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 and 2006 : The
    accounting auditor has expressed the non-binding opinion towards the
    financial statement. The auditor is Miss Sukanya Sutheeprasert from
    AMC Co., Ltd.

-   Financial Statement for year-end, as of December 31, 2008 : 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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 (c) Financial Ratios

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

  Ratio                                      2008       2007       2006

  Current Ratio (times)                      0.97       1.04       1.05

  Quick Ratio (times)                        0.50       0.56       0.71

  Cash Flow Ratio (times)                    0.30       0.31       0.41

  Accounts Receivable Turnover (times)       8.23       7.07       6.06

  Average Debt Collection Period (times)     44         51         59

  Inventory Turnover (times)                 5.86       6.93       9.16

  Average Selling Period (days)              61         52         39

  Debtor Turnover (times)                    3.31       3.56       3.88

  Debt Payment Period (days)                 109        101        93

  Cash Cycle (days)                          (4)        2          6

  Profitability Ratio                                              

  Ratio                                      2008       2007       2006

  Gross Profit (%)                           30.66      31.17      31.52

  Operating Profit (%)                       5.79       7.08       7.98

  Other Profits (%)                          1.20       1.30       1.21

  Cash to Earnings Ratio (%)                 130.37     103.75     111.38

  Net Profit Margin (%)                      4.40       4.65       5.61

  Rate of Return to Equity (%)               29.62      27.60      32.73

  Efficiency Ratio                                                 

  Ratio                                      2008       2007       2006

  Return on Assets (%)                       14.21      17.15      20.43

  Return on Fixed Assets (%)                 66.65      65.39      71.22

  Asset Turnover (times)                     2.48       2.45       2.59

  Financial Policy Ratio                                           

  Ratio                                      2008       2007       2006

  Debt to Equity Ratio (times)               1.79       1.63       1.22

  Interest Capability Ratio (times)          2,264.37   1,170.61   2,091.06

  Debt Service Coverage Ratio (cash basis)   0.95       0.95       1.27

  Dividend Payment Rate (%)**                98.19      98.65      91.09
  ------------------------------------------ ---------- ---------- ----------

  Remark ** Dividend payment rate 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, 2009 and
  calculated based on the number of common shares to be counted on
  November 28, 2008.

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

Publishing Business Situation in 2008

The overall economic outlook in 2008 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 2008, which
later became worsen towards the year’s end. This is considered one of
the hardest years for retail business entrepreneurs.

However, the book business in 2008 continued to grow in a consistent
fashion, even though the growth seemed to slow down, like other retail
businesses. The major force behind growth is the unusually high number
of network store openings from 2007 and 2008, in particular, small
convenient stores which opened by large-chain convenient store company.
The effect can also be attributed to the Company’s store opening as well
as other the entrepreneurial store opening, 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 2008 were expected to be 36 titles per day, compared to 31 titles per
day in 2007, 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 in 2008 to be somewhere around 3%, a fourth
consecutive drop with respect to Thailand total market value with the
approximation using cover price at THB 18,900 million in 2008 with
anticipation that each Thai has a budget of THB 300 per person per year
to buy books. These statistics when compared to the developed nations,
it is found that the rate of book-reading is still far too little and it
reflects a much more market potential for greater growth book business.

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 2008

In 2008 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 2008, the main activities excluding normal operation were as follow:

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

-   New 49 branches were opened. As in December 31, 2008 there
    were in the total of 303 stores, and 37 points of sales currently in
    operation.

-   Renovated 11 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.  Installed Close-Circuited Television (CCTV) for SE-ED Book Center
    Bookstores and its network stores which has gradually been installed
    since the end of fourth quarter of 2006, until almost all the
    systems were installed in 2007, and also additionally installed to
    the newly opened stores in 2008 totaling 49 branches, resulting in
    the significant reduction of book loss in 2007.

3.  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.

4.  Organized “Thailand Electronic & Industrial Technology 2008”
    Exhibition from 10^(th) to 13^(th) of July 2008, at Bangkok
    International Trade Exhibition Center (BITEC), Bangna, Hall 102.
    This is the largest electronic product exhibition event in Thailand.
    For the past year, several new product categories were added, such
    as security protection system, GPS products, as well as automotive
    audio system. The Company also organized Thailand USACi Competition
    2007 - 2008, the event gathering of those automotive audiophiles to
    compete for the best automotive audio. This year, the Company
    together with Asia Institute of Technology (AIT), Thai Robotic
    Association, and Seagate Technology (Thailand) Co., Ltd. organized
    intelligence vehicle Thailand competition to promote the competition
    in vehicle design to move according to pre-determined track course
    without driver with shortest distance in the fastest time, and also
    were supported by different educational institute in exhibiting the
    work both the winner and also other participants.

5.  Officially opened the “SE–ED Learning Center” at Chamchuri Building,
    Samyan in September 2008, to provide knowledge and inspiration for
    youths and general public in wider scale. Not only increasing the
    number of the SE–ED Kiddy Camp launched in 2002 to allow more
    options during the summer school break, the Company also added other
    courses during weekend. In 2008, the Company has organized training
    at SE-ED Learning Center for more than 50 courses, which consists of
    4 Youth activity courses (i.e. human planning game course, wire
    bending invention and coconut cone course, Pocket Planner game
    course, Art on the bag course) as well as seminar training course
    for general public in total of 46 courses (for example, computer
    crime law 2007 course, VBA on excel course, Microcontroller MCS 8051
    using FPGA course, Basic photography technique course, camera
    handling course, Dramatic workshop & composition course, etc

6.  Installing SE-ED Channel system, a system that allows total control
    of both visual and audio contents from the headquarters via
    readily-installed long distance communication lines, which has
    already been in operation since the middle of 2008. Last year alone,
    the system has been installed to 116 bookstore branches, with 62
    branches in Bangkok suburban area and 54 branches in the countryside
    area. The system will help the public relation work for products and
    services that each branch has to all customers who visit the stores,
    including the training and variety of communication between branch
    and the headquarters.

7.  Developed and improved the reservation system, making possible for
    book ordering & reservation to be made directly from branches 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 2008, 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.

8.  Organized Industrial Sourcing Fair 2008 for the first time between
    July 31 to August 3, 2008 at BITEC Bangna international exhibition
    center Hall 103, an event that exhibits overall industrial products,
    allowing manufacturers, dealers, and industrial service provider of
    more than 300 firms to meet with Thai potential buyers. There are 16
    product categories displayed exhibition, for example, glue and
    shield, automation and electronics system categories, chemical
    products, manufacturing and made-to-order, electrical devices, and
    power system, etc.

9.  Launched Wi-Fi Hot Spot service at every SE-ED Book Center branch
    with cooperation from Acument Co., Ltd. (subsidiary company from
    Jusmin group) to install Wi-Fi Hot Spot 2 Mb/sec at every branch of
    SE-ED Book Center from early November 2008 to service internet users
    around SE-ED Book Center. The benefit of this project is to gain
    revenue from selling internet pay-card and allow communication which
    requires a lot of bandwidth between branch and main office to
    improve more significantly without added expense.

10. Installed wireless communication system between main office and
    warehouse in the month of October, 2008, using long-distance
    wireless LAN (similar to Wi Max system with slightly lower
    frequency) to replace Lease Line 2 Link communication system, in
    which, after the system is modified to reduce risk that may come
    from linkage, the Company will be able to significantly reduce
    monthly expense.

11. In the end of 2008, the Company has expanded an area of additional
    3,000 sq.m. for distribution center from previously 10,000 sq.m with
    the total of 13,000 sq.m. to increase the distribution efficiency up
    to 400 copies per minute (currently, the distribution center can
    support the book out-going distribution of up to 200 copies per
    minute and can support in-coming book from different publishers of
    up to 12-15 publishers) and to be ready for branch expansion and
    service.

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 2008, the Company opened 49 more branches of bookstore. As of
    December 31, 2008, the total branches from this amount, there were
    303 branches which are still in operation, plus 37 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.

  -------------------------------- ------------ ------------ ------------
                                   2008         2007         2006

  Total Income (THB million)       4,423.00     3,949.59     3,725.74

  Growth from the last year(%)     +11.99       +6.01        +9.87
  -------------------------------- ------------ ------------ ------------

Operating Results For the year 2008 as of December 31, 2008, the
financial information can be summarized as follows:

Total revenue of the year 2008 is worth THB 4,423.00 million or
increased from the same period of the previous year by 11.99%. The sales
revenue is accounted for THB 4,370.00 million from the total revenue or
increased by 12.10%. The Company’s higher revenue, which contradicts the
overall situation in retailing business, is the result of 52 new
branches of SE-ED Book Center in 2007 and 49 new branches in 2008. The
revenue from SE-ED Book Center and its network stores, therefore,
increased by 11.95% in spite of the fact that the same-store sales
revenue only slightly increased.

Moreover, the revenue from the book distribution business, and the
wholesales of books to other bookstores, schools and universities
increased up to 12.82% from the same period of last year. This is the
result from the higher sales volumes of ELT books from Oxford University
Press by approximately 41.25%. Also, the number of books that the
Company has distributed for other publishers increased satisfactorily
due to the fact that more publishers has continuously trusted the
Company to distribute more popular books.

The net profit from the year 2008 is worth THB 194.63 million, which
increased from the same period of last year by 5.89%. This is the result
from the 12.10% sales growth from the previous year, and from tax
benefits derived from the decreasing rate of corporate income tax from
30% to 25% and book donations that is worth THB 14.23 million more than
last year which granted benefit from tax reduction in investment
expense. The following are the reasons why the Company’s net profit only
slight increased.

-   The initial profit rate slightly decreased due to the sales growth
    of low - profit products, which are newspapers and magazines in
    particular, in SE-ED Book Center and its network stores.

-   The sales and administrative expenses increased from the same period
    of last year by THB 146.30 million or 14.89%, which is higher than
    the sales growth rate. This is the result from the following:

-   The amount of time for the expansion of SE-ED Book Center to yield
    satisfactory sales growth

-   The same-store sales growth that is lower than the increasing
    expenses, which is the consequence of the economic and political
    problems stated above

-   The rental fee, service expenses, and employees’ salaries increased
    because of the new branches, the higher rate of minimum wage, the
    higher cost of living rate provided for employees, and the higher
    transportation fee due to the increased gas price

The Board of Directors considered and approved the dividend payment for
the operating performance of the year 2008 at the rate of THB 0.59 per
share, for the total amount of 323,921,130 shares from net profit
portion from the financial statement which the equity method calculated
by which is not exempt from corporate income tax. However, the Company
already paid some interim dividend of the first three quarters at THB
0.30 per share. Thus, the additional dividend of this period will be THB
0.29 per share, for the total amount of 323,921,130 shares due to the
Company’s continuous profit gain and high liquidity. The names of
shareholders listed for the right to receive the dividend is scheduled
to be announced on May 15, 2009 and, by the section 225 in Securities
and Exchange Act, the names of shareholders will be compiled by closing
the shareholders register book on May 18, 2009. The payment of dividend
will be made on May 28, 2009

Financial status analysis for year 2008 compare to 2007

Total Asset As of December 31, 2008 the company had a total asset of THB
1,826.49 million, increase of THB 92.94 million from the end of last
year. Causes of changing of total assets :

-   Cash and cash equivalent items as of December 31, 2008 for THB
    336.68 million increased of THB 37.90 million

-   Inventories-net for THB 498.62 million increased THB 52.12 million
    from the ordered of foreign books to sell to the institutes for the
    coming academic term of May and the publishing of dictionaries
    series in the third quarter of 2008 and English language outside
    reading series which was the first year publishing.

-   Loan due from associated company increased THB 11 million from the
    loan to Plearn Patt Co.,Ltd.

-   Short-term investment-net for THB 167.93 million decreased THB 39.37
    million from transferred investment in government bond (age not over
    than 3 months) to be in the cash equivalent item

-   Trade accounts and notes receivable-net for THB 81.12 million, an
    decreased 11.09 million from payment received from wholesales
    debtors and foreign books debtors.

-   Property, plant and equipment-net for THB 345.22 million increased
    THB 73.67 million from in 2008 opening of more 49 new branches.

-   Assets pending for sale-net decreased THB 19.20 million from sales
    of five four-storied buildings in Din Dang district.

Total liabilities As of December 31, 2008 the Company had a total
liability of THB 1,172.54 million, an increase of THB 99.34 million or
9.26%. Causes of changing of total liabilities :

-   Account payable and note payable THB 972.11 million, was increased
    THB 113.33 million. Most of them was wholesales creditors of SE-ED
    Book Center and account payable of distributors.

-   Other accounts and notes payable THB 36.67 million, was increased
    THB 8.99 million. Most of them were Accrued Rents.

-   Accrued expenses THB 97.45 million, was increased THB 2.33 million.
    Most of them were Accrued Bonus.

-   Accrued corporate income tax decreased THB 29.06 million due to the
    benefits derived from the decreasing rate of corporate income tax
    from 30% to 25% and book donation.

Shareholders’ equity As of December 31, 2008 amount THB 653.95 million,
an decrease of THB 6.40 million represent 0.97% due to:

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

-   Unrealized loss from investment available for sales increased THB
    18.18 million from due to the financial crisis in the U.S. which
    affected to Thai capital market and monetary market with additional
    of prolonged politics problem causing to the decline of Thai
    Securities exchange.

-   Net profit from operation result year of 2008 amount 194.63 million.

-   Paid-up share capital increased THB 0.16 million from the exercised
    of warrant to common share the exercised of ESOP. (Since rights to
    exercise warrants was expired on January 14, 2008.)

Cash flow and sufficiency of capital structure

  ----------------------------------- ----------- ---------- --------- --------
                                      For the                (Unit :   
                                      years ended            Million   
                                                             Baht)     

                                      On                     Change    
                                      December,                        
                                      31                               

  Description                         2008        2007       Amount    (%)

  Cash flow received (used) from      329.70      286.20     43.50     15.20
  operation activities                                                 

  Cash flow received (used) from      (108.40)    (89.22)    (19.18)   21.50
  investing activities                                                 

  Cash flow received (used) from      (183.41)    (188.88)   5.47      (2.90)
  financing activities                                                 

  Cash flow increase (decrease)       37.89       8.10       29.79     367.78
  ----------------------------------- ----------- ---------- --------- --------

Cash Flow Received from Operation Activities for 2008 was THB 329.70
million as listed below :

-   Monetary Profit from operation in the amount of THB 381.30 million :

-   The Net profit before corporate income tax for 2008 in the amount of
    THB 252.72 millions.

-   Revenues and expenses in non-monetary form or not dealing with main
    operation in the amount of THB 128.57 million (Depreciation and
    Leasehold written-off in the amount of THB 104.61 million, Loss from
    lost goods as THB 27.39 million, Loss from donated goods as THB
    16.53 million, and Loss from goods destroyed as THB 10.04 million).

-   Cash flow increased from trade accounts and notes payable THB 112.96
    million.

-   Cash flow decreased amount THB 52.12 million from inventories.

-   Cash flow decreased from tax payment THB 87.15 million.

Cash Flow Used from Investment Activities for 2008 in the amount of THB
(108.40) million as listed below :

-   Cash flow decreased from Purchase of assets as THB 164.74 million
    due to investment for new branches expansion.

-   Cash flow decreased from Loan due from associated company as THB 11
    million.

-   Cash flow increased from selling of short-term investments in
    government bond (age over than 3 months) at the value of THB 21.61
    million.

-   Cash flow increased amount THB 20 million from sales of assets
    pending for sale of five four-storied buildings.

Cash Flow Used from Financial Activities in 2008 was THB (183.41)
million due to Dividend payment as THB 181.40 million.

3.  Remuneration of Auditor

Auditing Fee The Company and its associated company has paid auditing
fee for the period of fiscal year 2008 to the SAM NAK-NGAN A.M.C. Co.,
Ltd. in the amount of THB 690,000.00. 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 2008.