NUAL F/S 1997/1998

SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (Cont+d) FOR THE YEARS ENDED 30 JUNE 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Baht Baht Baht Baht CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of fixed assets 3,334,073 5,187 3,334,073 5,187 Purchases of fixed assets (37,328,906) (73,432,533) (36,788,218) (72,957,442) (Increase) in prepaid rent (14,104,910) (31,600,858) (14,104,910) (31,600,858) Decrease (increase) in receivable from and loans to employees 887,109 (3,326,210) 1,096,567 (2,203,450) (Increase) in investment in subsidiaries - - (1,248,000) - Proceeds from sales of a subsidiary+s share capital 2,000 - - - (Increase) in long term investment (1,139,914) - - - Net cash (outflow) from investing activities (48,350,548) (108,354,414) (47,710,488) (106,756,563) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debenture - 500,000,000 - 500,000,000 Repayment of long-term loans (340,000,000) (620,000,000) (340,000,000) (620,000,000) Proceeds from long-term loans 180,225,000 1,368,120,000 180,225,000 1,368,120,000 (Decrease) increase in employees Security deposits and provident funds (42,180,728) 51,660,480 (42,181,090) 51,654,329 Redemption of debenture - (300,000,000) - (300,000,000) Dividend paid (151,314,084) (386,901,447) (151,272,084) (386,901,447) Dividend income - - 13,958,000 - Net cash inflow (outflow) from Financing activities (353,269,812) 612,879,033 (339,270,174) 612,872,882 SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (Cont+d) FOR THE YEARS ENDED 30 JUNE 1998 AND 1997 Consolidated Company 1998 1997 1998 1997 Restated Notes Baht Baht Baht Baht Increase (decrease) in cash and cash equivalents 71,169,767 (36,849,687) 69,902,020 (36,799,692) Cash and cash equivalents at beginning of the year 43,644,723 80,494,410 41,971,152 78,770,844 Cash and cash equivalents at end of the year 19 114,814,490 43,644,723 111,873,172 41,971,152 ADDITIONAL CASH FLOWS INFORMATION Interest paid during the year 465,339,187 441,670,109 451,313,535 433,895,538 Income tax paid during the year 97,888,989 272,918,059 94,571,802 266,129,122 SINGER THAILAND PUBLIC COMPANY LIMITED NOTES TO CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 30 JUNE 1998 AND 1997 1 Economic crisis and effects on company+s operations 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. The ultimate outcome of the economic crisis cannot be determined at present, therefore, the consolidated and company financial statements for the year ended 30 June 1998 do not include any adjustments that are not foreseeable as a result of the effects of this crisis. 2 Summary of significant accounting policies 2.1 Basis for preparation of financial statements The consolidated and company financial statements have been prepared in conformity with generally accepted accounting principles in Thailand and regulations of the Stock Exchange of Thailand. 2.2 Principles of consolidation The consolidated financial statements incorporate the financial statements of Singer Thailand Public Company Limited and its subsidiaries. Intercompany transactions are eliminated in the consolidation. Subsidiaries are those companies in which the company holds, directly or indirectly, more than 50% of the voting shares and dominant influence is exercised in the their management. Subsidiaries included in the consolidated financial statements are 1998 1997 % of shareholding % of shareholding Singer Industries (Thailand) Limited 99.88 99.88 Singer (Broker) Limited 99.70 99.70 Singer Trading (Thailand) Limited 99.86 99.86 Sansui (Thailand) Limited 50.86 50.86 S. T. L. Electronics Limited 99.84 - 2.3 Revenue recognition Sales comprise cash sales, credit sales and installment sales. Cash sales and credit sales are recognised when products are delivered. Installment sales represent sales under hire-purchase contracts whereby the related debts are effectively secured by the products sold. Revenue from installment sales comprises sales of product and interest. The interest on installment sales are calculated on customary financing terms. Sales of product and gross profit are recognised when contracts are signed and first payments are received. Interest is recorded in unearned carrying charges and recognised as earned by using the sum- of-the-months+ digits method. Collection commissions are accrued upon collection. 2.4 Trade accounts receivable In accordance with trade practice, installment accounts receivable are classified as current asset regardless of when payments are due. This receivable is effectively secured by the products sold. The company makes an allowance for doubtful accounts to cover the estimated losses that may be incurred in the collection of the debts, and makes a provision for losses and expenses relating to future estimated sale cancellation and discounts . 2.5 Inventory Inventory is presented on the balance sheet at the lower of cost and net realisable value (NRV), cost being determined on the first-in first-out basis. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts, allowances or rebates. The company estimates net realisable value from the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. 2.6 Investments Investment in an enterprise where the company holds more than 50 percent of its share capital or has control over its operations is considered an investment in a subsidiary company and is recorded using the equity method of accounting. Other investments are stated at cost less provision for permanent diminution in value. 2.7 Property, plant and equipment Carrying value | at appraised value Part of land is presented at market value appraised by an independent appraisal specialist in March 1992. A revaluation increase is recorded as a +Surplus on revaluation of land" under the shareholders+ equity. Carrying value - at cost Property, plant and equipment are recorded at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. Property, plant and equipment, except land, are presented in the balance sheet at cost less accumulated depreciation. Depreciation Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives are as follows: Buildings 20 years Building improvements 5 Years Machinery and equipment 5 Years Office furniture, fixtures and equipment 5 Years Motor vehicles 5 Years The company records depreciation as an expense in that period. When a long-term asset is retired, the company will write-off both the asset account and its related accumulated depreciation, and recognised any gain or loss from retirement of the asset. Capital expenditures Expenditures for addition, renewal and betterment, which result in a substantial increase in an asset+s current replacement value, are capitalised. Repair and maintenance costs are recognised as an expense when incurred. 2.8 Foreign currency translation Foreign currency transactions during the year are translated into Baht at the rates of exchange ruling on the transaction dates, except where a transaction is hedged by a forward contract, in which case the contract rate is used. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Baht at the rates ruling at that date, with the exception of liabilities covered by forward contracts which are translated at the contract rates. Gains and losses on exchange arising on settlements and translation are recognised as income or expense when incurred. 2.9 Related companies Companies are considered to be related if one company has the ability to control or exercise significant influence over the other company in making financial and operating decisions or most of the shareholders or executive management of both companies are the same persons or relatives. 2.10 Earnings per ordinary share Earnings per ordinary share is computed by dividing the income before extraordinary item, extraordinary item, and the net income for the year by the weighted average number of paid-up ordinary shares outstanding during the year. 3 Change in accounting principle With effect from 1 July 1997, the company changed the method of accounting for investments in subsidiaries from the cost method to the equity method in order to comply with a notification issued by the Stock Exchange of Thailand. The prior year+s financial statements have been restated to give retroactive effect to the change to comply with generally accepted accounting principles and for comparative purpose. The net effect of this change on net income was to increase (decrease) the net income and earnings per share as follows: Company 1998 1997 Baht Baht Increase (decrease) in net income (12,886,072)8,567,506 Increase (decrease) in earnings per share (0.48) 0.31 4 Cash in hand, at banks and in transit Fixed deposit with a bank amounting to Baht 30 million (1997 : nil) has been used as collateral to guarantee subsidiary+s bank overdraft amounting to Baht 20 million. 5 Trade and installment accounts receivable Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Accounts receivable trade and installment accounts 5,163,749,414 6,669,628,349 5,151,610,070 6,664,318,767 Less: Allowance for doubtful accounts (297,683,676) (190,100,000) (297,562,476) (190,100,000) Provision for sale cancellation and discounts (150,065,111) (155,834,599) (150,065,111) (155,834,599) 4,716,000,627 6,323,693,750 4,703,982,483 6,318,384,168 Less: Unearned carryings charges (854,597,959) (1,072,466,396) (854,597,959) (1,072,466,396) Trade and installment accounts receivable, net 3,861,402,668 5,251,227,354 3,849,384,524 5,245,917,772 The aging of overdue trade accounts receivable are set out below. Trade accounts receivable | installment sales and credit sales Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Over 3 months to 6 months 50,893,813 40,979,306 50,893,813 40,979,306 Over 6 months to 12 months 82,384,852 56,648,722 82,384,852 56,648,722 Over 12 months 102,122,112 48,312,072 102,122,112 48,312,072 Total 235,400,777 145,940,100 235,400,777 145,940,100 Allowance for doubtful accounts 119,294,806 94,100,000 119,173,606 94,100,000 Trade accounts receivable - other Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Over 3 months 323,008,022 194,180,187 323,008,022 194,180,187 Allowance for doubtful accounts 178,388,870 96,000,000 178,388,870 96,000,000 6 Inventories Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Finished goods 1,040,237,919 1,677,523,802 1,022,653,295 1,678,699,710 Component parts 88,833,824 67,367,854 54,444,305 31,005,457 Supplies and tools 1,902,222 2,115,291 - - 1,130,973,965 1,747,006,947 1,077,097,600 1,709,705,167 Less: Provision for inventory Obsolescence (28,278,888) (24,204,985) (26,700,000) (23,800,000) 1,102,695,077 1,722,801,962 1,050,397,600 1,685,905,167 Component parts in transit 850,007 5,187,276 - - Work in process 3,779,495 7,323,990 - - 1,107,324,579 1,735,313,228 1,050,397,600 1,685,905,167 7 Short-term Investments Short-term investments represent promissory notes for period not exceeding 3 months. 8 Long-term investments Long-term investments as at 30 June can be summarised as follows: Consolidated Company 1998 1997 1998 1997 Restated Baht Baht Baht Baht Promissory note 1,139,914 - - - Investment in subsidiaries - - 137,854,633 163,372,671 Investment in other company 970,000 1,970,000 970,000 1,970,000 2,109,914 1,970,000 138,824,633 165,342,671 Investment in other company represents investment in Thai Swedish Furniture Co., Ltd., which the company holds 9.95% of its share capital. 8 Long-term investments (Cont+d) Investment in subsidiaries as at 30 June in the company financial statements comprise the following companies: In Baht as at 30 June 1998 Nature of Paid up capital Investment Amount of Amount in Nature of business relationship Baht Portion % Cost method Equity method Balance sheet Singer Industries (Thailand) Limited Manufacturing Holding 5,000,000 99.88 4,994,000 120,877,507 120,877,507 Singer (Broker) Limited Life insurance Broker Holding 200,000 99.70 199,400 17,583,126 17,583,126 Singer Trading (Thailand) Limited Trading Holding 125,000 99.86 124,825 153,920 153,920 Sansui (Thailand) Limited Trading Holding 50,000 50.86 25,430 (31,476) (31,476) S.T.L. Electronics Limited Trading Holding 1,250,000 99.84 1,248,000 (728,444) (728,444) 6,591,655 137,854,633 137,854,633 In Baht as at 30 June 1997 (Restated) Nature of Paid up capital Investment Amount of Amount in Nature of business relationship Baht Portion % Cost method Equity method Balance sheet Singer Industries (Thailand) Limited Manufacturing Holding 5,000,000 99.88 4,994,000 140,772,203 140,772,203 Singer (Broker) Limited Life insurance Broker Holding 200,000 99.70 199,400 22,406,451 22,406,451 Singer Trading (Thailand) Limited Trading Holding 125,000 99.86 124,825 206,648 206,648 Sansui (Thailand) Limited Trading Holding 50,000 50.86 25,430 (12,631) (12,631) (More)