GSK, cash equivalents of 250,000 won

Cash outflow from operating activities for the third year

Increase in trade receivables and inventories last year

Capital increases are also carried out

GSK Korea's cash flow is rapidly deteriorating.

 

It has not been able to generate cash through operating activities for three consecutive years, so money is not circulating.

 

Cash equivalents fell to 250,000 won.

 

Short-term borrowings borrowed to raise operating funds exceeded 90 billion won.

 

According to the Financial Supervisory Service on the 24th, as of the end of last year, GSK Korea's cash and cash equivalents were 250,000 won, a decrease of about 100% from the previous year (15.1 billion won).

 

Cash and cash equivalents, which were 33.2 billion won in 2018, gradually decreased to 14.9 billion won in 2019 and 6.1 billion won in 2020, and then bottomed out in 5 years.

 

The company's cash equivalents bottomed out because cash outflows from operating activities continued for the third consecutive year.

 

GSK Korea's cash flow from operating activities turned to an outflow of 3.6 billion won in 2020, and the amount of outflow soared to 36.5 billion won in 2021.

 

Last year, the situation worsened with an outflow of 80.6 billion won.

 

Looking at last year's operating cash flow excluding interest and corporate tax, the increase in trade receivables and inventories had a negative impact last year.

 

According to GSK Korea's 'change in assets and liabilities due to operating activities' account, there was no cash flow of 24.7 billion won due to an increase in trade receivables.

 

Accounts receivable refers to the amount of money sold by a company on credit.

 

If sales increase on the books due to selling goods, but actual cash does not come in due to credit transactions, it is marked with a minus sign (-).

 

The larger the negative value, the greater the number of credit transactions without payment.

 

Compared to the previous year (6.2 billion won), account receivables increased by 30 billion won.

 

Inventories also increased by 22.1 billion won from the previous year.

 

GSK Korea purchases finished products from the headquarters, stocks them up, and sells them in Korea.

 

Last year, the company suffered a cash outflow of 37.9 billion won because it could not sell goods as much as its inventory increased.

 

As the working capital burden increased, GSK Korea's trade receivables and other receivables (accounts receivable) reached 158.7 billion won at the end of last year based on book value.

 

This is a 19% increase over the previous year.

 

During the same period, inventory increased by 70% from 77.7 billion won to 132.3 billion won.

 

Companies running out of cash are raising operating funds with short-term borrowings that must be repaid within one year.

 

GSK Korea, which borrowed 50 billion won in 2021, borrowed an additional 41.5 billion won last year.

 

It also carried out a paid-in capital increase of 28.2 billion won.

 

GSK headquarters and affiliate Stiefel participated in the paid-in capital increase.

 

In particular, while new short-term borrowings have soared to 91.5 billion won in the last two years, liquidity concerns have grown as the cash equivalents currently held are only 250,000 won.

 

Currently, short-term borrowings amount to 380,000 times cash equivalents.

 

Trade and other debt liabilities to be paid within one year were also tallied at 39.3 billion won.

 

To make matters worse, sales also declined last year due to the absence of new products and the suspension of vaccine supply.

 

As the cost of sales increased, the operating profit also turned to the red.

 

Last year, sales decreased by 9.4% from the previous year (304.4 billion won), and operating profit turned into a loss of -6.1 billion won.

 

GSK Korea is trying to turn things around this year with Shingrix, a new shingles vaccine.

 

Although Shingrix is more expensive than existing vaccines, it has changed the game in the global market with its overwhelmingly high preventive effect.

 

Shingrix, which was officially released in Korea in December last year, is being sold in earnest in hospitals and clinics this year.