[At a Crossroads: Listed Company] Izmedia, Can It Avoid Being a Management Item Due to Revaluation of Office Building Value? ①

[Asia Economy Reporter Jang Hyowon] Izmedia, a KOSDAQ-listed company, has expanded its capital through asset revaluation of its office building. As a result, it is expected to avoid being designated as a management item if it does not incur a large loss in the fourth quarter.

According to the Financial Supervisory Service's electronic disclosure on the 30th, Izmedia received a revaluation of its headquarters building as of the 23rd, resulting in an appraisal gain of 6.9 billion KRW.

Izmedia purchased its office building in Pyeongchon, Anyang, in early 2016. As of the end of the third quarter this year, the book value of the building was approximately 12.3 billion KRW, consisting of 5.2 billion KRW for the land and 7.1 billion KRW for the building. In this revaluation, the land was valued at 11.1 billion KRW and the building at 8.0 billion KRW. The total value rose to 19.2 billion KRW, an increase of about 56% over roughly six years.

The gain from the revaluation will be reflected as non-operating income in Izmedia's net income for this year. Considering the deferred corporate tax effect, it is estimated that about 5.5 billion KRW of net income will be recorded.

Izmedia recorded a net loss of approximately 5 billion KRW through the end of the third quarter this year. If the revaluation gain is reflected in the fourth quarter net income, it is analyzed that the losses up to the third quarter can be offset. However, since an operating loss is expected in the business aspect in the fourth quarter as well, it is forecasted that turning a profit for the entire year will be difficult.

Izmedia is a company engaged in manufacturing inspection equipment for 2D and 3D CCM (Compact Camera Modules) used in smartphone cameras and autonomous vehicles. Since recording an operating loss in 2019 on a consolidated basis, it has continued to incur losses through the third quarter of this year.

However, due to the capital expansion effect from the asset revaluation, it is expected that if a large loss is not incurred in the fourth quarter, Izmedia can avoid being designated as a management item. KOSDAQ-listed companies are designated as management items if they record pre-tax continuing business losses exceeding 50% of their equity capital in two out of the last three fiscal years.

Last year, Izmedia recorded a consolidated pre-tax net loss of 15.6 billion KRW. As of the end of last year, Izmedia's total equity was 18.4 billion KRW, and the net loss accounted for 84.8% of the total equity.

As of the end of the third quarter this year, Izmedia's total equity was 16.4 billion KRW. Although this may change with the year-end settlement, if a pre-tax net loss exceeding 10 billion KRW is recorded this year, there is a possibility of being designated as a management item due to exceeding 50% of equity capital.

An Izmedia official stated, "We expect to resolve the management item issue through the asset revaluation."

Meanwhile, the land and building of the headquarters building revalued this time are both provided as collateral for the 13.5 billion KRW second tranche convertible bonds (CB) issued in June.

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