01 มีนาคม 2549
Reasons for over 20% change company's financial performance
Translation
H.T. 009/2006
Date: February 28, 2006
Re: Reasons for over 20% change in company's financial performance.
To: President
The Stock Exchange of Thailand
The company Total Revenue registered at 4,916 million Baht showing
an increase of 14.7% from the previous year. However Profit
before Interest and Income Tax registered at 252 million Baht
against 331 million Baht of the previous year. It decreased
by 79 million Baht or 23.9% of the previous year.
The decrease was due mainly to:
- The product gross margin as a result of the product mix between
Home Appliance and Motorcycle Sales made a negative impact
of 147 million Baht.
- Interest from Installment Sales increased 337 million due to
the higher sales of motorcycle
- Selling & Administration Expenses increased by 252 million
mainly due to sales personnel expense 141 million, rental
of pick up trucks 58 million and the increase of provision
for bad debt of 45 million.
- There was gain on sales of land 23 million in previous year
but none in 2005.
- Other revenue increased 6 million mainly due to sales of
insurance for motorcycle accounts
Net Profit for the year registered at 88 million compared
to 184 million in the previous year was mainly due to
the increase of interest expenses of 66 million as a result both
higher interest rate and borrowings to support the higher
portion of Accounts Receivable Installment.
During 2005 our product sales mix changed with higher sales of motorcycle
contributing 55% against 44% in the previous year.
Consequently the % Product Gross Margin dropped from 25.5% to 19.1%.
In addition the % of collection performance of motorcycle accounts
was around 10% lower than the Home Appliance accounts.
One of the major causes of the poor quality accounts was
the low down payment scheme which the company launched
since November 2004 till the first half of 2005.
The company has implemented a lot of measures to improve
the motorcycle accounts quality. There are:
- Increased the low down payment in July 2005
- Central approval of motorcycle accounts commenced on 1st February 2006.
- From 1st April 2006 all accounts will be cleared through
the National Credit Bureau database.
- Credit Default insurance introduced to new motorcycle sales
from September 2005.
- Automation of internal blacklist process
- "golden rule" has been established to ensure prompt repossession
from defaulting customers.
- Processing capability of the Sena reconditioning centre
has been trebled thus shortening the period between repossession and resale.
- The new Singer Call Centre established in February 2006
will support debt collection process.
We are confident that all above mentioned measures will
enable the company to improve the quality of motorcycle
accounts and improve the management of the repossessed motorcycle.
Undoubtedly it will improve our overall operation performance in the future.
Yours sincerely,
Singer Thailand Public Co.,Ltd.
(Mr. Prateep Saenghiranwathana)
Controller and Finance Director