information memorandum - megachem (thailand) public

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- Information Memorandum - Megachem (Thailand) Public Company Limited (MGT)

Head Office and Factory Location Address

: 25 Soi Chalongkrung 31, Ladkrabang Industrial Estate Soi G1/9 Lamplathew, Ladkrabang, Bangkok 10520 Telephone: 02-739-6333 Fax: 02-739-6332 Website: http://www.megachem.co.th

Listing Date : At as February 23, 2017 (Trading commencement on February 23, 2017)

Listed Securities : 400.00 million shares of common stock at par value 0.50 Baht. Total value 200 million Baht (The Company offers 3,000,000 shares of common stock to employees and offers 97,000,000 shares of common stock to public)

Capital : As of February 23, 2017 (first trading day) Registered Capital: Common shares 200.00 million Baht (400.00 million shares) Paid-up capital: Common shares 200.00 million Baht (400.00 million shares)

Secondary Market : Market for Alternative Investment (mai)

Offering Price : 1.89 Baht per share

Offering Date : February 15-17, 2017 (The Company offers 100 million shares of common stock to the public)

Objectives and Plans for Utilizing the Capital Proceeds:

Objective for utilizing he capital proceeds Estimated Amount

(Million Baht) Utilizing period

1. To be used as investment capital to open new branch offices in Thailand

6.00

2017

2. To be used as investment capital to open new branch offices in Myanmar and Cambodia

10.00

Q1 - 2018

3. To be used as working capital 162.20 2017 Total 178.20

http://www.megachem.co.th/

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Green Shoe Option : - None -

Type of Business and Nature of Operation:

Megachem (Thailand) Public Company Limited (“Company” or “MGT”) operates as a distributor of specialty chemicals which are used as an additive to the main ingredient to create chemical reaction in order to provided special properties or features for the products. The Company provides specialty chemical to customers in various industries. The Company invests in its associate company which is Vertis Latex Company Limited which operates as manufactures and distributes of latex pillow and latex mattress. The Company’s group structure is as follow;

.

The Company’s group structure

Note1/: Vertis Latex Company Limited’s major shareholders are Vertis Latex (Thailand) Company Limited’s shareholders, that consist of Kerdwongbandit family, Upattusring Family and Phankosol Family, which now hold 70% of Vertis Latex Company Limited’s paid-up capital and the Company hold 30% of Vertis Latex Company Limited’s paid-up capital.

Characteristics of products

The Company operates as distributor of specialty chemicals for the customers which are manufacturing companies in many industries mainly located in Thailand. The Company distributes its products as original package that the Company purchased from its suppliers. Specialty chemicals that the Company distributes are used as an additive to the main ingredient to create chemical reaction in order to provided special properties or features for the products. Specialty Chemicals are used in small proportion comparing to total volume of raw materials and also highly diverse. Moreover, there are small numbers of manufacturers for each specialty chemicals which are located in various different countries, due to the patent holding and also low demand for each specialty chemicals. If customers ordered specialty chemicals from the suppliers directly, they would have to contact many suppliers by themselves, with the low volume order; customers will have low bargaining power and also waste of human resource, due to the hassle of

Megachem (Thailand) Public Company Limited (Issuer Company)

Registered Capital 200.00 Million Baht Paid –up Capital 150.00 Million Baht

Vertis Latex Company Limited1/ Registered Capital and Paid-Up capital

70.12 Million Baht

30.00%

Kerdwongbandit Family Upattisring Family Phankosol Family

70.00%

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ordering each specialty chemicals from different manufactures. Thus, the Company aims to be the solution provider which can provide the supply chain management for customers which include of response to customers’ needs, select and offer products that meet customers’ demand in both features and price. The Company also provides services of ordering specialty chemicals and efficient logistic support to match requirement from each customers. Moreover, the Company can provide very wide range of specialty chemicals for over 1,000 products that cover customers in many industries such as polymerization industry (which the Company’s products are used in the process to create polymer or polymerization process to produce plastic resin, adhesive, fiber, etc.), paint industry, and metal finishing industry.

The Company also has planned to invest in a laboratory for chemical analysis which will be located in the Company’s head office in the purpose of analyzing the chemical’s ingredients and features of the Company’s products such as specific gravity, viscosity, and tolerance to acid or alkali, with the purpose to gain confidence from its customers to trust in the Company’s products and also to provide after-sell service and to analyze problems without sending chemicals to be analyzed in outsourced laboratory. The Company has investment budget for this project around 30 million baht, which the construction period is expected to be around 6 months and the laboratory is expected to be operational within the 2nd quarter of 2560.

Revenue Structure

(หน่วย : ล้านบาท)

Revenue Structure Operate

by

Consolidated Financial Statement Financial Statements

in which equity method is applied

2013 2014 2015 9 Months - 2015 9 Months - 2016

M. Baht % M. Baht % M. Baht % M. Baht % M. Baht % Revenues from Distribution of Specialty Chemicals

MGT 715.45 98.97 608.95 98.93 530.92 97.08 406.90 96.51 432.43 98.64

Total Revenues from Sales

715.45 98.97 608.95 98.93 530.92 97.08 406.90 96.51 432.43 98.64

Other Revenues 7.42 1.03 6.58 1.07 15.95 2.92 14.73 3.49 5.97 1.36 Total Revenues 722.86 100.00 615.54 100.00 546.87 100.00 421.63 100.00 438.40 100.00

Note: 1/ In the past, the Company has its subsidiary which is Megalatex Company Limited, which operates as manufacturer and distributor latex pillow with the vulcanization technology by using radio frequency. Megalatex Company Limited, merged with Vertis Latex (Thailand) Company Limited, which operates as manufacturer and distributor latex pillow and latex mattress on 2 June 2015, and changed its name to Vertis latex Company Limited. The revenue in consolidated financial statement for the fiscal year 2013 and 2014 is prepared on the basis that the performance of latex pillow business is stated as “Profit (losss) from discontinued operation for the year” for comparison purpose.

2/ Other revenues in the year 2015 consist of gain on investment in associate 10.68 million baht from the merger of the Company’s ex-subsidiary; Megalatex Company Limited and Vertis Latex (Thailand) Company Limited.

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Target Customers The Company’s customers are mainly located in Thailand. In 2013, 2014, 2015 and the first 9 months of 2016, the Company sold its products to customers in Thailand in proportion of 98.73%, 96.56%, 96.56% and 99.55% of the total revenues from sales, respectively. The Company customers’ characteristics are diversified to direct customers and chemical distributors, details are provided as follow;

1) Direct Customers Direct customers consist of customers who use the Company products as a raw material in their productions in order to create features or special properties as required. Since the Company’s products are very diverse, the Company’s direct customers are the manufacturers in various industries, such as polymerization industries (which the Company’s products are used in the process to create polymer or polymerization process to produce plastic resin, adhesive, fiber, etc.), paint industry, and metal finishing industry. The Company focuses on providing its products mainly to direct customers which the main direct customers, consisting of polymerization industries, paint industry, and metal finishing industry, has their end users as follows;

Major Customers Products End User

Polymerization Resin Paint (Decorative and Automotive Paint) Construction Material (Lacquer, Coating, PVC, Fiberglass, etc.)

Acrylic Sheet Sanitary Wares Construction Material (Roof, Overhang, Signs, other decorative)

Platsic Resin Automotive parts (Plastics) Acrylic Wares (i.e. transparent container)

Paint Acrylic Paint Construction Material Industrial Paint Automotive

Electrical Appliance

Metal Finishing Metal coating Automotive (for Metal Parts) Industrial Machinery (for Metal Parts)

Electronic Parts Cleaner

Electronic Parts

2) Chemical Distributors Chemical Distributors are customers who buy the Company’s product in order to resell because the Company is a distributor of such chemical or customers cannot contact the maker of such products directly.

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Distribution Channels The Company’s distribution channel is its sales persons who have knowledge and experience in chemicals.

The Company’s sales persons are divided by the industry of target customers which each sales person will contact his/her customers directly to acquire the clients’ needs, the properties of required products, and usage of the products. Then, the Company’s salespersons will propose appropriate chemicals to the customers as well as provide the information of new products which can improve efficiency or reduce costs for the customers.

If the customers interested to procure the proposed products, the Company would send product samples to the customers to test products’ properties and sample the products in order to be certain that the products can chemically react to other raw materials to create required features or special properties. Then, salespersons will receive purchase orders from customers. For frequent customers, the Company’s salespersons will cooperate with the customer to create forecast for product usage in order to manage the Company’s inventory for efficiently providing products to the customers. Moreover, the Company also provides manual for storage of dangerous chemicals to the customers.

Moreover, the Company joined Thai Paint Manufacturers Association (TPMA) in order to acquire business information and create opportunity to expand customer base in in such industry. Sources of Supply

The Company procures specialty chemical from Thailand and other countries. For imported chemicals, the Company mainly procures directly from maker while domestic products are procures through local distributors. The main currency for product procurement is US Dollars. Currently, the Company procures its products from more than 400 makers/distributors.

The Company is appointed to be a distributor of chemical products for: brand as follows Appointer Brand Type Period Products

The Chemours (Thaiand) Co., Ltd.

Chemours Non-Exclusive Jan 1, 2016 – Dec 31, 2017 (2-year period)

Chemicals under brands Vazo® series / DMAc® / Capstone® and Fluorosurfactant & Coating additives

Since the specialty Chemicals are highly diverse, any change in chemical ingredient can impact to the

chemical reaction which might lead to the change in products’ features that does not match to customers’ requirements. Thus, the Company frequently finds the special chemical’s manufacturers and distributors, and keep information of these manufacturers and distributors in Enterprise Resource Planning (ERP) so the Company can be able to quickly response to the customers’ needs. This information can be accessed only by authorized person

To import chemical from other countries, the Company will purchase in Cost Insurance Freight term (CIF), which the sellers have to arrange vessel to transport chemicals to a port of destination and provide the Company with the documents necessary to obtain the product from the vessel, then the Company will comply with the Customs process and also the procedure prescribed by laws and regulations.

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Industry Overview Chemical Industry is important to develop the industrial sectors and other service sectors. This industry

mainly relies on imported materials and also focuses in domestic market. The Company’s main product is specialty chemical which is used as an additive to create chemical reaction

which is important to the manufacture products in various industries which are paint industry, automotive industry, construction industry, plastic industry and etc. Thus, the Company’s volume of consumer product will increase as those industries increase. According to Office of Industrial Economics, the chemical industry tends to grow consistently, which the growth in volume of imported chemical will be in line with the increase in Thailand’s gross domestic product.

Overall and Thailand Economic outlook

In 2016, the Office of the National Economic and Social development Board (“NESDB”) expected Thailand’s Economic to grow by 3.00% – 3.50% approximately, due to these key factors which are the expansion of government spending, the economic stimulates package from the government’s policy in late 2015 – April 2016, the low fuel price, high number of tourism in Thailand and recovery and acceleration of agricultural production due to the increase in these products’ prices and the easing of the drought. Consequently, households’ incomes for people in this sector will rise. (Source: Thai Economic Performance in Q3 and Outlook for 2016-2017- NESDB Economic report)

Paint Industry

Currently, in Paint industry, there are more than 1,000 companies, which makes this industry to be high competitive due to high numbers of paint manufacturers and paint products are vary in both quality and price. Paint can be divided into 2 groups, which are industrial paint and decorative paint

1. Industrial Paints which are consisting of Anti-Rust automotive paint, high quality Anti-Rust paint, marine paints, publication paint, publication paint, wood stain paint and etc

2. Decorative Paint which are used in real estate and household sector, such as watercolor, oil paint, enamel paint and etc.

In the year 2015, numbers of paint production increased from the year 2014 by 0.09% from 77,011.44 tons to 77,080.27 tons, the number of paint production changed in line with the automotive production and purchase value of land and building. (Source: Office of Industrial Economics)

Automotive Industry The automotive production is expected to increase to 1.95-2.01 million units or 2-5% approximately. While the domestic car market will continue to shrink due to the first car policy and an increase in excise tax, with these reasons, people bought cars in late 2015, and also the financial institution tend to be more careful in lending credit. However, the numbers of car export in the year 2016, will lead to an increase in overall vehicle productions as a result of the change in pickup truck models and passenger car models. The vehicle productions will continually increase through the year 2017-2018 to 2.10-2.14 million units and 2.30-2.33 million units respectively because the vehicles which were purchased as first car policy will be prohibited from selling after the year 2017 onward, which may affects some consumers’ decisions to change their new cars. And also the Thai Economy is expected to recover and also the export

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market will rise by the Asean Economics Community (“AEC”) and Approval of BOI to Eco-cars. (Source: Research Department at Krungsri Securities Plc)

Real estate and construction industry In overall of real estate industry, households are expected to remain their interests in housing sector, with the market value for house construction sector will be 13,5000 – 14,000 million baths approximately or increase around 4-8% from the year 2015. If Thai’s economy becomes more stabilize, will lead to the recovery in real estate market. The main factor to recover this industry is stimulus package to boots economy by the cabinets on October 13. 2016 which real estate sector is one of the stimulus plans in this package by provides the relief measures of loan approval amount of 10,000 million baths with period of one year. This stimulus plan covers land and housing for residential building and to build house for the low-middle class income people. In 2016, the government try to invest in mega projects especially transport infrastructure. This will invest in transportation sectors for 20 projects in the budget of 1.796 million baht. This investment project will improve in many projects which are motorway between provinces, water transportation, air transportation, double track railway system and mass rapid transit. This mega project will increase construction industry 52.6 – 78% approximately, represent 76,150 – 88,800 million baths in total value. This investment budget will not spend on newly mega project yet but mainly focus in on-going project, for example 4 routes of mass rapid transit.

Plastic Industry

Due to the recovery of Thailand’s trade partners’ economy, especially United States, the plastic products’ market has expanded to CLMV which the economies in these countries continually grow, and also a decline in oil price will not affect the plastic prices, these factors will encourage the plastic manufacturers to increase their capabilities. The plastic products’ export volumes will raise 2.3-4% from 2015. In the short-term, main factor of export-driven for the plastic industry will be basic plastic product, and also bioplastic which will create opportunity for Thai entrepreneurs due to the increase in bioplastic demand tend to increase year by year. In 2020, the demand of bioplastic will increase to 1.30 million tons or a growth rate of 27% per year. (Source: K SME analysis) Market Competition

In Thailand, there are a lot of companies which operate as specialty chemicals distributors. The main factors of competition in this business are consisting of prices, products’ qualities and service’s qualities. Thus, the Company mainly prioritizes in product’s qualities, service’s qualities and to be solution provider for its customers without consider in pricing competitive, because there are small numbers of companies in Thailand that can be able to provide wide range of specialty chemicals for their customers. The lists of the Company’s competitors and their revenues are as follow;

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Unit : Million Baht

Lists of competitors/1 Revenue from sale and service/2

2014 2015 Colossal International Co., Ltd. 1,776.55 1,910.61

Koventure Co., Ltd. 1,188.34 1,145.05 Urekote-Thai Co., Ltd. 585.42 529.70

Brighten Polytrading Co., Ltd. 2,364.77 N/A Unique Fine Product Co., Ltd. 753.02 750.77

Total 608.95 530.92 Note: /1Source: Company’s executive directors

/2Source: Business Online PCL

Environmental Impact (If any): -None-

The Company distributes its products as original package that the Company purchased from its suppliers, without opening the package, which can reduce the risk that chemicals leakage or contamination which can directly impact the environmental. Moreover, the Company also prioritizes the important of monitoring, storage and transport of chemical. For the transportation, all drivers must have the specific driver license to carry hazardous material (Driver

license class 4). In order to comply with the law, the Company hires a company to manage and transport industrial waste (dead stock). Moreover, the Company understands the importance of environmental management, as department of industrial works’ standard. Currently, the Company does not discharge any waste which may negatively affect the environment or has any legal dispute relate to the environment.

Summary of Contract

1) Chemicals Distribution Agreement

Distribution Agreement is made and entered into by and between Megachem (Thailand) Company Limited and The Chemours (Thailand) Company Limited with the following details used in this contract.

Contract parties : The Chemours (Thailand) Company Limited (“CHEMOURS”)

Megachem (Thailand) Company Limited (“DISTRIBUTOR”) Period of Agreement: : 1 March 2015 – 31 July 2018 Appointment : - Distributor’s area of primary responsibility and the area in which

Chemours will judge its performance are strictly limited to the Territory. Chemours may, in its absolute discretion, appoint further distributions for the Territory.

- DISTRIBUTOR shall use its best endeavors to ensure that, except with the prior written approval of CHEMOURS, the PRODUCTS shall not be sold for export from the Territory to other jurisdiction nor sold to a third party with a view to such

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export, whether direct or indirect. - DISTRIBUTOR undertakes to request information on the use of

PRODUCTS sold by it and to refuse any sale in markets and end-uses other

- Subject to the prior written approval from CHEMOURS, DISTRIBUTOR is authorized to promote and/or sell PRODUCTS on-line through a web presence.

- CHEMOURS may add or remove one or more PRODUCTS from the list of PRODUCTS from time to time by giving prior written approval to DISTRIBUTOR.

Orders : DISTRIBUTOR shall order from CHEMOURS such quantities of the PRODUCTS as DISTRIBUTOR needs to meet requirements of the trade in DISTRIBUTOR’s Territory and Market, as well as the Minimum Order Requirements (if applicable). CHEMOURS shall give careful consideration to all orders received from DISTRIBUTOR; provided, however, that such orders, whether for shipment to DISTRIBUTOR or to others as designed by DISTRIBUTOR, shall at all times be subject to acceptance by CHEMOURS. CHEMOURS shall have no liability whatsoever because of failure to accept any order.

Direct Sales : Notwithstanding anything stated in this Agreement, CHEMOURS shall have the right to negotiate with and to sell PRODUCTS directly to any third party in the Territory and/or Market or for shipment into the Territory and/or Market whenever in CHEMOURS’s sole determination the business can be handled more advantageously, and DISTRIBUTOR shall have no right to any commission or other compensation in relation to such sales.

Title/Property and Risk : Possession and ownership of the goods will be CHEMOURS’ property until payment in full. Then, ownership will be DISTRIBUTOR’s thing.

Liability Limitations : Notwithstanding anything herein contained, CHEMOURS’ aggregate total liability for any and all losses and damages arising out of or in connection with any cause whatsoever shall in no event exceed one hundred percent of the total purchase price allocated to the PRODUCTS in respect to which such cause arises.

Liability for Non-Acceptance : Whenever CHEMOURS, at DISTRIBUTOR’s request, makes shipment directly to DISTRIBUTOR’s customer and the acceptance thereof is refused by the customer; DISTRIBUTOR shall reimburse CHEMOURS for all shipping charges and all other related expenses

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incurred by CHEMOURS. Period of Agreement and Termination

: Except as otherwise provided herein, this Agreement shall be effective during the Period of Agreement unless terminated sooner, with or without cause, by either Party by 30 days’ prior written notice to the other Party.

Assignment : Neither Party shall assign or transfer this Agreement or any interest arising hereunder, in whole or in part, without the prior written consent of the other Party; provided however, that CHEMOURS shall have the right to assign or transfer any and all rights, benefit, obligations or liabilities under or in relation to this Agreement to any of its Affiliate(s).

Governing Law : This Agreement shall be interpreted and construed in accordance with the laws of Thailand without consideration to its conflict of laws provisions and of the United Nations Convention on Contracts for the International Sale of Goods.

2) Non-Competitive Agreement)

Megachem (Thailand) Company Limited enter into this agreement in respect of the non-competition of the associated company and subsidiaries of Megachem Limited

Contract parties :

Megachem Limited and Affiliates (the associated company and subsidiaries of Megachem Limited) (“MGS”) And Megachem (Thailand) Company Limited

Execution date : 15 August 2016 Terms and Conditions : 1. MGT shall solely be responsible for the business strategy,

marketing activity, business development, distribution of chemical products in its territory. MGS agrees that it will not, either intentionally or unintentionally, carry out any activity which is deemed direct or indirect intervention of the markets in MGT’s territory, except for MGS’s rights as the shareholder of MGT. Further, MGS agrees that it will not carry out any chemical activity which is deemed as business competition to MGT in MGT’s Territory.

2. Apart from the territory of each Party, both parties may expand its business and carry out any marketing activity for business development purpose to any worldwide market without the permission from another party.

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3. MGS shall solely be responsible for the business strategy, marketing activity, business development, distribution of chemical products in its territory. Trading territory of MGS composed of country’s major customers of MGS which are located in 50 countries (please kindly

see the details of lists of country at note 1) which MGT agrees that it will not, either intentionally or

4. The parties acknowledge that each party respects and will not infringe the other party’s interests regarding its existing customers and sales channels.

5. In case the customers in MGT’s territory requests to purchase any chemical products from MGS, MGS shall recommend customer to order products from MGT and MGT will pay the commission to MGS. On the other hand, in case the customers in MGS’s territory requests to purchase any MGT, MGT shall recommend customer to order products from MGS and MGS will pay the commission to MGT. (For example, customers in MGT’s territory (such as Thailand) have contacted MGS in order to purchase products, but MGS cannot be sold because of the conditions in the agreement. So, MGS refers that Thai customer to MGT and MGT will pay the commission to MGS as the referral fee in the rate of 2.00% (Two per cent) of selling price. In addition, such client must not be the ex-customer or not customer that company has plan to contact in the future.)

6. In the event where MGS wishes to sell the chemical products to a customer in MGT’s territory, it shall seek the written consent of MGT prior to such sale. In the same time, if the audit committee does not consent or board member disapprove; MGS is not entitled to sell chemicals to customers located in countries that are designated as primary customers of MGT. Conversely, if MGT wishes to sell the chemical products to locate in countries that are designated as primary customers of MGS’s territory, it shall seek the written consent of MGS prior to such sale. (For example, customers in Singapore who have many factories within several countries, including Thailand would like to purchases for the entire group from MGS. If MGS refused to sell to those customers, they would get upset. So that MGS has requested authorization from the Company to be sold in Thailand under the terms of the contract without requiring that the MGS must be paid to the Company in any way.) (After the signing of non-competitive contract, there is only one event that MGS asked the permission from the

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Company to sell across Territory that is Megachem International Trading (Shanghai) Co., Ltd. (“MITS”) affiliated with MGS. MGS has requested authorization to sell its chemicals to customers in Thailand. Because such customers prefer to buy directly from the manufacturer in China, but manufacturers are not able to export to Thailand directly. Therefore, customers contact MITS which is a distributor sale representative to make sales to customers in Thailand. The company has followed the measures prescribed by the approval of the Audit Committee and got approval from Board of Directors for such an application from MITS.)

7. MGS agrees that it shall adopt and apply the procedures and policies to prevent the person who has conflict of interests with MGT, including but not limited to its directors, executive directors, person in-charge for management and MGS’s representatives nominated into MGT’s directors, executive directors, person in-charge for management from knowing the confidential information of MGT and from making decision in the following matters. In case MGT wishes to invest in or expand its business to the

new customers or new products whereby such investment or business expansion may have conflict of interests with MGS

In case MGT wishes to supply the good or contact the supplier whereby such goods supply or the supplier may have conflict of interest with MGS.

8. MGT will not disclose any information to MGS in the event that MGT deems, at its sole discretion, MGS has conflict of interests in the following matters: In case MGT wishes to invest in or expand its business to the new

customers or new products whereby such investment or business expansion may have conflict of interests with MGS.

In case MGT wishes to supply the good or contact the supplier whereby such goods supply or the supplier may have conflict of interest with MGS.

9. MGT will not disclose any information of its customer to MGS unless MGT deems, at its sole discretion, that such information will not cause conflict of interest between MGT and MGS. On the other hand, MGS will not disclose any information of its customer

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to MGT unless MGS deems, at its sole discretion, that such information will not cause conflict of interest between MGS and MGT.

Duration and Termination : 1. This agreement shall commence on the date of this agreement and continues to be in effect until and unless terminated by mutual consent of the parties.

2. Notwithstanding the provision in clause 1, either Party may immediately terminate this agreement without prejudice to its other remedies forthwith by delivering written notice of termination to the other Party if 2.1 The other party commits a breach of this agreement. 2.2 The other party ceases or threatens to cease to carry on

business; 2.3 MGT ceases to be an associated company of MGS; 2.4 The other party goes into liquidation; 2.5 The other party goes into judicial management or enters into

a voluntary arrangement with its creditors or suffers any similar insolvency process or process.

Dispute Resolution : - Any dispute arises out of or in connection with this agreement or its formation, senior executive personnel or its equivalent of the parties with authority to negotiate and settle the dispute will, within fourteen (14) days of a written request from one party to the other, meet in a good faith effort to resolve the dispute.

- The dispute is not wholly resolved at that meeting, the parties will attempt to resolve the dispute by arbitration in Bangkok, Thailand in accordance with the arbitration rules of the Arbitration Institute, Ministry of Justice, provided that the arbitral tribunal shall consist of three arbitrators, one of whom appointed by each of the Party hereto. The third arbitrator shall be appointed by such two arbitrators. The arbitral award shall be final and binding upon the Parties hereto. The arbitration shall take place in English language. Any arbitral award may be entered in any court of competent jurisdiction.

Governing Law : This agreement shall be governed by and construed in accordance with the laws of Thailand.

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The detail of MGS’s Territory is set out below

Singapore Venezuela Austria

Malaysia Brazil Sweden

Indonesia Argentina Norway

Philippines Columbia Denmark

Vietnam Australia Poland

China United States of America Romania

India Mexico Hungary

Pakistan United Kingdom Czech Republic

Sri Lanka Ireland Slovenia

Bangladesh Belgium Turkey

Korea France Kenya

Taiwan Italy Congo

Brunei Netherland Tunisia

UAE Spain Morocco

Saudi Arabia Germany Nigeria

Kuwait Portugal Egypt

Bahrain Switzerland Note: The mentioned countries are coming from the countries where each party sold their products during the past three years (2013 - 2015) and each of party has a plan to expand in the future.

If there is a modification of mentioned non-competitive agreement in the future, The Company will comply with all laws and regulations related requirements strictly.

The study feasibility of the project (if any) - Not applicable-

The providing of technical assistance and management. - Not applicable- The future project

The company has planned to invest more in projects related to the distribution of specialty chemicals. The details are as follows:

1. Set up a branchs in Thailand

Because nowadays, the company's customers are mainly based in Bangkok, Metropolitan areas and neighboring provinces such as Chonburi and Rayong etc. Therefore, the company has planned to establish the branch offices located in Hat yai part of Songkhla province and Nakhon Phanom in order to

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expand more customer bases in Northeast and South regions. The organization will invest in each branch approximately 3 million baht, together the total investment will be 6 million baht. This investment, however, is not included the circulating fund for office’s operation. MGT estimated that it will take time around six months to establish the offices which will start operating by 2017.

2. Set up a branch in Myanmar and Cambodia

Beside the goal of expanding customer bases in Thailand, the organization will have a project on

expanding customer bases aboard by setting up offices in Myanmar and Cambodia to accommodate for

the growth of industries in those areas. The organization will invest in each branch approximately 5

million baht, together the total investment will be 10 million baht. This investment, however, is not

included the circulating fund for office’s operation. MGT estimated that it wi ll take a year to establish the

offices which will start operating by Q1 2018.

Related Party Transaction:

Persons/ Entity that may have

conflict of interest/ Business

Description of Transaction

Value of related party transaction (Million Baht)

Rationale for, and Necessity of Transaction December 31, 2015

November 30, 2016

Megachem Ltd. (Singapore) (“MGS”) (The major shareholders of the company)

The Company bought products from MGS - Bought products - There is outstanding balance at end of period

4,571,310 1,561,661

1,724,902 501,021

The Company bought chemical products from MGS in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from MGS are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

The Company sold products to MGS - Sold products - There is outstanding balance at end of period

558,790 148,579

72,930 34,041

The Company sold chemical products to MGS with margins and commercial terms equivalent to those offered to the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. There are margins and commercial terms

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November 30, 2016

equivalent to those offered to the company. The Company made insurance and health insurance groups with MGS The Company paid Insurance Premium via MGS - Insurance Premium - Premiums paid in advance -There is outstanding balance at end of period The company claims medical fees through MGS - Claim insurance fees through MGS - There is outstanding balance at end of period

549,639 - -

114,185

91,006

467,471 157,836 599,343

70,276 -

The Company made insurance and health insurance groups for company's asset and employees with MGS. The insurance rate premiums are equal to the Company part plus processing fee from MGS at a rate of 5 percent. The company will pay the premiums and claims through MGS, which has been a better condition of insurance from the insurance company than doing by itself. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable. The company will pay the premiums and claims through MGS, which has been a better condition of insurance from the insurance company than doing by itself.

Companies paid for travel expenses to staff of the MGS. - Travel expenses - There is outstanding balance at end of period

5,180 -

- -

Companies paid for plane tickets to staff of the MGS who joining the MGS' chemical distributions training. The rate is equal to the actual trip airfare plus a processing fee of 5 percent from MGS. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable. They are the expenses paid to officials who are employees of the company for the products distributed by normal business operations.

Dr. Vitthya Inala (The authorized signatory of the company,Directors, executives and the major shareholders of the Company)

Dr. Vitthya guaranteed Loan and Letters of credit and / or trust receipts of the Company. - The Company has outstanding balance of the aforementioned collateral (Thai baht)

160,000,000

-

It was necessary for the Company to acquire the short term loan from financial institution to be use as working capital for business operation. No collateral or guarantee fee was charge by guarantor for such guarantee. Financial institutions have returned all Mr. Vitthya 's collateral on 22 September 2016. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and for the benefits of the Company’s operation since the Company needs to comply with conditions provided by financial institution as to acquire loan to be used in the Company’s business operation.

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November 30, 2016

Dr. Vitthya borrowed money from the company Loans - The beginning balance - Increased during the period - Repayment during the period - The ending balance Loans interest - The beginning balance - Increased during the period - Repayment during the period - The ending balance

5,000,000 -

5,000,000 -

571,479 93,485

664,964

-

- - - -

- - - -

Dr. Vitthya borrowed money from the company 5,000,000 baht since 6 March 2009. The company calculated interest rate based on the interest rates of loans, letters of credit and / or trust receipts from financial institutions. Currently, the Company received payment of all such loans on 29 December 2015 and the Company has no policy to provide loans to directors and executives in the future. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction was a loan from the company, with an interest rate equal to the cost of financial income from financial institutions and The Company has no policy to provide loans to directors and executives in the future.

Dr. Vitthya was advance payment creditor - Advances payment during period - There is outstanding balance at end of period

686,211

106,552

349,499 -

Dr. Vitthya has made advances for travel expenses, Regale allowance and office expenses to the company. Mr. Vitthya brought proof of payment to be reimbursed in accordance with the normal procedures of the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable which is advance payment for the company and reimbursed in accordance with the normal procedures of the company.

Mrs. Busaraporn Prathumrat (The authorized signatory of the company,Directors, executives and the major shareholders of the Company)

Mrs. Busaraporn was advance payment creditor - Advances payment during period - There is outstanding balance at end of period

759,200

15,619

1,187,228 -

Mrs. Busaraporn has made advances for travel expenses, Regale allowance and office expenses to the company. Mr. Vitthya brought proof of payment to be reimbursed in accordance with the normal procedures of the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable which is advance payment for the company and reimbursed in accordance with the normal procedures of the company.

Vertis Latex Co.,Ltd (“VL”) (An associated

The company made an advance payment for moving machine to the VL - Advances payment for the

3,980,400

-

The company made an advance payment for moving machine of Mega Latex Co. Ltd. located in Amata Nakorn Industrial Estate, Chonburi province to plant of VL, Phuket province. It is the conditions of merger between Mega Latex

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November 30, 2016

company) transport machinery - There is outstanding balance at end of period

-

-

Co. Ltd. and Vertis Latex (Thailand), which VL has made the whole of advance payment for the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable for advance payment used to move machine according to the conditions of merger. Currently, the advance payment is clear.

The Company made an advance payment for developing molded rubber mattress project to VL - Advances payment for developing molded rubber mattress project - There is outstanding balance at end of period

- -

467,055 -

The Company made an advance payment for developing molded rubber mattress project to VL according to the contract between the company and plastic institution which signed on 19 November 2014. In addition, VL cleared the whole of developing molded rubber mattress projec on 8 August 2016. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable for advance payment used for developing molded rubber mattress project. Currently, the advance payment is clear.

The ex-shareholders of the Vertis Latex (Thailand) Co. Ltd.

(The ex-shareholders of Vertis Latex (Thailand) Co., Ltd. Before merging with Mega Latex Co., Ltd. to become Vertis Latex Co., Ltd ) consists of

1.Kerdvongbundit Family

2. Upattisring Family

3. Phankosol Family

The Stock subscriptions receivable - The Stock subscriptions Value - There is outstanding balance at end of period

895,425

895,425

-

895,425

In June 2015, the former subsidiary of Mega Latex Co., Ltd. was merged with Vertis Latex (Thailand) Co., Ltd. transferred all the assets at fair value as determined by an appraiser and cash accrual of the former subsidiary at that time with a total value of 29.37 million baht. and The company has a stake in the company resulting from the merger which is Vertis Latex Co. Ltd. 30.00 percent of the paid-up capital worth 28.48 million baht. Causing the difference which the ex-shareholders of Vertis latex (Thailand) Company Limited had to pay 0.90 million baht. Currently, Vertis Latex Limited stillfacing losses from operations, so it did not make a payment in excess of such payment yet. However, The ex-shareholders of the Vertis latex (Thailand) Co. Ltd. made the whole stock subscriptions receivable to The Company on 16 January 2560. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable for the difference of transaction resulting from the merger. However, The debtors owed The Company for a long time. Therefore, the Committee urges the company to make a call to the payment of such debtors.

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November 30, 2016

Chori Co., Ltd. (“Chori”) (The major shareholder of MGS)

The Company bought products from Chori - Bought products - There is outstanding balance at end of period

2,586,046 -

2,553,175 -

The Company bought chemical products from Chori in order to distribute to customers because the products have unique features specified by the customer and having reasonable prices and trade terms. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

Megachem (UK) Ltd. (“MGU”) (A company under the control of Megachem Ltd. (Singapore)).

The Company bought products from MGU - Bought products - There is outstanding balance at end of period

8,596,876 1,054,265

4,091,044 -872

(Negative balances

resulting from the issuance

of debt reduction

because of a claim)

The Company bought chemical products from MGU in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from MGU are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

MGU alternate accommodation costs for the executives attending the exhibition in Germany. - Advances payment during period - There is outstanding balance at end of period

30,272 -

- -

MGU has made advances for accommodation expenses for the executives attending European Coating Show, Germany in April 2015 . MGU charged the company at a rate equal to the actual cost and the company has already repaid on 31 March 2015. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable which is advance payment for the company and reimbursed in accordance with the normal procedures of the company.

Megachem International Trading (Shanghai) Co., Ltd. (China)

The Company bought products from MITS - Bought products - There is outstanding balance at end of period

1,616,838 -

4,411,259 -

The Company bought chemical products from MITS in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from MITS are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification

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November 30, 2016

(“MITS”) (A company under the control of Megachem Ltd. (Singapore)).

met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

The company claims the product from MITS - Claims the product from MITS - There is outstanding balance at end of period

- -

80,393 -

The company claims the product from MITS because such products are not in accordance with the standards. By claiming in normal condition. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction accordance with the general trading standards.

MG Chemicals (Australia) PTY LTD (Australia) (“MGA”) (A company under the control of Megachem Ltd. (Singapore)).

The Company bought products from MGA - Bought products - There is outstanding balance at end of period

4,855,446 -

1,350,355 -

The Company bought chemical products from MGA in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from MGA are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

MGA made an advance payment for helping the MGA executive's relatives funeral to The Company - Donation during period - There is outstanding balance at end of period

6,542 6,667

- -

MGA made an advance payment for helping the MGA executive's son funeral to The Company as one of supplier with amount 250 US dollar in November 2015. And already repaid in April 2016. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable for advance payment for

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November 30, 2016

helping the MGA executive's relatives funeral. Megachem Vietnam Co., Ltd. (Vietnam) (“MGV”) (A company under the control of Megachem Ltd. (Singapore)).

The Company bought products from MGV - Bought products - There is outstanding balance at end of period

335,545 338,973

- -

The Company bought chemical products from MGV in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from MGV are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

The Company sold products to MGV - Sold products - There is outstanding balance at end of period

803,852 113,158

1,061,383 205,420

The Company sold chemical products to MGV with margins and commercial terms equivalent to those offered to the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. There are margins and commercial terms equivalent to those offered to the company.

The Company paid the hotels fee for MGV - Hotels fee - There is outstanding balance at end of period

186,501 186,496

- -

The Company paid the hotels fee for MGV because MGV sale team have paid for hotels fee for MGT sale team, who went to the Megachem group conference, in advance.The payment is equal to the hotel price plus 5% for the operation which includes finding and contacting hotels and paying hotel fee in advance. This 5% operation fee is same rate that MGV charged from other organizations who attended the conference. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable to pay the hotels fee for supporting the sale team's conference.

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November 30, 2016

C.N. Chemicals SDN BHD (Malaysia) (“CN”) (A company under the control of Megachem Ltd. (Singapore)).

The Company bought products from CN - Bought products - There is outstanding balance at end of period

114,397 114,424

121,580 -

The Company bought chemical products from CN in order to distribute to customers. The products have unique features specified by the customer. The reasons that MGT purchased from CN are better price and conditions than other vendors or the limited suppliers. Or because of restrictions on the chemical suppliers who have qualification met by customers. The Company set up the controlling policy for the transactions that may have conflicts of interest by specifying processes that control order from MGS and related companies. Effective Date: 22 August 2016 onwards. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. The chemicals qualified by the customer have reasonable prices and trade terms.

The Company sold products to CN - Sold products - There is outstanding balance at end of period

694,497 208,176

521,709 319,557

The Company sold chemical products to CN with margins and commercial terms equivalent to those offered to the company. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and normal commercial transaction. There are margins and commercial terms equivalent to those offered to the company.

CN paid for trade show exhibition to The Company - Trade show exhibition expenses - There is outstanding balance at end of period

53,724

53,310

- -

MGT partner with CN to present their products at a trade show exhibition in Japan to the distributors of The Company with the condition that CN will pay 30% of the expense. Audit Committee’s opinion The Audit Committee has considered the issue and viewed that the transaction is reasonable and the paid division of the cost of the exhibit on the terms agreed. The cost ratio based on estimated area of each company.

Obligations -none- Risk Factors 1. Risk of major shareholders becoming a competitor in similar business.

Megachem Limited (Singapore), a major shareholder who owns 48.26 percent shares of total paid-up capital in Megachem (Thailand) PCL, operates as a distributor of specialty chemical solutions provider in the same manner as

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Megachem (Thailand) PCL, as well as, Megachem Limited (Singapore) ‘s major shareholder, Chori Co., Ltd. (Japan), and its major shareholder, Toray Industries, Inc. (Japan).

Nevertheless, Megachem (Thailand) PCL and Megachem Limited (Singapore) had signed Non- Competition Agreement as of 15 August 2016, which stated that the Company would be a sole distributor of chemicals in Thailand, Laos, and Cambodia. Whereas, in return, Megachem (Thailand) PCL agreed not to conduct a business related to chemicals distribution other than specified countries in the agreement which included 50 countries that Megachem Limited (Singapore) operates. Thus, the Non-Competition Agreement mitigates the risk of major shareholders becoming a competitor and reserves the authorization in making approval only to Megachem (Thailand) PCL, moreover, this also prevents potential conflict of interests that may arise with Chori Co., Ltd. and Toray Industries who have control over Megachem Limited (Singapore) as well. 2. Risk of Megachem Limited (Singapore) not being a shareholder

Currently, Megachem Limited (Singapore) or MGS, owns 48.26 percent shares of total paid-up capital in Megachem (Thailand) PCL and permitted the rights to brand under “Megachem”. Thus, in the future, if MGS no longer have stake in Megachem (Thailand) PCL. The Company might not be able to sell to or buy from MGS.

Nevertheless, since the business relied heavily on direct selling to the manufacturers, therefore, Megachem Thailand assigned sale personals to contact directly with them. Moreover, with 20 years of operation, the Company gained a strong reputation in chemicals distribution business. As a result, the risk of a negative impact on the credibility of the company is quite low.

3. Risk of business territory restriction

The Company and MGS had signed a Non- Competition Agreement on 15th August 2016 that prohibited the Company to sell their products to 50 countries that MGS had specified in the agreement. Nevertheless, most of the sales were derived from the base customers who resided in Thailand, accounted for 98.73%, 99.56%, 99.56%, and 99.55% for 2013, 2014, 2015, 9M2016, respectively.

4. The risk of the declining revenues and operating results

During 2013 to 9M2016, the revenue trend dramatically declined from 722.86 MB, 615.54 MB, 546.87 MB and 438.40 MB respectively. As a consequence, the Net Profit (excluding the income from investment in associates) had fallen from 88.94, 55.67, 34.07 to 25.19 respectively, represented a net profit margin of 12.30%, 9.04%, 6.35% to 5.74% respectively.

The steady decline of the revenue and operating would make the Company to become vulnerable if the Company unable to increase its sales and future earnings. However, 9M2016 performance had slightly improved when compared to the same reporting period in 2015. Consequently, the Company also planned to expand the business both inbound and outbound, thus, the Company planned to finance its working capital through this initial public offerings.

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5. Risk of chemicals price volatility The Company sells chemical products to specialty chemicals sector, thus, required various chemicals to

produce diverse formula. Consequently, the volatility in chemicals price that are used as raw materials would expose the risk which may impact the results of operations of the Company.

As the consequence, to undermine the impact from the risk, the Company established a policy to set up prices by using cost-plus-margin. In addition, sale personnel can only quote the selling prices less than stated price list only with an appropriate authorization. The Company also monitored the price trend closely so that the sale personnel can inform the customers of price changes in advance if raw material prices are very volatile and also give advice to use other substitute chemicals (if any)

6. Risk of reliance on the industries of major customers

The main source of income from sales of specialty chemicals to customers in the industrial polymer paint and coating metals, which engendered the Company’s performance to become more vulnerable if the industry's major customers slowed down their production. To prevent the risk, The Company had expanded its customer base in other industries. Which made it possible to reduce the proportion of revenue from customers in the industry’s major customers.

7. Risk of exchange rate volatility

The Company imports various types of chemicals directly from abroad without intermediaries, hence, bids and payments would be denominated in US dollars only, whereas, the company's revenue is mainly denominated in baht. Therefore, the Company may be affected by fluctuations in exchange rates. Which ultimately affects the product cost and gross profit of the Company, however, the firm had taken the impact this into account by taking a long position of foreign exchange forward with financial institutions to hedge such risk. The amount is sufficient to cover the balance payable abroad at any one time in order to insure risks that may result from fluctuations in foreign currency exchange rates.

8. The risk of reliance on management and personnel

The Company markets specialty chemicals (Specialty Chemical), which requires knowledgeable personnel with experience and talents; especially, the sales personnel who are considerably crucial in the operations. Therefore, if a company could not retain the management and staff with the expertise, the operation could be hampered. As the consequence, the Company had reviewed the Compensation and Employee Benefits against the market regularly to improve its structure of remuneration and welfare of the Company, as well as, to attract new talents. In supplement, to mitigate the risk that could affect the business operation; the Company had gathered information on products, suppliers and customers in a systematic way into the database.

9. Risk from leakage of dangerous chemicals during storage and transportation The business of specialty chemicals distribution involves the selling of dangerous chemicals. If these chemicals were not handled properly during storage or transportation, it could cause the chemicals to spill or leak which could negatively affect the lives and assets of the Company, its employees and local people as well as

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damaging the environment. As a result, the Company carries the risk from leakage of dangerous chemicals during storage and transportation. However, the Company realizes the importance of safety during storage and transportation of dangerous chemicals and has implemented preventive measures like separating the chemicals that could react with each other and set a transportation procedure to ensure that the chemicals are being handled correctly and safely in compliance with Thailand and international standards.

10. Risk from client bypassing the company and buy chemicals directly from its suppliers The Company sells and distributes specialty chemicals by ordering from the suppliers and transport the products to customers in its original packaging, the customers will be able to figure out the suppliers’ names from the packaging and can order from the suppliers directly, bypassing the Company. However, the specialty chemicals that the Company sells act as an additive to create new properties and features to the customer’s product and the amount used in each time is very minimal. If the customer were to buy the chemicals directly from the supplier, they will not be quoted the same price if they bought it from the Company because it cannot take advantage of economies of scale from ordering a large quantity at a time. Furthermore, it is hard for customers to keep storage of the chemicals because different chemicals have different way to store it, which is why it is unlikely that they would buy chemicals in large quantity and store it by themselves. For each type of specialty chemicals, there is only a handful of suppliers who offer the product, so it is a very time-consuming and costly process for the customers to contact each supplier directly to place an order for different type of specialty chemicals. As a result, the risk from client bypassing the company and buy chemicals directly from its suppliers is relatively low. 11. Risk from suppliers entering the specialty chemicals distribution market In case the chemicals manufacturer companies wish to enter the specialty chemicals distribution market and sell the product directly to end user, bypassing the Company, there is a risk that the Company will lose the sale opportunity to its supplier and ultimately have to compete with each other. However, the Company believes that the aforementioned risk is unlikely to happen because the Company has been in the specialty chemicals distribution business for a long time and has acquired a large customer base over that time. Moreover, the Company has an efficient operation system and can swiftly respond to and satisfy its customer’s needs. The specialty chemicals is used in small portion at a time because the chemicals is only an additive, not the main ingredients to the finished goods, therefore, it might not be cost efficient for the suppliers of different type of chemicals to enter specialty chemicals distribution market. 12. Risk from losing the right to distribute important products The Company is a distributor to a large number of chemical manufacturers. The product quality is an important factor to gain trust from its customers because the chemicals will directly affect the quality of the customer’s finished goods. Some type of specialty chemicals have a few or only one supplier, therefore, if the Company were to lose this supplier for any reason, it could have an impact on the Company’s sales revenue. However, since 2007, the Company never loses the right to distribute any chemical product and has been able to comply with the terms and conditions set by the suppliers. Therefore, the Company is trusted by its suppliers to be a distributor of their products.

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Also, the Company has excellent distribution channel and sales team, which is why they are confident that they will be able to continue and maintain a good relationship with its supplier. 13. Risk from reliance on major suppliers In 2014, 2015 and Q9/2016, the Company and its subsidiary bought from its top 10 supplier equal to 57.07%, 60.20% and 60.77% of the total purchase, respectively. This reliance on major suppliers create a risk from shortage of chemicals supply if the major suppliers failed to deliver the product within deadline and the Company cannot find a substitute products with the same chemical properties. In order to mitigate the risk, the Company has implemented a plan to order and stock chemicals supply according to each customer’s operational plan. Furthermore, the Company consistently collaborates with its supplier, which enable them to foresee any difficulties, adapt its plan accordingly and as a result reduce the negative impact of the shortage. However, the Company has yet to experience any shortage in chemicals supply. Disputes: -No disputes-

Number of Employees: As of 30 September 2016, the total number of employees is 50 persons.

The Company’s Brief History:

Megachem (Thailand) Public Company Limited (“the Company”) was established on 5 October 1992 by a group of Thai shareholders, consist of Mr. Somprasong Utis, Mr.Charoen Phrompanyanun, Mr. Wanchai Rattanamongkol and Dr. Vitthaya Inala, all of whom have extensive knowledge in chemistry, together with management team from Megachem PTE Company Limited located in Singapore (The company, now known as Megachem Company Limited, is a publicly listed company on the Stock Exchange of Singapore Dealing and Automated Quotation or SESDAQ, ticker symbol SGX: 5DS). They saw a business opportunity in the expansion of chemical products in Thailand, the Company has the objective of becoming the distributor of Specialty Chemical used in various industry, the chemical is an additive product to the main ingredients and their chemical reaction can transform the product to have the intended features and properties as the customer desired.

The important development of the Company is as follows:

Year 1992 October 1992: the Company was established on 5 October 1992 with initial registered and fully paid-up

capital of 1 million baht; consist of 10,000 shares at 100 Baht par value. The Company main business objective is to distribute chemical products, focusing on specialty chemical used in various industries. At the time, main shareholders of the Company are Mr. Somprasong Utis, Mr.Charoen Phrompanyanun, Mr. Wanchai Rattanamongkol and Dr. Vitthaya Inala, who hold 13.80%, 13.60% and 10.00% in the Company, respectively. This constitutes a total of 51.00% of registered and paid-up capital, while the remaining 49%

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were owned by Megachem PTE Company Limited’s management team, consists of Mr. Lim Yee-O, Mr. Chew Choon Tee and Mr. Tan Bock Chia

Year 1995 January 1995: Dr. Vitthaya Inala bought common shares from Mr. Somprasong Utis, Mr.Charoen

Phrompanyanun, Mr. Wanchai Rattanamongkol totaling 40.99% of the 1,000,000 baht registered and paid-up capital. As a result, Dr. Vitthaya Inala is the major shareholder of the Company with total shareholding percentage of 50.99% of registered and paid-up capital.

October 1995: The Company increased its registered capital to 2,000,000 baht on 25 January 1995 by

issuing 10,000 common shares with par value of 100 baht to existing shareholders according to their shareholding proportions.

Year 2001 October 2001: The Company received Standard Certification of Quality Management System, in

compliance with ISO 9001: 2008 standard for its chemical product distribution operations, certified by Bureau Veritas (Thailand) Company Limited.

Year 2003 October 2003: The Company increased its registered capital to 2,030,500 baht on 19 March 2003 by

issuing 305 common shares with par value of 100 baht to Mrs. Busaraporn Prathoomrat. The Company’s shareholders consist of Dr. Vitthaya Inala, Mrs. Busaraporn Prathoomrat and Megachem Company Limited, all of whom hold 50.24%, 1.5% and 48.26% of registered and paid-up capital, respectively.

Year 2007 December 2007: The Company increased its registered capital to 4,088,800 baht on 21 December 2007 by

issuing 20,583 common shares with par value of 100 baht to existing shareholders according to their shareholding proportions.

Year 2009 October 2009: The Company founded Mega Latex Company Limited on 28 October 2009 with registered

and paid-up capital of 1,000,000 baht; consist of 10,000 shares at 100 Baht par value. Mega Latex is the manufacturer and seller of latex pillow and the Company holds a total of 99.97% of registered and paid-up capital.

December 2009: Mega Latex Company Limited increased its registered capital to 15,000,000 baht on 1

December 2009 by issuing 140,000 common shares with par value of 100 baht, in which the Company hold a total of 99.99% of registered and paid-up capital.

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Year 2015 March 2015: Mega Latex Company Limited increased its registered capital to 49,000,000 baht on 21

March 2015 by issuing 340,000 common shares with par value of 100 baht, in which the Company hold a total of 99.99% of registered and paid-up capital.

April 2015: Mega Latex Company Limited decreased its registered capital to 18,620,000 baht on 7

April 2015 by decreasing the number of common shares from 790,000 shares with par value of 100 baht to 490,000 shares with par value of 38 baht. This is done in order to offset the accumulated retained losses equal to 30,380,000 baht and to aid the merger with Vertis Latex (Thailand) Company Limited.

June 2015: Mega Latex Company Limited merged with Vertis Latex (Thailand) Company Limited on 2

June 2015 and the resulting company adopted the name Vertis Latex Company Limited. After the merger, Vertis Latex Company Limited has a total registered capital of 70,120,000 baht; consist of 701,200 shares at 100 Baht par value. The major shareholder of Vertis Latex Company Limited are the Company which holds 30% of registered and paid-up capital and former Vertis Latex (Thailand) Company Limited’s shareholders group, consist of Kerdwongbandit family, Upattisring family and Phankosol family, collectively hold the remaining 70% of registered and paid-up capital.

Year 2016 April 2016 : The Company increased its registered capital to 150,000,000 baht on 27 April 2016 by

issuing 1,459,112 common shares with par value of 100 baht to existing shareholders according to their shareholding proportions.

: The following agendas were approved at the general shareholders meeting no.2/2016,

which was held on 29 April 2016:

1) A special resolution to convert to a public company limited 2) A resolution to change par value of 100 baht to par value of 0.50 baht 3) A special resolution to increase registered capital of the Company to

200,000,000 Baht, consist of 100,000,000 ordinary shares at par value of 0.50 Baht.

4) A resolution to approve the issuance and the initial public offering (IPO) of 100 million shares at the par value of 0.50 Baht

5) A resolution to approve the listing of the Company common stock on the MAI stock exchange.

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Investment in Subsidiary, Associates and Related Companies:

Company Type of Business Paid-up Capital

(Million Baht)

Shareholding Proportion

(%)

Cost of capital investment (Million Baht)

Vertis Latex Company Limited

Manufacturer and seller of latex pillow and mattress

70.12 30.00 28.48

Increase (Decrease) of Capital in past 3 years:

Date / Month / Year Capital Increase /

(Decrease) (Million Baht)

After increase(decrease) of capital (Million Baht)

Note / Objective

27 April 2016 145.91 150 To raise fund by offering common shares to existing shareholders to be used as working capital.

29 April 2016 50.00 200 For the purpose of initial public offering Fiscal Period: January 1st – December 31st Auditor: EY Office Company Limited By Mrs. Chonlaros Suntiasvaraporn, Certified Public Accountant No.4523 Registrar: Thailand Securities Depositary Company Limited (TSD) Financial Advisor: Capital Nomura Securities Public Company Limited Lead Underwriter: Capital Nomura Securities Public Company Limited Dividend Policy: The Company’s dividend payout policy is at least 40% of net profit after tax

and legal reserves, complying with the rules and regulations. It is considered from the financial statement of the Company. Dividend payment is subject to change depending on the Company’s cash flow, investment plan, and other factors relating to managements of the company as well as other necessity and suitability of other factors in the future. The Board of Director has authority to decide and approve for aforementioned dividend payment. However, the yearly dividend payment must be approved in the shareholders meeting, except for interim dividend payment that the board of directors have the

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authority to consider for declaring interim dividend as they deem appropriate, nevertheless such approval must be reported to the shareholders in the next shareholders’ meeting.

BOI Certificates: -None- Number of Shareholders : as of February 20, 2017 is shown below

Number of

shareholder Number of shares

(common shares only) % of paid-up

capital 1. Strategic Shareholders

1.1 Directors, managers and executive management including related persons and associated persons.

1.2 Shareholders who have a holding of above 5% including related persons.

1.3 Controlling shareholders

2

1 -

155,223,000

144,777,000

-

38.81

36.19

-

2. Non – Strategic shareholders holding > 1 trading unit 4,098 100,000,000 25.00

3. Non – strategic shareholders holding <1 trading unit - - -

Total shareholders 400,000,000 100.00

Major Shareholders : as of February 20, 2017

No. Name After IPO

Before IPO As of April 29, 2016

No. of shares % of paid-up

capital No. of shares

% of paid-up capital

1 2

Mr. Vitthaya Inala Megachem Ltd.

150,726,000 144,777,000

37.68 36.19

150,726,000 144,777,000

50.24 48.26

3 Mr. Akechonsith Woraharn by KTB Securities (Thailand) Co., Ltd.

5,000,000 1.25 - -

4 Mrs. Busaraporn Prathoomrat 4,497,000 1.12 4,497,000 1.50

5 Ms. Sureerat Techakamolsook 1,199,100 0.30 - -

6 Mrs. Chuenthip Jeerapornprapa 918,500 0.23 - -

7 People who have Jundang Surname1/ 900,000 0.23 - -

- Ms. Panadda Jundang 450,000 0.11 - -

- Mr. Tawatchai Jundang 450,000 0.11 - -

8 People who have Jai-imsin Surname1/ 615,000 0.15 - -

- Mr. Alongkorn Jai-imsin 600,000 0.15 - -

- Mr. Pongsak Jai-imsin 15,000

0.00

- -

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No. Name After IPO

Before IPO As of April 29, 2016

No. of shares % of paid-up

capital No. of shares

% of paid-up capital

9 Ms. Thidarat Katechumpon 500,000 0.13 - -

Mr. Chumpot Bhorkerd 500,000 0.13 - -

Mr. Peerapat Kittipornnon 500,000 0.13 - -

10 Ms. Jantira Sanpakdee 450,000 0.11 - -

Mrs. Pataraporn Chaisinsorn 450,000 0.11 - -

Mrs. Revadee Lertnimitkij 450,000 0.11 - -

Mr. Chitsanu Pongpanit 450,000 0.11 - -

Mr. Boonchuay Taisuwan 450,000 0.11 - -

Mr. Mangkorn Thanasansin 450,000 0.11 - -

Mr. Ronakorn Chalermsanyakorn 450,000 0.11 - -

Mr. Wongkrit Jiemsripong 450,000 0.11 - -

Mr. Somporn Limrattanakulchai 450,000 0.11 - -

Mr. Sakesun Rangsiyanon 450,000 0.11 - -

Mr. Ekapon Kramakum 450,000 0.11 - -

11 Other Employees 3,000,000 0.80 - -

12 Other Shareholders 81,917,400 20.48 - -

Total 400,000,000 100.00 300,000,000 100.00

Note: 1/ The above presentation of shareholders by grouping of shareholders who have the same surname but may not be related by blood and also does not convey that persons among the group are concert party.

Foreign Shareholders: As of February 20, 2017, the Company has 11 foreign shareholders, who own a

total of 144,937,000 shares, equivalent to 36.24 percent of the registered and paid-up capital

Note: The company has a limitation on the percentage of equity shares held by foreign shareholders stated in the article 14 of association that “The Company’s shares can be freely transferable, unless any such transfer of shares shall cause the aggregate shareholding by non-Thai nationals to exceed forty-nine percent of the Company’s total number of shares sold. The Company has the right to refuse any transfer of shares which would make the portion of foreign shareholder exceed the portion stated above”

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Board of Directors Name – Surname Position Appointment Date

1. Mr. Phongphanu Sawetrun Chairman of the Board of Directors/ Audit Committee/ Independent Director

30 April 2015

2. Dr. Vitthaya Inala Director/ Chairman of Board of Executive Committee/ Chief Executive Officer

5 October 1992

3. Mrs. Busaraporn Prathoomrat Director/ Board of Executive Committee/ Vice Chief Executive Officer

14 March 2003

4. Mr. Tan Bock Chia* Director 10 October 2005 5. Mr. Chew Choon Tee* Director 26 November 2004

6. Assoc. Prof. Dr. Montree Socatiyanurak Director/ Chairman of the Audit Committee / Independent Director

25 August 2015

7. Mr. Anuporn Aroonrut Director/ Audit Committee/ Independent Director

30 April 2015

*Mr. Tan Bock Chia and Mr. Chew Choon Tee are the Company’s directors and also the representatives from Megachem Limited. However, Megachem Limited does not send any representatives to participate in MGT’s managements nor staffs. And the Company’s secretary is Mrs. Piyasuda Jariyatham. Audit Committee: Annual General Meeting 2015 held on 30 April 2015 and Board of directors

Meeting No. 4/2015 held on 11 August 2015 has resolution to appoint Audit Committee and independence directors, whose names are written below.

Name – Surname Position 1. Assoc. Prof. Dr. Montree Socatiyanurak Chairman of the Audit Committee 2. Mr. Phongphanu Sawetrun Audit Committee

3. Mr. Anuporn Aroonrut Audit Committee

Note: Assoc. Prof. Dr. Montree Socatiyanurak is the audit committee with sufficient knowledge and experience in reviewing the reliability of financial reports.

Scope of Duties and Responsibilities of the Audit Committee

1. To review the Company’s financial report to ensure of its accuracy, reliability, and information disclosure adequacy by coordinating with external auditors and the management, in charge of preparing the Company’s financial reports, on quarterly and yearly financial reports.

2. To review the internal control and internal audit system of the Company, to ensure of its suitability and efficiency, and to determine the independency of internal audit department, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit department or any other department in charge of an internal audit. The Committee may also recommend the Company to review or audit the transactions, deems necessary and important, and advise any necessary adjustment in internal control

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system needed to Board of Director, by reviewing with external audit and chief of an internal audit department.

3. To review the appropriateness and efficiency of Company’s risk management.

4. To review the Company’s compliance with the law and regulation of securities and exchange, the Exchange’s regulations, and the laws relating to the business of the Company.

5. To consider, select, and nominate an independent person to be the Company’s auditor, and to propose

such person’s remuneration, as well as to attend a non-management meeting with an auditor at least

once a year.

6. To review the Related Party Transactions, or the transactions that may result in conflicts of interests, to

ensure that they are in compliance with the laws and The Stock Exchange’s regulations, and are

reasonable and for the highest benefit of the Company.

7. To prepare and include the Audit committee’s report in the Company’s annual report. It must be signed by the chairman of the audit committee, and include the following information:

- an opinion on the accuracy, completeness and creditability of the Company’s financial report

- an opinion on the adequacy of the Company’s internal control system.

- an opinion on the compliance with the law on securities and exchange, the Exchange’s

regulations, or the laws relating to the Company’s business.

- an opinion on the suitability of an auditor.

- an opinion on related party transaction or the transactions that may result in the conflicts of

interests.

- the number of the audit committee meetings, and the attendance of such meetings fo each

committee member.

- an opinion or overview comment the audit committee obtain from performing duties in accordance with the charter.

- other transactions which, according to the audit committee’s opinion, should be known to the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Company’s board of directors.

8. To perform any other act as assigned by the Company’s board of directors and the audit committee. In performing duties as stated above, the Audit Committee is directly responsible to the Board of Directors.

And the responsibility of the Company to the third party belongs to the Board of Director. Audit committee has duty to inspect, management team has duty to prepare the company’s financial

statement and external audit has duty to audit that financial statement. Audit committee and board of directors acknowledge that management team, external audit have resources and time including the knowledge of accounting, auditing, internal control system and process of financial statement preparing more than the audit committee therefore the audit committee’s inspection is not the extra guarantee in the financial statement and financial data that the company present to shareholders and third parties.

The term of Chairman of Audit Committee and Audit Committee is 3 years.

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Listing Conditions (If Any): - None - Silence Period: The original shareholders holding 220,000,000 shares of the Company prior to

IPO, or 55% of paid-up capital after IPO, certify to The Stock Exchange of Thailand that their shares will not be sold for the period of one year from the trading date. Upon the expiry of 6 months period of the prescribed time, those shareholders will be allow to sell 25% of the total amount prohibited for sale and the rest after one year.

Waived from the SET: - None –

Others Important Information: - None – Statistics Summary:

Megachem (Thailand) Public Company Limited -----------Million Baht----------- ---------------Baht/ Share/1--------------

Period Revenue from

Sale and Service Net Profit

(Loss) Net Profit

(Loss) Dividend

Book Value

Dividend Payment per Earning (%)/2

2013 715.45 88.94 0.22 0.11 0.83 50.60 2014 608.95 55.67 0.14 0.10 0.87 71.85

2015 530.92 44.75 0.11 0.30 0.68 268.13 For 9-month ended at September 30, 2016(Reviewed)

432.43 25.19 0.06 0.73 0.39 1,152.36

/1 Adjusted to the same par value for the purpose of comparing by adjusting par value during 2013 to 2015 from 100 Baht/share (original par value) to 0.50 Baht/Share, and calculated by total number of shares of registered and paid-up capital. /2 Dividend payment in 2015 and 9 month ended are from retain earnings from the historical performance that may not reflect the dividend payment per earning in the future.

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Megachem (Thailand) Public Company Limited For Fiscal Year 2013 - 2015 and for 9-month ended September 30, 2016

Statement of Financial Position

Consolidated Financial Statements Financial Statements


December 31, 2013 (Audited)



September 30, 2016 (Reviewed)

M. Baht % M. Baht % M. Baht % M. Baht %

Assets

Current Assets

Cash and Cash Equivalents 25.39 5.72 41.50 9.27 41.56 11.47 15.54 4.43

Trade and other Receivables 183.92 41.43 165.17 36.88 126.40 34.88 145.26 41.44

Loan of Directors and Interest Receivable 5.48 1.23 5.57 1.24 - 0.00 - 0.00 Inventories – Net 111.03 25.01 111.25 24.84 70.10 19.34 83.04 23.69

Other Current Assets 0.33 0.07 4.75 1.06 2.67 0.74 2.61 0.74

Total Current Assets 326.14 73.47 328.25 73.28 240.72 66.42 246.44 70.31

Non-Current Assets

Restricted Bank Deposits 23.49 5.29 30.93 6.91 23.35 6.44 7.18 2.05

Investments in subsidiaries - 0.00 - 0.00 - 0.00 - 0.00

Investment in associates - 0.00 - 0.00 25.21 6.95 23.40 6.68

Property Plant and Equipment - Net 89.09 20.07 83.84 18.72 69.58 19.20 70.22 20.03

Intangible Asset – Computer Software – Net 0.08 0.02 1.84 0.41 1.11 0.31 0.54 0.15

Deferred Tax Asset 3.22 0.73 1.19 0.27 1.97 0.54 2.22 0.63

Other Non-Current Assets 1.86 0.42 1.86 0.41 0.50 0.14 0.50 0.14

Total Non-Current Assets 117.75 26.53 119.66 26.72 121.72 33.58 104.07 29.69

Total Assets 443.89 100.00 447.91 100.00 362.43 100.00 350.51 100.00

Liabilities and Shareholder Equity

Current Liabilities

Short-term loans from financial institutions 29.80 6.71 39.28 8.77 33.09 9.13 115.19 32.86

Trade and other payables 48.19 10.86 41.39 9.24 33.63 9.28 59.27 16.91 Long-term loans from financial institution due in 1 year

8.30 1.87 - 0.00 - 0.00 - 0.00

Income Tax Payable 12.03 2.71 6.61 1.48 6.61 1.82 3.11 0.89

Other Current Liabilities - 0.00 6.23 1.39 8.52 2.35 8.24 2.35

Total Current Liabilities 98.31 22.15 93.50 20.88 81.85 22.58 185.81 53.01

Non-Current Liabilities

Provision for Long-Term Employee Benefits 13.42 3.02 7.08 1.58 8.49 2.34 9.77 2.79

Total Non-Current Liabilities 13.42 3.02 7.08 1.58 8.49 2.34 9.77 2.79

Total Liabilities 111.74 25.17 100.59 22.46 90.34 24.93 195.58 55.80

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Statement of Financial Position

Consolidated Financial Statements Financial Statements





September 30, 2016 (Reviewed)

M. Baht % M. Baht % M. Baht % M. Baht %

Shareholder Equity

Registered Capital

40,888 Ordinary Shares of 100.00 Baht 4.09 0.92 4.09 0.91 4.09 1.13 - -

400,000,000 Ordinary Shares of 0.50 Baht

- - - - - - 200.00 57.06

Issued and Fully Paid Up

40,888 Ordinary Shares of 100.00 Baht 4.09 0.92 4.09 0.91 4.09 1.13 - -

400,000,000 Ordinary Shares of 0.50 Baht

- - - - - - 150.00 42.79

Share Premium 0.35 0.08 0.35 0.08 0.35 0.10 0.35 0.10

Retained Earnings – Appropriated – Statutory Reserve

0.41 0.09 0.41 0.09 0.41 0.11 0.41 0.12

Retained Earnings – Unappropriated 327.30 73.74 342.47 76.46 267.25 73.74 2.21 0.63 other components of shareholders, equity - Share Based Payment

- - - - - - 1.97 0.56

Total Shareholder Equity 332.15 74.83 347.32 77.54 272.10 75.07 154.93 44.20

Total Liabilities and Shareholder Equity 443.89 100.00 447.91 100.00 362.43 100.00 350.51 100.00

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Statement of Comprehensive Income

Pro Forma Consolidated Financial

Statements1/ Consolidated Financial Statements

Financial Statements in which equity method is

applied December 31, 20131/

(Audited) December 31, 2014

(Audited) December 31, 2015

(Audited) September 30, 2016

(Reviewed) M. Baht % M. Baht % M. Baht % M. Baht %

Revenue Revenue from sale 715.45 98.97 608.95 98.93 530.92 99.02 432.43 98.64 Other Incomes 7.42 1.03 6.58 1.07 5.27 0.98 5.97 1.36 Gain in Investment in associates - 0.00 - 0.00 10.68 1.99 - 0.00 Total Revenue 722.86 100.00 615.54 100.00 546.87 100.00 438.40 100.00 Cost of Sales 534.36 73.92 461.83 75.03 391.14 71.52 317.22 72.36 Selling Expenses 37.28 5.16 40.28 6.54 44.34 8.11 39.59 9.03 Administrative Expenses 36.67 5.07 40.29 6.55 44.28 8.10 44.59 10.17 Total Expenses 608.30 84.15 542.40 88.12 479.76 87.73 401.40 91.56 Profit from continued Operation Before Share of Loss from Investment in Associate, Financial Cost and Income Tax Expenses

114.56 15.85 73.13 11.88 67.11 12.27 37.00 8.44

Share of loss from Investment in Associate2/ - 0.00 - 0.00 -3.27 -0.60 -1.80 -0.41 Profit from Continued Operation before Financial Cost and Income Tax Expenses

114.56 15.85 73.13 11.88 63.84 11.67

35.20

8.03 Financial Cost -7.35 -1.02 -3.51 -0.57 -3.12 -0.57 -2.72 -0.62 Income Tax -21.70 -3.00 -14.50 -2.36 -10.57 -1.93 -7.29 -1.66 Profit (Loss) from discontinued operation for the Period2/ 3.43 0.47 0.54 0.09 -5.40 -0.99 - 0.00

Net Income 88.94 12.30 55.67 9.04 44.75 8.18 25.19 5.74

Net Income exclude Profit in Investment in Associates

88.94 12.30 55.67 9.04 34.07 6.35 25.19 5.74

Unrecognized item – actuarial estimates - 0.00 -0.63 -0.10 0.02 0.00 - 0.00 Less: Impact of Income Tax -0.89 -0.12 0.13 0.02 0.00 0.00 - 0.00 Other Comprehensive Income -0.89 -0.12 -0.50 -0.08 0.02 0.00 - 0.00 Comprehensive Income 88.05 12.18 55.17 8.96 44.77 8.19 25.19 5.74 Basic Earnings per Share (Baht/ Share) 2,175.18 1,361.60 1,094.55 0.14

Basic Earnings per Share (Baht/ Share) Exclude Profit from Investment in Associates

2,175.18 1,361.60 833.35 0.14

Par Value (Baht/ Share) 100 100 100 0.50 Number of Ordinary Shares (Million Shares) 0.04 0.04 0.04 177.52 Earnings per Shares (Fully Dilute)3/ 0.22 0.14 0.11 0.06 Earnings per Shares (Fully Dilute)3/ Exclude Profit from Investment in Associates

0.22 0.14 0.09 0.06

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Note: 1/ Statement of Comprehensive Income in 2013 prepared as the produce and distribute latex pillow business of Megalatex Co., Ltd., which is ex-subsidiary of the Company, is stated as “Profit (Loss) from discontinued operation for the Period” for comparison. 2/ In June 2, 2015, Megalatex Co., Ltd. merged with Vertis Latex (Thailand) and became Vertis Latex Co., Ltd. to conform to standard of financial reporting, then the company has “Profit (Loss) from discontinued operation for the Period” transaction that showed since 2013 until January 1, 2015 to June 2, 2015. Since June 2, 2015, the Company has 30% in the investment proportion in Vertis Latex Co., Ltd., so the company will show the operating activities of Vertis Latex Co., Ltd. in “Profit (Loss) from Investment in Associates”.

3/ Earnings per Share (Fully Dilute) calculate by Net Income divide by total shares after IPO (Total 400,000,000 Shares).

(Unit: Million Baht)

Statment of Cash Flow

Consolidated Financial Statements

Audited December 31, 2013



Reviewed September 30, 2016

Net Cash from (Used in) Operating Activities 129.58 71.34 121.32 22.24 Net Cash Used in Investing Activities -4.57 -16.08 15.07 12.91 Net Cash from (Used in) Financing Activities -114.40 -39.16 -126.04 -61.17 Net Increase in cash and cash equivalents 10.61 16.11 10.35 -26.02

Cash and Cash Equivalents at beginning of period 14.78 25.39 41.50 41.56

Decreasing of Cash and Cash Equivalents from discontinued operation

- - -10.29 -

Cash and Cash Equivalents at ending of period 25.39 41.50 41.56 15.54

Prepared by: Capital Nomura Securities Public Company Limited

Certified for the Correctness of the Information Memorandum

______________________________ ______________________________ (Mr. Vitthaya Inala) (Mrs. Busaraporn Prathoomrat)

Director/ Chief Executive Officer Director/ Deputy Chief Executive Officer

information memorandum - megachem (thailand) public

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