Reasons for over 20% change company's financial performance

Translation H.T. 009/2006 Date: February 28, 2006 Re: Reasons for over 20% change in company's financial performance. To: President The Stock Exchange of Thailand The company Total Revenue registered at 4,916 million Baht showing an increase of 14.7% from the previous year. However Profit before Interest and Income Tax registered at 252 million Baht against 331 million Baht of the previous year. It decreased by 79 million Baht or 23.9% of the previous year. The decrease was due mainly to: - The product gross margin as a result of the product mix between Home Appliance and Motorcycle Sales made a negative impact of 147 million Baht. - Interest from Installment Sales increased 337 million due to the higher sales of motorcycle - Selling & Administration Expenses increased by 252 million mainly due to sales personnel expense 141 million, rental of pick up trucks 58 million and the increase of provision for bad debt of 45 million. - There was gain on sales of land 23 million in previous year but none in 2005. - Other revenue increased 6 million mainly due to sales of insurance for motorcycle accounts Net Profit for the year registered at 88 million compared to 184 million in the previous year was mainly due to the increase of interest expenses of 66 million as a result both higher interest rate and borrowings to support the higher portion of Accounts Receivable Installment. During 2005 our product sales mix changed with higher sales of motorcycle contributing 55% against 44% in the previous year. Consequently the % Product Gross Margin dropped from 25.5% to 19.1%. In addition the % of collection performance of motorcycle accounts was around 10% lower than the Home Appliance accounts. One of the major causes of the poor quality accounts was the low down payment scheme which the company launched since November 2004 till the first half of 2005. The company has implemented a lot of measures to improve the motorcycle accounts quality. There are: - Increased the low down payment in July 2005 - Central approval of motorcycle accounts commenced on 1st February 2006. - From 1st April 2006 all accounts will be cleared through the National Credit Bureau database. - Credit Default insurance introduced to new motorcycle sales from September 2005. - Automation of internal blacklist process - "golden rule" has been established to ensure prompt repossession from defaulting customers. - Processing capability of the Sena reconditioning centre has been trebled thus shortening the period between repossession and resale. - The new Singer Call Centre established in February 2006 will support debt collection process. We are confident that all above mentioned measures will enable the company to improve the quality of motorcycle accounts and improve the management of the repossessed motorcycle. Undoubtedly it will improve our overall operation performance in the future. Yours sincerely, Singer Thailand Public Co.,Ltd. (Mr. Prateep Saenghiranwathana) Controller and Finance Director