English translation of the original Korean report. Images and source documents may contain Korean text.

Company Swung to Net Loss in Year CEO Received KRW 1.1 Billion in Bonuses…KRW 23.6 Billion Antibiotics Plant Still ‘Awaiting Approval’ Nearly Two Years After Completion

Kisoo Lee, president and CEO of Yungjin Pharm, received KRW 1.318 billion in remuneration last year. That exceeded the company’s 2024 net profit of KRW 1.233 billion, which served as a basis for calculating his performance bonuses. Meanwhile, a new antibiotics plant built at a cost of KRW 23.6 billion has yet to begin operations nearly two years after its completion, while the company’s cash holdings have fallen to KRW 3.6 billion.

According to the Financial Supervisory Service’s Electronic Disclosure System on the 11th, Lee’s remuneration last year consisted of KRW 210 million in salary and KRW 1.108 billion in bonuses. The bonuses included a short-term performance bonus based on 2024 results and a long-term performance bonus based on his performance during the term from March 2022 to March 2025. The long-term performance bonus can be up to five times his base salary. In 2024, no executive received KRW 500 million or more in remuneration. Last year, Lee accounted for 94% of the KRW 1.4 billion in total remuneration paid to five directors.

The company’s performance moved in the opposite direction. Yungjin Pharm, which recorded operating profit of KRW 8.7 billion in 2024, saw its operating profit decline 61% to KRW 3.4 billion last year, while its audited net result swung to a loss of KRW 227.66 million. In the first nine months of this year alone, the company recorded an operating loss of KRW 5.5 billion and a net loss of KRW 7.5 billion.

■ From KRW 22.5 Billion to KRW 23.6 Billion…Repair Costs Before the Facility Even Begins Operations

In September 2022, during the period covered by Lee’s long-term performance bonus, Yungjin Pharm decided to invest KRW 22.575 billion in expanding a production building for cephalosporin antibiotic injections at its Namyang plant in Hwaseong, Gyeonggi Province. The investment amount increased to KRW 22.975 billion in July last year because of rising raw material prices, and then to KRW 23.651 billion in July this year. The stated reason for this year’s increase was ‘repair costs arising from inspections of production equipment in preparation for operations.’ The production building received completion approval on December 27, 2024, but it is still undergoing the Ministry of Food and Drug Safety’s Good Manufacturing Practice (GMP) approval process, one year and 11 months later.

Litigation costs were also substantial. In January, the Seoul High Court ruled in a sales rights contract dispute that Yungjin Pharm must pay R&S Bio KRW 9.28762 billion plus interest for delayed payment. The KRW 16.1 billion that Yungjin Pharm had recognized as a litigation provision at the end of last year was fully settled during the first half of this year. In August, Ripo Bio Lab filed a damages lawsuit seeking KRW 9 billion, and Yungjin Pharm said it would actively defend itself.

Cash fell 87%, from KRW 28.4 billion at the end of last year to KRW 3.6 billion at the end of June. At investors’ request, Yungjin Pharm repaid KRW 24.9 billion of its first series of convertible bonds (CBs), issued in 2023, during last year and the first half of this year. The amount was nearly equal to the KRW 25.1 billion raised through its newly issued second series of convertible bonds in November last year. Holders of the remaining KRW 6.4 billion in first-series convertible bonds may again request repayment on the 21st of this month. At the end of June, total equity stood at KRW 86.2 billion, below the company’s share capital of KRW 91.4 billion, indicating partial capital impairment, a condition in which accumulated losses reduce total equity below share capital.

Shareholders have received no dividends. Although Yungjin Pharm’s articles of incorporation provide for dividend payments, the company has never paid a dividend. Its 77,297 minority shareholders, who collectively hold 47.55% of the company, are left holding shares whose price has fallen below KRW 1,000. Yungjin Pharm plans to seek approval at an extraordinary general meeting of shareholders on the 11th of next month to consolidate every five shares into one. The company stated that the purpose was ‘to maintain an appropriate number of shares in circulation.’

Lee also serves as chairman of the board of directors. Yungjin Pharm’s board has an audit committee but no remuneration committee. Its largest shareholder is KT&G, which holds a 52.45% stake, and Lee Dong-jae, head of the Strategic Planning Office at KT&G, sits on Yungjin Pharm’s board as a non-executive director. KT&G is a widely held company that is not controlled by any particular individual or family. Last year, it acquired KRW 5.1 billion worth of Yungjin Pharm convertible bonds while receiving repayment of KRW 4.5 billion it had lent to the subsidiary during the same quarter. CEO Kisoo Lee’s term as an inside director runs until the annual general meeting of shareholders in March 2027.