Report Independent Accountants

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We have audited the accompanying balance sheets of 3S KOREA CO.,LTD.(the "Compant") as of March 31, 2002 and 2001, and hte related statements of income, appropriations of retained earnings and cash flows for the years then ended, expressed in Korean Won. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statments based on our audits.

 

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we 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 disclosure 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. We believe that our audits provide a reasonable basis for out opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of the Company as of March 31, 2002 and 2001, and the results of its operations, the changes in its retained earnings and its cash flows for the years then ended, in accordance with financial accounting standards generally accepted in the Republic of Korea.
As discussed in Note 11 to the accompanying financial statements, the Company has reduced its capital through a reverse stock split and the capital of the Company as March 31, 2002 amounts to \805 million. As discussed in Note 17 to the accompanying financial statements, the Company has provided \230 million of short-term loans to its employees as of March 31, 2002 including \215 million of short-term loans in relation to the acquisition of the employee stock ownership.
As discussed in Note 19 to the accompanying statements, the Company's shares were listed on the KOSDAQ on April 23, 2002 and the Company's capital stock has increased by \395 million. in addition, the Company has acquired 33.33% ownership of Ocean Bio Ltd. for \100 million on May 7, 2002.
Without qualifying our opinion, we draw attention to Note 20 of the financial statements which states that the operations of the Company may be direcly or indirectly affected by the general unstable economic conditions in the Republic of Korea and the impact of the implementation of structural reforms.
The accompanying financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of Korea. The procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries and jurisdictions. Accordingly, this report and the accompanying financial statements are not intended for use by those who are not informed about Korean accounting principles or auditing standards and their application in practice.

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