VIEWED QUARTER-2 1997/1998

4 Extraordinary item On 2 July 1997, the Ministry of Finance announced a change in the exchange rate system for Thai Baht from the basket of currencies system to the managed float system which resulted in a significant decline in Thai Baht value from Bht 25.84 per US dollar on 30 June 1997 to Bht 47.56 per US dollar as of 31 December 1997. This caused the company and its subsidiaries to incur a loss on exchange of Bht 124 million which the company and its subsidiaries have fully recognised as expenses in 1997. This exchange loss was reported as extraordinary item in accordance with the announcement of the Institute of Certified Accountants and Auditors of Thailand No. 002/2540-2542 dated 19 September 1997. At 31 December 1997, the company has a three-year long term loan denominated in foreign currency amounting to US$ 5 million. The loan will be repaid in US$ by three consecutive semi-annual equal installments commencing on the date falling two years after the date of first drawing. The first repayment will be due in July 1999. The liability was not hedged by forward contracts or other financial instruments, and was translated into Baht at the rate of exchange as at 31 December 1997. The unrealised loss on exchange relating to these liabilities amounted to Bht 105 million is a part of theBht 124 million loss on exchange rate referred to in the previous paragraph. 5 Economic crisis and effects on company's operates The company operates in Thailand, which, together with a number of other countries in the Asia Pacific Region is currently experiencing an economic crisis. The crisis in Thailand has involved a slowdown in economic growth, a shortage of liquidity within the country and volatility in both the securities market and the value of the Thai Baht. The company's operations have been affected by the economic crisis in the current year and are expected to continue to be effected for the foreseeable future, with particular regard to the ability of the company to repay debt and the ability of the company to collect its receivables. The ultimate outcome of the economic crisis cannot be determined at present. The interim financial statements for the three-month and six-month periods ended 31 December 1997 do not include any adjustments that may arise as a result of the effects of this crisis. 6 Related party transactions The company enters into a number of transactions with subsidiaries and related companies as follows: Subsidiaries a) Purchases of goods from Singer Industries (Thailand) Limited totaling Bht 51,467,760 (1996 : Bht 188,411,000. The transfer price is determined at cost plus gross margin of approximately 2% -3%. b) Interest income on loan to Singer Industries (Thailand) Limited Bht 3,892,738 (1996 : nil). The loan balance at 31 December 1997 is amounting to Bht 87,292,000 million (1996 : nil ) and bearing interest at the rate of 12.50% per annum. c) Interest expense on outstanding monthly balance payable to Singer (Broker) Limited totaling Bht 1,913,431 (1996 : Bht 1,575,243 ). The outstanding balance at 31 December 1997 is amounting to Bht 35,407,842 million (1996 : Bht 30,130,843) and bearing interest at the rate of 11% per annum. d) Management fee income of Bht 568,049 (1996 : Bht 699,413) receivable from Singer (Broker) Limited, calculated at 5.5% of total brokerage income of Singer (Broker) Limited. Related companies a) Purchases of goods from related companies abroad totaling Bht 24,546,861 (1996 : Bht 33,334,103), at market price. b) Trademark license fee and offshore service fee totaling Bht 29,767,430 (1996 : Bht 44,784,383) payable to a related company abroad, calculated at 1.1% of total net sales in accordance with signed agreement. 7 Segment information The company trades in a single business segment and in a single geographical area i.e., Thailand. Accordingly no segment information has been presented. 8 Reclassifications Certain reclassifications have been made to the presentation of the interim financial statements for the three-month and six- month periods ended 31 December 1996 for comparative purpose. 9 Approval of financial statements The interim consolidated and company financial statements for the three-month and six-month periods ended 31 December 1997 were approved by the directors on 30 January 1998.