-1-
– 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
-2-
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
-3-
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
-4-
Product/business Line
Separate financial
statements Consolidated financial statements
For the year ended December 31 For the nine months ended September 30
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
Product/business Line
Separate 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 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
Company reclassified some sales discount to selling expenses
-5-
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.
-6-
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.
-7-
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
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. 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
Company reclassified some sales discount to selling expenses
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.
-8-
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.
-9-
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
-10-
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 (%)
Rank/1 Brand 2015 2016 the nine months
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 •••
••• •••
•••
•••
15 NAMU LIFE SNAILWHITE (Rank) 0.6 (15) 0.4 (21) 0.7 (15)
Source: The Nielsen Company
Note: /1 Ranking based on market share for the nine months ended September 30, 2017
Cleanser market
Cleanser Market share in year/ period (%)
Rank/1 Brand 2015 2016 the nine months
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
•••
••• •••
•••
•••
31 NAMU LIFE SNAILWHITE (Rank) 0.3 (35) 0.4 (32) 0.4 (31)
Source: The Nielsen Company
Note: /1 Ranking based on market share for the nine months ended September 30, 2017
-11-
Liquid Soap market
Liquid Soap Market share in year/ period (%)
Rank/1 Brand 2015 2016 the nine months
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)
Source: The Nielsen Company
Note: /1 Ranking based on market share for the nine months ended September 30, 2017
/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)
Facial Moisturizer Market share in year/ period (%)
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
4 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE
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
•••
•••
•••
•••
•••
•••
56 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE
Miracle/2
N/A 0.2 (131) 0.4 (56)
Source: The Nielsen Company
Note: /1 Ranking based on market share for the nine months ended September 30, 2017
/2 Company started to sell NAMU LIFE SNAILWHITE Miracle since 2
nd quarter of 2016
-12-
Facial Moisturizer market ranking by SKUs in large retail stores (Hypermarket, Supermarket and Specialty
store) with price over THB 800/piece
Facial Moisturizer Market share in year/ period (%)
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
16.7 (1) 12.9 (1) 9.6 (1)
2 Olay Regenerist Micro-Sculpting
Cream
3.4 4.4 4.1
3 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE
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
•••
•••
••• •••
•••
•••
19 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE
Miracle/3
N/A 0.7 (34) 1.3 (19)
30 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE Day
Cream/3
N/A N/A 0.8 (30)
50 NAMU LIFE SNAILWHITE
(Rank)
NAMU LIFE SNAILWHITE Gold
Facial Cream/3
N/A N/A 0.5 (50)
Source: The Nielsen Company
Note: /1 Ranking based on market share for the nine months ended September 30, 2017
/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
Most agreements stipulate that:
- 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
Most agreements stipulate that:
- 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
Most agreements stipulate that:
- 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
Most agreements stipulate that:
- 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.
-27-
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.
-28-
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
-31-
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
-32-
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
-35-
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
statements Consolidated financial statements
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
statements Consolidated financial statements
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
statements Consolidated financial statements
For the year ended December 31 For the nine months ended September 30
2014 20151/ 2016 2016 2017
THB mm % THB mm % THB mm % THB mm % THB mm %
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