4. The Description of Company's Operation in Each Product Line

4.1 Type of Essential Products and Services :

1.  Books Currently, SE–ED is on of the largest book publishers in
    Thailand, publishing books for bookstores nationwide. The Company
    pioneered in publishing knowledge books in several fields; such as
    administration/management, self-development, psychology, engineering
    in various fields, youth development books, language and dictionary,
    parenting, food and health, maps, non-book products (e.g. CD) which
    help to promote the development in many aspects.

2.  Magazines At the end of 2009, the Company has published 9 magazines
    of science and technology which are,

-   Semiconductor Electronics Plus: A monthly magazine emphasizing on
    electronics, launched in 1974, and later the Company changed the
    name of magazine from ‘Semiconductor Electronics’ to the new name of
    "Semiconductor Electronics Plus", since January 2008, while
    maintaining similar types of contents to the previous issues.

-   UpDATE : A monthly magazine catering to those readers who want to
    keep abreast of latest developments in the world of science and
    technology, published since 1978.

-   MICROCOMPUTER : A monthly magazine devoting entirely to the
    knowledge about Computer and information technology for Corporate.
    In circulation since 1983.

-   Hobby Electronics: A monthly magazine specially preparing the
    knowledge of electronics for the fledgling electronics enthusiasts
    and also interested readers was launched in early 1991.

-   Industrial Technology Review : A monthly magazine provided reading
    material on major developments in industry technology and management
    for plant engineers and general readers, launched in mid -1994.

-   Mechanical Technology : A monthly magazine related to mechanical
    engineers concerning operating techniques, and machine
    problem–solving guidance for engineers and general readers - first
    published in the middle of 2001.

-   The Absolute Sound & Stage : A monthly magazine about video and
    audio for home, car, studio and stage, launched since the end of May
    2002.

-   Extreme Technology : A monthly magazine about new technology and
    hi–tech products with comparative review of performance as a source
    of buyer's decision, first launched in late October 2003.

-   add Magazine : A free monthly magazine offering variety of
    interesting information and also new technology adaptable to the
    daily living (launched in February 2006), distributed free of charge
    mainly through SE–ED Book Center Bookstore branches.

  The Company’s revenue from magazines comes from the sales of
  magazines, advertisement and special edition, as well as revenue from
  organizing several activities.

3. Distribution The Company distributes books published by SE-ED and
other publishers including the companies whose publishing is in line of
the Company's direction, by distributing books to small and large scale
stores nationwide roughly around 2,600 stores. The Company also sells
directly to the educational institutions and distributes books to SE–ED
Book Centers and network stores and some universities book centers,
owned by SE–ED.

  The Company has been appointed as Thailand’s sole distributor of
  Oxford University Press (OUP) for book and related media for English
  language teaching and learning from January 1^(st) 2007 onward. Under
  this agreed cooperation between SE–ED and OUP, the business activities
  of production and distribution associated with English language
  learning will be increased through company’s distributing channel
  which promptly allows SE–ED to share some responsibility of resolving
  the country’s problem with regards to English language learning in
  Thailand in the much greater extent.

  Presently, the Company is the largest book distributor to the chain
  bookstores. Books which were self-published by the Company is around
  1,300 titles, while also help distributing 5,400 titles from other
  several publishers and organizations.

4.  Bookstore Business (SE–ED Book Center or SBC) SE–ED operates SE–ED
    Book Center and network stores and "University bookstores" all
    located both in Bangkok and other provinces, including managing
    space in the selling areas in different models.

  SE–ED Book Centers are medium–sized bookshops selling all kinds of
  books, with modern design and good layout plan, efficiently selling
  and emphasizing in being located in convenient location for people to
  come buying books. The main locations are located in leading
  supercenters (such as Tesco Lotus, Big C, and Carrefore, etc.) leading
  shopping malls (such as Siam Paragon, Central, The Mall, Robinson,
  Future Park Rangsit, Future Park Bangkae, provincial leading shopping
  centers, etc) and education institutes (such as Ramkhamhaeng
  University, National Institute of Development Administration, Dhurakij
  Bundit University, Siam University, Khon Kaen University and
  University of the Thai Chamber of Commerce.) in different models both
  in Bangkok and other provinces.

By the end of 2009, SE–ED has already opened 348 branches of SBC. From this mentioned figure, there are 324 branches in operation, with 125 branches in Bangkok and nearby provinces, and 199 branches in other provinces. With 314 of bookstores operated by the Company, the other 5 branches are designated as SE–ED Book Center Network Bookstores (SE–ED Book Center fully supports the shops, as a book distributor supplying the books) and 2 branches are SE–ED Network Bookstores. (SE–ED does not fully support, since the shop owners can order books by themselves.) Moreover, SE–ED also responsible for managing the books and magazines sales space in Supercenters, and other shopping centers in different formats totaling of more than 33 sales and service points. Today, SE–ED Book Center are the chain general bookstores with the highest sales in Thailand.

  []Number of SE–ED Book Center Branches and its Network Stores by the
  Year–End

Remarks: - There is a reclassification of bookstore branches to be
properly suited. Therefore, the number of branches may be different from
other published documents by the Company. Branch includes the small size
of bookshop of 20-50 square meters. Kiosk means mainly the newstand
sales type. Points of sales means the sales type that the Company takes
charge in managing the products in book corners (including newspapers
and magazines) in supercenters of department stores.

  - At the end of 2009 there are 324 existing branches in operation.
  There are 125 branches in Bangkok and its vicinity and 199 branches in
  other provinces. This figure has included the small scale of 23
  branches.

  - At the end of 2009 there are 314 existing branches in operation,
  using the brand of, SE-ED book center, 3 branches in universities book
  centers.

  - At the end of 2009, there are 5 SE-ED Book Center network (SE-ED is
  responsible for all book supplied to the network stores) and there are
  2 SE-ED network (SE-ED allows the stores to choose either the name of
  "SE-ED Book Center" or "SE-ED network sine the shop owners can order
  books by themselves"), and there are 33 kiosks.

5.  Other Activities The Company also performs additional activities as
    in the following:

-   Organized an exhibition called Thailand Electronic Technology, an
    exhibition for electronic industrial products and technology, which
    has the largest number of entrepreneurs and visitors in the country.
    It is regarded as nation’s largest electronic industrial products
    and technology fair which promotes the Thailand industry potential
    and capability that can compete head to head with the world market.
    The event has been organized annually for the past 10 years.

-   Organized the Industrial Sourcing Fair, an exhibition for industrial
    products at international level in response to the industrial
    purchaser’s needs in every aspects and also offers knowledge about
    the products, technology, standard and environmental security, venue
    for producer, seller, industrial service provider to meet potential
    buyers in Thailand industry.

-   Organized SE-ED Kiddy Camp for young people from 8-14 years, which
    is normally held during the school breaks. There are various types
    of camp to choose, from countryside camp, day-trip camp, to
    stimulate young people to learn more, while studying the learning
    behavior of children before the idea becomes amalgamated with other
    ideas that support the development of Thai children in greater
    number, teaching young participants the courage to learn whether
    they are the study of science, electronic experiment, teamwork,
    leaderships, self-learning, basic knowledge in survival, moral, and,
    in particular, friendships. Moreover, it allows children to
    participate in several different enjoyable activities for example,
    young researcher activity, activity base, gaming, exercise, sports,
    etc.

-   Organized English Camp 2009 as an activity to promote young kids the
    correct use of English Language for communication during the stay in
    the camp for them to be familiarized with language use, simulating
    the daily language use. In 2009, the Company organized youth camp
    called SE-ED English Camp at Brookeside Valley Resort, Rayong
    Province, and the Pechrimtarn Resort, Pechburi Province, with the
    total of 89 young participants.

-   Produced a cable TV program called “Book Variety”, a program that
    offers a variety of knowledge from different points of view from
    books for example, health, religion, managerial perspective, stocks
    and finance, children and youth books through recommendations and
    interview of person involved in publishing. This includes writers,
    translators, or editors broadcasted on TTV1 Nation Channel, every
    Saturday from 9.00-9.30 a.m.

-   Organized seminar training for management, engineer, computer,
    specific profession, general knowledge, offering training according
    to the needs of private and government sectors, as well as general
    public.

-   Electronics Grand Sale 2009: It is the exhibition event to showcase
    electronic products, computer and IT, organized specifically for
    electronic enthusiasts. In the event, there are variety of IT
    products for sales, such as measuring equipment, electronic kits,
    mechanics tool kit, industrial electronic tools, electrical
    appliances, computer and IT, as well as speakers and Hi-Fi system
    etc.

  4.2 Marketing and Competition

Policy and Marketing

Throughout the past 30 years, the Company has been a leading initiator
in publishing academic books, in “How-to...” category. This reputation
as Thailand’s main publisher of technological books and journals enabled
other Company’s operations to flourish and enjoy greater success.

The Company has set a long-term direction and marketing strategy which
can be briefly described as follows:

Vision: SE–ED shall be a leader in providing easy and convenient access
to knowledge to Thai people.

Mission: SE-ED seeks to do business in the areas that promote education
in the fields necessary to the development of the nation. It operates
the business that will make "Thais Smarter" by developing a sustainable
business with a continuous earning growth at the revel above the
industry’s average, being a role-model company that can create work
result deems beneficial and accepted by society at large with happy
staffs, and able to deliver and maintain an attractive long-term
investment returns at the satisfaction level.

Marketing Strategy: To achieve the stated vision and mission, the
Company stresses the readiness in several areas to develop and serve
with quality which responds to the needs of target customers by focusing
on the expansion of SE-ED Book Center for the larger service coverage
and add more attractive products to the stores. The Company will
concentrate on the following marketing strategies :

1.  The Company determines to ensure growth and business strength by
    stressing on the of market expansion build the potential to cover
    more sizable communities nationwide. SE-ED Book Center and network
    formats will be implemented and expanded, selecting the high
    potential areas for long-term growth, rather than solely taken into
    account of the initial profitability outcome as a main source of
    consideration, to promote and ease customer access to the stores
    more conveniently and equally. It also proceeds to strategically and
    thoroughly responds to the customers' needs wherever they are, to
    maintain the Company as the leader in the business, and to support
    the growth of book business as a whole into the future while creates
    favorable brand perception and acceptance, with the emphasis on the
    idea of "Think of buying books, think of SE-ED Book Center".

2.  The Company emphasizes on providing products or service that is
    convenient fast, and punctual. To do this, the Company focuses on
    creating impressive experiences, under the idea of "Think of reading
    books, you will get to read it by no later than tomorrow", The
    Company uses technology in combination with modern management to
    link production, warehousing, order picking, and delivery together,
    allowing more efficient logistic management at best. This reduces
    the need to acquire more space to support large volume of books in
    the market, making possible for an increase in service capability
    and wider coverage of store throughout the country that serve and
    respond more quickly to the customers' need and create customers'
    satisfaction, so as to make the Company more competitive.

3.  The Company seeks to find and develop attractive and interesting
    products and create marketing mix in the stores in a consistent
    manner to allow more attractive store outlook and more frequent
    customer visits to the stores, while able to acquire products that
    customers look for within a short period of time, creating
    differentiation as compared to its counterparts. This results in
    much better profitability at each branch.

4.  The Company understands the importance of excellent services and the
    promotion of Company's image, by concentrating on staff and team’s
    consistent development, and also create professional working
    attitude to the staffs to really take care of each customer in more
    detail aspects, leading to the better customer's satisfaction.

5.  The Company uses an integrated marketing communication model by
    developing suitable tools and channels to promote products, and
    reinventing itself with several models towards relentless
    promotional activities. That is to say the Company is stressing the
    importance of marketing activities as a value creation for business.
    With this, the Company also directs all of its efforts to the target
    customers, and in addition, directly respond to the customers' need,
    which allows success for most of the newly-launched products; such
    as promotion of products and services through advertisement and
    public relation via storefront LCD display system which will be
    installed in the branches to stimulate more books buying sentiment.

6.  The Company promotes customer’s relationship and business alliances,
    that work closely together. The Company is committed to treating
    customers as promised, under the etiquette of business operation.
    The Company also seeks to work on the basis of mutual business
    success, for the Company open to the exchange of views in doing
    business to seek was in resolving conflicts and difficulties that
    might occur. For the better cooperation, the information learned can
    be used to improve the product development and management process to
    meet the unwavering standard and this should benefit all parties
    involved.

7.  The Company builds and uses the marketing database more earnestly,
    through the database collection system by recording all historical
    data about the customers' needs. By providing products and services
    to customers in needs, the Company ensures the success in creating a
    good impression for customers. It also brings the information to
    analyze and use the information to improve services in the future.

Policy and Marketing

Pricing Policy: Pricing policy is set to meet the purchasing power of each target group, and the production costs, while maintaining reasonable profits in a long run. However, this will not be applied to magazines sales, which depend on advertising income as the main revenue earning. 

Distribution Channels: The Company distributes books and magazines through networks of SE–ED Book Center, and other bookshops in Bangkok and other provinces by managing the distribution channels according to customers, products and services as follows: 

1.  Books and Magazines Retail Customers The customers are general
    readers and working people. The Company distributes books and
    magazines through the network of SE-ED Book Center’s 348 branches
    with 324 branches still operating including 7 branches for network
    bookstores (as of December 31, 2009) which the centers of books and
    entertainment for family and working people, located in shopping
    centers and supercenter in Bangkok and other provinces and also in
    the higher educational institutes.

2.  Books and Magazines Wholesale Customers This group of customers is
    accounted for around 2,600 different stores. The Company is
    responsible for distributing all books and magazines that the
    Company has the sole rights to distribute to all the bookshops in
    Bangkok using its own transportation. For distribution to other
    provinces, the Company uses private transportation company as found
    appropriate.

    -   However, for the distribution of magazines published by SE–ED,
        the Company uses several transportation companies in each region
        to distribute to bookshops.

    -   For the circulation and distribution to stores in Bangkok and
        around its vicinity, the Company utilizes the “Standing Order”
        distribution system, a combination of consignment and
        non–returnable sales system. For most of booksellers in other
        provinces, a non–returnable sales system has been applied with a
        limit of returnable quantities.

  3. Advertisers Major companies in the industrial circle including the
  computer and electronic circle are both regular and non–regular
  advertisers in the Company’s monthly magazines.

  Competition

Industry Overview and Competition The publishing industry grew at ever
larger rate which was expected to be around +1% in 2009 and
approximately 4% in 2010, It was believed that the market was quite
small and would have much room to grow. As a result, it attracted many
interested individuals into the publishing business, retail business and
magazines business. The competition, therefore, increased dramatically.
However, it was also believed that this type of competition would
stimulate the publishing market growth in the long run.

However, the Company had a very good growth rate in the book publishing,
wholesale and retail businesses, as the Company still held its strength
in these areas. Whereas the overall magazine business grew but the
computer periodicals were most heavily affected by the competition and
the advertising price war, causing a significant decrease in its
advertising revenue. However, electronics and industrial periodicals
still showed the significant growth.

Opportunities and Threats Government policy currently promotes more
advanced education for its citizens to prepare them for the global
challenge. This, in turn, creates a thirst for new areas of knowledge,
triggering an increase in local demand for books. All these factors led
to an even brighter and more stable future for the book business as a
whole, particularly technical books and magazines. The rapid expansion
of megastores and supercenters all over the country has helped to
mushroom the Company’s retail outlets. As a top publisher and
distributor of technical books, and the owner of the largest bookstore
chain with high cash liquidity, the Company is in a strong position to
respond to this encouraging market trend, and has a potential to grow
locations ever larger than the market average growth.

However, the Company’s future branch growth in some depended on the
retail growth restriction policy and also the rule of law stipulated by
government, which may affect the growth of shopping centers and
supercenters.

Key Success Factors The factors that contribute to the Company’s current
leading position and the Company’s more important role in the future
book business can be summarized as follows:

-   Business policy is evidently conducive to national development Since
    the begining the Company has all along adhered to its business in
    knowledge dissemination, with a view to developing the full
    potential of Thai people in areas essential to the national
    development. The Company’s continued growth is in line with the
    national development, and, fortunately, not severely affected by the
    economic slump. Besides, its corporate image is clear, well
    received, and trusted by every party concerned.

-   Tools and business components for future business operation
    Nowadays, the Company’s different business divisions support one
    another efficiently and render more opportunities for success.

    1.  The Company has its own largest distribution channel and network
        store SE-ED Book Center. The stores spread into major
        communities all over the country and the Company is always the
        first to receive offers to select new locations for new
        branches. As a result, the distribution business had more
        chances to grow while the bookstore business cost was lower.
        Moreover, it allows more possibilities of success for books
        publishing, as there are direct distribution channels that
        allowed the customers to receive the products faster and more
        conveniently.

    2.  The Company also has its own media and PR tools, including
        magazines, Book Variety TV Show, www.se-ed.com,
        www.thailandindustry.com and www.se-edlearning.com.

Quantity and Size of Competitors As the book business is one of the
continuously growing businesses and still has a potential to grow while
the business barrier for new operators is low, many people are
interested in this business each year, both as a publisher and book
seller, despite that fact that many went out of business already.
Because each of the operators tries to differentiate themselves from one
another, this result in the flourishing of books and the number of books
readers keeps expanding. That’s why the Company isn’t heavily affected
by this.

Moreover, as the Company’s business model covers publishing,
distributing and bookstores, the Company always benefits from the new
comers in the book business, as the result the effect of competitors is
slightly.

For the bookstore business, there are more competitors from several
large firms interested in doing this business but the market has divided
which conform to the products mixed in the stores and to location, as
such, this causes not much effect to the Company. While the Company as
the market leader with strong financial position and receiving great
acceptance by general readers and being ready to expand new branches,
the Company can keep a big step ahead by taking advantage of first
priority to choose new location and has the lower operating investment.
In the future the books business is expected to grow out of a few large
firms who are well prepared to face the competition.

Market Share Although the Company is the market leader in 3 important
businesses: the leading retailer in bookstores chain and book
distributor (or wholesaler), and books publishers. Owing to the
continuous growth of book business, numerous entrepreneurs show interest
in joining and this causes the spread of business concentration. The
market shares for market leaders in this industry are not significantly
different.

As book business has limitation in terms of completeness of database
which makes the market share estimation in each segment contains some
errors.

For retail bookstore business, the Company believes the network of SE-ED
Book Center will have the market share of 25-35%, which is considered
one of the top in the country.

For the business of distributing book to booksellers, the Company
becomes the largest distributor in the market, but the proportion is
still not high, due to the fact that market share in book business is
less concentrated. The market share should fall somewhere around 10-20
percent from the distribution system of books to retailers of Thai books
in Thailand.

For publishing business, the Company always ranks between number 1 to 3
in the book market, depending upon which publishing, in each year,
produces the best selling tittles more or less, but in general the
market share is not that significant because it is less concentrated
than usual. It is expected that the market share should be around 3-6
percent of the whole publishing business in the country.

Substitution products The rapid development in industry and business
leads to a need to learning new things and developing knowledge to gain
advantage over the competition. Regardless of how far the communication
and computer technology progress, books still play an important role in
imparting knowledge to people conveniently and inexpensively anywhere,
anytime, and for a long time.

Bargaining power of buyers and sellers As the books business has a
standard trading condition structure with several traders in which
nobody can evidently dominate the market and the needs to be
interdependent of each other, there are not many problems in bargaining.
However, due to the fact that new large retailers in other businesses
expand into the books business and may cause bargaining with publishers
and distributors according to the general retail business nature but is
still not much effect of the over all business as their market share is
still not significantly large enough at present.

4.3 Procurements of Products and Services

Products from other publishers : in general, consists of 2 parts.

1.  Books for distribution: At present the books that are distributed to
    all bookstores through out the country come from the Company own
    publishing house and other around 800 publishers who decide to grant
    the Company as their distributors to distribute their book
    nationwide. The Company will consider only the products which are in
    accordance with the Company marketing direction and have an
    opportunity to sell.

2.  Books and other goods SE–ED Book Center sells directly : SE–ED Book
    Center receives goods from 2 main channels: the Company distribution
    business unit and the other channel and mostly deals directly with
    suppliers by the marketing department of SE–ED Book Center in charge
    of consideration and selection products for sales in the Company
    bookstores.

Relation with suppliers and the effect of losing them :

For value of products bought for reselling from each distributor will
not be more than 15% of total selling cost, whereby the proportion of
product value purchased from 10 first largest trading partner against
the cost of goods sold for the past 3 years is illustrated as follows :

(Unit : Million Baht)

  ------------------ ----------- ------- ----------- ------- ----------- -------
  Item               Year 2009           Year 2008           Year 2007   

                     Value       %       Value       %       Value       %

  Value of reselling 987.40      31.46   893.91      29.50   678.88      25.30
  products from the                                                      
  first 10 largest                                                       
  trading partners                                                       

  Total cost of      3,138.55    100     3,030.31    100     2,683.28    100
  goods sold                                                             
  ------------------ ----------- ------- ----------- ------- ----------- -------

In 2009, there is no specific revenue from sales considered to have
severe effect on the Company. In addition, the Company is not involved,
in any way, with the particular seller and has no obligation to place
any order in the future.

Books published by SE–ED Books and magazines published by the Company.
Are the responsibility of the book publishing and magazines departments
to prescribe the direction and selection of original manuscripts to
publish including the production process of printing into complete copy
before handover to the Company distribution group for distribution.

Production utilization ratio : As the Company does not own any printers
press, the production of books and magazines are in the responsibility
of in–house work group to take care of the production throughout the
complete cycle and spread the printing jobs to several printers matched
with the schedule. Therefore the real production can be increased or
decreased without any unnecessary delay.

Raw materials and suppliers : Paper is the main raw material which the
Company purchases from local distributors in lump sum. The types of
paper used in the production of books and magazines mostly are
wood–free, newsprint, coated and cover coated.

Relation with raw material suppliers and the effect of losing them: For
the purchasing value of paper, the Company has no particular relation
with these suppliers and no any binding obligation to buy from them in
the future. In the case that these suppliers can not provide the Company
with paper, the Company can still procure them from other suppliers. The
total value the Company expenses for raw materials and finished goods to
10 main suppliers was 27.35% of the cost of products in 2009 or 0.40% of
cost of goods sold, which can be considered that no specific supplier
can cause severe effect to the Company.

Process and production technology : Production process for a new book
starts from editorial team call for meeting to plan and consider the
selection of manuscripts. This manuscript may come from the
self–proposed original writer, or from the Company–assigned writer or
translator in accordance with the Company’s determined guidelines. Then
editorial team will consider the content, correctness, and readability
of the books which also include the activity involved re–evaluating and
opinionating the books in terms of marketability by Company’s
respectable book advisors who possess knowledge and interest in
particular subject areas. After the team agreed on the book, the content
may be re–adjusted and format at the suitable level for the market, and
the use of copyright contract may be signed with a writer, a translator,
or a foreign publisher.

In the mean time, the artwork team will start to design the book cover
and when the finished manuscript is ready for print, the computer
artwork will later takes its duty. After finishing the artwork, the step
of proof–reading activity will be taken and corrected until the content
and art design are completed. In the case of book, there will be
additional step that is the naming of the book and pricing, which also
involves the related marketing work that is suitable for the target
audiences.

The process of producing magazine is quite similar to the process of
book publishing that is the editorial team takes responsibility right
from the market direction till the end of the production process.

For book and magazine manuscript works, the Company uses Macintosh
computer and PC along with all other related tools and equipments,
whereby all these computer technology shows sign of having higher
efficiency but becoming less expensive. In addition, the editorial
staffs in the team are very experience and expertise in writing. They
come from people in the editorial team and also general writers.

After the manuscript is done, the Company will pay for the printer to
print, while paper is supplied directly by the Company. The paper
Company then delivers paper straight to the printing press at the
determined time so that each manuscript is printed into book and
magazine.

Capability, necessity, and expenses in modifying machines to be able to
compete: As the Company doed not own printing press, therefore, there is
no need for Company to invest in the machinery and equipment in
printing. It becomes unnecessary for Company to develop machinery and
equipment. And due to the competitive environment of printing press
business, it equips the Company with bargaining power and, with this,
the Company is always allowed to have choices of printing press
companies to choose from.

Environmental Impact : The core production team for the Company is
actually the editorial team. Therefore, production process is only
concerned the production of manuscript and coordination within offices
of the Company. Such activity will not result in the making pollution
that can affect the environment and the Company’s business is not under
the direct control of any government agency.

4.  Undelivered Jobs

– None –