3.  Business Operations

  Property Development

1.  Product Description

  Business operations of the Company and its subsidiaries

  3.1.1 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 2007 is a
  total area of 12,145.64 sqm or 28.36 % of the total gross floor area.

  3.1.2 Sattahip Land, a residential plot awaiting development with a
  total area of 222-1-99 rai, located at Highway 332, Bangsare
  Sub-District, Sattahip District, Chonburi Province.

  3.1.3 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 2007 is 2 units with a total area
  of 119.91 sqm.

  3.1.4 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.

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

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

  3.1.7 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.

2.  Review of the Property Market

  Economic review and outlook

  The Thai economy remains on track to post at least 4.5% growth for
  2007, down from 5.1% in 2006. Nevertheless, the economy displayed
  resilience and fundamental strength amidst skyrocketing oil prices and
  political strife. The economy continued to perform particularly well
  on the export front, with an estimated 18% year-on-year growth over
  2006 despite continued appreciation of the Thai Baht.

  According to the Bank of Thailand (BOT), the Thai economy is
  forecasted to expand by 4.5%-6.0% in 2008. The formation of a new
  government in 2008 is expected to provide for a more stable political
  situation which should improve consumer and business sentiment, spur
  household spending, and re-invigorate both public spending and private
  investment, while off-setting a projected slowdown in exports.

  Domestic conditions should become more favorable with interest rates
  remaining attractive while unemployment continues to be at record lows
  and wages on a steady incline. However, downside risks associated with
  rising and volatile oil prices and a world economic slowdown may
  dampen a full economic rebound for Thailand. Inflation rate is
  projected at 3%-5%.

  Property market review and outlook

  The Thai property market proved to be resilient in 2007 despite
  political uncertainty and rising oil prices. While the market remained
  buoyant, underlying changes in the economy did precipitate a notable
  shift in demand away from suburban homes and toward the condominium
  sector, particularly in middle and lower priced condominium units in
  city areas.

  With oil prices raising pressure on daily commuting costs, many chose
  to move closer into the city and catch the Skytrain or MRT system to
  work rather than endure daily highway traffic snarls. Thus 2007 saw
  the emergence of a segment of buyers now commonly dubbed the
  “Skytrain” generation. Typically young professional singles or couples
  looking for a first home, these buyers prefer the lifestyle and
  convenience of living in the city, albeit in more constrained urban
  spaces, over the more traditional preference of a landed home in the
  suburbs.

  Sales of luxury condominiums in downtown areas, while slowing down
  from previous years, also performed relatively well, with prices of
  newly launched projects continuing to increase in the face of
  escalating construction costs and ever diminishing plots of attractive
  downtown sites.

  Looking forward, suburban housing supply will continue to contract in
  the short term, however, stable to improving demand conditions should
  see prices recover. Economic fundamentals remain good, and a new
  government in 2008 should see the introduction of measures to further
  stimulate both the economy and the property sector. Opportunities for
  well located, professionally developed condominiums in the city remain
  attractive, while the continued expansion of road and rail
  infrastructure will open up potential sites for future housing
  development, particularly in the Eastern corridors towards the
  international airport.

  Landed Housing

  The estimated number of new registered residential units in the
  Bangkok Metropolitan Region (BMR) for 2007 was 69,513 units, a 11.0%
  drop from the 78,116 units registered in the same period last year.
  Self-built, developer-built housing, apartments and condominiums
  represent 37%, 38% and 25%, respectively.

  []

  Source: Bank of Thailand

  The housing price index continued to increase through 2007 due to the
  increase in land prices, which climbed 2.6% YoY. However, house prices
  alone softened by 0.8% compared to the previous year, despite
  increasing construction costs, and this was reflective of the
  competitive housing sector as demand slowed down.

  The number of land allocation permits for 2007 dropped significantly
  compared to 2006. Unless demand recovers early in the year, overall
  new housing supply should therefore continue to contract in 2008.

  Despite the general shift in demand towards condominiums, well located
  housing projects that deliver good value for money should meet with
  better demand in 2008 as the political climate stabilizes and domestic
  economic conditions improve. Favourable factors such as tax incentives
  for home buyers and continued low interest rates will be encouraging
  for the housing sector.

  Condominium

  The estimated total supply of downtown freehold condominiums increased
  from 46,548 units in 2006 to 51,270 units in 2007, representing a 10%
  increase or 4,722 completed units. Sukhumvit remained the most popular
  area for condominiums, representing 35% of total freehold supply. This
  was followed by the Silom/Sathron area (20%), Rama III (18%),
  Riverside (11%), Pathumwan (9%), and Central Lumpini (7%)
  respectively.

  []

  Source: CBRE

  The overall performance of the condominium market sector was good
  given the unfavorable political and economic situation throughout the
  year. Inventory levels remain healthy with occupancy rates of existing
  condominiums in the downtown area increasing steadily throughout the
  year to about 87% at present.

  The emerging "Skytrain" generation and the changing lifestyle of city
  dwellers have been key drivers for the mid-range condominium market
  particularly in established locations. The mid-range condominium
  market, mostly priced between 65,000 and 80,000 baht psm, has been
  active throughout the year. 1,656 mid-range units were completed in
  downtown Bangkok in 2007, representing a 13% increase YoY.

  The average price of grade A condominiums rose from Baht 110,000 psm
  in the first quarter to about Baht 126,000 psm by the end of 2007,
  rising by about 15% from the beginning of the year. Prices of projects
  positioned at the highest end of the segment continue to increase in
  larger bounds. As the market improves in 2008, prices of top end
  condominiums launched in prime areas are expected to reach upwards of
  Baht 200,000 psm.