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Webzen Inc. 2006 4Q Earnings Results


SEOUL, South Korea, Feb. 14 /Xinhua-PRNewswire-FirstCall/ --

2006 4Q Results Summary

(Unit: KRW mm)

206 Q4 2006 Q3 QoQ 2005 Q4 YoY

Revenue 5,347 5,053 5.8% 5,513 -3.0%

Operating

Expenses 11,181 12,028 -7.0% 11,640 -3.9%

Operating -5,834 -6,975 -- -6,127 --

Profit

OP Margin -109.1% -138.0% -- -111.1% --

Ordinary

Profit -3,804 -7,546 -- -5,802 --

Ordinary

Profit -71.1% -149.3% -- -105.2% --

Margin

Net Income -10,876 -5,987 -- -4,151 --

Revenue

During 4th quarter, we recorded a 5.3 billion KRW revenue and 5.8 billion KRW operating loss.

Due to the stabilization of MU domestic revenue and the commercial launch of SUN on November 14, revenue increased 6% from previous quarter, and 3% YoY.

Total operating expenses decreased 7% to 11.2 billion KRW due to the reduction of marketing costs, and operating loss decreased 16% compared to previous quarter.

Ordinary loss decreased 49.5% due to the partial disposal of GameOn shares, and net loss was 10.8 billion KRW due to the write-off of deferred income tax of 7 billion KRW.

2006 Q4 Revenue Breakdown

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

Revenue 5,347 5,053 5.8% 5,513 -3.0%

Domestic 4,694 4,289 9.4% 4,526 3.7%

Overseas 646 748 -13.6% 949 -31.9%

Other 7 16 -56.3% 38 -81.6%

Domestic revenue decreased 9% to 4.7 billion KRW. With regular updates, MU has been showing signs of stabilization in Korea, and we will try to keep the revenue at the current level.

Overseas royalty decreased 14% to 646 million KRW from previous quarter and revenue, including mobile revenue decreased 56%.

Domestic Revenue Breakdown

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

MU 4,340 4,289 1.2% 4,526 -4.1%

Individual 3,335 3,264 2.2% 3,402 -2.0%

Internet Cafe 1,005 1,025 -2.0% 1,124 -10.6%

Soul of the

Ultimate

Nation (SUN) 354 -- -- -- --

Individual 255 -- -- -- --

Internet Cafe 99 -- -- -- --

Total 4,694 4,289 9.4% 4,256 3.7%

Individual revenue increased 2% to 3.3 billion KRW and internet cafe revenue decreased 2% to 1 billion KRW. SUN's revenue, including internet cafe revenue, was 354 million KRW.

SUN internet cafe revenue was slow due to the partial subscription model (microtransaction model), and because the item mall opened in mid December, revenue contribution from item shops was small for 4Q.

Overseas Royalty Revenue Breakdown

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

Overseas 646 748 -13.6% 949 -31.9%

China 67 57 17.5% 90 -25.6%

Taiwan 106 110 -3.6% 206 -48.5%

Japan 390 467 -16.5% 564 -30.9%

Thailand -- -- -- 66 --

Philippines 58 69 -15.9% 23 152.2%

Vietnam 8 26 -69.2% -- --

U.S. 17 19 -10.5% -- --

Overseas royalty revenue decreased 14% QoQ.

Regionally, China increased 18%, and Taiwan, Japan, Philippines, Vietnam, US decreased.

Total Operating Costs

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

Total

Operating

Costs 11,181 12,028 -7.0% 11,640 -3.9%

Labor Costs 5,489 5,915 -7.2% 5,067 8.3%

Depreciation 773 583 32.6% 866 -10.7%

Commission Paid 1,485 1,570 -5.4% 1,201 23.6%

Marketing

Expenses 881 1,492 -41.0% 1,782 -50.6%

Sales Commission 254 173 46.8% 204 24.5%

Other 2,299 2,295 0.2% 2,520 -8.8%

Total Operating Expenses

Labor costs, which constitute 49% of our total operating costs, decreased 7% to 5.5 billion KRW.

As of end of 4th quarter, our total headcount decreased to 646, from 668 end of third quarter. YoY, headcount decreased by 30 people. Depreciation increased 13% to 773 million KRW, due to the increase in equipment for SUN's service. Sales Commission increased 46% to 254 million KRW. Commission paid decreased 5% to 1.5 billion KRW. As a result of minimizing unnecessary marketing expenses, marketing expenses decreased 41% to 883 billion KRW. Other costs were 2.3 billion KRW, which was similar to 3rd quarter.

Non-operating Items

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

Non-operating Income 2,030 -571 -- 325 524.6%

Interest Income 975 973 0.2% 1,125 -13.3%

Profit(Loss)

on Foreign

Exchange -108 -85 -- -85 --

Gain on Equity

Method -1,192 -1,501 -- -802 --

Gain on

disposal of

Marketable

Securities 2,320 3 77233.3% 139 1569.1%

Other 35 39 -10.3% -52 --

Interest income was 975 million KRW, which is similar to 3rd quarter. Due to the gain of 2.3 billion KRW, from the disposal of shares in our Japan partner, GameOn, non-operating income during 4th quarter was 2 billion KRW. As of end of 4Q, cash and cash equivalents decreased by 6.5 billion KRW to 83 billion KRW. (end of 3Q: 89.5 billion KRW)

Equity Method

(Unit: KRW mm)

2006 Q4 2006 Q3 QoQ 2005 Q4 YoY

9Webzen -396 -436 -- -269 --

Webzen Taiwan -19 -278 -- -135 --

Webzen China -16 -11 -- -417 --

Webzen America -761 -776 -- 19 --

Total -1,192 -1,501 -- -802 --

We recognized a 1.2 billion KRW loss on equity method from our overseas sudsidiaries.

FY 2006 Earnings Summary

(Unit: KRW mm)

2006 2005 YoY

Revenue 21,950 29,015 -24.3%

Operating Profit -30,115 -18,003 --

OP Margin -- -- --

Ordinary Profit -30,115 -16,444 --

Net Income -31,519 -13,205 --

Year 2006 revenue decreased 24% YoY to 22 billion KRW, and operating loss was 30 billion KRW.

FY 2006 Revenue Summary

(Unit: KRW mm)

2006 2005 YoY

Revenue 21,950 29,015 -24.3%

Domestic 17,886 23,762 -24.7%

Individual 13,489 17,219 -21.7%

Internet Cafe 4,397 6,543 -32.8%

Overseas 3,994 4,881 -18.2%

Other 70 372 -81.2%

Domestic revenue decreased 25% YoY to 17.9 billion KRW, and overseas royalty revenue decreased 18% to 4 billion KRW.

FY 2006 Expense Summary

(Unit: KRW mm)

2006 2005 YoY

Labor cost 24,186 19,599 23.4%

(R&D cost) 9,027 8,021 12.5%

Marketing cost 8,431 7,941 6.2%

Commission paid 5,988 5,887 1.7%

Depreciation 2,609 2,803 -6.9%

Year 2006 Labor costs increased 23% to 24.2 billion KRW.

Marketing costs increased 7% to 8.4 billion KRW, associated with MU and SUN marketing.

Commission paid and depreciation during 2006 was 6 billion KRW, and 2.6 billion KRW respectively.

Webzen Inc.

Non-consolidated Balance Sheet

* The FY 2006 Q4 financials have been prepared on an unaudited basis,

and may be subject to change during the independent auditing process

* The FY 2006 Q4 financial statements are non-consolidated, and have

been prepared under the Korean General Accepted Accounting Principles)

As of

31-Dec-06 30-Sep-06 31-Dec-05

KRW KRW KRW

Assets

I. Current Assets 99,658,502,314 102,039,180,901 134,032,699,865

(1) Quick Assets 99,658,502,314 102,039,180,901 134,032,699,865

Cash and

cash equivalents 76,238,563,962 65,035,126,135 118,107,261,444

Short-term

financial

instruments 4,445,690,286 21,950,035,707 2,270,052,194

Accounts

receivable, net. 4,949,516,538 4,654,791,974 4,364,944,214

Short-term loans 962,392,920 938,709,650 1,188,773,620

Accrued income

receivable 420,319,037 382,826,251 123,611,466

Non-trade receivable 64,741,816 69,839,939 48,180,328

Marketable

securities 11,747,356,143 2,536,759,131 4,812,410,603

Advance payments 38,353,000 96,016,945 236,773,361

Prepaid income taxes 538,892,220 408,474,280 706,861,305

Value added taxes -- -- --

Prepaid expenses 252,676,392 504,827,918 270,442,755

Other current assets -- -- --

Deferred income tax debits -- 5,461,772,971 1,903,388,575

(2) Inventory -- -- --

1. Goods -- -- --

II. Fixed Assets 65,219,879,590 67,767,319,243 57,645,050,070 (1) Investments 41,257,926,154 42,901,164,638 34,296,263,543

Long-term financial

instruments -- -- --

Long-term loans 2,155,052,841 1,871,587,602 1,059,131,500

Investments in

securities according

to equity method 1,737,121,508 2,176,072,944 6,046,614,750

Available-for-sale

securities -- 535,665,682 535,665,682

Long-term prepaid

expenses 18,382,683,300 15,332,175,800 7,247,951,381

Guarantee deposits 18,682,266,355 18,656,616,355 17,222,505,555

Other investments 300,802,150 300,802,150 300,802,150

Long-term deferred

income tax debits -- 4,028,244,105 1,883,192,525

(2) PP&E 11,221,639,851 12,047,322,707 11,806,355,288

Land 2,611,544,500 2,611,544,500 2,611,544,500

Buildings and

auxiliary facilities 5,602,562,912 5,640,959,913 5,756,150,904

Equipment 2,561,237,036 3,250,882,680 3,017,003,089

Facilities 446,295,403 543,935,614 421,656,795

(3) Intangible

assets 12,740,313,585 12,818,831,898 11,542,431,239

Organization expenses -- -- --

Software 3,373,579,747 3,659,835,972 4,323,065,415

Goodwill -- -- --

Capitalized R&D

costs 9,366,733,838 9,158,995,926 7,219,365,824

Other intangible assets -- -- --

Total assets 164,878,381,904 169,806,500,144 191,677,749,935

I. Current

Liabilities 7,269,155,752 8,256,755,180 8,610,099,605

Accounts payable 1,215,266,183 1,760,913,239 2,037,638,581

Accrued expenses 465,467,883 986,908,160 849,909,423

Accrued income taxes -- -- --

Withholdings 253,692,658 248,925,721 242,146,687

Deposits received 871,875,000 871,875,000 871,875,000

Withhold value added

tax 213,494,404 85,204,833 1,507,437

Advances received 103,019,641 101,121,176 95,018,396

Unearned revenues 4,084,039,983 3,754,927,884 4,172,407,865

Provision for

sales promotion -- 257 ,838,466 251,796,216

Provision for other estimated

liabilities 62,300,000 189,040,701 87,800,000

Short term deferred income tax

credits -- -- --

II. Fixed

Liabilities 5,640,781,629 5,195,763,486 4,115,591,495

Accrued severance

benefits 5,602,929,856 5,135,740,342 3,912,843,444

Long-term unearned

income 27,851,773 50,023,144 192,748,051

Long term Deferred

income tax

Credits -- -- --

Long-term accounts

payable 10,000,000 10,000,000 10,000,000

Total Liabilities 12,909,937,381 13,452,518,666 12,725,691,100

I. Capital Stock 6,486,000,000 6,486,000,000 6,485,000,000

Common stock 6,486,000,000 6,486,000,000 6,485,000,000

II. Capital

Surplus 135,466,502,809 135,466,502,809 135,405,721,645

Additional paid-in

capital 135,466,502,809 135,466,502,809 135,405,721,645

III. Retained

Earnings 22,298,261,066 33,174,883,944 54,045,173,788

Legal appropriated

retained

earnings 322,500,000 322,500,000 322,500,000

Appropriated-Reserve for

business

rationalization 117,904,363 117,904,363 117,904,363

Appropriated-Reserve for

future investments 442,699,142 442,699,142 442,699,142

Unappropriated retained

earnings to be carried

forward 21,415,157,561 32,291,780,439 53,162,070,283

IV. Capital

adjustments (12,282,319,352) (18,773,405,275) (16,983,836,598)

Capital Adjustment-Unrealized

gains on AFS 6,771,795,838 242,960,714 287,070,348

Capital Adjustment-Unrealized

losses on AFS -- -- --

Treasury Stock (18,307,830,040) (18,307,830,040)(16,865,799,640)

Stock option 719,780,537 742,067,170 474,087,134

Loss on investments in equity

method securities (1,453,391,587) (1,437,929,019) (879,194,440)

Gains on sale of treasury

stock (12,674,100) (12,674,100) --

Total shareholders'

equity 151,968,444,523 156,353,981,478 178,952,058,835

Total liabilities

and SE 164,878,381,904 169,806,500,144 191,677,749,935

Webzen Inc.

Non-consolidated Income Statement

* The FY 2006 Q4 financials have been prepared on an unaudited basis,

and may be subject to change during the independent auditing process

* The FY 2006 Q4 financial statements are non-consolidated, and have

been prepared under the Korean General Accepted Accounting Principles)

Twelve months

Three months ended ended

31-Dec-06 30-Sep-06 31-Dec-06

KRW KRW KRW

I. Sales 5,347,040,497 5,053,080,240 21,950,096,648

Online game 4,698,633,001 4,302,922,905 17,946,246,899

Royalty 648,407,496 750,157,335 4,003,849,749

Merchandise -- -- --

II. Cost of goods sold 3,680,560,809 2,811,464,669 11,867,271,214

Online game 3,680,560,809 2,811,464,669 11,867,271,214

Merchandise -- -- --

III. Gross profit 1,666,479,688 2,241,615,571 10,082,825,434

IV. Selling, general

and administrative 7,500,893,218 9,216,608,370 40,198,233,214

Salaries expenses 1,776,681,632 1,773,865,533 7,032,136,024

Bonus (107,485,650) 241,599,174 513,950,330

Severance benefits 262,547,595 243,100,518 893,280,743

Welfare benefits 251,881,377 264,164,424 993,075,250

Travel expenses 98,020,505 106,475,892 536,529,480

Entertainment expenses 55,988,308 61,209,270 326,229,870

Communication expense 19,320,794 20,815,439 155,196,550

Utility expenses 16,651,014 29,203,021 93,605,713

Taxes and dues 98,317,059 122,887,382 403,727,971

Depreciation 162,327,204 159,728,425 600,146,376

Rental expense 60,555,600 60,587,980 253,194,355

Repairs expenses 150,000 -- 4,050,000

Insurance premium 46,948,533 49,446,402 195,012,235

Vehicle maintenance

expenses 14,541,874 16,402,829 66,282,649

Ordinary research and

development expenses 2,916,712,181 3,460,302,939 14,771,854,798

Freight expenses 4,741,356 4,055,233 22,902,212

Training expenses 32,019,393 22,185,641 110,175,095

Publication expenses 10,743,419 9,604,384 37,696,575

Office supplies expenses 2,118,311 4,373,034 11,647,681

Supplies expenses 19,452,181 16,001,905 79,559,874

Commissions paid 563,264,058 702,140,054 3,110,960,217

Advertising expenses 881,391,404 1,491,867,541 8,430,713,595

Bad debt expenses 20,510,147 46,415,995 352,448,585

Sales commissions 254,107,072 172,922,395 808,728,024

Amortization cost

of intangible assets 40,328,012 40,149,100 160,548,366

Sample expenses -- -- --

Compensation expenses

assoc. w/stock options (940,161) 97,103,860 234,580,646

V. Operating profit (5,834,413,530) (6,974,992,799)(30,115,407,780)

VI. Non-operating income 3,349,958,906 1,035,918,330 6,693,484,725

Interest income 974,844,687 973,182,852 3,992,686,488

Gains on foreign currency

transaction 6,181,588 11,504,490 28,724,141

Income from commission 22,324,968 24,197,909 83,022,877

Gains on foreign currency

translation 9,380 8,761,063 9,380

Gains on valuation of

forward currency

contracts -- -- --

Gains on disposition

of PPE -- -- 574,648

Equity income on

investments -- -- --

Gains on available

for sale securities 2,320,561,588 3,446,250 2,535,124,319

Gains on forward

currency transactions -- -- --

Reversal of Compensation

Exp. associated with SO -- -- --

Miscellaneous income 26,036,695 14,825,766 53,342,872

VII. Non-operating

expenses 1,319,755,744 1,607,058,263 6,692,970,616

Losses on foreign

currency transaction 75,611,505 68,189,266 391,635,625

Donations 550,000 -- 550,000

Losses on foreign

currency translation 38,114,656 37,166,049 138,032,069

Loss on disposal of

tangible assets 7,908,189 92,490 15,284,766

Losses on forward

currency transactions -- -- --

Losses on disposal of

available-for-sale

securities -- -- 390,000

Losses on valuation of

intangible assets -- -- --

Miscellaneous losses 6,042,655 125,401 46,743,383

Losses on valuation of

forward currency contracts -- -- --

Additional Payment of

Income Taxes -- -- --

Losses on disposition of

PPE -- -- --

Equity losses on

investments 1,191,528,739 1,501,485,057 6,100,334,773

VIII. Profit before

extraordinary

items (3,804,210,368) (7,546,132,732)(30,114,893,671)

IX. Extraordinary gains -- -- --

X. Extraordinary losses -- -- --

XI. Income before

income tax expenses (3,804,210,368) (7,546,132,732)(30,114,893,671)

XII. Income tax expenses 7,0721,412,510 (1,559,329,145) 1,403,751,982

XIII. Net income

(loss) (10,876,622,878) (5,986,803,587)(31,518,645,653)

Forward-Looking Statements:

Certain statements in this document 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 of 1995. Forward-looking statements can generally be identified by the use of "estimate," "anticipate," "believe" "project," or "continue" or the negative thereof or other similar words, although not all forward-looking statements will contain these words. These forward-looking statements are based on our current assumptions, expectations and projections about future events. All actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements, to collect, and in a timely manner, license fees and royalty payments from or operate commercially successful online games; our ability to compete access technological developments in our industry; our ability to recruit and strategies; and economic and political conditions globally. Investors should consider the information contained in our submissions and filings with the registration statement on Form F-1, as amended, and our annual report on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, including on Form 6-K. The forward-looking statements reflect new, changing or unanticipated events or circumstances.

Contacts:

Webzen Inc.

6th Floor, Daelim Acrotel Building

467-6 Dogok-dong, Kangnam-Ku,

Seoul, Korea 135-971

Sung Ho Lee

Investor Relations

Tel: +82-2-3498-6818

Email: shlee@webzen.com

本文源自: 环亚娱乐游戏