Gun-Ho suggested that they should get together anytime soon.
"Hey, Min-Ho Kang, we will soon turn 40 years old. I know that we are all busy with our work and life, but we should meet sometime before forgetting each other's faces."
"You're right. It was Won-Chul who suggested in the first place that we make a club and meet regularly; he even named it as WestFacing Club, but we haven't had any gatherings ever since."
"I guess he is very busy. Why don't you call our high school friends for our next meeting? You don't need to collect membership fees this time; I will pay for it. We can have dinner and also drinks afterward."
"Really? Do you have any place in mind?"
"Well, the Korean food restaurant in the Gangnam Station areaBackHwawhere we had our gathering last time is good. Or, you can pick any place if you know any good ones."
"Okay. I will start making calls to the friends and arrange the gathering and will let you know."
After getting off the phone with Min-Ho Kang, Gun-Ho had his tea. At the moment, the stock brokerage company's branch manager arrived at his office.
"Thank you for coming."
"Wow, the factory is amazing. It's a brand new building, isn't it? There are so many workers working here too. It seems that you have a research center here as well, right? I saw the sign at the front entrance."
"You're right. We do have an in-house research center."
"How many employees do you have?"
"We currently have about 150 workers."
"You said that the company generated around 50 billion won last year, did you?"
"It's 52.8 billion won to be exact. Our net earnings are 9 billion won."
"The profit rate is awfully high for a manufacturing company."
"It's because we have no debt."
"Can I take a look at last year's financial statements?"
Gun-Ho made a call to the internal auditor.
"We have a guest from the stock brokerage company here. Can you come to my office now? Also, please bring our last year's financial statements."
"Yes, sir. I will be there right away with Accounting Manager Jo."
Gun-Ho said as he placed his smartphone back to the table, "Our internal auditor and accounting manager will be here soon."
"Did you say an internal auditor? Your company has an internal auditor, sir?"
"Haha. We are not a public company, but we do have someone in a position called an internal auditor. He handles the financial affairs of our company. We just call him Mr. Internal Auditor for convenience reasons."
"Oh, I see."
The internal auditor and the accounting managerMs. Myeong-Sook Jocame into Gun-Ho's office. Manager Jo was carrying last year's year-end financial report.
"Let me introduce this gentleman here. This is the branch manager of the stock brokerage firm in Gangnam District. This is Dyeon Korea's internal auditor and accounting manager."
The branch manager stood up from his seat. They greeted each other as they exchanged their business cards.
"Please have a seat."
As Gun-Ho asked them to have a seat, the three people sat at the table.
"So, that is last year's year-end financial report? Let me see."
Manager Myeong-Sook Jo handed the folder that she was carrying to the branch manager. It was made by the Anchang Accountant Office. The branch manager opened the folder and closely looked at the financial statements.
"I don't see any non-operating expenses. So, the company doesn't have any debt as you mentioned earlier."
The internal auditor replied.
"The cost of goods sold looks very fine for a manufacturing company. You have a profit margin of 30% which is really good too."
"We spend less on our labor cost in manufacturing products than many other manufacturing companies because we use extruding machines that produce our products."
"How are you currently doing with sales?"
"The sales have increased by 30% compared to the ones last year. We are anticipating more increase during the second half of the year."
"Really? That's impressive. I don't mean to bother you, but can you show me the total trial balance for the period from January to May this year?"
Accounting Manager Jo replied as she stood up from her seat.
"Can you also bring the list of the shareholders as well? I would like to take a look at a copy of corporate registration if you have one already issued."
The branch manager smiled and said to Gun-Ho, "You mentioned earlier to me that you are establishing a manufacturing facility in China and India, didn't you?"
"Yes, I think I did."
"In order to have the company go public, you need to make a request to the KOSDAQ Listed Companies Association for their preliminary examination as you get into the application stage. As Mr. Internal Auditor in front of me should know well, the price of the initial public offering is basically determined by the estimated demand from institutional investors for the company's shares."
"Hmm, of course."
"When you give an investment briefing to your potential investors, you probably want to explain to them why you want to go public, by clearly stating that the company currently has no debt, and you are planning to expand your manufacturing facility overseas. And, in order to procure the necessary funds, you want to have the company go public."
The internal auditor asked, "During the investment briefing, do we need to distribute the business plan doc.u.ment as well?"
"Yes, you should. If you give us a rough draft with all the necessary data, we will complete the doc.u.ment for you."
At the moment, Manager Jo came back to Gun-Ho's office with the total trial balance, the list of the shareholders, and the copy of corporate registration. The branch manager began to review the doc.u.ments carefully.
"The total trial balance looks good. The sales are indeed on the rise substantially. The list of the shareholders looks good too. I see the shares are well dispersed. However, something doesn't seem right in the corporate registration."
"What do you see?"
"The 10% of the company shares that you dispersed among your employees by the employee stock ownership program is not reflected in the increase in the capital."
Gun-Ho and the internal auditor looked at each other in confusion.
"The company started with a capital of 10 billion won, and later, it increased the capital by adding 9 billion won from its profits. That means the current capital is 19 billion won."
"Hmm, I see the point. You're right. It's indicating a wrong number."
Gun-Ho and the internal auditor quickly understood what the branch manager pointed out.
"Your dispersing the company shares among the employees was not done without consideration, but you received the pay for the shares that were distributed to the employees from those employees. You are also providing a payment plan to them for it by taking out a certain amount of money from their salary. You will need to reflect that by increasing the capital by 10% and make the total capital 20 billion won."
"We have already made the report with the register office. What do we do about it?"
"You can make a request to amend or update the corporate registration."
The branch manager pulled out some doc.u.ments from his bag.
"Well, since I'm here, why don't we sign the contract now, so our stock brokerage company can handle the work to have your company registered with KOSDAQ?"
"Isn't it too early to sign the contract now since we are going to register with KOSDAQ after we get our end-year financial report for this year?"
"Not at all. Even though we will actually submit the application to register with KOSDAQ around probably early next year, we need time for preparation."
"Can you give us a moment?"
"Since this is a joint venture company, I think I'd better talk with our vice president, who is American, representing the interest of our co-venturer."
Gun-Ho called for Secretary Seon-Hye Yee.
"Please ask Mr. Vice President Adam Castler to come to my office. And don't forget to bring Assistant Manager Myeong-Joon Chae with him."