Reasons for over 20% change in financial performance

Translation H.T. 032/2005 Date: May 13, 2005 Re: Reasons for over 20% change in company's financial performance. To: President The Stock Exchange of Thailand Net Profit for the three-month period was Baht 41.9 million in 2005 versus Baht 77.9 million in 2004. Because of the high growth of motorcycle sales and the lower sales of electrical home appliance resulted the portion of motorcycle sales reaching to over 64% (40% in previous year) in the first quarter of this year. The company started adjusting selling expenses to be in line with the change of the revenues structure. At the same time canvassing vehicles were invested to increase our electrical home appliance sales. Causes of lower Net Profit can be analyzed as follows: 1. Sales for the three-month period registered an increase of 43.2% compared with the same period last year. The increase was mainly due to the motorcycle sales with hire purchase period averaged at 36 months registered an increase of over 100%. Interest earned from hire purchase sales (ECC) also registered an increase of 36.7%. However absolute gross margin was only 6.4% higher than the same period last year. The low increase was due to the low product gross margin of motorcycle (6-10%) while the margin of electrical home appliance will be 30-40%. Sales of electrical home appliance were 21.4% lower the same period of last year. 2. Total Selling & Administration expenses represented 30.0% of Total Sales including ECC while it was 35.5% in the previous year. In term of amount, it was Baht 75.9 million higher than that of last year. The main contributions for the increase in total expenses were from: a. Variable expenses Baht 40 million b. Sales Advertising & Sales Promotion Baht 10 million c. Personnel Cost Baht 10 million d. Investment in canvassing vehicles Baht 5 million e. Written-offs following the decision to close Singer Plus outlets Baht 2 million. 3. As a result of higher interest rates and higher borrowing to fund the increase of HP Receivables, the interest expense increased Baht 10.4 million. Net profit, although lower than the same period last year, is ahead of the company's operating plan and significantly higher than the previous quarter. Gross margin enhancement plans have been implemented, which will increase gross margin yield on motorcycles and improve home appliance sales at higher margins. Management expects revenue to continue above previous year levels for the remainder of the year and, as a result, full year profit is expected to be higher than in 2004. Yours sincerely, Singer Thailand Public Co.,Ltd. (Mr. Prateep Saenghiranwathana) Controller and Finance Director