Y2K REPORT

Report on the preparation to cope with Y2K Problem We, Sino-Thai Engineering & Construction Public Company Limited, having business as general construction with registered office at 29th-30th floor, Sino Thai Tower, Sukhumvit21, Asoke, Bangkok 10110 Tel : (02) 260-1321-32 Fax : (02) 260-1339, wish to provide the first report on the company's preparation to cope with Y2K Problem as of 31 July 1998. The Preparation to cope with Y2K Problem. Impact Analysis and Assessment The analysis and assessments on the impact of Y2K problem will be mainly conducted on the systems related to the Operation function which is our core business. Back Office and other related units will be treated as lower priority. External impact will also be included. Procedures on the Analysis and Assessment. 1.Set up the scope of the problem by investigating thoroughly on inventory and related systems, review on the problems and impact both in the company's operation aspects and external factors. 2.Assess the degree of problem level to be affected by Y2k problem and analyze the procedure to fix it. 3.Ranking the solution sequence by considering on most urgently need to fix and level of impact to each core business. Working Committee for Y2K Problem In order to fix the Y2K problem, the company has set up the committee to oversee to Y2K problem and report to the Board of Directors. The Y2K committee are: 1. .Mr.Somkid Siriapinunt......Project Manager 2. .Ms.Natnicha Thanetpongtham.AS/400 Supervisor 3. .Ms.Supavadee Charnvirakul..AS/400 Supervisor 4. .Mr.Nopporn Sriviseth.......AS/400 Supervisor 5. .Mr.Songkarn Auppala........Network Supervisor 6. .Mr.Boonchana Singthong.... PC & Package Program 7. Mr.Siam Noipin.............Program on PC (In house application) 8. .Mr.Pichai Suviwattanakul.. Program on PC (In house application) Impact of Y2K Problem for Business Operation. Impact to the computer systems and the organization Our computer system has been utilized in the following areas 1. Internal management system(Back Office ) : The back office systems including: accounting, procurement, personnel, asset management and cost control are internally developed and run on IBM AS/400 under 4 GL/LANSA development tool 2. General Office system : The general office work are implemented by software package program such as word processing , worksheet and other in house applications on PC basic. For head-office computers are linked together via LAN,while job sites are stand alone PC. The impact on Y2K problem may be analyzed in many mission critical applications as follows: 1. Impact on Back Office and Operation Function Systems. - Hardware&Operating system The AS/400 system need to be upgraded OS to version 3R2 as suggested by IBM. - Software Development tool "LANSA(4GL)" currently version will not be able to cope with the Y2K problem. This will lead to miscalculation about date in the following systems Personnel System ; Recruitment, Welfare, Assessment and Salary. Accounting System ; Aging, Prepaid Expenses. Asset System ; Depreciation However, the above mentioned problem can be fixed by upgrading LANSA program to higher version. Only remaining problem is sorting, especially for reports showing data longer than 1 year (Index by year) . But due to the systems was developed to process base on monthly and yearly basis and data was also collected year by year. (most data and reports are prepared within 1 year period) This will, then, have little affect on sorting problem and can be resolved as necessary since all source program are available. 2. General Office system The Company is now having the following PC : Model Percentage Capacity 386 7 % Cannot cope with Y2K Problem 486 70 % Require to upgrade the date calculation in the early of year 2000 (Users will be advised how to upgrade) Pentium 23 % No-Problem - Package program such as MAIL, WORD need to be investigated about Y2K problem with the manufacturers. - 12 Internally developed applications are to be modified. 3. Local Area Network (LAN) and Wide Area Network (WAN) - No impact on HUB, SWITCHING, ROUTER - No impact on SERVER - Network Programs and Data Backup System must be fixed 4. Communication Devices; such as MODEM, MULTIPLEXER or PABX has no impact 5. Interface to others; there is no information linkage with any third parties, except for data transfer to Social Security (via diskette) and Info Banking. These areas were fixed. Possible Impact on General Business Operation. Our nature of business is construction. The Operation Function, which has projects at several job sites, is the most important unit of the company. However, the computers using at job sites are applied for just general office work such as typing, progress calculation or payroll calculation, considered as support function. So it can be assumed that there is no significant impact on business operation since most of Operation Function Systems do not rely on computer which in case any problems incurred on computer, manual process can be in placed. However, the computer problem in the Support Function (BACK OFFICE) may trigger off some indirect impact on Operation Function System; such as Human Resources System for proceeding payroll. The inaccuracy on payroll may cause to labor problem, strike, which affecting to the suspension of construction work. Possible Impact from External Factors Our company has analyzed and assessed by type of company's shareholders as follows. - Main customer Private Sector: We expect low impact since most of our customers are major companies, having high potential to resolve the problem and there is no computer linkage network. Government Sector: We expect no impact on this portion, as the government have clear solution policy and there is no linkage of computer network. - Suppliers There is a low impact on suppliers because we have several suppliers in the vendor's list. In case any suppliers have problem, we can replace by others. In addition, there is no computer linkage network with them. - Bank and Financial Institutes The banking and financial institution group are active to fix the Y2k problem and closely followed-up and controlled by the government. We expect a low impact from this group. - Subsidiary and Associated Companies It is expected a low impact from this group, as there is no data exchange via compute network systems. Also type of business of each firm are not too related nor to share the customers and suppliers base. Additionally, their core businesses do not depend on the computer system. The subsidiary and associated companies' revenue proportions are less when comparing to our company's earnings. Nevertheless, the high revenue proportion ones are from SET those have planned to cope with Y2K problem. Computer System Testing & Problem Solving The Y2K problem solving schedule was set by Working committee (Annex 1) It is expected to entirely fix Y2K problem by May 1999. The detailed schedule as per (Annex 2) is as follows: 1. Internal Management System (On AS/400) - HARDWARE & OS: Upgrade Operating System to be VERSION 3 R2, which support Year-2000 (As manufacturer, IBM, assures), supplied by PRO-LINE (Thailand) Ltd. - UPGRADE LANSA to Version 7.5, to support Y2K problem which to be supplied by PRO-LINE (Thailand) Ltd. This will help existing application, which were developed from previous LANSA version to fix about date calculation. Since it can recognize 2 digit year as a correct year by year 2000 and over - Modify the programs that have sorting problem in the report systems. - Test programs and overall systems. 2. General Office Systems: - PC: Upgrade Model 386 or terminate this model - Conduct a training to fix the date calculation of Year-2000 for the PC (desktop) at job site, and appoint the responsible person. - Operating Systems: The modification programs from manufacturers will modify be applied. - Software package : Study and test the software limitation as per manufacturer's recommendation and inform users to follow the guidelines and acknowledge the program limitation for date calculation and display. - In-house application: We modify the program to cope with year-2000 by fixing the date field to four digits year. 3. Network System _ Device: No need to solve, as it can support the Year-2000. _ Network Program: - Applied fixing program from vendor's or upgrade program - System test Note: In addition to upgrading the LANSA program and Operating System on AS/400, we will fix the problem by utilizing our in house team. Budget The budget to fix Y2K problem about 1 million Baht, was approved as follows: Q3'98 Increment of HARDDISK & UPGRADE OS 150,000 Baht Q3'98 UPGRADE LANSA 300,000 Baht Q2'-Q4'98 UPGRADE PC 300,000 Baht Q2'98-Q2'99 UPGRADE SOFTWARE PACKAGE 250,000 Baht Note: The estimated cost is exclusive the internal modification by the company. Contingency Plan. To reduce risk and damages to be incurred on computer systems due to the Y2K problem, especially for internal management system (BACK OFFICE) we prepare the contingency plan to cope with the situation as follows: 1. Problem on the delay of milestone schedule and repeated schedule slippage Guidance: Employ an outsource consultant, PROLINE, to engage in controlling the plan. 2. System Error Guidance: - Device & Operating System: Contact IBM to solve the problem under our maintenance contract with IBM. - Application Software: - Investigate and modify date error by programmer - Recover the existing system by Data Backup System (Tape Backup) 3. Data Damage Guidance: Rehabilitate the data damage by Data Backup System (Tape Backup) Problem Solving for the Current Company's Business Operation : 1. Back Office System - Hardware : Additional harddisk and operating system upgrade are expected to completed by 15/8/98. The upgrading of LANSA will be scheduled to complete within August 1998. - Application Modification : Partial Systems modification on employment, accounting (aging and prepaid expenses) was implemented with the progress of 39% - Testing : The progress on testing is 20%. 2. General Office Work - Hardware : Investigate and upgrade PC inventory to process the date properly beyond year 2000. The SET UP MANUAL is under prepared by the computer section to use for the staff training. - In-House developed program : The program has been being modified up to 64% in which 37% was tested. - Software Package : The 80% of the program package can cope with the Y2K Problem. About 20% of programs are waiting for information and instruction from manufacturers. 3. Network Systems - Hardware : Cope with Y2K problem. - Software : Be upgraded and fixed. - Testing : Being planned and test run. Analysis Report and Executive Summary. The company is fully aware of the problem and impact from Y2K problems on the business operation. However, with our study we believe that there will be no significant impact to our business operation. In addition, the company has been preparing to cope with Y2K problem especially in our computer system, we confide that there will be no major impact to our business. The Company's EDP Manager was assigned to study on the impact that will affect computer systems since 1997. The project committee was set up to study on solution and develop the strategy to protect the year 2000 impact. The fix was done to a certain level and reported to the concerning management from time to time. Regarding the external impact, the company's management considered and agreed that no significant impact will be happened due to no external dependencies on the company business systems. The impacted part from the financial and banking institutes are ensured by Y2K problem solving preparation of both parties. Concerning to the suppliers, the company has the vendor's lists for the substitution on the procurement in case the problem found. We believe that the nature of our business has no Y2K problem impact from our clients . The subsidiary and associated companies are less dependence on computer systems and running the separate business to the company. We believe that the study on the Y2K impact, solutions and prevention will be followed to the plan and completed by Q2 of 1999. The development and progress of Y2K solution are under pipeline and reported monthly to the management. Upon the review on the content of this report, the company hereby read, examine and verify the content and the information contained herein being true. It is understandable that no misinterpreted content and information are conducted, nor any significant information is missing from to report and harmful to all shareholders. To verify the conrrect copy of the whole document, the company hereby appoint ..Mr.Udomsak Chakreyavanich .... to be our representative to have his initial / signature on each page of the report. If any pages are found without the initial / signature of .... Mr.Udomsak Chakreyavanich. ...the company will not be bound to any content of such information. No. Name Position Signature 1 Mrs.Tassanee Charnvirakul Chairman of the Board 2 Mr.Anutin Charnvirakul Director 3 Dr.Udomsak Chakreyavanich Director 4 Mr.Vallop Rungkijvorasathien Director 5 Mr.Masthawin Charnvirakul Director Authorized representative Name Position Signature Mr.Udomsak Chakreyavanich Director ......................................... Form 57 (Y2K) 6/1