NSOLIDATED FINANCIAL STATEMENTS Q3/2000 - STECON

Minority interests in net (income) loss (811) 4,665 - - - Net loss (1,495,895) (665,974) (1,495,895) (665,974) Basic loss per share (Baht) (Note 1.5) (65.04) (28.96) (65.04) (28.96) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN DEFICIT IN SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 ( UNAUDITED ) (Amounts : Thousands 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 2.6) Beginning balance 571,100 929,174 571,100 834,565 Increase during period - - - - Decrease during period (793) (409,611) (793) (390,850) Ending balance 570,307 519,563 570,307 443,715 Appropriated retained earnings to 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 (Amounts : Thousands 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 (2,962,043) (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 (2,962,043) (1,881,371) (2,954,444) (1,873,773) Increase during period - net loss (1,495,895) (665,974) (1,495,895) (665,974) Decrease during period - - - - Ending balance (4,457,938) (2,547,345) (4,450,339) (2,539,747) Unrealized loss on non-current marketable securities (Note 1.5) Beginning balance (154,875) (255,754) (154,796) (254,592) Increase during period - 102,708 - 101,546 Decrease during period 88,025 - 87,946 - Ending balance (66,850) (153,046) (66,850) (153,046) (3,112,317) (1,338,664) (3,112,317) (1,414,513) Minority interests Beginning balance 64,164 61,616 - - Increase during period 53 6,639 - - Decrease during period - - - - Ending balance 64,217 68,255 - - Total Deficit in Shareholders' Equity (3,048,100) (1,270,409) (3,112,317) (1,414,513) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF DEFICIT FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 ( UNAUDITED ) (Amounts : Thousands Baht) Consolidated Statements of Deficit Company's Separate Statements of Deficit 2000 1999 2000 1999 ( Restated ) ( Restated ) Deficit Beginning balance as previously reported (2,962,043) (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 (2,962,043) (1,881,371) (2,954,444) (1,873,773) Net loss (1,495,895) (665,974) (1,495,895) (665,974) Total Deficit (4,457,938) (2,547,345) (4,450,339) (2,539,747) Appropriated retained earnings Legal reserve 56,164 56,164 48,565 48,565 Total Deficit (4,401,774) (2,491,181) (4,401,774) (2,491,182) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 ( UNAUDITED ) (Amounts : Thousands 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 (1,495,895) (665,974) (1,495,895) (665,974) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Doubtful debts 162,511 (22,573) 148,789 (31,612) Depreciation 62,391 68,718 56,516 55,825 Deferred charges written off 327 13,328 - 20,980 Loss on sales of short-term investment - 95,047 - 95,047 (Gain) loss on sales of equipment and condominiums (369) (2,761) (3,429) 1,002 Equity in (profit) loss of subsidiaries and associated companies and joint ventures (43,635) 6,068 23,994 83,560 Loss on impairment of assets 4,262 (1,125) - (1,125) Unrealized gain in marketable securities (49,366) (106,711) (49,369) (106,711) Provision against value of inventories (44,985) (2,990) - - Loss on impairment of investments 132,473 1,162 129,402 - Loss on currency swap contracts in prior year 155,971 - 155,971 - Unrealized losses on exchange rate 145,920 390,885 145,648 377,968 Loss on sales of long-term investments 54,966 73,398 55,637 73,398 Minority interest 53 14,742 - - Changes in operating assets and liabilities (Increase) Decrease in operating assets Accounts receivable 227,862 245,569 182,898 157,652 Retentions receivable (15,302) 170,311 (15,302) 170,319 Inventories 77,277 58,022 - - Construction contract in progress (5,590) - - - Other current assets (139,949) (41,641) (132,304) (46,712) Other assets 41,044 (108,189) 40,970 (109,320) (Amounts : Thousands 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 (84,847) (205,907) (70,254) (167,228) Advance receipt on contracts (79,221) 27,721 (80,894) 27,765 Other current liabilities 587,698 267,579 592,214 256,762 Other liabilities 55,976 (9,743) (16,239) (9,743) Net Cash Provided by (Used in) Operating Activities (250,428) 264,936 (331,647) 181,853 CASH FLOWS FROM INVESTING ACTIVITIES Increase in short-term investments (1,154) (5,710) - (24) (Increase) decrease in short-term loans to related parties - (111,528) (113,810) 2,333 (Increase) decrease in loans to related parties (131,321) 32,494 - 35,966 Increase in investments (9,978) (107,069) (9,978) (135,379) Proceeds from sales of investments 175,620 86,439 165,870 86,439 Receipt of dividends 1,400 - 1,400 - Purchase of equipment (82,530) (33,935) (83,180) (56,412) Proceeds from sales of equipment 14,360 12,888 9,896 8,145 Proceeds from sales of condominiums 4,965 8,832 4,965 8,832 Increase in loans and advances to directors and employees (19,523) (3,106) (19,863) (1,896) Net Cash Used in Investing Activities (48,161) (120,695) (44,700) (51,996) (Amounts : Thousands Baht) Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 (Restated) (Restated) CASH FLOWS FROM FINANCING ACTIVITIES Increase in bank overdrafts and loans from financial institutions 80,993 27,851 174,789 11,113 Increase (decrease) in short-term loans from directors (384) 6,322 - - Net Cash Provided by Financing Activities 80,609 34,173 174,789 11,113 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (217,980) 178,414 (201,558) 140,970 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) (822,122) (839,666) (821,899) (836,553) CASH AND CASH EQUIVALENTS AT END OF PERIOD (Notes 1.5 and 2.2) 154,882 217,570 147,762 160,055 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash paid during the period Interest expense 5,823 24,131 3,355 8,533 Income tax 34,150 55,720 33,807 54,136 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 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 September 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 September 30, 2000 and December 31, 1999, the Company and subsidiaries have staffs for 586 persons and for 666 persons, respectively and staff costs for the nine-month periods ended September 30, 2000 and 1999 are in the amount of Baht 126.79 million and Baht 144.00 million, respectively in the consolidated financial statements. As at September 30, 2000 and December 31, 1999, the Company has staffs for 569 persons and 581 persons, respectively and staff costs for the nine-month periods ended September 30, 2000 and 1999 are in the amount of Baht 120.89 million and Baht 133.12 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. 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 nine-month period ended September 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 informations of subsidiaries have been reviewed by us except for the financial statements of Sino-Thai Joint Venture which have been reviewed by another auditor. The Company's separate financial statements for the three-month and nine-month period ended September 30, 2000 includes equity in profit (loss) of the above subsidiaries, associated companies and three joint ventures as the Company has significant influence and/or has powers to participate in the financial and operating policy decisions. The financial informations of the above associated companies and two joint ventures prepared by the Company's management and have not been reviewed by auditor and have been reviewed by another auditor for one joint venture. 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 September 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 nine-month periods ended September 30, 2000 and for the year ended December 31, 1999 includes the financial statements of subsidiaries which have been reviewed by another auditor. Its 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 are as follows: Assets Total revenues Net income (loss) September 30, December 31, September 30, September 30, 2000 1999 2000 2000 Subsidiary Sino Thai Joint Venture 3.02 1.25 3.44 0.12 The Company's separate financial statements for the three-month and nine-month periods ended September 30, 2000 and 1999 include equity in profit (loss) of associated companies and joint ventures, which have been prepared by the management and have not been reviewed by auditor that reflected to net income (loss) as follows : 2000 1999 % % Associated companies HTR Corporation Limited 0.28 2.65 DKK Sino-Thai Engineering Company Limited 2.83 0.43 Thai Maintenance Contracting Company Limited 0.27 0.12 Joint Ventures Philipp Holzmann (Thai)/U.T.M. Engineering/ Sino-Thai Joint Venture - 3.07 Zueblin W&F Stecon Joint Venture 0.11 1.63 The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited/Totems Company Limited 0.01 0.01 1.4 Going Concern For the nine-month periods ended September 30, 2000 and 1999, the Company and subsidiaries have incurred net loss from operations in the amount of Baht 1,495.90 million and Baht 665.97 million, respectively, and as at September 30, 2000 and December 31,1999, their total current liabilities exceeded total current assets amount of Baht 4,372.07 million and Baht 3,264.23 million, respectively in the consolidated financial statements and Baht 4,392.12 million and Baht 3,252.96 million, respectively in the separate financial statements. The Company and subsidiaries also have total liabilities exceeded total assets in the amount of Baht 3,048.10 million and Baht 1,639.49 million, respectively in the consolidated financial statements and Baht 3,112.32 million and Baht 1,703.57 million, respectively in the separate financial statements as at September 30, 2000 and December 31, 1999. The financial statements have been prepared on going concern (more)