Reasons for over 20% change in company's operations

( Translation ) No. 008/2541 16 February 1998 Re : Reasons for over 20% change in company's operations To : Director of Listed Companies Department Stock Exchange of Thailand As shown in the second quarter consolidated financial statements, the company has suffered a loss after tax including an exchange loss amounting to Baht 316 million, representing a sharp decrease of 227 % vs the after-tax profit of Baht 249 million achieved for the same period of prior year. In this connection, the company wish to provide reasons for the unfavorable result of its operations as follows : - 1. In view of possible loss on exchange relating to the company's loan of US $ 5 million and in accordance with the Accounting Standard guidelines No. 30, the company has increased Provision for Exchange Rate Loss by Baht 37.5 million to a total of Baht 2. Loss on exchange rate was incurred as the company imported some products for sales in the country and the devaluation of Baht. Consequently, the company had to push the discrepancy of exchage rate into the cost of such import, resulting in 2-3% increase in the cost of imported products from prior year. 3. Loss from operations for the period of six months covering July 1997 to December 1997 amounting to Baht 192.8 million was due to :- 3.1 Decrease in sales of 33.5 % or Baht 1,364 million from prior year. The country's worsening economic slowdown, rising unemployment and the company's responsive strict measures on hire purchase financing scheme, all attributed to the company'''' 3.2 Some expenses could not be reduced immediately in proportion to the dwindling revenue eg. prepaid rent of the company's retail shops. 3.3 As a result of liquidity crunch, the company had to bear higher interest rates -- from 10-11% per annum in 1996 to 13-14 % per annum in 1997. Yours sincerely, Singer Thailand Public Company Limited ( Mr. Sophon Pholvilai ) Controller & Finance Manager