EXPLANATION ON 1997 FINANCIAL STATEMENT

Sino-Thai Engineering & Construction Public Company Limited AC.ST. 011/2541 March 2, 1998 Subject : Explanation on 1997 financial statement To : Director and Manager, Securities Exchange of Thailand As the company has submitted the financial statement for the year ended December 31, 1997, the net loss of the company has increased 1,632.67% from 1996. Details are referred in the letter, AC.ST. 010/2541.The company would like to clarify the reasons as follow: 1.Due to announcement of Thai Government to change the currency exchange system from Basket System to Managed Float System on July 2, 1997,it directly effected to the company foreign currency debt.The company has recognized the whole amount of foreign exchange loss of 1,917.35 Mil.Baht to be an expense in the 1997 income statement. 2. As the economy slowed down in 1997, a severely poor liquidity in financial sector make the interest rate high for a long period. This effect the company to face with the high interest expense. 3. According to the company accounting policy to apply the equity method for investment transaction, the company recognized the loss from subsidiaries and affiliated companies of 345.63 Mil.Baht for the year ended December 31, 1997 under the item of Profit(Loss) from subsidiaries and affiliated companies in the income statement. The loss came from increase in cost of operation, high interest rate, and effect from foreign exchange. 4.The company recognized an unrealized loss from investment in marketable securities of 364.24 Mil.Baht under the item of Short term investment due to total market price was lower than total cost for the year ended December 31, 1997. As mentioned above, therefore, the company has an increase in net loss compare to the same period of 1996. Please kindly be informed. Best regards, Anutin Charnvirakul Director