3.  Business Operations

Business operations of the Company and its subsidiaries

  3.1 Property Development

  3.1.1 Watcharapol Project, 78-0-46 rai of freehold land which will
  yield 270 units of two-storey detached houses when completed.

  3.1.2 Srinakarin Project, 99-3-97.8 rai freehold land which will yield
  367 units of two-story detached houses when completed.

  3.2 Sale of Assets

  3.2.1 The Company divested its holding of the 222-1-99 rai of raw land
  at Sattahip in November 2008.

3.  Other Operations and Assets

  3.3.1 Jewellery Centre, a 34-storey commercial tower covering a total
  area of 42,833.78 sqm for sale and lease, located at 138 Nares Road,
  Sipraya, Bangkok. The retained interest as of 31 December 2008 is a
  total area of 12,145.64 sqm or 28.36 % of the total gross floor area.

  3.3.2 Sukhapiban 3 Mansion, a 19-storey residential condominium with
  1,024 units, located at 22/1 Sukhapihan 3 Road, Huamark, Bangkok. The
  retained interest as at 31 December 2009 is 2 units with a total area
  of 119.21 sqm.

  3.3.3 The Trio Chiang Mai (formerly named Chiang Mai VIP Tower), a
  4-storey commercial building in which KTP has a retained interest of 4
  units totaling 890.88 sqm. The development is located at 188/1-2 and
  188/5-6 Moo 1 Huay Kaew Road, Changpueng Sub-District, Muang District,
  Chiang Mai Province.

  3.3.4 Granite Factory, located at 1 Moo 5, Mai Ngam Sub-District,

  Muang District, Tak Province. The granite operation has ceased since
  2000. The machinery has been divested in early 2002 while the land
  will be either sold or leased.

4.  Review of the Property Market

  Economic review

  The economy expanded by 2.6% in 2008, slowing down significantly from
  4.9% growth recorded in 2007. The year-on-year decline in growth was
  due to the global economic slowdown, coupled with domestic political
  unrest throughout the year. The inflation rate increased to 5.5% in
  2008, up from 2.3% in the previous year. Energy and raw food prices
  rose sharply during the first half. Nevertheless, prices declined
  during the second half, in tandem with oil prices and as consumption
  slowed.

  The Thai economy is likely to weaken further in 2009 with projected
  GDP contracting to the range of -1% to 0%, as the impact of the
  deteriorating global economic condition on exports, tourism and
  investor confidence intensifies. Domestic demand should continue to
  remain soft. However, the government’s efforts to stimulate growth,
  particularly in the property sector, together with the expected
  execution of public spending on infrastructure projects, should likely
  provide some buffer and create opportunities for some reprieve in
  economic performance in the coming year.

  Property market review

  Landed Housing

  The estimated number of new registered residential units in the
  Bangkok Metropolitan Region (BMR) for 2008 was 79,500 units, a 7.0%
  increase from the 74,271 units registered in 2007. Self-built,
  developer-built housing, apartments and condominiums represent 28%,
  34% and 38%, respectively.

  []

  Source: Bank of Thailand

  The future supply of detached houses is likely to decline as the
  number of detached house land allocation permits for 2008 dropped by
  20% compared to 2007, while permits for townhouses and semi-detached
  houses increased by 77% and 27%, respectively. Due to lower
  affordability, most developers have responded by building on smaller
  plots, which can be seen in the growth of new townhouses and the
  decline in the number of single detached houses.

  The housing sector has been one of the better performers in 2008, with
  sales of townhouses leading the way, supported by the government’s tax
  breaks on transfers of completed property. The government’s announced
  tax breaks, which were effective in stimulating sales earlier in the
  year, appear to have less of an effect, as reduced affordability on a
  slowing economy and political uncertainty may have a greater
  counter-effect on home sales through the year.

  Condominium

  The estimated total supply of downtown freehold condominiums increased
  from 49,294 units in 2007 to 54,163 units in 2008, representing a 10%
  increase or 4,869 completed units. Sukhumvit remained the most popular
  area for condominiums, representing 34% of total freehold supply. This
  was followed by the Silom/Sathron area (20%), Rama III (17%),
  Riverside (12%), Pathumwan (9%), and Central Lumpini (8%)
  respectively.

  []

  Source: CBRE

  Average prices of future luxury and upper-mid-range freehold
  condominiums in the primary market were Baht 155,801 psm as of 4Q08,
  up 0.4% quarter-on-quarter, 14.3% year-on-year.

  The condominium sector has seen a slowdown in launches, but prices
  remain buoyant. Developers have employed a variety of methods to
  contain costs, including selling projects in phases and trying to lock
  in construction material costs.

  The overall performance of the condominium market sector was good
  given the unfavorable political and economic situation throughout the
  year. During 2008, overall average sales performance in downtown
  condominium projects being marketed remained strong with about 75% of
  units at these projects already sold. However, concerns remain going
  forward, as poor economic conditions, weak sentiment and tight credit
  will negatively affect new condominium sales.