Reasons Over 20% Change in Company's financial performance

(Translation) NO. H.T.007/2007 February 28, 2007 To: Managing Director of SET Re: Singer Thailand operating results for the 4th Quarter and fiscal year 2006 The fourth quarter of 2006 witnessed an improvement in the business of Singer Thailand. The ongoing drive to improve operating cash flow has resulted in Baht 322 million being generated during the 4th Quarter. For the 12 months ended 31 December 2006, a total of Baht 932 million of cash has been generated. This compares to cash utilization of Baht 1.08 billion during 2005. The company expects to continue to generate significant operating cash flows during 2007. The number of used motorcycles on hand has reduced from is peak of almost 36,000 in August 2006 to about 26,000 at year end, a decline of 28%.The remaining used motorcycles on hand will be sold during 2007. During the 4th quarter, the company implemented meaningful and decisive restructuring initiatives. The restructuring has reduced fixed costs significantly, the benefits of which will flow through during 2007. This has resulted in: - 37 underperforming branches being closed - 2,400 unproductive sales agents being released - A 19% reduction in the corporate office head count The strategy of Singer Thailand is to re-focus attention on the home appliance hire purchase business in Thailand. The objective is to regain market share lost over recent years while efforts were directed towards the motorcycle business. As the ownership ratios of many home appliance products have increased in Thailand, the market has shifted to that of a replacement business as opposed to generally first time buyers. New strategies such as'trade-in promotions' have been adopted to take account of this opportunity. The company continues to enhance its risk management processes and control environment. The stricter credit granting procedures will continue to improve the quality and profitability of the new business. The new management team of the company has been re-shaped under the leadership of Daniel Philiponet. Daniel has twice formerly had successful periods as Managing Director of Singer Thailand in the mid and late 1990's and is welcomed back to the position. His experience and management skills have been invaluable in the turn around of the company. Daniel has over thirty years experience within the Singer Worldwide businesses. Comments to Key Financial Numbers: Income Statement The operating performance for 2006 has been dominated by the impact of the actions taken to repossess motorcycles following the underperforming hire purchase loans granted during 2004 and 2005. Not only has this resulted in repossession losses but also large write-downs in the value of the used motorcycle inventory. More conservative bad debt provision policies have also been adopted. The impact of these actions accounted for Baht 902 million which is over 73% of the net loss of the company for the year being Baht 1,233 million. Stricter credit granting has resulted in revenue reducing by 42% in 2006 to Baht 3,813m compared to 2005. However an 8% improvement in the fourth quarter was evident compared to the third quarter as the business adapted to the new trading criteria. In summary, the Net Loss for the year was Baht 1,233 million compared to a Net Profit of Baht 88 million in the same period of last year. The difference of Baht 1,321 million can be analyzed as follows: i.The loss on devaluation of repossession motorcycles349 million ii.The additional reserve for motorcycles HP accounts 103 million iii.The increase of loss on repossession 257 million iv.The decrease of interest from installment 337 million v.Higher interest paid 50 million vi.The impact of lower gross sales & other 225 million Balance Sheet Net installment and other receivables decreased to Baht 2770 million at end of December 2006 from Baht 4,706 million the prior year.This resulted due to the large number of accounts being repossessed, an increase in provision policies and lower sales. At 31 December 2006 the numberof installment receivable accounts was 296,063 compared to 391,656 at the end of the prior year, a decrease of 95,593 accounts. Net inventories decreased from Baht 754 million to Baht 547 million. This was mainly due to the high reserve for the motorcycles. Interest bearing debt decreased by Baht 945 million over the year due to strong positive operating cash flows resulting from ongoing collections of receivable accounts and lower purchase of new inventory. Kindly be informed. Yours truly, Prateep Saenghiranwathana Controller & Finance Director