber cement tiles in order to meet the rising demand of the products.

4. Jearanai Products (NT): The Company had a revenue from the sale of Jearanai Products in 2005 for a total of 9.06 million Baht or 0.45 percent of total revenue. Jearanai Products are products that do not contain asbestos fibers and were first introduced to the market during the fourth quarter of 2005.

5. Accessory Products (Acc.): The Company had a revenue from the sale of accessory products in 2005 for a total of 40.87 million Baht or 2.04 percent of total revenue. This was an increase of 20.01 million Baht or 95.87 percent from 2004.

Total Revenue

0500

1000150020002500

2546 2547 2548

Mio.Baht

Sales Value Traspot Imcome Other Income

Sales by Product

0

500

1000

1500

2000

2500

2546 2547 2548Year

Mio.Baht

FC CT DSB NT Acc.

1,797.842,000.581,993.74

72.49%

2.04%13.27% 22.53%

61.70%

1.05% 9.69%

22.21%

67.06%

5.90%21.62%

0.45%

94.09%

1.05%4.05%

94.90%

0.62 % 3.26%

96.12%

2.39% 3.52%

1,910.84 2,108.022,074.22

62

Profitability Gross Profit: The Company’s gross profit for 2005 was 605.12 million Baht and had a Gross Profit Margin of 29.01 percent per total sales. This was a decrease from 615.99 million Baht or a Gross Profit Margin of 29.88 percent in 2004. This was due to increased competition in the market which caused a lowering of prices and a decreased overall growth of the market. In addition, overall cost of production increased in line with the oil prices which contributed to higher production costs, higher electricity costs, wages and transport costs. Net Profit: The Company’s net profit for 2005 was 201.43 million Baht or 9.54 percent of the total revenue. This was a decrease from 215.47 million Baht or 10.39 percent in 2004. This was due to lowered selling prices while there were increased production and management costs, including an increase in interest rates. Earnings per Share: The Company had net earnings per share of 1.22 Baht per share in 2005, a decrease of 0.07 Baht or 1.35 Baht per share in 2004. This was an overall decrease of 6.66 percent. The return on equity decreased from 22.15 percent in 2004 to 17.89 percent in 2005. This was due to a decreased of net profit in 2005 and from the increase in shareholders’ equity from sales of 40 million ordinary shares in 2005. Earning Efficiency The Company’s return on total assets, return on fixed assets and asset turnover ratio decreased in 2005, due to the decrease in net profit of 14.34 million Baht but an increase in total assets including equipment, products and accounts receivables of 414.03 million Baht.

Description Yr. Yr. In(De)crease

(Unit: Million Baht) 2005 2004 Amount %

Revenue from Sales 2,085.87 2,061.30 24.52 1.19

Less Cost of Sales 1,480.75 1,445.32 35.43 2.45

Gross Profit 605.12 615.98 (10.86) (1.76)

Gross Profit Margin (GP) (%) 29.01 29.88

Less Sales & Management Costs 328.12 310.96 17.16 5.52

Plus Other Revenue 22.15 12.91 9.23 71.50

Less Extraordinary 14.00 (14.00) (100)

Earning Before Interest, Taxes 299.16 303.94 (4.78) (1.57)

Ratio (EBIT) (%) 14.34 14.75

Less Interest and Taxes 98.02 88.47 (9.55) (10.79)

Net Profit 201.13 215.47 (14.34) (6.66)

Net Profit Ratio (NP) (%) 9.54 10.39

Earnings Per Share* 1.22 1.35 (0.07) (6.66)

*Calculation of Earnings Per Share using an average weighted number of shares.

Financial Ratio 2003 2004 2005

Net Profit (Loss) Margin % 17.73 10.39 9.54

Return on Equity %* 42.57 22.15 17.89 * Return on Equity calculated on a Fully diluted basis

Financial Ratio 2003 2004 2005 Return on Total Assets % 29.16 16.69 12.89Return on Fixed Assets % 66.55 39.01 32.82Assets Turnover Ration (%) 1.64 1.61 1.35

63

Financial Status

Description As of

December As of

December Increase (Decrease)

(Unit: Million Baht) 31st, 2005 31st, 2004 Amount %

Total Assets 1,767.67 1,353.64 414.03 30.59

Total Liabilities 499.63 372.99 126.64 33.95

Total Shareholders’ Equity 1,268.04 980.66 287.38 29.31

Book Value – Baht Per Share* 6.34 6.13 0.21 3.44 *Total number of shares use to calculate 2547 : 2548 equal to 160 million shares : 200 million shares (on a Fully diluted basis)

Total Assets: The Company’s total assets as of December 31, 2005 increased from 2004 by a total of 414.03 million Baht or 30.59 percent. This was due to an increase in fixed assets by a total of 196.46 million Baht for the Jearanai products project (NT8) and concrete cement project (CT5) which is currently in setup phase. Also, this included costs incurred for the Jearanai project (NT7) that was a continuation from 2004 which increased fixed assets by 217.57 million Baht such as leftover product inventory and accounts receivables. This was due the Company’s policy of increasing production capacity to meet increased demand for the high season of 2006 and to increase sales to customers with good standing by increasing their credit terms. Total Liabilities: The Company’s total liabilities as of December 31, 2005 increased from 2004 by 126.64 million Baht or 33.95 percent. This was due to a short term loan from a financial institution of 107.63 million Baht and an increased current liability of 19.01 million Baht.

Total Assets

0

500

1000

1500

2000

2003 2004 2005ป

Mill. Baht

Current Asset Fixed Asset

Total Liabilities

0

200

400

600

2003 2004 2005ป

Mill. Baht

Current Liabilities Fixed Liabilities

1,227.931,353.64

1,767.67

46.11%

56.00%

44.00%

58.62%

41.38%

53.89%

262.74

499.63

372.99

97.58%

2.54%

97.46%

2.83%

97.17% 2.42%

64

Total Shareholder’s Equity: The Company’s total shareholder equity as of December 31, 2005 increased from 2004 by 287.38 million Baht or by 29.31 percent due to an increase in net profit of 201.13 million Baht. Additionally, there was an increase from sales on the stock market of 40 million shares in 2005, thus increasing capital by 200 million Baht. There was also a capital gain over par value of shares of 102.25 million Baht and payment of dividend from operations in 2004 in April of 2005 of 120 million Baht and an interim dividend payment for 2005 of 96 million Baht for a total dividend payment of 216 million Baht in 2005. Book Value per Share: Due to the aforementioned reasons, the Company’s book value per share rose from 6.13 Baht per share in 2004 to 6.34 Baht per share in 2005.

Total Shareholder's Equity

0

200

400

600

800

1000

1200

1400

2546 2547 2548

ป

Mio.Baht

retained Earning not yet appropriatedLegal reserve set asideTotal paid shares

Cash Flows

Description Year Year

(Unit: Million Baht) 2005 2004 Cash flows from operating activities 115.19 224.63Cash flow from investment activities (256.02) (201.89)Cash flow from financing activities 176.24 (82.95)

Net Increase (Decrease) in Cash 35.41 (60.20)

Cash at beginning of the period 35.14 95.34Cash at end of period 70.55 35.13CFROE = Cash Flow Return on Equity 9.08 22.91

The Company’s cash flow operating activities for 2005 was 115.19 million Baht. This was a decrease from 2004 of 85.90 million Baht. This was due items that did not affect cash such as depreciation and sales of assets for 82.69 million Baht. However, there was also an increased inventory of 155.12 million Baht, an increased accounts receivable of 14.87 million Baht and current assets and liabilities of 1.40 million Baht.

Book Value Per Share

6.13

6.34

6.03

5.85.9

66.16.26.36.4

2003 2004 2005ป

Mio. Baht

1,268.04

980.66 965.18

86.93%

3.23%9.84%

81.58%

3.06% 15.36% 0.00%17.11%

82.89%

65

The Company’s net cash used in investment activities for 2005 was 256.02 million Baht. This was due to a fixed asset investment in the Jearanai products project (NT8) of 101.39 Baht and a concrete cement tile project (CT5) for 49.38 million Baht, both of which are currently in the setup phase. Also, there was an investment cost for project (NT7) from year 2004 of 33.16 million Baht and an investment of an additional 17.64 million Baht for the investment in other assets for a total of net total of 72.09 million Baht.

The Company’s net cash from financing activities for 2005 was 176.24 million Baht. This was due to a sale of ordinary shares of 40 million shares for a net total of 302.25 million Baht; a short term loan from a financial institution for a net total of 107.63 million Baht; the payment of interest of 17.64 million Baht; and the payment of dividend for a net total of 216 million Baht.

In summary, the Company’s main sources of cash were predominantly from the sales of roofing tile products and siding board with the timely collection of accounts receivables. The Company’s net cash flow return on equity for 2005 was 9.08 percent, which was lower than 2004. This could be considered a large difference due to the net cash from operations in 2005 was lower by 109.44 million Baht down from 2004. However, shareholder’s equity was increased to 287.38 million Baht as previously shown.

Liquidity

Description Year 2005 Year 2004 Current Ratio (%) 1.60 1.55Quick Ratio (%) 0.82 0.93Cash Flow Liquidity Ratio (%) 0.27 0.73Accounts Receivable Turnover (times) 6.61 7.55Collection Period (days) 54 48Inventory Turnover (times) 27 16Accounts Payable Turnover (times) 35 39Cash Cycle (days) 46 25

• The Company’s overall liquidity was considered in good standing.

The current ratio as of the year ended 2005 was 1.60. The quick ratio was 0.82 equal which is considered low due to the Company’s policy of increasing production capacity to product sufficient amounts of products to meet demand for the 2006 season and to distribute products to customers of good standing by increasing their credit terms.

• The Company’s cash flow liquidity ratio was equal to 0.27, down from 0.46 in 2004 due the decrease in cash from operations of Baht 109.44 million and an increase in current liabilities of Baht 124.5 million from 2004, thereby decreasing liquidity slightly.

• The Company’s cash cycle for 2005 was 46 days; an increase of 21 days from 2004 due to the fact the Company had increased credit terms for an average of 54 days, an increase of 6 days from 2004. The average sale period was 27 days, an increase from 2004 of 11 days. However, the average period receivable was 35 days, a decrease from 2004 by an average of 4 days.

66

Borrowing Capacity and Loan Repayment Ability

Description Year 2005 Year 2004

Debt To Equity Ration (Fully diluted basis) (times) 0.39 0.38

Interest Coverage Ration (times) 18.38 79.71

Debt Service Coverage (Cash basis) (times) 0.23 0.58

• The Company’s total debt to equity ratio as of the year ended 2005

was 0.39, which is considered low, therefore, the Company’s borrowing capacity is considered high, should additional funding be required for investment.

• The Company’s interest coverage ratio as at the year ended 2005 was 18.38, which is considered to be more than adequate to cover interest expense.

• The Company’s debt service coverage ratio as of year ended 2005 was equal to 0.23, which is considered low when compared to 2004. This was because in 2005 there was cash from operations for a total of Baht 115.19 million, a decrease of Baht 109.44 million from 2004. There was investment in assets of Baht 277.40 million, an increase from 2004 of Baht 98.18 million. Additionally, there was a payment of interest and finance lease of Baht 16.99 million, an increase from last year of Baht 6.36 million. Lastly, there was a payment of dividends for total of Baht 216 million, an increase of Baht 16 million from 2004.

67

SHAREHOLDING STRUCTURE AND MANAGEMENT

68

Major Shareholders and Shareholding Proportion

Major Shareholders (as of November 21, 2005)

No. of Shares %

1. Myriad Materials Co.,Ltd. 146,650,000 73.33 2. Mr. Prakit Pradipasen 6,589,900 3.30

3. Mr. Sakda Maneeratchatchai 1,120,000 0.56

4. Provident Fund of EGAT & Related Companies’ Employees

968,700 0.48

5. Mr. Somboon Phuvoravan 800,000 0.40

6. Mr. Satid Sudbuntad 640,000 0.32

7. Mr. Suchon Simakulthon (Private Fund by Bualuang Securities)

585,200 0.29

8. Mr. Suvit Nardwangmuang 520,000 0.26

9. Mr. Manutchai wanarath 505,700 0.25

10. ING Open-ended Equity Fund 504,900 0.25 Others 41,115,600 20.56

Total 200,000,000 100.00

Currently, Myriad Material Co.,Ltd. is the major shareholder of the Company, with the groups of shares belonging to Mr. Chaiyut Srivikorn, Mr. Prakit Pradipasen and Khunying Sasima Srivikorn being the major shareholder groups, both directly and indirectly of Myriad Materails Co.,Ltd. with holdings of 42.07 percent, 25.11 percent and 25.0 percent respectively. Consequently, the 4 representatives of Myriad Materails Co.,Ltd. who have positions of directorship in the Company are: Mr. Prakit Pradipasen, Mr. Chaiyut Srivikorn, Mr. James P. Rooney and Mr. Phaitoon Kijsamrej

In 2002, Myriad Materails Co.,Ltd. entered into a share buying agreement with the Management of the Company as a performance incentive to encourage the Management to meet common objectives. Whereas, the management would be entitled to buy shares of the Company if yearly operating targets were met. This agreement would be in effect for 3 years from 2004 to 2006 and full exercise rights were carried out in the first 2 years. The last right to exercise would be in 2006 and the Management and employees will be given the right to buy a total of 2,700,000 shares from, Myriad Materails Co.,Ltd. at a price per share of Baht 6.25 for a total of Baht 16,875,000.

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Structure of the Directors

1. Directors of the Company

As of January 10, 2005 the following 9 directors of the Company were: Name Title Mr. Prakit Pradipasen Chairman Mr. Chaiyut Srivikorn Director Mr. James P. Rooney Director Mr. Phaitoon Kijsamrej Director and Chairman of Executive Board Mr. Sakda Maneeratchatchai Director, Director of Executive Board,

Managing Director Mr. Satid Sudbuntad Director, Director of Executive Board, Vice

President of Marketing and Sales Division Mr. Somboon Phuvoravan Director, Audit Committee Chairman,

Independent Director Mr. Suvit Nardwangmuang Director, Audit Committee Member,

Independent Director Mr. Anun Louharanoo Director, Audit Committee Member,

Independent Director * The names of the directors authorized to sign for the Company are: Mr. Prakit Pradipasen,

Mr. Chaiyut Srivikorn, Mr. James P. Rooney, Mr. Phaitoon Kijsamrej, Mr. Sakda Maneeratchatchai and Mr. Satid Sudbuntad. Two out six must sign together and affix seal of the Company.

Authority and Responsibility of the Directors

The Board of Directors has the authority, duty and responsibility for the

management of the Company by conducting its duties honestly, in compliance with all laws, the objects and Articles of Association of the Company, and the resolutions of any shareholder meetings in good faith and with care to preserve the interests of the Company. In summary, the main functions and responsibilities are as follows:

1. The Board of Directors will call an annual ordinary meeting of shareholders within the first 4 months after the end of the yearly accounting period of the Company.

2. The Board of Directors will call a meeting of the Board not less than once every three months.

3. The Board of Directors will oversee the preparation of the financial statements of the Company for external audit as of the end of the Company’s yearly accounting period and propose the audited financial statements at the shareholders meeting for approval.

4. The Board of Directors may assign authority to the Executive Board to manage the daily operations of the Company within the details and limits of stated authority. It may assign authority to one or many members of the Executive Board or to another individual as seen fit to act in stead of a director under the authority of the Board within a set time limit as the Board deems appropriate. The Board may also cancel or revoke said authority or revise or change the individual to whom authority had been granted as deemed appropriate. Notwithstanding, the granting of said authority must not be so that it would result in the opportunity for the Executive Board or the individual to authorize or make decisions that would result in a personal gain or conflict of interest for the Company or its subsidiaries with exception that said authorization was within the policy and guidelines previously authorized by the Board of Directors.

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5. The Board of Directors will be responsible for establishing the objectives, direction, policies and business plans as well as budget guidelines for the Company. It will oversee the management of the Company by the Executive Board to ensure compliance with overall policy with the exception of the following: the Board of Directors must receive authority from the meeting of shareholders before carrying out the following; any issues that are regulated by law that must be approved by shareholders such as capital increases, dilution of shares, issuing of debenture, partial or total sale or purchase of the Company to other individuals; the buying or transferring of ownership of another company’s rights to the Company; and the correction or revision of memorandum of association.

In addition, the Board of Directors has duties to manage in accordance to the laws of the Securities and Exchange Commission, regulations of the Stock Exchange of Thailand, such as related transactions, acquisition and disposition of significant assets according to the regulations of the Stock Exchange of Thailand or relevant laws to the business of the Company.

6. The Board of Directors will consider the organizational structure of the Company; appoint the Executive Board, Managing Director and other committees as deemed appropriate.

7. The Board of Directors will follow and check on the progress of operations to see that business plans are being followed within budget guidelines.

8. The Board of Directors will not own or operate any business that is the same or similar to the Company’s as to be a direct competitor. They will not hold shares in limited or unlimited companies or act as directors in private or other types of companies that operate similar business as the Company as to be considered a competitor whether or not for personal or other’s gains, with the exception that the director has notified or informed the shareholders prior to being appointed.

9. The Board of Directors will notify the Company as soon as is possible if a conflict of interest occurs directly or indirectly from the business agreements of the Company or if there is an increase or decrease in the individual director’s holdings in the Company and/or its subsidiaries.

2. Audit Committee and Independent Directors

True independence of the directors is a key indicator of the proper management of a company. Therefore, the Company places a high priority for this issue and strictly abides by the rules and regulations set forth by Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand. Whereas, independent directors and the Audit Committee will have the following qualifications:

1. They will not hold more than 5 percent of the paid-up capital of the Company, an affiliate of the Company, or any related company that may cause a conflict of interest (inclusive of related persons as stipulated in Code 258 of the law regulation of securities).

2. They will not take part in the management or be an employee, advisor, paid consultant, or an individual that has authority to control the Company, an affiliate of the Company or related company or be an individual that may have a conflict of interest or stake in the Company for a period of no less than 1 year before being appointed.

71

3. They will not have a business relationship or business interest either directly or indirectly either financially or by management of the Company, an affiliate of the Company or associate company or an individual that may have a conflict of interest that would cause him or her to lose validity as an independent director.

4. They will not be related or close to any management or major shareholder of the Company, an affiliate of the Company or associate company or an individual with a possible conflict of interest and not be appointed to safeguard the benefits of the Managing Director or major shareholder.

As of January 10, 2005, the Audit Committee consisted of the following 3 members:

Name Title Mr. Somboon Phuvoravan Chairman, Audit Committee and

Independent Director Mr. Suvit Nardwangmuang Director, Audit Committee and

Independent Director Mr. Anun Louharanoo Director, Audit Committee and

Independent Director

Duties and Responsibilities of the Audit Committee:

The Audit Committee is appointed by the Board of Directors and reports to the Board and is assigned to carry out the following responsibilities and duties:

1. To review the preparation process and disclosure of the Company’s financial reports for their correctness, completeness and reliability, by coordinating with external auditors and executives responsible for preparing the Company’s quarterly and annual financial reports.

2. To review the Company’s internal controls and internal audit systems for appropriateness and effectiveness.

3. To ensure that the Company abides by the laws and regulations of the Securities and Stock Exchange Commission (SEC) and Stock Exchange of Thailand, and other relevant laws concerning business operations of the Company.

4. To consider and recommend for appointment the Company’s external auditor and its remuneration for the year.

5. To consider for proper disclosure, the Company’s correct and complete information concerning related transactions or transactions with a possible conflict of interest.

6. To perform any and other tasks as deemed appropriate and delegated by the Board of Directors and approved of by the Audit Committee.

7. To periodically report on the Audit Committee’s activities to the Board of Directors as shown in the Annual Report of the Company, whereas the report should be signed by the Chairman of the Audit Committee and include the following:

• The opinion of the Committee on the process and disclosure of the financial reports of the Company for their correctness, completeness and reliability.

72

• The opinion of the Committee on the sufficiency of internal controls of the Company.

• The reason the Committee deems the external auditor appropriate for appointment or re-appointment.

• The opinion of the Committee as to the Company’s abiding by the laws and regulations of the Securities and Stock Exchange Commission (SEC) and Stock Exchange of Thailand, and other relevant laws concerning business operations of the Company.

• The presentation of any other reports or pertinent information the is deemed appropriate for shareholders to know within the duties and responsibilities assigned to the Committee by the Board of Directors.

8. To report to the Board of Directors on the activities of the Audit Committee at least once a year.

9. To have the authority to audit matters as deemed appropriate

including the seeking of independent opinion from other professionals if necessary at the expense of the Company to carry out the duties and responsibilities delegated. 3. Board of Executive Directors

As of March 18, 2005, the Executive Board consisted of the following 3 members:

Name Title Mr. Phaitoon Kijsamrej Chairman, Board of Executive Directors Mr. Sakda Maneeratchatchai Director, Board of Executive Directors Mr. Satid Sudbuntad Director, Board of Executive Directors

Duties and Responsibilities of the Board of Executive Directors

The Board of Executive Directors has the duty and responsibility to oversee and monitor the normal operations of the Company and the management of the Company in accordance with the policies, strategies, business plans and budget set forth under the corporate structure and authority of the Company and in accordance with the current economic situation. The Executive Board will propose to the Board of Directors for approval issues that it deems appropriate, including the audit and monitoring of the Company’s operations. In summary, the Board of Executive Directors will have the following duties and responsibilities:

1. To oversee and monitor the management of the Company according to the purposes, policies, regulations, directives and resolutions set forth by the Board of Directors and/or the shareholder’s meeting of the Company.

2. To consider the proposals of the management concerning policy, direction and strategy for the operation of the business including financial planning, budget and personnel management, technological investment and marketing and promotions; and to propose these issues to the Board of Directors for approval.

3. To monitor the operations of the Company for conformance to the policy and objectives of the Board of Directors and to direct and oversee that the operations are appropriate and efficient especially in the areas of:

73

• Risk management • Management of costs and investment in accordance to budget • Management according to the regulations, laws and other stipulations

and according to the policies of good corporate governance

4. To set corporate structure and authority, including the appointment, hiring, transferring, setting of wage policy and rate, bonus policy of the Management that are not included in the Executive Board, including their termination.

5. To consider the appropriation of the yearly budget as proposed by management before proposal for approval to the Board of Directors.

6. To consider the profit or loss from operations to propose payment of dividend or interim dividends before proposal to the Board of Directors.

7. To have the authority to appoint sub-committees and/or working committees for the operations purposes of the Company and to set forth regulations, authority and responsibilities of said committees including the monitoring of the progress of these committees to meet the objectives.

8. To have the authority to approve regular financial expenses incurred for operations such as purchasing, hiring or maintenance that are above the authority limited to the Managing Director but within the authority granted to the Board by the Board of Directors of the Company.

9. To have the authority to authorize payment for important investment projects that have been agreed upon in the yearly budget or that have been authorized by the Board of Directors of the Company or have been previously authorized by the Board of Directors.

10. To have the authority to consider and approve procuring of short term loans or other financial credit for the Company of timing not more than 1 year and of amount not more than Baht 50,000,000.00 (Fifty million Baht). In the case it is necessary to use the Company’s assets as collateral; authorization must be obtained from the Board of Directors of the Company.

11. To consider the entering into agreement by the Company for certain contracts necessary for operation such as purchasing agreements, hiring agreements or maintenance agreements, whereas the contracts or agreements must be no longer than 1 year in length and of a sum not more than Baht 5,000,000.00 (Five million Baht) and not more than the amount authorized by the Board of Directors of the Company.

12. To have the authority to consider the write-off of damaged or broken assets of the Company that are no longer currently usable according to the current value of the asset but not more than Baht 2,000,000.00 (Two million Baht) or according to book value but not more than Baht 100,000 (One hundred thousand Baht) per each item, or assets that have been fully depreciated over their lifespan or over 80% of their current lifespan according to the regulations of the Internal Revenue Department (for example: machinery 10 years, equipment 5 years). Approval must be obtained from the Board of Directors beforehand.

13. To have the authority to approve the adjustment to the inventory of products or raw materials that are not currently usable or fully depreciated; the amount of each transaction or item not to exceed Baht 500,000.00 (Five hundred thousand Baht) and must be approved by the Board of Directors.

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14. To have the authority to assign authority to one or many directors to manage the daily operations of the Company within the details and limits of stated authority within a set time limit as the Board deems appropriate. The Board may also cancel or revoke said authority or revise or change the individual to whom authority had been granted as deemed appropriate.

15. To have the authority to work and give authorization according to the regulations that have been set forth and authorized by the Board of Directors of the Company.

16. To have the authority to proceed with any/or other matters that the Board of Directors of the Company deems appropriate.

Notwithstanding, the authority given to the Executive Board of Directors shall not be given to or exercised during the period of time that may cause a conflict of interest within the Company (according to the stipulations set forth by the Securities and Exchange Commission and the Stock Exchange of Thailand), this includes any authority that would result in a personal gain or cause a conflict of interest for the Company, the subsidiaries of the Company, or affiliate companies. This excludes any decisions or authorizations made in the course of the normal operations of the Company and within the set limits of authority. 4. The Management

As of January 12, 2005, the Company’s management was composed of the following individuals:

Name Title Mr. Sakda Maneeratchatchai Managing Director Mr. Satid Sudbuntad Vice President Sales and Marketing Mr. Maitri Tawonnatiwasna Vice President Production and Engineering Dr. Thirarath Limtasiri Assistant Vice President Production and

Engineering Mr. Suwit Kaewamphumsawat Assistant Vice President Sales and Marketing Ms. Thanakarn Phanthapirat Accounting & Finance Manager

Duties and Responsibilities of the Managing Director

1. To control and monitor the operations or normal operations of the Company

2. To operate and manage the Company in accordance with the Company’s objectives, policies, business plans by the rules and regulations and within the budget approved by the Executive Board or the Board of Directors of the Company.

3. To have the authority for the Company in the management of operations to comply with the objectives, regulations, policies, rules, directives, orders and resolutions from the shareholders ‘ meeting and/or from the meeting of the Board of Directors or Executive Board.

4. To determine the duty, objectives and path of the Company’s policies, including the direction and monitoring of the total operations for the utmost benefit of the Company.

5. To follow and assess the results of the operations of the Company regularly to prevent risk from the various factors, including internal and external risk; and to have the duty to report to the Executive Board, the Audit Committee

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and the Board of Directors on the results of the Company’s operations, management and progress.

6. To have the authority to appoint and management various working groups to carry out certain duties with efficiency for the benefit of the Company with transparency and/or to assign certain individuals to have temporary authority to act as proxy within the limits stipulated and/or to carry out duty within the regulations or directives stipulated by the Board of Directors of the Company and/or the Company’s stipulations.

7. To have the authority to consider and approve ordinary expenses incurred as a result of normal operations of the Company such as related to purchasing, hiring for service or maintenance that is necessary for production whereas each transaction shall not exceed Baht 5,000,000.00 (Five million Baht) with the exception of authorizing purchases of raw materials from abroad and the purchase of cement, whereas each transaction shall not exceed Baht 10,000,000.00 (Ten million Baht).

8. To consider the entering into agreement by the Company for certain contracts necessary for operation such as purchasing agreements, hiring agreements or maintenance agreements, whereas the contracts or agreements must be no longer than 1 year in length and of a sum not more than Baht 5,000,000.00 (Five million Baht).

9. To have the authority to consider the write-off of damaged or broken assets of the Company that are no longer currently usable according to the current value of the asset but not more than Baht 1,000,000.00 (One million Baht) or according to book value but not more than Baht 10,000 (Ten thousand Baht) per each item, or assets that have been fully depreciated over their lifespan or over 80% of their current lifespan according to the regulations of the Internal Revenue Department (for example: machinery 10 years, equipment 5 years). Approval must be obtained from the Board of Directors beforehand.

10. To have the authority to approve the adjustment to the inventory of products or raw materials that are not currently usable or fully depreciated; the amount of each transaction or item not to exceed Baht 200,000.00 (Two hundred thousand Baht) and must be approved by the Executive Board.

11. To have the authority to appoint or hire, transfer, move or terminate employees of the Company and to set the wage policy, remuneration, bonus and benefits of the employees of the Company from the level of manager downwards.

12. To have the authority to issue orders, regulations, announcements or records to ensure that the operations of the Company conform with the policies and for the benefit of the Company and to ensure that rules and regulations are observed in the organization.

13. To have the authority to work and give authorization according to the regulations that have been set forth and authorized by the Board of Directors of the Company.

14. To have the authority to proceed with any/or other matters that the Board of Directors of the Company deems appropriate.

Notwithstanding, the authority given to the Managing Director shall not be given to or exercised during the period of time that may cause a conflict of interest within the Company (according to the stipulations set forth by the Securities and

76

Exchange Commission or the Stock Exchange of Thailand), this includes any authority that would result in a personal gain or cause a conflict of interest for the Company, the subsidiaries of the Company, or affiliate companies. This excludes any decisions or authorizations made in the course of the normal operations of the Company and within the set limits of authority. Director and Management Nomination The Company does not have a nominating committee. However, it does have guidelines to choose and appoint directors to committees as stated in the Company’s Articles of Association according to SEC and SET.

Board of Directors of the Company

The Board of Directors of the Company must be comprised of not less than 5 persons and not more than 11 persons, whereas not less than 1 of the directors must reside in Thailand.

1. The meeting of shareholders will appoint the Board of Directors in accord with the following guidelines and methods:

1.1 Each shareholder has one (1) voting right per one (1) share

1.2 Each shareholder must use his/her vote (as stipulated in 2.1) to vote for one or many persons to be a director, but cannot split individual voting rights.

1.3 The individual who has received the highest number of votes followed by individuals with the next highest number of votes and so forth, will be appointed director for up to the total number of directorships available for that meeting. In the case that individuals have received the same number of votes, the Chairman shall have the casting vote.

2. At every annual meeting of shareholders, one-third, 1/3, of the directors must be retired by rotation. If the number of directors is not divisible by 3, then the nearest divisible number to 1/3 shall be used.

3. Directors that have been retired may be re-appointed.

4. The Directors will resolve amongst themselves the order of retirement for a total number that must be 1/3 or nearest 1/3. However, for the first and second year after listing, directors who shall be retired by rotation will be chosen by drawing lots and for subsequent years, the directors that have been position longest shall be retired.

5. A director who wishes to retire from the Board of Directors must submit a letter of resignation to the Company which will have effect once the letter is received by the Company.

6. The annual meeting of shareholders may vote to retire a director even though his/her term of directorship is still valid. This must be done by vote and must be approved by not less than three-fourths (3/4) of the total shareholders with the right to vote at the meeting and the total number of shareholders at the meeting must be more than half of the total number of shares held by the authorized shareholders attending the meeting.

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The Audit Committee The Company does not have a committee to search out potential directors for the Audit Committee. However, the Company does have guidelines for the qualifications of individuals to serve in the committee and strictly abides by the regulations set forth by the Securities and Exchange Commission and by the Stock Exchange of Thailand whereas, the Audit Committee must be comprised of not less than 3 individuals and 1 individual will have professional knowledge of accounting and finance and must be appointed by the Board of Directors or shareholders. The Management The Company does not have a nominating committee for the management executives. Nevertheless, the Company has a policy to search out individuals of management quality who have the knowledge, ability and experience concerning business operations and must be appointed by the Board of Directors.

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Directors and Executives Information

Executives Name - Surname / Position Age (year) Education

Share Holding

(%) Time Position Company 1 .Mr.Prakit Pradipasen Chairman

63 • Bachelor of Science in Business Administration Silliman University, Philippines

• Master of Business Administration Wayne State University, USA

• Citibank Credit Training Center, Philippines

• Senior Executive Program, Stanford National of Singapore, Singapore

• Special Program of National Defence College, Joint Public & Private Sector Class 3

• Program for Senior Executive The Sloan School of Management Massachusetts Institute of Technology, USA

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): - Director Accreditation Program

Class 1/2004 (DAP 1 /2004)

3.30 2004 – Present 2002 - Present 2000 – Present 2000 – Present 2000 – Present 2000 – Present 2002 – Present

2000 – Present 2000 – Present 2000 – Present 2000 – Present 2000 – Present 2000 – Present 2000 – Present 2004 – Present 2002 – Present 2002 – Present 1980 – Present

2000 – 2005

Chairman Chairman Chairman Chairman Chairman

Executive Director Independent Director ,Audit

Committee Chairman Director ,Audit Committee Chairman Director ,Audit Committee Chairman Director ,Audit Committee Chairman Director ,Audit Committee Chairman Director ,Audit Committee Chairman

Director ,Audit Committee Director ,Audit Committee

Director Director Director Director

Director

Thai Sugar Millers Crop Diamond Roofing Tiles PCL Asian Marine Service PCL Angthong SugarTerminal Nai Lert Park Hotel Co.,Ltd. J.P.Rooney & Associates Magnecomp Precision Technology PCL Hardthip PCL Luckytex (Thailand) PCL Bata Shoe of Thailand PCL Amarin Plaza PCL Supalai PCL Thai Carbon Black PCL The Minor Group PCL Siam Mongkol Marine Co.,Ltd. Siam United Service PCL Myriad Materials Co.,Ltd. The Bangkok Weaving Mill Co.,Ltd. Bangkok Mass Transit System PCL

79

Executives Name - Surname / Position Age (year) Education

Share Holding

(%) Time Position Company 2. Mr.Chaiyut Srivikorn Director

39 • Bachelor of Economics, New York University, USA

• Master of Public Administration, NIDA

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program Class 33/2005 (DAP 33 /2005)

0.03 2004 – Present 2003 – Present 2002 – Present 1999 – Present 1999 – Present 1998 – Present

1996 – Present

1991 – Present

Chairman Director Director

Executive Director Chairman President

Chairman

Executive Director

K M C Apparel Company Limited Diamond Roofing Tiles PCL Myriad Materials Co.,Ltd. TCH Suminoe Co.,Ltd. Thai Outdoor Sport Co.,Ltd. Srivikorn Group Holdings Co.,Ltd. Thai Tech Garment Manufacturing Co.,Ltd. President Hotel and Tower Co.,Ltd.

3. Mr. James P. Rooney Director

67 • The American Graduate School of International Management, MBA

• Yale University Department of Far Eastern Studies

• Pomona College, BA • Certificate: Directors Development

Program of Thai Institute of Directors Association (IOD): -Director Certification Program

Class 47/2004 (DCP 47/2004)

0.20 1979 – Present 2003 – Present 2003 – Present 2003 – Present 1998 – Present 1994 – Present

1994 - Present 1984 – Present 2001 – Present

1998 – 2003

Chairman Director Director Director Director Director

Director Director Director

Director

J.P. Rooney&Associates Limited Diamond Roofing tiles PCL Myriad Materials Co.,Ltd. Samitivej PCL Asia Works Television Limited American University Alumni Association Language Center Bangkok Airway Limited Taxplan Limited Center for International Business Education and Research, University of Colorado Carpets International PCL

80

Executives Name - Surname / Position Age (year) Education

Share Holding

(%) Time Position Company 4 . Mr. Phaitoon Kijsamrej Director, Executive

Committee Chairman

62 • Bachelor of Commerce, Chulalongkorn University

• Asian Institute of Management, Manila, Philippines

• Pacific Rim Bankers Program, University of Washington, USA • Certificate: Directors Development

Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program Class 32/2005 (DAP 32 /2005) -Director Certification Program Class 55/2005 (DCP 55/2005)

0.20 2005 – Present

2005 – Present 2004 - Present 2003 – Present 2003 – Present

2003 – Present 2001 – Present

1998 – Present

2001 – 2003 2001 – 2003 1998 – 2001 1999 – 2003 1999 – 2003 1999 – 2003

Director, Audit committee Chairman

Director, Audit committee Director Audit Committee Director

Director Director, Executive Committee

Chairman Director Director

Director, Advisor

Chairman Chairman Chairman Chairman Chairman President

Finansa Life Assurance Co.,Ltd. TSEC Securities Co.,Ltd. The Thai Chamber of Commerce Myriad Materials Co.,Ltd. Diamond Roofing Tiles PCL Elm Tree Co.,Ltd. Siam Administrative Management Co.,Ltd. SCMB Co.,Ltd.

Wongpaitoon Planner Co.,Ltd. Wongpaitoon Group PCL Siam City M.B. Co.,Ltd. Siam City Shiwa Leasing PCL Siam City Insurance Co.,Ltd. Siam City Bank PCL

5 . Mr. Sakda Maneeratchatchai

Director, Executive Committee Member, Managing Director

61 • Bachelor of Electrical Engineering, FEATI University, Philippines

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program Class 32/2005 (DAP 32 /2005)

-Audit Committee Program Class 4/2005 (ACP 4/2005)

0.56 1999– Present

1995 – 1999 1992 – 1995 1989 – 1992 1982 – 1989

Director, Executive Director, Managing Director Managing Director Managing Director Managing Director

Purchasing Manager

Diamond Roofing Tiles PCL Citypack Co.,Ltd. Ceratech Co.,Ltd. Citypack Co.,Ltd. Siam City Cement PCL

81

Executives Name - Surname / Position

Age (year) Education

Share Holding

(%) Time Position Company 6. Mr. Satid Sudbuntad Director, Executive

Committee Member, Vice President Sales & Marketing

45 • Bachelor of Engineering, King Mongkut’s Institute of technology North Bangkok

• Master of Engineering Administration (Major in Marketing Technology) The George Washington University, Washington D.C., U.S.A.

• Managing Change and Change of Management in Asia Insead Euro-Asia Center, Hong Kong (2/2000)

• Orchestrating Winning Performance International Institute for Management Development, Lausanne, Switzerland (6/2000)

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Certification Program Class 2001 (DCP 12/2001) -Finance for Non-Finance Director (FN) 2003 -Audit Committee Program Class 8/2005 (ACP 8/2005)

0.32 2000 – Present

1999 – 2005 1989 - 1999

Director, Executive Director, Vice President Sales & Marketing

Director The last position as Executive

Manager

Diamond Roofing Tiles PCL Karat faucet Co.,Ltd. Siam City Cement PCL

82

Executives Name - Surname / Position

Age (year) Education

Share Holding

(%) Time Position Company 7. Mr. Somboon

Phuvoravan Director, Audit

Committee Chairman, Independent Director

59 • Bachelor of Engineering, Chulalongkorn University

• Master of Business Administration (MBA), Thammasart University

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program

Class 32/2005 (DAP 32 /2005) -Audit Committee Program Class 4/2005 (ACP 4/2005) -Director Certification Program

Class 55/2005 (DCP 55/2005)

0.40 2003 – Present

1995 – 2004

2001 – 2004 2001 – 2004 1993 – 1999 1995 – 1999

Director, Audit Committee Chairman, Independent Director

Executive Director, Senior Vice President

Executive Director Executive Director Executive Director Managing Director

Diamond Roofing Tiles PCL Siam City Cement PCL Eagle Cement Co., Ltd. Holcim (Bangadesh) Co., Ltd. Siam City Brassware Co.,Ltd. Siam City Tiles & Pipes Co.,Ltd.(Currently named as Diamond Roofing Tiles PCL)

8. Mr. Suvit Nardwangmuang

Director, Audit Committee Member, Independent Director

61 • Bachelor of Engineering.(Civil) Chulalongkorn University

• M.I.M) .Master in Marketing(, Thammasart University

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program Class 24/2004 (DAP 24/2004) -Audit Committee Program Class 4/2005 (ACP 4/2005) -Finance for Non-Finance Director (FN) 2004

0.26 1999 - Present

2000 - Present

1996 - Present 1995 - 2000

Managing Director, Chief Executive Officer

Director, Audit Committee Member, Independent Director

Director Managing Director

Royal Porcelain PCL Diamond Roofing Tiles PCL SV&A Holding Co.,Ltd. Ceratech Co.,Ltd.

83

Executives Name - Surname / Position

Age (year) Education Share

Holding (%)Time Position Company

9. Mr. Anun Louharanoo Director, Audit

Committee Member, Independent Director

52 • Bachelor of Accounting, Thammasart University

• Bachelor of Laws, Thammasart University

• Certificate: Directors Development Program of Thai Institute of Directors Association (IOD): -Director Accreditation Program Class 1/2003 (DAP 1/2003)

-Director Certification Program Class 29/2003 (DCP 29/2003) -Audit Committee Program Class 2/2004 (ACP 2/2004)

0.00 2004 – Present

2005 – Present

1985 – Present

1999 – 2002

1994 – 2000

Director, Audit Committee Member, Independent Director

Director, Audit Committee Member, Independent Director

Director, Executive Director, Chief Financial Officer

Director

Director

Royal Porcelain PCL Diamond Roofing Tiles PCL Lanna Resources PCL Karat Sanitaryware PCL. (Currently named as Kohler PCL) Gulf Electric PCL

10. Mr.Maitree Tawonatiwasna

Vice President Production & Engineering

59 • Bachelor of Industrial Electrical Technology, King Mongkut’s Institute of technology North Bangkok

• Master of Business Administration, NIDA

0.00 2004 - Present

1997 – 2004

Vice President Production & Engineering

Managing Director

Diamond Roofing Tiles PCL Karat Sanitaryware PCL.(Currently named as Kohler PCL)

11. Dr.Thirarath Limtasiri Assistant Vice President Production & Engineering

48 • Bachelor of Science, Mahidol University

• Master of Science, Mahidol University

• Doctor of Polymer Science /Plastics Engineering Option ,Massachusetts at Lowell University, USA

0.00 2004 - Present

2002 – 2004 2000 - 2002

Assistant Vice President Production & Engineering

Technical Director Manager

Diamond Roofing Tiles PCL PPC Decorative Products Co.,Ltd. Thai Plastics and Chemicals Co.,Ltd. (Subsidiary of The Siam Cement PCL)

84

Executives Name - Surname / Position

Age (year) Education

Share Holding

(%) Time Position Company 12. Mr.Suwit Kaewamphunsawat

Assistant Vice President Sales & Marketing

41

• Bachelor of Laws, Chulalongkorn University • Master of Public Administration,

NIDA

0.14 1999 - Present

1993 - 1999

Assistant Vice President Sales & Marketing

Regional Manager

Diamond Roofing Tiles PCL Siam City Cement PCL

13. Ms.Thanakarn Phanthapirat Company Secretary, Accounting & Finance Manager

50

• Bachelor of Accounting, Chiang Mai University • Master of Business Administration,

NIDA • Certificate: Directors Development

Program of Thai Institute of Directors Association (IOD): -Company Secretary Program Class 5/2004 (CSP 5/2004)

0.13 2000 – Present

1997- 2000

Company Secretary, Accounting & Finance Manager

Accounting Manager

Diamond Roofing Tiles PCL Toyota (Thailand) Co.,Ltd.

85

Title of the Company’s Executives in the Subsidiary, Associated and Related Companies

Other Related Company Names Comany

Myriad Materials Co.,Ltd.

1. Mr. Prakit Pradipasen X /

2. Mr. Chaiyut Srivikorn / /

3. Mr. James P. Rooney / /

4. Mr. Phaitoon Kijsamlej / /

5. Mr. Sakda Maneeratchatchai /, ///

6. Mr. Satid Sudbuntad /, ///

7. Mr. Somboon Phuvoravan XX

8. Mr. Suvit Nardwangmuang //

9. Mr. Anun Louharanoo //

10. Mr.Maitree Tawonatiwasna ///

11. Dr.Thirarath Limtasiri ///

12. Mr.Suwit Kaewamphunsawat ///

13. Ms.Thanakarn Phanthapirat ///

Remark X Chairman / Director XX Audit Committee Chairman // Audit committee Director ///Executive

86

Remuneration for the Directors and Executives 1. Explicit Remuneration Remuneration for the Board of Directors

Name Appointed RetiredYr. 2003

(Mill. Baht)

Yr. 2004 (Mill. Baht)

Yr. 2005 (Mill. Baht)

1. Mr. Prakit Pradipasen 0.36 0.56 0.76

2. Mr. Chaiyut Srivikorn 0.24 0.34 0.34

3. Mr. James P. Rooney 0.24 0.34 0.34

4. Mr. Phaitoon Kijsamlej 0.24 0.34 0.64

5. Mr. Vanchai Tosomboon 1/8/47 0.24 0.24 -

6. Mr. Suvit Nardwangmuang 0.24 0.34 0.40

7. Mr. Sakda Maneeratchatchai 0.24 0.34 0.34

8. Mr. Satid Sudbuntad 0.24 0.34 0.34

9. Mr. Manop Jaroenjit 1/1/47 0.24 0.10 -

10. Mr. Somboon Phuvoravan 1/8/47 0.25 0.70

11. Mr. Anun Louharanoo 10/1/48 0.31

Total 2.28 3.19 4.17 In 2005 the amount of remuneration for the directors remained the same.

Remuneration for the Management

Yr. 2003 Yr. 2004 Yr.2005 Total number of executives 10 11 7 Salary, bonus and other compensation (million baht) 16.15 19.03 18.0

2. Other Remuneration The Company has set up a pension fund for employees whereas in 2004 and 2005, the Company contributed to the pension fund for the executives in the amounts of Baht 0.44 million and Baht 0.40 million, respectively.

87

CORPORATE GOVERNANCE In the past, as the Company had not been listed, the Company had not complied fully with the code of best practice. Nevertheless, the Company realizes the importance of compliance and therefore has proposed the following 15 principles of good corporate governance, established by the Stock Exchange of Thailand to the meeting of the Board of Directors for acknowledgement and practice as of March 18, 2005. The Board of Directors has agreed that the Company should strictly adhere to the following principles as follows: 1. Policy on Corporate Governance

The Board of Directors recognize the importance of good corporate governance in order to promote transparency and strengthen confidence of the shareholders, investors and other related parties. Therefore, the policy on corporate governance has been established, comprising of the following major principles.

1). Rights and equitable treatment to shareholders and stakeholders are implemented.

2). The Board of Directors aim to add value to the business in the long-term, manage the business with prudence; be responsible to its duties with adequate expertise and efficiency, maximizing shareholder’s benefits, monitor activities to prevent any conflict of interest; and be accountable for its decision and action.

3). The business operation and management are transparent and may be audited; and adequate information disclosure is implemented.

4). Business risks are always considered in the operation and the risk management systems have been appropriately established.

5). Business ethics have been established for directors and employees to follow.

2. Shareholders’ Rights

The Company has a policy to act in fairness towards shareholders and to facilitate convenience to shareholders in participating in meetings, receipt of information and news and the right to vote on issues at the shareholders’ meeting. For the invitation to every meeting, the Company will send an invitation along with the meeting proposals of the Board of Directors and other relevant information to the shareholders no less than 7 (seven) days prior to the meeting (or as stipulated by the Securities Exchange Commission and the Stock Exchange of Thailand) in order for the shareholder to properly prepare and study the information before attending the meeting.

In the case that the shareholder is unable to attend the meeting, the shareholder may grant a proxy to another individual to attend in his stead. Whereas the Company has added a choice for shareholders by appointing the Independent Director to receive the proxy and act on behalf of the shareholder if he so wishes. The shareholder may stipulate to which director he or she wishes to grant proxy by filling in the form that is attached with the invitation to the meeting.

3. Rights of Stakeholders

The Company realizes the importance of the rights of all groups who hold a stake in the Company, including internal stakeholders such as employees and management or external stakeholders such as creditors and competitors as according to the details as follows:

88

Employees : Fair and just treatment of all employees and compensation that is adequate and appropriate

Creditors

: To comply with the contracts as agreed upon

Customers : To sell a product of good quality at a fair price, to care for and be responsible to the customer, develop new products and services, keep the customers information private and have a process whereby customer’s problems are addressed and solved in a timely and just manner

Competitors

: To adhere to ethical business practices and with honesty and forthrightness

Society : To be a responsible member of society by operating an ethical and professional business and not practicing or operating any business that has a detrimental affect on society or the environment, also to support activities that are for the benefit of the society as a whole.

4. Shareholders’ Meeting The Company has arranged for the meeting of shareholders for the shareholder’s convenience at a venue that is conveniently located in the city and easily accessible. It has also arranged for there to be sufficient time for the meeting. Additionally, due to the importance of the meeting, it has been stipulated that the Chairman of the Board, Chairman of the Audit Committee and Chairmen of various other sub-committees be present at each meeting; also it is encouraged that the various directors attend the meeting if they do not have a prior previous engagement. During the shareholders’ meeting, the Chairman will provide an opportunity for the shareholders to exercise their rights and express their opinions or ask questions, whereas the Chairman will do his utmost to answer all questions thoroughly and clearly. The Company will duly record all the important issues, opinions and suggestions put forth by the shareholders during the meeting.

5. Leadership and Vision

The Board of Directors is responsible for establishing policy and consideration for approval the various objectives, strategies, business plans and budget of the Company. This includes the monitoring of the Company’s operations to ensure that it is efficient and effective. In addition, the Board has directed that an effective internal control system, internal audit and risk monitoring system be implemented as well as regular monitoring and assessment be carried out.

The Board of Directors have approved the appointment of various working committees or groups to carry out various operations as assigned and have established duty and responsibility for these committees, sub-committees and the management in order for them to precisely fulfill their duties in strict adherence to the policies of fair market pricing and agreement, which must be comparable others’ prices.

In addition, the Company has put into place controls that will protect investors that are transparent and able to be audited. The Company will reveal related transactions in the documents attached to the financial statements of the Company that have been externally audited and the Company will ensure that the documents have been audited by the Audit Committee who will express opinions as to the fairness and appropriateness of said transactions.

89

The Company has also implemented processes to monitor internal information such that directors, management, managers and employees will not be permitted to use information that has not been made publicly available or their own gain or to influence the value of the stock of the Company. If it is found that either the directors, management, managers or employees have used privileged information for personal gain, the Company will prosecute to the full extent of the law, without bias.

6. Conflict of Interest

The Company has put in place various processes to prevent conflict of interest and will abide by the laws and regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand concerning regulations, rules, directives and other stipulations of the Stock Exchange of Thailand strictly. Whereby any transaction by the directors, management, shareholder or other individual that may have a conflict of interest will not have authority for that issue. Nonetheless, such transaction must be done for the operation of the business of the

7. Business Ethics

The Company has informed the Board of Directors as to the importance of following the guidelines of the Code of Best Practices as set forth by the Stock Exchange of Thailand.

Additionally, the Management of the Company have strongly reiterated their individual justness, ability, business experience and their carrying out their duties with fairness and prudence for the benefit of the Company. They have a strong commitment to the continued operation of the business and an understanding and responsibility to society and do not have any prohibited characteristics as stipulated in Section 17 of the Announcement of the Securities and Exchange Commission no. gor.jor.12/2543 concerning the request for authorization and the authorization for propose sale of new shares.

8. Balance of Power for Non-Executive Directors

The Company has the following 9 directors as follows:

Two directors that are also a part of the management, or 22.22 percent of the total number of directors.

Four directors who are not part of the management, or 44.44 percent of the total number of directors.

Three independent directors who comprise 33.33 percent of the total number of directors, who are all part of the Audit Committee.

9. Aggregation or Segregation of Positions

The Company has separated the position of Chairman of the Board and Managing Director into two positions and the two positions are not held by the same person, whereas the Chairman is independent of the Company in order for their to be a balance of power in the Company. The duties and responsibilities for each the Chairman and Managing Director are clearly stipulated and each position has a limited authority and do not overlap. The Chairman is considered the authority for Company policy and the Managing Director is considered the authority for Company management.

90

10. Remuneration for Directors and Management

The Company has established a clear and appropriate remuneration for the directors at a level comparable to the general practice in the industry and in line with the responsibilities and duties each of the directors. However, the directors who are also management shall receive a remuneration that is higher from having a position of management in the Company and such remuneration is related to results of operation of the Company and the performance of the director. The remuneration is clearly stipulated, transparent and has received approval from the shareholders.

The payment of remuneration to the management is at a comparable level and appropriate to the responsibilities and each of the management.

The Company has established that the level or rate of remuneration be disclosed in the Annual Report and Annual Registration Statements.

11. Board of Director’s Meeting

The Company has set forth a requirement for a meeting of the Board of Directors at least every 3 months and a call for a meeting on other issues as deemed appropriate or necessary. The Company shall prepare a meeting invitation including the meeting agenda to the members of the Board of Directors not less than 7 days prior to the date of the meeting as required in the Articles of Association of the Company. In 2004 and 2005, the Board of Directors met for a total of 6 and 10 times respectively. The following is the detail of the meeting and total number of times each director attended:

No. of times of Attendance Name Title

2004 2005 Mr. Prakit Pradipasen Chairman 6/6 10/10 Mr. Chaiyut Srivikorn Director 5/6 9/10 Mr. James P. Rooney Director 5/6 10/10 Mr. Phaitoon Kijsamlej Director and Executive Director 6/6 10/10 Mr.Sakda Maneeratchatchai Director, Executive Director, Managing

Director 6/6 10/10 Mr. Satid Sudbuntad Director, Executive Director, Vice President of

Sales & Marketing 6/6 10/10 Mr. Somboon Phuvoravan* Director, Audit Committee Chairman,

Independent Director 6/6 10/10 Mr. Suvit Nardwangmuang* Director, Audit Committee Director,

Independent Director 6/6 9/10 Mr. Anun Louharanoo** Director, Audit Committee Director,

Independent Director - 10/10

* Had previously held position of director before being appointed Audit Committee Director ** Was appointed director on January 10, 2005

12. Committees

The Board of Directors has appointed the Audit Committee (comprised of 3 members) on January 10, 2005 with a term for 2 years. The duties and responsibilities of the Audit Committee are stated in the duties and responsibilities of the Audit Committee section.

91

In 2005, the Audit Committee met for a total of 10 times to consider issues concerning the following: to examine the financial statements for compliance with generally accepted accounting standards and full disclosure; to examine that there are appropriate internal controls and adequate internal audits; the examine that the Company’s practices are in line with the Codes of Good Governance; and to monitor that there is no conflict of interest that occurs with related transactions and that said transactions are properly disclosed; and to propose the external auditor for the Company.

13. Controlling System and Internal Audit The Company has a department that is responsible for the internal audit. Its duties are to direct and monitor that the operations are being carried out in line with the Company’s policies. In order for this department to remain independent and to carry out its duties of checks and balances, this department is directly under the supervision and reports to the Audit Committee.

14. Director’s reporting

The Board of Directors is directly responsible for the operation of the Company, its financial statements and the reporting the said financial statements to the public. The financial statements have been prepared in accordance with the generally accepted accounting standards buy using the appropriate accounting policy and audited on a regular basis by a certified public accountant that has been approved by the Securities and Exchange Commission and Stock Exchange of Thailand. The preparation of said financial documents was undertaken with prudence and careful estimation and sufficiently disclosed in the notes to the financial statements.

The Board of Directors has established and maintained an effective internal control system to ensure that the financial accounts and records are correct, complete and adequate to prevent fraud or any other significant irregularity.

The Board of Directors has appointed the Audit Committee, comprising of non-management directors and independent directors, to oversee and be responsible for the completeness and correctness of the financial statements as well as to monitor the internal control systems.

The Board of Directors feels that the internal auditing process has functioned at a level that is satisfactory and thus is able to reasonably concur that the financial statements of the Company were reliable and accurate.

15. Relations with Investors

The Company has an open information policy and aims to report all information correctly, reliably and in a timely manner in accordance to the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand.

As for matters dealing with Investor Relations, the Company has yet to set up a department to handle such issues, however, it has appointed Mr. Phongsak Chamnanchang, the legal officer, to coordinate matters and provide information to investors, analysts and other interested persons. He can be reached at the following contact number (036) 224-001-8 extension 296. The Company has future plans to set up an Investor Relations Department soon.

92

RE

LA

TE

D T

RA

NSA

CT

ION

S

The

Com

pany

had

the

follo

win

g re

late

d tr

ansa

ctio

ns w

ith in

divi

dual

s w

ith m

utua

l bus

ines

s be

nefit

for

2004

and

200

5 as

follo

ws:

1. R

elat

ed T

rans

acti

ons

Am

ount

(M

ill. B

aht)

P

erso

n/

Juri

stic

Per

son

Rel

atio

n T

ype

of T

rans

acti

on

2005

20

04

2003

Pri

cing

P

olic

y R

easo

n/N

eces

sity

of R

elat

ed T

rans

acti

on

Roy

al

Por

cela

in,

Pub

lic

Com

pany

L

iimit

ed

R

oyal

Por

clai

n, P

CL

, ha

s a

com

mon

dir

ecto

r w

ith

the

Com

pany

, Mr.

Su

vit

Nar

dwon

gmua

ng,

how

ever

the

re a

re n

o ho

ldin

g of

com

mon

sh

ares

bet

wee

n th

e co

mpa

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.

At

the

mee

ting

of

th

e B

oard

of

D

irec

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No.

154

on

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embe

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04, i

t w

as r

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of 2

ng

arn

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orce

lain

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CL

at

th

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as

appr

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rais

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In

acco

rdan

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to

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Com

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licy

and

norm

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agre

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aid

land

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tle

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sq.w

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L. a

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ice

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use

as a

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com

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wit

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tal

shar

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com

pris

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3 pe

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the

Com

pany

. T

here

ar

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com

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di

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ors

betw

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the

com

pani

es:

Mr.

P

raki

t P

radi

pase

n, M

r. C

haiy

ut

Sriv

ikor

n, M

r. J

ames

P.

Roo

ney

and

Mr.

Pha

itoo

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ijsam

lej.

1 (A

t th

e B

oard

of D

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mee

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N

o. 1

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n Ju

ly 2

6, 2

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it w

as

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to

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xpen

ses

for

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Gre

ensh

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ptio

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om t

he le

nder

of

shar

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yria

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if t

here

was

pro

fit fr

om t

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ale

of

shar

es o

n th

e st

ock

mar

ket.

2 (H

ad g

iven

con

sult

atio

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the

Com

pany

con

cern

ing

tech

nica

l iss

ues

for

the

busi

ness

dev

elop

men

t of t

he

Com

pany

. The

agr

eem

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ende

d on

Ja

nuar

y 3,

200

5 an

d no

exp

ense

s w

ere

char

ged.

The

agr

eem

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was

no

t ex

tend

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0.50

-

- 6.

36

- 6.

36

Use

of a

gree

d up

on p

rice

Use

of a

gree

d up

on p

rice

In a

ccor

danc

e to

res

olut

ion

of t

he B

oard

of

Dir

ecto

rs a

nd

finan

cial

con

sult

ants

(B

ualu

ang

Secu

riti

es,

PC

L) w

ho c

harg

ed

fees

for

adv

isin

g on

the

Gre

ensh

oe O

ptio

n to

the

Com

pany

, th

eref

ore

the

Com

pany

ch

arge

d ex

pens

es

to

Myr

iad

on

cond

itio

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be

paid

onl

y if

prof

it i

s m

ade

from

the

sal

es o

f sh

ares

on

the

stoc

k m

arke

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acc

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to t

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ompa

ny’s

polic

y an

d ag

reem

ent,

due

to

the

fact

tha

t pr

ior

to c

ontr

act

with

Myr

iad,

the

Com

pany

was

no

t ye

t fin

anci

ally

sou

nd a

nd h

ad a

ccum

ulat

ed l

osse

s an

d th

e C

ompa

ny w

as in

the

pro

cess

of

chan

ging

ow

ners

hip.

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s, it

w

as n

eces

sary

to

have

an

expe

rien

ced

advi

sor

for

the

busi

ness

is

sues

and

was

sup

port

ed b

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ajor

sha

reho

lder

, Myr

iad,

in

this

mat

ter

whi

ch e

nded

on

Jan.

2, 2

005.

A

gree

men

t w

as n

ot

exte

nded

as

the

Com

pany

did

not

req

uire

fur

ther

adv

ice

as it

w

as n

ow fi

nanc

ially

sou

nd.

93

2. Conflict of Interest

In future, the authorization of related transactions by the Company will be in accordance to the regulations of the Stock Exchange of Thailand. Individuals who may have a conflict of interest will be unable to authorize such transactions and authorization will be screened by the Audit Committee beforehand. In the event that the Audit Committee lacks expertise in the matter, the Company will obtain advice from an experienced and independent source to offer an opinion to the Audit Committee. The Audit Committee will then in turn propose to the Board of Directors said transaction for consideration and approval. The Company will disclose all transactions in the notes to the financial statements of the Company.

In addition, future agreements concerning related transactions will only be entered on if necessary and only for the benefit of the Company. The agreement of a price or remuneration will be in line with common business practice and common sale agreements for the maximum benefit of the Company.

3. Protection for Investors

The Company will establish standards for the protection of investors that will be able to be audited such as; the Company will disclose related transactions in the notes to the financial statements that have been audited by an external auditor; the Company will have the Audit Committee consider and certify as to necessity the related transactions and noted in the financial statements that have been audited. In the event that the Audit Committee lacks expertise in the matter, the Company will obtain advice from an experienced and independent source to offer an opinion concerning the related transaction for further consideration by the Board of Directors or shareholders.