NANCIAL STATEMENT 1997

Allowance for Doubtful Accounts The Company provides allowance for doubtful accounts on the basis of those amounts which may prove to be uncollectiable. Inventories Inventories are stated at cost using first-in, first-out method, net of provision for damaged goods. Investments Investments in listed securities are valued at the lower of aggregate cost or aggregate market value. The declining in value of non-current marketable securities is shown under shareholders equity. Investments in subsidiary and associated companies are stated at the equity method. Investments in other securities which the Company holds less than 20 per cent and joint venture are stated at cost net of allowance for decline in value of investment. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by the straight-line method, based on the estimated useful lives of assets 5-20 years. Deferred Charges Deferred charges of parent company represent the underwriting fees and the expenses related to the issue of convertible bonds which are amortized over a period of 5 years and 10 years respectively. Foreign Currency Accounts Foreign currency transactions during the year are translated into Baht at the rates prevailing at the dates of transactions. Liabilities in foreign currencies outstanding at the balance sheet date are translated into Baht at the rates prevailing at that date and at forward exchange rates in case there are forward exchange contracts. Convertible bonds are stated at the initial conversion price. Gain or loss on translation is included in the statement of income. The effects of the Change in Currency Exchange System to a Managed Float System The Company has recognized the entire gain or loss on the change in currency exchange system under Managed Float System and shown as "Gain (loss) on currency exchange under Managed Float System" in the statement of income. Earnings (loss) per Share Earnings (loss) per share is computed by dividing net income (loss) by the number of shares outstanding at the end of the year. NOTE 5 - RELATED PARTIES TRANSACTIONS The company has significant transactions with its related companies. The financial statements reflect the effects of these transactions on the normal business operations. At December 31, the outstanding balances with its related companies are as follow: 5.1 Investment as at December 31 are summarized as follows: percentage of share holding CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 1997 1996 Baht Baht Baht Baht Subsidiaries (Equity method) Sino-Thai Construction Services Company Limited 99.99 99.99 - - - 146,712,277.97 Sino-Thai Resources Development Public company Limited 51.16 51.00 - - 86,037,166.63 168,825,739.95 - - 86,037,166.63 315,538,017.92 percentage of share holding CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 1997 1996 Baht Baht Baht Baht Associated company (Equity method) STP & I Public Company Limited 24 24 155,473,300.83 211,311,247.65 155,473,300.83 211,311,247.65 HTR Corporation Limited 47.60 31.72 295,042,917.33 189,399,652.99 295,042,917.33 189,399,652.99 DKK Sino-Thai Engineering Company Limited 35 35 26,294,822.96 21,167,004.56 26,294,822.96 21,167,004.56 CBI/ST Limited 35.02 35.02 - 48,219,187.06 - 48,219,187.06 ACS Asia Limited 50 50 8,097,655.58 4,649,943.01 8,097,655.58 4,649,943.01 ACS Asia (1996) Company Limited 50 50 8,396,438.92 7,500,000.00 8,396,438.92 7,500,000.00 MMR Asia Company Limited 45.12 30 3,000,000.00 11,998,950.00 - 8,998,950.00 Thai Maintenance Contracting Company Limited 29.70 19 1,589,893.20 2,339,810.00 1,589,893.20 2,339,810.00 497,895,028.82 496,585,795.27 494,895,028.82 493,585,795.27 Other related companies (cost method) Abico Land Co.,Ltd 15 15 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00 Nithipat Leasing Co.,Ltd 15 15 129,567,600.00 129,567,600.00 97,167,600.00 97,167,600.00 National Insurance Co.,Ltd 10 - 30,000,000.00 - 30,000,000.00 - National Life Issurance Co.,Ltd 10 - 50,000,000.00 - 50,000,000.00 - Others 343,997,960.34 402,120,721.91 342,847,933.53 342,847,933.52 583,565,560.34 561,688,321.91 550,015,533.53 470,015,533.53 Less Allowance for decline in investment (256,635,693.00) (5,000,000.00) (256,635,693.00) - 326,929,867.34 556,688,321.91 293,379,840.53 470,015,533.53 Investments - net 824,824,896.16 1,053,274,117.18 874,312,035.98 1,279,139,346.72 5.2 Account receivable-trade from related companies consisted of: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Subsidiaries - - 2,940,373.94 1,337,548.03 Associated companies 41,324,085.94 44,644,349.35 41,324,085.94 44,644,349.35 Other related companies 18,637,300.25 15,249,141.97 6,625,406.09 10,293,926.04 Total 59,961,386.19 59,893,491.32 50,889,865.97 56,275,823.42 5.3 Account payable - trade from related companies consisted of: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Subsidiaries - - 16,917,872.28 7,558,082.19 Associated companies 1,533,844.61 23,828,014.19 1,533,844.61 23,828,014.19 Other related companies 23,885,980.07 24,058,007.45 20,549,504.07 14,962,160.28 Total 25,419,824.68 47,886,021.64 39,001,220.96 46,348,256.66 5.4 The company significant transactions with its related companies for the years ended December 31 are as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Revenues from construction 139,483,439.94 5,553,560.00 139,483,439.94 5,533,560.00 Revenues from services, rent and others 47,701.20 2,285,363.20 2,109,176.22 4,290,081.01 Interest income - - 6,221,301.37 3,058,630.14 Equipment purchase - - 17,607,550.00 9,156,794.53 Concrete service and others - - 826,890.01 6,423,901.74 NOTE 6 - CHANGE IN ACCOUNTING METHOD In 1994, the Company changed its accounting method for recording investments in associated companies from the cost method to the equity method. The Company recorded investments in associated companies by using the equity method in the financial statements for the years ended December 31, 1997 and 1996 on the basis of the financial information obtained from the management which had not been audited or reviewed by the auditors in accordance with standards established by the Thai Institute of Certified Accountants and Auditors for the recording of investments in associated companies. The retroactive adjustments made to the retained earnings at the beginning of years ended December 31, 1997 and 1996 are separately shown in the financial statements. The change of accounting method has been adopted to comply with the regulations of the Stock Exchange of Thailand in its letter date December 30, 1993. In 1996 and 1995, an associated company increased its registered share capital of which the whole amounts were issued to the new shareholders, resulting in the increase of the Company's equity in that company in the amount of Baht 43.12 million and Baht 25.71 million respectively. These excess of book value over cost of investment are shown as non -current liabilities in the financial statements and are amortized by the straight-line method over a period of 10 years. NOTE 7 - CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Cash in hand and at banks 43,409,119.04 56,341,419.21 42,400,691.97 51,863,453.05 Bank overdrafts (205,229,352.05) (211,497,171.16) (161,673,340.08) (141,332,422.70) (161,820,233.01) (155,155,751.95) (119,272,648.11) (89,468,969.65) NOTE 8 - ACCOUNTS RECEIVABLE Accounts receivable at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Accounts receivable 1,673,023,257.56 1,091,037,977.59 1,555,895,619.77 982,734,305.29 Unbilled works on construction contracts 612,069,767.00 836,655,499.00 612,069,767.00 836,655,499.00 Total 2,285,093,024.56 1,927,693,476.59 2,167,965,386.77 1,819,389,804.29 Less Allowance for doubtful accounts (47,746,078.11) (37,514,145.45) (44,017,690.98) (35,385,340.92) Accounts receivable - net 2,237,346,946.45 1,890,179,331.14 2,123,947,695.79 1,784,004,463.37 As at December 31, 1997, the Company has accounts receivable amounting to approximately Baht 513.27 million for which the debtors are undertaking loan negotiations with foreign financial institutions. Management believes that the debt will be settled up. NOTE 9 - RETENTIONS RECEIVABLE Retentions receivable at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Retentions receivable 196,795,490.89 368,058,704.40 193,004,295.56 364,867,592.84 Less Allowance for doubtful accounts (950,000.00) (950,000.00) (950,000.00) (950,000.00) Retentions receivable - net 195,845,490.89 367,108,704.40 192,054,295.56 363,917,592.84 NOTE 10 - INVENTORIES Inventories at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Raw materials 8,675,609.87 8,675,609.87 - - Finished goods 17,715,151.98 14,515,151.98 - - Consumable materials 715,633.25 715,633.25 - - Tool and equipment for sales 225,047,415.87 195,807,293.89 - - Spare part and supplies 67,298,608.06 87,175,085.96 - - Work in process 10,450,857.12 5,949,082.94 - - Total 329,903,276.15 312,837,857.89 - - Less Provision for damaged goods (19,704,137.96) (1,455,318.85) - - Inventories - net 310,199,138.19 311,382,539.04 - - NOTE 11 - OTHER CURRENT ASSETS Other current assets at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Withholding corporate tax 140,733,095.52 - 140,733,095.52 - Others 116,337,503.83 115,575,748.52 81,169,096.92 94,333,022.31 Total 257,070,599.35 115,575,748.52 221,902,192.44 94,333,022.31 Less Allowance for doubtful accounts (19,331,552.36) (19,331,552.36) (19,331,552.36) (19,331,552.36) Other current assets - net 237,739,046.99 96,244,196.16 202,570,640.08 75,001,469.95 NOTE 12 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31 are summarized as follows: CONSOLIDATED THE COMPANY ONLY 1997 1996 1997 1996 Baht Baht Baht Baht Land 1,248,268,668.52 1,230,788,957.02 1,015,136,089.98 997,656,378.48 Land improvements 11,030,519.90 11,030,519.90 11,030,519.90 11,030,519.90 Buildings 100,023,562.94 100,057,435.83 57,680,793.36 57,680,793.36 Leasehold improvements 20,874,255.26 20,874,255.26 20,874,255.26 20,874,255.26 Dredges 282,379,837.93 282,379,837.93 - - Machinery and construction equipment 542,832,129.70 498,984,075.37 384,453,416.65 350,636,983.08 Furniture and office equipment 107,042,665.16 97,286,126.79 91,119,585.04 88,015,620.83 Vehicles 106,379,818.78 74,583,238.01 79,073,605.26 51,164,499.83 Construction in progress 255,688,308.67 106,777,014.32 182,902,505.49 106,528,787.32 Total 2,674,519,766.86 2,422,761,460.43 1,842,270,770.94 1,683,587,838.06 Less Accumulated depreciation and amortization (756,635,206.00) (638,548,477.74) (329,464,277.60) (267,862,158.69) Property, Plant and Equipment-net 1,917,884,560.86 1,784,212,982.69 1,512,806,493.34 1,415,725,679.37 In 1996 the parent company revalued its land resulting in surplus on revaluation of Bath 834.57 million as approved by the Executive Board of Directors No. 12/2539 held on March 28, 1996. The Company recorded the increase in value of land as surplus on revaluation shown under shareholder's equity. A subsidiary revalued its land resulting in surplus on revaluation of Baht 185 million as approved by the Executive Board of Directors No. 4/2539 held on June 28, 1996, which is shown as surplus on revaluation under shareholders equity in the amount of Baht 94.61 million. NOTE 13 - PROVISION FOR VALUATION OF INVESTMENT As at December 31, 1997, the subsidiary has set up provision for decline in value of investment in its subsidiary of Baht 31.93 million in the consolidated financial statements. NOTE 14 - LONG-TERM LOANS In 1996 the parent company obtained the US$ 80,000,000 syndicate loan from 19 banks and financial institutions and the US$ 5,000,000 loan from a foreign bank which bear interest at the rate subject to the SIBOR rate. The principals are repayable at the end of 3 years from the drawdown date and interest payable semi-annually. The lenders may request the Company to repay the loans at the end of 2 years from the drawdown date. Loan covenants include maintenance of important financial ratios to the level as set out in the agreement. In 1997 the Company cannot maintain the above mentioned financial ratios which may result in the lender calling the loan. NOTE 15 - GAIN OF DEBTS RESTRUCTURING In 1997 the subsidiary is under the process of debts restructuring with a bank as per the subsidiary's letter No. SDS 26/2540 date April 30, 1997 and the bank's letters No. Tor. 4-400232 dated May 7, 1997 and No. Tor. 4-400300 date May 13, 1997. The subsidiary reduced the book value amount of loan, bank overdrafts and accrued interests from Baht 99 million to Baht 43 million and recorded the reduced debts amounting approximately Baht 56 million as gain on debts restructuring in the statement of income. The Company has already paid and redeem a mortgage for such debt since August 4, 1997. NOTE 16 - CONVERTIBLE BONDS EXPENSES Convertible bonds expenses for the year ended December 31, 1996 consist of bonds redemption under put option expenses amounting to approximately Baht 262.31 million and other expenses amounting to approximately Baht 49.35 million. NOTE 17 - LOSS ON CHANGE IN CURRENCY EXCHANGE SYSTEM TO A MANAGED FLOAT SYSTEM On July 2, 1997 the Ministry of Finance announced a change in the currency exchange system to the managed float system. Accordingly, the value of liabilities in foreign currencies were effected. As at December 31, 1997 the Company showed the effects of the change in the currency exchange system amounting to Baht 1,917.35 million in the statement of income of the Company. NOTE 18 - CONTINGENCIES AND COMMITMENTS The company has contingent liabilities and commitments resulting from the following: 1997 1996 Million Baht Million Baht Guarantor of credit facilities of affiliated companies 800.00 1,660.78 Letter of guarantee issued by bank 3,886.18 1,876.28 As at December 31, 1997 the parent company was contingently liable as guarantor of credit facilities of affiliated companies in the approximate amount of Baht 800 million. The actual credit amount of such affiliated companies was Baht 303.84 million. Management believes that such companies would not have any debt repayment difficulties. NOTE 19 - SEGMENT INFORMATION Information by operation segments of the Company and subsidiaries for years end December 31, are summarized as follows: Construction Sale Service Total (Amount in Million Baht) 1997 1996 1997 1996 1997 1996 1997 1996 Income 5,472.91 5,736.42 569.29 579.84 51.72 62.02 6,093.92 6,378.28 Cost 4,942.97 5,269.15 494.02 481.03 41.11 57.20 5,478.10 5,807.38 Gross profit 529.94 467.27 75.27 98.81 10.61 4.82 615.82 570.90 NOTE 20 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the financial statements for the year December 31, 1996 have been reclassified to conform with the presentation in the financial statements for the year ended December 31, 1997.