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 - Net income (loss) 54.30 (46.98) 54.30 (46.98) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2000 AND 1999 Consolidated Statements of Changes Company's Separate Statements of in Shareholders' equity (deficit) Changes in Shareholders' equity (deficit) 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht Share capital (Notes 1.4 & 2.12) Preference shares Beginning balance 70,000,000.00 70,000,000.00 70,000,000.00 70,000,000.00 Increase during year - - - - Decrease during year - - - - Ending balance 70,000,000.00 70,000,000.00 70,000,000.00 70,000,000.00 Ordinary shares Beginning balance 230,000,000.00 230,000,000.00 230,000,000.00 230,000,000.00 Increase during year 550,000,000.00 - - - 550,000,000.00 - - Decrease during year - - - - - - Ending balance 780,000,000.00 230,000,000.00 780,000,000.00 230,000,000.00 Paid-in capital Premium on ordinary share Beginning balance 486,000,000.00 486,000,000.00 486,000,000.00 486,000,000.00 Increase during year 550,000,000.00 - - - 550,000,000.00 - - Decrease during year - - - - - - - Ending balance 1,036,000,000.00 486,000,000.00 1,036,000,000.00 486,000,000.00 Assets revaluation surplus Beginning balance 443,714,909.07 834,565,471.57 443,714,909.07 834,565,471.57 Increase during year - - - - - - - Decrease during year - (390,850,562.50) - (390,850,562.50) Ending balance 443,714,909.07 443,714,909.07 443,714,909.07 443,714,909.07 Assets revaluation surplus of subsidiaries Beginning balance 127,385,173.55 - 127,385,173.55 - Increase during year - - 127,385,173.55 - - - 127,385,173.55 Decrease during year (127,385,173.55) - (127,385,173.55) - Ending balance - 127,385,173.55 - 127,385,173.55 Appropriated retained earnings to legal reserve Beginning balance 48,565,466.52 48,565,466.52 48,565,466.52 48,565,466.52 Increase during year - - - - - - - Decrease during year - - - - - - - Ending balance 48,565,466.52 48,565,466.52 48,565,466.52 48,565,466.52 Consolidated Statements of Changes Company's Separate Statements of in Shareholders' equity (deficit ) Changes in Shareholders' equity (deficit) 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht Deficit Beginning balance as previously reported (2,954,444,222.52) (1,883,300,813.03) (2,954,444,222.52) (1,883,300,813.03) Cumulated effect of change in accounting policy of a subsidiary (Note 1.6) - (10,863,395.28) - (10,863,395.28) Adjustment of deficit of subsidiary at beginning of year not included in consolidated financial statements - 20,330,403.78 - 20,330,403.78 Beginning balance as restated (2,954,444,222.52) (1,873,833,804.53) (2,954,444,222.52) (1,873,833,804.53) Increase during year - net income (loss) 1,739,799,049.84 (1,080,610,417.99) 1,739,799,049.84 (1,080,610,417.99) Decrease during year - - - - Ending balance (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 Beginning balance (154,874,233.30) (255,754,111.22) (154,796,233.30) (254,591,849.30) Increase during year - 100,879,877.92 - 99,795,616.00 Decrease during year 87,873,864.00 - 87,795,864.00 - Ending balance (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 Beginning balance 64,163,899.78 61,616,112.69 - - Increase during year - 2,547,787.09 - - Decrease during year (64,163,199.78) - - - Ending balance 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) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF DEFICIT FOR THE YEAR ENDED DECEMBER 31, 2000 AND 1999 Consolidated Statements of Deficit Company's Separate Statements of Deficit 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht Deficit Beginning balance as previously reported (2,954,444,222.52) (1,883,300,813.03) (2,954,444,222.52) (1,883,300,813.03) Cumulated effect of change in accounting policy of a subsidiary (Note 1.6) - (10,863,395.28) - (10,863,395.28) Adjustment of deficit of subsidiary at beginning of year not included in consolidated financial statements - 20,330,403.78 - 20,330,403.78 Beginning balance as restated (2,954,444,222.52) (1,873,833,804.53) (2,954,444,222.52) (1,873,833,804.53) Net income (loss) 1,739,799,049.84 (1,080,610,417.99) 1,739,799,049.84 (1,080,610,417.99) Total Deficit (1,214,645,172.68) (2,954,444,222.52) (1,214,645,172.68) (2,954,444,222.52) Appropriated retained earnings Legal reserve 48,565,466.52 48,565,466.52 48,565,466.52 48,565,466.52 Total Deficit (1,166,079,706.16) (2,905,878,756.00) (1,166,079,706.16) (2,905,878,756.00) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2000 AND 1999 Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) 1,739,799,049.84 (1,080,610,417.99) 1,739,799,049.84 (1,080,610,417.99) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Doubtful debts 176,726,200.38 286,308,172.11 157,664,298.49 205,246,220.79 Depreciation 76,932,464.69 91,047,960.63 75,948,049.77 73,973,942.22 Deferred charges - 108,219,507.40 - 107,783,067.40 (Gain) loss on sales of condominiums and equipment (52,951.94) 9,072,176.41 (3,564,152.29) 2,039,607.69 Equity in (profit) loss of subsidiaries and associated companies and joint ventures (63,522,990.58) 32,313,312.33 15,236,056.81 289,575,722.33 Loss on impairment of condominiums - 13,366,468.11 - 13,366,468.11 Increase (Decrease) in provision against (41,916,683.15) 104,158,829.63 - - value of inventories 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 - Unrealized losses on exchange rate 147,210,769.78 68,592,507.12 145,648,242.07 72,978,476.56 Loss on transfering assets for debt restructuring 68,391,961.84 - 68,391,961.84 - Gain on debts restructuring (3,565,327,324.04) - (3,565,327,324.04) - Loss of Minority interest - (47,623,640.13) - - Changes in operating assets and liabilities (Increase) Decrease in operating assets Accounts receivable 118,436,013.92 28,676,446.59 93,687,694.12 (64,785,590.88) Retention receivables 27,131,014.03 191,760,107.56 27,131,014.03 191,763,242.60 Inventories 83,930,627.11 60,803,101.57 - - - Construction contract in progress (5,244,730.00) - - - Other current assets (56,736,467.39) 219,468,999.27 (61,831,796.15) 206,531,153.20 Other assets 42,313,698.29 (43,859,592.13) 40,076,484.87 (37,913,699.23) Increase (Decrease) in operating liabilities Accounts payable (158,523,528.90) (177,948,721.94) (139,899,538.76) (125,212,177.89) Other current liabilities 599,336,466.09 382,141,388.09 605,351,204.98 414,870,377.16 Other liabilities 4,476,815.82 8,464,888.63 (22,354,643.15) (36,853,088.42) Net Cash Provided by (Used in) Operating Activities (489,145,632.88) 419,949,881.16 (509,055,226.24) 371,134,661.63 Consolidated Statements Company's Separate Statements of Cash Flows of Cash Flows 2000 1999 2000 1999 ( Restated ) Baht Baht Baht Baht CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in short-term investments 1,800,276.68 190,551.96 - (24,080.60) (Increase) decrease in short-term loans and advances to related parties (129,814,697.30) (88,062,132.28) (127,272,697.30) 1,731,506.17 Decrease in loans - others 4,150,000.00 12,131,086.49 4,150,000.00 35,966,355.48 (Increase) Decrease in investments 81,835,524.09 (55,000,703.07) 139,259,687.33 (47,564,277.65) Dividend income 1,399,800.00 - 1,399,800.00 - Transfering property, plant and equipment of subsidiary for debt restructuring 359,424,903.68 - - - Purchase of equipment (99,124,247.46) (43,146,980.70) (99,124,247.46) (62,728,372.09) Proceeds from sales of equipment 14,480,315.93 13,579,707.13 10,730,315.93 8,610,646.80 Proceeds from sales of condominiums 4,965,195.00 9,150,240.01 4,965,195.00 9,150,240.01 (Increase) decrease in loans and advances to directors and employees (13,149,036.40) 1,971,725.04 (13,492,987.01) (1,915,057.89) Net Cash Provided by (Used in) Investing Activities 225,968,034.22 (149,186,505.42) (79,384,933.51) (56,773,039.77) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in bank overdrafts and loans from financial institutions 51,195,762.92 (7,095,714.93) 146,507,224.16 1,219,293.82 Increase (decrease) in loans from directors (2,322,178.53) 2,322,178.53 - - - Proceeds from increase in share capital 100,000,000.00 - 100,000,000.00 - Repayment to debt restructuring creditors (100,000,000.00) - (100,000,000.00) - Decrease in subsidiary's debt restructuring creditors (185,986,492.45) - - - Increase (Decrease) in minority interest (64,163,199.78) 50,171,427.22 - - Net Cash Provided by (Used in) Financing Activities (201,276,107.84) 45,397,890.82 146,507,224.16 1,219,293.82 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (464,453,706.50) 316,161,266.56 (441,932,935.59) 315,580,915.68 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Notes 1.5 & 2.2) 340,674,198.52 794,792,489.44 317,132,011.69 771,607,653.49 CASH AT BANK PLEDGED AS COLLATERALS AT BEGINNING OF YEAR (Notes 1.5, 2.2 & 2.15) 854,309,723.98 84,030,166.50 854,086,723.98 84,030,166.50 CASH AT BANK PLEDGED AS COLLATERALS AT ENDING OF YEAR (Notes 1.5, 2.2 & 2.15) (678,567,644.51) (854,309,723.98) (678,344,644.51) (854,086,723.98) CASH AND CASH EQUIVALENTS AT END OF YEAR (Notes 1.5 & 2.2) 51,962,571.49 340,674,198.52 50,941,155.57 317,132,011.69 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: (Note 2.2) Cash paid during the year Interest expense 5,878,086.64 34,880,025.34 4,175,124.05 16,554,880.86 Income tax 49,725,292.10 69,746,793.62 49,519,630.11 68,101,422.27 SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 NOTE 1 GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 GENERAL INFORMATION Sino-Thai Engineering and Construction Public Company Limited has major business in general construction. As at December 31, 2000, the Company's major group of shareholders are Finansa Fund Management Limited and Charnvirakul family for 24.73% and 24.32%, respectively and as at December 31, 1999 was Charnvirakul's family for 52.27 % of total fully paid shares capital. The Company is major shareholders of SinoThai Construction Services Company Limited in 2000 and 1999. And the Company was a major shareholder of SinoThai Resources Development Public Company Limited in 1999. As at December 31, 2000 and 1999, the Company and its subsidiaries have staffs for 585 persons and 611 persons, respectively. For the year 2000 and 1999, the Company and its subsidiaries have staffs cost in the amount of Baht 202.21 million and Baht 200.59 million, respectively, in the consolidated financial statements. As at December 31, 2000 and 1999, the Company has staffs for 568 persons and 581 persons, respectively. For the year 2000 and 1999, the Company has staffs cost in the amount of Baht 196.30 million and Baht 187.35 million, respectively, in the separate financial statements of the Company. 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 and its subsidiaries. However, actual results could differ from the management estimates. 1.3 BASIS OF CONSOLIDATION 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 principle 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 accompany consolidated financial statements for the year ended December 31, 2000 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, and Sino-Thai Joint Venture. And the 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, Sino-Thai Resources Development Public Company Limited and Sino-Thai Joint Venture. The Company has the significant role to control and/or percentage of shareholding is considered to possess the ability to exercise significant influence over subsidiaries in the financial and operating policy decisions, collectively "subsidiaries". All significant intercompany transactions and balances have been eliminated in preparing the consolidated financial statements. The financial information of the Company and its subsidiaries which included in the consolidated financial statements are summarized as follows: Percentage of holding 2000 1999 Sino-Thai Construction Services Company Limited 99.99 99.99 Sino-Thai Resources Development Public Company Limited - 51.16 Sino-Thai Joint Venture 100.00 100.00 The consolidated financial statements for the years ended December 31, 2000 and 1999 include the financial statements of subsidiary which have been audited by another auditor and prepared by the Company's management which have not been audited by another auditor. Its total assets, total revenues and net income (loss) reflected in percentage of total assets, total revenues and net income (loss) in the consolidated financial statements are as follows: Assets Total revenues Net income (loss) 2000 1999 2000 1999 2000 1999 Subsidiary Sino - Thai Joint Venture 3.00 1.25 3.04 0.01 0.12 0.10 The separate financial statements of the Company for the year ended December 31, 2000 and 1999 include equity in profit (loss) of subsidiaries in 2000 which audited by another auditor and in 1999 which prepared by the Company's management and were not audited by auditor that reflected to net income (loss) of the seperate financial statements of the Company as follows: 2000 1999 % % Subsidiary Sino-Thai Joint Venture 0.29 (0.28) Associated companies HTR Corporation Limited (0.32) (5.57) DKK Sino-Thai Engineering Company Limited 3.81 0.71 Thai Maintenance Contracting Company Limited 0.24 (0.14) ACS Asia (1996) Company Limited - (0.02) Joint Ventures Philipp Holzmann (Thai)/U.T.M. Engineering/ Sino-Thai Joint Venture - 2.21 Zueblin W&F Stecon Joint Venture (0.25) (0.18) The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited/Totems Company Limited (0.01) 0.01 3.76 (3.26) 1.4 GOING CONCERN For the year ended December 31, 1999, the Company and its subsidiaries have incurred in net loss in the amount of Baht 1,080.61 million. And as at December 31, 1999, the Company and it subsidiaries have also deficit in the amount of Baht 2,954.44 million, total current liabilities exceed total current assets in the amount of Baht 3,264.23 million and Baht 3,252.96 million, respectively, and total liabilities exceed 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. The Company and a subsidiary in 1999 failed to repay loans and interest and did not maintain financial ratios condition under loan agreement that entitles the banks to accelerate the maturity of all amount outstanding and interest 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 and perform under this restructuring plan. In 1999,a subsidiary suffered recurring loss from operation, total current liabilities exceeded total current assets. In addition, the Stock Exchange of Thailand has informed the subsidiary concerning to the withdrawal from being a listed company, since the operating assets decreased in material amount. The subsidiary has been still in the process of avoiding withdrawal from being a listed company. Thereafter, a subsidiary 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, requiring consulting fee of Baht 67,500 per quarter until this plan to be finalized. On November 6, 2000 the Company transfer 6,651,000 shares of Sino-Thai Resources Development Public Company Limited to STECON AMC Company Limited, as a repayment for the creditors in complied with the rehabilitation plan. In 2000 and 1999, another subsidiary has suffered recurring in net loss from operation. Its total current liabilities exceed total current assets, total liabilities exceed total assets and there were difficulties in operating as a going concern. The extraordinary of shareholders meeting of the subsidiary also resolved to cease the operation temporarily. On December 17, 1999, the creditors and the Company submitted their petition for rehabilitation plan for the Company to the Central Bankruptcy Court. On January 17, 2000, the Court ruled that the Company has rehabilitated by appointing, Mr. Anutin Charnvirakul and Mr. Chavarat Charnvirakul as the planners by requesting of the creditors and the Company. On August 23, 2000, the creditors meeting resolved to approve the rehabilitation plan. On September 4, 2000, the Central Bankruptcy Court authorized the rehabilitation plan under Section 90/58 of the Bankruptcy Act, B.E. 2483, which determined STECON Administrator Company Limited located at 29th-30th Floor, Sino-Thai Tower, 32/59-60, Asoke Soi, Sukhumwit 21 road, North Klongtoey, Wattana, Bangkok 10110 as the Plan Administrator. Any of the planner's rights or privileges, powers and duties will be transferred to the Plan Administrator since from date of order of the Court. The Company's rehabilitation plan, which is approved by the creditors meeting and the Central Bankruptcy Court are summarized as follows: Types of creditors Million Baht 1. Financial creditors 4,656.31 2. Working capital creditors 55.00 3. Foreign currency swap creditors 201.17 4. Sub-contractor creditors 31.89 5. Trade creditors 81.89 6. Creditors whose claims are disputed by the Company 41.04 7. Condominium creditors and facility agents creditors under the Syndicated loan 4.20 8. Bond issuer creditors and beneficiary creditors 1.73 Total 5,073.23 The aforementioned class 1 and class 3 creditors will waive a part of debts after the Company follows under steps 1 to 5 of the business rehabilitation plan. 1. Increasing in share capital registered Within 60 days from the date of plan approval, the Company will increase its registered share capital and issue 55 million ordinary shares. These shares will be divided into (i) Group 1 Shares consisting of 5 million newly issued shares with the par value of Baht 10 per share, offered for sale to the majority shareholder at the price of Baht 20 per share, and (ii) Group 2 Shares consisting of 50 million newly issued shares with the par value of Baht 10 per share, offered for sale to class 1 and class 3 creditors at the price of Baht 70 per share. 2. Purchasing newly issued shares by the major shareholders Within 60 days from the date of plan approval, the majority shareholders will purchase Group 1 Shares of 5 million ordinary shares at the price of Baht 20 per share. 3. Debt-equity conversion of the financial creditors Within 60 days from the date of plan approval, class 1 and class 3 creditors will convert the Baht 3,500 million principal into Group 2 Shares of 50 million ordinary shares at the price of Baht 70 per share under proportionate to the outstanding principal due to each creditor. 4. Non-core assets transferring to STECON AMC Company Limited Within 60 days from the date of plan approval, the Company will transfer its non-core assets (Non-core assets are not main assets to operations) to STECON AMC Company Limited to repay outstanding principal of Baht 5.52 million to class 1 creditors under proportionate to that due to each creditor. 5. Cash repayment Within 60 days from the date of plan approval, the Company will repay outstanding principal of Baht 100 million to class 1 and class 3 creditors in cash under proportionate to that due to each creditor. 6. Extension of repayment The Company will repay its Baht 600 million outstanding principal to class 1 and class 3 creditors in installments over six years in accordance with the guideline set forth in the plan. The class 2, 4, 5, 6, 7 and 8 creditors will be repaid in accordance with the guidelines set forth in this plan. The financial statements for 1999 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 there classification of those assets and liabilities. Thereafter, the plan administrator and the Company have implemented the rehabilitation steps as follows: - 1. On September 22, 2000, the Company has registered to increase the authorized share capital by Baht 550 million, from Baht 300 million to Baht 850 million, by issuing new totally 55,000,000 ordinary shares, Baht 10 par value, which offering support to the majority shareholder for 5,000,000 shares and for the debt-equity conversion of the financial creditors for 50,000,000 shares. 2. On November 2, 2000, the Company has sold to the majority shareholder (the Charnivirakul family) for 5,000,000 shares, Baht 20 per share, which totally amount of Baht 100 million. 3. On November 2, 2000, the Company has converted loan principal of the financial institutions for Baht 3,500,000,000 by offering 50,000,000 ordinary shares at Baht 70 per share (Fair market value at Baht 20 per share). 4. On November 2, 2000, the Company has transferred the ownership on 2 plots of land, which have book value of Baht 30,474,624.00 and its fair value of Baht 28,669,149.00 to STECON AMC Company Limited. 5. On November 8, 2000, the Company has transferred the ownership on 58 condominiums, which have book value of Baht 58,158,038.60 and its fair value of Baht 58,194,874.00 to STECON AMC Company Limited. 6. On November 17, 2000,the Company has repaid to creditors by cash for Baht 100,000,000. 7. On November 6, 2000 and November 24, 2000, the Company has transferred the ownership on shares of Sino-Thai Resources Development Public Company, Thanayong Public Company Limited, Hemaraj Land and Development Public Company Limited, Phoenix Pulp and Paper Public Company Limited, Distar Electric Public Company Limited for 6,651,000 shares, 60,200 shares, 120,400 shares, 3,578,950 shares, 28,200 shares, respectively, which book value totally amount of Baht 207,429,902.49 and theirs fair value totally amount of Baht 140,013,360.00 to STECON AMC Company Limited. 8. Remaining debt for Baht 600 million are extended period for 6 years installment commencing from the dated of plan approval and with interest rate at 6 % per annum. And please see Note 2.10 to the financial statements. 9. On December 15, 2000, the rehabilitation plan is cancelled by the Central Bankruptcy Court. 1.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICY The Measurement recognition in financial statements preparation Except other topics, which disclosed in Summary of significant accounting policy and other notes to the financial statements, these financial statements are prepared on the historical cost basis. Revenue Recognition Revenue from construction of the parent company is recognized on the basis of the percentage-of-completion method as estimated by the Company's engineers. Differences between income, which recognised on the basis of the percentage-of-completion method and billing income, are recorded as accounts receivable. Subsidiary's revenue from sales is recognized when significant risk on ownership or rewards is transferred to the buyer. Service income is recognized on the basis of the percentage-of-completion method and invoices are collected. Rental income on toll and equipment is recognized when invoices are collected. Other income is recognized on the accrual basis. Expenses Recognition Costs of construction of the Company are recognised on the basis of the percentage of work completed to the total estimated costs or the actual costs. Differences between the estimated costs and the actual cost are recognised on the basis of the percentage of work completed which are recorded as construction contracts in progress. Subsidiary's service costs are recognised on the basis of actual cost. Expenses are recognised on the accrual basis. Cash and Cash equivalents Cash and cash equivalents represent cash in hand and at banks, fixed deposits and notes receivable financial institutions with an original maturity of three months or less, net of bank deposits pledged as collateral. Allowance for Doubtful Accounts The Company provides allowance for doubtful accounts on the basis of those amounts, which may proved to be uncollectible. Inventories Inventories of its subsidiaries are stated at cost, using first-in, first-out method, net of provision for declining in value of inventories. Short-term Investments Short-term investments in marketable equity securities, which held for trading, are stated at fair value. Unrealized gains or losses arising on the revaluation of trading securities are recognized in the statement of income. Short-term investments in non-marketable equity securities, which are general investment, are stated at cost. Investments Long-term investments in marketable equity securities represent available for sale are stated at fair value. Unrealized gains or losses arising on the revaluation of available for sale securities are shown as a separate from shareholders' equity and recognized in the statement of income upon sale or when the securities are impaired in the value. General investments are stated at cost net of provision for impairment of investments. Investments in subsidiaries and associated companies are stated at equity method. 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. Property, Plant and Equipment of subsidiaries are stated at cost. Depreciation is computed by the straight- line method on costs less approximate salvage value, based on the estimated useful life of assets (Except dredges of which depreciation is computed by the ratio of actual production of tin concentrate to the estimated tin ore reserves and bucket bands, tumblers and bucket idlers which are based on actual production hours over their estimated useful lives) as follows: Buildings 5% Buildings, jetty and dry dock 5% Leasehold buildings improvements 5% Vehicles 10 - 20% Motor launches and tugs 10% Machinery and construction equipment 10 - 20% Mining equipment 5 - 20% Furniture and office equipment Revaluation The Company and its subsidiaries recorded the land and dredge's carrying amount, which were increased as a result of this appraisal, directly to assets revaluation surplus under shareholders'equity. Where the asset's carrying amount, has been decreased as a result of a revaluation, the expense is charged in the statement of income. A revaluation decrease is however charged directly against any related revaluation surplus to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same property, plant and equipment. Revaluation surplus on dredges is transferred to deficit when revaluation surplus has already incurred. Dredges of which depreciation is computed by the ratio of actual production of tin concentrate to the estimated tin ore reserves and shown to be expenses in statements of income. The fixed assets revaluation in respect of land and dredges based on Fair Value as determined by an independent appraiser. Unamortized Mining Rights Mining rights for 2 right is amortized by the straight-line method over the lives of mining rights, 25 years, as from February 1979 and August 1979. Accounts in Foreign Currencies Transactions in foreign currencies are translated into Baht at the rates of exchange prevailing on the dates of transactions. Liabilities in foreign currencies outstanding at the balance sheet date are translated into Baht at the rate of exchange prevailing on that date and at forward exchange rates where the Company has entered into forward exchange contracts. Gain or loss on translation is included in statements of income. Accounting Estimation The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingencies assets and liabilities at the date of the financial statements. Actual results may differ from those estimates. Income Tax Income tax is recognized on the accrual basis and calculated on net income. Basic Earning (loss) per share Basic earning (loss) per share is calculated by dividing net income (loss) for the year by the weighted average number of ordinary shares outstanding during the year for 2000 and by the number of ordinary shares outstanding at the end of the year for 1999. 1.6 CHANGE IN ACCOUNTING POLICY During 1999, a subsidiary changed its accounting policy with respect to the treatment of unamortized mining development cost previously recognized as assets to be recognized as expenses in order to conform with the TAS interpretation No. 4 issued by the Institute of Certified Accountants and Auditors of Thailand. This Change in accounting policy has been accounted for retrospectively. The effect of the change has decreased in net loss and basic losses per share by Baht 136,380.95 and Baht 0.01 per share, respectively. The cumulative effect of change in accounting policy resulted to opening deficit of the year 1999 have been increased by Baht 10,863,395.28. NOTE 2 SUPPLEMENTAL INFORMATION 2.1 TRANSACTIONS WITH RELATED PARTIES The Company and its subsidiaries have 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 non-related parties and included in financial statements. The significant transactions with its related parties during the year in the Company's separate financial statements are as follows: Policy of pricing 2000 1999 Baht Baht Revenues from construction Market price 99,108,186.00 47,591,031.00 Revenues from services, rental and others - 14,233.60 693,000.00 Interest income - - 935,838.64 Purchase of equipment - 28,050.00 711,487.60 Concrete service and others - - 773,352.00 Accounts receivable-related parties as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Subsidiaries:- Sino-Thai Construction Services Company Limited - - 304,050.00 18,485,287.94 Sino-Thai Resources Development Public Company Limited - - - 1,391.00 Total - - 304,050.00 18,486,678.94 Associated companies:- STP & I Public Company Limited 17,018.00 9,654,825.42 - - ACS Asia Limited 12,378.48 15,716.15 12,378.48 15,716.15 Thai Maintenance Contracting Company Limited - 266,147.41 - 266,147.41 Total 29,396.48 9,936,688.98 12,378.48 281,863.56 Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Joint ventures:- Philipp Holzmann (Thai) /U.T.M. Engineering / Sino-Thai Joint Venture 18,513,530.26 39,358,217.11 18,513,530.26 39,358,217.11 Zueblin W&F Stecon Joint Venture 123,200.00 4,929,670.45 - 4,149,377.45 The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited/ Totems Company Limited 1,129,400.34 16,032,272.88 1,129,400.34 16,032,272.88 Sino-Thai Joint Venture - 1,499,661.46 3,581,745.72 1,499,661.46 SS Joint Venture - 70,000.00 - 70,000.00 Total 19,766,130.60 61,889,821.90 23,224,676.32 61,109,528.90 Other related parties:- 18,967,409.01 21,814,497.01 18,967,409.01 18,987,097.01 Total account receivable-related parties 38,762,936.09 93,641,007.89 42,508,513.81 98,865,168.41 Less Allowance for doubtful accounts (34,526,027.45) (23,301,604.49)(34,402,827.45)(37,254,352.37) Total Accounts receivable-related parties-net 4,236,908.64 70,339,403.40 8,105,686.36 61,610,816.04 Short-term loans and advances to related parties as at December 31 are summarized as follows: Consolidated Company's Separate Policy of borrowing cost Balance Sheets Balance Sheets 2000 1999 2000 1999 Consolidated Company's Separate Baht Baht Baht Baht Balance Sheets Balance Sheets Subsidiary Sino-Thai Construction Services Company Limited - - 215,942,722.55 158,911,455.72 - 6-9% Less Allowance for doubtful accounts - - (215,942,722.55)(158,911,455.72) Total - - - - Associated company MMR Asia Company Limited 17,050,077.69 17,050,077.69 11,611,792.69 11,611,792.69 15-17% 17% Less Allowance for doubtful accounts (17,050,077.69) (17,050,077.69) (11,611,792.69) (11,611,792.69) Total - - - - Thai Maintenance Contracting Company Limited - 5,000,000.00 - - Joint Ventures Philipp Holzmann (Thai)/ U.T.M. Engineering/ Sino-Thai Joint Venture - 15,345,517.33 - 15,345,517.33 15% 15% The Joint Venture of Tomen Enterprise (Bangkok) Limited/ Sino-Thai Engineering and Construction Public Company Limited/ Totems Company Limited 6,671,120.78 6,671,120.78 6,671,120.78 6,671,120.78 11% 11% Sino-Thai Joint Venture - - - 2,542,000.00 - 9.25% Other related parties Is Geo System Company Limited 78,566,828.67 - 78,566,828.67 - - - Less Allowance for doubtful accounts (78,566,828.67) - (78,566,828.67) - Total - - - - Siam Dimension Stone Company Limited - 77,297,494.17 - - Less Allowance for doubtful accounts - (77,297,494.17) - - Total - - - - Total short-term loans and advances to related parties - net 6,671,120.78 27,016,638.11 6,671,120.78 29,558,638.11 Accounts payable-related parties as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Sino-Thai Construction Services Company Limited - - - 149,569.95 HTR Corporation Limited - 174,960.72 - 174,960.72 ACS Asia Limited 75,878.32 75,878.32 75,878.32 75,878.32 Other related parties 2,250,250.00 3,683,297.75 - 2,606,384.48 Total 2,326,128.32 3,934,136.79 75,878.32 3,006,793.47 Investments as at December 31, consisted of:- 2000 Fully paid Company's separate Shares Capital Portion of Consolidated balance sheets Balance Sheets Type of Business(Thousand Baht) investment Cost Method Equity Method Cost Method Equity Method Jont Ventures Baht Baht Baht Baht Philipp Holzmann (Thai)/ U.T.M. Engineering/ Sino-Thai Joint Venture - 100% - 14,861,271.94 - 14,861,271.94 Less Provision for declining in value - (14,861,271.94) - (14,861,271.94) Total - - - - Zueblin-W&F-Stecon Joint Venture - 33% - - - - The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited / Totems Company Limited - 33% - - - - Sino-Thai Joint Venture - 100% - - - 2,067,318.83 Total investment in joint ventures - - - 2,067,318.83 Related Parties Subsidiary Sino-Thai Construction Rental, dealer Services Company in construction Limited equipment and heavy machinery 30,000,000 99.99% - - 29,999,300.00 - Associated Companies HTR Corporation Limited Real estated 500,000,000 47.60% 329,990,005.00 166,582,292.15 329,990,005.00 166,582,292.15 DKK Sino-Thai Engineering Telecommunications Company Limited and transmission lines 8,000,000 35% 2,799,600.00 102,053,434.10 2,799,600.00 102,053,434.10 ACS Asia Company Limited Light steels fabrication 10,000,000 50% 5,000,000.00 8,985,576.90 5,000,000.00 8,985,576.90 Less Provision for declining in value of investments (8,985,576.90) (8,985,576.90) Total - - Thai Maintenance Maintenance Contracting service for large Company Limited industrial plants 12,315,000 25.14% 2,339,810.00 9,951,215.64 2,339,810.00 9,951,215.64 Inter IMC PTE Ltd. Construction 12,600,000 30% 3,780,000.00 3,780,000.00 3,780,000.00 3,780,000.00 Total investments in related parties - net 282,366,941.89 282,366,941.89 2000 Fully paid Company's separate Shares Capital Portion of Consolidated balance sheets Balance Sheets Type of Business (Thousand Baht) investment Cost Method Equity Method Cost Method Equity Method Others Baht Baht Baht Baht Available for sale securities STP & I Public Steel fabrication, Company Limited Steel construction, Industrial boilers and pressure vessels manufacturing 250,000,000 10% 75,750,054.30 75,750,054.30 Nakornthai Stripmill Public Company Limited 8,600,000,000 1.85% 110,000,000.00 110,000,000.00 185,750,054.30 185,750,054.30 Less Provision for declining in value of available for sale securities (177,000,369.30) (177,000,369.30) Total 8,749,685.00 8,749,685.00 General Securities Abico Land Company Limited 200,000,000 15% 30,000,000.00 30,0000,000.00 Peroxy Thai Company Limited 838,115,850 2.44% 20,453,050.00 20,453,050.00 Others 87,731,665.78 87,731,665.78 138,184,715.78 138,184,715.78 Less Provision for declining in value of general securities (108,012,658.18) (108,012,658.18) Total 30,172,057.60 30,172,057.60 Total other investments net 38,921,742.60 38,921,742.60 1999 Fully paid Company's separate Shares Capital Portion of Consolidated balance sheets Balance Sheets Type of Business (Thousand Baht) Investment Cost Method Equity Method Cost Method Equity Method Baht Baht Baht Baht Joint Ventures Philipp Holzman (Thai)/ U.T.M. Engineering/ Sino-Thai Joint Venture - 100% - 14,861,271.94 - 14,861,271.94 Zueblin-W&F-Stecon Joint Venture - 33% - - - - The Joint Venture of Tomen Enterprise (Bangkok) Limited/Sino-Thai Engineering and Construction Public Company Limited/ Totems Company Limited - 33% - 17,908.19 - 17,908.19 Sino-Thai Joint Venture - 100% - - - - Total investment in joint ventures - 14,879,180.13 - 14,879,180.13 Related Parties Subsidiaries Sino-Thai Construction Rental, dealer Services Company in construction equipment and heavy machinery 30,000,000 99.99% - - 29,999,300.00 - Sino-Thai Resources Development Public Company Limited 130,000,000 51.16% - - 201,441,563.75 67,215,221.56 Total - - 231,440,863.75 67,215,221.56 1999 Fully paid Company's separate Shares Capital Portion of Consolidated balance sheets Balance Sheets Type of Business (Thousand Baht) Investment Cost Method Equity Method Cost Method Equity Method Baht Baht Baht Baht Associated Companies HTR Corporation Limited Real estated 500,000,000 47.6% 329,990,005.00 202,554,811.66 329,990,005.00 202,554,811.66 DKK Sino-Thai Engineering Telecommunications Company Limited and transmission lines 8,000,000 35% 2,799,600.00 37,152,298.16 2,799,600.00 37,152,298.16 ACS Asia Company Limited Light steels fabrication 10,000,000 50% 5,000,000.00 8,985,576.90 5,000,000.00 8,985,576.90 Less Provision for declining in value of investments (8,985,576.90) (8,985,576.90) Thai Maintenance Maintenance Contracting Service for large Company Limited industrial plants 12,315,000 25.14% 2,339,810.00 5,836,091.75 2,339,810.00 5,836,091.75 Total investments in related parties - net 245,543,201.57 312,758,423.13 Others Available for sale securities STP & I Public Steel fabrication, Company Limited steel construction, industrial boilers and pressure vessels manufacturing 250,000,000 10% 75,750,054.30 - 75,750,054.30 - Nakornthai Stripmill Public Company Limited 8,600,000,000 1.85% 110,000,000.00 - 110,000,000.00 - Thanayong Public Company Limited 3,064,557,000 0.02% 10,033,133.00 - 10,033,133.00 - 195,783,187.30 195,783,187.30 Less Provision for declining in value of available for sale securities (154,796,233.30) (154,796,233.30) Total 40,986,954.00 40,986,954.00 General Securities Abico Land Company Limited 200,000,000 15% 30,000,000.00 - 30,000,000.00 - Nithipat Leasing Company Limited 800,000,000 15% 129,567,600.00 - - - 800,000,000 11.25% - - 97,167,600.00 - Peroxy Thai Company Limited 793,000,000 2.73% 21,650,000.00 - 21,650,000.00 - The Preferred Shares mutual fund - Subordinated Debentures of Thai Farmer Bank Public Company Limited 40,000,000,000 0.25% 100,000,000.00 - 100,000,000.00 - Government Bond - - 23,888,000.00 - 23,888,000.00 - Others 92,531,665.78 - 87,731,665.78 - 397,637,265.78 - 360,437,265.78 - Less Provision for declining in value of General Securities (156,594,749.89) - (131,666,749.89) - Total 241,042,515.89 - 228,770,515.89 - Total other investments - net 282,029,469.89 - 269,757,469.89 - As at December 31, 2000 and 1999, the Company recognized loss on investments in subsidiaries and joint ventures exceeding carrying amount by equity method in the amount of Baht 27.51 million and Baht 35.87 million, respectively, in the consolidated financial statements, and Baht 273.27 million and Baht 203.81 million, respectively, in the separate financial statements of the Company and shown as other liabilities. 2.2 CASH AND CASH EQUIVALENTS Cash and cash equivalents as at December 31, 2000 and 1999 are summarized as follows: Consolidated Company's Separate Statements of Cash Flows Statements of Cash Flows 2000 1999 2000 1999 Baht Baht Baht Baht Cash in hand and at banks 66,161,138.56 368,994,055.93 64,947,772.08 345,228,869.10 Add Short-term investment-fixed deposit- three months maturity 664,369,077.44 825,989,866.57 664,338,028.00 825,989,866.57 Less Cash at bank pledged as collateral (22,558,000.00) (29,755,139.56) (22,335,000.00) (29,532,139.56) Short-term investment pledged as collateral (656,009,644.51) (824,554,584.42)(656,009,644.51) (824,554,584.42) Cash and cash equivalents net 51,962,571.49 340,674,198.52 50,941,155.57 317,132,011.69 Supplemental of cash flows information regarding transferring for 6,651,000 shares of a subsidiary company as rehabilitation plan, so the Company has not ability to exercise significant influence over subsidiaries in making financial and operating decision from September 30, 2000 onwards. The effects to consolidated cash flows statement in 2000 regarding subsidiary's assets and liabilities transferring and cash flows as follows: Baht Cash flows from operating activities:- Decrease in accounts receivable 2,946,801.79 Decrease in inventories 3,144,744.95 Decrease in other current assets 5,347,974.81 Decreace in other assets 1,983,936.47 Decrease in accounts payable (5,727,579.96) Decrease in other current liabilities (2,092,671.18) Decrease in other liabilities (47,950,176.29) Net cash used in operating activities (42,346,969.41) Cash flows from investing activities:- Decrease in short-term investments 1,800,276.68 Increase in investments (67,270,653.24) Transferring property, plant and equipment of subsidiary for debt restructuring 359,424,903.68 Net cash provided by investing activities 293,954,527.12 Cash flows from financing activities:- Decrease in short-term loans from directors (2,322,178.53) Decrease in subsidiary's debt restructuring creditors (185,986,492.45) Decrease in minority interest (64,163,199.78) Net cash used in financing activities 252,471,870.76 Net decrease in cash and cash equivalents (864,313.05) 2.3 SHORT-TERM INVESTMENTS Short-Term Investments as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Equity securities securities for trading 2,426,429.25 305,826,407.00 722,029.25 305,722,007.00 Less Provision for declining in value of (2,424,149.25) (214,779,001.70) (722,029.25) (214,679,161.70) Equity securities net 2,280.00 91,047,405.30 - 91,042,845.30 Fixed deposit 664,369,077.44 827,790,143.25 664,338,028.00 825,989,866.57 Short-term investments net 664,371,357.44 918,837,548.55 664,338,028.00 917,032,711.87 2.4 ACCOUNTS RECEIVABLE Accounts receivable - others as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Accounts receivable 720,813,507.23 934,408,602.35 680,059,136.18 879,588,612.58 Unbilled works on construction contracts 741,394,432.00 594,912,058.00 738,834,218.00 594,912,058.00 Total 1,462,207,939.23 1,529,320,660.35 1,418,893,354.18 1,474,500,670.58 Less Allowance for doubtful accounts (341,550,339.98) (334,200,547.97) (309,436,644.25) (317,503,395.93) Accounts receivable-others - net 1,120,657,599.25 1,195,120,112.38 1,109,456,709.93 1,156,997,274.65 Accounts receivable - others are overdue as at December 31 are as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Overdue:- 1 month to 4 months 68,423,436.62 350,838,642.57 70,171,406.94 327,833,370.23 More than 4 months to 12 months 35,298,591.11 58,124,452.25 26,891,419.08 54,575,675.98 More than 12 months 363,573,968.36 417,574,719.03 332,920,326.74 382,134,238.59 Total 467,295,996.09 826,537,813.85 429,983,152.76 764,543,284.80 Allowance for doubtful accounts have been provided for 376,076,367.43 357,502,152.46 343,839,471.70 354,757,748.30 The above overdue accounts receivable, the Company is processing to follow up the collection and the Company and subsidiaries' management have provide allowance for doubtful accounts in compliance with the Company's policy which expect adequacy. 2.5 RETENTION RECEIVABLES Retention receivables as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Retention receivables 78,474,425.73 105,605,439.76 78,474,425.73 105,605,439.76 Less Allowance for doubtful accounts (4,560,784.22) (4,560,784.22) (4,560,784.22) (4,560,784.22) Total 73,913,641.51 101,044,655.54 73,913,641.51 101,044,655.54 2.6 INVENTORIES Inventories as at December 31 are summarized as follows: Consolidated Balance Sheets 2000 1999 Baht Baht Raw materials - 3,144,744.95 Tool and equipment for sales 42,336,454.36 113,016,814.34 Spare parts and supplies 42,449,030.89 49,568,129.54 Work in process - 4,251,076.88 84,785,485.25 169,980,765.71 Less Provision for diminution in value of inventories (70,531,138.23) (113,712,474.73) Total 14,254,347.02 56,268,290.98 2.7 OTHER CURRENT ASSETS Other current assets as at December 31 are summarized as follows: Consolidated Balance Sheets Company's Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Advances to suppliers 155,775,561.69 53,071,443.89 155,775,561.69 42,039,594.28 Withholding tax 120,054,536.17 203,847,603.81 119,738,082.85 199,360,846.25 Others 89,229,248.96 47,536,934.28 88,385,007.89 60,917,811.08 365,059,346.82 304,455,981.98 363,898,652.43 302,318,251.61 Less Allowance for doubtful accounts (47,360,663.81) (39,086,086.43) (47,360,663.81) (47,465,975.56) Total 317,698,683.01 265,369,895.55 316,537,988.62 254,852,276.05 2.8 PROPERTY, PLANT AND EPUIPMENT Property, plant and equipment in the consolidated financial statements at December 31, 2000 are summarized as follows: (Amounts: Baht) Balance at Increase/ Sale by Balance at December 31, 1999 Adjusted Sale/Disposal subsidiaries December 31, 2000 Cost / Increment revaluation :- Land Cost 204,794,780.41 - (30,474,624.00) (24,224,162.00) 150,095,994.41 Increment revaluation 596,641,115.07 - - (152,926,206.00) 443,714,909.07 Land improvements 91,153,088.65 - - - 91,153,088.65 Buildings 151,100,002.14 2,011,840.10 - - 153,111,842.24 Buildings, jetty and dry dock 16,017,534.19 - - (16,017,534.19) - Leasehold building improvements 20,874,255.26 2,458,471.50 - - 23,332,726.76 Motor launches and tugs Cost 293,672,199.14 - - (293,672,199.14) - Increment revaluation 96,060,000.00 - - (96,060,000.00) - Machinery and construction equipment 376,391,549.44 29,653,241.91 (37,997,430.68) - 368,047,360.67 Mining equipment 93,155,822.84 - - (93,155,822.84) - Furniture and Office equipment 96,228,514.96 7,452,961.54 (14,076,556.73) (12,197,828.99) 77,407,090.78 Vehicles 125,060,566.43 51,507,887.32 (15,198,130.89) (1,809,107.00) 159,561,215.86 Construction in progress 9,236,721.09 6,039,845.09 - - 15,276,566.18 Total 2,170,386,149.62 99,124,247.46 (97,746,742.30) (690,062,860.16) 1,481,700,794.62 Accumulated Depreciation :- Buildings 36,634,177.92 7,611,746.79 - - 44,245,924.71 Buildings, jetty and dry dock 5,794,283.06 - - (5,794,283.06) - Leasehold building improvements 14,273,555.68 1,451,997.86 - - 15,725,553.54 Motor launches and tugs Cost 293,502,130.95 - - (293,502,130.95) - Increment revaluation - - - - - Machinery and construction equipment 250,605,289.41 42,017,861.33 (32,107,596.13) - 260,515,554.61 Mining equipment 22,201,378.22 - - (22,201,378.22) - Furniture and Office equipment 73,797,900.07 4,841,973.59 (12,881,820.09) (4,393,362.25) 61,364,691.32 Vehicles 60,619,866.00 21,008,885.12 (8,694,361.19) (542,034.00) 72,392,355.93 Construction in progress - - - - - Total 757,428,581.31 76,932,464.69 (53,683,777.41) (326,433,188.48) 454,244,080.11 Provision for impairment assets:- Land - (4,204,768.00) - (4,204,768.00) - Balance at Increase/ Sale by Balance at December 31, 1999 Adjusted Sale/Disposal subsidiaries December 31, 2000 Net Book Value :- Land Cost 200,590,012.41 150,095,994.41 Increment revaluation 596,641,115.07 443,714,909.07 Land improvements 91,153,088.65 91,153,088.65 Buildings 114,465,824.22 108,865,917.53 Building, jetty and dry dock 10,223,251.13 - Leasehold building improvements 6,600,699.58 7,607,173.22 Motor launches and tugs Cost 170,068.19 - Increment revaluation 96,060,000.00 - Machinery and construction equipment 125,786,260.03 107,531,806.06 Mining equipment 70,954,444.62 - Furniture and Office equipment 22,430,614.89 16,042,399.46 Vehicles 64,440,700.43 87,168,859.93 Construction in progress 9,236,721.09 15,276,566.18 Property, plant and equipment-net 1,408,752,800.31 1,027,456,714.51 Property, plant and equipment in the separate financial statements of the Company as at December 31, 2000 are summarized as follows: (Amounts: Baht) Cost / Increment revaluation :- Balance at Balance at December 31, 1999 Increase/ Adjusted Sale/Disposal December 31, 2000 Land Cost 180,570,618.41 - (30,474,624.00) 150,095,994.41 Increment revaluation 443,714,909.07 - - 443,714,909.07 Land improvements 91,153,088.65 - - 91,153,088.65 Buildings 146,900,002.14 2,011,840.10 - 148,911,842.24 Leasehold building improvements 20,874,255.26 2,458,471.50 - 23,332,726.76 Machinery and construction equipment 362,748,041.58 29,653,241.91 (22,013,859.32) 370,387,424.17 Furniture and Office equipment 80,498,708.42 7,452,961.54 (10,963,320.96) 76,988,349.00 Vehicles 116,487,198.69 51,507,887.32 (7,810,542.11) 160,184,543.90 Construction in progress 9,236,721.09 6,039,845.09 - 15,276,566.18 Total 1,452,183,543.31 99,124,247.46 (71,262,346.39) 1,480,045,444.38 Accumulated Depreciation :- Buildings 36,167,000.14 7,401,746.89 - 43,568,747.03 Leasehold building improvements 14,273,555.68 1,451,997.86 - 15,725,553.54 Machinery and construction equipment 241,214,053.44 41,564,376.69 (20,337,180.52) 262,441,249.61 Furniture and Office equipment 67,002,978.78 4,759,060.37 (10,403,042.83) 61,358,996.32 Vehicles 55,341,846.47 20,770,867.96 (3,720,358.50) 72,392,355.93 Total 413,999,434.51 75,948,049.77 (34,460,581.85) 455,486,902.43 Net Book Value :- Balance at Balance at December 31, 1999 Increase/ Adjusted Sale/Disposal December 31, 2000 Land Cost 180,570,618.41 150,095,994.41 Increment revaluation 443,714,909.07 443,714,909.07 Land improvements 91,153,088.65 91,153,088.65 Buildings 110,733,002.00 105,343,095.21 Leasehold building improvements 6,600,699.58 7,607,173.22 Machinery and construction equipment 121,533,988.14 107,946,174.56 Furniture and Office equipment 13,495,729.64 15,629,352.68 Vehicles 61,145,352.22 87,792,187.97 Construction in progress 9,236,721.09 15,276,566.18 Property, plant and equipment-net 1,038,184,108.80 1,024,558,541.95 Depreciation expenses as at December 31, are included in: - Consolidated Company's Separate Statements of Income Statements of Income 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Costs of construction 38.51 52.52 37.99 40.69 Selling and administrative expenses 38.42 38.53 37.95 33.29 Total 76.93 91.05 75.94 73.98 Loss on impairment assets in 1999 in the amount of Baht 427.63 million was included in statements of income in the amount of Baht 4.20 million. As at December 31, 1999, some plot of lands including structures and machinery of a subsidiary company with a book value of Baht 163.50 million were pledged as collateral for loan from banks. In March 1999, the Company revalued land with a book value of Baht 65.29 million by comparing with market value, in the amount of Baht 509 million, as the independent appraiser report dated March 4, 1999. Therefore, as at December 31, 2000and 1999, the revaluation surplus of Baht 443.71 million was shown under shareholders' equity in the separate financial statements of the Company. In June 1999, a subsidiary company revalued land by comparing with market value as the independent appraiser report dated June 14, 18 and 21, 1999. Therefore, as at December 31, 1999, the revaluation surplus of Baht 153.93 million was shown under shareholders' equity. In December 1999, the subsidiaries revalued two dredges as the independent appraiser report dated December 30, 1999, based on the comparison with useful value of the dredges. The Company recorded increment revaluation as the revaluation surplus and was shown under shareholders' equity. As at December 31, 2000 and 1999, land and land improvements with a book value of Baht 175.96 million, the Company is processing to revalue all of them. 2.9 OTHER ASSETS Other assets as at December 31 are summarized as follows: Consolidated Balance Sheets Company'Separate Balance Sheets 2000 1999 2000 1999 Baht Baht Baht Baht Loans and advances to directors and employees 31,685,802.81 18,536,766.41 31,685,802.81 18,192,815.80 Condominiums 6,692,448.93 92,589,819.96 6,692,448.93 92,589,819.96 Advance payments for condominiums 29,179,236.07 29,179,236.07 29,179,236.07 29,179,236.07 Withholding tax - - - - Others 12,355,615.34 54,669,313.63 12,158,115.34 52,234,600.21 79,913,103.15 194,975,136.07 79,715,603.15 192,196,472.04 Less Allowance for doubtful accounts (36,526,152.60) (58,461,266.93) (36,526,152.60) (58,461,266.93) Other assets - net 43,386,950.55 136,513,869.14 43,189,450.55 133,735,205.11 2.10 DEBTS RESTRUCTURING As described in Note 1.4 to the financial statements, thereafter, the Company has performed under the rehabilitation plan dated July 24, 2000 and amendment on August 7, 2000 which consisted of condition for debts releasing of Baht 651,749,494.96 and summarized as follows: - Million Baht Outstanding principal include interest before debt restructuring (Rehabilitation plan of Baht 5,073.23 million) 5,607.60 Less Debt-equity conversion (fair value) 1,000.00 Transfer of non-core assets (fair value )226.87 Cash repayment 100.00 Remaining debts before debt restructuring 4,280.73 Outstanding debt under new conditions:- Principal 600.00 Interest, 6 % per annum 115.40 Total outstanding debt under new condition 715.40 Thereafter, performing under the rehabilitation plan and the Executive Board of Directors Meeting dated December 19, 2000, the Company has arised the gain on debt restructuring in 2000 of Baht 3,565.33 million, which shown as extraordinary item in statement of income, and loss on assets transferring for debt restructuring of Baht 68.39 million. Under debts restructuring agreement, outstanding of creditors and accrued interest expense as at December 31, 2000 are summarized as follows:- Baht Debts restructuring creditors 600,000,000.00 Less Current portion of debts restructuring creditors shown under current liabilities (100,000,000.00) 500,000,000.00 Accrued interest expense under debts restructuring agreement 124,076,712.30 Less Current portion of accrued interest expenses under debts restructuring agreement shown under current liabilities (45,287,671.23) 78,789,041.07 Debts restructuring creditors and accrued interest expense of Baht 600 million and Baht 124.08 million, respectively, with a quarterly repayment within 6 years, which commencing from March 31, 2001 to December 30, 2006, at interest rate 6% per annum. As at December 31, 1999, long-term loans in default consisted of the US$ 80,000,000 syndicate loan from 19 foreign banks and financial institutions and the US$ 5,000,000 loan from a foreign bank, which were equivalent to Baht 3,205,333,000 and interest rate of the SIBOR. The principals are repayable within 3 years from the drawndown date and interest payable semi-annually. The lenders may request the Company to repay the loans within 2 years from the drawdown date. Loan covenants include maintenance of important financial ratios to the level as set out in the agreement. As at December 31, 1999, the Company failed to pay loans and interest and has not performed in accordance with loan agreement concerning financial ratios. The default entitles the lenders to accelerate the maturity of all outstanding amounts immediately due and payable. Therefore, the Company has reclassified the entire amount to current liabilities. As at December 31, 1999, the subsidiary's debt restructuring creditors amounted to Baht 185.99 million was loan agreement with a domestic commercial bank for Baht 117 million in 1997, principal repayable quarterly in twenty-four installments within 7 years. The first repayment was repaid at the end of the one year and 3 months from loan agreement's date. The monthly interest is payable as from the first month of drawdown and in 1998, the Company has entered into a loan agreement with the same bank for Baht 30 million, repayable quarterly in twenty-four installments within June 30, 2004. The first repayment was repaid on September 1998. The monthly interest is payable as from the first month of drawdown. Later the Company has not repaid on loan repayments as a whole. On November 4, 1999, the subsidiary company entered into the debt restructuring agreement with a domestic commercial bank. Under debts restructuring agreement, total outstanding in default consisted of bank overdrafts, short-term loans and long-term loans of Baht 10.53 million, Baht 28.46 million and Baht 147 million, respectively, which equal principal and accrued interest expenses under new agreement of Baht 185.99 million and Baht 23.39 million, respectively. Under the said agreement, the banks charge interest at MLR per annum (8.5%per annum at the agreement dated) and summarized as follows: Under debts restructuring agreement, banks have modified term of principal repayment to be 21 quarterly repayment except the first repayment. The first repayment will be on December 31, 2003 which are summarized as follows: Year Amount (Million Baht) 2003 145.86 2004 (quarterly payable Baht1,547,400) 6.19 2005 (quarterly payable Baht 1,992,600) 7.97 2006 (quarterly payable Baht 2,145,000) 8.58 2007 (quarterly payable Baht 2,655,000) 10.62 2008 (quarterly payable Baht 1,691,623) 6.77 Total 185.99 Under debts restructuring agreement, banks have modified term of interest repayment to be monthly repayment with the first repayment on the agreement dated and summarized as follows: For the Period Interest rate Equivalent monthly interest % per annum Thousands Baht January 1, 1999 to December 31, 2000 0.5420 84 January 1, 2001 to December 31, 2001 1.3550 210 January 1, 2002 to December 31, 2002 2.7099 420 January 1, 2003 to 2008 MLR The difference between the interest expense which are calculated based on the interest rate of MLR per annum and debt restructuring agreement, the subsidiary has agreed to repay which depend on the Company's performances and the bank's approval. The subsidiary has to repay to bank when cash in available after the repayment of the normally debt repayment. Commencing from the fourth quarter 1999 to December 31, 2003, uncertainty on loans repayment depend on the subsidiary's performance, so the subsidiary has not recorded the accrued interest expense on difference between the interest expense which are calculated based on bank's right and debt restructuring contract. As at December 31, 1999, the subsidiary will recognized accrued interest expenses which calculated from bank's right in the amount of Baht 2.47 million. The subsidiary has agreed to repay accrued interest expense within 2003 of Baht 11.16 million and the remaining within December 31, 2013. 2.11 HIRE-PURCHASE CREDITORS As at December 31, hire-purchase creditors represented car lease agreements with 6 leasing companies for 47 lease agreements for the operating. The first installment starts in 1996 to 2002. 2000 1999 Baht Baht Hire-purchase creditors 20,237,819.77 41,892,903.92 Less Current portion of hire-purchase creditors shown under current liabilities (18,723,880.80) (23,078,760.00) 1,513,938.97 18,814,143.92 2.12 SHARE CAPITAL On September 20, 2000, the Company registered to decrease the authorized share capital from Baht 750 million to Baht 300 million by dividing to 23 million ordinary shares, Baht 10 per value, and 7 million preference shares, Baht 10 per value. Later on September 22, 2000, the Company has registered to increase the authorized share capital from Baht 300 million to Baht 850 million by increasing Baht 550 million, dividing to 78 million ordinary shares, Baht 10 par value, and 7 million preference shares, Baht 10 par value. Preference shares are entitled to receive dividend before ordinary shares. If net income of any fiscal year is less than or equal to 9% of the value of issued and fully paid preference shares, total dividend of that fiscal year will belong to preference shareholders, and be uncollectible to the following year. In addition, preference shares are convertible into the ordinary shares. 2.13 CONTINGENCIES AND COMMITMENTS The Company and its subsidiaries have commitments and contingent liabilities as at December 31 are as follows: 2000 1999 Million Baht Million Baht Guarantor of credit facilities for other company 7.50 75.15 Unused letter of credit 6.84 - The Company and subsidiaries' claims under litigation 12.79 67.21 As at December 31, 1999, the subsidiary was sued for compensation in disputed in mining development contract and quarry for crushing mill 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 is still in the process on consideration of the arbitrator of judge, presently cannot be finalized. 2.14 SEGMENT INFORMATION The Company and its subsidiaries operate in business of construction, sale of goods and services in Thailand. Segment information classified by type of businesses in the consolidated financial statements for the years ended December 31 are summarized as follows: (Amounts: Baht) 2000 Construction Sale Service Total Revenues 3,187,621,936.49 9,225,626.40 77,710.40 3,196,925,273.29 Costs of construction and sale (3,626,644,668.66) (86,995,817.37) (4,434,152.97) (3,718,074,639.00) Gross loss (439,022,732.17) (77,770,190.97) (4,356,442.57) (521,149,365.71) 1999 Revenues 3,348,884,534.19 167,989,579.92 18,816,846.26 3,535,690,960.37 Costs of construction and sale (3,036,049,410.35) (169,098,211.75) (23,729,963.14) (3,228,877,585.24) Gross profit (loss) 312,835,123.84 (1,108,631.83) (4,913,116.88) 306,813,375.13 2.15 PLEDGE As at December 31, 2000 and 1999, the Company's and subsidiary's fixed deposit (short-term investment) and saving accounts amounted to Baht 678.57 million and Baht 854.31 million, respectively in the consolidated financial statements, and Baht 678.34 million and Baht 854.09 million, respectively in the Company's separate financial statements. The aforementioned amount was pledged about the construction matters. As at December 31 1999, a subsidiary's land including construction and equipment with a book valued of Baht 163.50 million, were pledged as collateral for the loan from bank. 2.16 FINANCIAL INSTRUMENTS The Company uses financial instruments to decrease in risk which arising from foreign exchange rate fluctuations by using forward exchange contracts on imported goods. The Company has no policy to speculate or trade in derivatives, which off blance sheet financial instruments. The Company manages risk which arising from foreign exchange rate fluctuation as follow: - Negotiate in payment condition on each items - Enter into forward exchange contract Foreign exchange rate risk Foreign exchange rate risk will arise from purchasing supplies or equipment that can not available in domestic. Before repayment to suppliers, the Company will enter into forward exchange contacts on each currency. As at December 31, 2000, the Company has imported and entered into forward exchange contacts as follow: Currency (EUR) Exchange rate Due Amount at due date (Baht) 185,315.00 36.9025000 January 18, 2001 6,838,586.79 Interest rate risk Interest rate risk arises from market interest rate fluctuation, which will effect to the Company's performance and cash flows. The Company hedges interest risk by borrowing on long term loans under restructuring agreement with fixed interest rate. See Note 2.10 to financial statement for details. Credit risk The Company has risk on accounts receivable. However, the Company has carefully in credit line approval and accounts receivable consists of private and public sectors. In addition, the Company has closely follow up. Therefore, the Company expects material risk on uncollection will not arise. Fair Value on financial instruments Fair value on financial instruments is the amount for which an asset could be exchange between persons. Procedures and assumptions on fair value estimation of financial instruments of the Company and its subsidiaries as follows: - Book value of cash in hand and cash at banks, short-term investments (Fixed deposit), accounts receivable, retention receivable, bank overdrafts and loans from financial institutions, accounts payable are estimated equal fair value because these financial instruments will be dued in short-term. - Book value of short-term loans and advances to related parties, loans-others, loans and advances to directors and employees are estimated equal fair value. - Fair value of short-term investments-trading securities are estimated equal market prices. - Book value of other investments are estimated equal net asset value. - Fair value of debts restructuring creditors, long term loans in default are estimated equal book value. - Fair value of hire purchase payables are estimated from future cash flows of individually financial instruments at the currently interest rate which similar to financial liabilities which due similar to hire purchases payables. Fair value of hire purchase payables as at December 31, 2000 is approximately amount of Baht 19.28 million. 2.17 RECLASSIFICATION Certain items in the financial statements for the year ended December 31, 1999 have been reclassified to conform with the presentation in the financial statements for the year ended December 31, 2000.