do day dream public company limited (“ddd” or “the company...

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– Information Memorandum –

Do Day Dream Public Company Limited (“DDD” or “the Company”)

Head Office Location 32 Keharomklao Road, Saphansung, Saphansung, Bangkok, 10240

Tel. 02-917 3055 Fax. 02-917 3054

Website: http://www.dodaydream.com

Factory Location 53 Moo 9, Rojana Road, Thanu Sub-district, U-thai District, Ayutthaya,

13210

Listing Date December 26, 2017 (First trading day on 26 December 2016)

Listing Securities 316,000,000 ordinary shares with the par value per share of THB 1.00

totaling to THB 316,000,000

Capital As at December 26, 2017 (First trading day)

Registered Capital: Ordinary shares THB 318,000,000

Paid-up Capital: Ordinary shares THB 316,000,000

Secondary Market Stock Exchange of Thailand (“SET”)

Offering Price THB 53.00 per share

Offering Date December 14 – 15 and 18, 2017

Objectives and plans for utilizing the capital increase

Use of Proceeds

Approximate

Amount

(THB mm)

Approximate Timing

1. Business expansion

1.1 To expand our factory and warehouse

1.2 To expand our distribution channel and distribution center

1.3 To renovate our office and related network

1.4 To improve our research and development facilities

406

256

40

50

60

2018-2019

2018-2019

2018-2019

2018

2018-2019

2. Working capital 3,534.88 2018-2020

Total 3,940.88

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Green Shoe option -None-

Type of Business and Nature of Operation

The Company (defined as Do Day Dream Public Company Limited or Do Day Dream Public Company Limited

and its subsidiaries (as the case may be)) is a manufacturer and distributor of skincare product. The Company

is the producer of SNAILWHITE skincare products under our own brand NAMU LIFE. The brand is driven by a

“Beauty is Healthy” concept as the Company believes that healthy skin is the origin of true beauty. This concept

reflected our product characteristic to improve every skin types toward a natural glowing skin. In addition, the

Company pay attention to every production process to reinforce product quality from selecting quality and

reliable raw material from international suppliers, improving our production process to be more efficient to

produce good quality and safety products, and ensuring product safety with strict quality control prior to product

distribution. At every stage of our production, our quality control department ensure that every products have

met our criteria and good industry standard. In addition, we have a research and development department to

create new product innovation and to conduct market research in order to accurately respond to our customer

needs. Moreover, we also focus on packaging quality which was designed to keep material inside safe, durable

and easy to use. The Company structure is as follows:

1) Product Characteristics

Our businesses can be categorized into two main categories as follows

1) Manufacturing and distribution skincare products under the Company’s brand

We produces and distributes “SNAILWHITE” skincare products under NAMU LIFE brand with a wild

range of product types to meet diverse customer needs which include facial and body care products,

facial and body cleansing products and sunscreen products. We sell our products through the

Company’s shop and distribution partners. One of our key distributors is Namu Life Plus Co.,Ltd.,

our 100% owned subsidiary.

Our product portfolio can be separated into 6 sub-groups, (1) Facial Skincare, (2) Body Care, (3)

Facial Cleansing, (4) Body Cleansing, (5) Sunscreen, and (6) Gift Set

2) OEM Business

We also engage in OEM business to produce other facial skincare products under our clients’ brand.

Do Day Dream PCL.Producing and distributing skincare products

Namu Life Plus Co.,Ltd.

Distributing product for the Company

Do Infinite Dream Co.,Ltd. (IHQ)

International Headquarter

Do Singapore Dream Co.,Ltd.

Holding company to invest

overseas

Do Day Dream trading Co.,Ltd.

Trading company in international

market

100% 100%

100% 100%

Incorporated in

Thailand

Incorporated in

Singapore

Current Structure

Future Structure

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2) Revenue Structure

Our revenue structure classified by business segment for the year ended December 31, 2014, 2015, 2016 and

nine months ended September 30, 2016 and 2017

Product/business Line

Separated financial

statements Consolidated financial statements

For the year ended December 31 For the nine months ended September 30

2014 2015 2016 2016 2017

THB mm % THB mm % THB mm % THB mm % THB mm %

Sales Revenue

1. Revenue from selling product

under our brand

1) Facial Skincare 378.4 86.4 860.5 90.0 1,072.7 89.0 872.1 88.4 996.4 78.8

2) Body Care 13.0 3.0 56.3 5.9 36.4 3.0 22.9 2.3 41.6 3.3

3) Facial Cleansing - 37.4 3.9 48.7 4.0 29.8 3.0 60.3 4.8

4) Body Cleansing - - - - 9.8 0.8 2.1 0.2 94.4 7.5

5) Sunscreen - - 27.9 2.9 58.9 4.9 49.9 5.1 50.0 4.0

6) Giftset

4.7 1.1 22.6 2.4 63.4 5.2 45.5 4.6 39.7 3.1

7) Food supplement/1 13.1 3.0 7.1 0.7 0.7 0.1 1.5 0.2 - -

Total revenue from selling product under

our brand 409.2 93.4 1,011.8 105.8 1,290.6 107.0 1,023.8 103.8 1,282.4 101.5

Deduct Sales Discount/2 - - (77.2) (8.1) (91.0) (7.5) (40.7) (4.1)

/6 (26.2) (2.1)

/6

Revenue from selling product under our

brand – Net 409.2 93.4 934.6 97.7 1,199.6 99.5 983.1 99.7 1,256.2 99.4

2. Sales from OEM business 5.3 1.2 2.5 0.2 1.9 0.2 2.0 0.2 0.2 0.0

3. Other sales revenue/3 23.5 5.4 18.0 1.9 - - - - - -

Total Sales 438.0 100.0 955.1 99.8 1,201.5 99.7 985.1 99.9 1,256.4 99.4

Other income/4

0.1 0.0 1.6 0.2 3.3 0.3 1.3 0.1 7.2 0.6

Total Revenue 438.1 100.0 956.7 100.0 1,204.8 100.0 986.4 100.0 1,263.6 100.0

Note : /1 The Company has stopped distribution of food supplement product since the beginning of 2016

/2 For the year ended 2014, the Company did not deduct sales discount from sales revenue but recorded them as selling expenses

/3 Other sales revenue comprise of revenue from sales of packaging to related company which the Company has discontinued

selling such packaging since 2015 /4

Other income comprise mainly of interest income and services revenue /5

The consolidated financial information for the year ended December 31, 2015, which is a comparison figures presented according

to PAE standard in the consolidated financial statement for the year ended December 31, 2016, was prepared by management of

the Company and was not audited by auditor /6 For the nine months ended September 30, 2016 and 2017, proportion of sales discount to total revenue decreased as the

Company reclassified some sales discount to selling expenses

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Separate financial



2014 2015 2014 2015

THB mm % THB mm % THB mm % THB mm

Sales Revenue 1. Domestic

1.1 Revenue from selling product under our brand

1) Facial Skincare 297.3 67.9 697.3 72.9 935.9 77.6 765.0 77.6 572.1 45.3

2) Body Care 10.4 2.4 47.3 4.9 34.4 2.9 21.1 2.1 39.3 3.1

3) Facial Cleansing - - 32.6 3.4 46.0 3.8 27.6 2.8 36.3 2.9

4) Body Cleansing - - - - 9.6 0.8 2.1 0.2 94.2 7.4

5) Sunscreen - - 27.4 2.9 54.5 4.5 45.3 4.6 42.9 3.4

6) Giftset 4.7 1.0 21.2 2.2 63.3 5.3 45.4 4.6 39.7 3.1

7) Food supplement/1 13.1 3.0 6.0 0.6 0.7 0.1 1.4 0.1 - -

Total revenue from selling product under our brand 325.5 74.3 831.8 86.9 1,144.4 95.0 907.9 92.0 824.5 65.2

Deduct Sales Discount/2 - - (77.2) (8.0) (91.0) (7.7) (40.8) (4.1)

/6 (26.2) (2.0)

/6

Revenue from selling product under Company’s brand – Net 325.5 74.3 754.6 78.9 1,053.4 87.3 867.1 87.9 798.3 63.2

1.2 Sales from OEM business 5.3 1.2 2.5 0.2 1.9 0.2 2.0 0.2 0.2 0.0

1.3 Other sales revenue/3 23.5 5.4 18.0 1.9 - - - - - -

Sales Revenue from Domestic 354.3 80.9 775.1 81.0 1,055.3 87.5 869.1 88.1 798.5 63.2


Separate financial



2014 2015 2016 2016 2017


Sales Revenue 2. Overseas

2.1 Revenue from selling product under Company’s brand

1) Facial Skincare 81.1 18.5 163.2 17.1 136.8 11.4 107.1 10.9 424.2 33.5

2) Body Care 2.6 0.6 9.0 0.9 2.0 0.2 1.9 0.2 2.3 0.2

3) Facial Cleansing - - 4.8 0.5 2.7 0.2 2.2 0.2 24.0 1.9

4) Body Cleansing - - - - 0.2 0.0 - - 0.3 0.0

5) Sunscreen - - 0.5 0.1 4.4 0.4 4.6 0.5 7.1 0.6

6) Giftset - - 1.4 0.1 0.1 0.0 0.1 0.0 - -

7) Food supplement/1 - - 1.1 0.1 0.0 0.0 - - - -

Total revenue from selling product under Company’s brand 83.7 19.1 180.0 18.8 146.2 12.2 115.9 11.8 457.9 36.2

Sales Revenue from Overseas 83.7 19.1 180.0 18.8 146.2 12.2 115.9 11.8 457.9 36.2

Total Sales 438.0 100.0 955.1 99.8 1,201.5 99.7 985.1 99.9 1,256.4 99.4

Other income/4

0.1 0.0 1.6 0.2 3.3 0.3 1.3 0.1 7.2 0.6

Total Revenue 438.1 100.0 956.7 100.0 1,204.8 100.0 986.4 100.0 1,263.6 100.0

Note: /1

The Company has stopped distribution of food supplement product since the beginning of 2016

/2 For the year ended 2014, the Company did not deduct sales discount from sales revenue but recorded them as selling expenses

/3 Other sales revenue comprise of revenue from sales of packaging to related company which the Company has discontinued selling such packaging since 2015

/4 Other income comprise mainly of interest income and services revenue

/5 The consolidated financial information for the year ended December 31, 2015, which is a comparison figures presented according to PAE standard in the consolidated financial statement for the year ended December 31, 2016, was prepared by management of the Company and was not audited by auditor

/6 For the nine months ended September 30, 2016 and 2017, proportion of sales discount to total revenue decreased as the


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Target Customer

Our target customer are customers at all ages and genders with moderate income or higher who have demand

for facial and skin care and cleansing products, especially a customer with health awareness needs.

3) Distribution Channel

The Company sells its products both directly and indirectly through distribution partners to various domestic and

international distribution channels.

Overview of product distribution from the Company to end customer

5 Main distribution channels of the Company are (1) Modern Trade (2) NAMU LIFE Shop (3) Traditional Trade

(4) Online and (5) Export which can be described as follows:

1) NAMU LIFE SHOP

The Company established first NAMU LIFE Shop at BTS Sky Train Siam Station in 2016 in order to

increase distribution channel and to reach target customers directly. In addition, the shop allows the Company

to study and gain more understanding on customers’ behavior and also helps to promote the Company’s

brand, which is an important strategy to strengthen our brand. We are considering to gradually expand

additional NAMU LIFE Shop branches by focusing areas that can be used to promote the Company’s products

such as tourism area and high traffic area.

As of September 30, 2017, the Company has two NAMU LIFE Shop, (1) at BTS Sky Train Siam

Station and (2) at Show DC Rama IX department store.

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2) Modern Trade

Modern trade channel is another key distribution channels that we are focusing on as it is a channel

that customers can access easily with high growth rate and wide network coverage across the country. The

Company’s strategy is to focus on modern trade stores which could generate high margin for the Company

and stores that can reach target customer who interested in the Company’s products. This includes specialty

stores, convenience stores and large retail stores.

As of September 30, 2017, the Company was selling through more than 13,000 modern trade

branches in Bangkok metropolitan area and other major cities such as Chonburi, Rayong, Ubon Ratchathani,

Buriram, Phuket, Hat Yai, Chiang Mai and Nakorn Ratchasima. Most of modern trade shops have credit term

of 30 – 60 days.

3) Traditional Trade

Traditional trade stores are spread widely throughout Thailand which customers can quickly access as

traditional trade stores usually locate close to residential areas, community areas or tourist destinations. We

sell our products in this channel through Namu Life Plus and our distribution partners. Traditional Trade stores

include both retail and wholesale stores such as local cosmetic stores, local supermarket, local convenience

stores, local pharmacy chain, local consumer goods stores and local department stores located in major cities.

Example of traditional trade stores include Super Cheap, Yongsanguan, Amporn department store and

Biggim.

As of September 30, 2017, the Company is selling though more than 1,300 traditional trade stores

under Namu Life Plus and distribution partners which covers Bangkok metropolitan area and other major cities

such as Chonburi, Rayong, Loei, Ayutthaya, Ubon Ratchathani, Buriram, Phukey, Hat Yai, Chiang Mai and

Nakorn Ratchasima. Most of traditional trade stores have credit term of 0 – 60 days while distribution partners

have credit term of 15 – 45 days. In the last quarter of 2017, the Company started to distribute products via

King Power shop at Srivaree as a first branch and Suvarnabhumi Airport as a second branch.

4) Online

We sell our products in online channel through our partners who are resellers and sell through NAMU

LIFE website (https://shop.namulife.com) which we collaborate with our partner. In addition, we sell our

products through social media such as Line, Facebook and Instagram in which our customers can easily order

our products.

5) Export

The Company started exporting its products overseas since 2014 through international distributors to

traditional trade, modern trade and online channel abroad as the Company saw a growing opportunity in the

Company’s products overseas.

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As of September 30, 2017, the Company exports its products to many countries including China,

Hong Kong, Myanmar, Cambodia and Laos. However, most of the Company’s export revenue were from China

and Hong Kong in which the Company key distributor is Riya Home (Holding) Limited (“Riya Home”). The

revenue from exporting to China and Hong Kong contributed approximately 97% and 99% of the Company’s

total revenue in 2016 and the first nine months of 2017, respectively. Currently, the Company’s overseas

customers paid to us in cash except Riya Home which has credit term of 90 days. This is due to long

outstanding business relationship with Riya Home and Riya Home reliability in large order placement and

excellent payment record. In addition, product transportation to China could take longer time (sometimes more

than 60 days) than other nearby countries such as Myanmar, Laos and Cambodia.

Sales revenue classified by distribution channels which are point of revenue recognition of the

Company

Distribution channel

Separate financial



2014 2015 2016 2016 2017


Sales Revenue

1. Modern Trade 130.1 29.7 324.7 34.0 387.3 32.2 294.4 29.9 364.4 29.0

2. Traditional Trade 119.5 27.3 75.4 7.9 153.2 12.8 138.8 14.1 50.5 4.0

3. Distribution Partner /2

100.9 23.0 449.6 47.1 602.6 50.2 475.1 48.2 402.0 32.0

4. Export 83.7 19.1 180.0 18.8 146.2 12.2 115.9 11.7 457.9 36.5

5. NAMU LIFE Shop - - - - 1.5 0.1 - - 5.1 0.4

6. Others/3 3.8 0.9 2.6 0.3 1.7 0.1 1.6 0.2 2.7 0.2

Sales Revenue Before Discount 438.0 100.0 1,032.3 108.1 1,292.5 107.6 1,025.8 104.1 1,282.6 102.1

Sales Discount/4 - - (77.2) (8.1) (91.0) (7.6) (40.7) (4.1) (26.2) (2.1)

Sales Revenue – Net 438.0 100.0 955.1 100.0 1,201.5 100.0 985.1 100.0 1,256.4 100.0

Note: /1

For the year ended 2014, the Company did not deduct sales discount from sales revenue but recorded them as selling expenses /2 Distribution partner mainly distribute to traditional trade

/3 Others mainly comprise sales from employees’ welfare program and retail customer who purchased lower than THB 100,000 per year

/4 For the nine months ended September 30, 2016 and 2017, proportion of sales discount to total revenue decreased as the


By distribution channels, traditional trade sales decreased in 2015 and 2016 while proportion of

sales through distribution partner increased as the Company started to appoint distributors nationwide to

manage retail customers in 2015.

For the nine months ended September 30, 2017, export sales increased significantly mainly

attributable to the increase in sales from China. This was a result of the Company’s marketing campaign in

China to reach Chinese customers such as launching Chinese exclusive products and expanding distribution

channel of distributor in China.

The Company plans to expand its distribution channel in the future by focusing more on selling

through NAMU LIFE Shop and export as well as modern trade channel as they have attractive product shelf

design, organized information technology system which can attract and reach customers very well.

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4) Procurement

This includes two main section, raw material procurement and production plant. The details are as follow:

Raw material Procurement

Key raw materials used in our production are natural extract chemical, and packaging. Our key natural extracts

include snail secretion filtrate, Alpha-Arbutin and Hyaluronic acid. The Company planned raw material

procurement according to sales projection in order to forecast the demand for raw material. The forecast then be

used by the procurement department to create purchase orders to the suppliers. The Company set a safety

stock level on average of approximately 60 days to prevent raw material shortage. The Company also set policy

and procedure for supplier selection. For raw materials that are regularly ordered, price and quality will be

reviewed at least once a year.

Production plant and production capacity

Currently, the Company relocates from old production plant located at Keharomklao Road, Saphansung,

Bangkok to new production plant located at Rojana industrial park, Ayutthaya to expand our production base.

The new plant started operation in October 2016 and have maximum capacity of approximately four times higher

than the old production plant which have capacity approximately 400,000 – 500,000 piece/month (per one shift).

The Company expects that the capacity of the new production plant can support the company’s growth over the

next 3 – 5 years. Additionally, the new production plant at Rojana Industrial park still have an ample room for

expansion of around 10 rai in which the Company is planning to build the second phase of the production plant

as well as allocate some area for common usage.

For the nine months ended September 30, 2017, our new production plant had production capacity and

actual production, separated into high viscosity and low viscosity cream as follows:

Capacity of the new plant for the nine

months ended September 30, 2017

Unit High Viscosity Low Viscosity Total

Mixing Capacity Million ml. per

three quarters 457.5 969.9 1,427.4

Actual Production Million ml. per

three quarters 187.4 452.9 640.3

Utilization rate % 41.0 46.7 44.9

Note: Production capacity is calculated based on total capacity of machine of one shift per day, running for 10 hours per day, total 122 days

for the nine months ended September 30, 2017 net of production loss

5) Market Competition

The skin care market is a market with strong prospect with its high market value and continuing growth trend.

These resulted in high competition among large and small competitors in the market including foreign

competitors with have a renowned brand.

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Number of Application and Approval of Cosmetic and Skincare Production

Source: Ministry of Public Health of Thailand

During 2011 – 2015, there were an increasing number of application and approval for cosmetic and skincare

production. In 2015, there were 13,907 applicants for cosmetic and skincare production reflecting a 32.4%

increased from 2014 and there were 8,045 applicants which received an approval in 2015 reflecting a 37.6%

increased from 2014 which shown an increasing demand from the manufacturer to engage in cosmetic and

skincare business. Additionally, they also reflected a strong consumer expectation to more beneficial attributes

from products as well as their carefulness and dedication in product selection process, which resulted in an

intensify and challenging competition in cosmetic and skincare market.

Example of Products and its Brand position

Source: The Company

Comparing to other competitors, the Company plans its brand position as premium quality products that

are able to reach wide range of customers (Premium Mass). This brand position of as premium mass is between

mass market and premium market which have higher price. As a result, the Company is able to benefit from

4,168

5,677

7,950

10,507

13,907

2,193 2,566

3,905

5,847

8,045

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2011 2012 2013 2014 2015

Apply for permission Approved

Unit : no. of product

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lower competition in similar market while being able to benefit from changing consumers’ behavior towards a

product with higher quality and price.

According to the beauty and skincare market data from The Nielsen Company by our main product categories

which are (1) Facial Moisturizer (2) Body Moisturizer (3) Cleanser and (4) Liquid Soap, the Company’s market

share compared to other competitors can be shown as follows:

Facial Moisturizer market

Facial Moisturizer Market share in year/ period (%)

Rank/1 Brand 2015 2016 the nine months

ended September

30, 2017

1 Olay 14.9 15.2 15.1

2 Garnier 12.5 14.5 14.1

3 Dermo Expertise 8.4 9.2 9.5

4 Pond’s 12.1 9.7 8.9

5 Eucerin 6.5 6.2 6.7

•••

•••

•••

•••

•••

8 NAMU LIFE SNAILWHITE (Rank) 3.2 (10) 3.6 (9) 3.7 (8)

Source: The Nielsen Company

Note: /1 Ranking based on market share for the nine months ended September 30, 2017

Body Moisturizer market

Body Moisturizer Market share in year/ period (%)


ended September

30, 2017

1 Vaseline 30.9 31.5 30.3

2 Nivea 15.3 15.8 14.6

3 Citra 16.9 14.5 14.0

4 Johnson 7.1 7.3 7.0

5 Bhaesaj 3.7 4.9 6.1 •••

••• •••

•••

•••




Cleanser market

Cleanser Market share in year/ period (%)


ended September

30, 2017

1 Garnier 4.8 6.6 9.5

2 Nivea Men 10.5 9.6 8.9

3 Smooth-E 10.6 10.3 8.8

4 Pond's 9.8 7.9 7.0

5 Garnier Men 6.8 6.2 6.4

•••

••• •••

•••

•••




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Liquid Soap market

Liquid Soap Market share in year/ period (%)


ended September

30, 2017

1 Shokubutsu 13.3 14.4 15.8

2 Lux 16.2 14.8 15.2

3 Benice 10.5 11.0 10.7

4 Protex 10.3 10.9 9.7

5 Dettol 7.0 7.2 6.9

•••

••• •••

•••

•••

18 NAMU LIFE SNAILWHITE/2

(Rank) N/A 0.1 (57) 1.4 (18)



/2 Company started to sell liquid soap product (NAMU LIFE SNAILWHITE Crème Body Wash) in 2016

According to the information above, manufacturers with leading market share are large multinational

corporations with a wide product range. However, if we consider market share by SKUs in large stores

(hypermarket, supermarket and specialty store selling health and beauty products), a distribution channel which

consistent with the marketing position of the Company, the Company’s products are in top position in facial

moisturizer market as follows:

Facial Moisturizer market ranking by SKUs in large retail stores (Hypermarket, Supermarket and Specialty

store)


Rank/1 Brand Name of Product 2015 2016 the nine months

ended September 30,

2017

1 NAMU LIFE SNAILWHITE

(Rank)

NAMU LIFE SNAILWHITE

Facial Cream

4.4 (1) 3.7 (1) 3.0 (1)

2 Dermo Expertise Revitalift Anti-Wrinkle and

Firming Day Cream

0.0 1.4 1.5

3 Olay Regenerist Micro-Sculpting

Cream

0.9 1.2 1.3


(Rank)


Concentrate Facial Cream

0.1 (247) 0.8 (10) 1.2 (4)

5 Dermo Expertise Revitalift Anti-Wrinkle and

Firming Night Cream

0.1 1.1 1.2

•••

•••

•••

•••

•••

•••


(Rank)


Miracle/2

N/A 0.2 (131) 0.4 (56)



/2 Company started to sell NAMU LIFE SNAILWHITE Miracle since 2

nd quarter of 2016

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Facial Moisturizer market ranking by SKUs in large retail stores (Hypermarket, Supermarket and Specialty

store) with price over THB 800/piece


Rank/1 Brand Name of Product 2015 2016 the nine months

ended September 30,

2017


(Rank)


Facial Cream

16.7 (1) 12.9 (1) 9.6 (1)

2 Olay Regenerist Micro-Sculpting

Cream

3.4 4.4 4.1


(Rank)


Concentrate Facial Cream

0.4 (66) 3.0 (4) 3.8 (3)

4 Olay Regenerist Advanced Anti-aging

Micro-Sclulpting Cream

Moisturizer Night

2.2 3.3 3.4

5 Eucerin Elastic Filler Serum In Oil N/A 2.6 2.7

•••

•••

••• •••

•••

•••


(Rank)


Miracle/3

N/A 0.7 (34) 1.3 (19)


(Rank)

NAMU LIFE SNAILWHITE Day

Cream/3

N/A N/A 0.8 (30)


(Rank)

NAMU LIFE SNAILWHITE Gold

Facial Cream/3

N/A N/A 0.5 (50)



/2 Market share is calculated from Facial Moisturizer market with price over THB 800/piece

/3 Company started to distribute NAMU LIFE SNAILWHITE Miracle, NAMU LIFE SNAILWHITE Day Cream and NAMU LIFE

SNAILWHITE Gold Facial Cream since 2nd

quarter of 2016, 1st quarter of 2017 and 2

nd quarter of 2017, respectively

From the information above, by considering market competition in facial moisturizer market by SKUs in

large retail stores which comprise of Hypermarket, Supermarket and Specialty store in 2015 - 2016 and the nine

months ended September 30, 2017, the Company’s market share increased significantly. NAMU LIFE

SNAILWHITE Facial Cream, NAMU LIFE SNAILWHITE Concentrate Facial Cream, and NAMU LIFE

SNAILWHITE Miracle were ranked at 1st ranked, 4

th ranked and 56

th ranked, respectively. Additionally, NAMU

LIFE SNAILWHITE Facial Cream was at the 1st ranked since 2015.

NAMU LIFE SNAILWHITE Facial Cream and NAMU LIFE SNAILWHITE Concentrate Facial Cream

ranked at 1st and 3

rd of facial moisturizer product with price over THB800/piece, respectively, while, NAMU LIFE

SNAILWHITE Miracle NAMU LIFE, SNAILWHITE Day Cream and NAMU LIFE SNAILWHITE Gold Facial Cream

ranked at 19th, 30

th and 50

th, respectively. Moreover, the Company is the only manufacturers who use snail

secretion filtrate as key ingredient in its products in the top 100th position.

-13-

Comparison with other competitors that sell similar products with the Company and having a wide target

customers range, similar offering price, established brands and wide distribution coverage are as follows:

Brand NAMU LIFE

SNAILWHITE

BEAUTY KAMART Oriental

Princess

Cute Press Smooth E Skin Food Yves

Rocher

The Body

Shop

Etude

House

Skincare companies/1 Company Beauty

Community

Pcl

Kamart Pcl O.P

Natural

Product

Co., Ltd.

S SUP

Bangkok

1991 Co.,

Ltd.

Smooth E

Co., Ltd

Malachi

Co., Ltd.

Yves

Rocher

(Thailand

Ltd.

Earth Care

Co., Ltd.

Cosmega

Co., Ltd.

Year of

establishment

2553 2543 2537 2528 2527 2539 2548 2535 2536 2543

Year of operation/2 4 17 23 32 33 21 12 25 24 17

Registered capital as

of December 31, 2016

(THB mm)

225.0 302.3 396.0 78.0 70.0 10.0 160.0 12.5 55.0 1.0

Net sales and

services revenue

(THB mm) for 2016

1,201.6 2,539.5 1,430.3 2,519.7 1,225.7 1,205.0 619.3 577.3 341.9 10.9

CAGR of net sales

and services for 2014

– 2016 (%)

65.6 36.7 21.3 (0.6) 1.6 5.0 9.5 7.8 (6.7) (83.9)

Source: Company financial statement, BOL

Note: /1 Company could not guarantee that information in the table above covers all distributors under such brand

/2 Company started to manufacture and distribute NAMU LIFE SNAILWHITE in 2013

From the table above, the Company’s revenue increased significantly in the past three years (2014-2016) with

65.6% CAGR which is the highest among competitors. Additionally, the Company has strong growth potential as

there are opportunities in the untapped market that the Company has yet to develop products to respond to

strong market demand such as anti-aging product, oil control product and for men product. Hence, even though

there is a strong competition in the beauty and skincare market, the Company still believe that we have potential

to compete with others. In addition, with our commitment to deliver best products to our customer, we believe

we could achieve a sustainable growth in the future.

Impact to Environment - None –

-14-

Summary of Material Agreement

1) Material agreement related Company’s assets

1.1 Lease Agreement

Agreement Date of

agreement

Lessor Lessee Location Purpose Duration Renewal

Shop

leasing

agreement

at Siam

September

1, 2017

VGI Global

Media PCL.

Namu

Life Plus

Area on BTS

sky train Siam

station

Rent space for NAMU

LIFE Shop to sell

product

The lease term

is one year from

the date of the

agreement

Lessee show its

intention for contract

extension in writing for

not less than six

months before the end

of contract

Shop

leasing

agreement

at Show

DC

December

28, 2016

Show DC Corp

Co.,Ltd.

Namu

Life Plus

2nd

floor of Show

DC department

store

Rent space for NAMU

LIFE Shop to sell

product

The lease term

is three year

from the date of

the agreement

Renewal for another

three years

Warehouse

leasing

agreement

August 16,

2017

J&J Warehouse

and service

limited

partnership

Company Warehouse

located at 15/1

Moo 4 Uthai,

Uthai, Ayutthaya

Rent warehouse for

inventory storage

The lease term

is three year

from the date of

the agreement

Lessor led lessee to

rent another one year

period but lessee must

send notice for Lessor

for not less than two

months before the end

of contract

Vehicle

leasing

agreement

September

29, 2016

Phatra Leasing

PCL.

Namu

Life Plus

- Lease eight vehicle

for sales employee

welfare with rental fee

of THB 12,500 –

13,300 per vehicle

per month

The lease term

is four year

from September

29, 2016 or

March 13, 2017

No renewal. Lessee

must return the

property to the lessor

upon the end of

contract

1.2 Insurance Policy

Head Office Rojana Plant Vehicle

Insurance company Bangkok Insurance PCL. Bangkok Insurance PCL. Four insurance companies

The Insurer The Company The Company The Company

Type of insurance

policy

Property Risk Insurance Policy Property Risk Insurance Policy Car Insurance Policy

Beneficiary The Company The Company The Company, hire purchase

company

Property Insured - Building (not including its foundation)

including building renovation, fence,

wall, door, guardhouse, construction in

progress

- Furniture, decorations, tools, office

equipment, electrical appliances ,

computer, electrical system, plumbing,

air conditioning system, communication

system, utility system, security system,

fire extinguish system, electrical

transformer, electronic control, electric

pole and cable

- Machine, parts and accessories used in

business operation

- Building (not including its foundation)

including building renovation, fence,

wall, door

- Furniture, decorations, tools, electrical

appliances, office equipment, electrical

system, plumbing and utility system

- Machine, parts and accessories

- Inventory, raw material, work in

process and finished goods

- Compensation for business disruption

Insured car

Insured Amount THB 70.5 mm THB 978.1 mm Only cover on agreement with

specified amount of insurance

Period of Insurance June 4, 2017 – June 4,2018 March 31, 2017 –March 31, 2018 Approximately 1 year

-15-

2) Loan Agreement

As at September 30, 2017, the Company has long-term loans from financial institutions as follows:

Lender Credit facilities Loan amount

Interest Rate

(% per annum) Important Condition

Financial

institution

THB 60 mm THB 46.5 mm 1st – 2

nd year : MLR – 2.00

From 3rd year : MLR- 1.75

- Maintain debt to equity ratio of not exceeding 2.5

times

- Collateralized by land building and constructions

- Guaranteed by Dr. Sarawut Pornpatanaruk

Financial

institution

THB 70 mm THB 70 mm 1st – 2

nd year : MLR – 2.00

From 3rd year : MLR- 1.75

- Maintain debt to equity ratio of not exceeding 1.5

times

- Maintain debt service coverage ratio (DSCR) of at

least 1.5 times

- Collateralized by land building and constructions

- Guaranteed by Dr. Sarawut Pornpatanaruk

In addition, as at September 30, 2017, the Company has short-term loan facilities in THB and USD currency comprise of

(1) Overdraft facilities amounting to THB 15.0 mm (2) Short-term loan includes promissory note (P/N), letters of credit

(L/C), derivatives contracts in THB amounting to THB 655.0 mm and in USD amounting to USD 3,857,000 and (3) Letter

of guarantee amounting to THB 1.0 mm

3) Material Agreements Relating to the Company’s Business

3.1 Domestic Distribution Agreement

Parties Namu Life and each of the distribution partners

Terms

(Approximately)

1 Year

Extension

Most agreements stipulate that:

The agreement will be automatically extended for another one year period except when either party notify its intention

to not extend the agreement for not less than three months prior to the expiration of the agreement

Termination


- When either party be placed in receivership, liquidation, bankruptcy or in breach of this agreement or become a

default party in any financial agreements and such condition is not rectified within 30 days

- Namu Life has the right to terminate the agreement upon written notice to the other party for not less than one

month in the event that the distributor changes its shareholders

- Namu Life has the right to terminate the agreement upon written notice to the other party for not less than three

month in the event that Namu Life or its affiliate company enters into another distribution agreement with another

distributor within the territory of the distribution partner without any compensation required

- Distribution partners has the right to terminate the agreement upon written notice to the other party for not less

than three month without any compensation required

Other Key

Conditions


- Namu Life as a supplier intends to appoint the distribution partner to be the sole distributor in the territory of the

products set forth in the agreement

- The distribution partner shall purchase products exclusively from Namu Life, and shall sell and deliver products to

the customers in the Territory in its own name

- The distribution partner shall not manufacture or distribute, within the territory, goods which compete with any of

the products and shall not entered into any distributor ship arrangements with any individuals or entities which

compete directly or indirectly with Namu Life

- Namu Life shall supply the products at prices specify in the products list and shall compensate the distribution

partner with distribution fee calculated as a percentage of the products prices as agreed

- The distribution partner shall sell the products at the prices specify in the products list in accordance to the

marketing program specify by Namu Life

- The distribution partner shall report actual marketing expenses such as promotional discount, actual marketing

expenses, sales commission, and KPI based incentive fee for Namu Life on a monthly basis

-16-

3.2 International Distribution Agreement

Parties The Company and Riya Home

Terms

(Approximately)

1 year from June 26, 2017

Extension The agreement shall automatically be renewed for further periods of one year each except when either party notify its

intention to not extend the agreement

Termination By either party upon written notice to the other party in the terms as stipulate in the agreement if other party is in any

material breach of any terms of the agreement

Other Key

Conditions

- The Company, as a supplier, appoints Riya Home as its official distributor in China. he distributor shall not sell

the Products outside the agreed territory

- The distributor shall purchase Products exclusively from the Supplier

- The distributor shall buy Products at prices established by the Supplier stating in the appendix

- The distributor may reimburse its promotional and marketing activities with the supplier at the agreed amount

- The distributor may reimburse additional incentive fee once the sales exceeded the target

- the distributor shall not, for the term of the agreement, manufacture or distribute, within the Territory, goods

which compete with any of the products and shall not entered into any distributor ship arrangements with any

individuals or entities which compete directly or indirectly with the Supplier, the Suppliers’ affiliates and/or the

products

- All brand s, trade names, copyrights, patents, know-how and other intellectual property rights used for and/or

related to the Products are owned by and shall remain the exclusive property of the Supplier

- The distributor shall be responsible for all expenses as stated in the agreement

- Both parties shall treat as strictly confidential all information and not to disclose to any other persons any such

knowledge without the express consent in writing of the other party

- After the termination of this Agreement, the distributor and its affiliates shall discontinue any use of the name

“Namu Life”, “Snail White”, and/or other names, brand s, or company names of the Supplier in any of its

products,

- During the term of this Agreement and for a period of three years after the termination of this Agreement, the

distributor and/or its affiliates shall not enter or start a business activity in the Territory that produces, markets,

distributes or sells products using the same or similar name and brand, “Snail White”, “Namu Life”, brand s or

company names, and/or other names of the Supplier, and/or other brands in the snail-based skincare products.

3.3 Presenter Agreement

Parties The Company and Presenter or Representative

Terms

(Approximately)

1 Year

Extension Not specify

Termination


- if other party is in any material breach of any terms of the agreement another party has the right to terminate the

agreement

Other Key

Conditions


- The Company, as a contractor, appoints the presenter for the filming and recording voices into the commercial videos and

photos for advertising of the Company’s products under the Company’s brands

- The Presenter shall participate in product launching events at the location, date and time as agreed with the Company for

the number of times as stipulate in the contract

- The presenter agrees for the Company crew to film and record voices of the presenter during the contract period

- The presenter confirm that, during the terms of the contract, the presenter does not enter into any contract or have any

obligation with the Company’s competitors

- If the presenter does not present on at the agreed location, date and time, the presenter agree to compensate the

company for the agreed amount per time unless it is a force majeure events in which the presenter must notify the

Company

Project Feasibility Study - None -

-17-

Technical Assistance - None -

Future Projects

1) Expansion of factory and warehouse

The Company is planning to expand its production capacity which includes expansion of factory areas,

investing in additional equipment and machinery and expansion of warehouse at Rojana plant which has an

ample expandable area of approximately 10 rai (total area of 19 rai, of which 9 rai was used for current

production plant). The Company is planning to bring more advanced and efficient machinery for its production

and to focus more on automation to reduce cost, improve standards and efficiency. Moreover, the Company is

also planning to invest in efficient warehouse management system to respond to demand in both domestic and

overseas markets. The Company is planning to build a three-floor building on the area of 6 rai comprising of an

additional warehouse area of 6,000 square meters, factory area of 12,000 square meters and additional

production line and cream filling line area to expand production capacity from 1,900 million ml per year to 3,800

million ml per year. This project is expecting to cost about THB 256 mm and is expecting to be completed within

2019.

2) Expansion of distribution channel and distribution center

The Company is planning to expand its distribution channel and improve its distribution center by

focusing to expand in the area where the Company still has not covered and could promote the Company’s

brand such as tourism area and high traffic area. The Company is expecting to expand NAMU LIFE Shop as

well as distribution center in high prospect areas in Bangkok and major cities with total investment cost of THB

40 mm. The Company is expecting to introduce three - four stores per year and is expecting to have ten stores

by 2020. The Company is expecting that the expansion of distribution channel and distribution center as well as

other supporting sales channels would help the Company to operate more efficiently.

3) Renovation of office and related network

The Company is planning to expand and renovate its office to support more employees which increase

in accordance with business growth. Moreover, Company is planning to install an IT system that will improve its

operations and management efficiency. The Company is also planning to renovate the head office of the

Company at Keharomklao Road, Saphansung with a usable area of approximately 2,000 square meters and is

planning to expand office space at a new location at the center of Bangkok which would accommodate the

Company’s business operation, save transportation cost for the employees and attract quality staff to the

Company, with total investment cost of THB 50 mm and a targeted completion date in 2018

4) Improvement of research and development facilities

The Company is planning to improve the R&D facilities to be able to create innovative, high quality and

unique products in response to the rapid changes in customer needs for beauty and skincare. This comprise of

a building renovation project for R&D department at the Company head office located at Keharomklao Road,

Saphansung with a usable area of appoximately 2,000 square meters. This improvement of R&D facilities can

be separated into R&D room and microbiology labatory of appoximately 500 square meters and purchasing of

additional equipment with total investment cost of approximately THB 60 mm and a targeted completion date in

2019

-18-

Related Party Transactions

1. Details of related party of the Company as of September 30, 2017

Details of related party and

nature of businesses

Relationship

as of September 30, 2017

1. The Fourteen Co.,Ltd. (“The Fourteen”)

- Distribution partner of the Company in Bangkok Metropolitant region to distribution

channels that the Company does not sell directly

• Major shareholder holding 98% and director, Ms. Pornpen Suangkasem, is a spouse of Mr.Nitiroj Manolamai, a director and

executive of the Company

2. P.M. Chemical Co.,Ltd. (“P.M. Chemical”)

- Importing and distributing chemical and producing and distributing automotive paint

and decorative paint

• Major shareholders, Mr.Sarawut Pornpatanarak, Ms. Saranya Pornpatanarak and Mr.Saranont Pornpatanarak holding 37.5%,

25.0% and 17.5%, respectively, is a major shareholders of the Company holding 79.6%, 9.9% and 9.9%, respectively

• Director, Mr.Sarawut Pornpatanarak is a director and executive of the Company

2. Related party transactions for the accounting year ended December 31,2016 and the nine months ended September 30, 2017 are summarized as follows:

Person who might

have conflict of

interest

Nature of Transaction

Transaction Value (THB mm)

Necessity and Rationale of the Transaction For the year

ended 31

December 2016

For the nine

months ended

30 September

2017

1. The Fourteen Sales of goods

The Fourteen is one of the distribution partners

of the Company to distribution channels that

were not sales directly by the Company. Namu

Life Plus, the Company subsidiary, sales

products to the Fourteen at price net of

distribution fee. Namu Life Plus is also

responsible for actual promotion and marketing

expenses. The selling prices and distributing fee

are in accordance with the distribution

agreement and are based on arm’s length basis

with other distribution partners.

- Revenue from sales of goods

- Selling expenses

- Account receivables

- Accrued expenses for distribution fee

499.3

26.7

37.1

3.1

203.8

7.8

32.2

-None-

The Fourteen is one of the largest distribution partners with sales revenue accounting for

38.7% and 15.7% of our sales before discount for the year 2016 and for the nine months

ended September 30, 2017, respectively. The selling prices are in accordance with standard

price of the Company for every distribution partners. The Fourteen must sell to its customers at

the price determined by the Company. In addition, distribution fee for the Fourteen is in

accordance with the distribution agreement and are based on arm’s length basis with other

distribution partners.

Audit Committee’s Opinion

The transaction is appropriate and is beneficial to the Company’s business. The Fourteen is

capable in distributing the Company’s products to each distribution channels. The selling prices

are in accordance with standard price of the Company for every distribution partners. In

addition, distribution fee for the Fourteen is in accordance with the distribution agreement and

are based on arm’s length basis with other distribution partners with actual marketing

expenses.

-19-

Person who might

have conflict of

interest

Nature of Transaction

Transaction Value (THB mm)

Necessity and Rationale of the Transaction For the year

ended 31

December 2016

For the nine

months ended

30 September

2017

2. P.M. Chemical Purchase of raw material and decorative paint

The Company purchase certain raw material,

mainly specialized mineral water and anti-

counterfeit stickers, and decorative paint for the

Company’s plant and head office from P.M.

Chemical. The prices and payment condition

were per unit of goods and shipping expenses

were charged as actual occurred.

- Purchase of raw material and decorative

paint

- Freight expenses

- Account payables

16.5

0.4

0.8

12.6

0.1

3.1

The purchase of raw material and decorative paint were beneficial to the Company. The prices

of raw material and decorative paint were lower than other supplier and the payment condition

is based on ordinary business terms. Thus, the transaction was appropriate and mandatory to

the Company business. However, as at June 1, 2017, the Company and P.M. Chemical has

entered into an agreement to purchase specialized mineral water and anti-counterfeit stickers

in a cost plus basis of not exceeding 5% to cover operation cost of P.M. Chemical. The

shipping expenses will be charged as actual occurred.

Audit Committee’s Opinion

The transaction is reasonable and is beneficial to the Company’s business. The prices and

general conditions was based on arm’s length basis. Therefore, the Audit Committee has

considered that the transaction is appropriate and reasonable. In addition, the Audit Committee

acknowledge and agree with the MOU between the Company and P.M. Chemical to specify

selling prices based on cost-plus basis which will make the transaction more appropriate.

-20-

Contingencies and Commitments

The Company’s has entered into several operating and service agreements relating to space leasing, equipment

leasing and service contracts with terms of agreements of generally one - three years.

As at September 30, 2017, the Company’s has minimum future payments required under the above agreements which

are not able to be cancelled as follows:

Consolidated financial statement as at

September 30, 2017

To be paid

Up to one year THB 16.4 mm

Over one year and up to three years THB 3.8 mm

Risk Factors

1. Risk relating to our business operation

1.1 Risk of reliance on “SNAILWHITE” product group

Almost all of our revenue was contributed from the manufacturing and distributing of “SNAILWHITE” skincare

products under the “NAMU LIFE” brand. In 2014-2016 and first nine months of 2017, revenue from manufacturing

and distributing of skincare products under the Company’s brand accounted for 98.8%, 99.7%, 99.8% and 100.0% of

total sales revenue, respectively. The consumers gave utmost value to the quality and reliability of the beauty and

skincare product as they must be applied directly to facial and body skin. If there is a negative impact on the image

of SNAILWHITE products such as consumer allergies to our skincare products or falsify news from the competitors of

the company, the Company’s sales and operating result may be adversely affected.

However, with the Company’s attention on product quality and quality control at every stages of production to

ensure consumers satisfaction, the Company believes that the risk of negative images to the SNAILWHITE products

and the NAMU LIFE brand shall be reduced and rectified. In addition, the company is planning to launch other

product groups under new brands next year which will capture new consumer groups and reduce the product

concentration risk.

1.2 Risk of revenue concentration from SNAILWHITE Facial Cream

From the Company’s past operations, majority of our revenue came from SNAILWHITE Facial Cream which is a

product that received good feedbacks from the consumers. In 2014-2016 and first nine months of 2017, the revenue

from SNAILWHITE Facial Cream accounted for 73.5%, 57.1%, 59.0% and 39.6% of our total sales revenue before

discount, respectively. Hence, should there be any negative impact on product and/or the decrease in sales of

SNAILWHITE Facial Cream, the overall performance of the Company may be adversely affected.

However, the Company has continuously researched and developed new products to meet diverse customer

needs. This can be seen from the reduction in the proportion of sales revenue from SNAILWHITE Facial Cream.

Since 2014, the Company launched 18 new products (6 products in 2014-2015, 4 products in 2016 and 8 products in

first nine months of 2017). The Company expects the proportion of sales revenue from new products will increase in

the future and will diversify the risk of revenue concentration from SNAILWHITE Facial Cream.

1.3 Risk from all of our products have snail secretion filtrate as a major ingredient

All of our products have snail secretion filtrate as a major ingredient and the Company uses this ingredient for

its marketing purpose. Thus, if there is any negative impression to snail secretion filtrate, material shortage or

changing in consumer trend, the overall performance of the Company may be adversely affected.

-21-

However, the Company has never experienced a shortage or confronted any difficulty in obtaining the snail

secretion filtrate. In addition, the Company procured snail secretion filtrate from several qualified suppliers which, in

case that some suppliers have any difficulty to supply the snail secretion filtrate, could be used interchangeably. The

Company also explored several alternative ingredients to replace snail secretion filtrate in the future and implemented

marketing campaign to influence consumer towards brand recognition and product quality instead of snail secretion

filtrate itself.

1.4 Risk of reliance on certain key distributors

The Company has two major distributors namely RIYA Home who is a distributor in China and The Fourteen

who is a domestic distributor. In 2016 and first nine months of 2017, the Company sales revenue before discount

from Riya Home was THB 142.0 mm and THB 455.6 mm, respectively, which accounted for 11.0% and 35.5% of

total sales revenue, respectively, and the Company sales revenue before discount from The Fourteen was THB 499.3

mm and THB 200.9 mm, respectively, which accounted for 38.7% and 15.7% of total sales revenue, respectively.

Collectively, the Company sales revenue from those two major distributors in 2016 and first nine months of

2017 were THB 641.2 mm and THB 656.6 mm, respectively, or equivalent to 49.7% and 51.2% of sales revenue

before discount, respectively. Hence, in the event of decreasing sales revenue from these distributors or if one of the

distributors were to discontinue its business with the Company, the Company’s distribution channel will be affected

and the overall performance of the Company may be adversely affected.

However, the Company managed such risk by dealing with several other distributors which could be used

interchangeably. In the events that there are any problems with certain key distributors such as communication,

logistic, or any other problems which resulted in such distributor ceasing its operation with the Company, the

Company will still have several other modern trade, traditional trade and online channels for end consumers to

access to the Company’s products. In addition, the Company is planning to open more NAMU LIFE shops which

would help reducing the reliance on primary distributors.

1.5 Risk of reliance on Chinese customers

The Company directly and indirectly relied on Chinese customers by (1) exporting its products to China and (2)

selling its products to distribution partners in Thailand in which most of their customers are from China. The revenue

from these two channels collectively accounted for approximately 50.0% of the Company’s total sales revenue before

discount. Hence, if the Company were to lose its sales revenue from Chinese customers from factors such as

economic slowdown, changing government policy or any events which have negative impact to Chinese tourist

coming to Thailand or affect the confidence of Chinese customers, the result of operations and financial positions of

the Company may be adversely affected.

However, the Company is planning to expand its customer base by exporting to other countries and the

Company is also planning to expand its domestic distribution channels, especially in modern trade channel and

NAMU LIFE Shop to reduce its dependency on Chinese customers.

In addition, in case that one of our above distributors stop selling our products while Chinese customers still

have demand for our products, the Company can assign other distributors to replace such distributor to response to

such demand. However, the Company could not guarantee that the new distributor would be as good as the former

distributor. Nevertheless, the Company still maintains good relationship with these two distributors and expects this

good relationship to be maintained in the future. Furthermore, the Company has established a new department to

focus on overseas customer research in order to gain more understanding in Chinese and overseas customers and

other overseas customer as well as introducing several marketing campaigns to create extensive brand awareness to

reduce the reliance in the current customers.

-22-

1.6 Risk of reliance on a packaging supplier

The Company relies on a packaging supplier, “Yonwoo”, who is a large packaging manufacturer for beauty and

cosmetic products in South Korea. This manufacturer is the owner of bottles packaging patent that the Company

used in its products as they have distinctive quality and features. Therefore, if there are any factors that cause this

supplier to unable to deliver its packaging products, or cause its price to rise substantially, the Company may have to

source packaging, with similar quality, from another supplier instead. If the Company fails to promptly find another

supplier, the production plan may be affected which may result in lost business opportunity. Additionally, as Yonwoo

owned the patents for their distinctive packaging innovation, switching to other suppliers may require the Company to

change its packaging which may adversely affect satisfactory of the customer or efficacy of product usage.

However, the Company believes that it is difficult for Yonwoo to face any problems or limitations and would not

be able to supply packaging to the Company in the long run as Yonwoo is one of the largest packaging

manufacturers for beauty and cosmetic products in South Korea and is a listed company in the South Korea Stock

Exchange. Yonwoo also has production plants in several countries and was prominent for on-time delivery and

product quality. In addition, the Company has explored other packaging manufacturers who can produce similar

quality packaging product to reduce this risk of reliance on Yonwoo.

1.7 Risk of intense competition in skincare and cosmetics market

Skincare and cosmetics market have intense competition and received attention from many operators both

domestic and international, especially multinational companies with renowned brand such as manufacturers from

South Korea and Japan which have strong influence to Thai customers as well as small operators which require small

amount of start-up funding. This intense competition is the reason why there are wide ranges of substitute products

with similar attributes in the skincare and cosmetic market from several brands, so that the customers could have

variety of choices. In addition, customers’ behavior may be altered toward their attitude, social trend and information

received about property of products.

In order to cope with the increasing competitive environment in the industry, the Company has defined

strategies and has paid attention on key factors that would lead to our success which include (1) strong product

identity which would lead to top-of mind brand awareness (2) quality, reliability and safety of our products (3)

extensive distribution network coverage (4) commitment to research and development for better products and new

products innovation (5) a team of young, highly capable, and creative management team. The company believes that

these factors would help the company to cope with the intense competition in the skincare and cosmetics market.

Even with the entering of a large number of small operators, but it is expected to be difficult for them, who mainly rely

on OEM to manufacture their products, to maintain production quality standard, create a customer base and promote

their products successfully in the long run with limited capital and lack of knowledge and expertise in this business.

1.8 Risk of counterfeit products or use of the Company’s brand as the name of a company

The Company’s products have gained a lot of popularity among customers, thanks to the high product quality,

successful marketing campaigns, and efficient management. However, this creates many counterfeit products that are

similar in external appearance and certain concept of the Company’s products which may bring confusion to our

customers. In addition, low quality counterfeit goods may cause adverse side effect from the usage. If this happens

and the Company could not handle it in a timely manner, the Company’s reputation, results of operations and

financial position could be significantly adverse affected.

However, the Company is aware of the possible impact to the product reputation and safety to the customers

which could be misled by low quality counterfeit goods. Thus, the Company has registered its brand and assigned our

staff to conduct market surveys for counterfeit goods to gather evidences in order to take legal action against the

piracy manufacturer. Moreover, the Company has communicated the method to detect counterfeit goods to the

-23-

customers and always being innovated to distinct its product such as Anti – Counterfeit sticker that customers can

conveniently check for the genuine products.

Additionally, the Company also has risk from the external parties that use the Company’s brand or name of the

product group as the company names. If those parties cause any action that could negatively impact the Company’s

reputation and the Company could not handle it in a timely manner, it may cause a material adverse effect on the

Company’s operation and financial position.

However, the Company may not be able to prevent the external party from using our brand as the company

names as it the right of those parties in doing so, but the Company emphasized more on brand imitation as the

usage of our brand in unauthorized products could cause more severe impact. Thus, currently, the Company has

registered its brand in Thailand and other key countries including China.

At present, the Company has allowed Riya Home which is our distributor in China to use our Namu Life brand

as name of its subsidiary, Namu Life (Beijing) Trading Co.,Ltd. for its marketing purpose in China.

1.9 Risk relating with the operation of our manufacturing plant

Our business depends on the proficiency of our manufacturing plant to produce high quality skincare products.

Thus, the Company is exposed to risk that products produced by our manufacturing plant may not meet relevant

requirements, or there may be an interruption of production plant causing by an unplanned shutdown including natural

disaster such as flood, storm which may cause a material adverse effect to the Company’s operations, results of

operations and financial position.

However, the Company is aware of this risk and has paid attention on improving efficiency of our production

process. As a result, we received several Thai and international certification such as Food and Drug Administrative

(FDA). In addition, the Company set strict quality control process to ensure that our products meet relating standard

and criteria. Moreover, the Company regularly conducted the scheduled maintenance which allows our machinery to

run uninterruptedly in the past three years. Our production plant also received ASEAN GMP (Good Manufacturing

Practice) in October 2017 and is in process to obtain other internationally certified production processes including ISO

9100, ISO 14001 and OHSAS 18001 by early 2018.

1.10 Risk of product liability and damage to customer or product recall

Our products are usually applied directly to facial and body skin which are a sensitive and important part of the

body. Thus, if there are any damages to the consumers which are caused by the proven defected from our products

or raw material used in our production, of which the Company is not able to control raw material production process

of its suppliers both in Thailand and international, the consumers could make claim or take legal action on the

Company in exchange for a compensation which may be in significant amount and the Company may be required to

recall all potential unsafe of harmful products. This may affect our corporate and brand reputation and may result in

our product manufacturing and/or distribution certification or license and may have a material adverse effect to the

Company’s results of operations and financial position.

However, the Company gave utmost priority to its product quality and implement quality control in every

production process from product developing to product delivery. The Company also has a quality control department

to control and check product quality in every production process to ensure that all products meet our standard. The

Company also selected raw material suppliers mainly based on their quality and reliability. Moreover, in product

developing process, the Company requested third party for quality inspection before distributing to customers.

1.11 Risk that the Company’s insurance policy coverage may not be sufficient to cover all potential losses and

claims

Even the Company has insurance policy which covers most of our business operation to reduce risk from

damages to our assets, the Company still faces with the risk that such insurance policy may not covers all potential

-24-

losses and claims such as terrorism, or flood or in case that the loss value is greater than the insured amount. In

addition, we have the risk that we may not be able to renew our insurance policy or the insurance policy may not be

renewed at a reasonable price and condition, which may have material adverse effect on the Company’s operation

and financial position. However, at present, the Company’s insurance policy, which covers business interruption,

covers the losses or clams of approximately THB 1,048.6 mm and covers amount of total fixed assets.

1.12 Risk relating to foreign exchange

In 2016 and first nine months of 2017, the Company ordered certain raw material for its production from

overseas suppliers, which mainly are packaging from manufacturer in South Korea. As all payment were made in

USD while the Company sold its products in Thai Baht, the Company faced with foreign exchange risk. As a result, in

the event of Thai Baht depreciation and/or USD appreciation, the cost of packaging may be adversely affected.

However, the Company has managed this risk by entered into forward contracts of approximately 70% of total raw

material purchased.

1.13 Risk from breaching of certain terms in the loan agreement

Currently, the Company financed portion of its investment in land and factory from loan from financial

institutions. As at September 30, 2017, the Company entered into long-term loan agreements with credit line

amounting to THB 130.0 mm. These agreements contain various financial covenants such as requirement to maintain

debt-service-coverage-ratio (DSCR), debt to equity ratio (D/E) and other cross-default clauses. A breach of such

covenants could give rise to a default, which could entitle our lenders to charge interest at default rate, set other

additional conditions or hold collateral of the Company, which may have a material adverse effect on the Company’s

reputation, financial position and operation result.

As at December 31, 2016, debt to equity ratio (D/E) of the Company was 1.17x which exceeded the level

specified in a loan agreement which we agreed to maintain D/E ratio of not exceeding 1.0x in each financial year

over loan terms since 2015. As a result, the Company had to reflect this loan as a long-term loan reclassified as

current liabilities in statement of financial position. However, the Company gave priority in compliance with the

financial terms and conditions. Thu, at the beginning of 2017, the Company has obtained a waiver from such

covenant and revised the D/E maintenance ratio from not exceeding 1.0x to not exceeding 2.0x since May 12, 2017

and the Company has paid back the loan in August 2017. Nevertheless, other loan agreements specified that we

have to maintain D/E ratio of not exceeding 1.5x in which the Company does not breach those terms. The Company

continuously monitored to ensure that we follow and comply with any terms and conditions in the loan agreements

and maintain good relationships with financial institutions.

2. Risk of management

2.1 Risk from major shareholder holding more than 50.0% of the Company’s shares which have control in

defining management policy

As at July 31, 2017, our major shareholders, Pornpatanaruk family collectively holds 223.6 million shares or

equivalent to 93.2% of the Company’s paid-up capital. Even after this IPO, the shareholding of Pornpatanaruk group

will be reduced to approximately 70.8% of the Company’s paid-up capital, but this proportion is enough to have a

significant influence over the Company and most of the shareholders’ meeting voting rights, especially in case some

shareholders do not attend the meeting, including the appointment of director or other matter which required majority

of votes or special resolution requiring three of fourth voting right in the meeting. Thus, other minority shareholders

face the risk of collecting the vote to consider any matters proposed by major shareholder in the shareholders’

meeting.

However, the Company’s organization chart comprises of Board of Director, Audit Committee, Nomination and

Remuneration Committee, Risk management Committee and Executive Committee where each committees have

clearly defined scope of duties and responsibilities. This assured that the Company is transparent. The Company’s

-25-

Board of Director comprises of 12 directors with five independent directors and the Chairman of the Board of Director

is an independent director. There are three independent directors appointed to be audit committee members in order

to investigate, counter-check and consider the agenda items for approval before submitting the proposal to

shareholders’ meetings. Moreover, in case of entering into a connected transaction with director, major shareholder,

controller and related parties or conflict of interest person, those people who may have a conflict of interest in a

transaction related to them shall be prohibited from taking part in the approval process of that transaction. In case of

securities offering which will impact the Company’s shareholders, the minority shareholders will have the right to veto

with 10% voting right of shareholders who attend the meeting. The approvals of transaction have to comply with

regulation of Securities and Exchange Commission (“SEC”) and Stock Exchange of Thailand (“SET”).

2.2 Risk from corporate restructuring and searching for qualify personnel to support Company’s growth

In the past three years, the Company has grown rapidly in term of customer base, distribution channels and

sales revenue. Our sales increased from THB 438.0 mm in 2014 to THB 1,204.8 mm in 2016, representing a 65.8%

CAGR with a tendency for future growth. As a result, it is compulsory for the Company to undergo a corporate

improvement from being a small organization with few employees to become a larger organization with numbers of

employees in each department. Particularly, to find additional qualify and competent employees to support its

business growth. Our employees increased from 73 people in 2014 to 355 people as at September 30, 2017. Thus, if

the corporate organization is not done appropriately, or if the Company could not find adequate personnel in a timely

manner to support is business growth, the Company’s results of operation, financial status and corporate reputation

may be adversely affected.

However, the Company was prepared in various aspects by undergo several internal operation improvement

such as upgrading our information technology system to support our operations, undergo a corporate reorganization

for a more management flexibility, and improve efficiency and agility in working process to enable the Company to

quickly adapt to changes. The Company also developed our human resources by soliciting new generation,

competent and creativity people to work with the Company as well as holding training courses for employees. The

Company also expanded to new production plant to support our business growth.

2.3 Risk of dependence on key executives and competent employees

The Success of our Company depends on the ability to motivate and retain key executives and competent

employees. These individuals include executives and employees who have experience in production, marketing and

distribution both domestic and overseas. Therefore, any failure to keep competent executives and employees with the

Company or inability to find substitute personnel in a timely manner, may adversely affect the Company’s operating

results.

However, the Company aware of this risk and has paid attention to the development and professional

advancement of its staff and executives. the Company also had a clear career path planned for each level of

employees. In addition, the Company has provided appropriate return to our employees based on their knowledge

and performance. The Company also continuously recruited new employees to replace former employees in order to

have sufficient personnel to support the Company’s growth.

3. Risk associated with offering of securities

3.1 The price of the Company’s shares may fluctuate which may cause significant losses to the investors who

purchase this IPO shares

The trading price of our Shares may be volatile and subject to wide price fluctuations in response to various

factors, including:

- Change in analyst forecast of the Company’s financial performance and recommendation to buy

or sell shares of the Company;

-26-

- Domestic and international economic and political conditions or events;

- Difference between our actual operating results and those expected by investors and analysts;

- Foreign exchange rate fluctuations and the exchange control policy;

- Selling or willingness to sell of large number of shares from existing shareholders;

- Change in certain conditions that affect the industry, general economic condition, stock exchange

market or other factors;

- legal and regulatory developments and changes;

- Announcement from other companies in the same industry of the Company;

- Change in market conditions in the broader stock market generally or of the listed company

which have similar business as the Company;

- Fluctuation in interest rates and the market price of debt and equity securities;

- Litigation;

- Natural disasters;

- Others risk that may affect the Company’s financial status and results from operations.

These and other factors may cause the market price and demand for our Shares to fluctuate

substantially, which may limit or prevent you from readily selling our Shares and may otherwise negatively affect

the liquidity of our Shares. In addition, in the past, in certain countries when the market price of a stock has

been volatile, holders of that stock have sometimes instituted securities class action litigation against the

company that issued the stock. If any of the shareholders were to bring a lawsuit against us, we could incur

substantial costs defending the lawsuit or if the lawsuit is ultimately resolved against us, we could incur

substantial costs in damages. Such a lawsuit could also divert the time and attention of our management from

our business.

3.2 Risk from the offering and allocation of new share to directors, executives and/or employees of the

company and/or its subsidiaries under ESOP scheme

After this IPO, the Company’s issued and paid-up shares will increase by up to 76 million shares at

THB 1.0 par value and after the ESOP share offering, in accordance with the Extraordinary General Meeting

No.2/2017 held on July 17, 2017, the Company’s issued and paid-up shares will increase further by up to two

million shares at THB 1.0 par value, collectively the Company’s issued and paid-up shares will increase from

240 million shares to up to 318 million shares or equivalent to up to 24.5% of issued and paid-up capital after

such offering. This will result in certain financial ratios which calculated by using shareholders’ equity and

number of shares as a denominator to decrease as the shareholders’ equity and number of shares will increase

(Dilution Effect) such as the Earnings per Share and Return on Equity.

The ESOP share offering of two million shares will result in earning per share dilution and control

dilution, calculated using total paid-up share of 318,000,000 shares (paid-up capital after this IPO and ESOP),

of 0.63% of the net profit and existing shareholders’ voting right.

In addition, the ESOP share offering of two million shares at a fair value price at THB 28.42 per share

may result in price dilution at the date of the ESOP share offering if the ESOP share price is below the market

price. However, we are unable to calculate the impact from price dilution from this ESOP offering as the

Company is not listed on the SET and do not have a market price. Nevertheless, if calculate the price dilution

effect based on the assumption that the market price at ESOP offering date is IPO price of THB 53.00 per

share comparing with ESOP offering price of THB 28.42 per share, the price dilution is 0.29%.

However, the Company expects to benefit from listing on the SET in the long run as the Company

could use net proceeds to expand its business. Additionally, the Company will receive other benefits from being

a listed company such as financial flexibility, good corporate image which would result in higher sales and net

profit to offset the increase number of shares.

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Offering shares to directors, management and/or employees of the Company would motivate them to

perform their work more efficiently which will benefit the Company and its shareholders. The ESOP would also

help retain capable staff with the Company in the long run as it gives the sense of ownership and align their

purpose with the shareholders for the Company best interest.

3.3 Risk from private placement shares offering

Before this IPO, on July 20, 2017, the Company offered 15,000,000 newly issued ordinary shares with

par value THB 1 per share to NHTPEC at THB 29.87 per share which is a private placement under the

definition of the Notification of Securities and Exchange Commission No. KorChor 17/2551 re Determination of

Definitions in Notifications relating to Issuance and Offer for Sales of Securities signed on December 15, 2008

(as amended). However, the offering price is higher than the Company’s fair value as appraised by an

independent appraiser at THB 28.42 per share, so the Company does not required to record share-based

expense. Nevertheless, the share price offered to NHTPEC of THB 29.87 is 43.64% lower than the IPO price of

THB 53 per share.

Selling of large number of the Company shares by NHTPEC or the perception that significant sales

may occur could have a material adverse effect to Company’s share price. The Company is not able to

anticipate the impact (if any) of the future selling of the Company’s shares on our share price.

However, the Company believes that offering shares to NHTPEC will benefit the Company in the long

run by having a strong partner such as the Morgan Stanley (NHTPE has Morgan Stanley Private Equity Asia

(“MSPEA”), a company held entirely by Morgan Stanley, as a fund manager and administrator) who has a long-

term investment nature and has outstanding past performance. The fund is operating by professional investment

committee which composes of top executives from Morgan Stanley. The Company expected that investment by

NHTPE will facilitate the Company business development by utilizing Morgan Stanley’s customer base as well

as stimulate the Company’s creditability.

Moreover, under lock-up provision, 15,000,000 ordinary shares offered to NHTPEC shares cannot be

sold for a period of 12 months following the date of commencement of trading of our shares on the SET except

that up to 25.0% of these Shares may be sold after the period of the first six months after trading commences

on the SET and the remaining 75.0% of these shares may be sold after the period of the first 12 months after

trading commences on the SET.

3.4 Risk from future sales of the Company’s shares by the major shareholders which could adversely affect

the trading price the Company’s shares

Under rules issued by the SET, shares comprising an aggregate of 55.0% of our post-offering share

capital cannot be sold for a period of one year following the date of commencement of trading of our shares on

the SET except that up to 25.0% of these Shares may be sold after the period of the first six months after

trading commences on the SET and the remaining 75.0% of these shares may be sold after the period of the

first 12 months after trading commences on the SET.

Therefore, after this IPO and trading commences on the SET, shares of Company held by

Pornpatanaruk group amounting to 49.8 million shares which accounted for 15.76% of our post-offering share

capital will be allowed to sell in the SET. Thus, significant sales of our shares by our existing shareholder after

this IPO and the silence period, investors may negatively impact from decreasing in share price of the Company

due to selling of shares by Pornpatanaruk group or the perception that significant sales may occur, could

adversely affect the trading price of the Shares. We cannot predict the adverse effect, if any, that future sales,

or the availability of Shares for future sale, will have on the market price of the Shares prevailing from time to

time.

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3.5 Investors who reside outside of Thailand may be limited to the rights offering in the future

In the future, the Company may issue new shares to existing shareholders (Rights Offerings) or similar

cases. However, the Company is not obligated and has the right to determine the method for shareholders to

follow to participate in the rights offering. In addition, compliance with securities laws or other regulatory

provisions in some jurisdictions may prevent certain investors from participating in any future rights issuances

and thereby result in dilution of their existing shareholdings. The Company do not have, and do not currently

foresee having, any obligation to register our securities in any jurisdiction outside Thailand to permit foreign

investors to participate in any future rights offerings we may undertake.

Lawsuit

The Company and its subsidiaries have no lawsuit and arbitration proceeding or other judicial processes that are

significant and directly related to the Company and its subsidiaries which may have an adverse effect to the

Company and its subsidiary assets in an amount exceeding 5% of the total shareholder equity as at September

30, 2017 or which would may have a material impact on the Company and its subsidiaries financial status,

operating results, business opportunities.

Number of Employees As at 30 September 2017, the Company had 355 Employees

Summary of the Company’s Background

The Company was incorporated in September 20, 2010 by the Pornpatanaruk family to manufacture and provide advisory

services on the OEM skincare product. Later in 2013, as we saw an opportunity to create its own brand by utilizing the

Company production expertise and with the foreseeable growth prospect in the skincare industry, we began to

manufacture and distribute SNAILWHITE skincare products under its own brand NAMU LIFE, which reflected the product

selling point that contain snail secretion filtrate as a main ingredient. During 2013 to 2016, our products gained its

popularity and recognition from consumers which resulted in the growth of our revenue. This is mainly attributable to the

high quality raw materials used in our products that provide benefit to the skin and the unique natural beauty concept

together with our successful marketing plan that uses celebrities as a presenter as well as the new product launches and

expansion of distribution channel both in domestic and overseas market.

Investment in Subsidiaries/Associated Companies/Related Companies As at October, 12 2017

Unit: in million baht

Company Name Type of Business and Nature

of Business

Paid-up Capital

% of

Shareholding

Investment Cost

(Cost method)

Namu Life Plus Company

Limited

Distribute product for the

Company

5.00 100.00 52.65

Do Infinite Dream Company

Limited

International Headquarter 25.00 100.00 25.00

Increase (Decrease) in Registered Capital in the Last 3 Years

Unit: in baht

Date/Month/Year Paid-up Capital

(Decrease)

Increase

Post Paid-up Capital

(Decrease) Increase

Note / Use of Proceeds

March 9, 2016 50,000,000 60,000,000 For working capital / For shareholding restructuring in Namu Life Plus Co.,Ltd.

May 26, 2016 165,000,000 225,000,000 For working capital

July 21, 2017 15,000,000 240,000,000 To offer shares to North Haven Thai Private Equity Clarity Company (HK) Limited

December 20, 2017 76,000,000 316,000,000 To offer shares for the initial public offering

-29-

Accounting Period January 1 – December 31

Auditor Ms.Somjai Khunapasut

Certified Public Accountant (Thailand) No.4499

EY Office Limited

Registrar Thailand Securities Depository Company Limited (TSD)

Financial Advisors Bualuang Securities Public Company Limited

Lead Underwriters Bualuang Securities Public Company Limited

Dividend Policy

Dividend Policy of the Company

The Board of Directors may recommend annual dividends subject to the approval of the Company’s

shareholders at its annual general meetings. From time to time, the Board of Directors may declare interim dividends

when the Board of Directors determines that the Company has sufficient net profits to do so. Such payment of interim

dividends must be reported in the next shareholders meeting of the Company.

The Company has a policy to pay dividends at the rate of not less than 50% of the Company’s separate net

profits after deducting corporate income tax and other reserve funds as required by law and as determined by the

Company. The Board of Directors may also, for the interest of the shareholders, take into consideration other factors in

paying dividends, such as the financial condition and results of operations of the Company, the Company’s reserve funds

for future investments and repayment requirements of loans or working capital requirements and whether a dividend

payment will have a material impact on the normal business operations of the Company, as deemed suitable and

appropriate by the Board of Directors.

Dividend Policy of subsidiary

The Board of Directors of subsidiary may recommend annual dividends of subsidiary subject to the approval of

the subsidiary’s shareholders at its annual general meetings, From time to time, the Board of Directors of subsidiary may

declare interim dividends when the Board of Directors determines that the subsidiary has sufficient net profits to do so.

Such payment of interim dividends must be reported in the next shareholders meeting of the subsidiary

The Company’s subsidirary has a policy to pay dividends at the rate of not less than 50% of the subsidiary

separate net profits after deducting corporate income tax and other reserve funds as required by law and as determined

by the subsidiary. The Board of Directors of subsidiary may also, for the interest of the shareholders, take into

consideration other factors in paying dividends, such as the financial condition and results of operations of the subsidiary,

the subsidiary’s reserve funds for future investments and repayment requirements of loans or working capital

requirements and whether a dividend payment will have a material impact on the normal business operations of the

subsidiary, as deemed suitable and appropriate by the Board of Directors.

BOI Certificates - None -

-30-

No. of Shareholders As of December, 20 2017 are as follows:

No. of

shareholders

No. of shares % of paid-up

capital

1. Strategic shareholders

1.1 Directors, manager, and executive management including

related persons and associated person 15 229,609,000 72.66

1.2 Shareholders who have a holding of above 5% including

related persons1/

- - -

1.3 Controlling Shareholders - - -

2. Non-Strategic shareholders hold > 1 trading unit 5,895 86,391,000 27.34

3. Non-Strategic shareholders hold < 1 trading unit - - -

Total Shareholders 5,910 316,000,000 100.00

Major Shareholders As of December 20, 2017

Shareholder list

Pre-IPO Post-IPO

Number of

Shares

% of Paid-up

Capital

Number of

Shares

% of Paid-up

Capital

1. Pornpatanaruk Family

1.1 Dr. Sarawut Pornpatanaruk 179,040,700 74.60 179,040,700 56.66

1.2 Mrs. Sarunya Ngarmpaiboonsombat 22,275,000 9.28 22,275,000 7.05

1.3 Mr. Saranon Pornpatanaruk 22,275,000 9.28 22,275,000 7.05

1.4 Mr. Manat Pornpatanarak - - 2,500,000 0.79

1.5 Ms. Saowakon Yamcharoen - - 1,036,000 0.33

Pornpatanarak Family 223,590,700 93.16 223,590,700 71.88

2. North Haven Thai Private Equity Clarity Company

(HK) Limited (“NHTPEC”)/1

15,000,000 6.25 15,700,000 4.97

3. THE HONGKONG AND SHANGHAI BANKING

CORPORATION LIMITED

- - 3,300,000 1.04

4. Bualuang Long-Term Equity - - 3,025,900 0.96

5. MORGAN STANLEY & CO. INTERNATIONAL PLC. - - 2,720,000 0.86

6. Mr. Palin Lojanagosin - - 2,700,000 0.85

7. Mr. Boonchai Limathiboon - - 2,000,000 0.63

8. Ms. Nattaya Tivanon - - 1,532,000 0.48

9. Employees of Electricity Generating Authority of

Thailand (EGAT)

- - 1,082,900 0.34

10. Bualuang Long-Term Equity 75/25 - - 913,100 0.29

11. Mr.Rungroj Chaisirivikrom 787,500 0.33 787,500 0.25

12. Mr. Rittikrai Thammaraksa 12,000 0.01 609,800 0.19

13. Mrs. Phanthida Meesajjee 609,800 0.25 612,000 0.19

รวม 240,000,000 100.00 316,000,000 100.00

Note : /1NHTPEC is a juristic person established to purchase share of the Company. North Haven Thai Private Equity L.P.

(“NHTPE”) is an indirect shareholder of NHTPEC (NHTPE holds 100% share of North Haven Thai Private Equity

Holding (HK) Limited (“NHTPEH”) and NHTPEH holds 100% share of NHTPEC)

/2 The extraordinary general meeting no.2/2017 on July 17, 2017 resolved the ordinary share capital increase of up to

2,000,000 shares, par value of THB 1.00, to offer to directors, executives, and/or employees of the Company and its

subsidiaries under the Company’s ESOP scheme which would make Company’s registered capital to increase to 318

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million shares, par value of THB 1.00. The offering date for ESOP shares is expecting to be during April 2 – 3, 2018,

but will not be later than July 17, 2018. The shares allocated to directors and executives are as follows:

Directors and Executives Position Shares Allocated

Mr. Suphawat Vanichprapha Director and Deputy Chief Executive Officer 640,000

Mr.Nitiroj Manolamai Director and Deputy Chief Executive Officer 360,000

Mr.Piyawat Ratchapolsitte Director and Chief Financial Officer 50,000

Mr.Rungroj Chaisirivikrom Director 50,000

Mr.Thiti Rattamany Chief Strategy and Insight Officer 50,000

Mr.Wuth Kruanamkam* Chief Operating Officer 50,000

Other employees whereby each employees are not allocated more than 5% of the total shares allocated 800,000

Total 2,000,000

Note : * Mr. Wuth Kruanamkam resigned from the Company and the Company is considering allocating Mr. Wuth’s right to other employees

whereby each employees will not be allocated more than 5% of the total shares allocated

Foreign Shareholders As of December 20, 2017, the Company has 61 foreign shareholders with total of

23,833,300 shares or equal 7.54% of total paid-up capital

Note: The Company has foreign shareholders limit under no.11 of its Articles of Association that

“There is no restriction on the transfer of Company’s shares and the shares hold by foreign

shareholders at any time must not in total exceed 49% of total paid-up shares. The Company

can deny such transfer of share which makes the total shares hold by foreign shareholders

exceed the above proportion”

Board of Directors

Name Position Starting date

1. Police General

Chatchawal

Suksomjit Chairman and Independent director June 13, 2016

2. Dr. Sarawut Pornpatanaruk Vice chairman and Chief Executive Officer September 20, 2010

3. Mr. Nitiroj Manolamai Director March 1, 2013

4. Mr. Piyawat Ratchapolsitte Director July 9, 2015

5. Mr. Rungroj Chaisirivikrom Director July 1, 2015

6. Mr. Suphawat Vanichprapha Director March 1, 2013

7. Ms. Saowakon Yamcharoen Director March 1, 2013

8. Mr. Rittikrai Thammaraksa Director July 1, 2013

9. Mr. Krish Follet Independent director June 13, 2016

10. Ms. Nuanphan Lamsam Independent director June 13, 2016

11. Mr. Nattawoot Krerpradab Independent director June 13, 2016

12. Mr. Songpol Chevapanyaroj Independent director June 13, 2017

Audit Committee

Name Position Starting date

1. Mr. Krish Follet Chairman of the Audit Committee June 13, 2016

2. Mr. Nattawoot Krerpradab Member of the Audit Committee June 13, 2016

3. Mr. Songpol Chevapanyaroj Member of the Audit Committee June 13, 2017

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Mr. Krish Follet and Mr. Songpol Chevapanyaroj are the Member of Audit Committee with sufficient knowledge and experience to

perform their duty of auditing the reliability of the Company’s financial statements. Ms. Chulaporn Rattapong is a secretary of the

Audit Committee.

Audit Committee Scope of Work

(1) review the Company’s financial reports to ensure the correctness and sufficiency of financial reports in accordance

with the relevant financial reporting standards and to cooperate with the external auditor and the management in

preparing quarterly and annual financial reports. The audit committee may also suggest the auditor review or audit

any transaction which is deemed important and necessary during the review of the financial reports;

(2) review the internal control and internal audit system and ensure that they are suitable, sufficient and efficient.

Assess the internal audit unit’s independence, and approve the appointment, transfer, dismissal and evaluation of

the performance of the chief of an internal audit and other department responsible for internal audit;

(3) Ensure that the Company complies with the securities and exchange law, SET regulation or the laws that are

relevant to the Company’s business.

(4) consider, select, and nominate an independent auditor, to propose the independent auditor’s remuneration, and to

attend a non-management meeting with the independent auditor at least once a year;

(5) review related party transactions, or any transactions that may lead to conflicts of interest, acquisition and disposal

transactions, and to ensure that they are done in compliance with laws and the regulations of the SET, SEC and

the Capital Markets Supervisory Board and are reasonable and beneficial to the Company and shareholders;

(6) prepare and disclose in the annual report, the result of the corporate governance conducted by the Audit

Committee. Such report shall be signed by the Chairman of the Audit Committee and must contain the following

details

(a) Opinion on the accuracy, completeness and reliability of the Company’s financial report;

(b) Opinion on the sufficiency of the Company’s audit control system;

(c) Opinion on compliance with the law governing securities and exchange, the regulations of the Stock Exchange

of Thailand and the laws relating to the Company’s business;

(d) Opinion on suitability of the auditor;

(e) Opinion on transactions which may result in conflicts of interest and connected transaction;

(f) Number of meetings held by the Audit Committee and the attendance records of each member of the Audit

Committee;

(g) Comments or overall remarks obtained by the Audit Committee from the performance under the Charter;

(h) Other matters of which the shareholders and general investors should be informed, to the extent of their

scope of duties and responsibilities, as assigned by the Board of Directors;

(7) perform any other duties assigned by the Board of Directors with the Audit Committee’s approval

(8) If there is transaction or act which could extremely affect the Company’s financial status and financial performance,

the Audit Committee shall report to the Board of Directors in order to rectify within the time that the Audit

Committee deems appropriate.

(a) transactions that may lead to conflicts of interests

(b) dishonest, extremely unusual or remiss the internal control system

(c) violation of the securities and exchange law, regulations of the Stock Exchange of Thailand or laws relating to

business of the Company

-33-

If the Board of Directors or the management fails to rectify within the time specified above, any member of the Audit

Committee may report the occurrence of the above transactions or actions to the Office of the Securities and

Exchange Commission or the Stock Exchange of Thailand

(9) review and propose the revised scope of duties and responsibilities of the Audit Committee as deem appropriate

(10) review and monitor the risk management process including assess risk mitigation result from Risk management

Committee which must consist at least one executive director

(11) review the results of operations in the previous year and report to the Board of Directors at least once a year;

In performing the abovementioned duties, the Audit Committee has direct responsibility to the Board of the Directors

while the Board of Directors has the responsibility for the operation of the Company to the third parties.

The Board of Directors has the authority to amend and change the definitions and the qualifications of the Independent

Directors and the Charter of the Audit Committee to be in line with the Audit Committee’s responsibilities so as to be in

accordance with the criteria prescribed by the SEC Office, SET, the Capital Market Supervisory Board, and/or other

provisions under other relevant laws.

Terms of Membership:

1. Chairman of the Audit Committee 3 years

2. Member of the Audit Committee 3 years

(Including appointment and removal from the Audit Committee)

Listing Condition – None –

Silent Period

Shareholders, who own ordinary shares before the Company’s public offering, holding 173,800,000 shares or

55% of paid up capital after the initial public offering certify to Stock Exchange of Thailand that their shares will

not be sold for the period of a year from the first trading date. Upon the expiry of 6 months period of the

prescribed time, those shareholders will be allowed to sell 25% of the total number of shares prohibited for sales

and the remaining after one year.

Additionally, as the Company has offered 15,000,000 newly issued ordinary shares to North Haven Thai Private Equity

Clarity Company (HK) Limited (“NHTPEC”) at THB29.87 on July 20, 2017, which considered as a share offering below

IPO price within the six months prior to the filing application to the SEC and the IPO offering date, according to the SET

regulation, ordinary shares allocated to NHTPEC of 15,000,000 shares will be prohibited for selling for period of 12

months from the first trading date. Upon the expiry of 6 months period of the prescribed time, NHTPEC will be

allowed to sell 25% of the total number of shares prohibited for sell and the remaining after one year.

Relaxation – None –

Others (if any) – None –

Statistical Summary

Do Day Dream Public Company Limited and its Subsidiaries

Accounting Period

Total Sales

(THB mm)

Net profit

(THB mm)

Net profit

per share/1

(THB/share)

Dividend per

share

(THB/share)/2

Book Value

per share/1

(THB/share)

Dividend

Payout to

Net Profit

(%)

-34-

2014 438.0 27.5 5.0 - 8.7 -

2015 955.1 193.9 17.6 - 24.2 -

2016 1,201.5 335.2 2.3 2.91 2.7 124.1

the nine months period ended

September 30, 2017 1,256.4 253.5 1.1 1.03 3.7 92.6

Note : /1

we calculated net profit per share, dividend per share and book value per share by using weighted average number

of ordinary shares from financial statement and net profit attributable to owners of the Company as adjust the par

value from THB 100 per share to current par value of THB 1 per share in accordance with the resolution of Annual

General Meeting of the shareholders for the year 2017 which resolved to change par value of the Company’s share from

THB 100 per share to THB 1 per share

/2 we calculated dividend per share by using dividend declared divided by net profit attributable to owners of the

Company

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Summary of financial statements for the year ended December 31, 2014 and consolidated financial statements for

the year ended December 31, 2015 and 2016 and for the nine months period ended September 30, 2016-2017

Statement of financial position

Separate financial


As at December 31 As at September 30

2014 20151/ 2016 2016

THB mm % THB mm % THB mm % THB mm %

Assets

Current assets

Cash and cash equivalents 41.7 16.6 73.9 14.0 41.5 5.3 405.3 28.1

Trade and other receivables 70.0 27.9 185.8 35.1 196.9 25.4 422.4 29.3

Short-term loan to related parties - - 1.6 0.3 - - - -

Inventories 63.0 25.2 106.0 20.1 263.7 34.0 262.8 18.3

Other current assets 7.0 2.8 11.4 2.2 10.8 1.4 18.8 1.3

Total current assets 181.7 72.5 378.7 71.7 512.9 66.1 1,109.3 77.0

Non-current assets

Restricted bank deposits - - 3.2 0.6 3.3 0.4 25.3 1.7

Property, plant and equipment 68.7 27.4 141.2 26.7 245.1 31.6 282.7 19.6

Intangible assets 0.1 0.0 3.3 0.6 7.7 1.0 10.9 0.8

Deferred tax assets 0.2 0.1 1.5 0.3 2.3 0.3 12.6 0.9

Other non-current assets - - 0.6 0.1 4.2 0.6 0.3 0.0

Total non-current assets 69.0 27.5 149.8 28.3 262.6 33.9 331.8 23.0

Total assets 250.7 100.0 528.5 100.0 775.5 100.0 1,441.1 100.0

Liabilities and shareholders’ equity

Current liabilities

Short-term loans from financial institutions - - - - 72.8 9.4 275.3 19.1

Trade and other payables 93.5 37.3 124.2 23.5 170.7 22.0 239.8 16.6

Short-term loan from related parties 20.8 8.3 68.3 12.9 - - - -

Current portion of long-term loans 9.6 3.8 10.0 1.9 27.4 3.5 9.6 0.7

Long-term loans reclassified as current

liabilities2/

- - - - 51.5 6.6 - -

Current portion of liabilities under hire

purchase and finance lease agreements

2.3 0.9 2.2 0.4 1.5 0.2 1.4 0.1

Income tax payable 4.7 1.9 27.8 5.3 27.3 3.5 27.9 1.9

Other current liabilities 9.5 3.8 2.7 0.5 2.0 0.3 2.2 0.2

Total current liabilities 140.4 56.0 235.2 44.5 353.2 45.5 556.2 38.6

Non-current liabilities

Long-term loans, net of current portion 58.5 23.3 48.5 9.2 44.0 5.7 36.8 2.6

Liabilities under hire purchase and finance

lease agreements, net of current portion

2.8 1.1 0.6 0.1 1.7 0.2 3.6 0.2

Provision for long-term employee benefits 0.9 0.4 1.7 0.3 1.6 0.2 2.8 0.2

Total non-current liabilities 62.2 24.8 50.8 9.6 47.3 6.1 43.2 3.0

Total liabilities 202.6 80.8 286.0 54.1 400.5 51.6 599.3 41.6

-36-

Statement of financial position

Separate financial


As at December 31 As at September 30

2014 20151/ 2016 2016

THB mm % THB mm % THB mm % THB mm %

Shareholders' equity

Share capital

Registered share capital 10.0 4.0 10.0 1.9 225.0 29.0 318.0 22.1

Issued and paid-up share capital 10.0 4.0 10.0 1.9 225.0 29.0 240.0 16.6

Share premium - - - - 47.7 6.2 480.7 33.4

Capital reserve for share-based payment

transactions

- - - - - - 0.1 0.0

Retained earnings

Appropriated – statutory reserve - - - - 22.5 2.9 31.8 2.2

Unappropriated 38.1 15.2 213.9 40.5 111.6 14.4 121.0 8.4

Other components of shareholders' equity

– discount from changes in the proportion

of investments in subsidiary

-

-

-

-

(31.8)

(4.1) (31.8) (2.2)

Equity attributable to owners of the

Company

48.1 19.2 223.9 42.4 375.0 48.4 841.8 58.4

Non-controlling interests of the subsidiary - - 18.6 3.5 - - - -

Total shareholders' equity 48.1 19.2 242.5 45.9 375.0 48.4 841.8 58.4

Total liabilities and shareholders' equity 250.7 100.0 528.5 100.0 775.5 100.0 1,441.1 100.0

Note : 1/

The consolidated financial information for the year ended December 31, 2015, which is a comparison figures presented according to

PAE standard in the consolidated financial statement for the year ended December 31, 2016, was prepared by management of the

Company and was not audited by auditor 2/ Long-term loans reclassified as current liabilities was a loan that subject to the covenant term that the borrower have to maintain Debt to

Equity ratio (D/E) of not exceeding 1.0 times in each financial year. However, the Company has requested to change such condition to no

more than 2.0 times since May 12, 2017. In addition, Company has repaid all of such loan on August 15, 2017

Statement of comprehensive

income

Separate financial



2014 20151/ 2016 2016 2017


Revenue

Revenue from sales 438.0 100.0 955.1 99.8 1,201.5 99.7 985.1 99.9 1,256.4 99.4

Revenue from services - - 0.0 0.0 0.1 0.0 0.1 0.0 0.1 0.0

Other income 0.1 0.0 1.6 0.2 3.2 0.3 1.2 0.1 7.1 0.6

Total revenues 438.1 100.0 956.7 100.0 1,204.8 100.0 986.4 100.0 1,263.6 100.0

Expenses

Cost of sales (248.2) (56.7) (347.5) (36.3) (374.8) (31.1) (297.7) (30.2) (397.6) (31.5)

Selling expenses (147.4) (33.6) (330.9) (34.6) (319.1) (26.5) (275.1) (27.9) (440.3) (34.8)

Administrative expenses (7.4) (1.7) (30.3) (3.2) (87.1) (7.2) (59.4) (6.0) (104.9) (8.3)

Total expenses (403.0) (92.0) (708.7) (74.1) (781.0) (64.8) (632.2) (64.1) (942.8) (74.6)

Profit before finance cost and

income tax expenses

35.1 8.0 248.0 25.9 423.8 35.2 354.2 35.9 320.9 25.4

Finance cost (0.4) (0.1) (3.9) (0.4) (5.8) (0.5) (3.5) (0.3) (9.4) (0.7)

Profit before income tax

expenses

34.7 7.9 244.1 25.5 418.0 34.7 350.7 35.6 311.5 24.7

Income tax expenses (7.2) (1.6) (50.2) (5.2) (82.8) (6.9) (71.9) (7.3) (58.0) (4.6)

Profit for the year/period 27.5 6.3 193.9 20.3 335.2 27.8 278.8 28.3 253.5 20.1

Other comprehensive income: THB mm THB mm THB mm THB mm THB mm

-37-

Items that will not be reclassified to

profit or loss

Actuarial gains (losses) - - (0.6) - -

Deduct: income tax effect - - 0.1 - -

Other comprehensive income for

the year/period

- - (0.5) - -

Total comprehensive income for

the year/period

27.5 193.9 334.7 278.8 253.5

Profit attributable to:

Equity holders of the Company 27.5 175.7 328.0 271.6 253.5

Non-controlling interests of the

subsidiary

- 18.2 7.2 7.2 -

Profit for the year/period 27.5 193.9 335.2 278.8 253.5

Total comprehensive income

attributable to:

Equity holders of the Company 27.5 175.7 327.5 271.6 253.5

Non-controlling interests of the

subsidiary

- 18.2 7.2 7.2 -

Total comprehensive income 27.5 193.9 334.7 278.8 253.5

Earnings per share (adjusted) 2/ THB per share THB per share THB per share THB per share THB per share

Profit attributable to equity holders

of the Company (Adjusted)2/(THB

per share)

5.0 17.6 2.3 2.5 1.1

Weighted average number of

ordinary share (Adjusted) 2/

(shares)

5,518,500 10,000,000 139,927,600 110,578,467 229,010989

Par Value (Adjusted) 2/

(THB per

share)

1.0 1.0 1.0 1.0 1.0

Note : 1/ The consolidated financial information for the year ended December 31, 2015, which is a comparison figures presented according to

PAE standard in the consolidated financial statement for the year ended December 31, 2016, was prepared by management of the

Company and was not audited by auditor

2/ Adjust par value from THB 100 per share to current par value at THB 1 per share in accordace with the resolution of Annual General Meeting

of shareholders for the year 2017 which resolved to change par value of the Company’s share from THB 100 per share to THB 1 per share

Statement of cash flows

Unit: THB mm

Consolidated financial statements

For the year ended December 31 For the nine months ended

September 30

2015 2016 2016 2017

Net cash from (used in) operating activities 83.3 218.8 445.3 103.6

Net cash from (used in) investing activities (86.5) (114.0) (101.5) (77.7)

Net cash from (used in) financing activities 35.4 (137.2) (195.5) 337.8

Net increase (decrease) in cash and cash equivalents 32.2 (32.4) 148.2 363.7

Cash and cash equivalents at the beginning of the year 41.7 73.9 73.9 41.5

Cash and cash equivalents at the end of the year 73.9 41.5 222.2 405.3

Note: The Company did not present and analyze financial information from statement of cash flows for the year ended December 31,

2014 as the financial information of the Company for the year ended December 31, 2014 is based on non-public financial statement

(NPAE) standard which is not required to present statement of cash flows

-38-

Prepared by Bualuang Securities Public Company Limited

The Company hereby certifies that the information reported in this information memorandum is correct

Do Day Dream Public Company Limited

(Dr. Sarawut Pornpatanarak) (Mr. Piyawat Ratchapolsitte)

Director Director

do day dream public company limited (“ddd” or “the company...

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