Page 6 - Annual report eng 2019

Tycoons Worldwide Group (Thailand) Plc.

production of annealed wire, bolt and the only heat treatment facility in Taiwan for the
screws. TGE also took the view that there was further potential for upward integration in
its industry. Thus, after consideration, TGE established TYCN in Thailand as its production
base for upward integrated products (wire rods as well as annealed wires and screw and
bolt). TGE chose Thailand as a production base because Thailand is extremely competitive
in terms of logistics and manufacturing cost. TGE’s investment in TYCN is done through
the TGI to take advantage of advantageous tax treatment. TGE’s primary market is limited
to Taiwan to avoid so-called cannibalization within its group of companies. In accordance
with company policy, management and operation of TGE and TYCN are clearly separated,
and the two management teams are independent each other, in order that each company is
acting in its own best interests.

1.4 Relationship with the business group of major shareholder

Currently, TYCN’s largest customer in Taiwan market, including wire rod and annealed
wire, is Tycoons Group Enterprise (TGE), TYCN’s indirect majority shareholder via Tycoons
Group International Co., Ltd.(TGI), (TGE holds a stake of up to 100% in TGI and TYCN is a
73.40% owned subsidiary of TGI). TYCN’s sales to TGE accounted for 7.03% of TYCN’s
total International sales in 2019, mainly due to the fact that TGE is TYCN’s agent who is in
charge of business development and marketing in Taiwan, which allows TYCN to rapidly
react to the demand and prices in Taiwan market. Therefore, the business relationship between
TGE and TYCN will be able to stay mutually beneficial.
In accordance with company policy, management and operation of TGE and TYCN are
clearly separated, and the two management teams are independent each other, in order that
each company is acting in its own best interests.

2. Nature of the business
Revenue structure

Product 2019 2018 2017
MB % MB % MB %
Domestic Sales
1. Wire rod (including reinforcing bar) 4,244 44.38 4,745 45.82 3,231 42.98
2. Annealed wire 83 0.87 99 0.96 108 1.44
3. Fastener 22 0.23 42 0.41 60 0.80
4. Others 2,547 26.64 1,007 9.72 - -

Total domestic Sales 6,896 72.12 5,893 56.90 3,399 45.22
International Sales
1. Wire rod (including reinforcing bar) 99 1.04 276 2.67 685 9.11
2. Annealed wire 816 8.53 1,119 10.81 1,119 14.89
3. Fastener 1,589 16.62 2,070 19.99 1,678 22.32
4. Others 162 1.69 998 9.64 636 8.46

Total International Sales 2,666 27.88 4,463 43.10 4,118 54.78
Total Sale 9,562 100.00 10,356 100.00 7,517 100.00

Based on the figures above, domestic sales generally accounted for a greater proportion of
TYCN’s total sales than international sales over period from 2018 through 2019, while
international sales accounted for greater proportion in 2017 Nonetheless, the relative
proportions of wire rods sold in the domestic and foreign markets have remained largely
3