THE WILLBES&CO, listed on the KOSPI, received an 'appropriate' opinion in its audit report for last year, thus escaping the risk of delisting that had been raised by some. However, concerns from investors are emerging as poor performance continues, and uncertainties regarding the company's going concern were noted for the first time in this audit report, raising the possibility of future audit issues.
On the 27th after the market closed, THE WILLBES&CO submitted its audit and business report late, showing an operating loss of 12.5 billion won and a net loss of 27.4 billion won. The losses widened by 199.7% and 77.5% compared to the previous year. Revenues increased by 0.6% to 21.74 billion won compared to last year (21.61 billion won). The company explained that the revenue decrease in its textile division was due to political unrest at its major subsidiary, 'THE WILLBES HAITIAN S.A', and an increase in provisions for inventory valuation contributed to the larger operating loss.
Established in 1973, the textiles and apparel corporation THE WILLBES&CO was listed on the securities market in 1989. The largest shareholder is Jeon Byung-hyeon, the chairman of the board, with an equity stake of 11.62%. THE WILLBES&CO entered the education business in 2008 and currently holds the highest number of students in specialized certification education fields, including appraisers and certified labor consultants. It also acquired the Namoo Management Academy, which has the number one market share in education for certified public accountants and tax accountants, in 2015. Currently, 70% of the company’s revenue comes from its textile business, while 30% derives from its education business.
Following the news of receiving an appropriate opinion in the audit, THE WILLBES&CO's stock price hit the upper limit (the highest daily price cap) on the 28th. However, there are uncertainties over whether the company will continue to receive appropriate opinions in future external audits.
Shinhan Accounting Corporation, the auditor for THE WILLBES&CO, noted in this audit report that, "The company has recorded operating losses for two consecutive years and net losses for seven consecutive years, raising significant doubts about its ability to continue as a going concern." The auditor indicated that they deemed the company could continue operations at this point, hence issuing an appropriate opinion, but warned of potential uncertainties in the future. Earlier, Kumyang, a secondary battery manufacturer, which received a 'rejection' of the audit opinion on the 21st, also received an appropriate opinion in its 2023 audit report but noted uncertainties regarding its ability to continue as a going concern.
The auditor also pointed out THE WILLBES&CO's related party transactions. About 22.4 billion won of the approximately 121.7 billion won revenue last year came from subsidiaries, while THE WILLBES&CO's manufacturing costs and goods purchased from subsidiaries reached 28.1 billion won, about half of the total amount (57 billion won). In this regard, Shinhan Accounting Corporation stated, "There are various types of transactions occurring with subsidiaries, so it is considered a risk factor whether all transactions are accurately accounted for." Currently, THE WILLBES&CO has 14 unlisted subsidiaries, including MiraeNet, Namoo Management, and THE WILLBES&CO Edu.
Securing funds in the future is also essential. THE WILLBES&CO issued general bonds in 2022 and 2023, with maturity dates set for April 28 and June 26, respectively. The annual interest rates are 5.89% and 6.74%, with a total principal of 12.1 billion won. This December, a maturity date for the 29th convertible bond (CB) also approaches, where early repayment claims of 5.8 billion won were exercised until last year, leaving only about 200 million won remaining. As of the end of last year, the company had 5.5 billion won in cash and cash equivalents.
Shareholders expressed concern that the stock price could fall further. The stock price of THE WILLBES&CO has already been on a downward trend for a long time. Three years ago, the price was in the 1,500 won range, but as of the 28th, it had dropped to 390 won, a decrease of 74%. According to NH Investment & Securities' Namoo app, the proportion of loss-making investors in THE WILLBES&CO stands at 100%, with an average revenue rate of minus (-) 76.17%.
THE WILLBES&CO plans to repay borrowings maturing this year through asset sales and extension of maturities. Additionally, it aims to eliminate uncertainties regarding its going concern by achieving revenue growth in its operating divisions. ChosunBiz attempted to contact THE WILLBES&CO to inquire about plans for additional funding, such as CB issuance, but the company stated that the responsible person was unavailable for comment.