6-K 1 c21407e6vk.htm FORM 6-K Form 6-K
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2011
Commission File Number 000-51138
GRAVITY Co., Ltd.
(Translation of registrant’s name into English)
Nuritkum Square Business Tower 15F, 1605 Sangam-Dong, Mapo-Gu, Seoul, Korea 121-795
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F þ       Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
 
 

 

 


 

GRAVITY REPORTS SECOND QUARTER OF 2011 RESULTS AND BUSINESS UPDATES
Seoul, South Korea — August 12, 2011 — GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2011, prepared in accordance with generally accepted accounting principles in the United States, and business updates.
FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2011
Revenues for the second quarter ended June 30, 2011 was KRW 14,584 million (US$13,837 thousand), representing a 5.6% increase from KRW 13,810 million for the first quarter ended March 31, 2011 (“QoQ”) and a 28.8% increase from KRW 11,326 million for the second quarter ended June 30, 2010 (“YoY”).
Review of Financial Results
Revenues
Royalty and licensing fee revenues for the second quarter of 2011 were KRW 9,033 million (US$8,570 thousand), representing a 3.6% increase QoQ from KRW 8,719 million and a 37.4% increase YoY from KRW 6,572 million. The increases QoQ and YoY were primarily due to the increased revenues from Ragnarok Online and H.A.V.E. Online, which was commercially launched in March 2011, in the Japanese market. The increase YoY was also attributable to the increased revenues from Ragnarok Online in Taiwan, Hong Kong and Macau and the revenues from Dragonica resulting from our acquisition of Gravity Games Corp., the developer of Dragonica in October 2010.
Subscription revenues for the second quarter of 2011 were KRW 2,922 million (US$2,772 thousand), representing a 11.7% decrease QoQ from KRW 3,310 million but a 8.6% increase YoY from KRW 2,691 million. The decrease QoQ mainly resulted from the decreased revenues from Ragnarok Online in Korea. The increase YoY was primarily driven by the increased revenues from Ragnarok Online in Europe.
Mobile game revenues were KRW 2,469 million (US$2,343 thousand) for the second quarter of 2011, representing a 45.2% increase QoQ from KRW 1,700 million and a 34.2% increase YoY from KRW 1,840 million.
Character merchandising and other revenues were KRW 160 million (US$152 thousand) for the second quarter of 2011, representing a 97.5% increase QoQ from KRW 81 million and a 28.3% decrease YoY from KRW 223 million.
Cost of Revenue and Operating Expenses
Cost of revenue was KRW 6,234 million (US$5,915 thousand) for the second quarter of 2011, representing a 15.8% increase QoQ from KRW 5,383 million and a 26.1% increase YoY from KRW 4,942 million. The increase QoQ was mostly from increased salaries for the headquarters, commission paid and outsourcing fee related to game development. The increase YoY was mainly attributable to increase in salaries due to the acquisition of Gravity Games Corp. in October 2010, and increased salaries for NeoCyon, Inc., the Company’s subsidiary in Korea for mobile game business, and outsourcing fee related to game development.
Operating expenses were KRW 6,398 million (US$6,070 thousand) for the second quarter of 2011, representing a 10.7% increase QoQ from KRW 5,779 million and a 4.7% increase YoY from KRW 6,112 million. The increase QoQ was mainly due to increased commission paid and advertising expenses. The increase YoY mostly resulted from increase in commission paid and salaries for the headquarters.

 

 


 

Income before income tax expenses and others was KRW 2,384 million (US$2,262 thousand) for the second quarter of 2011, which represents a 20.6% decrease QoQ from KRW 3,002 million and a 72.3% increase YoY from KRW 1,384 million.
As a result of the foregoing factors, Gravity recorded a net income attributable to parent company of KRW 1,721 million (US$1,633 thousand) for the second quarter of 2011 compared to KRW 2,408 million for the first quarter of 2011 and KRW 465 million for the second quarter of 2010.
The balance of cash and cash equivalents and short-term financial instruments was KRW 57,954 million (US$54,985 thousand) as of June 30, 2011.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,054.0 to US$1.00, the noon buying rate in effect on July 29, 2011 as quoted by the Federal Reserve Bank of New York.
BUSINESS UPDATES
 
Ragnarok Online II delayed to the first quarter of 2012
The launch schedule of Ragnarok Online II, a sequel to Ragnarok Online, has been delayed to the first quarter of 2012.
After the second closed beta testing in July 2011, the Company has decided to postpone the release of Ragnarok Online II to work on final tweaks and polish.
Mr. Hyun Chul Park, CEO of Gravity said, “We want to assure everyone that our development team is working to launch Ragnarok Online II in the earliest time. We really appreciate our users showing continued patience and bearing with us. It will be worth the wait.”
About GRAVITY Co., Ltd. ---------------------------------------------------
Based in Korea, Gravity is a developer and publisher of online games. Gravity’s principal product, Ragnarok Online™, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 80 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.

 

 


 

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
#       #       #

 

 


 

GRAVITY Co., Ltd.
Consolidated Balance Sheet
(In millions of KRW and in thousands of US$)
                                 
    As of  
    31-Dec-10     30-Jun-11  
    KRW     US$     KRW     US$  
Assets   (audited)     (unaudited)     (unaudited)     (unaudited)  
Current assets:
                               
Cash and cash equivalents
    44,122       41,861       38,954       36,958  
Short-term financial instruments
    12,500       11,860       19,000       18,027  
Short-term available-for-sale investments
    5,000       4,744       5,060       4,801  
Accounts receivable, net
    8,242       7,820       5,468       5,188  
Other current assets
    6,479       6,147       7,369       6,991  
 
                       
Total current assets
    76,343       72,432       75,851       71,965  
 
                       
 
                               
Property and equipment, net
    2,672       2,535       2,839       2,694  
Leasehold and other deposits
    1,711       1,623       1,684       1,598  
Intangible assets
    41,831       39,688       43,411       41,187  
Equity method investments
    1,336       1,268       1,294       1,228  
Other non-current assets
    1,597       1,515       1,279       1,212  
 
                       
Total assets
    125,490       119,061       126,358       119,884  
 
                       
 
                               
Liabilities and Equity
                               
Current liabilities:
                               
Accounts payable
    6,641       6,301       5,793       5,496  
Deferred revenue
    5,611       5,324       5,206       4,939  
Other current liabilities
    1,813       1,720       1,313       1,246  
 
                       
Total current liabilities
    14,065       13,345       12,312       11,681  
 
                       
Long-term deferred revenue
    8,993       8,532       8,386       7,956  
Accrued severance benefits
    1,031       978       1,146       1,087  
Other non-current liabilities
    2,989       2,836       2,579       2,447  
 
                       
Total liabilities
    27,078       25,691       24,423       23,171  
 
                       
Common shares
    3,474       3,296       3,474       3,296  
Additional paid-in capital
    75,395       71,532       75,395       71,532  
Retained earnings
    4,995       4,739       9,124       8,657  
Accumulated other comprehensive income
    3,552       3,370       3,382       3,209  
 
                       
Total parent company shareholders’ equity
    87,416       82,937       91,375       86,694  
 
                       
Non-controlling interest
    10,996       10,433       10,560       10,019  
 
                       
Total equity
    98,412       93,370       101,935       96,713  
 
                       
Total liabilities and equity
    125,490       119,061       126,358       119,884  
 
                       
     
*  
For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,054.0 to US$1.00, the noon buying rate in effect on July 29, 2011 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-11     30-Jun-10     30-Jun-11     30-Jun-10     30-Jun-11  
    (KRW)     (KRW)     (KRW)     (US$)     (KRW)     (KRW)     (US$)  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Revenues:
                                                       
Online games-subscription revenue
    3,310       2,691       2,922       2,772       5,125       6,232       5,913  
Online games-royalties and license fees
    8,719       6,572       9,033       8,570       13,056       17,752       16,843  
Mobile games
    1,700       1,840       2,469       2,343       3,679       4,169       3,955  
Character merchandising and other revenue
    81       223       160       152       585       241       228  
 
                                         
Total net revenue
    13,810       11,326       14,584       13,837       22,445       28,394       26,939  
 
                                                       
Cost of revenue
    5,383       4,942       6,234       5,915       9,803       11,617       11,022  
 
                                         
 
                                                       
Gross profit
    8,427       6,384       8,350       7,922       12,642       16,777       15,917  
 
                                                       
Operating expenses:
                                                       
Selling, general and administrative
    4,749       5,291       5,671       5,380       9,626       10,420       9,886  
Research and development
    1,030       821       727       690       1,482       1,757       1,667  
 
                                         
Operating income
    2,648       272       1,952       1,852       1,534       4,600       4,364  
 
                                                       
Other income (expenses):
                                                       
Interest income
    416       508       464       440       1,028       880       835  
Interest expense
    (17 )     (3 )     (15 )     (14 )     (8 )     (32 )     (30 )
Foreign currency gain (loss), net
    (58 )     596       (7 )     (7 )     281       (65 )     (62 )
Others, net
    13       11       (10 )     (9 )     61       3       3  
 
                                         
 
                                                       
Income before income tax expenses and equity income (loss) on investments
    3,002       1,384       2,384       2,262       2,896       5,386       5,110  
 
                                                       
Income tax expenses
    802       796       869       824       1,743       1,671       1,586  
 
                                         
 
                                                       
Income before equity income(loss) on investments
    2,200       588       1,515       1,438       1,153       3,715       3,524  
 
                                                       
Equity income (loss) on investments
    (12 )     120       (9 )     (9 )     279       (21 )     (20 )
 
                                         
Net income
    2,188       468       1,506       1,429       874       3,694       3,504  
LESS: Net income attributable to the non-controlling interest
    (220 )     3       (215 )     (204 )     28       (435 )     (413 )
 
                                         
Net income attributable to parent company
    2,408       465       1,721       1,633       846       4,129       3,917  
 
                                         
Earnings per share
                                                       
- Basic and diluted
    347       67       247       0.23       122       594       0.56  
 
                                         
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 per ADS(1)
                                                       
- Basic and diluted
    87       17       62       0.06       31       149       0.14  
 
                                         
     
*  
For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,054.0 to US$1.00, the noon buying rate in effect on July 29, 2011 as quoted by the Federal Reserve Bank of New York.
 
(1)  
Each ADS represents one-fourth of a common share.

 

 


 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  GRAVITY Co., Ltd.
 
 
Date: August 12, 2011  By:   /s/ Heung Gon Kim    
    Name:   Heung Gon Kim   
    Title:   Chief Financial Officer