NSOLIDATED FINANCIAL STATEMENTS Q2/2000

Total Revenues 1,622,101 2,026,853 1,442,992 1,870,541 EXPENSES (Notes 1.5 and 2.1) Costs of construction and cost of sales 1,564,697 1,663,525 1,425,276 1,553,880 Selling and administrative expenses 165,248 141,886 151,784 119,808 Loss on exchange rate 142,021 15,309 146,641 15,037 Loss on impairment of investments 106,304 - 98,971 - Loss on sales of investments 55,637 168,483 55,637 168,483 Loss on currency swap contracts in prior year 155,972 - 155,972 - Doubtful debts 41,514 (9,903) 28,135 (20,416) Directors' remuneration 92 293 - 270 Interest expense 331,066 220,206 321,621 201,228 Total Expenses 2,562,551 2,199,799 2,384,037 2,038,290 Loss before minority interests (940,450) (172,946) (941,045) (167,749) Minority interests in net (income) loss (595) 5,197 - - Net loss (941,045) (167,749) (941,045) (167,749) Basic loss per share (Baht) (Note 1.5) (40.92) (7.29) (40.92) (7.29) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN DEFICIT IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 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 - - - - Ending balance 486,000 486,000 486,000 486,000 Revaluation surplus (Note 2.5) Beginning balance 571,100 929,174 571,100 834,565 Increase during period - - - - Decrease during period (526) (18,761) (526) - Ending balance 570,574 910,413 570,574 834,565 Appropriated retained earnings - legal reserve Beginning balance 56,164 56,164 48,565 48,565 Increase during period - - - - Decrease during period - - - - Ending balance 56,164 56,164 48,565 48,565 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN DEFICIT IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 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 ) Deficit Beginning balance as previously reported (2,962,042) (1,870,569) (2,954,444) (1,862,971) Cumulated effect of change in accounting policy of a subsidiary (Note 1.6) - (10,802) - (10,802) Beginning balance as restated (2,962,042) (1,881,371) (2,954,444) (1,873,773) Increase during period - net loss (941,045) (167,749) (941,045) (167,749) Decrease during period - - - - Ending balance (3,903,087) (2,049,120) (3,895,489) (2,041,522) Unrealized loss on non-current marketable securities (Note 1.5) Beginning balance (154,875) (255,754) (154,796) (254,592) Increase during period (9,101) - (9,179) - Decrease during period 101,875 143,138 101,875 141,976 Ending balance (62,101) (112,616) (62,100) (112,616) (2,552,450) (409,159) (2,552,450) (485,008) Minority interests Beginning balance 64,164 61,616 - - Increase during period 93 6,497 - - Decrease during period - - - - Ending balance 64,257 68,113 - - Total Deficit in Shareholders' Equity (2,488,193) (341,046) (2,552,450) (485,008) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF DEFICIT FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 ( UNAUDITED ) (Amounts in thousand Baht) Consolidated Statements of Deficit Company's Separate Statements of Deficit 2000 1999 2000 1999 ( Restated ) ( Restated ) Deficit Beginning balance as previously reported (2,962,042) (1,870,569) (2,954,444) (1,862,971) Cumulated effect of change in accounting policy of a subsidiary (Note 1.6) - (10,802) - (10,802) Beginning balance as restated (2,962,042) (1,881,371) (2,954,444) (1,873,773) Net loss (941,045) (167,749) (941,045) (167,749) Total Deficit (3,903,087) (2,049,120) (3,895,489) (2,041,522) Appropriated retained earnings Legal reserve 56,164 56,164 48,565 48,565 Total Deficit (3,846,923) (1,992,956) (3,846,924) (1,992,957) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 ( UNAUDITED ) ( Amounts in thousand Baht ) Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 ( Restated ) ( Restated ) CASH FLOWS FROM OPERATING ACTIVITIES Net loss (941,045) (167,749) (941,045) (167,749) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Doubtful debts 45,776 (9,902) 28,135 (20,416) Depreciation 41,516 46,290 37,342 37,668 Deferred charges written off 2,182 6,487 1,963 11,588 Loss on sales of short-term investment - 95,085 - 95,085 (Gain) loss on sales of equipment and condominiums 369 293 (2,788) 996 Equity in (profit) loss of subsidiaries and associated companies and joint ventures (3,645) (15,974) 57,576 26,279 Unrealized gain in marketable securities (32,860) (90,633) (32,940) (90,633) Allowance for decline in valuation of goods written back (49,374) (2,990) - - Loss on impairment of investments 102,064 74,560 98,971 73,398 Loss on currency swap contracts in prior year 155,972 - 155,972 - Unrealized losses on exchange rate 145,532 2,151 145,648 9,813 Loss on sales of long-term investments 54,966 - 55,637 - Contingent cost 7,704 (40,090) 7,704 (40,090) Minority interest 595 14,210 - - Changes in operating assets and liabilities (Increase) Decrease in operating assets Accounts receivable 170,064 7,026 163,093 (33,247) Retentions receivable (4,852) 11,672 (4,852) 11,721 Inventories 78,349 57,854 - - Other current assets (120,693) (35,814) (119,780) (42,188) Other assets 40,805 (47,370) 40,561 (49,061) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 ( UNAUDITED ) ( Amounts in thousand Baht ) Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 ( Restated ) ( Restated ) Increase (Decrease) in operating liabilities Accounts payable (194,795) (65,355) (184,583) (25,911) Advance receipt on contracts (74,474) 56,499 (76,217) 56,743 Other current liabilities 297,649 184,981 303,009 176,025 Other liabilities 16,625 239 (10,054) 239 Net Cash Provided by (Used in) Operating Activities (261,570) 81,470 (276,648) 30,260 CASH FLOWS FROM INVESTING ACTIVITIES Decrease in short-term investments 420 970 - 7,001 (Increase) decrease in short-term loans to related parties (4,222) (70,052) (1,680) 31,567 Decrease in loans to related parties - 12,895 - 34,212 Increase in investments (10,000) (16,663) (9,978) (42,314) Proceeds from sales of investments 175,620 - 165,870 - Receipt of dividends 1,400 - 1,400 - Purchase of property and equipment (62,010) (41,997) (61,912) (40,816) Proceeds from sales of equipment 11,877 32,164 7,772 5,947 Proceeds from sales of condominiums 1,790 8,922 1,790 8,922 Increase in loans and advances to directors and employees (11,507) (1,914) (11,830) (14) Net Cash Provided by (Used in) Investing Activities 103,368 (75,675) 91,432 4,505 CASH FLOWS FROM FINANCING ACTIVITIES Increase in bank overdrafts and loans from financing institutins 20,512 23,797 57,218 2,805 Increase (decrease) in short-term loans from directors (384) 6,322 - - Net Cash Provided by Financing Activities 20,128 30,119 57,218 2,805 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 ( UNAUDITED ) (Amounts in thousand Baht) Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 (Restated) (Restated) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (138,074) 35,914 (127,998) 37,570 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD (Notes 1.5 and 2.2) 340,674 794,792 317,132 771,608 CASH AT BANK PLEDGED AS COLLATERALS AT BEGINNING OF PERIOD (Notes 1.5 and 2.2) 854,310 84,030 854,087 84,030 CASH AT BANK PLEDGED AS COLLATERALS AT ENDING OF PERIOD (Notes 1.5 and 2.2) (937,514) (637,878) (937,291) (637,011) CASH AND CASH EQUIVALENTS AT END OF PERIOD (Notes 1.5 and 2.2) 119,396 276,858 105,930 256,197 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash paid during the period Interest expense 2,617 10,734 2,104 5,397 Income tax 34,663 39,721 22,484 38,747 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 (UNAUDITED) NOTE 1 GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 General Information Sino-Thai Engineering and Construction Public Company Limited has operated major business in general construction. The major shareholder of the Company as at June 30, 2000 is the Charnvirakul family, who held 52.27% of total fully paid shares capital. The Company is major shareholder of SinoThai Construction Services Company Limited and SinoThai Resources Development Public Company Limited. As at June 30, 2000 and December 31, 1999, the Company and subsidiaries have staffs for 601 persons and for 645 persons, respectively and staff costs for the six-month periods ended June 30, 2000 and 1999 are in the amount of Baht 18.11 million and Baht 24.59 million, respectively in the consolidated financial statements. As at June 30, 2000 and December 31, 1999, the Company has staffs for 584 persons and 560 persons, respectively and staff costs for the six-month periods ended June 30, 2000 and 1999 are in the amount of Baht 13.56 million and Baht 14.97 million, respectively in the separate financial statements. 1.2 Economic Environment The operations of Sino-Thai Engineering and Construction Public Company Limited ("the Company") and subsidiaries may continue to be influenced by the economic conditions in Thailand and the Asia Pacific Region in general. The consolidated financial statements and the separate financial statements of the Company reflect the management's current assessment of the impact of current economic conditions on the financial position of the Company. However, actual results could differ from the management estimates. 1.3 Basis of Consolidaion The consolidated financial statements and the separate financial statements have been presented in accordance with the Ministerial Regulation No. 7 (B.E. 2539), under the Public Company Limited Act B.E. 2535 and in conformity with generally accepted accounting principles in Thailand, and 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. As required by Thai law and regulatory requirements, the Company's financial statements have been prepared in the Thai language. They have been translated into English for the convenience of the reader. The accompanying consolidated financial statements for the three-month and six-month period ended June 30, 2000 and 1999 and for the year ended December 31, 1999 consist of the financial statements of Sino-Thai Engineering and Construction Public Company Limited, collectively "the Company", and the financial statements of subsidiaries, Sino-Thai Construction Services Company Limited, Sino-Thai Resources Development Public Company Limited and Sino-Thai Joint Venture which the Company has the significant role to control and/or percentage of shareholding is considered to possess the ability to exercise significant influence over subsidiary in the financial and operating policy decisions, collectively "subsidiaries". The financial information of subsidiaries have been reviewed by us except for the financial statements of Sino- Thai Joint Venture which prepared by the Company's management and have not been reviewed by auditor. The Company's separate financial statements for the three-month and six-month period ended June 30, 2000 includes investments in the above subsidiaries, associated companies and joint venture, which the Company has significant influence and/or has powers to participate in the financial and operating policy decisions by using equity method. The financial information of the subsidiaries, associated companies and joint venture prepared by the Company's management and have not been reviewed by auditor. All significant intercompany transactions and balances have been eliminated in preparing the consolidated financial statements. The financial information of the Company and subsidiaries includes in the consolidated financial statements are summarized as follows: Percentage of holding As at June 30, As at December 31, 2000 1999 1999 Direct Subsidiaries Sino-Thai Construction Services Company Limited 99.99 99.99 99.99 Sino-Thai Resources Development Public Company Limited 51.16 51.16 51.16 Sino-Thai Joint Venture 100.00 - 100.00 The consolidated financial statement for the three-month and six-month period ended June 30, 2000 and for the year ended December 31, 1999 includes the financial statements of subsidiaries which have not been reviewed by auditor. Their total assets, total revenues and net loss reflected in percentage of total consolidated assets, total consolidated revenues and net loss in the consolidated financial statement as follows: Assets Total revenues Net income (loss) June 30, December 31, June 30, June 30, 2000 1999 2000 2000 Subsidiary Sino Thai Joint Venture 1.41 1.25 0.48 0.11 (more)