2.  Nature of Business

2.1 Company Background SE–EDUCATION Public Company Limited (SE–ED) was
established on October 10, 1974 with a registered capital of THB 99,000.
Their objective was to do business in knowledge dissemination, with a
view to developing the fullest potential of Thai people in areas
essential to the national development. The Company founders were ten
electrical engineering graduates from Chulalongkorn University, who used
to be active in varsity activities during their academic years at the
club of faculty of engineering, Chulalongkorn University. They
thoroughly realized that Thailand still lacked the development of
technical and academic material.

Change of Major Shareholders (Information as of Closing Date)

  ----------------------------- ------------ ------- ------------ ------- ------------ -------
  Shareholders                  November 28,         November 28,         November 27, 
                                2008                 2007                 2006         

                                Number of    %       Number of    %       Number of    %
                                Shares               Shares               Shares       

  HSBC (SINGAPORE) NOMINEES PTE 43,000,000   13.27   40,500,000   12.51   36,000,000   10.85
  LTD.                                                                                 

  GMM Grammy Public Company     42,422,200   13.10   42,422,200   13.10   42,422,200   12.79
  Limited                                                                              

  Mr. Rit Thirakomen            23,008,782   7.10    23,008,782   7.11    21,289,890   6.42

  Mr. Thanong Chotisorayuth     12,937,242   3.99    12,937,242   4.00    11,477,490   3.46

  Mr. Pongsak Sivapatrakumpol   10,850,842   3.35    10,850,842   3.35    9,856,300    2.97

  Investors can view the                                                               
  current Shareholder’s                                                                
  information from the                                                                 
  Company’s website before the                                                         
  date of the annual                                                                   
  Shareholder’s meeting.                                                               
  ----------------------------- ------------ ------- ------------ ------- ------------ -------

The Company has been approved as a listed company by the Stock Exchange
of Thailand (SET) in the category of media and publishing under of the
service industry sector, since 1991. The Company has transformed itself
to become a public company on April 29, 1993. Today the Company is
popularly known, in short, by the name of “SE–ED”, which is derived from
the words Science, Engineering and Education.

At the beginning, the Company published the monthly magazine
“Semiconductor Electronics” and was the distributor of electronic
devices from abroad.

In 1978, the Company published the monthly magazine “Taksa, Science and
Technology Edition” for the general and young readers whose interests
are in the areas of science and technology.

In 1979, the Company launched the monthly magazine “Miti Tee See” that
aimed at the creativity and imagination and, particularly, for those who
don’t like the heavy science, hoping to gain readers attention in
science.

In 1980, the Company started to publish the engineering and scientific
textbooks which were later became the textbook and academic books
division.

In 1983, published the monthly magazine “Microcomputer” and began to
publish the books about microcomputer. At the same time, the Company set
up the management books division for the purpose of publishing the books
that can help people work more efficiently rather than publishing books
that can only be sold in a short moment.

In 1985, the Company adapted and introduced the Standing Order
Distribution System and merged the magazine “Taksa, Science and
Technology Edition” with “Miti Tee See” which resulted in the new
magazine called “Rou – Rorb –Tua” magazine which was later transformed
and changed its name into what is today called “Update” magazine. In the
meantime, the Company’s Children Book division was born in 1986 and
“Wittayasat Arn Sanook” – the first finest set of cartoon books aiming
at teaching young learners – was published and warmly welcomed by
general public.

The Company continues to take its lead in publication of magazines and
educational books, becoming the forefront in knowledge publishing firm
in the country with the best distribution system in the book business.
The Company also became the book distributor for other publishers
producing books in the same fields.

Although, compared to the average publishing industry, SE–ED had
satisfied the expectation of both sales volume and sales growth, as the
publishing firm with highest sales volume through bookstores channels
and the largest books distributor at that time, the Company found that
there were still limitations due to that fact there were a few good
quality bookstores existed in the market. Consequently, the Company’s
books could not be effectively circulated. This resulted in the
inability to increase sales volume of each book sold at the desirable
level.

Following an extensive research into the retail industry, the Company
realized that the pre –existing bookstores could not be expanded or
improved much further. At that time, many new shopping centers had been
opened, and the Company believed that they would be good venues for the
bookshop business. As the Company had confident in those malls that they
are attractive and able to bring in large communities and would likely
change the buying behavior of Thais. Therefore, the strategy of
providing more convenient purchasing channel for Thais which was to
allow access to reading materials was to set up well – thought – out
bookstores in those malls. But as the investment cost was high and no
one has seriously venture in this area of business before, the Company
decided to start the bookstore business in leading shopping centers to
avoid affecting the previously existing bookstores which were mostly
located in commercial buildings.

In the third quarter of 1990 the Company was permitted to be listed on
the Stock Exchange of Thailand and started the “SE–ED Book Center”
project that allows Thai people to get access to book and to support the
future growth of overall book market by focusing on opening branches in
various leading shopping centers. SE–ED Book Centers will sell both
books from its publications and also from the others. The first branch
of bookcenters for family and working people opened in late 1991 at
Fortune Town Shopping Center.

In the third quarter of 1996, SE–ED opened SE–ED Book Center in
supercenters. The first branch was at Lotus Supercenter, Pattaya with
strong belief that supercenters would be the new trend going forward and
also suitable locations for long – term business. The Company further
improved its image to be more modern, by using bright and vivid colors.
Newly designed bookshelves were installed so that it could be
manufactured more easily and more cost effective. Consequently, SE–ED
could put new bookstore branches in operation faster and more
convenient. It also focused on developing the distribution centers to
accommodate more books for more than 600 branches. In 2006, the Company
expanded distribution center area from 7,400 sq.m. up to 10,000 sq.m.,
at the end of 2008, the Company has expanded the warehouse area by 3,000
square maters which made the total warehousing area to be as large as
13,000 square maters, or 30% increase. SE–ED also developed and tested
business model that is suitable for the Company’s competitiveness and
business sustainability. All these developments have enabled SE–ED to be
ready for future growth and to expand with confident. As it expanded,

SE–ED was able to operate the new branches more conveniently with less
capital and at reduced costs and, for this reason, made it possible for
bookstore to be successful in the business.

Furthermore, SE–ED Book Center has developed the relationships with
several shopping centers and supercenters, being recognized as an
important business alliance. This has enabled SE–ED to develop its
business format continuously. Nowadays SE–ED Book Center is a chain of
bookcenter evolving and expanding very fast, resulting in the highest
selling bookstore in Thailand and also serving as the very heart of
company’s business growth since 1997.

SE–ED’s business performance continued to be at the satisfactory level.
In 1997, when Thailand encountered serious economic crisis leading to
business collapse and widespread unemployment as the result of lower
purchasing power, the publishing business was affected in many ways.
Several of SE–ED’s major book suppliers encountered the severe loss and
liquidity problems, to the point that SE–ED had to allocate asset as bad
debt account, largely due to the lower purchasing power and decreasing
of sales orders from bookstores. SE–ED was seriously aware of granting
credit to customers to keep control of the possible bad debt. The
competition also became tougher than before. As a result, the sales
figure that came from both SE–ED own published book and other non –
SE–ED published books was not as it is hoped to be. It was considered
the first time that SE–ED faced accounting loss in 1998, since listed in
the Stock Exchange of Thailand.

However, after the economic meltdown, the Company began to revive its
business structure for the long – term strength. The Company started to
diversify risk at the suitable level and, at the same time, tried to
improve financial structure, increased more capital for unforeseeable
economic problem in 1998 and set the reliable financial standard for
paying up the long – term loan from financial institutes and for
incoming expansion. Finally, SE–ED can recoup from the almost fatal
slump and came back to profitability with adequate liquidity and
continuous expansion in 1999.

In 2001, at the Annual General Shareholders’ Meeting 1/2001, dated April
30, 2001, the shareholders has resolved the approval of additional share
register by the amount of THB 137,141,660 by followings details :

-   Warrants offered to shareholders are numbered at 10,549,356 shares,
    where the proportion of right to exercise per 1 unit can be used to
    buy common stock of 1 share at the price of THB 16.50 per share,
    with validity lasted for 5 years, from the date of issuing the
    paper, allowable for exercised every 3 months and the right to
    exercise is expired on December 15, 2006.

-   The Warrants offered to company’s directors, staffs, sub-agents are
    3,164,800 shares, where the proportion right exercise per 1 unit can
    be used to buy common stock of 1 share at the price of THB 10 per
    share, with validity lasted for 5 years from the issuing date listed
    on the paper, allowable for exercised with the duration of 1 year
    per warrant and each warrant for every 3 months, with each warrant
    allowed to buy common stock at the rate of 10, 10, 10, 30, 40 of the
    total warrants respectively, and the last date to exercise is on
    January 14, 2006.

As of 2003, at the Annual General Shareholders Meeting 1/2003, dated
April 23, 2003, shareholders have agree to approve the change of share
value (share dilution) from previously THB 10 to THB 1, which the
Company has proceed to register with the Commerce Ministry on May 22,
2003.

In addition, in 2004, at the Board of Directors’ meeting as of 1/2004,
dated February 4, 2004, has resolved to allow the Company to re-purchase
the shares, for the purpose of monetary management. As the Company has
over-excess liquidity of 19,783,600 shares (total worth of THB 122.64
million, re-purchase value of THB 6.20 per share) which according to the
Ministerial rule with regards to “outline and method of share
re-purchase, selling of re-purchase shares and cut-off for the Company’s
re-purchase shares”, stipulated that the Company must sell the
re-purchased shares with 3 years after date ending of share repurchase
activity, which was due on September 11, 2007. The Company could not
finish the re-purchasing of shares as committed by the Board of
Directors resolution. Therefore, to follow the guideline of Ministerial
rule, the Board of Directors’ meeting as of 4/2007 dated on September
29, 2007, approved the capital reduction by way of reducing the share
repurchase by 19,783,600 shares, resulting in the remaining capital of
328,345,090 share. The Company registered the reduction of registered
capital on October 24, 2007.

All Company’s offices were then completely relocated from Soi Trakunsuk,
Asoke – Din Daeng Road – the place where SE–ED offices have been located
since 1983 – to the new location situated at the Nation Tower building
in 2001, whereby SE–ED Book Center department was first to move since
the middle of 1998. With this relocation effort, the Company could have
bigger working space, enabling more convenient coordination and
management for future business expansion.

In 2003, the distribution center has been moved to 99 Moo 1 King Kaeo
Road, Ratchathewa, Bang Phli, Samut Prakan 10540 for larger area, enough
to support the Company’s long term growth.

Moreover, in 2008, the Company has opened the SE-ED Learning Center with
the space of 600 square meters, located at Chamchuri Square – a part of
Chulalongkorn University, to facilitate the expansion of youth
activities in different forms in the future. This includes the training
for professional and activity to increase human potential for general
public.

2.  Nature of Business The Company has three major business areas, which
    can be described as follows:

  1. Bookstores Business : SE–ED has operated SE–ED Book Center and
  network stores which consists of Book Variety, and many university
  bookstores in Bangkok and provinces as well as the network and sales
  area in various forms (representing 82% of 2008 revenue).

  2. Distribution Business : SE–ED distributed both the books published
  by SE–ED and other publishers to bookstores all over the country and
  other sales channels.

  3. Publishing Business : SE–ED publishes its own books and magazines,
  sells advertising space, provides the printing service for other
  parties, organizes yearly exhibition “Thailand Electronics &
  Industrial Technology Exhibition” and many specialized technology
  exhibition, and organizes the SE–ED Kiddy Camp for children, as well
  as arranges several academic training and seminar courses.

In all three major businesses, SE–ED continues to engage as a leader in
supporting and encouraging all aspects of the businesses, which has
resulted in the achievement of a competitive advantage, as well as
increasing the Company’s overall value added.

In addition, the Company also invested 25% shares in M & E Co., Ltd.
since 1984 with a paid–up share capital of THB 400,000. The M & E Co.,
Ltd. prints and publishes technical magazines and engineering manuals,
distributed by SE–ED.

The Company has also held 99.93% shares in SE–ED Book Center Co., Ltd.
(founded on May 11, 2001), with a paid–up share capital of THB 100,000.
The SE–ED Book Center Co., Ltd. does not operate any other business. The
purpose of registering the name of “SE–ED Book Center Co., Ltd.” is to
prevent the use of “SE–ED Book Center” from others who might seek to
register it as a new Company.

In 2003, the Company held 28.75% shares in Plearn Patt Co.,Ltd. (founded
on September 25, 2002) with a registered paid–up share of THB 80
million. In December 31, 2005, the Company increased percentage of share
holdings to 48.82% of registered share capital with the amount of THB
170 million and the paid–up share capital was THB 169.35 million. The
registering name of Plearn Patt Co., Ltd. is the name of the school
called “Plearnpattana School”, located at Bhuddhamonthon 2 Road,
enrolling students from pre–kindergarten year up to twelfth grade. The
first academic year started in 2004. This was the important gathering of
more than 70 education–loving alliances from several groups of people
such as parents, teachers, academics, school executives, in
collaboration with private organization who played a significant role
towards family institutions and education to create new concept school,
which to create quality children for Thai country.

As of December 31, 2008, the major Shareholders were :

+-------------------------------+----------------+---------------------+
| Major Shareholders            | Share Capital  | Percentage of share |
|                               | Paid-up        | holding             |
|                               |                |                     |
|                               |                | Amount Paid–up      |
|                               |                | share (%)           |
+-------------------------------+----------------+---------------------+
| 1. SE-EDUCATION Public        | 8,300,000      | 48.82               |
| Company Limited               |                |                     |
+-------------------------------+----------------+---------------------+
| 2. Mr. Rit Thirakomen         | 2,000,000      | 11.76               |
+-------------------------------+----------------+---------------------+
| 3. RAK LUKE FAMILY GROUP Co., | 700,000        | 4.12                |
| Ltd                           |                |                     |
+-------------------------------+----------------+---------------------+
| 4. Mrs. Thida Phitaksinsuk    | 400,000        | 2.35                |
+-------------------------------+----------------+---------------------+
| 5. Ms. Krongtong Bunprakong   | 400,000        | 2.35                |
+-------------------------------+----------------+---------------------+

3.  Total revenue from sales categorized by sales channels

+--------------------+---------+------+-------+------+-------+------+
| Revenue from       | 2008    |      | 2007  |      | 2006  |      |
|                    |         |      |       |      |       |      |
| Sales & Service    |         |      |       |      |       |      |
+--------------------+---------+------+-------+------+-------+------+
|                    | T       | %    | Tho   | %    | Tho   | %    |
|                    | housand |      | usand |      | usand |      |
|                    | Baht    |      | Baht  |      | Baht  |      |
+--------------------+---------+------+-------+------+-------+------+
| Books              |         |      |       |      |       |      |
+--------------------+---------+------+-------+------+-------+------+
| - Retail ¹         | 3,      | 8    | 3,25  | 8    | 3,14  | 8    |
|                    | 639,972 | 2.30 | 1,348 | 2.32 | 9,777 | 4.54 |
+--------------------+---------+------+-------+------+-------+------+
| - Wholesale ²      | 613,466 | 1    | 54    | 1    | 43    | 1    |
|                    |         | 3.87 | 3,761 | 3.77 | 0,037 | 1.54 |
+--------------------+---------+------+-------+------+-------+------+
| - Publishing       | 16,500  | 0.37 | 7,299 | 0.18 | 6,747 | 0.18 |
| service            |         |      |       |      |       |      |
+--------------------+---------+------+-------+------+-------+------+
| Total              | 4,      | 9    | 3,80  | 9    | 3,58  | 9    |
|                    | 269,938 | 6.54 | 2,408 | 6.27 | 6,561 | 6.26 |
+--------------------+---------+------+-------+------+-------+------+
| Magazines ³        | 100,064 | 2.26 | 9     | 2.43 | 9     | 2.53 |
|                    |         |      | 5,842 |      | 4,142 |      |
+--------------------+---------+------+-------+------+-------+------+
| Others             | 52,995  | 1.20 | 5     | 1.3  | 4     | 1.21 |
|                    |         |      | 1,338 |      | 5,042 |      |
+--------------------+---------+------+-------+------+-------+------+
| Total revenue      | 4,      | 100  | 3,94  | 100  | 3,72  | 100  |
|                    | 422,997 |      | 9,588 |      | 5,745 |      |
+--------------------+---------+------+-------+------+-------+------+

  Remark ¹ Retail - revenue from SE–ED Book Center and bookstores, the
  Company’s bookstores and other retail outlets managed by SE–ED Book
  Center.

  ² Wholesale - revenue from books published sales volume of magazines
  and distributed to bookstores and

  other sales channels : such as education institutions and library etc.

  1 and 2 - total sales of Company own publications in 2008, 2007 and
  2006 represents 6.91%, 6.41% and 7.81% of sales revenue respectively.

  ³ Magazines - total revenue from, advertising publishing and revenue
  from “Thailand Electronics &

  Industrial Technology Exhibition” and “SE–ED Kiddy Camp”. Organizing
  academic seminar and technology product sales