Preventing Overstatement

AhnLab's accounting method prevents overstatement. This is the result of careful contemplation on how to transparently reflect cash flow in the accounting book. AhnLab has consistently upheld a philosophy of transparent management since its founding and received the Transparent Accounting Award in 2007 and 2013. The Company was selected as a Good Company in Corporate Governance (by KCGS) in 2013, 2014, and 2016, and the Best Company in Corporate Governance (by KCGS) in 2015 and 2017.

Transparent Management Awards

• 2017 Selected as the Best Company in Corporate Governance (by KCGS)
• 2016 Selected as a Good Company in Corporate Governance (by KCGS)
• 2015 Selected as the Best Company in Corporate Governance (by KCGS)
• 2014 Selected as a Good Company in Corporate Governance (by KCGS)
• 2013 Transparent Accounting Award / Selected as a Good Company in Corporate Governance (by KCGS)
• 2007 Transparent Accounting Award (by KCGS)

Phased Revenue Recognition

AhnLab applies a unique revenue recognition method that recognizes reported revenue (accounting revenue) on a phased basis in line with the transparent management philosophy. For example, AhnLab divides the sales of V3 products into product and service components. At the time of sale, only the product component is recognized as revenue, while the remaining service component is recognized over a 12-month period. This approach takes into account the fact that AhnLab's flagship product, computer antivirus software, requires continuous service over a year after sale, unlike typical software. This conservative accounting method, which matches actual revenue and expenses, results in a tendency for the recorded sales (accounting sales) to be lower than the actual sales. Consequently, making direct comparisons of AhnLab's sales and those of other companies is not feasible. Simple comparisons of revenue may lead to misunderstandings about AhnLab's performance. Accordingly, investors should exercise caution when comparing AhnLab's revenue with that of other companies.

R&D Expense Recognition

Another distinguishing feature of AhnLab's accounting practices is that all R&D expenditures are recognized as expenses when incurred. Typically, expenses incurred in product development can be recognized as intangible assets, so many companies treat development costs, including personnel expenses, as intangible assets. However, AhnLab immediately recognizes R&D expenses as costs whenever they occur. While accounting for these expenses as assets might make the balance sheet look more favorable in the short term, AhnLab opts for the direct expense recognition. This is because we consider that recording these expenses as assets could pose future burdens if the development efforts fail. This is also part of AhnLab's ongoing efforts for transparent accounting practices.

Management Philosophy on Share Value and Share Price

Rather than emphasizing share price itself, AhnLab focuses on maximizing shareholder value. AhnLab believes that 'stock price' and 'stock value' are distinct concepts. Therefore, to convey a long-term perspective, AhnLab uses the term 'stock value' rather than 'stock price.' The stock price is determined by the market, and companies have limited direct control over it. Attempting to exert direct influence on stock price can lead to cases of market manipulation. Thus, the best approach the company can take is to enhance its corporate value and effectively introduce it to the market. Enhancing corporate value can be expressed as increasing 'stock value,' and effectively introducing it to the market is what 'IR activities' entail. AhnLab believes that when such corporate activities are effectively communicated to the market, it ultimately results in an increase in stock prices. The reason AhnLab chooses to use the term 'stock value' instead of 'stock price' is precisely for this reason. AhnLab will continue to strive to maximize shareholder value by enhancing the Company's value and effectively introducing it to the market.