Taeyoung Construction Rejects Audit Opinion on Financial Statements... "Reaudit to Resolve Delisting Cause"

Samjong Accounting Corporation "Uncertainty Over Going Concern Continuation"

Taeyoung Construction, which is undergoing a workout (corporate financial restructuring), announced on the 20th through an electronic disclosure that it received a 'disclaimer of opinion' from Samjong Accounting Corporation on its financial statements for the previous year.

Employees are arriving at the Taeyoung Construction headquarters in Yeouido, Seoul. / Photo by Yongjun Cho jun21@

The reasons for the disclaimer of opinion are 'uncertainty about the going concern assumption' and 'limitations on key audit procedures.' Samjong Accounting Corporation stated, "We were unable to obtain sufficient and appropriate audit evidence regarding the financial statement accounts presented by the company, and there is uncertainty about whether the company will continue as a going concern."

Since the impairment amount among Taeyoung Construction's investment and loan funds, and the debt conversion amount among the real estate project financing (PF) guarantee liabilities, may change during the process of liquidating PF project sites, the financial statements cannot be finalized at this stage. Additionally, since the corporate improvement plan under the workout procedure has not yet been established, it is not possible to determine whether the company can continue as a going concern.

According to the listing regulations of the Korea Exchange, a disclaimer of opinion by an external auditor on financial statements is grounds for delisting. Although the listing may be maintained depending on the Korea Exchange's review results, stock trading will be suspended until the final decision is made.

Regarding this, Taeyoung Construction stated, "Although the company internally closed the accounts prior to the shareholders' meeting, due to the special circumstances of undergoing a workout, the disclaimer of opinion was inevitable," and "we will promptly resolve the grounds for delisting in accordance with the procedures."

Companies notified of grounds for delisting can file an objection within 15 business days. If the objection is accepted, an improvement period of up to one year is granted through a review process. During this period, the company will have the financial statements that received the disclaimer of opinion re-audited. If an unqualified opinion is obtained at that time, the grounds for delisting will be resolved.

Taeyoung Construction must also resolve capital erosion, another ground for delisting. Earlier, on the 13th, Taeyoung Construction’s stock trading was suspended due to complete capital erosion reflecting expected losses from PF project sites following the commencement of joint management procedures. Taeyoung Construction expects that once a corporate improvement plan is established through negotiations with creditors, capital erosion will be resolved through creditor equity conversion.

A Taeyoung Construction official said, "We have established a plan for re-auditing last year's financial statements in consultation with Samjong Accounting Corporation," and added, "We plan to promptly submit the objection and sufficiently explain the situation to the exchange to secure the improvement period."

This content was produced with the assistance of AI translation services.