Page 6 - Annual report eng 2020
P. 6

Tycoons Worldwide Group (Thailand) Plc.


                              TGE was approved to be incorporated by the Ministry of Economic Affairs under the
                         company law of the Republic of China on November 20, 1980. Its total registered capital
                         as of December 31, 2020 was NT$ 7,000 million, paid-in capital was about NT$ 4,798
                         million Currently, TGE’s main business is to produce annealed wire using wire rod, raw
                         material imported from TYCN.  TGE also directly sells wire rods and annealed wire to
                         customers in the Taiwan market.
                              TGE currently has the production facility in Taiwan for 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 70.30% owned subsidiary of TGI). TYCN’s sales to TGE accounted for 4.73%
                      of TYCN’s total International sales in 2020, 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                  2020             2019             2018

                                                         MB       %      MB        %      MB        %
                         Domestic Sales
                         1. Wire rod (including reinforcing bar)          3,804   63.54   4,244   44.38   4,745   45.82
                                                            126
                                                                                              99
                         2. Annealed wire                        18     2.11       83      0.87       42      0.96
                                                                              22
                         3. Fastener
                                                                   0.30
                                                                                   0.23
                                                                                                      0.41
                         4. Others                           481        8.03   2,547   26.64   1,007      9.72

                         Total domestic Sales             4,429   73.98    6,896   72.12   5,893   56.90
                         International Sales
                                                                                             276
                                                                              99
                         1. Wire rod (including reinforcing bar)               11     0.18      816    1.04       1,119     2.67
                                                                                   8.53
                                                                   7.52
                         2. Annealed wire
                                                                                                   10.81
                                                            450
                         3. Fastener                        986   16.47   1,589   16.62       2,070   19.99
                             4. Others                      111     1.85      162    1.69     998    9.64

                         Total International Sales       1,558   26.02     2,666   27.88   4,463   43.10
                         Total Sale                         5,987   100.00        9,562  100.00   10,356   100.00

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