Clarification FS_STEC Q2/06

Ref. No.: A/C ST.0659/2006 August 15, 2006 Subject : Clarification of STEC' s financial statement ended 30 June 2006. To : President of the Stock Exchange of Thailand Dear Sirs, We, Sino-Thai Engineering & Construction Public Company Limited, would like to provide the clarification on quarterly financial statement ended 30 June 2006 which shows the decreased of net profit in the amount of Baht 1,979.02 million equal to 1,617.42% for the three month period and Baht 2,028.97 million equal to 906.92% for the six month period comparing to the same period of the previous year due to the following reasons: 1. The company 's gross (loss) margin for the three months period and six month period was amount Baht (878.47) million and Baht (765.19) million comparing to the same period of the previous year at Baht 207.93 million and Baht 366.64 million respectively. These amounts reflect the decreased of Baht 1,086.40 million and Baht 1,131.83 million, which equal to 522.49%and 308.70% for the three month period and six month period due to the prices of construction materials, wages, oil, and transportation costs have significantly risen. 2. Provision for loss on construction project of the company increased at the amount of Baht 900.65 million comparing to the same period of the previous year since the prices of construction materials, wages, oil, and transportation costs have significantly risen. In addition, major construction contracts have been extended due to uncontrollable external factors. Because of these, the company has decided to reserve for loss on construction for long term project and has recorded the whole amount of loss into its accounts. Please kindly be informed. Yours sincerely, ___________________________ (Mr. Woraphant Chontong) Director