Nexon Announces Fourth Quarter and Full Year 2013 Results

  Nexon Announces Fourth Quarter and Full Year 2013 Results

                         43% Full Year Revenue Growth

           Generated Over ¥60 Billion in Cash Flow from Operations

Business Wire

TOKYO -- February 13, 2014

NEXON Co., Ltd. (“Nexon”) (3659.TO), a worldwide leader in free-to-play online
games, today announced financial results for its fourth quarter and fiscal
year ended December 31, 2013.

Fourth quarter revenues grew 12% year-over-year and full year revenues grew
43% year-over-year. Fourth quarter IFRS operating income decreased 96%
year-over-year due to impairment loss primarily from consolidated subsidiary
NDOORS Corporation.

“We are proud of Nexon’s many accomplishments in 2013, including the strong
performance of our business in China, which continued to generate solid cash
flow as Dungeon&Fighter remained a top-performing game in the region, and of
our Korean business, which demonstrated significant growth driven by the
strength of new and existing titles,” said Seungwoo Choi, President and Chief
Executive Officer of Nexon. “While we are still underperforming in Japan and
the West, we made excellent progress against our long-term strategic
initiatives by entering into commercial partnerships with and making
investments in several studios headed by world-class developers. We also
announced changes to our management team, and are looking forward to our new
team’s enhanced efforts to grow our business in those markets.”

                                                
Fourth Quarter Fiscal 2013 Financial Highlights (IFRS) ^1
(Millions of yen, except for per share data)
                                                       
                              Q4 2012     Q4 2013      YoY%
Revenues                      ¥30,882     ¥34,467      12  %
PC                            23,813      27,750       17  %
Mobile                        7,070       6,717        (5  %)
Operating income ^2           8,793       327          (96 %)
Net income(loss)^3            552         (4,437 )
                                                       
Earnings(loss) per share:     1.27        (10.10 )
                                                       

Footnotes:
^1  Nexon voluntarily adopted IFRS beginning in the first quarter of 2013.
^2   Operating income includes recorded impairment loss of ¥9.5 billion,
     primarily from consolidated subsidiary NDOORS Corporation.
     Net income (loss) refers to net income (loss) attributable to owners of
     the parent, as stated in Nexon’s consolidated financial results. Nexon
^3   also recognized a ¥2.5 billion impairment loss from equity method
     affiliates related to 6waves Inc., which the Company recorded in finance
     costs under IFRS.

                                                
Revenue by Region^1 (IFRS)
                                                         
(Unit: ¥                                                 YoY % Change
millions)                  Q4 2013       Q4 2013
               Q4 2012     (As-          (Constant       As-          Constant
Revenue                  Reported)     Currency)^3     Reported   Currency
by Region                                                             ^3
China          ¥11,074     ¥12,065       ¥9,047          9%           (18%)
Korea          7,057       11,654        8,728           65%          24%
Japan          10,037      8,274         8,274           (18%)        (18%)
North          1,117       1,201         949             8%           (15%)
America
Europe and     1,596       1,273         959             (20% )       (40%)
Others ^2
Nexon        30,882      34,467        27,956          12%          (9%)
Total
                                                                      

Footnotes:
^1  Based on the region in which revenues originate; not a representation of
     our revenues according to Nexon entities.
^2   Others consists of other Asian countries and South American countries.
^3   On a constant currency basis (using Q4 2012 currency exchange rates).

Fourth Quarter 2013 Regional Highlights

China

Fourth quarter revenues were up 9% year-over-year, or down 18% on a constant
currency basis, in line with management’s internal expectations.
Dungeon&Fighter revenue decreased single digit year-over-year on a constant
currency basis in line with management’s internal expectations.

Korea

Fourth quarter revenues were up 65% year-over-year, or up 24% on a constant
currency basis, driven by continued strong performance of FIFA Online 3 and
double-digit growth of Dungeon&Fighter, Sudden Attack, and Mabinogi. Five
mobile titles were launched during the quarter, with two exceeding KRW 1
billion in 30-day revenues.

Japan

Fourth quarter revenues were down 18% year-over-year due to lower mobile and
PC revenues. The Company launched mobile titles Skylock and Wake Up! Girls
during the quarter.

North America, Europe and Others

Fourth quarter revenues in North America were up 8% year-over-year, or down
15% on a constant currency basis. Fourth quarter revenues for Europe and other
regions were down 20% year-over-year, or down 40% on a constant currency
basis.

Fiscal Year 2013 Financial Highlights

  *Total revenues were ¥155.3 billion, an increase of 43% over the prior
    fiscal year.
  *Operating income was ¥50.7 billion, an increase of 7% over the prior
    fiscal year. Operating income margin was 33%, compared to 44% in 2012.
  *Net income (attributable to owners of the parent) was ¥30.1 billion, an
    increase of 7% over the prior fiscal year.
  *Earnings per share were ¥69.25, up from ¥65.27 in 2012.

Management Change

In a separate statement today, Nexon also announced that its Board of
Directors has appointed Owen Mahoney as the Company’s President and Chief
Executive Officer-elect, effective following the Annual General Meeting of
Shareholders to be held on March 25, 2014. Mr. Mahoney, who currently serves
as Nexon's Chief Financial Officer and Chief Administrative Officer, will
succeed Seungwoo Choi, who has decided to retire and will assume the advisory
role of Honorary Chairman. Both Mr. Choi and Mr. Mahoney will continue to
serve in their current roles until the general shareholders’ meeting.

In conjunction with the CEO transition, Shiro Uemura, presently general
manager of the Accounting and Finance Department, will replace Mahoney as
Chief Financial Officer. Koji Abe, General Counsel, will assume the additional
role of Chief Administrative Officer.

First Quarter 2014 Business Outlook

The following table presents Nexon’s outlook for the first quarter of fiscal
2014.

                              
(Millions of yen)      Q1 2013     Q1 2014
                       (IFRS)      (IFRS)
                                               
Revenues               ¥44,364     ¥42,030     ~   ¥45,661
PC                     36,877      35,672      ~   38,658
Mobile                 7,487       6,358       ~   7,003
Operating income       20,716      15,619      ~   18,704
Net income^1           15,150      12,128      ~   14,480
                                                   
Earnings per share     34.77       27.62       ~   32.97
                                                   

Footnote:
^1  Net income (loss) refers to net income (loss) attributable to owners of
     the parent, as stated in Nexon’s consolidated financial results.
     

The Company also expects a weaker Japanese yen to continue to contribute to
year-over-year growth based on its ¥100.46 per US$1 and ¥9.48 per KRW100
currency exchange assumptions.

Conference Call and Webcast

Nexon management will host an earnings presentation for analysts, investors
and the media, which will be conducted in Japanese with simultaneous English
interpretation today, at 4:30 pm Japan Standard Time (JST) / 2:30 am Eastern
Standard Time (EST) to discuss Nexon’s financial results and outlook. A video
replay of the presentation will be made available via Nexon’s Investor
Relations website a few days after the presentation.

There will also be a live conference call conducted in English at 10:00 pm JST
/ 8:00 am EST. A replay will be made available 60 minutes following the
conclusion of the conference call, and a transcript will be available a few
days after. Dial-in information is as follows:

                             
Conference call dial-in:           1-412-902-6602 (US)
Conference call replay:            1-412-317-0088 (US)
Replay passcode:                   10038374#
                                   

For additional information regarding Nexon’s fourth quarter and full year 2013
financial results, please visit the Investor Relations section of Nexon’s
website at http://ir.nexon.co.jp/en/.

This press release is prepared to offer reference information about Nexon to
investors and is intended to generally provide investors and analysts with
financial and operational information about Nexon, but not to solicit or
recommend any sale or purchase of stock or other securities of Nexon.

About NEXON Co., Ltd. http://company.nexon.co.jp/

NEXON Co., Ltd. (“Nexon”) (3659.TO) is a worldwide leader in free-to-play
online games. Founded in Korea in 1994, Nexon developed one of the world's
first graphics-based massively multiplayer online games. Nexon also pioneered
the concept of microtransactions and the free-to-play business model, setting
a new standard in which play is free, and users have the option to purchase
in-game items to enhance their experience. Nexon currently services nearly 60
online games in more than 100 countries and since its founding, Nexon has
generated more than 1.4 billion player registrations. The Company is
headquartered in Tokyo, Japan and its shares are listed on the Tokyo Stock
Exchange.

Contact:

NEXON Co., Ltd.
Owen Mahoney, +81-3-3523-7910
Chief Financial Officer
or
Greg Melchior, +81-3-3523-7919
Corporate Public Relations
 
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