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Financial Overview of SCG Paper Public Company Limited and its Subsidiaries

2

172014 Consolidated Financial Statements of SCG Paper Public Company Limited and its Subsidiaries

82014 Operating Results of SCG Paper Public Company Limited and its Subsidiaries

166Directors’ Information

5SCG Paper Public Company Limited and its Subsidiaries

1032014 Financial Statements of SCG Paper Public Company Limited

14The Board of Directors of SCG Paper Public Company Limited

167First 10 Major Shareholders as at December 31, 2014

6Message from the Board of Directors

164Investment in Subsidiaries, Associates and Other Companies

14Executive Officers of SCG Paper Public Company Limited and its Subsidiaries

Financial Overview Of SCG Paper Public Company Limited and its Subsidiaries

Unit : Million Baht

Unit : Million Baht

Unit : Million Baht

Unit : Million Baht

Earnings Before Interest, Tax, Depreciation and Amortization - EBITDA

Profit Attributable to Owners of the Parent

Total Assets

Revenue from Sales

40,306 42,645 43,89047,110

42,729

51,71454,839 57,430

59,135 64,614

38,573 40,73446,685 51,102 47,942 50,127 52,463

58,43965,141

73,987

2,422 2,054 2,082 1,454

2,1143,290 3,123 3,332 3,418 3,194

010,000

20,000

30,000

40,000

50,000

60,000

70,000

15,000

0

30,000

45,000

75,000

60,000

0

4,000

2,000

6,000

5,000

0

10,000

15,000

20,000

9,355 9,485 7,7876,369

7,654 8,843 8,518 8,554 9,189 9,422

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2 ANNUAL REPORT 2014

Unit : Million Baht

Financial Overview Of SCG Paper Public Company Limited and its Subsidiaries

2014 2013 2012 2011 2010

Statements of Income

Revenue 65,041 59,588 57,969 55,149 51,968

Costs and expenses (60,664) (54,825) (53,416) (50,753) (47,257)

Income tax expenses (641) (829) (771) (1,097) (1,298)

Non-controlling interests (542) (516) (450) (176) (123)

Profit attributable to owners of the parent 3,194 3,418 3,332 3,123 3,290

EBITDA 9,422 9,189 8,554 8,518 8,843

Statements of financial position

Assets 73,987 65,141 58,439 52,463 50,127

Liabilities 29,150 26,105 22,656 19,936 19,957

Total equity attributable to owners of the parent 35,714 34,103 31,387 28,875 26,926

Total shareholders’ equity 44,837 39,036 35,783 32,527 30,170

Share information

Total number of shares issued (Million Shares) 156.3 156.3 156.3 156.3 156.3

Book value per share (Baht) 228.5 218.2 200.8 184.7 172.3

Basic earnings per share (Baht) 20.4 21.9 21.3 20.0 21.1

Perposed dividends per share (Baht) 5.0 5.0 5.0 5.0 5.0

Financial Ratio

Dividends payout ratio (%) 24.5 22.8 23.5 25.0 23.8

Profit on revenue from sales (%) 4.9 5.8 5.8 5.7 6.4

Return on assets (%) 4.6 5.5 6.0 6.1 6.7

Return on equity attributable to owners (%) 9.1 10.4 11.1 11.2 12.6 of the parent

Remark : The figures for year 2013 are restated for comparative purpose with 2014.

3SCG Paper Public Company Limited

Vietnam• VinaKraftPaperCo.,Ltd.• NewAsiaIndustriesCo.,Ltd• APPackaging(Hanoi)Co.,Ltd.• AlcamaxPackaging(Vietnam)Co.,Ltd.• Packamex(Vietnam)Co.,Ltd.

Indonesia• PTPrimacorrMandiri• PTIndorisPrintingdo

The Philippines• UnitedPulpandPaperCo.,Inc.

Singapore• TCGRengo(S)Ltd.

SCG Paper Public Company Limited

SCG Paper, a major business under SCG, is the largest integrated paperandpackagingmanufacturerinASEAN.


ASEANS u s t a i n a b l e G r o w t hM o v e s F o r w a r d t o

SCG Paper Public Company Limited and its Subsidiaries SCG Paper, the largest integrated paper and packaging manufacturer in ASEAN.

• TheSiamForestryCo.,Ltd.

• PhoenixPulp&PaperPublicCompanyLimited

• PhoenixUtilitiesCo.,Ltd.

• SiamCelluloseCo.,Ltd.

• ThaiPaperCo.,Ltd.

• ThaiUnionPaperPublicCompanyLimited

• SCGPExcellenceTrainingCenterCo.,Ltd.

• ThaiBritishSecurityPrintingPublicCompany Limited

• SCGPaperEnergyCo.,Ltd.

Packaging Business Chain

Fibrous Business Chain

PackagingPaperBusiness

PackagingBusiness

Forestry Business

Pulp and Paper Business

Other Businesses

• ThaiContainersGroupCo.,Ltd.

• ThaiContainersRayongCo.,Ltd.

• ThaiContainersKhonkaenCo.,Ltd.

• TawanaContainerCo.,Ltd.

• DynaPacksCo.,Ltd.

• OrientContainersCo.,Ltd.

• TCFlexiblePackagingCo.,Ltd.

• D-In-PackCo.,Ltd.

• TCGRengo(S)Ltd.(Singapore)

• NewAsiaIndustriesCo.,Ltd.(Vietnam)

• APPackaging(Hanoi)Co.,Ltd.(Vietnam)

• AlcamaxPackaging(Vietnam)Co.,Ltd.(Vietnam)

• Packamex(Vietnam)Co.,Ltd.(Vietnam)

• PTPrimacorrMandiri(Indonesia)

• PTIndorisPrintingdo(Indonesia)

• SiamKraftIndustryCo.,Ltd.

• ThaiCanePaperPublicCompanyLimited

• UnitedPulpandPaperCo.,Inc.(ThePhilippines)

• VinaKraftPaperCo.,Ltd.(Vietnam)


MESSAGEFROMTHEBOARD OF DIRECTORS

In 2014, the global economy remained fluctuated. Although the US economy showed a clear sign of recovery with expanding consumption and investment in the private sector, the economic situation in the European Union remained in trouble with high risks. Chinese economy meanwhile saw a slower growth rate. In Thailand, the overall economy had been affected by the previous political situation. Although overall economy recovered in the second half, investment and household consumption recovery remained slow.

SCG Paper continued operating the business by adjusting mainly to the changing market situation and consumers’ demand. We place high importance on the management and operations in order to become the leader in innovative packaging in ASEAN. In order to support the rising market demands, SCG Paper has grown packaging paper and packaging production bases in Thailand and overseas. Furthermore, we have developed products and services to better address demand of our customers while contributing to consumers’ quality of life improvement. We have also grown our export market to enhance competitiveness and boost our expansion in ASEAN. Thanks to such strategies and business activities, SCG Paper achieved a total sales of 64,614 million Baht, raised 9% from 2013 while the net profit was 3,194 million Baht, dropped from the previous year by 7%.

Looking ahead into 2015, it is expected that economic fluctuations in the world’s powerful countries would remain high and need a close monitoring because of a high impact on other economies. Chinese economic development, in particular, will have a direct impact on raw materials and paper sales price in the region. Amidst such economic uncertainty, the company has to continue its policy that focuses on sustainable business growth; especially on an effective cost management and control. Following this framework, SCG Paper’s business direction will be as follows:

Expanding businesses and services to become a packaging business leader In the past year, SCG Paper increased its packaging paper manufacturing base by opening the PM 16 production line in Ratchaburi, our own comprehensive paper production base with world-class innovation. Such improvement has enabled the company to produce the paper products that directly address customers’ needs as well as achieving an eco-friendly production process. The current production capacity is 320,000 tons per year. The company also expanded its paper packaging production base in Kamphaeng Phet to meet the rising demand in the northern market. It has acquired D-In-Pack Co., Ltd., a paper packaging manufacturer in Nakhon Pathom, and

Message from the Board of Directors

SCG Paper continued operating the business by adjusting mainly to the changing market situation and consumers’ demand.

We place high importance on the management and operations in order to become the leader in innovative packaging in ASEAN.


Roongrote RangsiyopashPresident

KanTrakulhoonChairman

co-invested in Prepack Thailand Co., Ltd. that marked the first step of SCG Paper in expanding into the flexible packaging business; packaging produced from other raw materials than paper. This is a significant strategy for the company to expand business and become the manufacturer and service provider in comprehensive packaging business. SCG Paper also considers a plan to invest in and grow market in the ASEAN region through the acquisition of PT Indoris Printingdo in Indonesia. Such investment has confirmed SCG Paper’s commitment to fully expand its business into the packaging industry, which focuses on high value-added products (HVA products) and seeking for growth opportunity to become the sustainable packaging business leader in ASEAN region.

Driving value-added innovative products to address consumers’ demand SCG Paper has continually driven innovation and high value-added product development. Glassine Paper production machinery has been improved and installed to increase the capacity in producing a pressure sensitive material, which is suitable for label lining. The production is scheduled to commence in the late of 2015. The company has also produced food safety packaging from food grade paper, Idea CarePack; a drinking water cone cup from virgin pulp that passed the fluorescence test and certified by GMP, and the Machine Glazed Paper that can directly contact with food which is suitable for hygienic packaging. The company has also improved printing quality on corrugated containers by using Pre-Print, a Flexography system which supports more of heavy weight products and has

as good quality as Offset printing system. This has enabled SCG Paper to better address customers’ needs for design and effective use.

Developing people, organization and the environment for sustainable growth in ASEAN SCG Paper is committed to operating its business under SCG 4 Core Values and has further improved employees’ capability through skill and expertise enhancement for operational excellence. It has also promoted learning spirit among the public through international exchange project which foreign students are given the opportunity to be trained in Thailand as we are preparing ourselves for the ASEAN Economic Community integration. In addition, the company expresses its care for the communities surrounding its plants in order to ensure harmony living. It also encourages employees and outsiders to value and take action in protecting the environment and participate in social development for environmental sustainability.

The Board of Directors would like to thank shareholders, joint investors, business partners, customers, employees and all stakeholders, including financial institutions in Thailand and overseas for their support. We will continue operating our business with efficiency and transparency by adhering to the good corporate governance principles and sustainable development so as to create the mutual benefits for all parties involved and grow with the Thai society and ASEAN in the long run.

Bangkok, 30th January 2015


2014 Operating Results

SCG Paper Public Company Limited and its Subsidiaries

In 2014, revenue from sales of SCG Paper was 64,614 million Baht, raised 9% compared to 2013 in regards to the increasing sales of packaging paper, packaging, pulp and printing paper. EBITDA was 9,422 million Baht, increasing of 3% from the previous year while the 2014 profit was 3,194 million Baht, dropped 7% from the previous year. • Packaging Business Chain: Total sales volume increased by 11% compared to 2013 driven by the rising market demand for packaging paper and packaging, especially in the ASEAN region whose demand for packaging increased by 4% in accordance with the economic growth. • Fibrous Business Chain: Total sales volume increased by 6% compared to 2013 due to higher dissolving pulp sales and printing and writing paper export.

Market and Competition • In 2014, there was a minor growth in the demand for paper packaging on the back of Thailand’s modest economic recovery. However, demand in ASEAN witnessed a continued growth, prompting paper packaging manufacturer in ASEAN to increase their production capacities, resulting

in an intense price competition. Innovation and operational efficiency improvement have become major tools to maintain the organization’s competitiveness and ability to effectively serve its customers’ demand as well as to maintain the organization’s long-term profitability. • Printing and writing paper segment in 2014, however, experienced more than 11% decrease in demand, especially on coated paper for magazine printing, which has been gradually replaced by electronic media. However, the import volume dropped by 17% from the previous year due to currency fluctuations and stagnant markets in Thailand.

Business Growth and Development • Expanding packaging paper manufacturing base by opening the PM 16 production line in Ratchaburi. The machine then becomes the most comprehensive paper manufacturing base with world-class innovation, resulting in the ability to produce a high-quality paper meeting customers’ demands and the eco-fr iendly production process. The machine has a capacity to produce 320,000 tons per year of packaging paper.


• Improving machinery in the pulp and paper business to be able to produce Glassine Paper. This makes SCG Paper be the first and largest manufacturer in ASEAN with this capability. Glassine is a smooth paper with high transparency which can be used as the lining for sticker label in the packaging industry. The machine has a capacity to produce 60,000 tons per year and is scheduled to commence in the late of 2015. • Expanding into the flexible packaging business to address an increasing demand in the food and consumer products segment. This is achieved by acquiring a 22% stake (increased to 72% in January 2015) in Prepack Thailand Co., Ltd. which has a production capacity of 14,000 tons per year as well as modifying a production line of Packamex (Vietnam) Co., Ltd., a flexible packaging business in Vietnam, with a capacity of 3,000 tons per year. This is considered a key strategy for SCG Paper to become the integrated packaging manufacturer and solution provider. • Expanding packaging business to support the rapid growth in paper packaging production segment. The company has acquired D-In-Pack Co., Ltd. with a capacity of 15,000 tons of corrugated paper packaging per annum. • Increasing an investment for Offset packaging through 90% stake acquisition in PT Indoris Printingdo which has a capacity of producing 8,000 tons per year, marking a significant step for the company’s expansion into overseas packaging business.

HumanResourcesDevelopment • Focusing on employees’ knowledge and skill development by providing technical and functional trainings. Training roadmap has been prepared to provide a framework for employees’ career path. This year, the company expanded its technical training service to cover its business in Vietnam. Such programs included labour development under the Constructivism concept or the C-Paper-Vietnam Project which promotes a project-based learning. The project also provided training on “Learn how to Learn” to overseas employees, which is a cooperation between SCG Paper and leading universities in Vietnam. • Init iat ing a program that allows its employees in ASEAN countries to visit Thailand and learn more about production technology, marketing, production planning and maintenance service. The main objective is to promote knowledge transmission such as technology and work standard as well as Thai culture and SCG Paper’s corporate culture, which supports operational excellence in overseas operation. The program meanwhile provides a good opportunity to promote networking among employees across all countries which will be beneficial for future cooperation. In addition to employees’ development, this program also enhances long-term employee engagement with SCG. • Instigating an International Internship Program to give students in Vietnam, Indonesia and the Philippines, the opportunity to know more about SCG and SCG Paper while widening the opportunity for the company to recruit potential employees in the future. Under this program, third year students from leading universities in the three countries will be given the opportunity to be trained in Thailand. • Prompting a leadership development at the management level to increase each unit’s capability to lead the team towards success as planned. The program was designed for the organization to cope with rapid changes and new challenges in the market.


• Encourag ing a concept o f Sa fe ty Management System from Dupont by sending safety engineers to acquire the process of safety practices which will later be applied within the organization and construct an advantageous safety culture. • Cultivating workplace safety behaviors through the “Good friends Good Safety” program under which colleagues are responsible for providing good advices on safety for other colleagues in unsafe situations.

Developing Products, Services, and Production Process m Product and Service Development SCG Paper i s committed to ensur ing environmental friendly development and design process in order to offer eco-friendly products and services. It believes that business activities must have the least possible impact on the environment while raw materials must come from sustainable resources. Focusing on resources management and optimizing the best benefit for stakeholders are SCG Paper’s top priority. In addition, product and service development has to be based on customers’ needs with consideration on the possible impact from product development process. Consumers’ confidence on the product quality and service remains a significant factor in which influencing customers’ satisfaction. • Improving printing technology by adopting Flexography system such as Pre-Print on packaging. The printing quality is as good as the Offset printing system which in turn, suitable for heavy weight lifting and serve customers’ need effectively. • Developing an Inspired Studio, the one-stop service product design and development center that provides a broad spectrum of services from consultation to creative and commercial graphic design and art works by a professional team. • Manufacturing packaging paper that has been certified by Forest Stewardship Council (FSC). With an appropriate ecology system

management, the company has developed the raw material sourcing process by acquiring materials from specific sources. Starting from the very first stage of raw material sourcing, reception, storage, volume control, sales to delivery. Nonetheless, the company also encourages consumers to participate in environmental conservation activities. • Manufacturing Machine Glazed Paper for hygienic packaging from high quality and highly hygienic materials, enabling it to be used for extra hygienic packaging such as medical equipment. This has also enabled the company to better address customers’ need.

• Developing an “Idea CarePack”, a hygienic paper cone cup which is made from 100% virgin pulp in the food grade standard that guarantees safety of consumers. The Curve Lock technology has also made the product more durable with leak proof performance. In addition to the technology, the product itself has passed the fluorescence test and become the first in Thailand to have received the Thai Industrial Standard Certification from The Thai Industrial Standards Institute. • Developing an “Idea Green Plus” that contains high-quality EcoFiber. Formerly made from recycled paper, the use of EcoFiber could substitute a certain amount


of virgin pulp, resulting in premium-quality paper which is suitable for various print media. The three key strengths of Idea Green Plus are environmentally friendly, high quality and cost the same as traditional printing paper to address the needs of eco-conscious customers. • Developing 10 eucalyptus species that are suitable for climatic conditions in Thailand which can be grown in various types of soil in many areas. This has also reduced problems related to insects and diseases while increasing the productivity and weight, which enables Thai farmers to generate a better income.

m Production Process Development SCG Paper develops green production process by using innovation for reducing resources consumption effectively. Some resources have been recycled or reused as a form of raw materials or energy, with the aim of pollution reducing and bringing the least impact to the environment. • SCG Paper’s plants have increased combustion efficiency in steam generators, as well as improving paper manufacture system to reduce energy consumption and waste management. Such processes include reuse or recycle of waste according to the 3R concept. The main objectives for such activities are to reduce impact on the environment and to promote sustainable industrial development.

m Social and Environmental Responsibility Community surrounding its plants and the society are main stakeholders that SCG Paper most concerned with. The company therefore has been caring and protecting the environment to maintain good ecosystem in the communities. It has initiated activities to instill environmental care spirit and social contribution among employees and the general public. This is an important part of the company’s efforts to become a major drive in quality of life improvement of surrounding communities. • SCG Paper and Siam Kraft Industry Co., Ltd. handed over the mud houses under the “Modeling Clay Sharing Smiles” project to the Samakkhi Community in Bangkok, which will be used as a learning center for pre-school children. Learning and teaching equipment were also donated to support children’s education and development.

• Promoting the use of Carbon Footprint label on packaging which provided information on greenhouse gas emission of the particular product. Useful information such as, greenhouse gases emitted from the raw material sourcing process, transportation, product usage or product treatment are shown. Such advice is considered to be important for consumers’ decision making and in turn, encouraging manufacturers to shift their production technology closer to an eco-friendly manufacturing process. • Developing products such as Idea Green Offset, Idea Green Card and gypsum board products to meet the standard requirement of SCG eco value. In addition to receiving such certification, consumers are ensured of high quality, yet environmentally friendly products.


• Thai Cane Paper Public Company Limited handed over the “Classrooms for Children” project under the 8th “Shar ing the Opportunity… Drawing the Future” campaign to Ban Makok Moo (Punnasiri Wittaya) in Kanchanaburi. The project helps provide the right environment and sufficient facility to support primary school children’s learning. • Green Read Paper donated 31,454 Baht for new books purchased to support the “1 Read, Millions Awakening” project. The activity is to promote a society with quality reading development and to draw a brighter future for the younger generation in 50 communities, 11 provinces.

• Phoenix Pulp & Paper Public Company Limited, held community visits under the “Phoenix for Community” project to update nearby communities of the plant’s activities and movement as well as listening to the community’s needs and advices which will be used for further social development. The “Yiam Yam Tham Khao” community visit project was also launched to provide a platform for the community to share their information on environmental impact. Meanwhile, the company could provide an update on its projects and career development activities. • Thai Br it ish Security Pr int ing Public Company Limited and representatives from 55 partners held the “Shred2Share” project in which learning, teaching tool kits and other necessities are donated to 18 Border Patrol Pol ice schools in Chantaburi and Sa Kaeo with a total donation of 3,800,000 Baht.

Major Achievements and Awards in 2014 • Siam Kraft Industry Co., Ltd., Kanchanaburi Plant and Thai British Security Printing Public Company Limited received the Bronze Award in the category of Genba Kaizen from the “Auto Oil” project and the Bronze Award in the category of Project

• The Siam Forestry Co., Ltd. and the Forest Resource Management Office 7, Khonkaen s igned a cooperation agreement to promote and grow forests in five provinces, namely Khonkaen, Kalasin, Mahasarakham, Mukdaharn and Roi Et. This will be completed through various projects, including economic plants growing project, alternative energy plants growing project, reforestation project

for economic, social and environmental improvement. These projects will improve people’s quality of life and increase plant productivity for household and industrial use.


Kaizen for the “Shortening Setup time for Hei-4 Printer” at Kaizen Award 2014 held by Technology Promotion Association (Thailand-Japan). • Siam Kraft Industry Co., Ltd., Kanchanaburi Plant received Thailand Energy Award 2014 - Creative Energy category from the Depar tment of A l ternat ive Energy Development and Efficiency, The Ministry of Energy. • Siam Kraft Industry Co., Ltd., Ratchaburi and Kanchanaburi Plants and Thai Containers Group Co., Ltd., Saraburi, Ratchaburi and Pathum Thani Plants received the CSR-DIW Continuous Award 2014 from The Ministry of Industry. • Siam Kraft Industry Co., Ltd., Ratchaburi and Kanchanaburi Plants received Thailand Quality Prize - Silver on Support QCC Prize and Manufactur ing QCC Pr ize from Technology Promot ion Assoc iat ion (Thailand-Japan). • Thai Containers Group Co., Ltd., Saraburi Plant and Thai Union Paper Public Company Limited received Award for Excellence in Consistent TPM Commitment while Thai British Security Printing Public Company Limited received TOM Excellence Award, Category A from the Japan Institute of Plant Maintenance, Japan. • Thai Containers Group Co., Ltd., Navanakhon, Saraburi, Samut Prakarn, Ratchaburi, Pathum Thani and Songkhla Plants, received an Outstanding Workplace Award for Workplace Health and Safety 2014. Thai Containers Group Co., Ltd., Navanakhon, Ratchaburi and Pathum Thani Plants received a certificate on an Outstanding Organization Award - Labour Relations and Welfare 2014 from the Department of Labour Protection and Welfare, The Ministry of Labour. • Thai Containers Group Co., Ltd., Chonburi Plant and Thai Containers Rayong Co., Ltd. were certified by Bureau Veritas Certification

(Thailand) for ISO 22301: 2012 for business continuity management. • Thai Containers Group Co., Ltd., Songkhla and Ratchaburi Plants and Thai Containers Khonkaen Co., Ltd. received the Zero Accident Awards 2014 from the Labour Protection and Welfare Office, The Ministry of Labour. • Thai Containers Group Co., Ltd., Samut Prakarn Plant received the Green Industrial Award Level 3 from The Ministry of Industry. • Thai Containers Group Co., Ltd., Ratchaburi Plant was certified for Responsible Sourcing: Green Level from WalMart Stores, Inc. • Thai Containers Group Co., Ltd., Pathum Thani Plant received Move Forward of SRM with Stability & Sustainability Award from Wan Thai Foods Industry Co., Ltd. for its support in an effective problem solving, and the Good Performance Award 2014 from Berli Jucker Foods Co., Ltd. • Thai Containers Khonkaen Co., Ltd. received Good Manufacturing Practice (GMP) award from Management System Certification Institute (Thailand) (MASCI). • Tawana Container Co., Ltd. received from the Regional Police Office - Region 1 an Outstanding Award for being a pilot organization as 100% of its employees wear safety helmets. It also received a runner up award for being an outstanding corporate with workplace safety at provincial level from the Provincial Office of Labour Protection and Welfare, Samut Prakan. • Thai Paper Co., Ltd. received Good Governance, Environment and Safety Award 2014 from The Ministry of Labour. • Thai Union Paper Public Company Limited received ESCO Project Awards 2014 in recognition for its success in energy preservation after the implementation of ESCO system from The Department of Alternative Energy Development and Efficiency, The Ministry of Labour.


Mr.RoongroteRangsiyopash

President


Packaging Business Chain

The Board of Directors of SCG Paper Public Company Limited

Executive Officers of SCG Paper Public Company Limited and its Subsidiaries

Mr.WichanJitpukdee

Managing Director

SiamKraftIndustryCo.,Ltd.

Mr.AmnuayPonpued

Managing Director

Thai Cane Paper Public Company Limited

Mr.WichanCharoenkitsupat

President and CEO

United Pulp and Paper Co., Inc. (ThePhilippines)

Mr.SangchaiWiriyaumpaiwong

General Director

VinaKraftPaperCo.,Ltd.(Vietnam)

SCG Paper Public Company Limited and its Subsidiaries(AsatDecember31,2014)

PackagingPaperBusiness

Mr.KanTrakulhoon

Chairman

Mr.ChaovalitEkabut

Director

Mr.AreeChavalitcheewingul

Director

Mr.SomchaiWangwattanapanich

Director

Mr.NithiPatarachoke

Director

Mr.RoongroteRangsiyopash

President

Mrs.PornpenNamwong

Secretary to the Board


Fibrous Business Chain

Mr.SurasakAmawat

Managing Director

PhoenixPulp&PaperPublicCompany Limited

Phoenix Utilities Co., Ltd.

Siam Cellulose Co., Ltd.

Thai Paper Co., Ltd.

Thai Union Paper Public Company Limited

Mr.KwanchaiWacharapairoj

Managing Director

SCGP Excellence Training Center Co., Ltd.

Mr.NatapongPinitpongskul

Managing Director

Thai British Security Printing Public Company Limited

Mr.PanyaSopasriphan

Managing Director

SCG Paper Energy Co., Ltd.

Mr.PoramateLarnroongroj

Managing Director

Thai Containers Group Co., Ltd.

Thai Containers Rayong Co., Ltd.

ThaiContainersKhonkaenCo.,Ltd.

Dyna Packs Co., Ltd.

D-In-Pack Co., Ltd.*

Orient Containers Co., Ltd.

TCGRengo(S)Ltd.(Singapore)*

Note

* The position of Director

Mr.SitthichaiWangteeraprasert

Managing Director

Tawana Container Co., Ltd.

Mr.KaranTejasen

Managing Director

TC Flexible Packaging Co., Ltd.

Mr.JakjitKlomsingha

General Director

NewAsiaIndustriesCo.,Ltd.(Vietnam)

AlcamaxPackaging(Vietnam)Co.,Ltd. (Vietnam)

APPackaging(Hanoi)Co.,Ltd.(Vietnam)

Packamex(Vietnam)Co.,Ltd.(Vietnam)

Mr.ChowvalitMeechow

President Director

PTPrimacorrMandiri(Indonesia)

PTIndorisPrintingdo(Indonesia)

PackagingBusiness

Forestry Business

Pulp and Paper Business

Other Businesses

Mr.JoompotTanmani

Managing Director

The Siam Forestry Co., Ltd.


SCG Paper Moves Forward to ASEAN Sustainable Growth

SCG Paper Public Company Limited and its SubsidiariesConsolidated financial statements for the year ended 31 December 2014 and Independent Auditor's Report

Notes to the consolidated financial statementsNotes to the consolidated financial statementsNotes to the consolidated financial statementsNotes to the consolidated financial statements

SCG Paper Public Company Limited and its SubsidiariesSCG Paper Public Company Limited and its SubsidiariesSCG Paper Public Company Limited and its SubsidiariesSCG Paper Public Company Limited and its Subsidiaries For the year ended 31 December 2014For the year ended 31 December 2014For the year ended 31 December 2014For the year ended 31 December 2014

Income tax recognised in other comprehensive income

2014 2013

(in thousand Baht)

Actuarial gain (loss) (13,589) 343

Reconciliation of effective tax rate

2014 2013

Rate

(%)

(in thousand

Baht)

Rate

(%)

(in thousand

Baht)

Profit before income tax expense 4,376,907 4,763,268

Share of loss (profit) of associates 66,094 (6,755)

4,443,001 4,756,513

Income tax using the Thai corporation tax rate 20 888,600 20 951,303

Tax effected from;

Tax rates in foreign jurisdictions 9,609 (30,382)

Income not subject to tax (355,153) (302,583)

Recognition of previous year as current taxable income 13,680 -

Tax privileges (32,600) (19,646)

Tax losses 73,918 130,429

Expenses not deductible for tax purposes and others 126,981 93,638

Current tax expense 725,035 822,759

Over provided in prior years (50,965) (4,482)

Movement in temporary differences (33,316) 10,882

Income tax expense 14 640,754 17 829,159


A_W SCG Eng 2015_(1c)-�� .indd 87 3/6/15 5:13 PM


SCG Paper Public Company LimitedFinancial Statements for the year ended 31 December 2014

and Independent Auditor's Report

Independent Auditor’s Report

To the Shareholders of SCG Paper Public Company Limited

I have audited the accompanying financial statements of SCG Paper Public Company Limited (the “Company”), which comprise the statement of financial position as at 31 December 2014, the statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.


Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2014 and its financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

(Pornthip Rimdusit) Certified Public Accountant Registration No. 5565 KPMG Phoomchai Audit Ltd. Bangkok 25 February 2015


Statement of financial positionSCG Paper Public Company Limited

As at 31 December 2014

Assets Note 2014 2013

Current assetsCash and cash equivalents 4,836 4,852Trade and other receivables 4, 5, 6 189,709 380,011Short-term loans to related parties 4 8,794,779 12,020,089Inventories 7 1,287 84,492Non-current assets held for sale 9, 11 - 147,430Other current assets 30,851 15,424Total current assets 9,021,462 12,652,298

Non-current assetsInvestments in associates 10 350,121 350,121Investments in subsidiaries 11 26,018,344 23,347,339Investment properties 12 208,954 209,909Property, plant and equipment 13 255,441 635,928Intangible assets 14 16,417 19,471 Deferred tax assets 15 19,202 20,010Other non-current assets 1,595 1,565Total non-current assets 26,870,074 24,584,343

Total assets 35,891,536 37,236,641

(in thousand Baht)

The accompanying notes are an integral part of these financial statements.


Statement of financial positionSCG Paper Public Company Limited

As at 31 December 2014

Liabilities and shareholders’ equity Note 2014 2013

Current liabilitiesBank overdrafts 257 -Trade and other payables 4, 16, 17 71,653 209,147Short-term loans from related parties 4 12,291,497 13,847,635Income tax payable - 1,444Short-term provisions 5,882 5,618Other current liabilities 33,509 29,584Total current liabilities 12,402,798 14,093,428

Non-current liabilitiesEmployee benefit liabilities 18 64,893 73,631Other non-current liability 4,032 4,032Total non-current liabilities 68,925 77,663

Total liabilities 12,471,723 14,171,091

Shareholders’ equityShare capital 19 Authorised share capital 1,563,000 1,563,000

Issued and paid-up share capital 1,563,000 1,563,000Premium on ordinary shares 20 1,935,000 1,935,000Retained earnings Appropriated Legal reserve 20 156,300 156,300 General reserve 3,000 3,000 Unappropriated 19,762,513 19,408,250Total shareholders’ equity 23,419,813 23,065,550

Total liabilities and shareholders’ equity 35,891,536 37,236,641

(in thousand Baht)



Statement of incomeSCG Paper Public Company Limited

For the year ended 31 December 2014

Note 2014 2013

Continuing operationsDividends income 4, 10, 11 896,668 1,550,386Net gain from business restructuring 4, 8, 11 316,719 -Other income 4 125,426 307,776Total revenue before expenses 1,338,813 1,858,162

Loss (gain) on exchange rate 32 (2,915) Administrative expenses 4, 21 28,960 34,200Total expenses 28,992 31,285

Profit before finance costs and income tax expense 1,309,821 1,826,877

Finance costs 4 141,611 122,900

Profit before income tax expense 1,168,210 1,703,977

Income tax expense 23 51,099 26,924

Profit from continuing operations 1,117,111 1,677,053

Discontinued operationProfit from discontinued operation, net of income tax 8 18,772 44,048

Profit for the year 1,135,883 1,721,101

Basic earnings per share (in Baht) 24 7.27 11.01

(in thousand Baht)



Statement of comprehensive incomeSCG Paper Public Company Limited


Note 2014 2013

Profit for the year 1,135,883 1,721,101

Other comprehensive income Defined benefit plan actuarial gain (loss) 18 (150) 1,773 Income tax on other comprehensive income 23 30 (355)Other comprehensive income for the year, net of income tax (120) 1,418

Total comprehensive income for the year 1,135,763 1,722,519

Kan Takulhoon Roongrote Rangsiyopash Chairman President

(in thousand Baht)

For and on behalf of the Board of Directors



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Statement of cash flowsSCG Paper Public Company Limited


2014 2013

Cash flows from operating activitiesProfit for the year 1,135,883 1,721,101 Adjustments forDepreciation and amortisation 40,497 79,184 Interest income (501,153) (555,088) Interest expense 642,542 677,639 Unrealised gains on exchange rate (1,123) (2,560) Allowance for decline in value of inventories (reversal) (310) 2,081 Impairment losses on property, plant and equipment 5,766 -Gain on return of investment (836) (61,794)

Gain on sales of property, plant and equipment (432) (94,032)

Gain on sales of intangible assets (5) -Employee benefit expense 7,889 8,515 Reversal of employee benefit expense of transferred employees (13,348) -Net gain from business restructuring (316,719) -Dividends income (896,668) (1,550,386) Income tax expense 55,792 37,936 Profit provided by operating activities before changes in operating assets and liabilities 157,775 262,596

Decrease (increase) in operating assetsTrade and other receivables 187,923 4,715 Inventories 83,515 16,610 Other current assets and other non-current assets 12,552 (95) Net decrease in operating assets 283,990 21,230

Increase (decrease) in operating liabilitiesTrade and other payables (135,912) (2,455) Employee benefit liabilities (3,165) (8,479) Other current liabilities and other non-current liability 3,925 8,824 Net decrease in operating liabilities (135,152) (2,110)

(in thousand Baht)



Statement of cash flowsSCG Paper Public Company Limited


2014 2013

Cash generated from the operations 306,613 281,716 Income tax paid (22,176) (36,998)

Net cash provided by operating activities 284,437 244,718

Cash flows from investing activitiesInterest received 504,642 555,982 Dividends received 896,668 1,550,386 Increase in investments in shares (551,201) (276,144) Proceeds from business restructuring 7,418,206 -Net cash outflow from business restructuring (8,663,302) -Income tax from business restructuring (64,237) -Proceeds from return of investment 836 241,794 Net cash outflow on purchase of net assets from subsidiary - (241,992) Purchase of property, plant and equipment (102,719) (124,431) Purchase of intangible assets (3,541) (8,759) Proceeds from sales of property, plant and equipment 36,356 98,543 Proceeds from sales of intangible assets 21 -Increase in short-term loans to related parties (35,694,747) (39,964,914) Collection of short-term loans to related parties 38,920,057 40,742,558 Net cash provided by investing activities 2,697,039 2,573,023

Cash flows from financing activitiesInterest paid (644,111) (679,119) Dividends paid (781,500) (781,500) Increase (decrease) in bank overdrafts 257 (617) Proceeds from short-term loans from related parties 22,779,522 17,995,372 Repayment of short-term loans from related parties (24,335,660) (19,351,900) Net cash used in financing activities (2,981,492) (2,817,764)

Net decrease in cash and cash equivalents (16) (23) Cash and cash equivalents at beginning of the year 4,852 4,875 Cash and cash equivalents at end of the year 4,836 4,852

(in thousand Baht)



Notes to the financial statements SCG Paper Public Company Limited

For the year ended 31 December 2014 Note Contents 1 General information 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Related parties 5 Trade and other receivables 6 Other receivables 7 Inventories 8 Discontinued operation 9 Non-current assets held for sale 10 Investments in associates 11 Investments in subsidiaries 12 Investment properties 13 Property, plant and equipment 14 Intangible assets 15 Deferred tax assets 16 Trade and other payables 17 Other payables 18 Employee benefit liabilities 19 Share capital 20 Reserves 21 Administrative expenses 22 Employee benefit expenses 23 Income tax expense 24 Basic earnings per share 25 Dividends 26 Financial instruments 27 Lease agreements 28 Contingent liability 29 Capital management 30 Others




31 Events after the reporting period 32 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet

effective




These notes form an integral part of the financial statements. The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English languages, and were approved and authorised for issue by the management on 25 February 2015.

1 General information SCG Paper Public Company Limited, the “Company”, is a company incorporated in Thailand. The head office of the Company is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand. The parent company is The Siam Cement Public Company Limited. It was incorporated in Thailand. The Company is engaged in investment. During 2014, the Company sold the pulp production business to a related party as disclosed in note 8.

2 Basis of preparation of the financial statements (a) Statement of compliance

The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS) and guidelines promulgated by the Federation of Accounting Professions (“FAP”). The FAP has issued the following new and revised TFRSs that are relevant to the Company’s operations and are effective for accounting periods beginning on or after 1 January 2014 as follows :

TFRSs Topic TAS 1 (revised 2012) Presentation of Financial Statements TAS 7 (revised 2012) Statement of Cash Flows TAS 12 (revised 2012) Income Taxes TAS 17 (revised 2012) Leases TAS 18 (revised 2012) Revenue TAS 19 (revised 2012) Employee Benefits



TFRSs Topic TAS 21 (revised 2012) The Effects of Changes in Foreign Exchange Rates TAS 24 (revised 2012) Related Party Disclosures TAS 28 (revised 2012) Investments in Associates TAS 34 (revised 2012) Interim Financial Reporting TAS 36 (revised 2012) Impairment of Assets TAS 38 (revised 2012) Intangible Assets TFRS 3 (revised 2012) Business Combinations TFRS 5 (revised 2012) Non-current Assets held for Sale and Discontinued

Operations TFRIC 10 Interim Financial Reporting and Impairment The initial application of these new and revised TFRSs has no material effect on the Company’s accounting policies, calculation method and financial performance or position. In addition to the above new and revised TFRSs, the FAP has issued a number of new and revised TFRSs which are effective for annual financial periods beginning on or after 1 January 2015 and have not been adopted in the preparation of these financial statements. Those new and revised TFRSs are disclosed in note 32.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material item in the statements of financial position; the present value of the defined benefit obligation.

(c) Functional and presentation currency

The financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the nearest thousand unless otherwise stated.




TFRSs Topic TAS 21 (revised 2012) The Effects of Changes in Foreign Exchange Rates TAS 24 (revised 2012) Related Party Disclosures TAS 28 (revised 2012) Investments in Associates TAS 34 (revised 2012) Interim Financial Reporting TAS 36 (revised 2012) Impairment of Assets TAS 38 (revised 2012) Intangible Assets TFRS 3 (revised 2012) Business Combinations TFRS 5 (revised 2012) Non-current Assets held for Sale and Discontinued

Operations TFRIC 10 Interim Financial Reporting and Impairment The initial application of these new and revised TFRSs has no material effect on the Company’s accounting policies, calculation method and financial performance or position. In addition to the above new and revised TFRSs, the FAP has issued a number of new and revised TFRSs which are effective for annual financial periods beginning on or after 1 January 2015 and have not been adopted in the preparation of these financial statements. Those new and revised TFRSs are disclosed in note 32.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material item in the statements of financial position; the present value of the defined benefit obligation.

(c) Functional and presentation currency

The financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the nearest thousand unless otherwise stated.



For the year ended 31 December 2014 (d) Use of estimates and judgements

The preparation of financial statements in conformity with TFRSs requires management to make

judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying

accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes:

Note 15, 23 Current and deferred taxation Note 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 Measurement of the recoverable amounts of each

asset and cash-generating units containing goodwill Note 18 Discount rate, salary increase rate, employee turnover

rate and mortality rate Note 28 Contingent liability

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Foreign currencies

Foreign currency transactions Transactions in foreign currencies are translated to functional currency at the foreign exchange rates ruling at the dates of the transactions.




Monetary assets and liabilities denominated in foreign currencies at the end of reporting period are translated to functional currency at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in foreign currencies are translated to functional currency using the foreign exchange rates ruling at the dates of the transactions.

(b) Cash and cash equivalents Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 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 receivables Trade and other receivables 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 The Company values its inventories at cost and net realisable value, whichever is lower. Cost is calculated as follows; Finished goods - at standard cost (which approximates actual production cost). Goods in process - at standard cost which include raw materials, labour and

manufacturing overhead costs. Raw materials, spare parts, supplies and others

- at average cost.




Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and goods in process, cost includes an appropriate share of production 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) Non-current assets held for sale

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. The assets are measured at the lower of their carrying value and fair value less cost to sell.

(f) Investments

Investments in subsidiaries and associates are accounted for using the cost method.

(g) Investment properties Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalised borrowing costs. Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each property. The estimated useful lives are as follows: Land improvement 20 years Building and structures 5, 20 years




Reclassification to property, plant and equipment When the use of an investment property changes such that it is reclassified as property, plant and equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.

(h) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and

accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different assumption patterns or useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within income or expense in profit or loss. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.




Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset less its residual value. Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows: Land improvements 20 Years Building and structures 5, 20 Years Machinery and equipment 5-20 Years Furniture, fixtures and office equipment 3-20 Years Transportation equipment 5 Years No depreciation is provided on freehold land or assets under construction. Depreciation methods, useful lives and residual values are reviewed at least at each financial year-end and adjusted if appropriate.

(i) Intangible assets Intangible assets that are acquired by the Company, which have finite useful lives, are stated at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.




Amortisation Amortisation is calculated based on the cost of the asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows: Software licenses 3-10 years

Amortisation methods, useful lives and residual values are reviewed at least at each financial year-end and adjusted if appropriate.

(j) Impairment

The carrying amounts of the Company’s assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. Calculation of recoverable amount The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. 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.




Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss.

Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. 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 accumulated depreciation or accumulated amortisation, if no impairment loss had been recognised.

(k) Trade and other payables Trade and other payables are stated at cost.

(l) Employee benefits Defined contribution plans

A defined contribution plan is a post-employment benefit under which an entity pays fixed contributions into a separate entity (Provident fund) and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs are deducted. The discount rate is the yield at the end of reporting period on government bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.




The calculation is performed by a qualified actuary using the projected unit credit method. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss. The Company recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss. Other long-term employee benefits The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the yield at the end of the reporting period on government bonds that have maturity dates approximating the terms of the Company’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains and losses are recognised in profit or loss in the period in which they arise. The calculation is performed by a qualified actuary using the projected unit credit method. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.



For the year ended 31 December 2014 (m) Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(n) Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts. Sale of goods Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised 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.

Rental income Rental income is recognised in profit or loss on a straight-line basis over the term of the lease agreements. Contingent rentals are recognised as income in the accounting period in which they are earned.

Interest and dividends income Interest income is recognised in profit or loss as it accrues. Dividends income is recognised in profit or loss on the date the Company’s right to receive payments is established.



For the year ended 31 December 2014 (o) Expenses

Operating leases

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of lease. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Finance costs Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

(p) Income tax Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to items recognised directly in equity or in other comprehensive income. Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.




Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realised.



For the year ended 31 December 2014 (q) Discontinued operations

A discontinued operation is a component of the Company’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of income is restated as if the operation had been discontinued from the start of the comparative period.

4 Related parties

Parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa. Relationships with related parties were as follows:

Name of entities

Country of incorporation / nationality

Nature of relationships

The Siam Cement Public Company Limited Thailand Ultimate parent company Siam Kraft Industry Co., Ltd. Thailand Subsidiary, direct ownership interest Phoenix Pulp & Paper Public Company

Limited Thailand Subsidiary, direct ownership interest

Thai Cane Paper Public Company Limited Thailand Subsidiary, direct ownership interest Thai Containers Group Co., Ltd. Thailand Subsidiary, direct ownership interest Thai British Securities Printing Public

Company Limited Thailand Subsidiary, direct ownership interest

InfoZafe Co., Ltd. Thailand Subsidiary, direct ownership interest United Pulp and Paper Co., Inc. Philippines Subsidiary, direct ownership interest SCGP Excellence Training Center Co., Ltd. Thailand Subsidiary, direct ownership interest SCG Paper Energy Co., Ltd. Thailand Subsidiary, direct ownership interest Phoenix Utilities Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai British Depost Co., Ltd. Thailand Subsidiary, indirect ownership interest




Name of entities

Country of

incorporation / nationality


Thai Containers Khonkaen Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Containers Rayong Co., Ltd. Thailand Subsidiary, indirect ownership interest The Siam Forestry Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Paper Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Union Paper Public Company Limited Thailand Subsidiary, indirect ownership interest Siam Cellulose Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Wanabhum Co., Ltd. Thailand Subsidiary, indirect ownership interest Siam Panawes Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panaboon Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panaram Co., Ltd. Thailand Subsidiary, indirect ownership interest Panas Nimit Co., Ltd. Thailand Subsidiary, indirect ownership interest Suanpa Rungsris Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panadorn Co., Ltd. Thailand Subsidiary, indirect ownership interest Thai Panason Co., Ltd. Thailand Subsidiary, indirect ownership interest Tawana Container Co., Ltd. Thailand Subsidiary, indirect ownership interest Dyna Packs Co., Ltd. Thailand Subsidiary, indirect ownership interest Orient Containers Co., Ltd. Thailand Subsidiary, indirect ownership interest TC Flexible Packaging Co., Ltd. Thailand Subsidiary, indirect ownership interest D-In Pack Co., Ltd. Thailand Subsidiary, indirect ownership interest Vina Kraft Paper Co., Ltd. Vietnam Subsidiary, indirect ownership interest New Asia Industries Co., Ltd. Vietnam Subsidiary, indirect ownership interest Alcamax Packaging (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest AP Packaging (Hanoi) Co., Ltd. Vietnam Subsidiary, indirect ownership interest Packamex (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest TCG Rengo (S) Limited Singapore Subsidiary, indirect ownership interest Paperlink Inter-Trade Corporation Philippines Subsidiary, indirect ownership interest PT Primacorr Mandiri Indonesia Subsidiary, indirect ownership interest PT Indoris Printingdo Indonesia Subsidiary, indirect ownership interest




Name of entities

Country of incorporation / nationality


Siam Toppan Packaging Co., Ltd. Thailand Associate, direct ownership interest P&S Holdings Corporation Philippines Associate, direct ownership interest Rengo Packaging Malaysia Sdn.Bhd. Malaysia Associate, indirect ownership interest Prepack Thailand Co., Ltd. Thailand Associate, indirect ownership interest Significant transactions for the years ended 31 December with related parties were as follows: 2014 2013 Pricing Policies (in thousand Baht) Parent Rental and service expense 50,273 69,438 Contract rate and market price Interest expense 642,431 675,765 Contract rate Subsidiaries Sale of goods 232,393 1,355,871 Market price Purchases 158,407 765,497 Market price Rental income 31,670 65,492 Contract rate Management fee income 92,209 82,753 Percentage of net sales Dividends income 891,449 1,547,564 Upon declaration Net gain from business

restructuring

316,719

-

Valuation price and net book value

Gain on sales of property, plant and equipment

-

93,768 Valuation price and net book

value

Gain on return of investment 836 61,794 Net book value Interest income 501,131 555,043 Contract rate Interest expense 94 1,874 Contract rate Associates Dividends income 5,219 2,822 Upon declaration




The Company presented interest expense amounted to Baht 643 million (2013: Baht 678 million) arose from loans to related parties net of interest income amounted to Baht 501 million (2013: Baht 555 million) arose from loans from related parties and included as a part of finance costs in profit or loss. Balances as at 31 December with related parties were as follows: Trade receivables

2014

2013 (in thousand Baht) Thai Paper Co., Ltd. - 112,383 Siam Kraft Industry Co., Ltd. - 59,588 Others - 20 Total - 171,991

Receivables from related parties

2014

2013

(in thousand Baht) Siam Kraft Industry Co., Ltd. 48,968 43,018 Vina Kraft Paper Co., Ltd. 22,336 21,531 Phoenix Pulp & Paper Public Company Limited 27,134 20,435 Thai Paper Co., Ltd. 24,420 18,916 Thai Containers Group Co., Ltd. 16,967 18,562 Siam Cellulose Co., Ltd. 6,359 5,363 SCGP Excellence Training Center Co., Ltd. 2,519 12,025 United Pulp and Paper Co., Inc. 1,158 19,949 Others 13,949 11,540 Total 163,810 171,339




Short-term loans to related parties

2014

2013 (in thousand Baht) Notes receivable (Interest rate 4.75% per annum in 2014 and 2013)

Thai Containers Group Co., Ltd. 3,412,214 2,744,974 Siam Kraft Industry Co., Ltd. 2,716,961 2,276,768 Phoenix Pulp & Paper Public Company Limited 2,650,221 3,305,760 Thai Paper Co., Ltd. - 2,149,034 Thai Union Paper Public Company Limited - 602,556 Others 15,383 940,997 Total 8,794,779 12,020,089

Movements during the years on short-term loans to related parties were as follows:

2014

2013

(in thousand Baht) At 1 January 12,020,089 12,633,377 Increase 35,694,747 39,964,914 Decrease (38,920,057) (40,578,202) At 31 December 8,794,779 12,020,089

Trade payables

2014

2013 (in thousand Baht) The Siam Forestry Co., Ltd. - 59,668 Others 7,179 14,061 Total 7,179 73,729




Payables to related parties

2014

2013 (in thousand Baht) The Siam Cement Public Company Limited 23,341 30,055 Siam Kraft Industry Co., Ltd. 6,864 19,470 Thai Paper Co., Ltd. 509 9,790 Thai Containers Group Co., Ltd. 167 4,513 Others 735 5,060 Total 31,616 68,888

Short-term loans from related parties

2014

2013 (in thousand Baht) Notes payable (Interest rate 0.50% to 4.75% per annum in

2014 and 0.75% to 4.75% per annum in 2013)

The Siam Cement Public Company Limited 12,247,617 13,842,972 SCGP Excellence Training Center Co., Ltd. 42,902 4,663 Others 978 - Total 12,291,497 13,847,635

Movements during the years on short-term loans from related parties were as follows:

2014 2013 (in thousand Baht) At 1 January 13,847,635 15,096,859Increase 22,779,522 18,102,676Decrease (24,335,660) (19,351,900)At 31 December 12,291,497 13,847,635



For the year ended 31 December 2014 Key management personnel compensation

2014 2013 (in thousand Baht) Short-term employee benefits 73,359 65,462 Post-employment benefits 6,669 6,658 Total 80,028 72,120

Management benefit expenses comprise of the remuneration paid to the management as staffs expenses in terms of salary, bonus, others and contribution to defined contribution plans.

5 Trade and other receivables

Note 2014 2013 (in thousand Baht) Trade receivables Related parties 4 - 171,991 Other receivables 6 Related parties 4 163,810 171,339 Other parties 25,899 36,681 189,709 208,020 Total 189,709 380,011

Aging analysis for trade receivables were as follow;

2014 2013 (in thousand Baht) Related parties Within credit terms - 171,991

The normal credit term granted by the Company is 30 days.



For the year ended 31 December 2014 6 Other receivables

2014 2013 (in thousand Baht) Allocated expenses 143,312 152,234 Accrued interest income 9,826 13,315 Others 36,571 42,471 Total 189,709 208,020

7 Inventories

2014 2013 (in thousand Baht) Finished goods - 2,348 Goods in process - 290 Raw materials - 27,776 Spare parts, supplies and others 4,797 56,166 Goods in transit - 1,732 Total 4,797 88,312 Less allowance for decline in value (3,510) (3,820) Net 1,287 84,492

Inventories recognised as an expense in ‘cost of sales’ - Cost (before revaluation) 225,179 1,284,450 - Reversal of net realisable value (310) (391)

Total 224,869 1,284,059

Changes in inventories of finished goods and goods in process 2,638 2,756 Raw materials and consumables used 151,016 867,154




8 Discontinued operation

In February 2014, the Company sold Banpong mill which comprising its entire pulp manufacturing segment to a related party. This segment was not a discontinued operation or classified as held for sale as at 31 December 2013. The comparative statement of income has been represented the discontinued operation separately from continuing operations.

For the period/year ended 31 December

Note

2014

2013

(in thousand Baht) Results of discontinued operation Revenue 251,572 1,358,710 Expenses 228,107 1,303,650 Profit from discontinued operation 23,465 55,060 Income tax 4,693 11,012 Profit from discontinued operation, net of income tax

18,772 44,048

Basic earnings per share (in Baht) 24 0.12 0.28

Cash flows from discontinued operation Net cash from operating activities 145,660 89,032 Net cash from investing activities 713,704 - Net cash from discontinued operation 859,364 89,032




For the period/year ended 31 December

Note

2014

2013

31 December 2014 (in thousand Baht) Effect of disposal on the financial position of the Company Property, plant and equipment (410,349) Inventories (83,204) Trade and other receivables (174,222) Trade and other payables 126,200 Net assets and liabilities (541,575)

Net cash inflow - Consideration received, satisfied in cash 713,704

The Company has gain on sales of property, plant and equipment of Banpong mill amounted to Baht 304 million.

9 Non-current assets held for sale

As at 31 December 2013, the investment in subsidiary amounted to Baht 147 million presented as non-current assets held for sale because the Company sold this investment in January 2014.


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11 Investments in subsidiaries

Movements for the years ended 31 December on investments were as follows:

2014 2013 (in thousand Baht) At 1 January 23,347,339 23,213,650 Acquisitions and additional investments 9,411,756 461,119 Disposal (6,740,751) - Return of investment - (180,000) Transfer to non-current assets held for sale - (147,430) At 31 December 26,018,344 23,347,339

In the fourth quarter of 2013, the Company has signed an agreement with Nippon Paper Industries Company Limited (NPI), company incorporated in Japan, to form a strategic joint venture of Fibrous Chain. This joint venture will involve NPI’s equity injection for a 30% stake in SCG Paper Group’s Fibrous Chain by equity injection of Baht 5,035 million. In the second quarter of 2014, NPI paid the first investment amounted to Baht 3,328 million or 22.13% and will pay the remaining amount within the second quarter of 2016 to stake of 30%.

The Company made a tender offer to purchase shares of Thai Cane Paper Public Company Limited from the minority shareholders at the offer price of Baht 21 per share, the tender offer period was 45 business days from 29 November 2013 to 6 February 2014. There are 23,975,031 shares were sold by the shareholders. The Company had purchased more shares from the shareholders in Stock Exchange of Thailand at Baht 20.9 per share totally 5,000 shares during 24 to 26 February 2014. As the result, the Company’s ownership increases from 86% to 93%. As at 14 January 2014, the Company sold 1.75% of shares in Phoenix Pulp & Paper Public Company Limited to Nippon Trading Co., Ltd. with totaling amount Baht 172 million. The Company presented this investment as non-current asset held for sale as at 31 December 2013. At the extraordinary meeting of the shareholders of the Company on 11 February 2014, the shareholders approved to sell the investments in three subsidiaries which comprising of Thai Union Paper Public Company Limited, Thai Paper Co., Ltd. and The Siam Forestry Co., Ltd. at book value as at 31 December 2013 amounted to Baht 2,341 million to Siam Cellulose Co., Ltd., a subsidiary of the Company. This transaction was the part of restructuring of Fibrous Chain business.




At the board of director’s meeting of the Company on 11 December 2013, the board agreed to increase the authorised share capital in Siam Cellulose Co., Ltd. amounted to Baht 3,770 million from Baht 300 million to Baht 4,070 million by issuing a new ordinary share totally 37,700,000 shares at Baht 100 per share. At the extraordinary meeting of the shareholders of Siam Cellulose Co., Ltd. on 11 February 2014, the shareholders approved such share capital increase. At the annual general meeting of the shareholders of the Company on 24 March 2014, the shareholders approved to sell the entire investment in Siam Cellulose Co., Ltd. totally 40,699,998 shares at Baht 102.72 per share, amounted to Baht 4,180 million to Phoenix Pulp & Paper Public Company Limited. This transaction was the part of restructuring of Fibrous Chain business. At the board of directors’ meeting of the Company on 30 April 2014, the board approved to subscribe the share capital increase of Phoenix Pulp & Paper Public Company Limited totally not exceeding 50,640,000 shares at Baht 95 per share, amounted not exceed to Baht 4,811 million in May 2014. In addition, the board approved to subscribe in Phoenix Pulp & Paper Public Company Limited totally not exceeding 1,756,857 shares at Baht 68.15 per share which separated the payment for 2 times. The first payment was not exceed to 1,161,165 shares, amounted not exceed to Baht 79 million within June 2014 and the second payment will not exceed to 595,962 shares, amounted not exceed to Baht 41 million within June 2016.


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12 Investment properties

Land Land improvements Buildings Total

(in thousand Baht) Cost At 1 January 2013 and 31 December 2013 178,997 27,497 36,993 243,487 Transfer from (to) property, plant and equipment 925 (1,345) - (420) At 31 December 2014 179,922 26,152 36,993 243,067

Accumulated depreciation At 1 January 2013 - 27,492 4,206 31,698 Depreciation charge for the year - - 1,880 1,880 At 31 December 2013 - 27,492 6,086 33,578 Depreciation charge for the year - - 1,880 1,880 Transfer to property, plant and equipment - (1,345) - (1,345) At 31 December 2013 - 26,147 7,966 34,113 Carrying amount

At 31 December 2013 178,997 5 30,907 209,909 At 31 December 2014 179,922 5 29,027 208,954

Investment properties comprise a number of commercial properties that are leased to related parties.


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1




In 2014, the Company sold its pulp production business as disclosed in note 8. The gross carrying amount of fully depreciated property, plant and equipment was still in use amounted to Baht 238 million as at 31 December 2014 (2013: Baht 1,616 million).

14 Intangible assets

Software licenses (in thousand Baht) Cost At 1 January 2013 51,425 Additions 8,759 Disposals / written-off (189) At 31 December 2013 59,995 Additions 3,541 Disposals / written-off (2,171) At 31 December 2014 61,365 Accumulated amortisation At 1 January 2013 34,844 Amortisation charge for the year 5,864 Disposals / written-off (184) At 31 December 2013 40,524 Amortisation charge for the year 6,523 Disposals / written-off (2,099) At 31 December 2014 44,948 Carrying amount At 31 December 2013 19,471 At 31 December 2014 16,417




15 Deferred tax assets

Movements in deferred tax assets during the year were as follows:

Credited/charged to At 1 profit Other At 31

January or loss comprehensive December 2013 Income 2013 (in thousand Baht) Inventories 348 416 - 764 Employee benefit liabilities 16,197 7 (355) 15,849 Others 3,397 - - 3,397 Total 19,942 423 (355) 20,010

Credited/charged to At 1 profit other At 31

January or loss comprehensive December 2014 income 2014 (in thousand Baht) Inventories 764 (62) - 702 Property, plant and equipment - 1,153 - 1,153 Employee benefit liabilities 15,849 (1,929) 30 13,950 Others 3,397 - - 3,397 Total 20,010 (838) 30 19,202




16 Trade and other payables

Note 2014 2013 (in thousand Baht) Trade payables Related parties 4 7,179 73,729 Other parties 12,954 57,180 20,133 130,909

Other payables 17 Related parties 4 31,616 68,888 Other parties 19,904 9,350 51,520 78,238 Total 71,653 209,147

17 Other payables

2014 2013 (in thousand Baht) Accrued expenses 6,152 5,290 Others 45,368 72,948 Total 51,520 78,238




18 Employee benefit liabilities

The Company operates post employment benefit based on the requirement of the Thai Labour Protection Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on pensionable remuneration and length of service.

Employee benefit liabilities in statement of financial position as at 31 December

Movement in the present value of the defined benefit obligations 2014 2013 (in thousand Baht) For the year ended 31 December Defined benefit obligations at 1 January 73,631 73,187 Benefits paid (1,956) (4,820) Current service costs and interest 6,194 7,115 Actuarial gains recognised in profit or loss (132) (78) Actuarial loss (gain) recognised in other comprehensive income 150 (1,773) Reversal of employee benefit expense of transferred employees (13,348) - Defined benefit obligations at 31 December 64,539 73,631

2014 2013

(in thousand Baht) Post-employment benefits - legal severance payments plan 60,945 68,305 Other long-term employee benefits 3,594 5,326 Other employee benefits 354 - Total 64,893 73,631




Recognised in profit or loss 2014 2013 (in thousand Baht) For the year ended 31 December Current service costs 3,752 4,336 Interest on obligation 2,442 2,779 Actuarial gains (132) (78) Reversal of employee benefit expense of transferred employees (13,348) - Total (7,286) 7,037

The expense is recognised in the following line items in the profit or loss:

2014 2013 (in thousand Baht) For the year ended 31 December Administrative expenses 5,954 6,450 Profit from discontinued operation, net of income tax (13,240) 587 Total (7,286) 7,037

Recognised in other comprehensive income

2014 2013 (in thousand Baht)

For the year ended 31 December Actuarial loss (gain) 150 (1,773)




Principal actuarial assumptions at the reporting date 2014 2013 (%) For the year ended 31 December Discount rate 3.57, 3.79 3.57, 3.79 Salary increase rate 3.00 - 8.70 3.00 - 8.70 Employee turnover rate 3.00 - 16.00* 3.00 - 16.00* Mortality rate 25.00 of TMO2008** 25.00 of TMO2008** * Upon the length of service ** Reference from TMO2008: Thai Mortality Ordinary Table 2008

19 Share capital Par 2014 2013 Value Number Number (in Baht) of shares Value of shares Value (thousand shares / thousand Baht) Authorised At 1 January - ordinary share 10 156,300 1,563,000 156,300 1,563,000 At 31 December

- ordinary share 10 156,300 1,563,000 156,300

1,563,000

Issued and paid-up At 1 January - ordinary share 10 156,300 1,563,000 156,300 1,563,000 At 31 December

- ordinary share 10

156,300 1,563,000 156,300 1,563,000




20 Reserves

Share premium Section 51 of the Public Companies Act B.E. 2535 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”). Share premium is not available for dividend distribution. Legal reserve Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), 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.

21 Administrative expenses

2014 2013 (in thousand Baht) Salary, welfare and personnel expenses 20,955 23,969 Rent and depreciation 2,605 3,422 Professional fees 1,097 2,135 Others 4,303 4,674 Total 28,960 34,200




22 Employee benefit expenses

2014 2013 (in thousand Baht) Salaries and wages 465,233 451,761 Defined benefit plans and other long-term employee benefits 6,062 7,037 Defined contribution plans 32,057 29,306 Others 57,435 52,770 Total 560,787 540,874

The Company has a provident fund plan to provide retirement benefits to the employees. The benefits are payable to the employees upon resignation at 5% to 10% of employees’ salaries depending on the length of employment. In addition to the above provident fund, the Company established a contributory funded provident fund covering substantially all employees in accordance with the Provident Fund Act B.E. 2530. Membership is voluntary upon attaining permanent status. Under the regulations of the fund, members are required to make monthly contributions to the fund at 2% to 13% of the members’ basic salaries and the Company is required to make monthly contributions to the fund at 5% to 13% of the members’ basic salaries depending on the length of employment.

23 Income tax expense

Income tax recognised in profit or loss

2014 2013 (in thousand Baht) Current tax expense Income tax for current period 57,232 38,442 Over provided in prior years (2,111) (83) 55,121 38,359 Deferred tax expense Movements in temporary differences 671 (423) 671 (423) Total 55,792 37,936




Note 2014 2013 (in thousand Baht) Attributable to: Income tax expense from continuing operations 51,099 26,924 Income tax expense from discontinued operation 8 4,693 11,012 Total income tax expense 55,792 37,936

Income tax expense recognised in other comprehensive income 2014 2013 (in thousand Baht) Actuarial gain (loss) (30) 355

Reconciliation of effective tax rate

2014 2013

Rate (%)

(in thousand Baht)

Rate (%)

(in thousand Baht)

Profit before income tax expense 20 1,191,675 20 1,759,037 Income tax using the Thai corporation tax rate 238,335 351,807 Tax effected from; Income not subject to tax (180,282) (310,136) Additional expenses deductible for tax purposes (4,994) (4,911) Expenses not deductible for tax purposes 4,173 1,682 Current tax 57,232 38,442 Over provided in prior years (2,111) (83) Movement in temporary differences 671 (423) Income tax expense 4.68 55,792 2.16 37,936




Income tax reduction Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively. Royal Decree No. 577 B.E. 2557 dated 10 November 2014 extends the reduction to 20% for the accounting period 2015 which begins on or after 1 January 2015. The Company has applied the reduced tax rate of 20% in measuring deferred tax assets and liabilities as at 31 December 2014 and 2013 in accordance with the clarification issued by the FAP in 2012.

24 Basic earnings per share

The calculations of basic earnings per share for the years ended 31 December were based on the profit for the years attributable to ordinary shareholders of the Company and the number of ordinary shares outstanding during the years as follow: 2014 2013 Continuing Discontinued Continuing Discontinued Operations Operation Total Operations Operation Total (Note 8) (Note 8) (in thousand Baht / thousand shares) Profit for the year 1,117,111 18,772 1,135,883 1,677,053 44,048 1,721,101

Number of ordinary shares outstanding

156,300

156,300 156,300

156,300

156,300

156,300

Basic earning per

share (in Baht)

7.15

0.12

7.27

10.73

0.28

11.01




25 Dividends

At the annual general meeting of the shareholders of the Company held on 19 March 2013, the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht 782 million. The dividend was paid to shareholders during 2013. At the annual general meeting of the shareholders of the Company held on 24 March 2014, the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht 782 million. The dividend was paid to shareholders during 2014.

26 Financial instruments (a) Liquidity risk

The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.

(b) Foreign exchange risk

The Company was a policy to enter into forward exchange contracts to manage foreign exchange risk related to liabilities denominated in foreign currencies.

(c) Credit risk

Credit risk arises from the possibility that customers may not be able to settle obligations to the Company as per contracts which may cause financial loss. The Company have a policy to protect this risk by assessing the credit of customers, defining the credit limit, asking for bank guarantees and/or personnel guarantees, credit terms, controlling credit utilisation and reviewing collections. Fair value of receivables which are presented in statement of financial position is the balances net of allowance for doubtful accounts.




(d) Interest rate risk Interest rate risk arises from the fluctuation of market interest rates, which may effect current and future operations of the Company. Management believes that the interest rate risk is minimal, hence, the Company do not have any hedging agreement to protect such risk.

(e) Fair value

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. The Company uses the following methods and assumptions in estimating the fair value of financial instruments: Cash and cash equivalents, receivables, payables, short-term loans to related parties, bank overdrafts and short-term loans from related parties - the carrying values approximate to their fair values because of the short period to maturity of these financial instruments.

27 Lease agreements

(a) The Company entered into lease agreements with related parties covering the land where its

factory and building are located. The term of the lease is up to year 2015 and 2019 with the rental fee of Baht 4.3 million per year.

(b) The Company entered into lease agreements for computer equipment with local companies.

The terms of the leases are up to year 2018 with the rental fees of Baht 3.1 million per year. (c) The Company entered into lease agreements for cars with local companies. The terms of the

leases are up to year 2018 with the rental fees of Baht 14.0 million per year. 28 Contingent liability

As at 31 December 2013, the Company had contingent liability for guarantee of subsidiary’s finance lease of peso 5.0 million.




29 Capital management

The management of the Company has the capital management policy for which to maintain a strong capital base by emphasis in planning and determining the operating strategies resulting in good business’s performance and sustain good cash flows management. In addition, the Company considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustain future operations of the business and to maintain shareholders, investors, creditors and others interest’s confidence.

30 Others

As at 29 July 2012, the control room of a subsidiary was fired and temporarily ceased its production. However, that subsidiary returned to normal operation in 2013. The financial statements as at 31 December 2012 of such subsidiary included fire damage adjustments amounted to Baht 30 million. All assets in control room were covered by insurance coverage. During 2013, the subsidiary received partial compensation amounted to Baht 68 million and recognised expenses amounted to Baht 7 million. Furthermore, the Company received a final insurance compensation of Baht 117 million from the insurance company in 2014 and wrote-off the damaged fixed assets at the carrying value of Baht 3 million.

31 Events after the reporting period

At the Board of Directors’ Meeting of the Company held on 25 February 2015, the directors approved to submit for approval at the Annual General Meeting of the Shareholders, the payment of a dividend for 2014 at the rate of Baht 5 per share, amounting to Baht 782 million and is scheduled for payment on 22 April 2015. The dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 23 March 2015.




32 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective A number of new and revised TFRSs have been issued but are not yet effective and have not been applied in preparing these financial statements. Those new and revised TFRSs which become effective for annual financial periods beginning on or after 1 January in the year indicated are set out below. The Company does not plan to adopt these TFRS early.

TFRSs Topic Year

effective

TAS 1 (revised 2014) Presentation of Financial Statements 2015

TAS 2 (revised 2014) Inventories 2015

TAS 7 (revised 2014) Statement of Cash Flows 2015

TAS 8 (revised 2014) Accounting Policies, Changes in Accounting

Estimates and Errors

2015

TAS 10 (revised 2014) Events after the Reporting Period 2015

TAS 11 (revised 2014) Construction Contracts 2015

TAS 12 (revised 2014) Income Taxes 2015

TAS 16 (revised 2014) Property, Plant and Equipment 2015

TAS 17 (revised 2014) Leases 2015

TAS 18 (revised 2014) Revenue 2015

TAS 19 (revised 2014) Employee Benefits 2015

TAS 20 (revised 2014) Accounting for Government Grants and Disclosure of

Government Assistance

2015




TFRSs Topic Year

effective

TAS 21 (revised 2014) The Effects of Changes in Foreign Exchange Rates 2015

TAS 23 (revised 2014) Borrowing Costs 2015

TAS 24 (revised 2014) Related Party Disclosures 2015

TAS 26 (revised 2014) Accounting and Reporting by Retirement Benefit Plans 2015

TAS 27 (revised 2014) Separate Financial Statements 2015

TAS 28 (revised 2014) Investments in Associates and Joint Ventures 2015

TAS 29 (revised 2014) Financial Reporting in Hyperinflationary Economies 2015

TAS 33 (revised 2014) Earnings per Share 2015

TAS 34 (revised 2014) Interim Financial Reporting 2015

TAS 36 (revised 2014) Impairment of Assets 2015

TAS 37 (revised 2014) Provisions, Contingent Liabilities and Contingent Assets 2015

TAS 38 (revised 2014) Intangible Assets 2015

TAS 40 (revised 2014) Investment Property 2015

TFRS 2 (revised 2014) Share-based Payment 2015

TFRS 3 (revised 2014) Business Combinations 2015




TFRSs Topic Year

effective

TFRS 4 (revised 2014)

Insurance Contracts

2016

TFRS 5 (revised 2014) Non-current Assets Held for Sale and Discontinued

Operations

2015

TFRS 6 (revised 2014) Exploration for and Evaluation of Mineral Resources 2015

TFRS 8 (revised 2014) Operating Segments 2015

TFRS 10 Consolidated Financial Statements 2015

TFRS 11 Joint Arrangements 2015

TFRS 12 Disclosure of Interests in Other Entities 2015

TFRS 13 Fair Value Measurement 2015

TSIC 10 (revised 2014) Government Assistance - No Specific Relation to

Operating Activities

2015

TSIC 15 (revised 2014) Operating Leases – Incentives 2015

TSIC 25 (revised 2014) Income Taxes - Changes in the Tax Status of an Entity

or its Shareholders

2015

TSIC 27 (revised 2014) Evaluating the Substance of Transactions Involving

the Legal Form of a Lease

2015

TSIC 29 (revised 2014) Service Concession Arrangements: Disclosures 2015




TFRSs Topic Year

effective

TSIC 31 (revised 2014)

Revenue - Barter Transactions Involving Advertising

Services

2015

TSIC 32 (revised 2014) Intangible Assets - Web Site Costs 2015

TFRIC 1 (revised 2014) Changes in Existing Decommissioning, Restoration

and Similar Liabilities

2015

TFRIC 4 (revised 2014) Determining whether an Arrangement contains a Lease 2015

TFRIC 5 (revised 2014) Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds

2015

TFRIC 7 (revised 2014) Applying the Restatement Approach under TAS 29

Financial Reporting in Hyperinflationary Economies

2015

TFRIC 10 (revised 2014) Interim Financial Reporting and Impairment 2015

TFRIC 12 (revised 2014) Service Concession Arrangements 2015

TFRIC 13 (revised 2014) Customer Loyalty Programmes 2015

TFRIC 14 TAS 19 - The Limit on a Defined Benefit Asset, Minimum

Funding Requirements and their Interaction

2015

TFRIC 15 (revised 2014) Agreements for the Construction of Real Estate 2015




TFRSs Topic Year

effective

TFRIC 17 (revised 2014)

Distributions of Non-cash Assets to Owners

2015

TFRIC 18 (revised 2014) Transfers of Assets from Customers 2015

TFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 2015

The Company has made a preliminary assessment of the potential impact on the financial statements of these new and revised TFRSs and expects that there will be no material impact on the financial statements in the period of initial application.


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3. Remuneration, shares, debentures, or other benefits which directors received from the company

As the Board of Directors Meeting on August 20, 2003 resolved to cancel all directors’ remuneration, the company doesn’t pay any remuneration to directors accordingly, effective from August 2003 onwards. Moreover, all directors don’t receive any other benefit given for being the company’s directors such as salary, bonus, attendance fee, share, debenture etc.

Directors


Affiliated Companies

Ordinary Shares (shares)

Ordinary Shares (shares)

Debentures (units)

Held personally

Held by spouse

and minor children

Increase (decrease)

during financial

year

Held personally

Increase (decrease)

during financial

year

Held personally

Increase (decrease)

during financial

year

1. Mr.Kan Trakulhoon - - - - - - -

2. Mr.Chaovalit Ekabut - - - 20,000* 20,000* - -

3. Mr.Aree

Chavalitcheewingul

- - - - - - -

4. Mr.Somchai

Wangwattanapanich

- - - 8,300* (8,300)* - -

5. Mr.Nithi Patarachoke - - - 4,000* - - -

6. Mr.Roongrote

Rangsiyopash

- - - 30,000* - 35,000** 3,000**

Notes: 1. No. 1. holds a position of the Chairman of the Board of Directors. No. 5. has been a company’s director since February 1, 2014 replacing Mr. Kajohndet Sangsuban. No. 6. holds a position of the President of the Board of Directors. 2. SCG Paper Public Company Limited has issued 156,300,000 ordinary shares. 3. According to the Public Limited Companies Act, an “affiliated company” means a public limited company with a relationship to a private company or with any public limited company, or with any companies in the following manner: - Any company that has the authority to control over appointment and removal of directors who have full or majority management authority of another company. - Any company holds more than 50% of issued shares of another company. * Ordinary shares of The Siam Cement Public Company Limited ** Debentures of The Siam Cement Public Company Limited 4. Shareholding of directors may be changed if directors have transaction after a specified date.

Directors’ InformationSCG Paper Public Company Limited

1. Directors having interests directly or indirectly in any contract entered into by the company during financial year.

- None -

2. Shareholding of Directors in affiliated Companies (As at December 31, 2014)


First 10 major shareholders (As at December 31, 2014)

Shareholders No. of ordinary shares Percent of total shares

1. The Siam Cement Public Company Limited 153,893,905 98.4606

2. Office of the Privy Purse 826,200 0.5286

3. Mr.Taewan Tantichattanont 116,000 0.0742

4. Ms.Orapin Thidarat 110,400 0.0706

5. Randery Burahmakan Company Limited 93,600 0.0599

6. Mr.Man Nana 78,160 0.0500

7. Roman Catholic Mission of Bangkok 53,448 0.0342

8. Mr.U-thane Tantichattanont 50,000 0.0320

9. Mr.Somsak Nana 46,572 0.0298

10. Mr.Pipatpong Israsena Na Ayuthaya 26,444 0.0169

Other Shareholders 1,005,271 0.6432

Total 156,300,000 100.0000


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