NUAL CONSOLIDATED FINANCIAL STATEMENTS 1998

16 Accrued liabilities Accrued liabilities comprise accrued expenses and provision for expenses relating to sales. 17 Other current liabilities Consolidated Company 1998 1997 1998 1997 Unaudited Unaudited Baht Baht Baht Baht Advance from customers 9,811,510 9,872,288 9,811,510 9,872,288 Value Added Tax payable 74,956,762 33,720,583 74,956,762 33,720,583 Other accounts payable 7,477,116 7,091,823 6,988,298 6,977,114 92,245,388 50,684,694 91,756,570 50,569,985 18 Unsecured debentures On 8 May 1997 the company issued three-year unsecured debentures totalling Baht 500,000,000 comprising 500,000 shares of Baht 1,000 each bearing interest rate of 12.35% per annum. The debentures were approved by the Securities and Exchange Commission in May 1997 and are due for redemption on 8 May 2000. 19 Provision for retirement cost The company has set up provision for retirement cost for staffs who work with the company more than 10 years. The retirement cost is calculated according to the rate determined in the Labor Law. 20 Provident funds There are two provident funds currently operated by the company: i) A fund, managed by an approved fund manager was set up in accordance with the Superannuation Fund Act 1987 with effect from June 1990. This fund operates for the benefit of salary employees. The company's and employees' contributions outstanding under the former provident fund scheme are being transferred to the new provident fund within 10 years. ii) An unfunded provident fund for the benefit of employees whose income is substantially in the form of commissions. 21 Surplus on revaluation of land The surplus on revaluation of land represents the difference between the appraised value and the historical cost of the land at the valuation date on 15 March 1992 and 23 September 1998 and is not available for dividend distribution. 22 Dividends 1998 1997 Unaudited Baht Baht Final dividend for prior period - 162,000,000 Interim dividend for this period - - - 162,000,000 23 Other income Other income for the six-month period ended 31 December 1998 includes income from waiver of prior year accrued offshore service fee by a related company in this year amounting to Baht 50.9 million because the company had net loss in the preceding year. 24 Cash and cash equivalents Cash and cash equivalents consist of cash in hand, at banks and in transit and loans to financial institutions for periods not exceeding three-months as follows: Consolidated Company 1998 1997 1998 1997 Unaudited Unaudited Baht Baht Baht Baht Cash in hand, at banks and in transit 100,192,133 42,867,090 98,811,934 42,293,504 Short-term investments 30,000,000 101,000,000 30,000,000 100,000,000 130,192,133 143,867,090 128,811,934 142,293,504 25 Related party transactions During the period the company enters into a number of transactions with subsidiaries and related companies as follows: Subsidiaries a) Purchases of goods from Singer Industries (Thailand) Limited totalling Baht 49,785,450 (1997 : Baht 51,467,760). The transfer price is determined at cost plus gross margin. b) Interest income on loans to the following subsidiaries: - Singer Industries (Thailand) Limited of Baht 5,719,358 (1997 : Baht 3,892,738). The loan balance at 31 December 1998 amounted to Baht 70 million (1997 : Baht 87 million) bearing interest at the rate of 14% per annum. (1997 : 15% per annum) - S.T.L. Electronic Company Limited of Baht 2,068,046 (1997: nil). The loan balance at 31 December 1998 amounted to Baht 36 million (1997 : nil) bearing interest at the rate of 14% per annum. (1997 : nil) c) Interest expense on outstanding balance each month due to Singer (Broker) Limited totalling Baht 1,383,815 (1997 : Baht 1,913,431). The outstanding balance at 31 December 1998 amounted to Baht 25 million (1997 : Baht 35 million) bearing interest at the rate of 11% per annum. d) Management fee income of Baht 424,700 (1997 : Baht 568,049) from Singer (Broker) Limited, calculated at 5.5% of total brokerage income of Singer (Broker) Limited. Related companies a) Purchases of goods from related companies abroad totalling Baht 5,202,291 (1997: Baht 24,546,861). The purchase price has been negotiated between the company and its related companies. b) Trademark license fee totalling Baht 1,592,475 (1997 : Baht 2,706,130) payable to a related company abroad, calculated at 0.1% of total net sales in accordance with signed agreement. c) The offshore service fee for the six-month period ended 31 December 1998 which calculated at 1% of total net sales has been waived from the related company as the company has losses from operations during the period (1997 : Baht 27,061,300). 26 Extraordinary item Loss from the change in exchange rate system On 2 July 1997, the Ministry of Finance announced a change in the exchange rate system for Thai Baht from the basket of currencies system to the managed float system which resulted in a significant decline in Thai Baht value. This caused the company and subsidiaries to incur a loss on exchange for the six-month period ended 31 December 1997 of Baht 124 million which the company had fully recognised as expenses. This exchange loss was reported as extraordinary item in accordance with the announcement of the Institute of Certified Accountants and Auditors of Thailand No. 002/2540-2542 dated 19 September 1997. At 31 December 1997, the company had a three-year long term loan denominated in foreign currency amounting to US$ 5 million. The liability was not hedged by forward contracts or other financial instruments, and was translated into Baht at the rates of exchange as at 31 December 1997. The unrealised loss on exchange relating to these liabilities for the six-month period ended 31 December 1997 amounted to Baht 105 million which is a part of the Baht 124 million loss on exchange rate referred to in the previous paragraph. 27 Restatement of 1997 interim financial statements In the accounting year ended 30 June 1998, the companys management made a dicision to change the method of accounting for investments in subsidiaries from the cost method to the equity method effective from 1 July 1997. The interim financial statements for the six-month period ended 31 December 1997 have, therefore, been restated to reflect the change in the accounting policy. 28 Segment information The company trades in a single business segment and in a single geographical area i.e., Thailand. Accordingly no segment information has been presented. 29 Year 2000 issue (This note is unaudited) The company has commenced modifying and upgrading its key financial information and operational systems to deal with the Year 2000 issue since 1995 by the companys specialist and hiring the outside company to inspect and modify. The company expects to complete the systems within the second quarter of 1999. As at 31 December 1998, part of systems have been completed. The company has estimated the expenditures relating to purchase new software and hardware not exceeding Baht 5 million. The expenditure relating to purchase new software will be recognised as expenses when incurred. Although the company expects to fully complete the modification on its computer system in 1999, the company remains exposed to the risk that other companies with which the company transacts might not be the Year 2000 compliant, which might have a significant effect on the companys operations. However, the company is unable to estimate the amount of the loss that the company might incur from such a situation at the present time. 30 Change of accounting period The company received an approval to change its accounting period from the period ended 30 June to 31 December of every year commencing from the period ended 31 December 1998 onward. 31 Reclassification Certain reclassifications have been made to the presentation of the interim financial statements for the six- month period ended 31 December 1997 for comparative purpose. SINGER THAILAND PUBLIC COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS AND COMPANY FINANCIAL STATEMENTS 31 DECEMBER 1998 25