26 February 2009
Thailand operating results for Year 2008
H.T. SET.003/2009
Date : February 26th, 2009
To : President
The Stock Exchange of Thailand
Re : Singer Thailand operating results for Year 2008
For the quarter, the Company has generated a net loss of Baht 66.4
Million compared to a net loss of Baht 82.1 Million for Q.4 2007.
For the year, the Company had a loss of Baht 81.6 Million compared
to a loss of Baht 500.2 Million for Y2007. As a result, the Company's
EBITDA improved from the negative figure of Baht 342.6 Million in
Y2007 to the positive figure of Baht 40.4 Million in Y2008. During
the year 2008, the major highlights were:-
The Company has generated a positive operating cash flow for
the year equal to Baht 314.3 Million and a positive cash flow for
Q1.-Q3. equal to 251.8 Million
From the positive operating cash flow, the Company had been
able to pay outstanding loans and interest for the year amounting
Baht 243.2 Million.
From the end of December 2008, long-term loans have been
reduced by Baht 256.7 Million from Baht 683.3 Million to Baht 426.6
Million whereas short-term loans increased by Baht 88.8 Million from
Baht 653.2 Million to Baht 742.0 Million giving a total reduction of
borrowings of Baht 167.9 Million.
At the end of December 2008, the Company had a total of 189,031
installment accounts out of which 20,093 motorcycle accounts represented
10.6% of total portfolio, and the inventory of used motorcycles was
reduced to 1,936 units.
At the end of December 2008, the percentage of paying accounts
which is measuring how many accounts are paying from the total portfolio
has been improving by 5.10% compared with the end of December 2007.
The Company managed to significantly reduce its absolute arrears
value by Baht 220.0 Million since December 2007.
The Accounting Change of the calculation of interest from
installment sales from Sum of the Digit to Effective Interest Rate to
comply with the Thai Accounting Standard (TAS # 29) commencing in Y2008
caused a reduction of Earning Carrying Charge about Baht 15.3 Million.
The adjustment in provision for the Company's Legal Severance
Plan based on an Actuarial Valuation Report issued by Watson Wyatt
after the Company Program to reduce the under performing shops.
To take advantage of the opportunity of a huge replacement business,
the Company still emphasizes a multi brands, multi products trade-in
strategy.
The Company has confirmed a successful U-Turn converting a core
business based on motorcycles into a core business based on electrical
home appliances as shown in total gross sales for Y2008, in which the
motorcycle business represented only 5.0% of the total Gross Product
Sales for Y2008.
In order to create a complete, updated and consistent customer and
guarantor contact information and streamline the credit approval
process including with improving the account checking function, the
Company have already re-engineered the Credit Process and Customer
Database Enhancements.
To engage Asia Plus Advisory Company Limited to be the Company's
Financial Advisory for funding and arranging the Company's debt
obligation since 16 October 2008 up to now.
Comments to Key Financial Numbers:
Income Statement
The operating performance for Y2008 is indicating that the Company
has generated net loss of Baht 81.6 Million compared to the losses of
Baht 500.2 Million for Y2007.
The revenue decreased from Baht 2,514.1 Million for Y2007 to Baht
2,355.4 Million or a decrease by 6.3% mainly due to net product sales
decreased by 6.2%, which was caused by a significant decrease of gross
motorcycle sales by -79.4% or equal to Baht -339.8 Million whereas an
increase of gross home appliances sales by 15.5% or equal to Baht 223.8
Million as the Company's Strategy to switch a core business based on
motorcycles into a core business based on electrical home appliances,
interest from installment sales decreased by 15.8% or equal to Baht
93.8 Million due to the deduction amounting Baht 15.3 Million caused
by the Accounting Standard to recognize the calculated interest from
installment sales changed from Sum of Digit to Effective Interest Rate
to comply with the Thai Accounting Standard (TAS# 29) and the impact
of the number of installment accounts reduced from 230,957 accounts
at the end of December 2007 to 189,031 accounts at the end of December
2008, which was caused by more accounts being closed and reverted
especially motorcycle installment accounts as per the Company's
strategy to re-focus on electrical home appliances.The number of new
Installment Accounts of home appliances have been increased month by
month but it could not cover with the number of accounts closed due
to the Company's Policy to clear the overdue accounts by discount
and revert.
Inventory reserve as of December 2008 equaling Baht 103.0 Million was
lower than the reserve at end of December 2007 at Baht 162.0 Million
due to on going plan to clear by selling the slow-moving stock of home
appliances.
In summary, the Net Loss for Y2008 was Baht 81.6 million compared to
a Net Loss of Baht 500.2 million for Y2007. The favorable difference
of Baht 418.6 million can be analyzed as follows:
Million Baht
i. A decrease of net products sale -116
ii. A decrease of interest from Installment -94
iii. An increase of other income 51
iv. A decrease of cost of goods sold 209
v. A decrease of variable expenses 11
vi. A decrease of semi-variable expenses 226
vii. A decrease of loss on products reprocess 80
viii. A decrease of period expenses 19
ix. A decrease of interest expense 32
Total difference 418
Balance Sheet
Net installment and other receivables decreased to Baht 1,395 million
at end of December 2008 from Baht 1,675 million at the end of December
2007 or a reduction of 16.7%, which was caused by more accounts being
closed by revert and discount. At 31 December 2008 the number of
installment receivable accounts was 189,031 compared to 230,957 at the
end of December 2007 or a reduction of 41,926 accounts.
Net inventories at the end of December 2008 decreased to Baht 222.2
million from Baht 230.6 million at the end of December 2007. This was
mainly due to a plan to turn all obsolete stock to be cash.
Trade account payable at the end of December 2008 increased to Baht
179.2 Million from Baht 72.0 million at the end of December 2007,
which was caused by increasing inventory orders for increasing sales
and the extension of credit term from major Suppliers.
Interest bearing debt was decreased by Baht 167.8 million compared
with Y2007 due to continued positive operating cash flows resulting
from ongoing collections of receivable accounts, and the related
reduction of borrowings.
Kindly be informed,
Yours truly,
Daniel Michel Philiponet
Managing Director