ANNUAL CONSOLIDATED FINANCIAL STATEMENTS ENDED DEC.31, 2000

Auditor's Report To the Shareholders of Sino-Thai Engineering and Construction Public Company Limited: I have audited the consolidated balance sheets of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries as at December 31, 2000 and 1999, and the related consolidated statements of income, changes in shareholders' equity (deficit), deficit and cash flows for each of the years then ended, and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for each of the years then ended. The Company's management are responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my report. As shown in the financial statements for 1999, the Company and its subsidiaries incurred net loss in the amount of Baht 1,080.61 million. As at December 31, 1999, its deficit was in amount of Baht 2,954.44 million, total current liabilities exceeded total current assets in the amount of Baht 3,264.23 million and Baht 3,252.96 million, respectively, total liabilities exceeded total assets in the amount of Baht 1,639.49 million and Baht 1,703.57 million, respectively, in the consolidated financial statements and the separate financial statements of the Company. In addition, the Company and a subsidiary failed to repay loans and interest and could not maintain financial ratio condition with domestic commercial banks and foreign banks. The default entitles the banks to accelerate the maturity of all amount outstanding immediately due and payable. If accelerated, the Company and the above subsidiary would not be able to repay such debt. Also, two subsidiaries have difficulties relating to operating as going concern, which is significant matter. In addition, the operations of the Company and its subsidiaries may continue to be influenced by the economic conditions in Thailand and the Asia Pacific Region in general. These factors raise substantial doubt about Sino-Thai Engineering and Construction Public Company Limited and subsidiaries' ability to continue as a going concern. The financial statements are prepared and do not include any adjustment relating to the recoverability of the recorded assets and the amounts and classification of liabilities that might be necessary should the Company and subsidiaries be unable to continue as going concern. However, in 2000 the Company has already operated on rehabilitation plan as described in Notes 1.4 and 2.10. In my opinion, the financial statements for the year 2000 referred to above presented fairly, in all material respects, the consolidated financial position of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries at December 31, 2000, the consolidated results of their operations and consolidated cash flows for the year then ended and the financial position, the results of its operation and cash flows of Sino-Thai Engineering and Construction Public Company Limited for the year then ended, in conformity with generally accepted accounting principles. Because of the uncertainty of the Company and subsidiaries' ability to continue as a going concern in 1999, as described in the third paragraph, which enter materially into the determination of the financial position, and the results of their operations and cash flows of the Company and subsidiaries, I do not express an opinion on the consolidated financial statements and the separate financial statements of the Company for the years ended December 31, 1999 of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries. I draw attention to Notes to the financial statements as follows: As described in Note 1.2 to the financial statements, the operations of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries may continued to be influenced by the economic condition in Thailand and the Asia Pacific Region in general. As described in Notes 1.4 and 2.10 to the financial statements, as at December 31, 2000, the Company and its subsidiaries have deficit in the amount of Baht 1,214.65 million. The Company has gain on debt restructuring after restructuring under the Company's rehabilitation plan in the amount of Baht 3,565.33 million. In addition, the Company has performed in compliance with new condition to settlement on remaining debt until 2006. A subsidiary has difficulties relating to operating as going concern, which is significant matter and temporarily cease its operation. These factors raise substantial doubt about the Company and its subsidiary's ability to continue as a going concern. As described in Note 1.6 to the financial statements, in 1999 the subsidiary changed its accounting policy with respect to the treatment of unamortized mining development cost previously recognized as other assets to be recognized as expense. As described in Note 2.1 to the financial statements, the Company and its subsidiaries have significant transactions with theirs related parties. As described in Note 2.8 to the financial statements, land and land improvement as at December 31, 2000 at book value of Baht 175.96 million, the Company has still in revaluation process on all items and expect to finalize in the first quarter of 2001. As described in Note 2.10 to the financial statements, as at December 31, 1999, a subsidiary has performed debt restructuring with a commercial bank. Under the restructuring agreement, the bank has modified the rate of principal and interest repayment. The differences between interest expense, which calculated, from bank's right and debt restructuring agreement, the subsidiary has committed to repay which based on the subsidiary's performance and the bank's approval. Commencing from the fourth quarter in 1999 to December 31, 1999, an uncertainty on repayment depends on a subsidiary's performance so the said subsidiary company has not recorded accrued interest expense of difference between interest expense which calculated from bank's right and debt restructuring agreement. As described in Note 2.13 to the financial statements, as at December 31, 1999, a subsidiary has disputed in mining development contract and quarry for crushing mill and has been sued for above compensation in the approximately amount of Baht 170.72 million and the subsidiary has counterclaimed in the same case in the amount of Baht 142.89 million. This case has still processed on consideration by the arbitrator of judge and not finalized. Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited Bangkok, February 16, 2001 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2000 AND 1999 Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Restated) ASSETS Baht Baht Baht Baht CURRENT ASSETS Cash in hand and at banks (Notes 1.5 & 2.2) 66,161,138.56 368,994,055.93 64,947,772.08 345,228,869.10 Short-term investments (Notes 1.5, 2.2, 2.3 & 2.15) 664,371,357.44 918,837,548.55 664,338,028.00 917,032,711.87 Accounts receivable - Related parties (Notes 1.5 & 2.1) 38,762,936.09 93,641,007.89 42,508,513.81 98,865,168.41 - Others ( Notes 1.5 & 2.4) 1,462,207,939.23 1,529,320,660.35 1,418,893,354.18 1,474,500,670.58 Total Accounts Receivable 1,500,970,875.32 1,622,961,668.24 1,461,401,867.99 1,573,365,838.99 Less Allowance for doubtful accounts (Notes 1.5, 2.1 & 2.4) (376,076,367.43) (357,502,152.46) (343,839,471.70) (354,757,748.30) Accounts receivable - net 1,124,894,507.89 1,265,459,515.78 1,117,562,396.29 1,218,608,090.69 Short-term loans and advances to related parties - net (Note 2.1) 6,671,120.78 27,016,638.11 6,671,120.78 29,558,638.11 Retention receivables - net (Note 2.5) 73,913,641.51 101,044,655.54 73,913,641.51 101,044,655.54 Inventories - net (Notes 1.5 & 2.6) 14,254,347.02 56,268,290.98 - - Construction contract in progress (Note 1.5) 5,244,730.00 - - - Other current assets (Note 2.7) Advances to contractors - net 145,808,658.98 32,113,775.15 145,808,658.98 32,113,775.15 Withholding tax recoverable - net 120,054,536.17 203,504,808.48 119,738,082.85 199,018,050.92 Others - net 51,835,487.86 29,751,311.92 50,991,246.79 23,720,449.98 Total Other Current Assets 317,698,683.01 265,369,895.55 316,537,988.62 254,852,276.05 Total Current Assets 2,273,209,526.21 3,002,990,600.44 2,243,970,947.28 2,866,325,241.36 INVESTMENTS (Notes 1.5 & 2.1) - Joint ventures - 14,879,180.13 2,067,318.83 14,879,180.13 - Related parties 282,366,941.89 245,543,201.57 282,366,941.89 312,758,423.13 - Others 38,921,742.60 282,029,469.89 38,921,742.60 269,757,469.89 Total Investments 321,288,684.49 542,451,851.59 323,356,003.32 597,395,073.15 LOANS - OTHERS - 4,150,000.00 - 4,150,000.00 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 1.5, 2.8 & 2.15) 1,027,456,714.51 1,408,752,800.31 1,024,558,541.95 1,038,184,108.80 OTHER ASSETS (Note 2.9) Loans and advances to directors and employees -net 25,523,350.21 12,374,313.81 25,523,350.21 12,030,363.20 Condominiums - net 5,507,985.00 69,470,241.70 5,507,985.00 69,470,241.70 Deposits 7,654,143.41 40,075,282.76 7,654,143.41 40,075,282.76 Others 4,701,471.93 14,594,030.87 4,503,971.93 12,159,317.45 Total Other Assets 43,386,950.55 136,513,869.14 43,189,450.55 133,735,205.11 Total Assets 3,665,341,875.76 5,094,859,121.48 3,635,074,943.10 4,639,789,628.42 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2000 AND 1999 Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Restated) LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Baht Baht Baht Baht CURRENT LIABILITIES Bank overdrafts and loans from financial institution 92,580,626.56 915,911,175.73 92,580,626.56 820,599,714.49 Accounts payable - Related parties (Note 2.1) 2,326,128.32 3,934,136.79 75,878.32 3,006,793.47 - Others 801,309,959.73 956,633,640.60 783,941,908.55 920,910,532.16 Total Accounts payable 803,636,088.05 960,567,777.39 784,017,786.87 923,917,325.63 Current portion of debt restructuring creditors (Notes 1.4 & 2.10) 100,000,000.00 - 100,000,000.00 - Long - term loans in default (Note 2.10) - 3,205,333,000.00 - 3,205,333,000.00 Other current liabilities Advance receipt on contracts 380,689,830.22 417,570,286.86 379,257,975.94 417,356,727.53 Accrued interest expenses (Notes 1.4 & 2.10) 45,287,671.23 640,595,054.31 45,287,671.23 638,406,743.79 Provision for contingent cost 200,503,902.88 9,174,379.00 200,503,902.88 9,174,379.00 Others 88,660,002.10 118,065,050.08 82,460,435.15 104,498,581.28 Total Other Current Liabilities 715,141,406.43 1,185,404,770.25 707,509,985.20 1,169,436,431.60 Total Current Liabilities 1,711,358,121.04 6,267,216,723.37 1,684,108,398.63 6,119,286,471.72 DEBT RESTRUCTURING CREDITORS (Notes 1.4 and 2.10) 500,000,000.00 185,986,492.45 500,000,000.00 - - OTHER LIABILITIES Provision for loss of subsidiaries 248,781,118.56 177,187,732.60 - - - Loss on investment in subsidiaries and joint ventures exceeding carrying amount (Note 2.1) 27,510,338.51 35,873,135.10 273,274,946.82 203,810,576.46 Hire purchase creditors (Note 2.11) 1,513,938.97 18,814,143.92 1,513,938.97 18,814,143.92 Accrued interest expenses on debt restructuring (Notes 1.4 & 2.10) 78,789,041.07 48,005,557.94 78,789,041.07 - Others 753,784.00 1,264,343.00 753,784.00 1,453,343.00 Total Other Liabilities 357,348,221.11 281,144,912.56 354,331,710.86 224,078,063.38 Total Liabilities 2,568,706,342.15 6,734,348,128.38 2,538,440,109.49 6,343,364,535.10 Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 (Restated) SHAREHOLDERS' EQUITY (DEFICIT) Baht Baht Baht Baht Share capital, Baht 10 par value (Notes 1.4 & 2.12) Authorized shares capital Preference shares 7,000,000 shares 70,000,000.00 70,000,000.00 70,000,000.00 70,000,000.00 Ordinary shares 78,000,000 shares in 2000 and 68,000,000 shares in 1999 780,000,000.00 680,000,000.00 780,000,000.00 680,000,000.00 Issued and fully paid Preference shares 7,000,000 shares 70,000,000.00 70,000,000.00 70,000,000.00 70,000,000.00 Ordinary shares 78,000,000 shares in 2000 and 23,000,000 shares in 1999 780,000,000.00 230,000,000.00 780,000,000.00 230,000,000.00 Paid-in capital Premium on share capital 1,036,000,000.00 486,000,000.00 1,036,000,000.00 486,000,000.00 Assets revaluation surplus (Notes 1.5 & 2.8) 443,714,909.07 443,714,909.07 443,714,909.07 443,714,909.07 Assets revaluation surplus of subsidiary (Notes 1.5 & 2.8) - 127,385,173.55 - 127,385,173.55 Appropriated retained earnings to legal reserve 48,565,466.52 48,565,466.52 48,565,466.52 48,565,466.52 Deficit (1,214,645,172.68) (2,954,444,222.52) (1,214,645,172.68) (2,954,444,222.52) Unrealized loss on available for sales securities (Note 1.5) (67,000,369.30) (154,874,233.30) (67,000,369.30) (154,796,233.30) 1,096,634,833.61 (1,703,652,906.68) 1,096,634,833.61 (1,703,574,906.68) Minority interests 700.00 64,163,899.78 - - - Total Shareholders' Equity (Deficit) 1,096,635,533.61 (1,639,489,006.90) 1,096,634,833.61 (1,703,574,906.68) Total Liabilities and Shareholder's Equity (Deficit) 3,665,341,875.76 5,094,859,121.48 3,635,074,943.10 4,639,789,628.42 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2000 AND 1999 Consolidated Company's Seperate Statements of Income Statements of Income 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht REVENUES (Notes 1.5 & 2.1) Revenues from construction and sales 3,196,925,273.29 3,535,690,960.37 3,182,405,715.49 3,349,577,534.19 Equity in profit (loss) of subsidiaries, associated companies and joint ventures 63,522,990.58 (32,313,312.33) (15,236,056.81) (289,575,722.33) Other income Allowance for decline in valuation of inventories written back 41,916,683.15 - - - Interest income 40,730,447.23 59,749,588.89 40,698,104.26 51,539,017.04 Others 39,651,453.45 72,380,879.64 34,973,504.10 51,834,107.61 Total Other Income 122,298,583.83 132,130,468.53 75,671,608.36 103,373,124.65 Total Revenues 3,382,746,847.70 3,635,508,116.57 3,242,841,267.04 3,163,374,936.51 EXPENSES (Notes 1.5 & 2.1) Costs of construction and cost of sales 3,718,074,639.00 3,228,877,585.24 3,624,502,707.20 3,036,049,410.35 Selling and administrative expenses 301,591,756.59 514,081,203.86 293,317,189.23 357,262,442.40 Loss on exchange rate 145,314,809.05 81,577,263.64 146,576,867.23 76,566,011.98 Loss on sales and devaluation of investments 161,522,492.33 165,598,387.90 159,016,702.33 138,381,357.98 Loss on currency swap contracts in prior year 155,971,469.00 - 155,971,469.00 - Loss on transfering assets for debt restructuring (Note 2.10) 68,391,961.84 - 68,391,961.84 - Doubtful debts 176,726,200.38 286,308,172.11 157,664,298.49 205,246,220.79 Interest expense 479,796,600.66 486,338,561.94 462,928,345.92 429,677,911.00 Directors' remuneration - 961,000.00 - 802,000.00 Total Expenses 5,207,389,928.85 4,763,742,174.69 5,068,369,541.24 4,243,985,354.50 Loss before tax ,minority interest and extraordinary items (1,824,643,081.15) (1,128,234,058.12) (1,825,528,274.20) (1,080,610,417.99) Income tax (Note 1.5) (885,193.05) - - - Loss before minority interests and extraordinary items (1,825,528,274.20) (1,128,234,058.12) (1,825,528,274.20) (1,080,610,417.99) Minority interests in net loss - 47,623,640.13 - - Loss before extraordinary items (1,825,528,274.20) (1,080,610,417.99) (1,825,528,274.20) (1,080,610,417.99) Extraordinary items Gain on debts restructuring (Notes 1.4 & 2.10) 3,565,327,324.04 - 3,565,327,324.04 - Net income (loss) 1,739,799,049.84 (1,080,610,417.99) 1,739,799,049.84 (1,080,610,417.99) Basic earning (loss) per share (Notes 1.5 & 2.10) Loss before extraordinary items (56.97) (46.98) (56.97) (46.98) Extraordinary items Gain on debts restructuring 111.27 - 111.27 - (more)