SEOUL, South Korea, Aug. 8 /Xinhua-PRNewswire-FirstCall/ --
WEBZEN INC. FY 2007 INTERIM FINANCIAL STATEMENTS
Webzen Inc.
Non-consolidated Balance Sheet
(* The FY 2007 Interim financials have been prepared on an unaudited
basis, and may be subject to change during the independent auditing
process
* The FY 2007 Interim financial statements are non-consolidated, and
have been prepared under the Korean General Accepted Accounting
Principles)
As of
31-Dec-06 31-Mar-07 30-Jun-07
KRW KRW KRW
Assets
I. Current assets 99,658,502,314 91,073,195,756 84,226,743,740
(1) Quick assets 99,658,502,314 91,073,195,756 84,226,743,740
1. Cash and cash 76,238,563,962 68,984,802,327 66,704,270,232
2. Short-term financial 4,445,690,286 4,445,931,689 1,435,690,277
3. Accounts receivable 4,949,516,538 5,981,066,030 6,436,778,624
4. Short-term loans 962,392,920 794,073,500 702,163,200
5. Prepaid expenses 252,676,392 636,410,829 623,313,535
6. Deferred income tax
debits -- -- --
7. Other current assets
Accrued income
receivable 420,319,037 443,507,552 261,617,827
Non-trade receivable 64,741,816 609,690,671 123,583,220
Marketable securities 11,747,356,143 8,499,256,998 7,606,918,849
Advance payments 38,353,000 559,938,720 61,486,936
Prepaid income taxes 538,892,220 118,517,440 270,921,040
Value added tax -- -- --
II. Non-current assets 65,219,879,590 67,702,694,985 70,421,603,467
(1) Investments 3,892,174,349 3,843,461,701 3,355,547,940
1. Long-term financial
instruments -- -- --
2. Investments in
securities according
to equity method 1,737,121,508 1,509,897,190 822,251,484
3. Long-term loans 2,155,052,841 2,333,564,511 2,533,296,456
(2) PP&E 11,221,639,851 10,865,609,588 10,446,626,867
1. Land 2,611,544,500 2,611,544,500 2,611,544,500
2. Buildings and
auxiliary
facilities 5,602,562,912 5,564,165,916 5,525,768,919
3. Equipment 2,561,237,036 2,342,583,045 1,993,557,661
4. Facilities 446,295,403 347,316,127 315,755,787
(3) Intangible assets 12,740,313,585 12,227,708,141 11,850,295,429
1. Capitalized R&D
costs 9,366,733,838 9,166,047,486 8,965,361,135
2. Software 3,373,579,747 3,061,660,655 2,884,934,294
(4) Other non-current 37,365,751,805 40,765,915,555 44,769,133,231
assets
1. Long-term prepaid
expenses 18,382,683,300 21,382,847,050 24,390,113,926
2. Guarantee deposits 18,682,266,355 19,082,266,355 20,078,217,155
3. Other investments 300,802,150 300,802,150 300,802,150
4. Long-term deferred
income tax debits -- -- --
Total assets 164,878,381,904 158,775,890,741 154,648,347,207
I. Current liabilities 7,269,155,752 8,941,950,161 7,503,880,957
1. Accounts payable 1,215,266,183 1,517,357,520 1,447,668,439
2. Accrued expenses 465,467,883 1,159,391,206 521,580,319
3. Unearned revenues 4,084,039,983 4,469,402,118 3,833,128,013
4. Other current
liabilities
Withholdings 253,692,658 279,037,959 175,809,285
Withhold Value
added tax 213,494,404 350,984,956 256,194,569
Deposits received 871,875,000 871,875,000 971,875,000
Provision for other
estimated liabilities 62,300,000 144,327,420 147,155,858
Advanced received 103,019,641 101,251,176 101,296,076
Long-term current
liabilities -- 48,322,806 46,173,398
Provision for sales
promotion -- -- --
II. Fixed liabilities 5,640,781,629 6,240,420,280 6,808,666,219
1. Long-term unearned
income 27,851,773 954,324,658 1,833,279,132
2. Accrued severance
benefits 5,602,929,856 5,161,149,381 4,863,057,805
3. Long-term borrowings 10,000,000 12,946,241 112,329,282
Total liabilities 12,909,937,381 15,182,370,441 14,312,547,176
I. Capital stock 6,486,000,000 6,486,000,000 6,486,000,000
1. Common stock 6,486,000,000 6,486,000,000 6,486,000,000
II. Capital surplus 135,466,502,809 135,466,502,809 135,466,502,809
1. Additional paid-in
capital 135,466,502,809 135,466,502,809 135,466,502,809
III. Retained earnings 22,298,261,066 16,372,240,902 13,954,504,744
1. Legal appropriated
retained earnings 322,500,000 322,500,000 322,500,000
2. Appropriated-Reserve
for business
rationalization 117,904,363 117,904,363 117,904,363
3. Appropriated-Reserve
for future investments 442,699,142 442,699,142 442,699,142
4. Unappropriated retained
earnings to be carried
forward 21,415,157,561 15,489,137,397 13,071,401,239
IV. Capital adjustments (12,282,319,352) (14,731,223,411)(15,571,207,522)
1. Capital
Adjustment-Unrealized
gains on AFS 6,771,795,838 4,230,254,190 3,378,222,940
2. Capital
Adjustment-Unrealized
losses on AFS -- -- -3,792,758
3. Loss on investments in
equity method
securities (18,307,830,040) (18,307,830,040)(18,307,479,566)
4. Stock option 719,780,537 781,858,501 792,346,002
5. Treasury Stock (1,453,391,587) (1,422,831,962) (1,417,479,566)
6. Gains on sale of
treasury stock (12,674,100) (12,674,100) (12,674,100)
Total shareholders'
equity 151,968,444,523 143,593,520,300 140,335,800,031
Total liabilities
and SE 164,878,381,904 158,775,890,741 154,648,347,207
Webzen Inc.
Non-consolidated Income Statement
(* The FY 2007 Interim financials have been prepared on an unaudited
basis, and may be subject to change during the independent auditing
process
* The FY 2007 Interim financial statements are non-consolidated, and
have been prepared under the Korean General Accepted Accounting
Principles)
Three months ended Six months ended
31-Mar-07 30-Jun-07 30-Jun-07
KRW KRW KRW
I. Sales 6,298,789,458 7,396,790,004 13,695,579,462
Online game 5,353,668,654 4,823,470,559 10,177,139,213
Royalty 945,120,804 2,573,319,445 3,518,440,249
II. Cost of goods sold 3,870,207,935 3,259,382,780 7,129,590,715
Online game 3,870,207,935 3,259,382,780 7,129,590,715
III. Gross profit 2,428,581,523 4,137,407,224 6,565,988,747
IV. SG&A 7,373,785,608 5,947,618,617 13,321,404,225
Salaries expenses 1,756,697,183 1,695,719,420 3,452,416,603
Bonus 282,927,707 (128,312,247) 154,615,460
Severance benefits 18,935,573 239,201,349 258,136,922
Welfare benefits 223,171,559 202,024,487 425,196,046
Travel expenses 99,720,986 128,541,775 228,262,761
Entertainment expenses 64,183,622 66,381,969 130,565,591
Communication expense 18,220,896 17,390,778 35,611,674
Utility expenses 25,484,950 17,287,310 42,772,260
Taxes and dues 80,324,135 78,408,640 158,732,775
Depreciation 92,262,049 115,972,943 208,234,992
Rental expense 58,580,986 60,852,761 119,433,747
Repairs expense 15,500 -- 15,500
Insurance premium 53,118,412 82,875,132 135,993,544
Vehicle maintenance
expenses 16,687,788 14,594,069 31,281,857
Ordinary research and
development
expenses 3,199,130,063 2,272,975,814 5,472,105,877
Freight expenses 3,898,468 3,189,562 7,088,030
Training expenses 11,310,718 20,826,235 32,136,953
Publication expenses 6,070,210 7,618,722 13,688,932
Office supplies
expenses 3,676,826 4,132,118 7,808,944
Supplies expenses 7,116,443 7,753,525 14,869,968
Commissions paid 734,552,898 649,531,588 1,384,084,486
Advertising expenses 313,725,045 159,278,928 473,003,973
Bad debt expenses -- -- --
Sales commissions 209,828,101 133,959,200 343,787,301
Amortization cost of
intangible assets 44,232,748 45,344,356 89,577,104
Sample expenses -- -- --
Compensation expenses
assoc. w/ stock
options 49,912,742 52,070,183 101,982,925
V. Operating Profit (4,945,204,085) (1,810,211,393) (6,755,415,478)
VI. Non-operating income 1,179,460,276 1,388,699,121 2,495,465,475
Interest income 881,621,940 918,359,515 1,799,981,455
Gains on foreign
currency transaction 17,902,671 27,716,797 45,619,468
Gains on foreign
currency translation 44,648,571 2,550 2,550
Income from commission 12,705,600 12,000,000 24,705,600
Gains on available for
sale securities 56,184,211 300,738,320 356,922,531
Gains on disposition
of PPE 211,508 -- 211,508
Equity income on
investments 28,045,351 -- --
Reversal of
Compensation Exp.
Associated with SO 137,841,548 100,194,197 238,035,745
Dividends income -- 29,506,944 29,506,944
Miscellaneous income 298,876 180,798 479,674
VII. Non-operating
expenses 1,117,407,565 1,567,858,451 2,612,572,094
Interest Expense 1,972,517 2,788,838 4,761,355
Losses on foreign
currency transaction 17,418,761 29,022,332 46,441,093
Losses on foreign
currency translation 123,985 78,687,463 34,162,877
Loss on disposal of
tangible assets 5,727,809 1,504,169 7,231,978
Equity losses on
investments 1,043,436,924 1,250,299,457 2,265,691,030
Losses on disposal of
available-for-sale
securities -- -- --
Donations -- -- --
Miscellaneous losses 48,727,569 205,556,192 254,283,761
VIII. Profit before
extraordinary items (4,883,151,374) (1,989,370,723) (6,872,522,097)
IX. Extraordinary gains -- -- --
X. Extraordinary losses -- -- --
XI. Income before income
tax expenses (4,883,151,374) (1,989,370,723) (6,872,522,097)
XII. Income tax expenses 1,042,868,790 428,365,435 1,471,234,225
XIII. Net income (loss) (5,926,020,164) (2,417,736,158) (8,343,756,322)
* The financial results for FY2007 Second quarter have been prepared on
an un-audited basis according to Korean GAAP standards, and may be
subject to change during the independent auditing process. Webzen Inc.
disclaims responsibility for individual investment decisions made based
on this material.
Webzen FY2007 Second Quarter Results Summary
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
Revenue 7,397 6,299 17.4% 6,368 16.2%
Operating
Expenses 9,207 11,244 -18.1% 17,307 46.8%
Operating -1,810 -4,945 -- -10,939 --
Profit
OP Margin -- -- -- -- --
Ordinary
Profit -1,989 -4,883 -- -11,391 --
Ordinary
Profit
Margin -- -- -- -- --
Net Income -2,418 -5,926 -- -8,798 --
Revenue Breakdown
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
Revenue 7,397 6,299 17.4% 6,368 16.2%
Domestic 4,821 5,351 -9.9% 4,572 5.4%
Overseas 2,573 943 172.9% 1,775 45.0%
Other 3 5 -40.0% 21 -85.7%
Domestic Revenue Breakdown
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
MU 4,125 4,392 -6.1% 4,572 -9.8%
Individual 3,310 3,426 -3.4% 3,440 -3.8%
Internet
Cafe 815 966 -15.6% 1,132 -28.0%
Soul of the
Ultimate
Nation (SUN) 696 959 -27.4% -- --
Individual 340 435 -21.8% -- --
Internet
Cafe 356 524 -32.1% -- --
Total 4,821 5,351 -9.9% 4,572 5.4%
During 2nd quarter, we realized a 7.4 billion won revenue. This is a 17% increase from previous quarter, and 16% increase YoY.
Domestic revenue decreased 10% to 4.8 billion won. MU's domestic revenue decreased slightly, and also SUN's domestic revenue has decreased since commercial launch. Among the domestic revenue, MU's individual accounts decreased 3% to 3.3 billion won and internet cafe revenue decreased 16% to 800 million won. We have implemented a value-added premium service for MU on June 19th, and are expecting revenue to improve. SUN's revenue, including internet cafe revenue, was 700 million won, which decreased 27% QoQ. SUN's domestic revenue decrease was caused by the delay in updates of the game due to the allocation of our technical support resources in the overseas markets, for the commercial launch of SUN in China. We launched a major update of SUN on July 10 in Korea, and are expecting a gradual increase in revenue. We are planning continuous updates and events in second half, so we are expecting domestic revenue to improve after third quarter.
Overseas Royalty Revenue Breakdown
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
MU 976 759 28.6% 1,775 -45.0%
China 51 55 -7.3% 59 -13.6%
Taiwan 98 104 -5.8% 124 -21.0%
Japan 675 347 94.5% 487 38.6%
Thailand -- -- -- 123 --
Philippines 55 61 -9.8% 126 -56.3%
Vietnam 35 124 -71.8% 345 -89.9%
U.S. 62 68 -8.8% 511 -87.9%
Soul of the
Ultimate
Nation (SUN) 1,576 184 765.5% -- --
Taiwan 177 184 -3.8% -- --
China 1,399 -- -- -- --
Other 21 -- -- -- --
TOTAL 2,573 943 172.9% 1,775 45.0%
2nd quarter overseas royalty increased 173% to 2.6 billion won due to the commercial launch of SUN in Taiwan and China. MU's overseas royalty revenue increased 29% to 970 million won. This was due to the big revenue increase from Japan since the switch to microtransaction model. SUN's overseas royalty revenue increased to 1.6 billion won due to the recognition of technical support fee and license fee received from China related to the commercial launch of SUN. With the continuous increase of MU royalty revenues from since the change to microtransaction model, and the stable service of SUN in China, we expect overseas royalty revenue to increase.
Total Operating Expenses
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
Total
Operating
Costs 9,207 11,244 -18.1% 17,307 -46.8%
Labor Costs 4,763 5,978 -20.3% 6,362 -25.1%
Depreciation 538 515 4.5% 670 -19.7%
Commission
Paid 1,180 1,760 -33.0% 1,866 -36.8%
Marketing
Expenses 159 314 -49.4% 5,285 -97.0%
Sales
Commission 134 210 -36.2% 187 -28.3%
Other 2,433 2,467 -1.4% 2,937 -17.2%
Due to the reduction of personnel, labor costs decreased 20% to 4.7 billion won. Through efficient management of personnel, total headcount decreased by 37 to 541 as of end of 2nd quarter. Depreciation increased 4.5% to 530 million won, and sales commission decreased 36% to 130 million won. Commission paid decreased 33% to 1.2 billion won. Also, by reducing unnecessary marketing costs, marketing expenses decreased 49% to 160 million won. During the second half of 2007, we are expecting an increase in marketing costs, related to the close beta tests of our new games. But we will continue to minimize marketing costs through effective marketing activities.
Non-operating Items
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
Non-operating
Income -179 62 -- -453 --
Interest
Income 916 880 4.1% 1,033 -11.3%
Profit
(Loss)
on Foreign
Exchange -80 45 -- -51 --
Gain on
Equity
Method -1,250 -1,015 -- -1,594 --
Gain on
disposal of
Marketable
Securities 301 56 437.5% -- --
Other -66 96 -- 159 --
We realized a non-operating income of 180 million won. Although our cash balance decreased, due to the rise in interest rates, our interest income increased by 4% to 916 million won. As of end of second quarter, cash, cash equivalents, and marketable securities, excluding GameOn shares, was 71 billion won, which decreased by 4.9 billion won from previous quarter.
Equity Method
(Unit: KRW mm)
2007 Q2 2007 Q1 QoQ 2006 Q2 YoY
9Webzen -- -- -- -- --
Webzen Taiwan -268 -286 -- -385 --
Webzen China -- -- -- -192 --
Webzen America -416 28 -- 174 --
Total -566 -757 -- -1,191 --
Loss in equity method increased by 235 million won to -1.2 billion won.
Contacts:
Webzen Inc.
Daelim Acrotel Building, 6th Floor
467-6 Dogok-dong, Kangnam-Ku,
Seoul, Korea 135-971
Sung Ho Lee
Investor Relations
Tel: +82-2-3498-6818
