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Published: 2023-03-31 07:23:07 ET
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EX-99.3 4 exhibit9932.htm EX-99.3 Document

Exhibit 99.3

2022 Annual Business Report


Table of Contents

1.Business Overview
(1)Business Results and Financial Statements for the Past Three Fiscal Years (2019 – 2022)

2.Company Overview
(1)Registered Purpose of the Company
(2)Description of Primary Business
(3)Problems Confronting the Company
(4)Business Offices and Game Development Facilities
(5)Stock
(6)Debenture
(7)Major Shareholders
(8)Investment in Other Companies
(9)Directors Holding Concurrent Positions
(10)Material Transactions with Related Parties
(11)Significant Creditors
(12)Employees
(13)Directors and Auditors
(14)Material Events after the End of Fiscal Year 2022

3. Consolidated Financial Statements as of and for the fiscal years ended December 31, 2022 and 2021
(1)Consolidated Financial Positions
(2)Consolidated Comprehensive Income
(3)Consolidated Statements of Changes in Equity
(4)Consolidated Statements of Cash Flows

4. Separate Financial Statements as of and for the fiscal years ended December 31, 2022 and 2021
(1)Financial Positions
(2)Comprehensive Income
(3)Statements of Appropriation of Retained earnings
(4)Statements of Changes in Equity
(5)Statements of Cash Flows






1. Business Overview
(1)Business Results and Financial Statements for the Past Three Fiscal Years (2020 – 2022)

(In thousands of Korean Won)
Category202220212020
Current assets250,876,266219,505,575 164,602,523
• Quick assets250,876,266219,505,575164,602,523
Non-current assets41,433,07439,159,99828,537,796
• Investment asset26,732,33421,679,84514,958,641
• Property and Equipment, net3,520,3855,608,3203,176,858
• Intangible asset3,867,9393,228,6352,663,857
• Other non-current asset7,312,4168,643,1987,738,440
Total assets292,309,340258,665,573193,140,319
Current liabilities28,335,11648,803,83248,824,376
Non-current liabilities3,382,4074,184,6483,370,754
Total liabilities31,717,52352,988,48052,195,130
Share capital3,474,4503,474,4503,474,450
Capital surplus27,482,68327,482,68327,482,683
Other components of equity--929
Retained earnings229,634,684174,719,960109,987,127
Total equity260,591,817205,677,093140,945,189
Revenues       232,717,405 288,258,376228,996,069
Operating income         62,144,800 78,174,46756,675,048
Income before income tax         75,203,609 92,546,06455,050,476
Net income         54,914,724 64,732,83339,416,922

2. Company Overview
(1)Registered Purpose of the Company
(1)Software consulting, development and supply
(2)Development and sales of software and CD
(3)Information-technology-related software development
(4)Production, development, distribution, sales and consulting of digital contents, including game software, as well as corresponding licensing
(5)Online network game services
(6)Applied package-related software development
(7)Production and sales of computer programs
(8)Import and export of software
(9)E-commerce
(10) Character development business
(11) Animation business
(12) Real estate leasing
(13) Service-area restaurant business
(14) Media-related business
(15) Printing and publication
(16) Record & video production and distribution
(17) Any other businesses incidental to the above businesses


(2)Description of Primary Business



Gravity Co., Ltd. (the “Company”) is the developer of Ragnarok Online, an MMORPG, which was launched in August 2002 and is commercially offered in 91 markets worldwide, including Korea, Japan, Taiwan, Thailand, Southeast Asia, the United States and Europe as of December 31, 2022.
Having strong global network and success from Ragnarok Online, the Company is expanding its business areas from online game development and publishing to cultural contents business based on various platforms, such as development of games for smartphones, console and IPTV, and animation and game character merchandising.
In addition, the Company has 8 subsidiaries, such as Gravity NeoCyon, Inc. in Korea, Gravity Interactive, Inc. in the United States, Gravity Communications Co., Ltd in Taiwan. Gravity Game Tech Co., Ltd. in Bangkok, Thailand, PT Gravity Game Link in Jakarta, Indonesia, Gravity Game Arise Co., Ltd. in Tokyo, Japan, GRAVITY GAME HUB PTE., Ltd in Singapore and GRAVITY GAME VISION LIMITED in Hong Kong.

(3)Problems Confronting the Company
Since the Company operates in a highly competitive industry, the Company is making every effort to enhance its development capacity and to maintain and increase its market share in overseas markets to preserve its competitive advantage.
The Company is in need of diversified revenue structure, continuous global market expansion and new business initiatives for sustainable revenue growth. The Company is doing its best diversely to expand new markets, to publish mobile games, to develop mobile games and to do IP licensing business.

(4)Business Offices and Game Development Facilities
ClassificationLocation
Head Office(Nuritkum Square R&D Tower) 15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea
Game Development Facilities(Nuritkum Square R&D Tower) 15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

(5)Stock

1) Total number of shares
(As of December 31, 2022)
Total number of shares authorizedTotal number of shares issuedTotal number of shares unissued
40,000,000 shares6,948,900 shares33,051,100 shares

2) Type of Stock issued (Par value per share: KRW 500)
(As of December 31, 2022)
TypeNumber of sharesTotal par value%
Registered common stock6,948,900 sharesKRW 3,474,450,000100 %

(6)Debenture: None.

(7)Major Shareholders
(As of December 31, 2022)
ShareholderShares Owned%Transaction with the Company
GungHo Online Entertainment, Inc.4,121,73759.31
-
Others2,827,16340.69-
Total6,948,900100.00-



(8)Investment in Other Companies

(As of December 31, 2022)
CompaniesRelationship with the Company
NameLocationShare capitalMain businessShares owned%Relationship
Gravity Interactive, Inc.California, USAUSD
10,540,000		Online and Mobile Game Service290,000
100.00%
Subsidiary
Gravity NeoCyon, Inc.Seoul,
Korea		KRW
3,990,990,000		Mobile game development794,440
99.53%
Subsidiary
Gravity Communications Co., Ltd.Taipei, TaiwanNTD
155,100,000    		Online and Mobile Game Service15,510,000
100.00%
Subsidiary
PT Gravity Game LinkJakarta, IndonesiaIDR
43,221,000,000		Online and Mobile Game Service3,025,470
70.00%
Subsidiary
Gravity Game Tech Co., Ltd.Bangkok, ThailandTHB
88,049,940 		Online and Mobile Game Service8,804,994
100.00%
Subsidiary
Gravity Game Arise Co., Ltd.Tokyo,
Japan		JPY
100,000,000		Online and Mobile Game Service25,000
100.00%
Subsidiary
Gravity Game Hub PTE., Ltd.SingaporeSGD
6,819,991		Online and Mobile Game Service682,000
100.00%
Subsidiary
Gravity Game Vision., Ltd.(*1)Hong KongHKD
3,900,001		Online and Mobile Game Service39,001
100.00%
Subsidiary
(*1) Gravity Game Vision., Ltd. was founded during 2022 and has been included as a subsidiary.


(9)Directors Holding Concurrent Positions


NameCompany
NamePositionResponsibility
Hyun Chul ParkGravity Co., Ltd.CEOOverall management
Gravity NeoCyon, Inc.Executive DirectorChief Operating Officer
Gravity Communications Co., Ltd.Executive Director-
Gravity Interactive, Inc.President-
Yoshinori KitamuraGravity Co., Ltd.Executive DirectorChief Operating Officer
Chief Compliance Officer
Gravity Interactive, Inc.CEOOverall management
Gravity NeoCyon, Inc.CEOOverall management
Gravity Communications Co., Ltd.CEOOverall management
PT Gravity Game LinkCEOOverall management
Gravity Game Tech Co., Ltd.CEOOverall management
Gravity Game Arise Co., Ltd.CEOOverall management
Gravity Game Hub PTE., Ltd.CEOOverall management
Gravity Game Vision., Ltd.CEOOverall management
Heung Gon KimGravity Co., Ltd.Executive DirectorChief Financial Officer
Gravity NeoCyon, Inc.Executive DirectorChief Financial Officer
Gravity Interactive, Inc.Vice President-
Gravity Communications Co., Ltd.Executive DirectorChief Financial Officer
PT Gravity Game LinkExecutive Director-
Gravity Game Tech Co., Ltd.Executive Director-
Gravity Game Arise Co., Ltd.Executive Director-
Gravity Game Hub PTE., Ltd.Executive DirectorChief Financial Officer
Gravity Game Vision., Ltd.Executive DirectorChief Financial Officer



(10)Material Transactions with Related Parties
① Sales and purchases
(In thousands of Korean Won)
NatureRelated Companies20222021
SalesPurchasesSalesPurchase
Parent companyGungHo Online Entertainment, Inc.24,812,72320,31935,489,01057,144
GungHo Online Entertainment America-42,479--
SubsidiariesGravity Interactive, Inc. 13,180,9441,462,36714,838,616643,324
Gravity NeoCyon, Inc.507,7777,064,199327,3296,734,567
Gravity Communications Co., Ltd.19,256,8446,326,90418,682,5915,676,890
PT Gravity Game Link360,061484,278298,864157,600
Gravity Game Tech Co., Ltd.7,583,91756,0876,769,77429,534
Gravity Game Arise Co., Ltd.27,9283,401,736-3,246,517
Gravity Game Hub892,325---
Gravity Game Vision Limited.13,257,431---
Total79,879,95018,858,36976,406,18416,545,576

② Receivables and Payables
(In thousands of Korean Won)
NatureRelated Companies20222021
ReceivablesPayablesReceivablesPayables
Parent companyGungHo Online Entertainment, Inc.2,707,6402,8045,051,0137,448
GungHo Online Entertainment America-29,692--
SubsidiariesGravity Interactive, Inc.3,591,765540,3463,538,932405,359
Gravity Game Hub PTE., Ltd.707,855-96,628-
Gravity NeoCyon, Inc.460,846904,356822,0091,550,411
Gravity Communications Co., Ltd.1,581,3561,696,2121,179,2281,283,908
PT Gravity Game Link412,174270,36235,8249,411
Gravity Game Tech Co., Ltd.1,848,604158,3701,439,384181,043
Gravity Game Arise Co., Ltd.135,588775,877310,4121,106,765
Gravity Game Vison Limited.7,359,665---
Total18,805,4934,378,01912,473,4304,544,345

(11)Significant Creditors: The Company had no significant creditors as of December 31, 2022.

(12)Employees
(As of December 31, 2022)
CategoryDirectors & OfficersDevelopersMarketing/OperatingFinance/AdministrationTotal
Employees112187746352

(13)Directors and Auditors
(As of December 31, 2022)
NamePositionMain workTransaction with the Company
Hyun Chul ParkCEOChief Executive Officer-
Yoshinori KitamuraExecutive Director
Chief Operating Officer
Chief Compliance Officer
-
Heung Gon KimExecutive DirectorChief Financial Officer-
Kazuki MorishitaExecutive Director--
Kazuya SakaiExecutive Director--
Jung YooIndependent DirectorMember of audit committee-
Yong Seon KwonIndependent DirectorMember of audit committee-
Kee Woong ParkIndependent DirectorMember of audit committee-



(14)Material Events after the end of fiscal year 2022: None


3. Consolidated Financial Statements as of and for the fiscal year ended December 31, 2022 and December 31, 2021
(1)Consolidated Statements of Financial Position
GRAVITY CO., LTD. (In thousands of Korean Won)
December 31, 2022December 31, 2021
Assets
Current Assets
421,767,238　306,134,920
Cash and cash equivalents
169,877,341　99,104,943
Short-term financial instruments
167,000,000　148,000,000
Accounts receivable, net
77,256,816　52,614,595
Other receivable, net
139,785　1,080,516
Prepaid expenses
3,332,317　3,164,075
Other current financial assets
3,370,146　598,099
Other current assets
790,833　1,572,692
Non-current Assets
22,326,742　21,391,403
Property and equipment, net
8,140,129　11,337,999
Intangible assets, net
3,869,478　3,342,028
Other non-current financial assets
2,175,769　3,018,823
Other non-current assets
2,481,845　1,973,064
Deferred tax assets
5,659,521　1,719,489
Total assets444,093,980　327,526,323
Liabilities
Current liabilities
105,709,908　73,997,475
Account payables
73,549,144　41,199,401
Deferred revenue
18,543,037　13,480,518
Withholdings
3,201,011　3,596,403
Accrued expenses
2,040,357　1,484,019
Income tax payable
5,469,061　10,628,981
Other current liabilities
2,907,298　3,608,153
Non-current liabilities
8,204,251　6,687,990
Long-term account payables
373,989　729,173
Long-term deferred revenue
30,239　98,226
Other non-current liabilities
4,968,325　5,860,591
Deferred tax liabilities
2,831,698
Total liabilities113,914,159　80,685,465
Equity attributable to owners of the Parent Company329,527,917246,070,907
Share capital
3,474,450　3,474,450
Common shares
3,474,450　3,474,450
Capital surplus
27,098,264　27,098,264
Other components of equity
2,475,675　2,180,388
Retained earnings
296,479,528　213,317,805
Non-controlling interest651,904　769,951
Total equity330,179,821　246,840,858
Total liabilities and equity444,093,980　327,526,323


(2)Consolidated Statements of Comprehensive Income
GRAVITY CO., LTD. (In thousands of Korean Won)
20222021
Revenues463,617,872413,937,974
Online games89,256,40675,370,395
Mobile games 358,771,544320,163,555
Other revenue15,589,92218,404,024
Cost of revenues267,365,143224,172,902
Gross profit　196,252,729189,765,072
Selling, general and administrative expenses91,410,93392,201,177
Operating Profit104,841,79697,563,895
Non-operating income and expenses5,039,9811,736,637
Financial income 15,953,4665,268,535
Financial costs(10,779,361)(2,686,170)
Other non-operating income605,316606,731
Other non-operating expenses(739,440)(1,452,459)
Profit before income tax expense109,881,77799,300,532
Income tax expense26,824,18933,420,741
Profit for the year83,057,58865,879,791
Owners of the Parent Company83,161,72365,946,650
Non-controlling interests(104,135)(66,859)
Other comprehensive income281,3753,271,136
Items that may be subsequently reclassified to profit or loss285,0343,273,897　
Foreign currency translation adjustments297,8483,226,854
Non-controlling interest of foreign currency translation adjustments(12,814)　47,043　
Items that will never be reclassified to profit or loss(3,659)(2,761)　
Remeasurement of defined benefit liabilities(2,561)　(1,933)　
Non-controlling interest of remeasurement of defined benefit liabilities(1,098)　(828)　
Total comprehensive income for the year83,338,96369,150,927
Owners of the Parent Company83,457,01069,171,571
Non-controlling interests(118,047)(20,644)
Earnings per share attributable to the equity holders of the Parent Company
Basic earnings per share11,9689,490
Diluted earnings per share11,9689,490



(3)Consolidated Statements of Changes in Equity
GRAVITY CO., LTD. (In thousands of Korean Won)



Share capital
Capital surplus
Other components of equityRetained EarningsTotal
Non-controlling
interest
Total
Equity
Balance at January 1, 20213,474,45027,109,803(1,044,533)147,371,155176,910,875437,141177,348,016
Profit for the year---65,946,65065,946,650(66,859)65,879,791
 Equity transaction-(11,539)--(11,539)353,454341,915
Remeasurements of defined benefit liabilities-　-　(1,933)-(1,933)(828)(2,761)
 Foreign currency translation adjustments--3,226,854-3,226,85447,0433,273,897
Balance at December 31, 20213,474,45027,098,2642,180,388213,317,805246,070,907769,951246,840,858
Balance at January 1, 20223,474,45027,098,2642,180,388213,317,805246,070,907769,951246,840,858
Profit for the year---83,161,72383,161,723(104,135)83,057,588
 Remeasurements of defined benefit liabilities--(2,561)-(2,561)(1,098)(3,659)
Foreign currency translation adjustments--297,848-297,848(12,814)285,034
Balance at December 31, 20223,474,45027,098,2642,475,675296,479,528329,527,917651,904330,179,821



(4) Consolidated Statements of Cash Flows
GRAVITY CO., LTD. (In thousands of Korean Won)
20222021
Cash flows from operating activities　98,278,652　74,182,958
Profit for the year83,057,58865,879,791 　
Adjustments31,362,84840,575,779 　
Changes in operating assets and liabilities10,254,125(2,883,876)　
Interest received3,032,676995,149 　
Interest paid(121,724)(111,416)　
Income tax paid(29,306,861)(30,272,469)　
Cash Flows from investing activities　(22,340,445)　(82,471,756)
Decrease in other current assets5,099　-
Proceeds from disposal of property and equipment14,609　13,850 　
Proceeds from disposal of other intangible assets-14,861 　
Decrease in other non-current financial assets-594,774 　
Increase in short-term financial instruments(19,000,000)　(77,000,000)
Purchase of property and equipment(739,413)　(1,747,427)
Purchase of intangible assets(2,055,632)　(2,463,914)
Increase in other current assets (200)-
Increase in other non-current financial assets(564,908)　(1,883,900)
Cash Flows from Financing Activities　(3,917,977)　(3,306,019)
Proceeds from capital contribution from non-controlling interests-353,454 　
Repayment of lease liabilities(3,917,977)　(3,647,934)　
Payment of share issuance-(11,539)　
Effects of exchange rate changes on cash and cash equivalents　(1,247,832)　67,278
Net increase (decrease) in cash and cash equivalents　70,772,398　(11,527,539)
Cash and cash equivalents at beginning of the year　99,104,943 　110,632,482 
Cash and cash equivalents at end of the year　169,877,341 　99,104,943 



4. Separate Financial Statements as of and for the fiscal year ended December 31, 2022 and December 31, 2021.

(1)Statements of Financial Position
GRAVITY CO., LTD. (In thousands of Korean Won)
December 31, 2022December 31, 2021
Assets
Current Assets250,876,266　219,505,575
Cash and cash equivalents42,985,625　26,602,122
Short-term financial instruments167,000,000　148,000,000
Accounts receivable, net35,117,290　40,569,841
Other receivable, net961,918　1,677,451
Prepaid expenses1,556,323　1,823,623
Other current financial assets3,249,537　790,051
Other current assets5,573　42,487
Non-current Assets41,433,074　39,159,998
Investments in subsidiaries26,732,334　21,679,845
Property and equipment, net3,520,385　5,608,320
Intangible assets, net3,867,939　3,228,635
Deferred tax assets3,689,765　4,045,964
Other non-current financial assets2,048,028　2,895,565
Other non-current assets1,574,623　1,701,669
Total assets292,309,340　258,665,573
Liabilities
Current liabilities28,335,116　48,803,832
Accounts payables17,641,888　29,467,721
Deferred income 4,258,298　4,139,025
Withholdings1,540,197　2,754,347
Accrued expenses 881,213　785,358
Income tax payable2,406,367　9,403,175
Other current liabilities1,607,153　2,254,206
Non-current liabilities3,382,407　4,184,648
Long-term account payables373,989　729,173
Long-term deferred revenue30,239　199,062
Other non-current liabilities2,978,179　3,256,413
Total liabilities31,717,523　52,988,480
Equity
Share Capital3,474,450　3,474,450
Common shares3,474,450　3,474,450
Capital surplus27,482,683　27,482,683
Other components of equity
Retained earnings229,634,684　174,719,960
Total equity260,591,817　205,677,093
Total liabilities and equity292,309,340　258,665,573



(2)Statements of Comprehensive Income
GRAVITY CO., LTD. (In thousands of Korean Won)
20222021
Revenues　232,717,405 　288,258,376
Online games32,969,528 　30,176,025 　
Mobile games198,512,493 　256,918,510 　
Other revenue1,235,384 　1,163,841 　
Cost of revenues　112,512,407 　141,815,263
Gross profit　120,204,998 　146,443,113
Selling, general and administrative expenses　58,060,198 　68,268,646
Operating Profit　62,144,800 　78,174,467
Non-operating income and expenses　13,058,809 　14,371,597
Financial income 13,734,710 　4,921,817 　
Financial costs(9,975,732)　(1,989,233)　
Other non-operating income9,578,611 　11,997,743 　
Other non-operating expenses(278,780)　(558,730)　
Profit before income tax　75,203,609 　92,546,064
Income tax expense　20,288,885 　27,813,231
Profit for the year　54,914,724 　64,732,833
Other comprehensive income　-　-　
Total comprehensive income for the year　54,914,724 　64,732,833


(3)Statements of Appropriation of Retained earnings
GRAVITY CO., LTD. (In thousands of Korean Won)
20222021
Confirmed disposition date:
March 31, 2023
Confirmed disposition date:
March 31, 2022
Retained earnings before appropriation229,634,684 174,719,960
Unappropriated retained earnings carried over from prior year174,719,960 109,987,127
Profit for the year54,914,724 64,732,833
Appropriation of retained earnings--
Unappropriated retained earnings to be carried forward229,634,684 174,719,960


(4) Statements of Changes in Equity
GRAVITY CO., LTD. (In thousands of Korean Won)



Share capitalCapital SurplusOther components of equityRetained EarningsTotal
Balance at January 1, 20213,474,45027,482,683929109,987,127140,945,189
Profit for the year---64,732,83364,732,833
Foreign currency translation adjustments--(929)-(929)
Balance at December 31, 20213,474,45027,482,683-174,719,960205,677,093
Balance at January 1, 20223,474,45027,482,683-174,719,960205,677,093
Profit for the year---54,914,72454,914,724
Balance at December 31, 20223,474,45027,482,683-229,634,684260,591,817


(5)Statements of Cash Flows
GRAVITY CO., LTD. (In thousands of Korean Won)
20222021
Cash flows from operating activities　45,514,786　70,320,586
Profit for the year54,914,724　64,732,833　
 Adjustments 12,550,795　18,716,916　
 Changes in operating assets and liabilities(7,886,555)　(2,637,125)　
 Interest received2,964,848　966,070　
 Interest paid (61,533)　(68,886)　
 Dividend received8,839,924　11,326,984　
Income tax paid(25,807,417)　(22,716,206)　
Cash flows from investing activities　(26,443,349)　(88,153,976)
 Decrease in other current financial assets901-
Decrease in other non-current financial assets-　500,000　
 Decrease in other non-current financial liabilities-89,860　
 Disposal of property and equipment1,368　235　
Acquisition of investments in subsidiaries(5,052,489)　(6,721,204)　
  Increase in short-term financial instruments(19,000,000)　(77,000,000)　
Increase in other current financial assets(200)　-
Increase in other non-current financial assets(500,000)(1,660,952)　
Purchase of property and equipment(291,433)　(1,210,372)　
Purchase of intangible assets(1,601,496)　(2,151,543)　
Cash flows from financing activities　(2,049,532)　(1,787,171)
Repayment of lease liabilities(2,049,532)　(1,787,171)　
Effects of exchange rate changes on cash and cash equivalents　(638,402)　(19,354,123)
Net increase (decrease) in cash and cash equivalents　16,383,503　
Cash and cash equivalents at the beginning of the year　26,602,122 　45,956,245 
Cash and cash equivalents at the end of the year　42,985,625 　26,602,122