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Message from the Board of Directors

In 2015, the global and the Thai economy staged a recovery although the growth was slower than previously forecast amid an extended period of low oil and energy prices. However, the economy in the ASEAN region in the second half of the year gradually regained momentum anchored by infrastructure development and continuing economic support from local governments, indicating a positive signal for the launch of the ASEAN Economic Community (AEC).

SCG reports revenue from sales of 439,614 Million Baht, a decrease of 10% from the preceding year due largely to lower chemical product prices on the back of the great plunge in oil prices. Nevertheless, with SCG's commitment to research and development to address customer needs and strategic business expansion in ASEAN, profit for the year amounted to 45,400 Million Baht, an increase of 35% year-on-year. Having taken into account the Group's performance, its overall financial status, and global economic conditions, the Board of Directors has resolved to propose to the 2016 Annual General Meeting of Shareholder a dividend of 16.00 Baht per share for 2015, representing 42% of consolidated profit for the year.



  Business in ASEAN in Anticipation of AEC Expansion  
 
     

SCG ASEAN expansion and pursuit of becoming ASEAN sustainable business leader continues. In 2015, major investment project startups include the first cement plant in Indonesia and capacity expansion at the cement plant in Cambodia. The cement plants in Myanmar and Lao People's Democratic Republic are scheduled to commence production in 2016 and 2017, respectively. All the cement plants will employ the latest advanced production technology that is friendly to the environment, raising operating standards. Moreover, to strengthen its position as ASEAN's building material leader, SCG changed its product brand from Tra Chang to SCG to enable consumers quick brand recognition, linking the products to the corporate brand. In addition, SCG Paper has rebranded as SCG Packaging to focus on the constantly-growing packaging business. To match wide-ranging application needs, SCG Packaging endeavors to become a leading total packaging solutions provider in ASEAN. Moreover, SCG Packaging also acquired an 80% stake in Tin Thanh Packing Joint Stock Company (BATICO), a major flexible packaging manufacturer in Vietnam.

For the operating results of SCG in the ASEAN region exclusive of Thailand in 2015, revenue from sales amounted to 100,150 Million Baht, accounting for 23% of total revenue, similar to the last year. At present, SCG's assets in ASEAN amounted to 108,183 Million Baht, or 21% of the Group's total assets. The number of employees excluding Thailand stands at 16,482 or 31% of the total workforce, ready to accommodate SCG's future business operations and expansion.

 
     

  Increasing R&D Investment  
 
     

With a firm belief that innovative products and services can help uplift people's quality of life and contribute to a better environmental and sustainable society, SCG has promoted and invested heavily in research and development (R&D). In 2015, the Company earmarked over 3,510 Million Baht budget for R&D, an increase of 30% y-o-y, representing 0.8% of total revenue from sales. SCG's R&D team consists of 1,646 members. Sales of HVA (high value-added products and services) have grown steadily to 161,851 Million Baht, accounting for 37% of total revenue from sales whereas sales of eco value products amounted to 114,084 Million Baht, representing 26% of total revenue from sales.

In 2015, SCG saw an increase of HVA in every business unit. Examples include Innovative medical materials provide damage resistance during shipment for lower costs and helps reduce imports of medical devices. The COTTO GRANDE Collection of extra-large porcelain slabs which are highly resistant to heat, impact, and alkalinity and easy to clean, expanding application and design possibilities. A Precast Concrete System uses cutting-edge technology in the design, manufacture, and fabrication process. Aside from the good insulation properties, the precast concrete provides excellent noise attenuation and rapid construction. FEST, the innovative food safety packaging designed to be heat-resistant, non-melting, and made from non-harmful substances. The Anti-microbial Dental-plaster which prevents germs from spreading is ideal for dental applications. Moreover, to further develop HVA, SCG acquired all stakes in Norner Holding AS, a leading innovation and technology firm in Norway, specializing in the petrochemical industry, to enhance the Company's competitiveness in the global marketplace.

In 2015, to globally showcase the Company's competitiveness and demonstrate in ASEAN, the dedication to developing innovation, SCG organized SCG Innovative Exposition under the theme "Innovation that Cares". This promotes that innovations can contribute to a better quality of life and well-being, enabling people to enjoy a safer and more comfortable living. As Thailand is becoming an aging society, SCG has developed SCG Eldercare Solution to address such an emerging trend.

 
     

  The World's No.1 in Sustainable Development for 5 Consecutive Years  
 
     

SCG has conducted business in tune with the sustainable development approach under good corporate principles. In 2015, SCG is the first cement manufacturer in Thailand to have achieved in all its cement plants across the country, the Green Industry Level 5 certificate, the highest level, from the Ministry of Industry. SCG also enjoys pride of place as the first in the chemical industry to have all its plants achieve eco-factory certification from The Federation of Thai Industries. This was support of the community enterprises at Map Ta Phut, Rayong, empowering them to create income in a sustainable way and to become an Eco Community, which in turn will help drive Rayong towards becoming an Eco Industrial Town.

The commitment to operate business with the sustainable development has resulted in SCG been appointed the Industry Leader in the Construction Materials category on the Dow Jones Sustainability Indices (DJSI) for five consecutive years. DJSI ranks the world's top-notch companies that adopt sustainable best practices based on economic, social and environmental criteria to ensure investor confidence in sustainable business operations.

 
     

As Mr. Kan Trakulhoon, President & CEO of SCG, retired on January 1, 2016, the Board of Directors appointed Mr. Roongrote Rangsiyopash as the new President & CEO, effective from January 1, 2016. Mr. Kan will continue as a member of the Board of directors.

Throughout the years, SCG has demonstrated its relentless commitment to becoming ASEAN sustainable business leader. The company is resolved to continue driving economic, social, and environment development in all the countries where it operates in the years to come. The Board of Directors wishes to express its sincere appreciation to all shareholders, debenture holders, joint-venture partners, suppliers, customers, staff, stakeholders, and domestic and international financial institutions for the continued support that has helped realize SCG's success. We promise that SCG will continue to conduct business with integrity, prudence, transparency, and adherence to good corporate governance and sustainable development principles, acting the best interests of all parties. We believe that by doing so, SCG will prosper, and so will Thailand, along with ASEAN in tandem with SCG Vision.

   
Chirayu Isarangkun Na Ayuthaya
Chairman
 
Roongrote Rangsiyopash
President & CEO