NUAL CONSOLIDATED FINANCIAL STATEMENTS

Increase during year 100,879,877.92 2,043,843.70 99,795,616.00 2,043,843.70 Decrease during year - - - - Ending balance (154,874,233.30) (255,754,111.22) (154,796,233.30) (254,591,849.30) Total Deficit in Shareholders' Equity (1,703,652,906.68) (386,117,757.82) (1,703,574,906.68) (479,563,808.86) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF DEFICIT FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts : Baht) Consolidated Statements of Deficit Company's Separate Statements of Deficit 1999 1998 1999 1998 (Restated) (Restated) Deficit Beginning balance as previously reported (1,890,898,995.30) (2,264,928,114.52) (1,883,300,813.03) (2,257,329,932.25) Cumulative effect of change in accounting policy of a subsidiary (Note 4) (10,863,395.28) (10,938,465.57) (10,863,395.28) (10,938,465.57) Adjustment of retained earnings of subsidiary at beginning of year not included consolidated financial statements 20,330,403.78 - 20,330,403.78 - Beginning balance as restated (1,881,431,986.80) (2,275,866,580.09) (1,873,833,804.53) (2,268,268,397.82) Net income (loss) (1,080,610,417.99) 374,165,500.17 (1,080,610,417.99) 374,165,500.17 Total Deficit (2,962,042,404.79) (1,901,701,079.92) (2,954,444,222.52) (1,894,102,897.65) Appropriated retained earnings Legal reserve 56,163,648.79 56,163,648.79 48,565,466.52 48,565,466.52 Total Deficit (2,905,878,756.00) (1,845,537,431.13) (2,905,878,756.00) (1,845,537,431.13) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts : Baht) Consolidated Statements of Cash Flows Company's Separate Statements of Cash Flows 1999 1998 1999 1998 (Restated) (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) (1,080,610,417.99) 374,165,500.17 (1,080,610,417.99) 374,165,500.17 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities operating activities : Doubtful debts 286,308,172.11 344,015,037.18 205,246,220.79 323,248,923.78 Depreciation 91,047,960.63 97,481,489.80 73,973,942.22 81,534,054.11 Amortization of goodwill 76,693,450.62 (49,568,816.73) 76,693,450.62 (38,929,366.05) Amortization of deferred charges 31,526,056.78 9,255,037.70 31,089,616.78 8,552,028.41 Gain on debts restructuring - (48,246,683.33) - - (Gain) loss on sales of equipment 7,434,426.42 (5,756,619.71) 401,857.70 1,723,830.80 Equity in loss of subsidiaries and associated companies and joint ventures 35,310,643.22 106,770,878.99 289,575,722.33 5,317,049.83 Unrealized gain in marketable securities (110,471,147.19) (24,666,894.55) (110,471,147.19) (24,766,734.55) Loss on sales of condominiums 1,637,749.99 13,340,648.93 1,637,749.99 13,340,648.93 Loss on sales of short -term investments 93,694,646.49 26,562,008.79 93,694,646.49 26,562,008.79 Loss on sales of long -term investments 73,397,778.68 39,245,538.76 73,397,778.68 39,245,538.76 Unrealized (gain) losses on exchange rate 68,592,507.12 (1,015,348,602.59) 72,978,476.56 (952,938,556.24) Contingent cost (62,114,639.81) 40,546,816.81 (55,196,551.47) 33,628,728.47 Provision for decline in value of investments 108,977,109.92 13,000,442.43 81,760,080.00 10,000,442.43 Loss on diminution in value of condominiums 13,366,468.11 11,428,483.86 13,366,468.11 11,428,483.86 Loss on diminution in value of inventories 104,158,829.63 21,667,938.04 - - Changes in operating assets and liabilities (Increase) decrease in operating assets Accounts receivable 24,704,841.07 674,969,347.33 (60,982,949.64) 757,333,329.18 Due from related parties 3,971,605.52 (21,341,065.57) (3,802,641.24) (30,668,499.55) Retentions receivable 191,760,107.56 (104,648,465.87) 191,763,242.60 (104,364,386.80) Inventories 60,803,101.57 93,841,019.14 - - Other current assets 220,276,788.68 (125,127,499.51) 206,531,153.20 (144,936,591.19) Other assets (43,859,592.13) (3,184,590.88) (37,913,699.23) (13,199,368.78) Increase (decrease) in operating liabilities Accounts payable (177,720,922.47) (150,167,618.66) (122,900,239.85) (122,143,667.83) Due to related parties (1,297,799.47) (35,665,984.11) (2,311,938.04) (32,770,445.14) Advance receipt on contracts 100,194,629.05 (240,348,004.67) 102,111,135.64 (132,324,286.15) Other current liabilities 341,956,110.70 155,744,834.49 367,955,792.99 130,426,689.53 See notes to financial statements (Amounts : Baht) Consolidated Statements of Cash Flows Company's Separate Statements of Cash Flows 1999 1998 1999 1998 (Restated) (Restated) Other liabilities 11,462,219.52 (32,120,714.25) (36,853,088.42) 309,362.00 Minority interests 2,547,787.09 (35,047,562.44) - - Net Cash Provided by Operating Activities 473,748,471.42 130,795,899.55 371,134,661.63 219,774,716.77 CASH FLOWS FROM INVESTING ACTIVITIES (Increase) Decrease loans and advances to directors and employees 1,971,725.04 8,323,792.11 (1,915,057.89) 3,968,139.57 (Increase) Decrease in short-term loans to related parties (90,604,132.28) (9,528,523.70) 1,731,506.17 (198,534,192.69) Purchase of short-term investments (24,080.60) (175,080.00) (24,080.60) (175,080.00) Increase in short-term investments - (13,724,977.44) - (13,698,877.44) (Increase) Decrease in note receivable - financial institutions 2,014,909.24 (2,014,909.24) - - (Increase) Decrease in investments (145,813,099.97) 155,449,431.67 (135,379,343.66) 143,055,362.94 Proceeds from sale of short - term investments 8,545,511.05 9,540,973.39 8,545,511.05 9,540,973.39 Proceeds from sale of long - term investments 79,269,554.96 39,100,319.70 79,269,554.96 39,100,319.70 Decrease in loans to related parties 12,131,086.49 - 35,966,355.48 - Purchase of property and equipment (65,753,867.94) (11,896,129.45) (62,728,372.09) (55,448,844.49) Decrease in subsidiary's property, plant and equipment 22,606,887.24 - - - Proceeds from sale of equipment 13,579,707.13 11,778,537.41 8,610,646.80 3,422,037.08 Increase in condominiums - (5,591,394.51) - (5,591,394.51) Proceeds from sale of condominiums 9,150,240.01 - 9,150,240.01 - Decrease in advance payments on condominium - 24,765,419.38 - 24,765,419.38 Net Cash Provided by (Used in) Investing Activities (152,925,559.63) 206,027,459.32 (56,773,039.77) (49,596,137.07) CASH FLOWS FROM FINANCING ACTIVITIES Increase (Decrease) in bank overdrafts and loans from financial institutions (7,095,714.93) (170,787,091.49) 1,219,293.82 (41,068,721.20) Proceeds from short - term loans from directors 2,322,178.53 - - - Increase in long-term loans - 20,250,000.00 - - Decrease in loans to related parties - 649,127,269.52 - 684,127,269.52 Net Cash Provided by (Used in) Financing Activities (4,773,536.40) 498,590,178.03 1,219,293.82 643,058,548.32 NET INCREASE IN CASH AND CASH EQUIVALENTS 316,049,375.39 835,413,536.90 315,580,915.68 813,237,128.02 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Notes 3 and 5) 794,792,489.44 43,409,119.04 771,607,653.49 42,400,691.97 CASH AT BANK PLEDGED AS COLLATERALS AT BEGINNING OF YEAR (Notes 3 and 5) 84,030,166.50 - 84,030,166.50 - CASH AT BANK PLEDGED AS COLLATERALS AT END OF YEAR (Notes 3 and 5) (854,309,723.68) (84,030,166.50) (854,086,723.98) (84,030,166.50) CASH AND CASH EQUIVALENTS AT END OF YEAR (Notes 3 and 5) 340,562,307.65 794,792,489.44 317,132,011.69 771,607,653.49 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash paid during the year for: Interest expense 34,880,025.34 240,806,767.84 16,554,880.86 224,474,821.62 Income tax 69,746,793.62 129,053,933.10 68,101,422.27 128,870,481.49 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 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 December 31, 1999 is the Charnvirakul family, who held 52.27% of total fully paid shares capital. The Company is major shareholder of Sino-Thai Construction Services Company Limited and Sino-Thai Resources Development Public Company Limited. As at December 31, 1999 and 1998, the Company has staffs for 645 persons and for 714 persons, respectively and staff costs are in the amount of Baht 218.90 million and Baht 221.33 million, respectively in the consolidated financial statements. As at December 31, 1999 and 1998, the Company has staffs for 560 persons and 613 persons, respectively and staff costs are in the amount of Baht 200.83 million and Baht 199.87 million, respectively in the separate financial statements. 1.2 Economic Environment and Basic of Financial Statement Presentation 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. The consolidated financial statements and the separate financial statements of the Company 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. 1.3 Basis of Consolidaion The accompanying consolidated financial statements for the year ended December 31, 1999 consist of the financial statements of Sino-Thai Engineering and Construction Public Company Limited and the financial statements of subsidiaries, Sino-Thai Construction Services Company Limited and Sino-Thai Resources Development Public Company Limited. The accompanying consolidated financial statements for the year ended December 31, 1998 consist of the financial statements of Sino-Thai Engineering and Construction Public Company Limited and the financial statements of subsidiaries and subsidiaries of subsidiaries, Sino-Thai Construction Services Company Limited, Sino-Thai Resources Development Public Company Limited and Siam Dimension Stone Company Limited, are as follows: Percentage of holding 1999 1998 Direct Subsidiaries Sino-Thai Construction Services Company Limited 99.99 99.99 Sino-Thai Resources Development Public Company Limited 51.16 51.16 Subsidiaries of subsidiaries held indirectly Siam Dimension Stone Company Limited - 35.81 In 1998 the Company had the powers to govern the financial and operating policies of subsidiary On March 30, 1999, the Company has sold Siam Dimension Stone's shares to external shareholders which caused to reduce portion in investment in Siam Dimension Stone from 70 % to 19 %, therefore, financial statements of Siam Dimension Stone has not been included in the 1999 consolidated financial statements. All significant intercompany transactions and balances have been eliminated in preparing the consolidated financial statements. 1.4 Going concern The Company and subsidiaries have incurred net profit (loss) on operation for the years ended December 31, 1999 and 1998, in the amount of Baht (1,080.61) million and Baht 374.17 million, respectively, deficit in the amount of Baht 2,962.04 million and Baht 1,901.70 million and Baht 2,954.44 million and Baht 1,894.10 million, respectively, total current liabilities exceeded total current assets amount of Baht 3,261.23 million and Baht 2,889.09 million in the consolidated financial statements and Baht 3,252.96 million and Baht 2,672.69 million, respectively in the separate financial statements. Total liabilities exceeded total assets in the amount of Baht 1,639.49 million and Baht 324.50 million in the consolidated financial statements and Baht 1,703.57 million and Baht 479.56 million, respectively in the separate financial statements. The financial statements have been prepared on going concern basis, which assumes that the Company will continue in existence. The validity of this assumption is dependent upon the Company's ability to meet its financial requirements, and the success of future operations. If the Company were unable to continue in existence, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any additional liabilities that might arise and to consider the classification of those assets and liabilities. The Company and a subsidiary in 1999 and two subsidiaries in 1998 have failed to repay loans and interest and have not performed financial ratio condition under loan agreement that entitles the banks to accelerate the maturity of all amount outstanding immediately due and payable. On August 20, 1998 and September 4, 1998, the lenders informed to the Company to repay the whole amount before due date in according to the loan agreement. The Company has appointed a financial consultant to prepare a financial restructuring plan. In 1999, a subsidiary's total liabilities exceeded total assets and a subsidiary has incurred a net loss from operations for many years and its total current liabilities exceeded total current assets. The above subsidiary has been informed by a letter from the Stock Exchange of Thailand reference No. Bor Jor/Mor 1921/2540 dated December 17, 1997, regarding to withdrawal from listed company because of a significant decrease in operating assets since it has ceased its operations on tin ore mining. The Company has been still in the process of rehabilitation. On April 8, 1998, a subsidiary has entered into a contract with a financial institution to be a financial consultant in order to perform the rehabilitation plan due to withdraw from listed company from stock exchange in Thailand, requring consulting fee of Baht 67,500 per quarter until this plan to be finalized. As describe in Note 19 to the financial statements, the Company had submited restructuring plan to Central Bankruptcy Court. NOTE 2- TRANSACTIONS WITH RELATED PARTIES The Company has significant transactions with its persons and related parties, which concerned certain director and shareholder of the Company, their sharing and directorships in the related parties. The basis of transactions occurring between the Company and its related parties is similar to the basis of transactions undertaken with nonrelated parties and included in financial statements. The outstanding balance occurred between the Company with related parties as at December 31, are as follows: 2.1 Accounts receivable-related parties are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 1999 1998 1999 1998 Baht Baht Baht Baht Joint ventures Philipp Holzmann (Thai) /U.T.M. Engineering / Sino-Thai Joint Venture 39,358,217.11 63,745,671.61 39,358,217.11 63,745,671.61 Zueblin - W&F - Stecon Joint Venture 4,929,670.45 2,692,891.92 4,149,377.45 2,147,060.92 The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited/ Totems Company Limited 16,032,272.88 275,573.16 16,032,272.88 275,573.16 Sino-Thai Joint Venture 1,499,661.46 - 1,499,661.46 - SS Joint Venture 70,000.00 - 70,000.00 - Total 61,889,821.90 66,714,136.69 61,109,528.90 66,168,305.69 Subsidiaries Sino-Thai Construction Services Company Limited - - 18,485,287.94 8,994,931.14 Sino-Thai Resources Development Public Company Limited - - 1,391.00 2,640.00 Total - - 18,486,678.94 8,997,571.14 Associated companies STP & I Public Company Limited 9,654,825.42 - - - ACS Asia Limited 15,716.15 12,378.48 15,716.15 12,378.48 ACS Asia (1996) Company Limited - 1,987,791.56 - 1,987,791.56 MMR Asia Company Limited - 8,078,170.20 - 6,993,043.82 Thai Maintenance Contracting Company Limited 266,147.41 782,164.00 266,147.41 782,164.00 Total 9,936,688.98 10,860,504.24 281,863.56 9,775,377.86 Other related parties 21,814,497.01 18,953,697.01 18,987,097.01 18,953,697.01 Total 93,641,007.89 96,528,337.94 98,865,168.41 103,894,951.70 Less Allowance for doubtful accounts (23,301,604.49) (29,108,137.40) (37,254,352.37) (27,786,500.02) Total Accounts receivable-related parties 70,339,403.40 67,420,200.54 61,610,816.04 76,108,451.68 Accounts receivable-related parties are analyzed by aging as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 1999 1998 1999 1998 Baht Baht Baht Baht Current 6,792,275.70 15,155,472.74 25,129,172.24 21,522,303.13 Overdue 1 month to 4 months 28,917,561.77 32,783,980.45 19,408,369.54 34,829,647.78 Over 4 months to 12 months 247,014.79 26,107,522.17 - 25,311,079.66 Over 12 months 57,684,155.63 22,481,362.58 54,327,626.63 22,231,921.13 Total 93,641,007.89 96,528,337.94 98,865,168.41 103,894,951.70 The overdue accounts receivable, as mention above, the Company and subsidiaries are following up on the collection of these debts. The Company's management has provided adequately for allowance for doubtful accounts in accordance with accounting policy. 2.2 Accounts payable - related parties are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 1999 1998 1999 1998 Baht Baht Baht Baht Joint ventures Philipp Holzmann (Thai) / U.T.M. Engineering/ Sino-Thai Joint Venture - - - - Subsidiaries Sino-Thai Construction Services Company Limited - - 149,569.95 1,072,660.34 Sino-Thai Resources Development Public Company Limited - - - 84,134.91 Total - - 149,569.95 1,156,795.25 Associated companies HTR Corporation Limited 174,960.72 232,929.09 174,960.72 232,929.09 ACS Asia Limited 75,878.32 75,878.32 75,878.32 75,878.32 ACS Asia (1996) Company Limited - 109,339.98 - 109,339.98 MMR Asia Company Limited - 408,751.19 - 408,751.19 Thai Maintenance Contracting Company Limited - 728,653.20 - 728,653.20 Total 250,839.04 1,555,551.78 250,839.04 1,555,551.78 Other related parties 2,613,297.75 2,606,384.48 2,606,384.48 2,606,384.48 Total 2,864,136.79 4,161,936.26 3,006,793.47 5,318,731.51 2.3 Short-term loans to related parties are summarized as follows : Consolidated Balance Sheets Company's Separate Balance Sheets 1999 1998 1999 1998 (more)