Thailand Operating Results for the Second Quarter 07

Date : August 14th , 2007 To : Managing Director The Stock Exchange of Thailand Bangkok Re : Singer Thailand Operating Results for the Second Quarter 2007 During the Second Quarter of 2007, the major highlights were : - Positive Operating Cash Flow of Baht 189.7 million for Apr.-Jun.2007, total positive operating cash flow for Jan.-Jun. 2007 was Baht 555.5 million - The Company has also sold certain non strategic shops which have generated cash of Baht 5.2 million for Apr.-Jun.2007, and Baht 15.7 million for Jan.-Jun.2007 - From the positive operating cash flow, the Company had been able to pay outstanding loans for Apr.-Jun.2007 amounting Baht 180.4 million (or totally loan repayment for Jan.-Jun.2007 equal to Baht 564.5 million) - Regarding to the updated Singer Thailand's Legal Severance Plan on a significant decrease of employee number in Y2006 and Y2007 by Watson Wyatt, impacting the Company's provision for benefit payments down from Baht 210.0 million to Baht 176.4 million The Company continued with its programme to reduce the number of used motorcycles in stock and from a peak of almost 37,000 units in August 2006, the stock was brought down to 12,261 units in June 2007. The motorcycle inventory will be reduced to normal level by year end 2007. In order to have business alliance with new Product Manufactures, the Company has joined with SVOA to do direct selling of SVOA branded home Personal Computer (PC). SVOA will provide full support in term of all POP materials, product training, delivery to Singer Shops,on-site service and exclusive model to Singer Thailand. It is planned to start selling SVOA home PC based on back to back orders in July 2007. All sales of these home PC require higher down payment and pre-approval from Central Credit. In order to improve its operating efficiency, the Company has converted a total of 72 shops from the traditional Singer business model where the sales and the collections were under the same person, into a New Model where the functions of sales and the function of collections are split, the Company expects to achieve higher sales and higher collections. The Company has implemented a Central Credit Process and Control by establishing basic credit guidelines, pre and post product delivery verifications, under the control of Credit Control Officers, while increasing the number of Account Checkers. The Company's objective is to ensure that it has in place a credit evaluation and approval system allowing the Company to operate while minimizing the risk when selling on hire purchase terms. Comments to Key Financial Numbers Income Statement Although the operating performance for the Second Quarter 2007 is showing some improvement in relation to the First Quarter 2007 as well as in comparison to the Second Quarter 2006, the Company is still reporting a loss of Baht 116.6 million caused by the impact of the actions taken to repossess motorcycles from poor hire-purchase loans granted during the years 2004 and 2005 and large write-downs in the value of the motorcycle inventory. Inventory provision as of June 2007 equaling Baht 235 million was significantly lower than the provision at end March 2007 at Baht 310 million due to a decreasing number of used motorcycles in inventory. The revenues decreased from Baht 611 million for the Second Quarter 2006 down to Baht 533 million or a decline of 12.8% mainly due to sales of both motorcycles and home appliances reduced by Baht 44 million and Baht 34 million respectively. A decrease of motorcycle sales is resulting from the Company's strategy to re-focus on home appliances,but due to an increase of down payment with the implement of pre-approval credit checking process under the economic downturn, sale of home appliances was also decreased. Interest from installment sales decreased by Baht 126 million compared with the Second Quarter 2006 due to a decrease of installment accounts number from 351,409 accounts to 264,105 accounts caused by more accounts closed and reverted. In summary the net loss for the Second Quarter 2007 was Baht 116.6 million compared to a net loss of Baht 134.3 million for the same period prior year. The positive difference of Baht 17.7 million can be analyzed as follows : - Cost of goods sold increased by 13.9% due to realized loss from a lot of motorcycles sold and higher provision in inventory for all products reverted especially motorcycles. - Selling and Administrative Expenses decreased by Baht 24 million mainly due to a decrease of provision for benefit payment after Watson Wyatt had their review on the number of employee staff decreased in Y2006. - Interest Expenses decreased by about Baht 13 million due to a huge decrease of loan from Baht 2,335 million at the end of December 2006 to Baht 1,771 million at the end of June 2007, somewhat offset by an increase in interest rate Balance Sheet Net installment and other receivables decreased to Baht 2,150 million at the end of June 2007 from Baht 2,770 million at the end of December 2006 due to a large number of motorcycles accounts being repossessed and reverted as well as a decrease of new motorcycles accounts by 27.7% compared with the same period of last year. At the end of June 2007, the number of installment receivable accounts was 264,105 accounts compared to 296,063 accounts at the end of December 2006. Net inventories decreased from Baht 547 million at the end of December 2006 to Baht 358 million at the end of June 2007 due to clearance of new and used motorcycles by 4,379 units and 11,493 units respectively. Kindly be informed. Yours truly, Daniel Philiponet Managing Director