11. Financial Position and Performance 

  11.1 Summary of Financial Statement in the Previous 3 Years

(A) Accounting Audit Summary

-   Financial Statement for year-end, as of December 31, 2011 : The
    accounting auditor has

  expressed non-binding opinions towards the financial statement. The
  auditor is Miss Pimjai Manitkajohnkit, Miss Rungnapa Lertsuwanku and
  Mr. Chayapol Suppasedtanon from Ernst & Young Office Limited.

-   Financial Statement for year-end, as of December 31, 2010, 2009 :
    The accounting auditor has expressed non-binding opinions towards
    the financial statement. The auditor is Miss Sansanee Poonsawat from
    AMC Co., Ltd.

(B) Financial Statement

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Financial Ratios (Consolidated financial statements*)

  -------------------------------------------- --------- --------- --------
  Liquidity Ratio                              2011      2010      2009

  Current Ratio (times)                        0.82      1.04      1.03

  Quick Ratio (times)                          0.55      0.74      0.64

  Cash Flow Ratio (times)                      0.32      0.37      0.33

  Accounts Receivable Turnover (times)         7.94      8.16      7.72

  Average Debt Collection Period (Day)         45        44        47

  Inventory Turnover (times)                   10.32     9.05      6.20

  Average Selling Period (days)                35        40        58

  Payable Turnover (times)                     2.98      3.14      3.04

  Average Payment Period (days)                121       115       118

  Cash Cycle (days)                            (41)      (31)      (14)

                                                                   

  Profitability Ratio                                              

  Gross Profit Margin (%)                      31.44     31.48     31.70

  Operating Profit (%)                         5.76      6.40      6.37

  Other Profits (%)                            1.41      1.16      1.07

  Cash to Earnings Ratio (%)                   150.07    199.21    147.40

  Net Profit Margin (%)                        4.05      4.70      4.63

  Rate of Return to Equity (%)                 32.32     34.36     32.24

                                                                   

  Efficiency Ratio                                                 

  Return on Assets (%)                         13.61     15.14     14.91

  Return on Fixed Assets (%)                   42.67     55.20     54.29

  Asset Turnover (times)                       2.36      2.37      2.20

                                                                   

  Financial Policy Ratio                                           

  Debt to Equity Ratio (times)                 2.37      1.86      2.00

  Interest Capability Ratio (times)            128.49    136.22    420.79

  Debt Service Coverage Ratio (times)          0.72      1.32      1.65

  Dividend Payout Rate (%)                     59.13**   97.28     99.73
  -------------------------------------------- --------- --------- --------

Remarks * Consolidated financial statements of the year 2009, The
Company commenced to consolidate the financial statements of Plearn Patt
Co., Ltd. Since October 1, 2009 onwards.

  ** Dividend payment rate is proposed by the board of directors, where
  by such rate will be decided at the annual general shareholder’s
  meeting on April 26, 2012, and the rate is calculated from common
  shares on November 28, 2011.

  11.2 Interpretation & Analysis of Financial Status and Results of
  Operations

Publishing Business Situation in 2011

Thailand’s overall economy in 2011 expanded only 0.1%, which is lower
than the last year’s growth of 7.8%. In the fourth quarter of 2011, Thai
economy dropped as much as 9% due to the flood crisis which had affected
the industrial production, consumption, investment, export and tourism.
As a result Thailand’s annual gross domestic product (GDP) only amounts
to THB 328,154 million. However, the Company could still maintain its
revenue and profit growth amidst the economic fluctuation.

The book business in 2011 continued to grow. The Publishers and
Booksellers Association of Thailand estimated that the book industry in
2011 was worth approximately THB 21,000-27,000 million. In the first
half of the year, the book business grew up to 10%. However, the yearly
growth only came to 1-1.5% because some publishers suffered from the
flood damage which was worth THB 500 million approximately. Nonetheless,
the Association forecast that in 2012 the publishing industry will grow
at least 5% or no less than THB 22,800 million because the flood
situation is recovered, the overall economy has improved and there will
be support from various organizations from both private and government
sectors.

E-books are also becoming more popular. There has been news surrounding
e-book Readers and tablets since late 2010. Though e-books could
potentially affect the sales of physical books in the future, the
Company believes that e-books will offer an alternative to reading for
Thai people who are technology enthusiasts, which will in turn boost the
book sales for publishers. Consequently, the operators in the publishing
industry will need to adjust and develop a plan for this new
advancement. Anyhow, the Company has already prepared its technology and
IT infrastructure and will officially provide e-book services in the
beginning of 2012.

Profitability and Operating Efficiency

During the past 3 years, the Company's revenue continued to grow. The
most 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 (University Bookstores, and points of sales).

  ---------------------- -------------- ---------- ---------- ------------ ---------- ----------
                         Consolidated                         Separate                
                         financial                            financial               
                         statements                           statements              

                         2011           2010       2009       2011         2010       2009

  Total Revenue (THB     5,561.77       5,171.79   4,673.69   5,441.25     5,054.98   4,646.84
  Million)**                                                                          

  Growth from the last   +7.54          +10.66     -          +7.64        8.78       +5.03
  year (%)                                                                            
  ---------------------- -------------- ---------- ---------- ------------ ---------- ----------

**The total revenue is from the financial statement that combines the
profit share from the associate, which is in accordance with the total
revenue information from the Stock Exchange of Thailand.

OPERATING RESULTS

Operating performance for year 2011 over the same period last year

Table : Operating performance for year 2011 over the same period last
year.

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

                                   Consolidated                        
                                   financial                           
                                   statements                          

                                   For the year                        

                                   2011           2010       Change    (%)

  Revenues                                                             

  Revenues from sales              5,370.06       4,999.89   370.17    7.40

  Income from tuition fees         111.34         108.99     2.35      2.16

  Interest and dividend income     23.95          20.79      3.16      15.20

  Other income                     54.41          39.36      15.05     38.24

  Total revenues                   5,559.76       5,169.03   390.73    7.56

  Expenses                                                             

  Cost of sales                    3,676.14       3,425.20   250.94    7.33

  Cost of services                 82.00          75.66      6.34      8.38

  Selling expenses                 924.72         831.98     92.74     11.15

  Administrative expenses          558.89         508.20     50.69     9.97

  Total expenses                   5,241.75       4,841.04   400.71    8.28

  Gross profit                     1,723.26       1,608.02   115.24    7.17

  Gross Margin (%)                 31.44          31.48                (0.04)

  EBITDA                           443.61         450.57     (6.96)    (1.54)

  Profit from operation accordance                                     
  with                                                                 

  Cash Flow Statement              484.53         475.09     9.44      1.99

  Equity holders of the Company    225.22         243.06     (17.84)   (7.34)

  EPS (Baht)                       0.70           0.75       (0.05)    (6.67)
  -------------------------------- -------------- ---------- --------- --------

The Company and its subsidiaries’ total revenue for the year of 2011
according to the consolidated financial statements worth THB 5,559.76
million compare with the same period last year, grew up 7.56%. While the
total revenue, according to the separate financial statements worth THB
5,441.25 million, or up 7.64% compare with the same period last year. In
this amount as revenues from sales 5,363.88 million, or up 7.40%.

The growth was the result of an increase in same store sales by 3.4%
from the same period last year due to the product mixed improvement in
SE-ED Book Center combined with higher sales from new SBC branches,
which opened 50 new branches in year of 2011, causing the continuous
growth of 8.99% sales of SE-ED book center.

Cost of sales and service the consolidated financial statements of the
year 2011 were worth THB 3,758.14 million or up to 7.35%. While the cost
of goods sold, according to the separate financial statements, worth THB
3,674.69 million or up to 7.41%. The gross margin for the year of 2011
worth 31.49%, which was close to the same period last year. The main
driver was the increasing sales rebate from suppliers. Nevertheless, the
sales ratio of high-profit products had decreased from the same period
last year because the wholesale of books that the Company published and
the income from advertising segments in the Company magazines had
decreased.

The Selling and Administrative expense for the year of 2011 according to
the consolidated financial statements worth THB 1,483.61 million, or up
10.70%. While the Selling and Administrative expense, according to the
separate financial statements worth THB 1,455.85 million, or up 10.39%.
The main drivers were:

-   The personnel expenses in 2011 increased than normal due to the
    salary structure adjustment in several business units according to
    the increasing of lowest wage adjustment rate and the higher cost of
    living. Otherwise the company also recognizing expense for employees
    benefit in long term future according with Thai Accounting Standard
    adopted in 2011.

-   The increasing expenses due to the growth of the new 50 bookstore
    branches are rental fees, service charges, logistic costs, and
    packaging costs. 

-   The Company had insured against the damages from products loss and
    the flood disaster and recorded the revenue from claiming in the
    financial statements of 2011. The damages cost THB 19.95 million,
    according to the letter of initial damages in claiming at the
    beginning of 2012.

The Company net profit before corporate income tax for the year of 2011
according to the separate financial statements worth THB 310.38 million,
compared with the same period last year or -1.41%. The decreasing income
was the result of the great flood disaster in the fourth quarter of
2011.

However, the calculated income tax had changed at a rate of 30% in 2011
instead of 25% of net income in 2010. The net profit of the year of
2011, according to the separate financial statements, worth THB 222.83
million, compared with the same period last year, decreased 5.97%.

The net profit belonging to shareholders’ equity of the parent company,
according to the consolidated financial statements, worth THB 225.22
million, compared with the same period last year, decreased 7.34%.

Financial status analysis for year 2011 compare to 2010

Asset Component

+--------------------------+-------+-----+-------+-----+-----+------+
|                          |       |     |       |     | (U  |      |
|                          |       |     |       |     | nit |      |
|                          |       |     |       |     | :   |      |
|                          |       |     |       |     | M   |      |
|                          |       |     |       |     | ill |      |
|                          |       |     |       |     | ion |      |
|                          |       |     |       |     | Ba  |      |
|                          |       |     |       |     | ht) |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Description              | Co    |     |       |     |     |      |
|                          | nsoli |     |       |     |     |      |
|                          | dated |     |       |     |     |      |
|                          | fina  |     |       |     |     |      |
|                          | ncial |     |       |     |     |      |
|                          | state |     |       |     |     |      |
|                          | ments |     |       |     |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+
|                          | Year  |     | Year  |     | Cha |      |
|                          | 2011  |     | 2010  |     | nge |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Assets                   | A     | %   | A     | %   | Amo | (%)  |
|                          | mount | to  | mount | to  | unt |      |
|                          |       | To  |       | To  |     |      |
|                          |       | tal |       | tal |     |      |
|                          |       | Ass |       | Ass |     |      |
|                          |       | ets |       | ets |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Current assets           |       |     |       |     |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Cash and cash            | 5     | 23  | 7     | 32  | (1  | (20  |
| equivalents              | 70.31 | .19 | 20.05 | .08 | 49. | .80) |
|                          |       |     |       |     | 74) |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Current investments      | 1     | 7   | 1     | 8   | (7. | (4   |
|                          | 78.86 | .27 | 86.48 | .31 | 62) | .09) |
+--------------------------+-------+-----+-------+-----+-----+------+
| Trade and other          | 1     | 5   | 1     | 5   | 13  | 1    |
| receivables              | 32.41 | .38 | 18.51 | .28 | .90 | 1.73 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Inventories              | 3     | 16  | 3     | 16  | 19  | 5.06 |
|                          | 96.08 | .11 | 76.99 | .80 | .09 |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Other current assets     | 39.93 | 1   | 29.75 | 1   | 10  | 3    |
|                          |       | .62 |       | .33 | .18 | 4.22 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Total current assets     | 1,3   | 53  | 1,4   | 63  | (1  | (7   |
|                          | 17.59 | .58 | 31.78 | .80 | 14. | .98) |
|                          |       |     |       |     | 19) |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Non-current assets       |       |     |       |     |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Restricted bank deposits | 12.39 | 0   | 12.32 | 0   | 0   | 0.57 |
| and other                |       | .50 |       | .55 | .07 |      |
|                          |       |     |       |     |     |      |
| investments              |       |     |       |     |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Investments in associate | 27.05 | 1   | 27.04 | 1   | 0   | 0.04 |
|                          |       | .10 |       | .20 | .01 |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Property, plant and      | 8     | 34  | 4     | 22  | 347 | 6    |
| equipment                | 44.50 | .34 | 97.20 | .15 | .30 | 9.85 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Leasehold right on land  | 7.37  | 0   | 7.71  | 0   | (0. | (4   |
|                          |       | .30 |       | .34 | 34) | .41) |
+--------------------------+-------+-----+-------+-----+-----+------+
| Leasehold right on       | 1     | 4   | 1     | 5   | (   | (10  |
| buildings                | 10.30 | .49 | 23.39 | .50 | 13. | .61) |
|                          |       |     |       |     | 09) |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Investment property      | -     | -   | 33.52 | 1   | (   | (100 |
|                          |       |     |       | .49 | 33. | .00) |
|                          |       |     |       |     | 52) |      |
+--------------------------+-------+-----+-------+-----+-----+------+
| Intangible assets        | 5.34  | 0   | 6.76  | 0   | (1. | (21  |
|                          |       | .22 |       | .30 | 42) | .01) |
+--------------------------+-------+-----+-------+-----+-----+------+
| Prepaid book copyright   | 27.18 | 1   | 22.38 | 1   | 4   | 2    |
| and translation fee      |       | .11 |       | .00 | .80 | 1.45 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Rental guarantee and     | 92.24 | 3   | 79.57 | 3   | 12  | 1    |
| deposit                  |       | .75 |       | .55 | .67 | 5.92 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Other non-current assets | 15.03 | 0   | 2.62  | 0   | 12  | 47   |
|                          |       | .61 |       | .12 | .41 | 3.66 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Total non-current assets | 1,1   | 46  | 8     | 36  | 328 | 4    |
|                          | 41.40 | .42 | 12.51 | .20 | .89 | 0.48 |
+--------------------------+-------+-----+-------+-----+-----+------+
| Total assets             | 2,4   | 100 | 2,2   | 100 | 214 | 9.57 |
|                          | 58.99 | .00 | 44.29 | .00 | .70 |      |
+--------------------------+-------+-----+-------+-----+-----+------+
|                          |       |     |       |     |     |      |
+--------------------------+-------+-----+-------+-----+-----+------+

Liabilities and shareholders’ equity Component

(Unit : Million Baht)

Consolidated financial statements

[TABLE]

Financial analyses

Total Asset As of December 31, 2011 the company and its subsidiaries had
a total asset of THB 2,458.99 million increase of THB 214.70 million or
9.57% from the end of last year. Causes of changing of total assets:

-   Cash and cash equivalent items as of December 31, 2011 for THB
    570.31 million decreased of THB 149.74 million or -20.80% from
    buying land to build distribution center in future.

-   Trade and other receivables net for THB 132.41 million which was
    increased by THB 13.90 million or 11.73%. Most of them were deferred
    receivables in claiming damages of flood insurance.

-   Inventories-net for THB 396.08 million increased from last year by
    THB 19.09 million or 5.06% Most of them were the result of the
    increasing orders in SE-ED Book Center, distributed books, and paper
    materials.

-   Other current assets net for THB 39.93 million increasing THB 10.18
    million or 34.22% Most of them were advanced expenses of the
    bookstore branches.

-   Property, plant and equipment-net for THB 844.50 million increasing
    THB 347.30 million or 69.85% due to buying land at Bangna-Trad road
    km.21 to build distribution and reclassifying unused land to the
    property, plant and equipment-net group.

-   Leasehold right on buildings net for THB 110.30 million decreasing
    of THB 13.09 million or -10.61% from a land leasehold amortization.

-   Investment property decreased THB 33.52 million due to reclassifying
    unused land to the property, plant, and equipment-net group.

-   Rental guarantee and deposit net for THB 92.24 million increased THB
    12.67 million from the deposit rental payment for opening 50 new
    bookstore branches.

-   Other non-current assets for THB 15.03 million increasing THB 12.41
    million mainly from software maintenance fee and advanced rental
    payment of Tuk Com group (the portion which give benefit more than
    one year).

Total liabilities As of December 31, 2011 the Company and its
subsidiaries had a total liability of THB 1,728.85 million increased of
THB 269.57 million or 18.47%. Causes of changing of total liabilities:

-   Trade and other payables THB 1,500.20 million, an increase by THB
    233.90 million or 18.47%. Most of them were wholesales creditors of
    SE-ED Book Center. It was also the improvement of sales figures and
    the expansion of branches.

-   Current portion of provision for long-term employee benefits THB
    6.12 million according with Thai Accounting Standard adopted in
    2011.

-   Income tax payable was worth THB 34.18 million, a decrease of THB
    7.05 million due to the decreasing net profit for Q4/2011.

-   Long-term loans were worth THB 64.60 million, an increase 6.60
    million, belonging to Plearn Patt Co., Ltd. for building an
    additional school building.

-   Provision for long-term employee benefits THB 39.62 million, was
    increased THB 38.14 million according with Thai Accounting Standard
    adopted in 2011.

Shareholders’ equity As of December 31, 2011 the Company and its
subsidiaries had a total shareholders’ equity of THB 730.14 million,
which the shareholders' equity of parent company worth THB 668.23
million decreased of THB 57.16 million. Causes of changing of
Shareholders’ equity:

-   Net profit of shareholders' equity of parent company from operation
    result of year 2011 amount THB 225.22 million.

-   Unrealized loss-securities available for sale increased THB 7.63
    million due to the changing market price.

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

    -   Operation result of Q4/2010 THB 0.43 per share as THB 139.29
        million.

    -   Operation result of Q1/2011 THB 0.10 per share as THB 32.39
        million.

    -   Operation result of Q2/2011 THB 0.10 per share as THB 32.39
        million.

    -   Operation result of Q3/2011 THB 0.10 per share as THB 32.39
        million.

-   Retained earnings decreased THB 37.28 million from recognizing
    expense for employees benefit in long term future according with
    Thai Accounting Standard adopted in 2011.

-   There was the record of transfer capital decreased from the changing
    of share ratio in affiliated company to be Retained earnings in the
    amount of THB 6.64 million.

Cash flow and sufficiency of capital structure

Table : Cash flow for year 2011 over the same period last year

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

                                       Consolidated                         
                                       financial                            
                                       statements                           

                                       2011           2010       Change     (%)

  Cash flow received (used) from       480.26         494.90     (14.64)    (2.96)
  operation activities                                                      

  Cash flow received (used) from       (401.06)       (104.40)   (296.66)   284.16
  investing activities                                                      

  Cash flow received (used) from       (228.93)       (215.26)   (13.67)    6.35
  financing activities                                                      

  Cash flow increase (decrease)        (149.73)       175.24     (324.97)   (185.44)
  ------------------------------------ -------------- ---------- ---------- ----------

Cash Flow Received from Operation Activities for year 2011 was THB
480.26 million as listed below:

-   Income from operation increased in the amount of THB 484.53 million:

-   The Net profit before corporate income tax year 2011 in the amount
    of THB 315.56 million.

-   Adjustments to reconcile profit before tax in the amount of THB
    168.97 million (Depreciation and amortization as THB 107.82 million,
    Expense from donated goods as THB 20.36 million, Write-off goods and
    equipment damaged by flood incident as THB 19.95 million, ,
    Amortized leasehold right on land and buildings as THB 13.43
    million, Expense from lost goods as THB 12.50 million, Provision for
    long-term employee benefits as THB 7.10 million, Dividend income as
    THB (10.72) million, and Interest income as THB (13.23) million).

    -   Cash flow increased from trade accounts receivable decreased
        amount THB 5.70 million according to the decreasing income of
        wholesale in Q4/2011 Hence, the Company collects the debts from
        major debtors who were the suspended debtors from the end of
        2010 in clearing of the consignment stock.

    -   Cash flow decreased from inventories increased amount 76.83
        million, because most of them were the result of the increasing
        orders in SBC, distributed books, and paper materials.

    -   Cash flow decreased from increasing of claiming damages money
        which costs THB 19.81 million. Most of them were deferred
        receivables in claiming damages of flood insurance.

    -   Cash flow increased from decreasing rental guarantee, deposit
        amount THB 12.67 million, and opening 50 new bookstore branches.

    -   Cash flow decreased from other non-current assets increased
        amount THB 12.41 million, mainly from software maintenance fee
        and advanced rental payment of Tuk Com group (the portion which
        give benefit more than one year).

    -   Cash flow increased from trade accounts payable increased amount
        THB 201.26 million. Most of them were wholesales creditors of
        SE-ED Book Center.

    -   Cash flow increased from accrued expenses increased amount THB
        19.76 million because most of them were setting suspended
        retirement mutual fund, anniversary bonuses, rental and service,
        and suspended delivery costs of bookstore branches.

    -   Cash flow increased from other payables increased amount THB
        9.07 million. Most of them were the increasing numbers of the
        payables sending off the billing notes at the end of the year
        and increasing of prepaid checks.

Cash Flow Used from Investment Activities for year 2011 was THB (401.06)
million as listed below:

-   Cash flow decreased from purchase of assets as THB 427.80 million
    due to buying land to build distribution center in future and the
    purchase of decoration items, bookshelves and computer for new SBC
    branches and head office.

-   Cash flow increased amount THB 13.23 million from interest income.

-   Cash flow increased amount THB 12.72 million from dividend revenue.

Cash Flow Used from Financial Activities for year 2011 was THB (228.93)
million due to dividend payment for Q4 of 2010 which would be paid in
May, 2011 and interim dividend payment for operation result of Q1, Q2
and Q3 of 2011

  11.3 Remuneration of Auditor

Auditing Fee The Company and its associated companies have paid the
auditing fee for the period of fiscal year 2011 to Ernst & Young Office
Limited. in the amount of THB 1,220,000.00. The Auditor doesn’t have any
relation with the Company other than auditing service only.

Other Service Fee The Company and its associated companies don’t pay any
other service fee to the Ernst & Young Office Limited. for the fiscal
year 2011.