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, 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.

-   Financial Statement as of December 31, 2004 : The accounting auditor
    has expressed the non-binding opinion towards the financial
    statement. The auditor is Miss Susan Eiamvanicha from AMC Co., Ltd.

(B) Financial Statement

+---------------------------------------+----------+--------+---------+
| SE-EDUCATION PUBLIC COMPANY LIMITED   |          |        |         |
+---------------------------------------+----------+--------+---------+
| BALANCE SHEETS                        |          |        |         |
+---------------------------------------+----------+--------+---------+
| As of December 31, 2006, 2005 and     |          |        |         |
| 2004                                  |          |        |         |
+---------------------------------------+----------+--------+---------+
|                                       | (Unit:   |        |         |
|                                       | Thousand |        |         |
|                                       | Baht)    |        |         |
+---------------------------------------+----------+--------+---------+
| ASSETS                                | 2006     | 2005   | 2004    |
+---------------------------------------+----------+--------+---------+
| CURRENT ASSETS                        |          |        |         |
+---------------------------------------+----------+--------+---------+
| Cash and cash equivalent items        | 290,689  | 2      | 93,721  |
|                                       |          | 69,776 |         |
+---------------------------------------+----------+--------+---------+
| Short-term investment-net (net from   | 194,793  | 1      | 161,939 |
| allowance for                         |          | 82,719 |         |
|                                       |          |        |         |
| diminution                            |          |        |         |
+---------------------------------------+----------+--------+---------+
| Trade accounts and notes              | 89,195   | 83,939 | 83,741  |
| receivable-net                        |          |        |         |
+---------------------------------------+----------+--------+---------+
| Loan due from an associated company   | -        | 9,000  | -       |
+---------------------------------------+----------+--------+---------+
| Inventories-net                       | 231,005  | 2      | 153,488 |
|                                       |          | 26,027 |         |
+---------------------------------------+----------+--------+---------+
| Other Assets                          |          |        |         |
+---------------------------------------+----------+--------+---------+
| Advance Copyright Expenses-net        | 17,735   | 16,736 | 11,613  |
+---------------------------------------+----------+--------+---------+
| Other current assets                  | 22,461   | 18,930 | 15,802  |
+---------------------------------------+----------+--------+---------+
| TOTAL CURRENT ASSETS                  | 845,878  | 8      | 520,304 |
|                                       |          | 07,127 |         |
+---------------------------------------+----------+--------+---------+
| NON-CURRENT ASSETS                    |          |        |         |
+---------------------------------------+----------+--------+---------+
| Investments in subsidiary and         | 89,330   | 50,651 | 34,837  |
| associated companies-net              |          |        |         |
+---------------------------------------+----------+--------+---------+
| Property, plant and equipment-net     | 264,067  | 2      | 241,943 |
|                                       |          | 55,282 |         |
+---------------------------------------+----------+--------+---------+
| Leasehold on buildings-net            | 154,294  | 1      | 137,009 |
|                                       |          | 66,862 |         |
+---------------------------------------+----------+--------+---------+
| Other assets                          |          |        |         |
+---------------------------------------+----------+--------+---------+
| Assets pending for sales-net          | 19,200   | 21,000 | 21,000  |
+---------------------------------------+----------+--------+---------+
| Land and building not used for        | 33,784   | 32,367 | 32,433  |
| operation-net                         |          |        |         |
+---------------------------------------+----------+--------+---------+
| Guarantee for rental and deposit      | 49,666   | 47,143 | 68,129  |
+---------------------------------------+----------+--------+---------+
| OTHER NON-CURRENT ASSETS              | 21,277   | 15,534 | 3,047   |
+---------------------------------------+----------+--------+---------+
| TOTAL NON-CURRENT ASSETS              | 631,618  | 5      | 538,398 |
|                                       |          | 88,839 |         |
+---------------------------------------+----------+--------+---------+
| TOTAL ASSETS                          | 1        | 1,3    | 1,      |
|                                       | ,477,496 | 95,966 | 058,702 |
+---------------------------------------+----------+--------+---------+

  ------------------------------------------ ---------------- ----------- -----------
  SE-EDUCATION PUBLIC COMPANY LIMITED                                     

  BALANCE SHEETS                                                          

  As of December 31, 2006, 2005 and 2004                                  

                                             (Unit:Thousand               
                                             Baht)                        

  LIABILITIES AND SHAREHOLDERS' EQUITY       2006             2005        2004

  CURRENT LIABILITIES                                                     

  Bank overdrafts                            2,013            12,032      11,474

  Trade accounts and notes payable           649,799          648,571     432,742

  Accrued Expenses                           55,390           27,903      25,276

  Accrued Copyright expenses                 16,632           15,203      13,003

  Accrued corporate income tax               46,088           40,137      22,626

  Other                                      37,013           33,784      35,836

  TOTAL CURRENT LIABILITIES                  806,935          777,630     540,957

  NON-CURRENT LIABILITIES                                                 

  Other-non current liabilities              5,551            5,036       2,669

  TOTAL NON-CURRENT LIABILITIES              5,551            5,036       2,669

  TOTAL LIABILITIES                          812,486          782,666     543,626

  SHAREHOLDERS' EQUITY                                                    

  Registered share capital                                                

  348,128,690 ordinary shares @ Baht 1.00    348,129          348,129     348,129
  each                                                                    

  Issued and paid-up share capital                                        

  332,894,970 ordinary shares @ Baht 1.00    332,895          -           -
  each                                                                    

  322,135,910 ordinary shares @ Baht 1.00    -                322,136     -
  each                                                                    

  314,152,170 ordinary shares @ Baht 1.00    -                -           314,152
  each                                                                    

  Premiums on share capital                  149,420          147,776     144,389

  Capital surplus from assets revaluation    31,047           17,344      19,484

  Unrealized (loss) - securities available   (5,571)          (5,757)     (5,558)
  for sale                                                                

  Retained earnings                                                       

  Appropriated                                                            

  Legal reserve                              35,627           35,627      32,086

  Treasury stock reserve                     122,641          122,641     122,641

  Unappropriated                             121,592          96,174      10,523

  Less Treasury stock 19,783,600 shares @    (122,641)        (122,641)   (122,641)
  Baht 6.20                                                               

  TOTAL SHAREHOLDERS' EQUITY                 665,010          613,300     515,076

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,477,496        1,395,966   1,058,702
  ------------------------------------------ ---------------- ----------- -----------

  --------------------------------------- ---------------- ----------- -----------
  SE-EDUCATION PUBLIC COMPANY LIMITED                                  

  STATEMENTS OF INCOME                                                 

  For the Year ended on December 31,                                   
  2006, 2005 and 2004                                                  

                                          (Unit:Thousand               
                                          Baht)                        

                                          2006             2005        2004

  REVENUES FROM OPERATION                                              

  Sales                                   3,680,704        3,365,002   2,833,648

  Other income                            45,042           24,615      21,116

  Participating gain in the associated    -                1,513       1,576
  companies                                                            

  TOTAL REVENUES                          3,725,746        3,391,130   2,856,340

  EXPENSES FROM OPERATION                                              

  Cost of sales                           2,520,718        2,332,845   1,981,604

  Selling and administrative expenses     901,600          790,284     704,327

  Directors' remuneration                 4,522            3,593       3,114

  Participating loss in the associated    5,320            -           -
  companies                                                            

  TOTAL EXPENSES                          3,432,160        3,126,722   2,689,045

  PROFIT BEFORE INTEREST EXPENSES                                      

  AND CORPORATE INCOME TAX                293,586          264,408     167,295

  INTEREST EXPENSES                       (197)            (157)       (239)

  CORPORATE INCOME TAX                    (84,198)         (76,337)    (50,095)

  NET PROFIT                              209,191          187,914     116,961

                                                                       

  BASIC EARNINGS PER SHARE                0.67             0.63        0.41

  DILUTED EARNINGS PER SHARE              0.65             0.59        0.38
  --------------------------------------- ---------------- ----------- -----------

+-----------------+------+----+------+---------+----+-----+---+----+
| SE-EDUCATION    |      |    |      |         |    |     |   |    |
| PUBLIC COMPANY  |      |    |      |         |    |     |   |    |
| LIMITED         |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| STATEMENTS OF   |      |    |      |         |    |     |   |    |
| CHANGES IN      |      |    |      |         |    |     |   |    |
| SHAREHOLDERS'   |      |    |      |         |    |     |   |    |
| EQUITY          |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| For the Years   |      |    |      |         |    |     |   |    |
| ended on        |      |    |      |         |    |     |   |    |
| December 31,    |      |    |      |         |    |     |   |    |
| 2006 2005 and   |      |    |      |         |    |     |   |    |
| 2004 (Unit :    |      |    |      |         |    |     |   |    |
| Thousand Baht)  |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
|                 | Is   | Pr | Cap  | Unr     | Re |     | T | T  |
|                 | sued | em | ital | ealized | ta |     | r | ot |
|                 | and  | iu | sur  | gain    | in |     | e | al |
|                 | pai  | ms | plus | (loss)  | ed |     | a |    |
|                 | d-up | on | from |         | ea |     | s |    |
|                 | s    | s  | as   | on      | rn |     | u |    |
|                 | hare | ha | sets | sec     | in |     | r |    |
|                 | cap  | re | rev  | urities | gs |     | y |    |
|                 | ital | c  | alua | av      |    |     | S |    |
|                 |      | ap | tion | ailable |    |     | t |    |
|                 |      | it |      | for     |    |     | o |    |
|                 |      | al |      | sale    |    |     | c |    |
|                 |      |    |      |         |    |     | k |    |
+-----------------+------+----+------+---------+----+-----+---+----+
|                 |      |    |      |         | Ap | Un  |   |    |
|                 |      |    |      |         | pr | app |   |    |
|                 |      |    |      |         | op | rop |   |    |
|                 |      |    |      |         | ri | ria |   |    |
|                 |      |    |      |         | at | ted |   |    |
|                 |      |    |      |         | ed |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Balance as of   | 255  | 1  | 21   | 1,078   | 25 | 1   | - | 5  |
| January 1, 2004 | ,071 | 07 | ,954 |         | ,1 | 54, |   | 66 |
|                 |      | ,8 |      |         | 32 | 979 |   | ,0 |
|                 |      | 30 |      |         |    |     |   | 44 |
+-----------------+------+----+------+---------+----+-----+---+----+
| Depre           | -    | -  | (2,  | -       | -  | -   | - | (  |
| ciation-Capital |      |    | 470) |         |    |     |   | 2, |
| surplus from    |      |    |      |         |    |     |   | 47 |
| assets          |      |    |      |         |    |     |   | 0) |
| revaluation     |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | -    | -  | -    | (6,636) | -  | -   | - | (  |
| loss-securities |      |    |      |         |    |     |   | 6, |
| available for   |      |    |      |         |    |     |   | 63 |
| sale            |      |    |      |         |    |     |   | 6) |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | 255  | 1  | 19   | (5,558) | 25 | 1   | - | 5  |
| transaction in  | ,071 | 07 | ,484 |         | ,1 | 54, |   | 56 |
| the income      |      | ,8 |      |         | 32 | 979 |   | ,9 |
| statements      |      | 30 |      |         |    |     |   | 38 |
+-----------------+------+----+------+---------+----+-----+---+----+
| Shares purchase | 59   | 36 | -    | -       | -  | -   | - | 95 |
| by exercising   | ,081 | ,5 |      |         |    |     |   | ,6 |
| warrants of     |      | 59 |      |         |    |     |   | 40 |
| shareholders,   |      |    |      |         |    |     |   |    |
| directors,      |      |    |      |         |    |     |   |    |
| employees       |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Appropriation   | -    | -  | -    | -       | 6  | (   | - | -  |
| for legal       |      |    |      |         | ,9 | 6,9 |   |    |
| reserve in the  |      |    |      |         | 54 | 54) |   |    |
| period          |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Appropriation   | -    | -  | -    | -       | 1  | (12 | - | -  |
| for treasury    |      |    |      |         | 22 | 2,6 |   |    |
| stock           |      |    |      |         | ,6 | 41) |   |    |
|                 |      |    |      |         | 41 |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Dividend        | -    | -  | -    | -       | -  | (13 | - | (  |
| payment         |      |    |      |         |    | 1,8 |   | 13 |
|                 |      |    |      |         |    | 22) |   | 1, |
|                 |      |    |      |         |    |     |   | 82 |
|                 |      |    |      |         |    |     |   | 2) |
+-----------------+------+----+------+---------+----+-----+---+----+
| Purchase of     | -    | -  | -    | -       | -  | -   | ( | (  |
| treasury stock  |      |    |      |         |    |     | 1 | 12 |
|                 |      |    |      |         |    |     | 2 | 2, |
|                 |      |    |      |         |    |     | 2 | 64 |
|                 |      |    |      |         |    |     | , | 1) |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Net profit for  | -    | -  | -    | -       | -  | 1   | - | 1  |
| the year        |      |    |      |         |    | 16, |   | 16 |
|                 |      |    |      |         |    | 961 |   | ,9 |
|                 |      |    |      |         |    |     |   | 61 |
+-----------------+------+----+------+---------+----+-----+---+----+
| Balance as of   | 314  | 1  | 19   | (5,558) | 1  | 10, | ( | 5  |
| December 31,    | ,152 | 44 | ,484 |         | 54 | 523 | 1 | 15 |
| 2004            |      | ,3 |      |         | ,7 |     | 2 | ,0 |
|                 |      | 89 |      |         | 27 |     | 2 | 76 |
|                 |      |    |      |         |    |     | , |    |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Depre           | -    | -  | (2,  | -       | -  | -   | - | (  |
| ciation-Capital |      |    | 140) |         |    |     |   | 2, |
| surplus from    |      |    |      |         |    |     |   | 14 |
| assets          |      |    |      |         |    |     |   | 0) |
| revaluation     |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | -    | -  | -    | (199)   | -  | -   | - | (  |
| loss-securities |      |    |      |         |    |     |   | 19 |
| available for   |      |    |      |         |    |     |   | 9) |
| sale            |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | 314  | 1  | 17   | (5,757) | 1  | 10, | ( | 5  |
| transaction in  | ,152 | 44 | ,344 |         | 54 | 523 | 1 | 12 |
| the income      |      | ,3 |      |         | ,7 |     | 2 | ,7 |
| statements      |      | 89 |      |         | 27 |     | 2 | 37 |
|                 |      |    |      |         |    |     | , |    |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Shares purchase | 7    | 3  | -    | -       | -  | -   | - | 11 |
| by exercising   | ,984 | ,3 |      |         |    |     |   | ,3 |
| warrants of     |      | 87 |      |         |    |     |   | 71 |
| shareholders,   |      |    |      |         |    |     |   |    |
| directors,      |      |    |      |         |    |     |   |    |
| employees       |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Appropriation   | -    | -  | -    | -       | 3  | (   | - | -  |
| for legal       |      |    |      |         | ,5 | 3,5 |   |    |
| reserve in the  |      |    |      |         | 41 | 41) |   |    |
| period          |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Dividend        | -    | -  | -    | -       | -  | (9  | - | (9 |
| payment         |      |    |      |         |    | 8,7 |   | 8, |
|                 |      |    |      |         |    | 23) |   | 72 |
|                 |      |    |      |         |    |     |   | 2) |
+-----------------+------+----+------+---------+----+-----+---+----+
| Net profit for  | -    | -  | -    | -       | -  | 1   | - | 1  |
| the year        |      |    |      |         |    | 87, |   | 87 |
|                 |      |    |      |         |    | 914 |   | ,9 |
|                 |      |    |      |         |    |     |   | 14 |
+-----------------+------+----+------+---------+----+-----+---+----+
| Balance as of   | 322  | 1  | 17   | (5,757) | 1  | 96, | ( | 6  |
| December 31,    | ,136 | 47 | ,344 |         | 58 | 174 | 1 | 13 |
| 2005            |      | ,7 |      |         | ,2 |     | 2 | ,3 |
|                 |      | 76 |      |         | 68 |     | 2 | 00 |
|                 |      |    |      |         |    |     | , |    |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Capital surplus | -    | -  | (13, | -       | -  | -   | - | (1 |
| from assets     |      |    | 942) |         |    |     |   | 3, |
| revaluation -   |      |    |      |         |    |     |   | 94 |
| Sales           |      |    |      |         |    |     |   | 2) |
+-----------------+------+----+------+---------+----+-----+---+----+
| Depre           | -    | -  | (    | -       | -  | -   | - | (  |
| ciation-Capital |      |    | 293) |         |    |     |   | 23 |
| surplus from    |      |    |      |         |    |     |   | 9) |
| assets          |      |    |      |         |    |     |   |    |
| revaluation     |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | -    | -  | -    | 186     | -  | -   | - | 1  |
| loss-securities |      |    |      |         |    |     |   | 86 |
| available for   |      |    |      |         |    |     |   |    |
| sale            |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Unrealized      | 322  | 1  | 31   | (5,571) | 1  | 96, | ( | 6  |
| transaction in  | ,136 | 47 | ,047 |         | 58 | 174 | 1 | 27 |
| the income      |      | ,7 |      |         | ,2 |     | 2 | ,1 |
| statements      |      | 76 |      |         | 68 |     | 2 | 89 |
|                 |      |    |      |         |    |     | , |    |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Shares purchase | 10   | 1  | -    | -       | -  | -   | - | 12 |
| by exercising   | ,759 | ,6 |      |         |    |     |   | ,4 |
| warrants of     |      | 44 |      |         |    |     |   | 03 |
| shareholders,   |      |    |      |         |    |     |   |    |
| directors,      |      |    |      |         |    |     |   |    |
| employees       |      |    |      |         |    |     |   |    |
+-----------------+------+----+------+---------+----+-----+---+----+
| Dividend        | -    | -  | -    | -       | -  | (18 | - | (  |
| payment         |      |    |      |         |    | 3,7 |   | 18 |
|                 |      |    |      |         |    | 73) |   | 3, |
|                 |      |    |      |         |    |     |   | 77 |
|                 |      |    |      |         |    |     |   | 3) |
+-----------------+------+----+------+---------+----+-----+---+----+
| Net profit for  | -    | -  | -    | -       | -  | 2   | - | 2  |
| the year        |      |    |      |         |    | 09, |   | 09 |
|                 |      |    |      |         |    | 191 |   | ,1 |
|                 |      |    |      |         |    |     |   | 91 |
+-----------------+------+----+------+---------+----+-----+---+----+
| Balance as of   | 332  | 1  | 31   | (5,571) | 1  | 1   | ( | 6  |
| December 31,    | ,895 | 49 | ,047 |         | 58 | 22, | 1 | 65 |
| 2006            |      | ,4 |      |         | ,2 | 641 | 2 | ,0 |
|                 |      | 20 |      |         | 68 |     | 2 | 10 |
|                 |      |    |      |         |    |     | , |    |
|                 |      |    |      |         |    |     | 6 |    |
|                 |      |    |      |         |    |     | 4 |    |
|                 |      |    |      |         |    |     | 1 |    |
|                 |      |    |      |         |    |     | ) |    |
+-----------------+------+----+------+---------+----+-----+---+----+

[TABLE]

(c) Financial Ratios

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

  Ratio                                     2006       2005       2004

  Current Ratio (times)                     1.05       1.04       0.96

  Quick Ratio (times)                       0.71       0.71       0.66

  Cash Flow Ratio (times)                   0.41       0.58       0.26

  Accounts Receivable Turnover (times)      4.53       4.50       4.13

  Average Debt Collection Period (times)    79         80         87

  Inventory Turnover (times)                9.16       10.05      10.69

  Average Selling Period (days)             39         36         34

  Debtor Turnover (times)                   3.88       4.31       4.66

  Debt Payment Period (days)                93         84         77

  Cash Cycle (days)                         25         32         44

  Profitability Ratio                                             

  Ratio                                     2006       2005       2004

  Gross Profit (%)                          31.52      30.67      30.09

  Operating Profit (%)                      7.98       7.86       5.90

  Other Profits (%)                         1.21       0.77       0.79

  Cash to Earnings Ratio (%)                111.38     154.94     86.60

  Net Profit Margin (%)                     5.61       5.54       4.09

  Rate of Return to Equity (%)              32.73      33.31      21.64

  Efficiency Ratio                                                

  Ratio                                     2006       2005       2004

  Return on Assets (%)                      20.43      20.74      15.12

  Return on Fixed Assets (%)                71.22      68.97      66.64

  Asset Turnover (times)                    0.65       0.66       0.65

  Financial Policy Ratio                                          

  Ratio                                     2006       2005       2004

  Debt to Equity Ratio (times)              1.22       1.35       1.15

  Interest Capability Ratio (times)         2,091.06   3,100.98   817.39

  Debt Service Coverage Ratio (cash basis)  1.27       2.15       0.66

  Dividend Payment Rate (%)**               93.81      99.11      71.03
  ----------------------------------------- ---------- ---------- ---------

Remark ** Dividend payment rate for 2006 has been approved from the
board of Directors and waiting for approval from shareholders in the
annual general meeting on April 25, 2007 and calculated from the amount
of common shares counted on January 26, 2007.

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

Publishing business situation in 2006

The overall economic outlook in 2006 was still in the state of slow down
growth due to multi-faceted factor and also negatively affect the
consumer confidence domestically and investors, whether it was the
fluctuation of petroleum prices, increased inflation, increased interest
rate, flood catastrophe in many provinces, and problems of proliferation
of violence and instability in the deep South. The most disturbing
factor was the unstable political atmosphere started from the political
conflicts who proceeded from 2005 and become even more volatile since
February, leading to the coup d’etat and resulted in political change in
the month of September.

The above factors affected the slow down in country’s demand. People
reduced their purchase, coupled with the psychological stress that
loomed in and instability of country’s direction. This has caused people
to reduce their buying sentiment. Less people shopped in the department
stores. All these ramifications have been severely affected the retail
business in department stores, indicating with clarity how slump the
retail industry really was for all of the 2006, which became worsen
towards the year’s end. This is considered one of the hardest years for
retail business entrepreneurs.

However, will the strength of economic foundation of the country, along
with the great celebration of the occasion of the 60th anniversary of HM
the King’s accession to the throne that people took such auspicious
occasion as an event to show the gesture of thankfulness toward the
King, causing them to wear yellow shirts every Monday even after the
ceremonial event has long passed. This has stimulated the retail economy
which is related to the ceremony, resulting in the economic growth of
4.5% which should be considered a quite satisfactory outcome.

The book business in 2006 still continued to grow in a consistent
manner, 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 2006 were expected to be 30.7 titles per day, compared to 31.9 titles
per day in 2005. This is because the more awareness of publishers in
screening books to meet the market demand, permitting better sales for
the book business in the future.

The Publishers and Booksellers Association of Thailand expected growth
of books business to be 10-12% in 2006 with the market size of THB
16,500~16,800 million in 2006 and the average reading rate was 1.7 book
per person a year, and it is expected that there will be THB 260 per
person per year for the money spent in buying books, which by this
figure, it was statistically considered relatively small. It also
reflected that overall potential of books market still has room to grow.

With even more newcomers and the fact that pre-existing publishers
continued to improve the quality of their publishing, it causes an
increasing in market demand, resulting in the enlargement of market base
which is good to the overall books business.

The market of magazines is very highly competitive, with growth only
4–5%, and the value of advertising in printing media was also decreased
a little.

Ever the economic depression of retail business in overall appearance
has been seen evidently throughout the year of 2006 and worse in year
end, but the overall of books business was still keep growing with
rather satisfy sale due to the selling of products according to the
celebration of the occasion of the 60th anniversary of HM the King’s
accession to the throw. While SE-ED Books Center had increased product
of Nano technology t-shirt with the lager of the occasion of the 60^(th)
anniversary of H M the king’s accession to the thrums with sales of
nearly two hundred thousand units. This affected much to the revenue of
as of 2006. In addition, the company has implied information technology
to use in SE-ED Book Center since October this cause the efficiency in
managing to be better to a certain level.

The significant operation in 2006

In 2006 the company still expanded the business which concentrated in
increasing bookstores branches SE–ED Book Center as the Company believes
in the growth of books business and education business. The company has
improved more business model of the bookstore to be profitable with new
store models suitable to each community. The company stressed in the
role of books distributors and publishers to match with the growth of
books business. 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
in the future, increasing efficiency and reducing product damage.

The main activities excluding normal operation 2006 were as follow:

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

-   New 26 branches were opened with 8 branches in Bangkok and 18
    branches in upcountry. As in December 31, 2006 there were 226
    branches opened with 216 branches still in operation, 101 branches
    in Bangkok and nearly, 115 branches in upcountry, 40 kiosks and 130
    point of sales.

-   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.  Launch “Add magazine in March 2006 which was distributed freely as a
    PR channel and give useful information to readers.

3.  Signing as the distributor of “technology Promotion Association
    (Thailand – Japan) in March 2006. The association has been the main
    publishers of translation books from Japanese Language in the field
    of engineering, management, literature and Japanese Language
    Teaching. The company was the distributor of all publications,
    except the Japanese language teaching books.

4.  Expanding the distribution center area from 7,380 square meters to
    be 9,936 square meters since middle of 2006 be able of servicing for
    600 branches of bookstores, for e–commence business, and improved
    operation performance to service at less times, more varieties, more
    efficient.

5.  Installing Navision software for distributions center and linked to
    all bookstores branches computer since October 2006 to connection of
    the retail business system with head quarter, speeding the account
    clearing, more flexible, less paper documents leading to use
    information in analyzing and apply to much more decision. Navision
    is the information system software of Microsoft which the company
    purchased since 2002 and has used in–house developer team to support
    the development and company–wide software installation.

6.  Developing and installing ADSL for all bookstores branches to
    supports all communication among branches, headquarters and
    distribution center, increasing service and decreasing communication
    expenses.

7.  Installed CCTV in SE–ED Book Center to reduce product damage and for
    internal control. The system has been installed since Q4 of 2006 and
    will be fully completed in 2007.

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

9.  Organized “Thailand Electronic & Industrial Technology 2006”
    Exhibition during September 21 – 24, 2006 at Queen Sirikit
    Convention Center.

10. Launched new web site www.thialandindustry.com to expand more
    service for customers in industry magazine group since November
    2006.

11. 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.

12. On November 28, 2006 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 nearby country.

Oxford University Press is the oldest publishers of more than 500 years
old and is the oldest university press in the world with sales revenue
more than all universities press combined. OUP has been highly regarded
as the largest university press of English Language Teaching, with 5,000
new titles per year.

The company and Oxford University Press has also projected other than
books distribution, such as providing translation books for English
language skill development, providing workshops seminar about teaching
media and English language technical for teachers and educational
institution, organizing teacher training, all across the country.

Profitability and Operating Efficiency During past 3 years, the Company
has continuously grown its revenue. The major satifactory growing rose
from the expansion of distribution channels through SE-ED Book Centers
and Book Vareity which are the name of the Company’s bookstore.

In 2006, the Company newly opened more 26 branches of bookstore. As of
December 31, 2006, the total branches became to 226 in various styles.
From this amount, there were 216 branches still be in operation, plus
170 points of sales. SE-ED still took more important role in
distribution to support its branches growing, including increasingly
published best-sellers.

Such growth confirmed the increased public awareness of information and
of the need to keep abreast of economic and technological developments.

  ------------------------------ ------------- -------------- ------------
                                 2006          2005           2004

  Total Income (THB million)     3,725.75      3,391.13       2,856.34

  Growth from the last year(%)   +9.87         +18.72         +17.55
  ------------------------------ ------------- -------------- ------------

Operating Results For the year 2006 as of December 31, 2006, the
financial information can be summarized as follows:

The operation result of 2006 was at satisfied level, considering to the
several fluctuations mentioned above. The net profit of the year 2006
was THB 209.19 million or growth 11.32% from last year. While the Q4
total net profit was THB 67.43 million, an increased from the third
period last year of 14.82% and 2.57%, which is the result of Harry
Potter book 6^(th) launched at the end of 2005.

The company’s total revenue of the year rose by THB 3,725.75 million or
growth 9.87% from the same period last year. The sale revenue accounted
for THB 3,680.70 million, or up 9.38%. The main driver for such growth
was still the increased revenue of SE–ED Book Center and Book Variety,
which grew 10.42% which was the new branches and sale point grow and
from the same stores sale growth with the branches renovated. Moreover
the sales of books for other bookstores and educational institutes grew
5.89%

The net profit : The company net profit for year 2006 rose to THB 209.19
million, an increase of 11.32% while the net profit for Q4 of 2007 rose
to THB 67.43 million, an increase by 14.82% from the Q3 of 2006 and
increased by 2.57% from the same period of last year, resulting from the
release of Harry Porter 6 at the end of the year.

Total revenue of the year 2006 : The total revenue rose by was THB
3,725.75 million, or up 9.87% from the same period last year. The sales
revenue was THB 3,680.70 million, or up 9.38%. The main driver for such
growth was still the increased revenue of SE-ED Book Center and Book
Variety, which grew 10.42%, which was attributed to the opening of new
branches and point of sales and was also from the same stores sales
growth with the branches renovated. Moreover, the sales of books for
other bookstores and educational institutes grew by 5.89%.

The profit after tax from operation : As of December 31, 2006, the
profit from operation was THB 205.49 million, representing 5.52% of
total revenue (For 2005 the company’s profit from operation was THB
184.52 million). The profit increase to THB 20.97 million, or up 11.36%
from the same period last year due to the gross profit increased by THB
127.83 million or up 12.38% from the increasing of sales revenue which
grew 9.38% from the same period last year, more than the growth of
operation sales and administrative expenses which grew to THB 97.07
million or 12.24% increasing.

The non-operation revenue and expense after tax as of December 31, 2006
was THB 3.70 million. The main revenue and expense was:

-   Dividend and interest income from securities available for sales by
    the amount of THB 13.17 million.

-   Directors’ remuneration expense after tax in the amount of THB
    (3.39) million which was attributed to pension payments for
    directors of 2005.

-   Sharing the loss from associated companies in amount of THB (5.32)
    million

Financial status analysis for year 2006 compare to 2005

Total Asset As of December 31, 2006 the company had a total asset of THB
1,477.50 million, increase of THB 81.53 million from the end of last
year. Causes of changing of total assets:

-   Cash and cash-equivalent items of THB 290.69 million which has
    increased by THB 20.91 million, as in the Q4 of 2006, there was more
    cash from the increasing of sales deposit in the financial
    institutions, which would be cashed in from the suppliers as the
    payment deadlines are due.

-   Short-term investment-net for THB 194.79 million increased THB 12.07
    million due to the
    redemption of government bond (age over than 3 months) increased of
    THB 15 million and
    decreased of THB 2.93 million, from reduced stock price in the
    market.

-   Account and Note receivable of THB 89.20 million which has increased
    by THB 5.26 million, as there was account receivable from several
    groups of financial institution in the end of year 2006.

-   Inventories-net for THB 231.01 million increased THB 4.98 million
    from the increasing production of English Language teaching CD and
    DVD, dictionaries and maps in the fourth quarter.

-   Other current assets increased THB 3.53 million. Most of then were
    in the accounting classification of advanced rental payment of one
    bookstore and warehouse.

-   Investment in subsidiary and associated companies increased by 38.68
    million for Plearn Patt Co., Ltd.

Total liabilities As of December 31, 2006 the company had a total
liability of THB 812.49 million, an increase of THB 29.82 million.
Increase in liabilities resulted from:

-   Account payable and note payable THB 649.80 million, was increased
    THB 1.23 million. Most of them were wholesales creditors.

-   Accrued expense was THB 72.02 million, an increase of THB 28.92
    million due to the changing of bonus payment policy to separate
    payment into two lots at the end of December this year and the end
    of March next year, instead of one lot payment normally paid at the
    end of December.

Shareholders’ equity As of December 31, 2006 amount THB 665.01 million,
an increased of THB 51.71 million, representing 8.43% due to:

-   Paid-up capital increased by THB 10.76 million from the conversion
    of warrant to common share.

    -   the exercised of SE-ED shareholders’ stock amount THB 2.62
        million and

    -   the exercised of ESOP with the value of THB 8.14 million

-   Premium share capital increased by THB 1.64 million, from exercising
    of SE-ED same shareholders’ stock.

-   Net profit from operation result year of 2006 is valued 209.19
    million.

Cash flow and sufficiency of capital structure

(Unit : million baht)

  ---------------------------- ---------- ---------- -------------- ---------
                               Jan-Dec    Jan-Dec    Change         

                               2006       2005       Increase       (%)
                                                     (Decrease)     

  Cash received (used in)      327.01     409.67     (82.66)        (20.18)
  operating activities                                              

  Cash received (used in)      (124.70)   (146.82)   22.12          (15.06)
  investment activities                                             

  Cash received (used in)      (181.39)   (135.90)   (45.49)        33.47
  finance activities                                                

  Net cash received (used)     20.91      126.95     (106.04)       (83.53)
  ---------------------------- ---------- ---------- -------------- ---------

Cash flow receive from operation activities, in 2006 was THB 327.01
millions as listed below :

-   Cash flow from operation was THB 372.23 millions:

-   The net profit of the year 2006 was THB 209.19 millions.

-   Non-monetary expenses was THB 163.99 millions (Depreciation and
    Leasehold written-off was THB 90.19 millions, loss from lost goods
    THB 49.38 millions, and loss from investment of associated company
    THB 5.32 millions.)

-   Excess cash from accrued expense was THB 29.46 million which
    majority of them was accrued bonus payment.

-   Cash flow increased due to the increasing of accrued tax payment was
    THB 5.95 million.

-   Cash flow decreased was amounted to THB 63.19 million due to the
    increasing of inventories.

-   Cash flow decreased from account and note payable increasing was THB
    8.48 millions.

Cash flow used from investment activities for 2006 in the amount of THB
(124.70) millions :

-   Investment of Plearn Patt Co., Ltd. was THB 45 millions

-   Purchase of assets was THB 74.70 millions.

-   Investment of government bond (age over 3 months) is amounted to THB
    35 million.

-   Cash received from Plearn Patt Co., Ltd. loan clearing was THB 9
    million.

Cash flow used from financing activities, in 2006 as THB (181.39)
million :

-   Cash used from bank overdrafts was THB 10.02 million

-   Cash used in dividend payment was THB 183.77 million

-   Cash received from the warrant exercises for nine-month of 2006 was
    THB 12.40 million.

    3.  Remuneration of auditor

Auditing Fee The company and its associated company has paid auditing
fee for the period of fiscal year 2006 to the SAM NAK-NGAN A.M.C. Co.,
Ltd. in the amount of THB 640,000. 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 2006.