CONSOLIDATED FINANCIAL STATEMENTS QUATER 1/2000

Auditor's Review Report To the Shareholders of Sino-Thai Engineering and Construction Public Company Limited: I have reviewed the consolidated balance sheet of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries as at March 31, 2000, and the related consolidated statements of income, changes in deficit in shareholders' equity, deficit and cash flows for each of the three -month periods ended March 31, 2000 and 1999, and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for the same periods. The Company's management are responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to issue a report on these financial statements based on my review. I conducted my review in accordance with standard on auditing applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquires of company personal and analytical procedures applied to financial data and thus provides less assurance than an audit in accordance with generally accepted auditing standards. I have not performed an audit and, accordingly, I do not express an audit opinion. As shown in the financial statements for the three-month periods ended, March 31, 2000 and 1999, the Company and subsidiaries incurred net loss on operations in the amount of Baht 321.55 million and Baht 202.17 million, respectively. As at March 31, 2000 and December 31, 1999, the Company's total current liabilities exceeded total current assets by Baht 3,436.74 million and Baht 3,264.23 million, respectively in the consolidated financial statements and Baht 3,434.31 million and Baht 3,252.96 million, respectively in the separate financial statements. It's total liabilities exceeded total assets by Baht 1,867.55 million and Baht 1,639.49 million, respectively in the consolidated financial statements and Baht 1,931.85 million and Baht 1,703.57 million, respectively in the separate financial statements. The Company and a subsidiary have failed to repay loans and interest and have not performed financial ratio condition with domestic commercial banks and foreign banks. The default entitles the banks to accelerate the maturity of all amount outstanding immediately due and payable. If accelerated, the Company and the above subsidiary would not be able to repay such debt. Later on the creditors and the Company submitted their petition for rehabilitation plan of the Company to the Central Bankruptcy Court and on January 17, 2000, the Court ruled that the Company must be rehabilitated by appointed planner. Therefore, the Company must follow the rehabilitation process as specified in the Bankruptcy Law. The subsidiary is operating along with the project to solve the status and operating in order to reach the plan. Also, the subsidiary has difficulties in operating as going concerns, which is significant matter. In addition, the operations of the Company and subsidiaries may continue to be influenced by the economic conditions in Thailand and the Asia Pacific Region in general. These factors raise substantial doubt about the Company and subsidiaries' ability to continue as a going concern. The financial statements are prepared in accordance with generally accepted 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 subsidiaries be unable to continue as going concern, as described in Notes 1.2, 1.4, and 2.4 to the finncial statements. According to generally accepted accounting principles, the Company and subsidiaries are required to estimate the recoverable amount of its land when circumstances or events indicate their value may be impaired. If the estimated recoverable amount is less than the carrying value of the assets, an impairment loss should be recognized in the statement of income. The Company revalued its land resulting in surplus on revaluation of Baht 1,019.57 million on the base of valuation of an independent appraiser. The Company and subsidiaries did not estimate the recoverable amount of its land in accordance with generally accepted accounting principles. Therefore, we were unable to review the carrying value of these assets for the three-month period ended March 31, 1999. As described in Note 2.5 to the financial statements, the Company has estimated the revaluation of land. Because of the pervasive effect on the consolidated and separate financial statements regarding the uncertainties of the Company and subsidiaries to continue as a going concern as described in the third paragraph and the recoverable amount of its land in 1999 as described in the fourth paragraph, therefore, I am unable to believe that the accompanying financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting principles. I have audited the consolidated financial statements of SinoThai Engineering and construction Public Company Limited and subsidiaries as at December 31, 1999 and the separate financial statements of the Company for the year then ended in accordance with generally accepted auditing standard and my report dated February 28, 2000 disclaimed an opinion on those statements. The accompanying balance sheet of the Company and subsidiaries and the separate balance sheet of the Company as at the same date, which have been presented for comparatives, are parts of the financial statements on which I have audited and reported. I have not conducted any audits on the financial information of the Company and its subsidiaries subsequent to the date of my report. I draw attention to Note 2.1 to the financial statements concerning the significant transactions of the Company and subsidiaries with related parties and Note 2.4 to the financial statements, regarding to debt restructuring contract with a domestic commercial bank. According to the above contract, the bank has agreed to release conditions on principal and interest payment as the specified rates. Differences between interest expense based on bank's right and debt restructuring contract, the subsidiary has agreed to repay by depend on the subsidiary's performance and the bank's approval. As an uncertainty regarding to ability on payment of the subsidiary that depends on its performance, the subsidiary has not recorded accrued interest expense of differences between interest expense based on bank's right and debt restructuring contract as from the fourth quarter of the year 1999 to March 31, 2000. A subsidiary has disputed in mining development contract and quarry for mill and has been sued for above compensation in the approximately amount of Baht 174.07 million and the Company has counterclaimed in the same case in the amount of Baht 142.89 million. The case is still in process on consideration of the arbitrator of judge. The dispute cannot presently be finalized and the subsidiary has not provided a provision for these contingent liabilities. Also, Note 1.6 to the financial statements, during 1999, the subsidiary changed its accounting policy with respect to the treatment of unamortized mining development cost previously recognized as other assets to be recognized as expenses. Therefore, the comparative financial statement for the three-month period ended March 31, 1999 of the subsidiary have been restated to conform to the changed accounting policy. For the three- month period ended March 31, 2000, equity in profit (loss) from three associated companies and two joint ventures in the amount of Baht 7.28 million, reflected 2.26% of net loss in the consolidated financial statements and equity in loss from three associated companies and three joint ventures in the amount of Baht 5.79 million, reflected 1.80 of net loss in the separate financial statements based on the financial information prepared by the management which had not been reviewed by the auditor. The comparative consolidated financial statements as at December 31, 1999 have been restated by including a joint venture, which the Company has the significant power to control. Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited Bangkok, May 11, 2000 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES "BALANCE SHEETS AS AT MARCH 31, 2000 AND DECEMBER 31, 1999" (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Unaudited) (Audited) (Unaudited) (Audited) ASSETS (Restated) CURRENT ASSETS Cash in hand and at banks (Notes 1.5 and 2.2) 984,662 1,196,784 978,415 1,171,219 Short-term investments (Note 1.5) 106,033 91,047 106,028 91,043 Accounts receivable - Related parties - net (Notes 1.5 and 2.1) 54,401 70,340 55,824 61,611 - Others - net ( Notes 1.5 and 2.3) 1,158,571 1,195,120 1,118,270 1,156,997 Total Accounts receivable - net 1,212,972 1,265,460 1,174,094 1,218,608 Short-term loans to related parties (Note 2.1) 11,671 27,017 11,671 29,559 Retention receivables - net (Note 1.5) 114,412 101,045 114,412 101,045 Inventories - net (Note 1.5) 31,368 56,268 - - Other current assets - net Advances to contractors 55,805 32,114 55,806 32,114 Withholding tax 209,062 203,505 208,056 199,018 Others 43,238 29,751 32,874 23,720 Total Other Current Assets 308,105 265,370 296,736 254,852 Total Current Assets 2,769,223 3,002,991 2,681,356 2,866,326 INVESTMENTS AND LOANS Investments (Note 2.1) Joint ventures 14,861 14,879 14,861 14,879 Related parties 245,385 245,543 312,745 312,758 Others 261,452 282,029 252,251 269,758 Total Investments 521,698 542,451 579,857 597,395 Loans - others (Note 2.1) 4,150 4,150 4,150 4,150 Total Investments and loans 525,848 546,601 584,007 601,545 PROPERTY, PLANT AND EQUIPMENT - NET (Note 1.5) 1,411,310 1,408,753 1,050,903 1,038,184 OTHER ASSETS - NET Loans and advances to directors and employees 21,408 12,375 21,385 12,031 Condominiums 67,323 69,470 67,323 69,470 Deposit 6,789 40,075 6,789 40,075 Others 17,166 14,594 14,912 12,159 Total Other Assets 112,686 136,514 110,409 133,735 Total Assets 4,819,067 5,094,859 4,426,675 4,639,790 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES "BALANCE SHEETS AS AT MARCH 31, 2000 AND DECEMBER 31, 1999" (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Unaudited) (Audited) (Unaudited) (Audited) LIABILITIES AND DEFICIT IN SHAREHOLDERS' EQUITY (Restated) CURRENT LIABILITIES Bank overdrafts and loans from financial institution 876,251 915,911 831,623 820,600 Accounts payable - Related parties (Note 2.1) 2,487 3,934 235 3,007 - Others 854,825 956,634 825,951 920,910 Total Accounts payable 857,312 960,568 826,186 923,917 Current portion of hire purchase creditors 23,929 23,079 23,929 23,079 Long-term loans in default (Note 2.4) 3,226,838 3,205,333 3,226,838 3,205,333 Short-term loans from directors 2,422 2,322 - - Advance receipt on contracts 325,017 417,570 323,060 417,356 Other current liabilities Accrued expenses 757,230 640,595 756,571 638,407 Deferred value added tax 57,817 51,379 54,870 51,379 Provision for contingent cost 44,935 9,174 44,935 9,174 Others 34,207 41,286 27,656 30,041 Total Other Current Liabilities 894,189 42,434 884,032 729,001 Total Current Liabilities 6,205,958 6,267,217 6,115,668 6,119,286 LONG-TERM LOANS (Note 2.4) 185,986 185,986 - - OTHER LIABILITIES Provision for loss on collection from subsidiary 209,987 177,188 - - Loss on investment in subsidiaries and joint ventures exceeding carrying amount (Note 2.1) 20,407 35,873 226,397 203,810 Hire purchase creditors 14,609 18,814 14,609 18,814 Others 49,667 49,270 1,850 1,454 Total Other Liabilities 294,670 281,145 242,856 224,078 Total Liabilities 6,686,614 6,734,348 6,358,524 6,343,364 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES "BALANCE SHEETS AS AT MARCH 31, 2000 AND DECEMBER 31, 1999 (Amounts in thousand Baht) Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Unaudited) (Audited) (Unaudited) (Audited) (Restated) DEFICIT IN SHAREHOLDERS' EQUITY 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 Revaluation surplus ( Notes 1.5 and 2.5 ) 570,834 571,100 570,834 571,100 Appropriated retained earnings - legal reserve 56,164 56,164 48,566 48,566 Deficit (3,283,596) (2,962,042) (3,275,998) (2,954,444) Unrealized loss on non-current marketable securities (Note 1.5) (61,251) (154,875) (61,251) (154,796) (1,931,849) (1,703,653) (1,931,849) (1,703,574) Minority interests 64,302 64,164 - - Total Deficit in Shareholders' Equity (1,867,547) (1,639,489) (1,931,849) (1,703,574) Total Liabilities net of Deficit in Shareholders' Equity 4,819,067 5,094,859 4,426,675 4,639,790 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 ( UNAUDITED ) (Amounts in thousand Baht Except Basic Loss per Share) Consolidated Company's Seperate Statements of Income Statements of Income 2000 1999 2000 1999 ( Restated ) ( Restated ) REVENUES (Notes 1.5 and 2.1) Revenues from construction and sales 695,018 952,369 661,268 873,152 Equity in profit (loss) of subsidiaries and associated companies and joint ventures 7,279 2,702 (30,284) (35,635) Other income Unrealized gain ( loss) in marketable securities 14,985 (796) 14,985 (796) Interest income 11,311 10,145 7,889 16,434 Others 17,187 6,165 16,786 5,378 Total Other Income 43,483 15,514 39,660 21,016 Total Revenues 745,780 970,585 670,644 858,533 EXPENSES (Notes 1.5 and 2.1) Costs of construction and cost of sales 712,189 876,938 652,248 806,515 Selling and administrative expenses 78,891 68,801 66,607 58,486 Loss on exchange rate 18,986 87,570 23,968 82,495 Loss on impairment of investments 114,123 - 111,052 - Doubtful debts 19,180 20,604 18,974 2,847 Directors' remuneration 46 144 - 120 Interest expense 123,526 122,146 119,349 110,242 Total Expenses 1,066,941 1,176,203 992,198 1,060,705 Loss before minority interests (321,161) (205,618) (321,554) (202,172) Minority interests in net (income) loss (393) 3,446 - - Net loss (321,554) (202,172) (321,554) (202,172) Basic loss per share (Baht) (Note 1.5) (13.98) (8.79) (13.98) (8.79) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN DEFICIT IN SHAREHOLDERS' EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 ( UNAUDITED ) (Amounts in thousand Baht) Consolidated Statements of Changes Company's Separate Statements of in Deficit in Shareholders' equity Changes in Deficit in Shareholders' equity 2000 1999 2000 1999 ( Restated ) ( Restated ) 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 - - - - (more)