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Macro Economic Environment

Actual Full Year 2013
Thailand’s economic growth was satisfactorily during the first half of 2013, with Q1/13 and Q2/13 Year on Year (YoY) GDP growth of 5.4% and 2.9% respectively, fueled by the Government’s continuing populist stimulus fiscal policies targeted at urban consumers and the agricultural sector throughout Thailand. However various ongoing global and local economic issues (i.e.: slower than expected recovery of key global economies and the Baht exchange rate volatility) impacted Thailand’s overall exports growth for the year and slightly increased inflation due to the volatile Baht/US exchange rate. Additionally, a ballooning of household debts resulted in a decline domestic consumption, which, together with declines in both public and private investments, have had major negative effects on Thailand’s GDP growth for the second half of 2013.

Further, the simmering political tension exploded in late Q3/13, however, unlike 2010, there has been minimal violence and limited impact to the business community as a whole. Only the day-to-day governing activities by the current caretaker Government and the daily commuting traffic within CBD Bangkok have been seen severe disruptions from these mass protests. Thus, a situation of a fast-escalating political polarization and major political impasse has now been created, which is expected to be prolonged with no potential and visible end in sight and lasting last well into most of Q1/2014 even of the schedule general election is held in early February.

All the above mentioned factors have resulted in an increasingly negative macro-economic trend for Thailand, with
FY/2013 exports at a very marginally negative growth of 0.2% YoY; while overall inflation for 2013 was at 2.5 – 3.0%. Q3/13 GDP growth at 2.7% and an expected Q4/13 GDP growth of approximately 2.0 – 2.5%, helped by the traditional tourism high season period whereby international tourist arrivals have achieved sustained growth of more than 20% throughout the whole of 2013. The resulting FY/2013 GDP growth is on 2.5 -2.9% (compared to original targets of 4.9 – 5.5%). Further, the recent escalating tense political situation and mass protests will have further adverse impacts on Thailand’s economy as it becomes prolonged into the first six months of 2014– especially for the tourism/hospitality sector business located in Bangkok locations.

Outlook for Full Year 2014 and beyond
Compared with the initial projections of a Full Year 2014 GDP growth of 5 – 6 % Year on Year, given the ongoing political protests and impasse and resultant limited government activities and budgets disbursements (which is not seen to be resolved in any satisfactory manner any time soon, even after the early February General Elections) will have negative impact the first half of 2014.

This continuing negative administrative and economic environment together with additional protests from provincial farmers (who have not been paid the promised funds from the Government’s embattled rice-pledging schemes) as well as increasing declines in both private consumption and investments as well as public investments as a result of low business and consumer confidence) will all have deep impact for the macroeconomic environment – certainly for much of the first half of 2014, even if the resolution to the current political impasse pass and the formation of a new legally acceptable Government can be achieved within Q2/14.

Thus, despite improved prospects for Thai exports due to the expected recovery of key targeted and traditional export markets, with FY/2014 exports expected at 4 – 6%YoY, the latest projected FY/2014 GDP growth for Thailand is projected at only 3 – 4%, with H1/2014 at not more than 1% and H2/2014 at 5 - 6% once a new Government is in place and effectively and quickly able to revive the overall economy; although should the very negative political situation is prolonged into Q3/14, then FY/2014 GDP may be only 2.5% - or less.

As far as Singer Thailand is concerned, the above mentioned sustained negative macro-economic trends coupled with reduced consumer spending power – especially in its targeted rural markets, will require that the Company focuses and gives special attention to its ability to effectively manage its core business and operations risks through diversifying its markets and customer base together with further enhancing and enforcing its existing credit approval controls and installment collections procedures .

Singer Thailand Pcl., Operating Performance Results for FY/2013

For the financial year ending December 31, 2013, the Company achieved total consolidated revenues, from both sales of products, interest from installment sales and other related services, of Baht 3,639.5 million (representing an increase of Baht 675.4 million or 22.8% compared to FY/2012), together with total Net Profit of Baht 320.6 million (an increase of Baht 94.3 million or 41.7% compared to FY/2012).is equal to an EPS of Baht 1.19 (compared to Baht 0.84 in 2012).

This represents the highest revenues for the Company for the past 13 years, as well as the best performance of a Singer company in the Asia region. The record breaking total FY/2013 operating results has been supported by sustained significant increases in consolidated revenues from sales of both products and interest from installment sales, as well as by the resultant Net Profit throughout each Quarter during the year.

As at the end of 2013, Singer Thailand has a network of 214 branches and almost 3,154 canvassers residing in the local markets and communities.

While, overall Gross Margins has declined marginally resulting from the increasing sales of commercial appliances; but in turn this has resulted in more positive changes in the overall mix of consumer products and commercial appliances/machinery sales, resulting in a much more balanced revenues mix and improved business risks profile for the Company.

Despite the sustained increases in installment accounts throughout the year together with a marginal increase in NPL risks (as a consequence of lower income growth in the provincial areas due to reduced positive impacts in these rural areas from the Government’s previous populist economic stimulus initiatives), through ongoing stringent credit controls strategies and close delinquent accounts monitoring actions, the Company has been successful in maintaining those non-performing installment accounts within targeted acceptable levels.

The sustained Net Profit increases throughout the year were achieved through continuing effective flexible and adaptive business development strategies relating to products and associated services offerings, ongoing focus on specific targeted market segments, improved sales and revenues mix, and a viable network of various sales generating channels (details of which appear in the MD&A section below), together with continuing improved management of overhead costs, credit controls measures, and corporate debts.

Therefore, due to this sustained positive and significant performance results over the last few years, the overall financial status of the Company as well as of the total Shareholders’ Equity have continued to strengthen, in order to facilitate and further support the ongoing expansion plans of the Singer Thailand Group of Companies.

Full Year 2014 Outlook and Business Objectives

2014 is indeed a significant year for Singer Thailand: it is our 125th Anniversary!

As mentioned above, the business environment for 2014 will remain even more challenging for sustaining both our overall sales and Net Profit growth. The expected spillover effects from current political tension together with its economic repercussions, especially in the Singer Thailand’s target provincial markets requires us to be even more circumspect in undertaking our financial services, which will enable the Company to manage our business and financial risks.

As such, The Company aims to maintain its vision to remain a “market leader through continued proactive expansion of its sales and services of home appliances to the household market and commercial equipments to small business operators, together with offering hire-purchase services within the provincial markets of Thailand”.

For 2014, the Company’s sustained growth strategies will focus on ongoing expansion of its products, interest from installment sales and services offerings together with continued proactive expansion of its grass roots market and customers base.

Additionally, further initiatives will be undertaken in regard to its internal operations improvements, staff skills development and training activities, and strengthening the financial structures that will achieve a lower cost of funds to support increasing installment sales; while strict adherence to stringent credit control and monitoring procedures will remain a priority to ensure the continued viability of the Company’s core financial services business.

We are fully confident that this will further strengthen Singer Thailand’s business base over the coming years so that it will remain well-positioned to offer a comprehensive range of products and services as well as to explore new business potential within the imminent AEC markets. As part of this overall goal, since mid 2012, the corporate structure has been reorganized and now consists of 3 business entities, under the Singer Thailand pcl., umbrella, that will facilitate each business unit to better leverage its respective strengths and be fully focused on distinctly differing business activities, i.e.:

  • Singer Thailand Pcl.,

will be the primary business unit in selling own brand and import/distributing third party products in Thailand. Further, this sales business unit will actively explore potential B2B projects sales of appliances and equipments will also be explored by this business unit aqs well as potential exports to new neighboring and, later also, AEC markets.

  • Singer Leasing Co., Ltd.,

will be the primary business unit to offer hire purchase and leasing financial services products to customers of Singer Thailand buying appliances as well as equipments for home and small business use. These business units will also explore financing of various additional non-appliances purchases sold by third parties, such as motorcycles, small business’ pick-up trucks and farm equipments.

  • Singer Service Plus Co., Ltd.,

will be the primary business unit in offering after sales services and maintenance of all brands of appliances and equipments bought from Singer Thailand, together with exploring maintenance of all brands of electrical appliances used at home, condominiums, and small businesses.


Corporate Governance Policies

Singer Thailand Pcl., together with its Board of Directors, Management and Staff all adhere to the principles of good corporate governance as well as ethical business practices, in order to ensure full transparency of all aspects of its operations and the full confidence on the part of all its Shareholders and Stakeholders.

At the same time, Singer Thailand has been a proactive participant to the private sector’s ‘Collective Action for Anti Corruption’ initiatives.

In undertaking its various business operations, the Company also believes strongly in always maintaining effective social and environmental responsibilities, so as to facilitate the achievement of sustainable economic and social development for its employees, the community and the country as a whole. As such, during every year, various initiatives have been continuously undertaken by Singer Thailand to help promote and protect, on a sustainable basis, the well-being of the environment of local markets and local communities in which the Company operates. Further details of such Corporate Social Responsibility (CSR)-related activities by the Company and its Staff are contained in the separate CSR section below.

Lastly, as always, despite the challenging economic and business situation, the continuing dedication as well as commitment towards achieving the Company’s objectives by our Board of Directors and Management Team together with the ongoing hard work by our staff have all contributed to and enabled Singer Thailand to achieve sustained significant positive performance results again in 2013. We, therefore, would like to thank all our customers, our staff and all other stakeholders of Singer Thailand for their continuing loyalty and invaluable contributions. Lastly, we also wish to express our great appreciation to all our Shareholders for their continuing positive support.