- Information Memorandum – Thanapiriya Public Company Limited (TNP) Head Office 661 Moo. 24 Rop Wiang, Muang, Chiang Rai 57000 Tel. +66 53 756 484 Fax: +66 53 756 484 Website: www.thanapiriya.co.th Listing Date As of 18 November 2015 (Trading commencement on 18 November 2015) Listing Securities 800 million common shares with par value of 0.25 Baht per share, total value of 200 million Baht Capital As of 18 November 2015 (Trading commencement) Registered Capital; Common Shares 200 million Baht (800 million shares) Paid-up Capital; Common Shares 200 million Baht (800 million shares) Secondary Market Market Alternative of Investment (mai) Offering Price 1.75 Baht Offering Date 11 - 13 November 2015 (The Company issues common shares to the public 200 million shares) Objectives and plans for utilizing the capital increase Amount Use of proceeds Estimated timing (million Baht) 1. Financing business expansion 245.00 Within 2016 2. Retiring bank loan 70.00 Within 2015 3. Using as working capital 19.41 Within 2015 - 2016 Total 334.41 Note: The capital increase in the amount of 350.00 million Baht, deduct an expenses in the amount of 15.59 million Baht, net proceeds in the amount of 334.41 million Baht. Green Shoe Option -None- Page 1 Type of Business and Nature of Operation Thanapiriya Public Company Limited (“The Company”) is a retailer and a wholesaler of consumer goods excluding fresh food under the name “Thanapiriya”. The major revenue is from store sales and the head office sales accounted for 75 percent and 25 percent of total sales revenue respectively. The Company owns and operates 12 stores dividing into 11 supermarket stores and 1 wholesale store located in Chiang Rai. Thanapiriya’s store model has a well mixture a wide variety of products and low price as modern trades but convenient as convenient stores. Thanapiriya aims to be a Thai traditional trade who provides good quality products and warm services to satisfy customer needs. Focusing on customer needs, the Company uses 25 years of experience in retail and wholesale business to develop its store model by offering well selected products over 15,000 SKUs, providing excellent service, and designing store layout to be more convenient to shop. Additionally, the supermarket stores are located in prime locations that are easy for customers to come for shopping. The Company offers a wide variety of products both retail and wholesale on every store to increase customer choices. Group Structure Thanapiriya Public Company Limited Registered Capital THB 200 mm Paid -Up Capital THB 200 mm 99 .99 % Thanaphoom Property 2013 Company Limited Registered Capital THB 90 mm Paid -Up Capital THB 60 mm Products and Services Category The Company offers well selected products for over 15,000 SKUs in order to satisfy customer needs. Most are necessity products such as Household Product, Personal Care Product, Drinks and Dried Food Product, Cosmetics and Supplements and Baby Care products. Thanapiriya offers variety of product size and package such as retail pack, boxes and crate. There are 5 categories as follows: 1) Household Product such as detergent, dish washing liquid, fabric softener, fabric conditioner, floor cleaner, tableware, candle, battery, automotive cleaning products, etc. 2) Personal Care Product such as shampoo, conditioner, soap, toothpaste, powder, cologne, sanitary napkin, paper towel and hair styling products, etc. 3) Drinks and Dried Food Product such as tea, coffee, milk, drinking water, snack, seasoning, vegetable oil, sugar, canned foods, juice, instant noodles, etc. 4) Cosmetics and Supplements such as skin care, foundation, lipstick, medicines and supplements etc. 5) Baby Care products such as milk bottles, milk powder, baby food, nappy, supersorber, toy, mom and baby care products etc. Page 2 Revenue Structure Revenue structure of each business line from 2012 – 2015 are summarized as follows 2012 2013 2014 Revenue structure million % million % million % Baht Baht Baht Store revenue 608.05 64.26 661.36 63.62 764.22 63.59 Head office revenue 324.89 34.33 361.66 34.79 408.40 33.98 Sales revenue 932.94 98.59 1,023.02 98.41 1,172.62 97.58 Others 13.35 1.41 16.55 1.59 29.11 2.42 Total 946.29 100.00 1,039.57 100.00 1,201.73 100.00 Revenue structure of each business line of January – September 2015 are summarized as follows 2014 (Jan – Sept) 2015 (Jan – Sept) Revenue structure million Baht % million Baht % Store revenue 560.48 62.76 696.85 72.40 Head office revenue 311.24 34.85 238.22 24.75 Sales revenue 871.72 97.62 935.07 97.15 Others 21.30 2.38 27.46 2.85 Total 893.01 100.00 962.53 100.00 Note: Others comprise sales promotion, rental income and interest income etc. Target customers Thanapiriya’s customers mainly are general customers covering all ages, all occupations, residents around that area, retail store operators selling consumer goods in Chiang Rai and neighboring provinces, government agencies and business professional, such as a school and a hospital and a laundry business, etc. Distribution Channels The Company distributes products via 2 channels: 1. Thanphiriya Stores The Company distributes products through its own stores as the main channel. The store is located near the residential area and next to major roads to be convenient for both regular and one-time customers. The Company has 12 supermarket stores dividing into 11 retail stores and 1 wholesale store. The details of store as of 31 August, 2015 are as follows: Page 3 Year's Area Branch Address Operating hours Opening (Sqm ) 1. Hor Naliga 414/1-2 Branprakarn Rd., Wiang, Muang, Chiang Rai 1991 220 7:00 – 21:00 57000 2. Den Ha 318/3 Moo 16, Rop Wiang , 2007 750 8:00 – 20:30 Muang, Chiang Rai 57000 . 3. Sri Sai Mun 139/6 Moo 9 Rop Wiang, 2009 400 8:00 – 20:00 Muang, Chiang Rai 57000 4. Bann Du 142 Moo 4 Baandu, Muang 2011 700 8:00 – 21:00 Chiang Rai 57100 5. Den Ha wholesale 510/14 Moo 16 Rop Wiang, 2012 900 8:00 – 19:00 Muang, Chiang Rai 57000 6. Mae Sai 888 Moo 9 Wiang Phang Kham, Mae Sai, Chiang Rai 2013 200 8:00 – 20:00 57220 7. Pa Gor 308/2 Moo 13 Rop Wiang, 2013 400 8:00 – 21:00 Muang, Chiang Rai 57000 8. Huai Khrai 302 Moo 2 Mae Rai, Mae 2014 500 8:00 – 20:00 Chan, Chiang Rai 57110 9. Wiang Pa Pao 340 Moo 2 Wieng, Wiang pa 2014 350 8:00 – 20:00 pao, Chiang Rai 57170 10. Mae Chan 500 Moo 4 ,Mae Chan, Mae 2014 400 8:00 – 20:00 Chan, Chiang Rai 57110 11. Phan 2347 Phan, Phan, Chiang Rai April 2015 550 8:00 – 20:00 57120 12. Mae Fah Luang 690 Moo Ta Sud, Muang August 356 8:00 – 20:00 Chiang Rai 57000 2015 2. Call Center - Head Office (Wholesale) For more customer coverage, Thanapiriya provides the service for wholesale customers via phone orders. This channel is mainly for customers buying in large amounts. The customer can call the head office or any nearby Thanapiriya stores to make an order. Product & Services Procurement The Company purchases products directly from suppliers or manufacturers. It selects the products based on customer preference, variety and quality of products. The Company has over 300 suppliers within the country to supply over 15,000 SKUs. The procurement procedures are as follows: Page 4 1) Survey customer needs The Company surveys the market by doing research on competitors, discussing with suppliers, observing consumer behaviors and catching up related advertisement. Moreover, the Company has a database to record store sales and purchase orders of wholesalers, in order to analyze the popularity of each product. 2) Product selection The product selection can be divided in 2 categories: New products selection The selection of new products is based on popularity, pricing, marketing strategies, quality and packaging that can attract consumers. Current products selection Thanapiriya uses the database to analyze sales, inventory turnover rate and the rate of return in order to procure appropriate product categories and optimal quantity to particular stores. Supplier selection The supplier selection criteria are as follows: 1) Popularity and needs of products 2) Quality standard 3) On time delivery 4) Effective marketing strategies 5) Reliability of suppliers The Company has policy to spread across over 300 suppliers, and does not place an order with any supplier exceeding 30 percent of total purchase to prevent the risk of dependency on a particular supplier. 3) Purchasing The Company has efficient control over the product procurement to ensure that it has optimal quantity of products to sell. The Company refers historical sales data of each store to estimate optimal order level. Before order, the Purchasing Department will check that there is no outstanding product exceeds the company's policy; otherwise, the Purchasing Department will discuss with the supplier to launch promotion campaign. 4) Distribution Products over 15,000 SKUs from suppliers will be delivered to the distribution center before distributing to Thanapiriya’s stores and wholesale customers outside the district. The distribution center is located at the head office and has area over 7,600 square meters. Distribution Center Management Products that pass the inspection process will be placed in the receiving warehouse on defined shelves and recorded into the inventory system. After that products will be transferred to distributing warehouse by a forklift to place on defined shelves separated by categories, with the First In First Out method (FIFO). Products are usually stored in the warehouse approximately 7 to 30 days before distributing to Thanapiriya stores and wholesale customers.