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 2013

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 x 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 2013 RESULTS AND BUSINESS UPDATES

 

Seoul, South Korea — August 29, 2013 — 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, 2013, prepared in accordance with generally accepted accounting principles in the United States, and business updates.

 

FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2013

 

Revenues for the second quarter ended June 30, 2013 was KRW 12,788 million (US$ 11,379 thousand), representing a 8.4% increase from KRW 11,796 million for the first quarter ended March 31, 2013 (“QoQ”) and a 9.2% decrease from KRW 14,084 million for the second quarter ended June 30, 2012 (“YoY”).

 

Review of Financial Results

 

Revenues

 

Royalty and licensing fee revenues for the second quarter of 2013 were KRW 5,543 million (US$ 4,932 thousand), representing a 16.7% decrease QoQ from KRW 6,654 million and a 31.6% decrease YoY from KRW 8,109 million. The decreases in royalty and licensing fee revenues QoQ and YoY were primarily due to decreased revenues from Ragnarok Online in Japan and strengthening of the Korean Won against the Japanese Yen. The decreases in royalty and licensing fee revenues QoQ and YoY were partially offset by revenues from Ragnarok Online in China where the game was relaunched in February 2013.

 

Subscription revenues for the second quarter of 2013 were KRW 2,836 million (US$ 2,523 thousand), representing a 45.6% increase QoQ from KRW 1,948 million and a 31.8% increase YoY from KRW 2,151 million. The increases QoQ and YoY were mainly driven by revenues from Ragnarok Online II in the United States, Canada and 28 European countries and markets where the game was launched in May 2013.

 

Mobile game revenues were KRW 3,996 million (US$ 3,556 thousand) for the second quarter of 2013, representing a 45.2% increase QoQ from KRW 2,753 million and a 77.9% increase YoY from KRW 2,246 million. The increases QoQ and YoY were mostly attributable to revenues from NeoCyon’s mobile game operation service for a third party and revenues from Ragnarok Online — Uprising: Valkyrie.

 

Character merchandising and other revenues were KRW 413 million (US$ 368 thousand) for the second quarter of 2013, representing a 6.3% decrease QoQ from KRW 441 million and a 73.8% decrease YoY from KRW 1,578 million. The decrease QoQ was mostly due to decreased revenues from Ragnarok Odyssey, a PS Vita game. The decrease YoY resulted mainly from sales of goods related to mobile phones in the second quarter of 2012, which did not occur in the second quarter of 2013.

 

Cost of Revenue and Operating Expenses

 

Cost of revenue was KRW 8,439 million (US$ 7,509 thousand) for the second quarter of 2013, representing a 14.1% increase QoQ from KRW 7,397 million but a 12.9% decrease YoY from KRW 9,691 million. The increase QoQ was mostly from increased commission paid related to our service for third parties. The decrease YoY resulted mainly from cost of goods sold by NeoCyon associated with its sales of goods related to mobile phones in the second quarter of 2012, which did not occur in the second quarter of 2013.

 

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Operating expenses were KRW 5,930 million (US$ 5,277 thousand) for the second quarter of 2013, representing a 0.4% decrease QoQ from KRW 5,951 million and a 3.1% decrease YoY from KRW 6,121 million. The decreases QoQ and YoY were mainly attributable to gain on disposal of investments related to liquidation of Online Game Revolution Fund No. 1, which is largely due to realization of related accumulated other comprehensive income balance. The decreases in operating expenses QoQ and YoY were partly offset by increased research and development expenses mostly related to Ragnarok Odyssey Ace, an expansion pack of Ragnarok Odyssey.

 

Loss before income tax expenses and others was KRW 1,020 million (US$ 908 thousand) for the second quarter of 2013 compared with loss before income tax expenses and others of KRW 1,133 million for the first quarter of 2013 and loss before income tax expenses and others of KRW 1,048 million for the second quarter of 2012.

 

As a result of the foregoing factors, Gravity recorded a net loss attributable to parent company of KRW 1,617 million (US$ 1,439 thousand) for the second quarter of 2013 compared with a net loss attributable to parent company of KRW 1,629 million for the first quarter of 2013 and a net loss attributable to parent company of KRW 1,126 million for the second quarter of 2012.

 

The balance of cash and cash equivalents and short-term financial instruments was KRW 50,813 million (US$ 45,213 thousand) as of June 30, 2013.

 

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,123.85 to US$ 1.00, the noon buying rate in effect on August 2, 2013 as quoted by the Federal Reserve Bank of New York.

 

BUSINESS UPDATES

 

· Ragnarok Online II was launched in Indonesia on August 28, 2013 and will be released in Thailand in the fourth quarter of 2013.

 

· Tower of Ascension, a mobile multiplayer online role playing game, was released in Korea on August 23, 2013. The Company developed Tower of Ascension using the Unreal Engine 3, one of the most advanced and robust game engines, and the game boasts high-quality graphics similar to those of PC-based games and an intuitive tap-based control system. The game was rolled out on iOS first and will be followed by Android. Gravity will enter overseas markets right after launching the game in the Korean market.

 

· Ragnarok Odyssey Ace, a PS Vita game based on the universe of Ragnarok Online and expansion pack of Ragnarok Odyssey, is slated to be launched in Korea, Japan, Taiwan, Hong Kong, Singapore, Malaysia, Thailand and Indonesia on August 29, 2013. The game will be rolled out in North America and Europe in the first quarter of 2014.

 

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 60 markets. For more information about Gravity, please visit http://www.gravity.co.kr.

 

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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

 

#              #              #

 

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GRAVITY CO., LTD.

Consolidated Balance Sheet

 

(In millions of KRW and in thousands of US$)

 

 

 

As of

 

 

 

31-Dec-12

 

30-Jun-13

 

 

 

KRW

 

US$

 

KRW

 

US$

 

 

 

(audited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

36,455

 

32,438

 

23,813

 

21,189

 

Short-term financial instruments

 

17,500

 

15,571

 

27,000

 

24,024

 

Accounts receivable, net

 

7,116

 

6,332

 

6,002

 

5,341

 

Other current assets

 

6,858

 

6,102

 

6,769

 

6,023

 

Total current assets

 

67,929

 

60,443

 

63,584

 

56,577

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

3,524

 

3,136

 

3,257

 

2,898

 

Leasehold and other deposits

 

5,767

 

5,131

 

5,577

 

4,962

 

Intangible assets

 

24,270

 

21,595

 

21,480

 

19,113

 

Equity method investments

 

647

 

576

 

 

 

Other non-current assets

 

8,418

 

7,491

 

8,499

 

7,563

 

Total assets

 

110,555

 

98,372

 

102,397

 

91,113

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

5,115

 

4,551

 

3,593

 

3,197

 

Deferred revenue

 

3,006

 

2,675

 

3,539

 

3,149

 

Other current liabilities

 

2,254

 

2,006

 

1,655

 

1,473

 

Total current liabilities

 

10,375

 

9,232

 

8,787

 

7,819

 

Long-term deferred revenue

 

9,172

 

8,161

 

8,084

 

7,193

 

Accrued severance benefits

 

683

 

608

 

321

 

285

 

Other non-current liabilities

 

247

 

220

 

318

 

283

 

Total liabilities

 

20,477

 

18,221

 

17,510

 

15,580

 

Common shares

 

3,474

 

3,091

 

3,474

 

3,091

 

Additional paid-in capital

 

75,395

 

67,086

 

75,395

 

67,086

 

Retained earnings

 

7,699

 

6,851

 

4,453

 

3,963

 

Accumulated other comprehensive income

 

3,001

 

2,670

 

1,582

 

1,407

 

Total parent company shareholders’ equity

 

89,569

 

79,698

 

84,904

 

75,547

 

Non-controlling interest

 

509

 

453

 

(17

)

(14

)

Total equity

 

90,078

 

80,151

 

84,887

 

75,533

 

Total liabilities and equity

 

110,555

 

98,372

 

102,397

 

91,113

 

 


*      For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,123.85 to US$1.00, the noon buying rate in effect on August 2, 2013 as quoted by the Federal Reserve Bank of New York.

 

5


 


 

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-13

 

30-Jun-12

 

30-Jun-13

 

30-Jun-12

 

30-Jun-13

 

 

 

(KRW)

 

(KRW)

 

(KRW)

 

(US$)

 

(KRW)

 

(KRW)

 

(US$)

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

1,948

 

2,151

 

2,836

 

2,523

 

6,392

 

4,784

 

4,257

 

Online games-royalties and license fees

 

6,654

 

8,109

 

5,543

 

4,932

 

16,819

 

12,197

 

10,853

 

Mobile games

 

2,753

 

2,246

 

3,996

 

3,556

 

4,283

 

6,749

 

6,005

 

Character merchandising and other revenue

 

441

 

1,578

 

413

 

368

 

2,947

 

854

 

760

 

Total net revenue

 

11,796

 

14,084

 

12,788

 

11,379

 

30,441

 

24,584

 

21,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

7,397

 

9,691

 

8,439

 

7,509

 

16,518

 

15,836

 

14,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

4,399

 

4,393

 

4,349

 

3,870

 

13,923

 

8,748

 

7,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

4,407

 

5,258

 

4,512

 

4,015

 

12,050

 

8,919

 

7,936

 

Research and development

 

1,392

 

1,400

 

2,061

 

1,834

 

2,787

 

3,453

 

3,072

 

Impairment losses on intangible assets

 

152

 

 

582

 

518

 

 

734

 

653

 

Gain on disposal of investments

 

 

(537

)

(1,225

)

(1,090

)

(537

)

(1,225

)

(1,089

)

Total operating expenses

 

5,951

 

6,121

 

5,930

 

5,277

 

14,300

 

11,881

 

10,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(1,552

)

(1,728

)

(1,581

)

(1,407

)

(377

)

(3,133

)

(2,788

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

370

 

458

 

345

 

307

 

934

 

715

 

636

 

Interest expense

 

(11

)

(14

)

(14

)

(12

)

(25

)

(25

)

(22

)

Foreign currency gain, net

 

60

 

170

 

230

 

204

 

10

 

290

 

258

 

Others, net

 

 

66

 

 

 

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income tax expenses and equity income (loss) on investments

 

(1,133

)

(1,048

)

(1,020

)

(908

)

608

 

(2,153

)

(1,916

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expenses

 

875

 

531

 

720

 

640

 

1,349

 

1,595

 

1,419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before equity income (loss) on investments

 

(2,008

)

(1,579

)

(1,740

)

(1,548

)

(741

)

(3,748

)

(3,335

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income (loss) on investments

 

(23

)

43

 

 

 

(39

)

(23

)

(20

)

Net loss

 

(2,031

)

(1,536

)

(1,740

)

(1,548

)

(780

)

(3,771

)

(3,355

)

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

(402

)

(410

)

(123

)

(109

)

(782

)

(525

)

(467

)

Parent company

 

(1,629

)

(1,126

)

(1,617

)

(1,439

)

2

 

(3,246

)

(2,888

)

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

(234

)

(162

)

(233

)

(0.21

)

0

 

(467

)

(0.42

)

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

 

(59

)

(41

)

(58

)

(0.05

)

0

 

(117

)

(0.10

)

 


*       For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,123.85 to US$1.00, the noon buying rate in effect on August 2, 2013 as quoted by the Federal Reserve Bank of New York.

 

(1) Each ADS represents one-fourth of a common share.

 

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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.

 

 

 

 

 

By:

/s/ Heung Gon Kim

 

Name:

Heung Gon Kim

 

Title:

Chief Financial Officer

 

Date: August 29, 2013

 

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