12. Financial Position and Performance 

  12.1 Summary of Financial Statement in the Previous 3 Years

(A) Accounting Audit Summary

-   Financial Statement as of December 31, 2007, 2006 and 2005 : The
    accounting auditor has expressed the non-binding opinion towards the
    financial statement. The auditor is Miss Sukanya Sutheeprasert from
    AMC Co., Ltd.

(B) Financial Statement

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 (c) Financial Ratios

  ------------------------------------------ ---------- ---------- ----------
  Liquidity Ratio                                                  

  Ratio                                      2007       2006       2005

  Current Ratio (times)                      1.04       1.05       1.04

  Quick Ratio (times)                        0.56       0.71       0.71

  Cash Flow Ratio (times)                    0.32       0.41       0.58

  Accounts Receivable Turnover (times)       7.07       6.06       6.25

  Average Debt Collection Period (times)     51         59         58

  Inventory Turnover (times)                 7.92       11.03      12.29

  Average Selling Period (days)              52         39         36

  Debtor Turnover (times)                    3.56       3.88       4.31

  Debt Payment Period (days)                 101        93         84

  Cash Cycle (days)                          2          6          10

  Profitability Ratio                                              

  Ratio                                      2007       2006       2005

  Gross Profit (%)                           31.17      31.52      30.67

  Operating Profit (%)                       7.08       7.98       7.86

  Other Profits (%)                          1.30       1.21       0.77

  Cash to Earnings Ratio (%)                 109.32     111.38     154.94

  Net Profit Margin (%)                      4.65       5.61       5.54

  Rate of Return to Equity (%)               27.60      32.73      33.31

  Efficiency Ratio                                                 

  Ratio                                      2007       2006       2005

  Return on Assets (%)                       17.15      20.43      20.74

  Return on Fixed Assets (%)                 65.39      71.22      68.97

  Asset Turnover (times)                     2.45       2.59       2.66

  Financial Policy Ratio                                           

  Ratio                                      2007       2006       2005

  Debt to Equity Ratio (times)               1.61       1.22       1.35

  Interest Capability Ratio (times)          1,842.50   2,091.06   3,100.98

  Debt Service Coverage Ratio (cash basis)   1.00       1.27       2.15

  Dividend Payment Rate (%)**                98.65      93.81      99.11
  ------------------------------------------ ---------- ---------- ----------

  Remark ** Dividend payment rate for 2007 has been approved from the
  board of Directors and waiting for approval from shareholders in the
  annual general shareholder's meeting, scheduled for April 29, 2008 and
  calculated based on the number of common shares to be counted on
  January 22, 2008.

2.  Interpretation & Analysis of Financial Status and Results of
    Operations

Publishing Business Situation in 2007

The overall economic outlook in 2007 was still in the state of slow
growth due to simultaneous multi-faceted factors which resulted in a
negative effect towards confidence of consumer and investors, whether it
was the fluctuation of petroleum prices, increased inflation, as well as
instability in the deep which has since been violently worsen.
The single most important factor is the political instability.

The above factors affected the slow down in country’s demand. People
reduced their purchase, coupled with the psychological stress that
started to loom in and instability of country’s direction. This has
caused people buy less. Buying sentiment has been lessened. Less people
shopped in the department stores. All these ramifications have been
severely affected the retail business in department stores, shown
through the economic slump in retail industry happened in 2007, which
later became worsen towards the year’s end. This is considered one of
the hardest years for retail business entrepreneurs.

The book business in 2007 still continued to grow in a consistent
fashion, even though it was expected to show a slow down in growth
similar to other retail businesses. This is the major force behind the
drive toward expansion of more bookstore branches, particularly from the
convenient store chain which is operated by large convenient company.
Large bookstores were also being opened in the large department store,
which just opened in 2006, also coupled with the growth of small and
medium scale publishers in this industry.

The new book titles which were distributed to bookstores and published
in 2007 were expected to be 31.4 titles per day, compared to 30.8 titles
per day in 2006, due to more awareness of publishers in selection of
books to meet the market demand, resulting in the better sales for the
book business in a longer term.

The Publishers and Booksellers Association of Thailand expected growth
of books business to be 6-7% in 2007 which has the similar growth figure
of that of 2006, with the market size of THB 16,000~16,900 million in
2006, and it is expected that Thais will spend THB 286 per person per
year buying books, which by this figure, it was statistically considered
relatively small. It also reflected that overall potential of books
market still has a huge room to grow as compared to other developed
countries.

With more new bookstores and the fact that pre-existing bookstores
continued to improve the quality of service, this results in more
convenient to buy books. It causes enlargement of market base which is
good to the overall books business.

The significant operation in 2007

In 2007 the Company still expanded in the direction that lead to
longer-term growth, as the Company believes that there are room to grow
for books and education business, by emphasizing on the continuity of
increasing the number of bookstores branches for SE–ED Book Center, and,
in addition, stressed even more emphasis on the role of being books
distributors and book publishers to align with the growth of books
business in larger picture. However, the Company has developed the
information technology system, communication system for all bookstores
branches and headquarters and distribution center in order to support
more services which deem to soar in the future, so as to increasing
efficiency and reducing product damage.

In 2007, the main activities excluding normal operation were as follow:

1.  New branches opening and renovation of existing branches as follow:

-   New 52 branches were opened. As in December 31, 2007 there
    were in the total of 268 stores, and 91 points of sales currently in
    operation.

-   Renovated 7 existing branches, some branches has been move to new
    suitable location, some branches increased the area according to the
    demand and some branches improved for more modernized and more
    attractive outlook.

2.  Launched new quarterly-released magazine, named "Industrial
    Sourcing" which introduced industrial products information in the
    field that is crucial to the industry, with clear indication of
    subject category to effectively facilitate the purchase of
    industrial products. The magazine was launched in April, 2007.

3.  Installed Close-Circuited Television (CCTV) for SE-ED Book Center
    Bookstores and network stores which has gradually been installed
    since the fourth quarter of 2006 till almost all the them were
    installed in 2007, resulting in the significant reduction of book
    loss.

4.  Improved computer system for bookstores branches expansion and
    supporting Navision software and all communication systems,
    supported e–commerce, including installed back up system and other
    reliable protection system.

    5.  Organized “Thailand Electronic & Industrial Technology 2007”
        Exhibition during from 12^(th) to 15^(th) of July 2007, at the
        Queen Sirikit Convention Center. This is the event that the
        largest exhibition in Thailand, show-casing all kinds of
        electronic products. In this past year, the several new product
        categories, such as security protection and GPS lines, as well
        as automotive audio sets, has been exhibited in this event. The
        Company also organized Thailand USACi Competition 2007 which is
        the event that is the gathering place of those automotive
        audiophile who like to compete in being the best in the best
        automotive audio components.

6.  Started the “SE–ED Learning Center” project to provide knowledge and
    inspiration for youths in holidays. The SE–ED Kiddy Camp was the
    activities established since 2002 for youths during their dosed term
    vacation with more camps for selective and has increased other
    courses in holidays such as brain–based courses, mathematic course,
    junior engineer course etc.

7.  The Company has signed the deal to be the exclusive distributor of
    Oxford University Press (OUP) in Thailand which effective on January
    1, 2007 and with right to sell in Cambodia, and Laos, Myanmar and
    Indonesia to push the learning English Language in Thailand and
    neighboring country in all levels.

Oxford University Press is not only the oldest publishers of more than
500 years old but also is the oldest university press in the world with
sales revenue more than all America universities press combined. OUP has
been highly regarded as the largest university press of English Language
Teaching.

  Apart from being books distributor, the Company and Oxford University
  Press has a great project that calls for deeper collaboration, such as
  providing translation books for English language skill development,
  providing workshops and seminars about teaching media and English
  language techniques for teachers and educational institution,
  organizing teacher training so that children all across the country
  can be developed.

8.  The testing of SE-ED Channel system format: This is a system that
    allows an unlimited control of both visual and audio contents from
    the headquarters and distributes the contents to all branches around
    the country through the Company's long-distance communicative
    network. Such system has already been installed and ready to be
    fully deployed in the middle 2008. It will help in promoting the
    products and services that each branch has to all the customers
    visiting the stores, including the training and variety of
    communication between branch and the headquarters.

9.  Organizing the event called "Company Visit". In 2007, the Company
    organized the event called "Company Visit" triple, where each time
    the investors and shareholders, as well as other general audiences
    in large number have shown great interest. The Company allows
    opportunity for investors, shareholders and other general audiences
    to meet with the Company's senior management. This project is one of
    the important projects that seek to provide everyone information
    needed for ones to learned more about registered Company. It also
    permit a chance for everyone interested in the Company to meet face
    to face with the management, and this information will be one of the
    criteria in investment decision.

10. Developed and improved the reservation system that can be reserved
    from the branch and also through the Company's website
    "www.se-ed.com" which make acquiring and purchasing books become
    more convenient and speedy, while providing enough information for
    faster decision to be made. In 2007, the Company has made possible
    the reservation at the bookstore branch to ensure the customer
    satisfaction. This project not only helps promote the sales which
    come from an increase reservation, but also allow staffs at the
    storefront to respond the customer's need.

Profitability and Operating Efficiency During past 3 years, the
Company's revenue continued to grow its revenue. The major satisfied
growth came from the expansion using distribution channels of SE-ED Book
Centers - the Company-owned bookstores, as well as through the network
stores (Book Variety, University Bookstores, and points of sales).

-   In 2007, the Company opened 52 more branches of bookstore. As of
    December 31, 2007, the total branches from this amount, there were
    268 branches which are still in operation, plus 91 points of sales.
    SE-ED still took more important role in distribution to support its
    branches expansion, including the increasing of publishing of
    best-sellers title.

  -------------------------------- ------------ ------------ ------------
                                   2007         2006         2005

  Total Income (THB million)       3,949.59     3,725.74     3,391.13

  Growth from the last year(%)     +6.01        +9.87        +18.72
  -------------------------------- ------------ ------------ ------------

Operating Results For the year 2007 as of December 31, 2007, the
financial information can be summarized as follows:

Total revenue of the year 2007 rose by was THB 3,949.59 million, an
increase of THB 223.84 million, or up 6.01%. The sales revenue was THB
3,898.25 million, an increase of THB 217.55 million, or up 5.91% while
in 2007 there was the slow down economy effect caused by the increasing
of petroleum price and unstable politics. This led to the drop of
purchasing power and willing to consume of customers which turned to
cause the same store sales of SE-ED Book Centers chain and network to be
slightly decreased and tended to decrease more in the fourth quarter
conforming to the overall retail business. However, as there were so
many new branches of up to 52 branches of SE-ED Book Center opened in
2007 the maximum statistics of new branches opening per year especially
in the fourth quarter which opened up to 20 branches including the great
amount of sales of Harry Potter Book in December drove the sales value
of SE-ED Book Center to be 3.22% higher than last year.

Otherwise the Company sales from wholesales business unit was 26.44%
higher than last year as the Company has been distributor of English
Learning Text books of Oxford University Press for first year and has
been trusted continuously to be distributors for other popular books
publishers.

The net profit as of December 31, 2007 was THB 183.80 million,
representing 4.65% of total revenue and THB 0.57 EPS. (For 2006 the
Company’s net profit was THB 209.19 million, representing 5.61% of total
revenue and THB 0.67 EPS) The profit decreased of THB 25.39 million or
growth 12.14%. Causes of changing of total assets:

-   The Company gross margin increased THB 54.98 million from last year
    with ratio of 31.17% of sales revenue which less than last year
    ratio of 31.52%. The main driver was the portion of selling low
    margin goods was increased especially the increasing of magazine and
    newspaper sales.

-   The selling and administrative expense increased THB 80.75 million
    from last year with ratio of 25.20% of sales which was more than
    last year ratio at 24.50%. The main driver was the slightly decrease
    of same store sales while the expenditure were increased for
    bookstore branches. Otherwise the opening of new branches of up to
    20 branches in Q4 which was the slowing down economics period caused
    to sales volume could not catching up with the increasing of
    expenses, then the selling and administrative expenses to sales
    revenue ratio was increased. Otherwise the Company has also reserved
    more for slow moving goods which were the cumulative of the out of
    dated books, slow moving books and other books that could not be
    distributed from the law arguments.

-   The participated loss in the associated firm decreased of THB 3.05
    million less than the previous year of THB 2.27 million due to the
    continuously better profit performing of Plearnpattana School staffs
    of Plearn Patt Company.

-   The corporate income tax was THB 91.84 million, or an increase of
    THB 7.64 million from the previous year. The increase rate of
    corporate income tax from 25% to 30%, when calculated the corporate
    income tax with the rate of income tax in the previous year, the
    corporate income tax will be decreased by THB 15.01 million. Should
    the elimination of the effect that comes from the change of tax rate
    be applied to the financial report, the Company will profit will be
    lowered by 4.96%.

  The Board of Directors considered and approved the dividend payment
  for 2007 operating performance at the rate of THB 0.56 per share,
  total to THB 181,323,419.30. However, the Company has already paid
  some interim dividend of first three quarter at THB 0.30 per share,
  total to THB 97,103,925.50, additional dividend of this period will be
  THB 0.26 per share, to the amount of 323,921,130 shares which were the
  latest registered shares on January 22, 2008 that lead to overall
  payment of THB 84,219,493.80 by setting date of payment to be May 28,
  2008 and closing date of the Company's share register to May 15, 2008
  at 12:00 a.m.

Financial status analysis for year 2007 compare to 2006

Total Asset As of December 31, 2007 the Company had a total asset of THB
1,740.30 million, increase of THB 262.80 million from the end of last
year. Causes of changing of total assets:

-   Cash and cash equivalent items for THB 298.78 million increased of
    THB 8.09 million

-   Short-term investment-net for THB 208.16 million increased THB 13.37
    million due to the redemption of government bond (age over than 3
    months)

-   Inventories-net for THB 446.50 million increased THB 215.50 million
    due to the Company has just been the distributor of English learning
    text books (ELT) of Oxford University Press in Thailand this year,
    so it is necessary to stock more books enough to distribute to
    bookstores suitable amount and as this was the first year of being
    distributor along with the fact that most of these books were
    composite books for learning and teaching in schools, soothe
    providing of adequate books for the opening academic school term was
    necessary in order not to lose the sales opportunity.

-   Prepaid expense increased of THB 10.22 million. Most of them was
    prepaid expense rents for bookstores branches and warehouse.

-   Property, plant and equipment-net asset increased THB 24.57 million
    due to opening of new branches which was the maximum statistics of
    new branches opening per year in 2007.

    Total liabilities As of December 31, 2007 the Company had a total
    liability of THB 1,073.19 million, an increase of THB 260.70
    million. Increase in liabilities resulted from account payable and
    note payable THB 858.78 million as of 2007 increased THB 208.98
    million from outstanding debt of consignment creditors and
    wholesales creditors.

Shareholders’ equity As of December 31, 2007 amount THB 667.11 million,
an increased of THB 2.10 million represent 0.32% due to

-   Capital decreased due to the writing off the Company’s repurchased
    shares which were not sold out as informed earlier of THB 19.78
    million.

-   Paid-up share capital increased THB 10.65 million from the exercised
    of warrant to common share of ESOP.

-   Retained earnings due to the dividend payment as THB 194.18 million.

-   Net profit from operation result year of 2007 amount 183.80 million.

Cash flow and sufficiency of capital structure

  ------------------------------------ ---------- ---------- --------- ---------
                                                             (Unit:    
                                                             Million   
                                                             Baht)     

                                       Jan. –                Change    
                                       Dec.                            

  Description                          2007       2006       Amount    (%)

  Cash received (used in) operating    301.55     327.01     (25.46)   (7.79)
  activities                                                           

  Cash received (used in) investment   (107.92)   (124.70)   16.78     (13.46)
  activities                                                           

  Cash received (used in) finance      (185.54)   (181.39)   (4.15)    2.29
  activities                                                           

  Net cash received (used)             8.09       20.92      (12.83)   (61.31)
  ------------------------------------ ---------- ---------- --------- ---------

Cash Flow Received from operation activities in 2007 was THB 301.55
millions as listed below :

1.  Cash flow from operation in the amount of THB 324.87 millions:

-   The net profit of the year 2007 in the amount of THB 183.80
    millions.

-   Non-monitory expenses in the amount of THB 141.07 millions
    (Depreciation and Leasehold written-off in the amount of THB 93.67
    millions, loss from lost goods as THB 28.92 millions, Loss from
    dilapidated and slow moving goods as THB 11.29 millions and Loss
    from goods donation as THB 4.75 millions.)

2.  Cash flow decreased from trade accounts increasing as THB 10.30
    millions.

3.  Cash flow increased from trade account and note payable increasing
    as THB 212.23 millions.

4.  Cash flow decreased amount THB 264.03 million due to the increasing
    of inventories of foreign books. Which the Company has just been the
    distributor of English learning text books (ELT) in Thailand this
    year as the first year.

5.  Cash flow increased from accrued expense THB 23.08 million. Most of
    them were accrued expense for new branches rental and service
    charges which depended on the increasing of new branches.

6.  Cash flow increased due to the increasing of other current
    liabilities THB 23.56 million as some of them were the increasing of
    selling gift coupon using to buy goods in SE-ED Book Center stores.

Cash Flow Used from Investment Activities for 2007 in the amount of THB
(107.92) millions : Purchase of assets as THB 106.67 million.

Cash Flow Used from Financial Activities in 2007 as THB (185.54) million
as listed below:

1.  Cash used from bank overdrafts was THB 2.01 million.

2.  Cash used in dividend payment was THB 194.18 million.

3.  Cash received from the warrant exercises was THB 10.65 million

3.  Remuneration of Auditor

Auditing Fee The Company and its associated company has paid auditing
fee for the period of fiscal year 2007 to the SAM NAK-NGAN A.M.C. Co.,
Ltd. in the amount of THB 655,000.00. The Auditor doesn’t have any
relation with the Company other than auditing service only.

Other Service Fee The Company and its associated company don’t pay any
other service fee to the SAM NAK-NGAN A.M.C. Co., Ltd. for the fiscal
year 2007.