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GRAVITY Reports Second Quarter Of 2012 Results And Business Updates

Stocks in this article: GRVY

As a result of the foregoing factors, Gravity swung to a net loss attributable to parent company of KRW 1,126 million (US$ 996 thousand) for the second quarter of 2012 compared with a net income attributable to parent company of KRW 1,128 million for the first quarter of 2012 and a net income attributable to parent company of KRW 1,721 million for the second quarter of 2011.

The balance of cash and cash equivalents and short-term financial instruments was KRW 55,288 million (US$ 48,895 thousand) as of June 30, 2012.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,130.75 to US$ 1.00, the noon buying rate in effect on August 10, 2012 as quoted by the Federal Reserve Bank of New York.

BUSINESS UPDATES

  • Ragnarok Online II to be launched in Singapore and Malaysia in the fourth quarter of 2012

Singapore and Malaysia are expected to be the first overseas markets where Ragnarok Online II is to be released. The Company and AsiaSoft Online Pte. Ltd., the licensee of Ragnarok Online II in Singapore and Malaysia,have agreed to commercially offer the game in these markets in the fourth quarter of 2012.

Mr. Hyun Chul Park, CEO of Gravity said, "The performance of Ragnarok Online II in Korea is below our expectations. However, I believe that we have overcome most of the technical problems in the early stages and that we are ready to release the game in the overseas markets where the game is eagerly anticipated."

The service language of Ragnarok Online II in Singapore and Malaysia will be English. The Company is also planning to launch the English version of the game in some other markets in the near future after localizing the content to tailor the game to local cultural preferences of each market.

  • Gravity strengthening its presence in the mobile game industry

Gravity has been enhancing its mobile game lineup by releasing more smartphone games with up-to-date technology, based on its flagship title Ragnarok Online. In particular, Ragnarok Online - Uprising: Valkyrie, a mobile massively multiplayer online role playing game for iOS and Android released in Korea is surging in popularity with more than 430,000 cumulative downloads in less than three months since its launch in May 2012. Ragnarok Online - Uprising: Valkyrie is a cross-platform game which allows users to play the game on one server regardless of their operating system.

The Company intends to release Ragnarok Online - Uprising: Valkyrie in other markets, such as China and Taiwan, in 2012 and more other smartphone games will be available later in 2012.

About GRAVITY Co., Ltd.

Based in Korea, Gravity is a developer and publisher of online games. Gravity's principal product, Ragnarok Onlineā„¢, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 79 markets. For more information about Gravity, please visit http://www.gravity.co.kr .

Forward-Looking Statements:

Certain statements in this press release may include, in addition to historical information, "forward-looking statements" within the meaning of the "safe-harbor" provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" "project," or "continue" or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the "SEC"), including our registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances.

 
GRAVITY CO., LTD.
Consolidated Balance Sheet
         
(In millions of KRW and in thousands of US$)
         
  As of
  31-Dec-11 30-Jun-12
  KRW US$ KRW US$
Assets (audited) (unaudited) (unaudited) (unaudited)
Current assets:        
Cash and cash equivalents 42,430 37,524 37,288 32,976
Short-term financial instruments 15,000 13,266 18,000 15,919
Accounts receivable, net 6,436 5,692 6,035 5,337
Other current assets 7,967 7,045 7,549 6,676
Total current assets 71,833 63,527 68,872 60,908
         
Property and equipment, net 2,731 2,415 4,195 3,710
Leasehold and other deposits 5,924 5,239 5,928 5,243
Intangible assets 42,163 37,288 41,792 36,960
Equity method investments 1,444 1,277 1,063 940
Other non-current assets 8,783 7,767 8,755 7,742
Total assets 132,878 117,513 130,605 115,503
         
Liabilities and Equity        
Current liabilities:        
Accounts payable 5,552 4,910 5,756 5,090
Deferred revenue 4,663 4,124 3,557 3,146
Other current liabilities 1,847 1,633 1,398 1,236
Total current liabilities 12,062 10,667 10,711 9,472
Long-term deferred revenue 7,457 6,595 7,768 6,870
Accrued severance benefits 916 810 911 806
Other non-current liabilities 1,784 1,578 1,373 1,214
Total liabilities 22,219 19,650 20,763 18,362
Common shares 3,474 3,072 3,474 3,072
Additional paid-in capital 75,395 66,677 75,395 66,677
Retained earnings  19,923 17,619 19,925 17,621
Accumulated other comprehensive income 3,042 2,690 3,006 2,659
Total parent company shareholders' equity 101,834 90,059 101,800 90,029
Non-controlling interest 8,825 7,805 8,042 7,112
Total equity 110,659 97,863 109,842 97,141
Total liabilities and equity 132,878 117,513 130,605 115,503
         
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,130.75 to US$1.00, the noon buying rate in effect on August 10, 2012 as quoted by the Federal Reserve Bank of New York.
 
 
GRAVITY CO., LTD.
Consolidated Statements of Operations
               
(In millions of KRW and in thousands of US$, except for share and ADS data)
               
  Three months ended Six months ended
  31-Mar-12 30-Jun-11 30-Jun-12 30-Jun-11 30-Jun-12
  (KRW) (KRW)  (KRW) (US$) (KRW) (KRW) (US$)
  (unaudited) (unaudited)  (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:              
Online games-subscription revenue  4,241  2,922  2,151  1,902  6,232  6,392  5,653
Online games-royalties and license fees  8,710  9,033  8,109  7,171  17,752  16,819  14,874
Mobile games  2,037  2,469  2,246  1,986  4,169  4,283  3,788
Character merchandising and other revenue  1,369  160  1,578  1,396  241  2,947  2,606
Total net revenue  16,357  14,584  14,084  12,455  28,394  30,441  26,921
               
Cost of revenue  6,827  6,234  9,691  8,570  11,617  16,518  14,608
               
Gross profit  9,530  8,350  4,393  3,885  16,777  13,923  12,313
               
Operating expenses:              
Selling, general and administrative  6,792  5,671  4,721  4,175  10,420  11,513  10,182
Research and development  1,387  727  1,400  1,238  1,757  2,787  2,465
Total operating expenses  8,179  6,398  6,121  5,413  12,177  14,300  12,647
               
Operating income (loss)  1,351  1,952  (1,728)  (1,528)  4,600  (377)  (334)
               
Other income (expenses):              
Interest income  476  464  458  405  880  934  826
Interest expense  (11)  (15)  (14)  (12)  (32)  (25)  (22)
Foreign currency gain (loss), net  (160)  (7)  170  150  (65)  10  9
Others, net  --   (10)  66  58  3  66  58
               
Income (loss) before income tax expenses and equity income (loss) on investments  1,656  2,384  (1,048)  (927)  5,386  608  537
               
Income tax expenses   818  869  531  470  1,671  1,349  1,193
               
Income (loss) before equity income (loss) on investments  838  1,515  (1,579)  (1,397)  3,715  (741)  (656)
               
Equity income (loss) on investments  (82)  (9)  43  38  (21)  (39)  (34)
Net income (loss)  756  1,506  (1,536)  (1,359)  3,694  (780)  690
LESS: Net loss attributable to the non-controlling interest  (372)  (215)  (410)  (363)  (435)  (782)  (692)
Net income (loss) attributable to parent company  1,128  1,721  (1,126)  (996)  4,129  2  2
Earnings (loss) per share               
- Basic and diluted 162 247  (162)  (0.14) 594 0 0
Weighted average number of shares outstanding               
- Basic and diluted 6,948,900 6,948,900 6,948,900 6,948,900 6,948,900 6,948,900 6,948,900
Earnings (loss) per ADS(1)              
- Basic and diluted 41 62  (41)  (0.04) 149 0 0
               
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,130.75 US$1.00, the noon buying rate in effect on August 10, 2012 as quoted by the Federal Reserve Bank of New York.
               
(1) Each ADS represents one-fourth of a common share.
CONTACT: Mr. Heung Gon Kim
         Chief Financial Officer
         Gravity Co., Ltd.
         Email: kheung@gravity.co.kr
         
         Ms. Yoon Joo Lee
         IR Manager
         Gravity Co., Ltd.
         Email: yoonjoo.lee@gravity.co.kr
         Telephone: +82-2-2132-7800

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