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 Caf* 815 966 -15.6% 1,132
-28.0% Soul of the Ultimate Nation (SUN) 696 959 -27.4% -- --
Individual 340 435 -21.8% -- -- Internet Caf* 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 caf* 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 caf* 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
DATASOURCE: Webzen Inc. CONTACT: Sung Ho Lee of Webzen Inc.,
+82-2-3498-6818
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