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CJ CheilJedang Headquarters Overview (Photo: CJ) |
[Alpha Biz= Kim Jisun] CJ CheilJedang is addressing the ongoing struggles of Batavia Biosciences, a Dutch cell and gene therapy (CGT) contract development and manufacturing organization (CDMO) it acquired three years ago. This is attributed to the downturn in the CGT CDMO industry and the underperformance of Batavia's new factory.
According to the Financial Supervisory Service (FSS) on Wednesday, CJ CheilJedang recognized an impairment loss (financial loss) last year after determining that the recoverable amount of Batavia’s assets would not meet the acquisition cost due to Batavia’s accumulated losses.
The amount invested in Batavia at the time of the acquisition in 2021 was 266.1 billion KRW, but as of the end of last year, the book value was recognized at 158.6 billion KRW, a decrease of approximately 100 billion KRW. The value of goodwill was also recognized at a reduction of about 100 billion KRW, standing at 108.9 billion KRW.
Impairment loss occurs when the value of an asset held by a company falls below its book value, and the reduced value is reflected in the financial statements. This is typically not a concern if operating profits are sufficient. However, if the future expected cash flows are projected to fall below the book value of the asset, it is reflected as an impairment loss.
In December 2021, CJ CheilJedang acquired a 75.82% stake in Batavia Biosciences, a Dutch CGT CDMO company, for about 266 billion KRW as part of its new business push. In 2020, Batavia’s revenue was 30.9 billion KRW, with a net loss of 400 million KRW, and its total asset size was around 88 billion KRW. Despite this, CJ highly valued Batavia's future potential and made a significant investment.
After the acquisition, Batavia achieved a net profit of 194 million KRW in 2022. However, in 2023, the company recorded a net loss of 12.2 billion KRW, and by 2024, the net loss had expanded to 18.6 billion KRW. CJ has not yet disclosed Batavia’s specific revenue or order details.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
