NSOLIDATED FINANCIAL STATEMENTS FIRST QUARTER

The notes on pages 10 to 19 form an integral part of the interim financial statements. SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE- MONTH PERIOD ENDED 31 MARCH Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht CASH FLOWS FROM OPERATING ACTIVITIES: Income before extraordinary item 22,111,202 44,767,707 22,111,202 44,506,077 Adjusted by: (Gain) on exchange rate (1,107,633) - (1,107,633) - Depreciation 11,598,767 10,843,657 10,863,296 10,528,694 Amortisation of prepaid rent 5,584,500 5,755,008 5,584,500 5,755,008 Allowance for doubtful accounts 12,320,800 26,570,000 11,499,000 26,570,000 (Decrease) in allowance for inventory obsolescence (5,534,975) (4,200,000) (5,600,000) (4,200,000) Provision for diminution in value of other investment - 1,000,000 - 1,000,000 (Decrease) in dividend payable (Note 13) (16,883,166) - (16,883,166) - Gain on disposal of fixed assets - (255,665) - (1,038,800) Share of loss from subsidiaries - - 3,672,225 1,603,419 (Increase) decrease in inventories (61,647,972) 117,313,096 (64,668,095) 120,848,076 Decrease in debtors and other current assets 149,883,988 336,897,279 144,596,797 327,114,789 Increase in creditors and other current liabilities 66,835,766 94,911,266 69,604,337 100,185,137 Increase (decrease) in accrued income tax 493,475 (42,270) - - Cash flows from operating activities before extraordinary item 183,654,752 633,560,078 179,672,463 632,872,400 Realised loss from the change in exchange rate system - (261,630) - - Net cash inflow from operating activities 183,654,752 633,298,448 179,672,463 632,872,400 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of fixed assets - 1,920,300 - 1,920,300 Purchases of fixed assets (9,858,554) (7,110,148) (9,846,404) (6,818,417) (Increase) in loans to subsidiaries - (19,100,000) - (19,100,000) (Increase) in prepaid rent (1,481,000) (2,044,000) (1,481,000) (2,044,000) Decrease in receivable from and loans to employees 558,585 729,485 520,594 701,850 Net cash (outflow) from investing activities (10,780,969) (25,604,363) (10,806,810) (25,340,267) The notes on pages 10 to 19 form an integral part of the interim financial statements. SINGER THAILAND PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (UNAUDITED) (Cont'd) FOR THE THREE MONTH PERIOD ENDED 31 MARCH Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht CASH FLOWS FROM FINANCING ACTIVITIES: (Decrease) in bank overdrafts and short-term loans (16,507,818) (671,695,169) (11,433,140) (671,587,580) Repayment of long-term loans (125,990,000) (20,000,000) (125,990,000) (20,000,000) (Decrease) in employees security deposits and provident funds (14,817,059) (26,357,469) (16,132,850) (26,346,216) Net cash (outflow) from financing activities (157,314,877) (718,052,638) (153,555,990) (717,933,796) Increase (decrease) in cash and cash equivalents 15,558,906 (110,358,553) 15,309,663 (110,401,663) Cash and cash equivalents at beginning of the period 130,192,133 143,867,090 128,811,934 142,293,504 Cash and cash equivalents at end of the period (Note 14) 145,751,039 33,508,537 144,121,597 31,891,841 ADDITIONAL CASH FLOWS INFORMATION Interest paid during the period 43,550,403 102,350,123 40,217,704 98,508,451 Income tax paid during the period 33,494 811,277 32,756 91,277 The notes on pages 10 to 19 form an integral part of the interim financial statements. SINGER THAILAND PUBLIC COMPANY LIMITED NOTES TO INTERIM CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (UNAUDITED) 31 MARCH 1999 AND 1998 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 of the securities market. The company's operations have been affected by the economic crisis in the current period and are expected to continue to be affected for the foreseeable future. The ultimate outcome of the economic crisis cannot be determined at present. 2 Summary of significant accounting policies 2.1 Basis for preparation of financial statements The interim consolidated and company financial statements have been prepared in accordance with and comply with generally accepted accounting principles in Thailand and regulations of the Stock Exchange of Thailand. 2.2 Principles of consolidation The interim 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 interim consolidated financial statements are 1999 1998 % 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 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 Installment 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. 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 Investments in an enterprise where the company holds more than 50 percent of its share capital or has control over its operations is considered an investments in a subsidiary company and is recorded using the equity method of accounting. The company has adopted the Thai Accounting Standard No. 40 "Accounting for Investments in Debt and Equity Securities" from 1 January 1999. Investment in non-listed securities is stated at cost and are reduced to net realisable value by a charge to statement of income for an impairment in value. Before 1 January 1999, investment in non-listed securities is stated at cost less allowance 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 and September 1998. 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 Leasehold 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 Prepaid rent Prepaid rent is amortised over the rental period on the straight-line basis. 2.9 Foreign currency translation Foreign currency transactions during the period 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. 2.10 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. 2.11 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 period by the weighted average number of paid-up ordinary shares outstanding during the period. 3 Trade and installment accounts receivable Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht Trade and installment accounts receivable 3,936,287,600 5,409,362,281 3,924,644,395 5,396,288,009 Less: Allowance for doubtful accounts (418,443,000) (352,432,200) (417,500,000) (352,432,200) 3,517,844,600 5,056,930,081 3,507,144,395 5,043,855,809 Less: Unearned carryings charges (584,178,286) (869,839,685) (584,178,286) (869,839,685) Trade and installment accounts receivable, net 2,933,666,314 4,187,090,396 2,922,966,109 4,174,016,124 The aging of overdue trade accounts receivable are set out below. Trade accounts receivable installment sales and credit sales Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht Over 3 months to 6 months 40,282,635 53,084,273 40,282,635 53,084,273 Over 6 months to 12 months 64,714,467 83,094,347 64,714,467 83,094,347 Over 12 months 148,244,826 74,789,553 148,244,826 74,789,553 Total 253,241,928 210,968,173 253,241,928 210,968,173 Allowance for doubtful accounts 158,943,000 211,432,200 158,000,000 211,432,200 Trade accounts receivable - other Consolidated Company 1999 1998 1999 1998 Baht Baht Baht Baht Over 3 months 455,171,463 285,592,841 455,171,463 285,592,841 Allowance for doubtful accounts 259,500,000 141,000,000 259,500,000 141,000,000 4 Short-term investments Short-term investments represent promissory notes for period not exceeding 3 months. (More)