이 기사는 2022년 01월 19일 08:12 thebell 에 표출된 기사입니다.

South Korea’s Com2uS Holdings is found to be short of cash even after turning profitable last year. More than 30% of its revenue came from unrealized valuation gains from its affiliates while it spent a large amount of money on mergers and acquisitions (M&A).

Com2uS Holdings had cash reserves of around 14 billion won ($12 million) in the third quarter of 2021 on a consolidated basis, remaining at the similar level for the second straight year.

It is notable that its cash reserves have stayed the same even though the company turned profitable two years ago. Com2uS Holdings swung to an operating profit in 2020 after recording operating losses for three years from 2017 to 2019.

This was because more than 30% of its revenue came from unrealized gains on valuation derived from investments in affiliates, which had no cash inflows. After changing its accounting standards in 2020, Com2uS Holdings recognized gains on valuation of its affiliate Com2uS as its operating profit from non-operating profit. The holding company recognized 35 billion won, or about 32%, of its accumulated revenue of 107.5 billion won during the first nine months of 2021 as gains on valuation.

This helped Com2uS Holdings to turn profitable very easily, but its cash shortage has continued. A gain on valuation is a profit on a financial statement that is calculated by multiplying revenue of affiliates, such as Com2uS, by a shareholding ratio, with no cash coming in from the affiliates. Com2uS Holdings recorded an operating loss of 1.4 billion won through its own business, excluding gains on valuation, in the third quarter of last year.

Blockchain business

Com2uS Holdings used cash on hand to make investments throughout the past year. It had a cash flow from investing activities of negative 42.2 billion won in the third quarter of 2021 on a consolidated basis, up 116% from a year ago. Of this, net cash outflows stood at 58.4 billion won, which increases to 110 billion won including its 53.9 billion won investment in Coinone earlier this month.

Com2uS Group is planning to expand its business by establishing an ecosystem centered on its metaverse platform Com2Verse. Of Com2Verse’ three main businesses – blockchain, contents, and game – Com2uS Holdings is responsible for the blockchain business.

Com2uS has been seeking a variety of ways to raise funds as it runs out of cash reserves. Com2uS had a cash flow from financing activities of 35.7 billion in September 2021, up 425% from a year ago, all of which was short-term borrowings of 50.5 billion during the first half. Com2uS Holdings used 330,000 shares in Com2uS as collateral to borrow money from Citibank Korea and Hana Bank.

The holding company also secured 21 billion won by selling its treasury shares at the end of last year to expand its blockchain business.

Considering Com2Verse is still in an early stage of business, Com2uS Holdings is expected to be in greater need of cash down the road. Com2uS Group plans to issue its non-fungible token tentatively dubbed C2X and launch a blockchain-based game platform in the first quarter of this year. (Reporting by Won-ji Hwang)