NUAL F/S 1997/1998

5,343,655 163,372,671 163,372,671 9 Property, plant and equipment Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht At cost or valuation Land - at cost 97,137,400 93,800,000 97,137,400 93,800,000 - at revaluation 322,578,874 323,858,874 213,318,874 214,598,874 Building 290,862,802 287,768,802 237,300,680 234,206,680 Leasehold improvements 73,655,691 69,726,060 73,080,503 69,287,721 Land improvement 8,094,946 8,094,946 8,094,946 8,094,946 Machinery and equipment 13,275,950 13,992,260 - - Office furniture, fixtures and Equipment 91,307,341 86,212,648 86,682,292 81,991,436 Motor vehicles 29,865,304 35,077,624 29,865,303 35,077,624 926,778,308 918,531,214 745,479,999 737,057,281 Less: Accumulated depreciation (200,527,684) (182,749,027) (175,453,355) (160,197,833) 726,250,624 735,782,187 570,026,644 576,859,448 Add: Construction in progress 1,750,000 2,597,000 1,750,000 2,597,000 728,000,624 738,379,187 571,776,644 579,456,448 Depreciation expenses for the year 44,389,019 43,267,566 41,865,882 40,525,335 The valuation of land was carried out in March 1992 by American Appraisal (Thailand) Ltd. 10 Prepaid rent Prepaid rent of the company's retail shops are being written off as expense over the period of the related leases. The lease terms vary from 2-20 years. 11 Bank overdrafts and short-term loans Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Bank overdrafts 73,842,876 238,027,774 65,143,407 230,980,642 Loans from banks and financial Institutions 633,803,707 1,350,550,883 633,803,707 1,319,430,582 707,646,583 1,588,578,657 698,947,114 1,550,411,224 Bank overdrafts and short-term loans are unsecured. Bank overdrafts bear interest at the rates ranging from 13.75% to 16.75% per annum (1997 : 13.25% to 15% per annum). Short-term loans comprise loans in U.S. dollars totalling US$ 5 million (1997 : US$ 14 million) bearing interest at the rates ranging from 6.65% to 7.6875% per annum, (1997 : 6.47% to 6.84% per annum) and loans in Thai Baht bearing interest at the rates ranging from 13% to 17% per annum (1997 : 9.875% to 18% per annum). As of 30 June 1998, Singer Thailand Public Company Limited has total unused credit facilities on bank overdrafts and short term loans of Baht 216 million (1997 : Baht 182 million) and Baht 1,053 million (1997 : Baht 4,447 million) respectively, and a subsidiary has total unused credit facilities on bank overdrafts and short term loans of Baht 23 million (1997 : Baht 67 million) and Baht 20 million (1997 : Baht 180 million) respectively. Hedging The company enters into foreign exchange forward contracts for the exchange rate risk associated with short- term loans denominated in the U.S. dollars. As at 30 June 1998, the company has entered into forward contracts to cover the short term loans of US$ 5 million (1997 : US$ 11 million). 12 Accrued liabilities Accrued liabilities comprise accrued expenses and expenses relating to sales. 13 Long-term loans Long-term loans are unsecured. As at 30 June, long-term loans comprise: Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Loans denominated in Thai Baht 400,000,000 640,000,000 400,000,000 640,000,000 Loans denominated in foreign currency 1,229,748,500 1,068,120,000 1,229,748,500 1,068,120,000 1,629,748,500 1,708,120,000 1,629,748,500 1,708,120,000 Loans denominated in Thai Baht are from financial institutions in Thailand amounting to Baht 400 million (1997: Baht 640 million). The loans bear interest at the rates ranging from 11% to 15% per annum (1997: 11% to 13% per annum). The loans will be due within 1 to 5 years. Long-term loans denominated in foreign currency include the followings: - Syndicated loan from overseas financial institutions for which Schroder International Merchant Banks Limited acted as the facility agent for Singer Thailand Public Company Limited amounts to US$ 40 million (1997: US$ 40 million) or Baht 1,016 million of which Baht 762 million is due for repayment in December 2001, and Baht 254 million in June 2002. Loan interest is at LIBOR per annum. - Loan from a branch of a foreign financial institution amounted to US$ 5 million (1997: US$ 2 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. Loan interest is at SIBOR per annum (1997: SIBOR per annum). Hedging In December 1996, the company entered into an agreement to swap both interest rate and principal of the US$ 40 million syndicated loan above, bearing interest at LIBOR, with the principal of Baht 1,016 million, bearing interest at the rate of 10.35% per annum for the principal amount of Baht 254 million, and 10.57% per annum of the principal amount of Baht 762 million. The loan from a branch of foreign financial institution in Thailand amounted to US$ 5 million was not hedged by forward contracts or other financial instruments. Total long-term loans as at 30 June are repayable as follows: Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Due within 1 year 40,000,000 320,000,000 40,000,000 320,000,000 Due within 2 to 3 years 1,589,748,500 1,336,800,000 1,589,748,500 1,336,800,000 Due within 4 to 5 years - 51,320,000 - 51,320,000 1,589,748,500 1,388,120,000 1,589,748,500 1,388,120,000 Total long-term loans 1,629,748,500 1,708,120,000 1,629,748,500 1,708,120,000 14 Other current liabilities Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Advance from customers 10,083,247 21,137,978 10,083,247 21,137,978 Value Added Tax payable 27,659,835 27,758,411 27,389,072 27,593,152 Other accounts payable 6,282,321 5,984,047 6,193,836 5,984,047 44,025,403 54,880,436 43,666,155 54,715,177 15 Unsecured debentures On 8 May 1997 the company issued three-year unsecured debentures totalling Baht 500,000,000 comprising 500,000 shares of Baht 1,000 each bearing interest rate of 12.35% per annum. The debentures were approved by the Securities and Exchange Commission in May 1997 and are due for redemption on 8 May 2000. 16 Provident funds There are two provident funds currently operated by the company: i) A fund, managed by an approved fund manager was set up in accordance with the Superannuation Fund Act 1987 with effect from June 1990. This fund operates for the benefit of salary employees. The company's and employees' contributions outstanding under the former provident fund scheme are being transferred to the new provident fund within 10 years. ii) An unfunded provident fund for the benefit of employees whose income is substantially in the form of commissions. 17 Surplus on revaluation of land The surplus on revaluation of land represents the difference between the appraised value and the historical cost of the land at the valuation date on 15 March 1992, and is not available for dividend distribution. 18 Dividends 1998 1997 Baht Baht Final dividend for prior year 162,000,000 261,900,000 Interim dividend for this year - 121,500,000 162,000,000 383,400,000 19 Cash and cash equivalents Cash and cash equivalents consist of cash in hand, at banks and in transit and loans to financial institutions for periods not exceeding three-months as follows: Consolidated Company 1998 1997 1998 1997 Baht Baht Baht Baht Cash in hand, at banks and in transit 56,814,490 42,644,723 53,873,172 41,971,152 Short-term investments 58,000,000 1,000,000 58,000,000 - 114,814,490 43,644,723 111,873,172 41,971,152 20 Related party transactions During the year, 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 totalling Baht 94,842,030 (1997 : Baht 359,900,877). The transfer price is determined at cost plus gross margin. b) Interest income on loan to the following subsidiaries: - Singer Industries (Thailand) Limited of Baht 10,046,771 (1997 : Baht 3,296,770). The loan balance at 30 June 1998 amounted to Baht 87 million (1997 : Baht 18 million) bearing interest at the rate of 15% per annum. - S.T.L. Electronic Company Limited of Baht 1,762,203 (1997: nil). The loan balance at 30 June 1998 amounted to Baht 24 million (1997 : nil) bearing interest at the rate of 16% per annum. c) Interest expense on outstanding balance each month due to Singer (Broker) Limited totalling Baht 3,729,622 (1997 : Baht 3,296,770). The outstanding balance at 30 June 1998 amounted to Baht 25 million (1997 : Baht 34 million) bearing interest at the rate of 11% per annum. d) Management fee income of Baht 1,070,885 (1997 : Baht 1,388,353) 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 totalling Baht 56,464,356 (1997 : Baht 110,715,905). The purchase price has been negotiated between the company and its related companies. b) Trade mark license fee and offshore service fee totalling Baht 73,160,010 (1997 : Baht 91,812,320) payable to a related company abroad, calculated at 1.1% of total net sales in accordance with signed agreement. 21 Extraordinary item Loss from the change in exchange rate system 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. This caused the company and subsidiaries to incur a loss on exchange for the year ended 30 June 1998 of Baht 76 million which the company has fully recognised as expenses. 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 30 June 1998, the company has a three-year long term loan denominated in foreign currency amounting to US$ 5 million. The liability was not hedged by forward contracts or other financial instruments, and was translated into Baht at the rates of exchange as at 30 June 1998. The unrealised loss on exchange relating to these liabilities for the year ended 30 June 1998 amounted to Baht 81 million which is a part of the Baht 76 million loss on exchange rate referred to in the previous paragraph. 22 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. 23 Year 2000 issue The company has commenced modifying and upgrading its key financial information and operational systems to deal with the Year 2000 issue since 1995 by the company+s specialist. The company expects to complete the systems within the second quarter of 1999. As at 30 June 1998, part of systems have been completed. The company has estimated the expenditures relating to purchase new software and hardware amounting to Baht 4.1 million and Baht 2.1 million respectively. The expenditure relating to purchase new software will be recognised as expenses when incurred. Although the company expects to fully complete the modification on its computer system in 1999, the company remains exposed to the risk that other companies with which the company transacts might not be the Year 2000 compliant, which might have a significant effect on the company+s operations. However, the company is unable to estimate the amount of the loss that the company might incur from such a situation at the present time. 24 Approval of financial statements The consolidated and company financial statements for the year ended 30 June 1998 were approved by the directors on 14 August 1998. SINGER THAILAND PUBLIC COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS AND COMPANY FINANCIAL STATEMENTS 30 JUNE 1998 17