14 พฤษภาคม 2551

hailand operating results for the First Quarter-Y2008

H.T.SET.010/2008 Date : May 13th, 2008 To : President The Stock Exchange of Thailand Re : Singer Thailand operating results for the First Quarter of Y 2008 The Company has generated for the quarter a profit of Baht 10.4 Million, which represents a significant improvement compared to the losses of Baht 196.5 Million for Q.1 2007. As a result, the Company's Earning Per Share (EPS) was Baht 0.04 compared to a negative figure of Baht 0.73 for Q.1 2007. It is a matter of satisfaction for the management to deliver profits following two years of heavy losses, and while encouraging it is also a clear indication that the Company's strategies have been working and are beginning to show in the results. During the first quarter of Y2008, the major highlights were:- - The Company has generated a positive operating cash flow of Baht 147.8 Million. - From the positive operating cash flow, the Company had been able to pay outstanding loans amounting Baht 128.6 Million. - At the end of December 2007, long-term and short-term loans have been reduced from Baht 683.3 Million and Baht 653.2 Million to Baht 599.9 Million and Baht 607.9 Million respectively. - The balance of hire-purchase motorcycle accounts has been reduced from 47,283 accounts to 40,388 accounts. - At the end of March 2008, the inventory of used motorcycles was reduced to 3,503 units. - At the end of March 2008, the percentage of paying accounts which is measuring how many accounts are paying from the total portfolio has been improving by 2.7% compared with the end of December 2007. The future strategy of Singer Thailand is to continue to dominate the appliance hire purchase business in the rural areas of Thailand. The Company has been in this market for more than 100 years. The Company's TV commercials on a multi brands, multi products trade-in strategy and on refrigerators for a "LIFE TIME WARRANTY" warranty have been overwhelmingly received, and the Company expect the momentum to continue and gaining in strength providing the opportunity of a huge replacement business for the Company. The Company has successfully made a U-Turn by converting a core business based on motorcycles into a core business based on electrical home appliances as shown in total gross sales for the first quarter of Y2008, in which the motorcycle business represented only 8.7% of total sales. In a view of the Government Plan to promote E-Learning for the people rural area, the Company will continue to develop its business alliance with SVOA Public Company Ltd for direct hire-purchase selling personal computers under SVOA brand on a back to back system with higher down payment and pre-approval from Credit Central. Comments to Key Financial Numbers: Income Statement The operating performance for Q.1 2007 is indicating that the Company has generated net profit of Baht 10.4 Million compared to the losses of Baht 196.5 Million for Q.1 2007. The revenue decreased from Baht 755.3 Million for Q.1 2007 down to Baht 599.4 Million or a decline of 20.6% mainly due to net product sales decreased by 16.9%, which was caused by a significant decrease of motorcycle sales by -76.3% or equal to Baht -130.9 Million, partially compensated by an increase of home appliance sales of +9.1% or equal to Baht +35.7 Million,interest from installment sales decreased by 32.8% or equal to Baht 61.4 Million due to a decrease of installment accounts number from 230,957 accounts at the end of December 2007 to 220,904 accounts at the end of March 2008, which was caused by more accounts being closed and reverted. A decrease of motorcycle sales is resulting from the Company's strategy to re-focus on electrical home appliances. Even the new number of Installment Accounts of home appliances have been increased month by month but it could not cover with the number of accounts closed due to the Company's Policy to clear the overdue accounts by discount and revert. Inventory reserve as of March 2008 equaling Baht 124.5 Million was lower than the reserve at end of December 2007 at Baht 162.0 Million due to on going plan to reduce the number of used motorcycles and to clear slow-moving stock of home appliances. In summary, the Net Profit for this quarter was Baht 10.4 million compared to a Net Loss of Baht 196.5 million at the first quarter of last year. The favorable difference of Baht 206.9 million can be analyzed as follows: Million Baht i. A decrease of products sale -95 ii. A decrease of interest from Installment -61 iii. A decrease of cost of goods sold 159 iv. A decrease of variable expenses 17 v. A decrease of semi-variable expenses 122 vi. A decrease of period expenses 50 vii. A decrease of interest expense 15 Total difference 207 Balance Sheet Net installment and other receivables decreased to Baht 1,608 million at end of March 2008 from Baht 1,675 million at the end of December 2007 or a reduction of 4%, which was caused by more accounts being closed by revert and discount. At 31 March 2008 the number of installment receivable accounts was 220,904 compared to 230,957 at the end of December 2007 or a reduction of 10,053 accounts. Net inventories at the end of March 2008 increased to Baht 250 million from Baht 231 million at the end of December 2007. This was mainly due to an increasing purchase stock of new sewing machines, and washing machines to serve sales in April and May 2008. Trade account payable at the end of March 2008 increased to Baht 178 million from Baht 72 million and was caused by increasing inventory orders for increasing sales and the extension of credit term from major Suppliers. Interest bearing debt decreased by Baht 128 million over the quarter due to continued positive operating cash flows resulting from ongoing collections of receivable accounts. Kindly be informed, Yours truly, Daniel Michel Philiponet Managing Director