NSOLIDATED FINANCIAL STATEMENTS QUARTER 2

15 Extraordinary item Gain or 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 gain on exchange for the six-month period ended 30 June 1998 of Baht 48 million which the company has recognised as gain on exchange rate of Baht 53 million in the first quarter and loss on exchange rate of Baht 5 million in the second quarter. This exchange gain or 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 30 June 1998, the company had a three-year long term loan denominated in foreign currency amounting to US$ 5 million. The loan will be repaid in US$ by three consecutive semi-annual equal installments commencing of the date falling two years after the date of first drawing. The first repayment will be due in July 1999. The liability was not hedged by forward contracts or other financial instruments, and was translated into Baht at the rates of exchange as at 30 June 1998. The unrealised gain on exchange rate relating to these liabilities for six-month period ended 30 June 1998 amounted to Baht 25 million which is a part of the Baht 48 million gain on exchange rate referred to in the previous paragraph. 16 Financial instruments In order to manage the risks arising from fluctuations in currency exchange rates and interest rates, the company makes use of the following derivative financial instruments: Interest rate and currency swap In December 1996, the company has entered into interest rate and currency swap contracts to swap both interest rate and principal of a three-year offshore loan totalling US$ 40 million, bearing interest rate at LIBOR, in exchange with the principal of Baht 1,016 million, bearing interest rate at 10.35% and 10.57%. Forward foreign exchange contracts As at June 30, 1999 the company has forward contracts to hedge long-term loans of US$ 3.333 million (1998 : US$ 5 million) at an average forward rate of US$ 1 per Baht 36.78 (1998 : Baht 40.41). 17 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. 18 Year 2000 issue 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 company's specialist and hiring the outside company to inspect and modify. As at 30 June 1999, the systems are completed. The company has the expenditures relating to purchase new software and hardware of Baht 8 million. The expenditure relating to purchase new software is recognised as expenses when incurred. Although the company completes the modification on its computer system, 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 company's 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. 19 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. 20 Reclassification Certain reclassifications have been made to the presentation of the interim financial statements for the three - month and six - month periods ended 30 June 1998 for comparative purposes. SINGER THAILAND PUBLIC COMPANY LIMITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND COMPANY FINANCIAL STATEMENTS (UNAUDITED) 30 JUNE 1999 1 The notes on pages 15 to 24 form an integral part of the interim financial statements. 14 21 25 ***