REVIEWED QUARTER-3 AND CONSOLIDATED F/S (F45-3)

FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES THIRD QUARTER ENDED SEPTEMBER30, 1999 AND 1998 Accountants' Review Report To the Shareholders of Sino-Thai Engineering and Construction Public Company Limited: We have made a review of the consolidated balance sheet of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries as at September 30, 1999, and the related consolidated statements of income, changes in shareholders' deficit, deficit and cash flows for the three-month period and nine-month period then ended and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for the same period, in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The financial statements of Sino-Thai Resources Development Public Company Limited and Sino-Thai Construction Services Company Limited which are included in the consolidated financial statements for the nine-month period ended September 30, 1999, of which the assets and revenue amounting to 13.10% and 6.82% of total assets and revenue, are reviewed by us, as our reports dated October 14, 1999 and October 19, 1999, respectively. Because of the significance of the uncertainty of the Company to continue as a going concern, we are not able to report whether there are any material modifications should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. As described in Note 1 to the financial statements for the period in 1999, the Company and its subsidiaries have incurred net loss on operation for three-month period and nine-month period ended September 30, 1999 in the amount of Baht 498.36 million and Baht 666.38 million, respectively. The consolidated financial statement and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited at September 30, 1999 have deficit in the amount of Baht 2,536.95 million and Baht 2,529.35 million, current liabilities exceeded current assets amount of Baht 3,905.71 million and Baht 3,657.37 million, total liabilities exceeded total assets in the amount Baht 1,260.02 million and Baht 1,404.12 million, respectively. The Company and subsidiary companies have not performed in accordance with loan agreements concerning loan and interest payment and financial ratio. Accordingly, the lender has right to call it back immediately. The Company and subsidiary companies are still in process of proposing a restructure plan and negotiating with payables and the operation of the Company has been affected and will continue to be affected for the foreseeable future by the economic condition. These factors raise substantial doubt about the Company and subsidiary companies' ability to continue as a going concern. The financial statements are prepared in accordance with generally aecepted accounting principles and do not include any adjustment relating to the recoverability of the recorded assets and the amounts and classification of liabilities that might be necessary should the Company and subsidiary companies be unable to continue in existence. Because of the uncertainty of the Company to continue as a going concern as described in the third and fourth paragraphs which enter materially to the consolidated financial statements and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited, we are not able to report whether there are any material modifications should be made to the financial statements for the period 1999 referred to above for them to be in conformity with generally accepted accounting principles. The financial statements of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for the period ended September 30, 1998, shown for comparative purposes, were reviewed by ourselves. In our report dated November 11, 1998, we express a qualified report on those financial statements except for the effects of adjustments on investments in associated companies and joint ventures by the equity method which based on the financial information obtained from the management and subject to the outcome of the uncertainty about the Company and subsidiary companies' ability to continue as a going concern. Presently, those uncertainties are still materially existence. The Company did not reclassified long-term loans to current liabilities and has default the loan contract due to the unability to maintain the financial ratio. Accordingly, the lender may has a right to call debts back immediately. . Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited Bangkok, November 4, 1999 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices to review such financial statements are those generally accepted and applied in Thailand. SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT SEPTEMBER 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets ASSETS 1999 1998 1999 1998 CURRENT ASSETS Cash in hand and at banks (Notes 4 and 6) 1,064,938 642,773 996,608 613,663 Short-term investments (Notes 4 and 7) 124,986 140,716 124,981 140,611 Notes receivable - financial institutes - 511 - - Accounts receivable - net (Notes 4 and 8) 988,334 1,278,304 959,599 1,203,645 Due from related parties - net (Notes 4 and 5) 79,090 57,386 82,772 61,560 Short-term loans to related parties - net (Note 5) 106,454 127,911 201,565 327,813 Retention receivables - net (Note 4) 129,387 244,806 126,100 240,798 Inventories - net (Note 4) 166,198 268,679 - - Other current assets (Note 4 ) Advances to contractors - net 21,798 48,636 21,798 48,636 Withholding tax 54,349 102,729 54,136 102,729 Others - net 55,561 80,491 48,415 46,465 Total Other Current Assets 131,708 231,856 124,349 197,830 Total Current Assets 2,791,095 2,992,942 2,615,974 2,785,920 INVESTMENTS AND LOANS (Notes 4 and 5) Joint ventures 11,423 - 11,423 - Related parties 285,108 329,458 345,182 451,613 Others 353,942 283,163 319,742 248,963 Total Investments and Loans 650,473 612,621 676,347 700,576 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 4 and 11) 1,318,414 1,825,303 1,030,802 1,459,264 OTHER ASSETS (Note 4) Excess of cost over book value of investment (Note 2) 64,787 75,427 - - Loans and advances to directors and employees - net 17,452 7,683 12,012 4,157 Condominiums - net 85,215 98,083 85,215 98,083 Advance payments on condominiums - 29,079 - 29,079 Withholding tax 416,094 283,759 411,881 283,759 Others - net 167,276 45,203 144,675 36,324 Total Other Assets 750,824 539,234 653,783 451,402 Total Assets 5,510,806 5,970,100 4,976,906 5,397,162 _________________________________ _________________________________ Director Director See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT SEPTEMBER 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets LIABILITIES AND SHAREHOLDERS' DEFICIT 1999 1998 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from financial institutes 1,018,189 915,786 858,130 827,312 Accounts payable 921,661 979,041 876,507 842,869 Due to related parties (Note 5) 11,564 4,512 3,075 5,821 Current portion of hire purchase payables 23,233 23,233 23,233 23,233 Long-term loans in default (Note 9) 3,643,382 147,000 3,496,382 - Short-term loans from directors 6,322 - - - Advance received on contracts 344,883 292,482 343,010 289,017 Other current liabilities Accrued interest expense 615,475 136,586 571,977 136,586 Deferred value added tax 55,178 58,497 51,712 58,497 Provision for contingent cost 12,480 83,201 12,480 83,201 Others 44,438 81,006 36,834 52,260 Total Other Current Liabilities 727,571 359,290 673,003 330,544 Total Current Liabilities 6,696,805 2,721,344 6,273,340 2,318,796 LONG-TERM LOANS (Note 9) - 3,355,265 - 3,355,265 OTHER LIABILITIES Loss on excess of cost of investments 46,436 80,075 79,606 80,075 Hire purchase payables 24,430 47,728 24,430 47,728 Others 3,152 3,022 3,650 3,022 Total Other Liabilities 74,018 130,825 107,686 130,825 Total Liabilities 6,770,823 6,207,434 6,381,026 5,804,886 MINORITY INTERESTS 68,255 76,944 - - See notes to financial statements (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets LIABILITIES AND SHAREHOLDERS' DEFICIT 1999 1998 1999 1998 SHAREHOLDERS' DEFICIT Share capital, Baht 10 par value Authorized shares capital Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 68,000,000 shares 680,000 680,000 680,000 680,000 Issued and fully paid Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 23,000,000 shares 230,000 230,000 230,000 230,000 Paid-in capital Premium on share capital 486,000 486,000 486,000 486,000 Surplus on assets revaluation (Note 11) 519,563 929,174 443,715 834,565 Appropriated retained earnings - legal reserve 56,163 56,163 48,565 48,565 Deficit (2,536,952) (1,840,515) (2,529,354) (1,832,917) Unrealized loss on non-current marketable securities (Note 4) (153,046) (245,100) (153,046) (243,937) Total Shareholders' Deficit (1,328,272) (314,278) (1,404,120) (407,724) Total Liabilities and Shareholders' Deficit 5,510,806 5,970,100 4,976,906 5,397,162 _________________________________ _________________________________ Director Director SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (Amounts in thousand Baht (UNAUDITED) Except Basic Earnings (Loss) per Share) Consolidated Statements of Income Company's Seperate Statements of Income 1999 1998 1999 1998 REVENUES (Notes 4, 5.6 and 13) Revenues from construction and sales 751,615 1,333,457 708,389 1,073,569 Other income Gain (loss) on exchange rate (389,460) 295,085 (368,226) 280,155 Others 31,391 40,066 23,348 43,021 Total Revenues 393,546 1,668,608 363,511 1,396,745 EXPENSES (Notes 4, 5.6 and 13) Costs of construction and cost of sales 643,511 1,207,931 598,133 1,012,523 Selling and administrative expenses 88,894 82,266 79,425 66,621 Equity in loss of subsidiaries and associated companies and joint ventures 22,042 112,031 57,417 8,932 (Gain) loss on current marketable securities (16,116) 16,169 (16,116) 16,169 Doubtful debts (12,671) 135,142 (11,196) 135,142 Directors' remuneration 284 138 210 120 Interest expense 165,561 99,945 153,999 90,691 Total Expenses 891,505 1,653,622 861,872 1,330,198 Income (loss) before minority interests and extraordinary items (497,959) 14,986 (498,361) 66,547 Minority interests in net (income) loss (402) 3,314 - - Income (loss) before extraordinary items (498,361) 18,300 (498,361) 66,547 Extraordinary items : Gain on debts restructuring (Note 10) - 56,753 - 8,506 Net income (loss) (498,361) 75,053 (498,361) 75,053 Basic earnings (loss) per share (Baht) (Note 4) Income (loss) before extraordinary items (21.67) 0.79 (21.67) 2.89 Extraordinary items - 2.47 - 0.37 Net income (loss) (21.67) 3.26 (21.67) 3.26 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht Except Basic Earnings (Loss) per Share) Consolidated Statements of Income Company's Seperate Statements of Income 1999 1998 1999 1998 REVENUES (Notes 4, 5.6 and 13) Revenues from construction and sales 2,635,384 3,877,650 2,476,975 3,527,974 Other income Gain (loss) on exchange rate (404,768) 777,977 (383,263) 727,104 Others 67,868 161,733 60,949 147,159 Total Revenues 2,298,484 4,817,360 2,154,661 4,402,237 EXPENSES (Notes 4, 5.6 and 13) Costs of construction and cost of sales 2,307,569 3,624,367 2,152,012 3,359,931 Selling and administrative expenses 230,780 238,825 199,234 201,679 Equity in (profit) loss of subsidiaries and associated companies and joint ventures 6,068 103,899 83,969 (27,458) Loss on marketable securities 61,734 22,775 61,734 22,775 Doubtful debts (22,573) 150,602 (31,612) 144,891 Directors' remuneration 577 458 480 360 Interest expense 385,767 312,005 355,227 284,152 Total Expenses 2,969,922 4,452,931 2,821,044 3,986,330 Income (loss) before minority interests and extraordinary items (671,438) 364,429 (666,383) 415,907 Minority interests in net loss 5,055 3,231 - - Income (loss) before extraordinary items (666,383) 367,660 (666,383) 415,907 Extraordinary items : Gain on debts restructuring (Note 10) - 56,753 - 8,506 Net income (loss) (666,383) 424,413 (666,383) 424,413 Basic earnings (loss) per share (Baht) (Note 4) Income (loss) before extraordinary items (28.97) 15.98 (28.97) 18.08 Extraordinary items - 2.47 - 0.37 Net income (loss) (28.97) 18.45 (28.97) 18.45 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht) Consolidated Statements Company's Separate Statements of Changes in Shareholders' deficit of Changes in Shareholders' deficit 1999 1998 1999 1998 Share capital Preference shares Beginning balance 70,000 70,000 70,000 70,000 Increase during period - - - - Decrease during period - - - - Ending balance 70,000 70,000 70,000 70,000 Ordinary shares Beginning balance 230,000 230,000 230,000 230,000 Increase during period - - - - Decrease during period - - - - Ending balance 230,000 230,000 230,000 230,000 Paid-in capital Premium on ordinary share Beginning balance 486,000 486,000 486,000 486,000 Increase during period - - - - Decrease during period - - - - Ending balance 486,000 486,000 486,000 486,000 Surplus on assets revaluation (Note 11) Beginning balance 910,413 929,174 834,565 834,565 Increase during period - - - - Decrease during period (390,850) - (390,850) - Ending balance 519,563 929,174 443,715 834,565 Appropriated retained earnings - legal reserve Beginning balance 56,163 56,163 48,565 48,565 Increase during period - - - - Decrease during period - - - - Ending balance 56,163 56,163 48,565 48,565 Deficit Beginning balance (2,038,591) (1,915,568) (2,030,993) (1,907,970) Increase during period - net income (loss) (498,361) 75,053 (498,361) 75,053 Decrease during period - - - - Ending balance (2,536,952) (1,840,515) (2,529,354) (1,832,917) Unrealized loss on non-current marketable securities (Note 4) Beginning balance (112,616) (147,648) (112,616) (146,485) Increase during period (40,430) (97,452) (40,430) (97,452) Decrease during period - - - - Ending balance (153,046) (245,100) (153,046) (243,937) Total Shareholders' Deficit (1,328,272) (314,278) (1,404,120) (407,724) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT (more)