Page 19 - One Report Thai Final_ENG_2021

Tycoons Worldwide Group (Thailand) Plc.

2. Risk Management

2.1 Risk Management

The Board of Directors has adopted a risk management system for all material
and controllable risk and included the reporting and evaluating system in response the
current situation. In 2021, the Board of Directors has considered political risk, which now
does not affect the company directly. As for economic risk in exchange rate, the company
has employed forward contract to minimize the risk. All managements are responsible for
risk management. In assessing the risk, the chance of occurring and the impact it might
create was examined, then prevention measures were proposed. The Company’s internal
audit has been performed audit in relation to risk and then reported to the committee, so
that the committee could report to the Board of Directors in time.

2.2 Risk factors

2.1 Sales risks

1. Global economic situation

Steel consumption is closely related to economic growth because economic
growth influences industries that consume steel such as construction, automobile,
and endurable goods. In the early stage of the outbreak of the new coronavirus
(COVID-19) disease in 2020, the global economic recession and weak steel
demand, and then in the post-epidemic era of 2021, as European countries and
United States launched infrastructure plans to revitalize the economy, steel
demand began to rise sharply. According to IMF estimates, the global economic
growth rate in 2022 is 4.4%, slightly lower than that in 2021 There are lots of
uncertainties around the world such as mutation of the new coronavirus (COVID-
19), geopolitical conflicts (Ukraine-Russia, Taiwan Strait, Korean Peninsula,
etc.), Brexit, Biden’s new policies, protectionism, U.S. and European monetary
policy .. etc..

On March 8, 2018, Trump signed steel and aluminum tariffs that imposes 25%
duty on steel and 10% charge on aluminum, which took effect on Mar 23, 2018.
TYCN's export to U.S. is less than 5% of its sales, therefore the tariff does not
bother TYCN's export. However, the long term influence of US-China trade war
can not be ignored.

2. Product and raw material price

TYCN’s major raw materials for downstream products are billets and wire rods.
Therefore, billet and wire rod prices play an important role when it comes to sales,
cost, and profit. TYCN’s raw materials sources are diversified by countries such
as China, Russia, Oman, and Thailand. As the largest steel producing country,
China‘s policy on producing and selling steel will directly affect global steel
prices. TYCN’s raw material and product prices fluctuate with global prices,
further influencing the company’s revenue and profit.

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