[Translation] Ref. PDI.B.02.81/1998 28 August, 1998 To : President The Stock Exchange of Thailand Re : Report on readiness to face problems in the year 2000 Attached herewith please find a filled Report Form 57 (Y2K) of Padaeng Industry Public Company Limited for the SET's information. Yours truly, - Signature - (Waykin Utharntharm) Senior Vice President (Finance) Report on readiness to face problems in the year 2000 (Form 57 Y2K) Company : Padaeng Industry Public Company Limited (Plc) Nature of business : Mining and Smelting of zinc concentrates Bangkok Office : 26th and 27th Floor, CTI Tower, 191/18-25 Ratchadaphisek Road, Klongtoey, Bangkok 10110 Telephone : 261-1111 Telefax : 261-1110 Report on the readiness to face problems for the year 2000, No. 1 (Information as of July 31, 1998) Preparations to face problems in the year 2000 1. Analysis and evaluation on the effect of problems The company has summarized the analysis and evaluation on the effect of problems in the year 2000 that impact on operations, both production and applications, is not significant. There will be little impact on some computer system, database and report. Major impact is being solved by a competent responsible team. Affiliated companies have also been analyzed and evaluated and no impact of problems in the year 2000 is found because business do not depend on any computer while accounting application package has already been prepared for the year 2000. 2. The effect of problems that could be on the business As described above, main business is not affected by problems in the year 2000 as far as production and applications are concerned, but there is little impact on some computer system, database and reports as follows :. 2.1 Computer system at Bangkok Office : IBM AS/400 .../2 - 2 - - Field year of system date in operating system or system software keeps 2 digits and understands year 00 to be year 1900 instead of year 2000, in which February of the year 1900 has 28 days; whereas February of the year 2000 has 29 days. -There are 3 applications impacted from the year 2000 - i.e. Fixed asset, Purchasing and Sales. Other applications are not affected from this case. Two digits field year has caused impact in sorting, age calculation and due date. 2.2 Computer system which controls production of both Tak and Rayong plants is Foxboro computer. The effects are the same as referred above. 2.3 Applications which contact to external company are not impacted from problems in the year 2000. 2.4 Old personal computers (PCs) have impact in field year of system date. PCs understand year 00 to be year 1900. But these PCs cause no impact on main business of the company because they have been used for preparing and printing general data and reports. 3. Plans for solving problems 3.1 Responsible persons and reporting Computer division is assigned to take responsibility in solving problems of the year 2000. Every calendar quarter, the computer division manager reports progress directly to the president and top management. .../3 - 3 - 3.2 Computer division, responsible for solving the year 2000 problems, has 6 staff. 3.3 Steps in solving problems and auditing system are as follow : (1) August - November 1997 - evaluated and made plans to solve problems of the year 2000 which give impact to organization and computer system; (2) October - November 1997, solved operating system of mini computer IBM AS/400 at Bangkok Office; (3) Solving of 3 impact application problem, (on IBM AS/400) - December 1997 - March 1998 : Modified fixed asset application - April - August 1998 : Modify purchasing application - September - December 1998 : Modify sales application (4) April - December 1998 : Check and solve PCs (5) October 1998 - January 1999 : Solve computer systems which use control production at both Tak and Rayong plants (6) January - March 1999 : Last checking and solving 3.4 Expected expenses which use to solve problems in each step Step (5) of paragraph 3.3 is the only step that will have expenses. Foxboro computer systems are used for controlling production of both Tak and Rayong plants. Solving problem at this step is dependent on Foxboro .../4 - 4 - (Thailand) since Foxboro (Thailand) is sole distributor in Thailand. The expense for Tak plant will be about Bt600,000 and about Bt200,000 is for Rayong plant. The budget has already been set aside for such expense. 4. Progress of solving problem up to the present time PDI process follow plans and steps referred in paragraph 3.3 above. Presently, about 65% of total work has completed which can be summarized paragraph as follows : - November 1997 - IBM (Thailand) Company Limited installed new version of operating system on mini computer IBM AS/400 that support the year 2000 free of charge - December 1997 - March 1998 : Computer team has completely modified fixed asset application - April 1998 - present : 50 % completion on modifying purchasing application - Sales application : To be awaited modification - April 1998 - Present : 40 % completion on checking and solving PCs. Computer systems used for controlling production of both Tak and Rayong plants are awaited outsourcing. 5. Analysis and explanations of management Although problems in the year 2000 have no significant impact on production and application, management has much concern and has given full support. The management has action plans to solve this problem in the course of 2 years and follow them step by step. The management has .../4 - 4 - confidence that PDI and affiliated companies will complete works by the first quarter of 1999. We have checked the particulars and information indicated in this report and certify that all particulars and information are true, accurate and not misleading to any persons and nothing in all material aspects which should have been disclosed has been omitted there from which would or might cause any damage to holder(s) or purchaser(s) of the stock. As evidence in this regard, all documents which are duly certified by us are being made in one set. We hereby authorize Mr.Waykin Utharntharm to be our authorised signatory signing on every page of these documents. Should there be no signature of Mr.Waykin Utharntharm affixed on any page thereof, it shall not be considered that this information has been certified by us. Authorised director Position Signature Mr. Arsa Sarasin Executive Chairman & CEO ......................... Grantee Position Signature Mr.Waykin Utharntharm Senior Vice President (Finance) ...................