Exhibit 99.3
2018 Annual Business Report
Table of Contents
| 1. | Business Overview |
| (1) | Business Results and Financial Statements for the Past Three Fiscal Years (2016 – 2018) |
| 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 Share holders |
| (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 2017 |
| 3. | Separate Financial Statements as of and for the fiscal years ended December 31, 2018 and December 31, 2017 |
| (1) | Financial Positions |
| (2) | Comprehensive Income |
| (3) | Statements of Appropriation of Retained earnings |
| (4) | Statements of Changes in Equity |
| (5) | Statements of Cash Flows |
| 4. | Consolidated Financial Statements as of and for the fiscal years ended December 31, 2018 and December 31, 2017 |
| (1) | Consolidated Financial Positions |
| (2) | Consolidated Comprehensive Income |
| (3) | Consolidated Statements of Changes in Equity |
| (4) | Consolidated Statements of Cash Flows |
| (1) | Business Results and Financial Statements for the Past Three Fiscal Years (2016 – 2018) |
|
|
|
|
|
| (In thousands of Korean Won) |
| |||||
Category |
| 2018 |
|
| 2017 |
|
| 2016 |
| |||
Current assets |
|
| 83,385,874 |
|
|
| 101,697,494 |
|
|
| 48,052,889 |
|
• Quick assets |
|
| 83,385,874 |
|
|
| 101,697,494 |
|
|
| 48,052,889 |
|
Non-current assets |
|
| 22,618,902 |
|
|
| 9,720,122 |
|
|
| 4,597,662 |
|
• Investment asset |
|
| 9,464,638 |
|
|
| 1,783,228 |
|
|
| 1,783,228 |
|
• Tangible asset |
|
| 882,089 |
|
|
| 476,027 |
|
|
| 320,560 |
|
• Intangible asset |
|
| 1,572,714 |
|
|
| 988,855 |
|
|
| 160,873 |
|
• Other non-current asset |
|
| 10,699,461 |
|
|
| 6,472,012 |
|
|
| 2,333,001 |
|
Total assets |
|
| 106,004,776 |
|
|
| 111,417,616 |
|
|
| 52,650,551 |
|
Current liabilities |
|
| 24,548,267 |
|
|
| 59,753,549 |
|
|
| 16,499,905 |
|
Non-current liabilities |
|
| 3,668,390 |
|
|
| 6,630,636 |
|
|
| 3,726,148 |
|
Total liabilities |
|
| 28,216,657 |
|
|
| 66,384,185 |
|
|
| 20,226,053 |
|
Share capital |
|
| 3,474,450 |
|
|
| 3,474,450 |
|
|
| 3,474,450 |
|
Capital surplus |
|
| 27,482,683 |
|
|
| 27,482,683 |
|
|
| 28,219,282 |
|
Retained earnings (Accumulated deficit) |
|
| 47,101,922 |
|
|
| 14,424,777 |
|
|
| 705,690 |
|
Other components of equity |
|
| (270,936 | ) |
|
| (348,479 | ) |
|
| 25,076 |
|
Total equity |
|
| 77,788,119 |
|
|
| 45,033,431 |
|
|
| 32,424,498 |
|
Revenues |
|
| 198,697,511 |
|
|
| 119,422,554 |
|
|
| 34,960,528 |
|
Operating profit (loss) |
|
| 40,450,700 |
|
|
| 13,675,573 |
|
|
| 5,436,475 |
|
Profit (loss) before income tax |
|
| 35,139,350 |
|
|
| 13,922,239 |
|
|
| 2,994,179 |
|
Net profit (loss) |
|
| 32,677,145 |
|
|
| 12,982,487 |
|
|
| (225,724 | ) |
* The Company has adopted IFRS adopted by the Republic of Korea for the annual period beginning on January 1, 2017. In accordance with First-time adoption of IFRS, the Company’s transition date to IFRS is January 1, 2016.
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 |
Gravity Co., Ltd. (the “Company”) is the developer of Ragnarok Online, an MMORPG, which was launched in August 2002 and is commercially offered in 81 markets worldwide, including Korea, Japan, Taiwan, Thailand, Southeast Asia, the United States and Europe as of December 31, 2018.
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, in order to strengthen its presence in the overseas markets, the Company has subsidiaries in the United States and Japan. The Company also has subsidiaries in Korea, such as NeoCyon, Inc. In November 2016, the company established a branch office in Taiwan and in April 2018, the company established a subsidiary in Taiwan.
| (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 |
Classification |
| Location |
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, 2018) |
Total number of shares authorized |
| Total number of shares issued |
| Total number of shares unissued |
40,000,000 shares |
| 6,948,900 shares |
| 33,051,100 shares |
| 2) | Type of Stock issued (Par value per share: KRW 500) |
(As of December 31, 2018)
Type |
| Number of shares |
| Total par value |
| % |
|
Registered common stock |
| 6,948,900 shares |
| KRW 3,474,450,000 |
| 100% |
|
| (6) | Debenture: None. |
| (7) | Major Shareholders |
|
|
|
|
|
| (As of December 31, 2018) |
| |||||
Shareholder |
| Shares owned |
|
| % |
|
| Transaction with the Company |
| |||
GungHo Online Entertainment, Inc. |
|
| 4,121,737 |
|
|
| 59.31 |
|
| * |
| |
Others |
|
| 2,827,163 |
|
|
| 40.69 |
|
|
| — |
|
Total |
|
| 6,948,900 |
|
|
| 100.00 |
|
|
| — |
|
* Refer to “(10) Material Transactions with Related Parties.”
|
|
|
|
|
|
|
| (As of December 31, 2018) | ||||||||
Companies |
| Relationship with the Company | ||||||||||||||
Name |
| Location |
| Common Stock |
| Main business |
| Shares owned |
|
| % |
|
| Relationship | ||
Gravity Interactive, Inc. |
| California, US |
| USD 14,540,000 |
| Gaming Service |
|
| 290,000 |
|
|
| 100.00 | % |
| Subsidiary |
Gravity Entertainment Corp. |
| Tokyo, Japan |
| JPY 167,850,000 |
| Animation making/service |
|
| 1,000 |
|
|
| 100.00 | % |
| Subsidiary |
NeoCyon, Inc. |
| Seoul, Korea |
| KRW 2,964,000,000 |
| Mobile game development |
|
| 585,300 |
|
|
| 98.73 | % |
| Subsidiary |
Gravity Communications Co.,Ltd |
| Taipei. Taiwan |
| NTD 155,100,000 |
| Online and Mobile Game Service |
|
| 15,510,000 |
|
|
| 100.00 | % |
| Subsidiary |
| (9) | Directors Holding Concurrent Positions |
|
| Company |
| |||||
Name |
| Name |
| Position |
| Responsibility |
| |
Hyun Chul Park |
| Gravity Co., Ltd. |
| CEO |
| Overall management |
| |
|
| NeoCyon, Inc. |
| Executive Director |
| Chief Operating Officer |
| |
|
| Gravity Communications Co.,Ltd |
| Executive Director |
|
| — |
|
|
| Gravity Interactive, Inc. |
| Executive Director |
|
| — |
|
Yoshinori Kitamura |
| Gravity Co., Ltd. |
| Executive Director |
| Chief Operating Officer |
| |
|
| Gravity Interactive, Inc. |
| CEO |
| Overall management |
| |
|
| Gravity Entertainment Corp. |
| CEO |
| Overall management |
| |
|
| NeoCyon, Inc. |
| CEO |
| Overall management |
| |
|
| Gravity Communications Co.,Ltd |
| CEO |
| Overall management |
| |
| (10) | Material Transactions with Related Parties |
| 1) | Sales and purchases |
|
|
|
|
|
|
|
|
|
|
|
| (In thousands of Korean Won) |
| |||||
|
|
|
| 2018 |
|
| 2017 |
| ||||||||||
Nature |
| Related companies |
| Sales |
|
| Purchases |
|
| Sales |
|
| Purchase |
| ||||
Parent company |
| GungHo Online Entertainment, Inc. |
|
| 9,538,157 |
|
| - |
|
|
| 9,488,821 |
|
|
| 35,912 |
| |
Subsidiaries |
| Gravity Interactive, Inc. |
|
| 15,068,304 |
|
|
| 2,937 |
|
|
| 918,141 |
|
| - |
| |
|
| Gravity Entertainment Corp. |
| - |
|
|
| 158,025 |
|
| - |
|
| - |
| |||
|
| NeoCyon, Inc. |
|
| 74,931 |
|
|
| 5,392,633 |
|
|
| 462,360 |
|
|
| 4,901,306 |
|
|
| Gravity Games Corp. |
|
| 255 |
|
|
| 2,635 |
|
|
| 985 |
|
|
| 218,600 |
|
|
| Gravity Communications Co.,Ltd |
|
| 741,076 |
|
|
| 13,845 |
|
| - |
|
| - |
| ||
|
| Total |
|
| 25,422,723 |
|
|
| 5,570,075 |
|
|
| 10,870,307 |
|
|
| 5,155,818 |
|
| 2) | Receivables and Payables |
|
|
|
|
|
|
|
|
|
|
| (In thousands of Korean Won) |
| ||||||
|
|
|
| 2018 |
|
| 2017 |
| ||||||||||
Nature |
| Related companies |
| Receivables |
|
| Payables |
|
| Receivables |
|
| Payables |
| ||||
Parent company |
| GungHo Online Entertainment, Inc. |
|
| 831,478 |
|
|
| 2,981 |
|
|
| 629,728 |
|
|
| 2,792 |
|
|
| Gravity Interactive, Inc. |
|
| 14,911,497 |
|
|
| 215,381 |
|
|
| 7,975,591 |
|
|
| 5 |
|
Subsidiaries |
| Gravity Entertainment Corp. |
| - |
|
|
| 139,984 |
|
| - |
|
| - |
| |||
|
| NeoCyon. Inc. |
|
| 851,615 |
|
|
| 660,630 |
|
|
| 1,691,503 |
|
|
| 220,279 |
|
|
| Gravity Games Corp. |
|
| - |
|
| - |
|
|
| 3,873,051 |
|
|
| 4,396 |
| |
|
| Gravity Communications Co.,Ltd. |
|
| 590,891 |
|
|
| 13,396 |
|
| - |
|
| - |
| ||
|
| Total |
|
| 17,185,481 |
|
|
| 1,032,372 |
|
|
| 14,169,873 |
|
|
| 227,472 |
|
| (11) | Significant Creditors: The Company had no significant creditors as of December 31, 2018. |
| (12) | Employees |
|
|
|
|
|
|
|
| (As of December 31, 2018) | ||
Category |
| Directors & Officers |
| Developers |
| Marketing/Operating |
| Finance/Administration |
| Total |
Employees |
| 9 |
| 149 |
| 58 |
| 33 |
| 249 |
| (13) | Directors and Auditors |
(As of December 31, 2018)
Name |
| Position |
| Main work |
|
| Transaction with the Company |
| ||
Hyun Chul Park |
| CEO |
| Chief Executive Officer |
|
|
| — |
| |
Yoshinori Kitamura |
| Executive Director |
| Chief Operating Officer |
|
|
| — |
| |
Kazuki Morishita |
| Executive Director |
|
| — |
|
|
| — |
|
Kazuya Sakai |
| Executive Director |
|
| — |
|
|
| — |
|
Jong Gyu Hwang |
| Independent Director |
| Member of audit committee |
|
|
| — |
| |
Doo Hyun Ryu |
| Independent Director |
| Member of audit committee |
|
|
| — |
| |
Jung Yoo |
| Independent Director |
| Member of audit committee |
|
|
| — |
| |
| (14) | Material Events after the end of fiscal year 2018: |
Gravity established a subsidiary, Gravity Game Tech. Co., Ltd in Thailand on January 29, 2019 and a Joint Venture in Indonesia, named as Gravity Game Link Co., Ltd on February 7, 2019.
3. Separate Financial Statements as of and for the fiscal year ended December 31, 2018 and December 31, 2017
| (1) | Statements of Financial Position |
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| December 31, 2018 |
|
| December 31, 2017 |
| ||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
| 83,385,874 |
|
|
|
|
|
|
| 101,697,494 |
|
Cash and cash equivalents |
|
| 46,598,874 |
|
|
|
|
|
|
| 34,990,206 |
|
|
|
|
|
Short-term financial instruments |
|
| 9,500,000 |
|
|
|
|
|
|
| 22,500,000 |
|
|
|
|
|
Accounts receivable, net |
|
| 24,659,595 |
|
|
|
|
|
|
| 38,890,644 |
|
|
|
|
|
Other receivable, net |
|
| 469,710 |
|
|
|
|
|
|
| 704,664 |
|
|
|
|
|
Prepaid expenses |
|
| 618,219 |
|
|
|
|
|
|
| 2,753,700 |
|
|
|
|
|
Other current assets |
|
| 1,539,476 |
|
|
|
|
|
|
| 1,858,280 |
|
|
|
|
|
Non-current Assets |
|
|
|
|
|
| 22,618,902 |
|
|
|
|
|
|
| 9,720,122 |
|
Investments in subsidiaries |
|
| 9,464,638 |
|
|
|
|
|
|
| 1,783,228 |
|
|
|
|
|
Property and equipment, net |
|
| 882,089 |
|
|
|
|
|
|
| 476,027 |
|
|
|
|
|
Intangible assets, net |
|
| 1,572,714 |
|
|
|
|
|
|
| 988,855 |
|
|
|
|
|
Deferred tax assets |
|
| 7,413,106 |
|
|
|
|
|
|
| 3,036,165 |
|
|
|
|
|
Other non-current financial assets |
|
| 1,405,988 |
|
|
|
|
|
|
| 1,357,272 |
|
|
|
|
|
Other non-current assets |
|
| 1,880,367 |
|
|
|
|
|
|
| 2,078,575 |
|
|
|
|
|
Total assets |
|
|
|
|
|
| 106,004,776 |
|
|
|
|
|
|
| 111,417,616 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
| 24,548,267 |
|
|
|
|
|
|
| 59,753,549 |
|
Accounts payables |
|
| 14,440,762 |
|
|
|
|
|
|
| 42,150,983 |
|
|
|
|
|
Deferred income |
|
| 6,751,978 |
|
|
|
|
|
|
| 14,141,070 |
|
|
|
|
|
Withholdings |
|
| 1,240,957 |
|
|
|
|
|
|
| 1,348,968 |
|
|
|
|
|
Accrued expenses |
|
| 564,621 |
|
|
|
|
|
|
| 343,690 |
|
|
|
|
|
Income tax payable |
|
| 1,390,798 |
|
|
|
|
|
|
| 1,628,368 |
|
|
|
|
|
Other current liabilities |
|
| 159,151 |
|
|
|
|
|
|
| 140,470 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
| 3,668,390 |
|
|
|
|
|
|
| 6,630,636 |
|
Long-term deferred income |
|
| 3,362,537 |
|
|
|
|
|
|
| 6,335,827 |
|
|
|
|
|
Other non-current liabilities |
|
| 305,853 |
|
|
|
|
|
|
| 294,809 |
|
|
|
|
|
Total liabilities |
|
|
|
|
|
| 28,216,657 |
|
|
|
|
|
|
| 66,384,185 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
| 3,474,450 |
|
|
|
|
|
|
| 3,474,450 |
|
Common shares |
|
| 3,474,450 |
|
|
|
|
|
|
| 3,474,450 |
|
|
|
|
|
Capital surplus |
|
|
|
|
|
| 27,482,683 |
|
|
|
|
|
|
| 27,482,683 |
|
Other components of equity |
|
|
|
|
|
| (270,936 | ) |
|
|
|
|
|
| (348,479 | ) |
Retained earnings |
|
|
|
|
|
| 47,101,922 |
|
|
|
|
|
|
| 14,424,777 |
|
Total equity |
|
|
|
|
|
| 77,788,119 |
|
|
|
|
|
|
| 45,033,431 |
|
Total liabilities and equity |
|
|
|
|
|
| 106,004,776 |
|
|
|
|
|
|
| 111,417,616 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| 2018 |
|
| 2017 |
| ||||||||||
Revenues |
|
|
|
|
|
| 198,697,511 |
|
|
|
|
|
|
| 119,422,554 |
|
Online games-subscription revenue |
|
| 18,891,718 |
|
|
|
|
|
|
| 31,533,084 |
|
|
|
|
|
Online games-royalties and license fees |
|
| 15,378,752 |
|
|
|
|
|
|
| 17,069,208 |
|
|
|
|
|
Mobile games |
|
| 164,303,242 |
|
|
|
|
|
|
| 70,634,135 |
|
|
|
|
|
Other revenue |
|
| 123,799 |
|
|
|
|
|
|
| 186,127 |
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
| 123,500,203 |
|
|
|
|
|
|
| 75,972,759 |
|
Gross profit |
|
|
|
|
|
| 75,197,308 |
|
|
|
|
|
|
| 43,449,795 |
|
Selling, general and administrative expenses |
|
|
|
|
|
| 34,746,608 |
|
|
|
|
|
|
| 29,774,222 |
|
Operating Profit |
|
|
|
|
|
| 40,450,700 |
|
|
|
|
|
|
| 13,675,573 |
|
Non-operating income and expenses |
|
|
|
|
|
| (5,311,350 | ) |
|
|
|
|
|
| 246,666 |
|
Finance income |
|
| 1,075,820 |
|
|
|
|
|
|
| 556,997 |
|
|
|
|
|
Finance costs |
|
| (79,822 | ) |
|
|
|
|
|
| (186,723 | ) |
|
|
|
|
Other non-operating income |
|
| 5,803,645 |
|
|
|
|
|
|
| 1,601,880 |
|
|
|
|
|
Other non-operating expenses |
|
| (12,110,993 | ) |
|
|
|
|
|
| (1,725,488 | ) |
|
|
|
|
Profit before income tax expense |
|
|
|
|
|
| 35,139,350 |
|
|
|
|
|
|
| 13,922,239 |
|
Income tax expense |
|
|
|
|
|
| 2,462,205 |
|
|
|
|
|
|
| 939,752 |
|
Profit for the year |
|
|
|
|
|
| 32,677,145 |
|
|
|
|
|
|
| 12,982,487 |
|
Other comprehensive income |
|
|
|
|
|
| 77,543 |
|
|
|
|
|
|
| (373,554 | ) |
Items that may be subsequently reclassified to income or loss |
|
|
|
|
|
| 77,753 |
|
|
|
|
|
|
| (373,554 | ) |
Foreign currency translation adjustments |
|
| 77,543 |
|
|
|
|
|
|
| (373,554 | ) |
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
| 32,754,688 |
|
|
|
|
|
|
| 12,608,933 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| 2018 |
|
| 2017 |
| ||||||||||
|
| Confirmed disposition date: March 29, 2019 |
|
| Confirmed appropriation date: March 30, 2018 |
| ||||||||||
Retained earnings before appropriation |
|
|
|
|
|
| 47,101,922 |
|
|
|
|
|
|
| 14,424,777 |
|
Unappropriated retained earnings carried over from prior year(*1) |
|
| 14,424,777 |
|
|
|
|
|
|
| 1,442,290 |
|
|
|
|
|
Profit for the year |
|
| 32,677,145 |
|
|
|
|
|
|
| 12,982,487 |
|
|
|
|
|
Appropriation of retained earnings |
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
Disposition of accumulated deficit with share premium |
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
Unappropriated retained earnings carried forwards to subsequent year |
|
|
|
|
|
| 47,101,922 |
|
|
|
|
|
|
| 14,424,777 |
|
(*1) The above comparative statement of appropriation of retained earnings for the prior year reflects the conversion effect of adopting Korean IFRS. Accordingly, the statement of appropriation of retained earnings under the previous Korean Accounting Standards for Non-Public Entities in Korea disposed at March 30, 2017 have differences with the above comparative statement.
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| Share capital |
|
| Capital Surplus |
|
| Other components of equity |
|
| Retained Earnings |
|
| Total |
| |||||
Balance at January 1, 2017 |
|
| 3,474,450 |
|
|
| 28,219,282 |
|
|
| 25,075 |
|
|
| 705,691 |
|
|
| 32,424,498 |
|
Profit for the year |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12,982,487 |
|
|
| 12,982,487 |
|
Disposition of deficit with capital surplus |
|
| — |
|
|
| (736,599 | ) |
|
| — |
|
|
| 736,599 |
|
|
| — |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| (373,554 | ) |
|
|
|
|
|
| (373,554 | ) |
Balance at December 31, 2017 |
|
| 3,474,450 |
|
|
| 27,482,683 |
|
|
| (348,479 | ) |
|
| 14,424,777 |
|
|
| 45,033,431 |
|
Balance at January 1, 2018 |
|
| 3,474,450 |
|
|
| 27,482,683 |
|
|
| (348,479 | ) |
|
| 14,424,777 |
|
|
| 45,033,431 |
|
Profit for the year |
|
| — |
|
|
| — |
|
|
|
|
|
|
| 32,677,145 |
|
|
| 32,677,145 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| 77,543 |
|
|
| — |
|
|
| 77,543 |
|
Balance at December 31, 2018 |
|
| 3,474,450 |
|
|
| 27,482,683 |
|
|
| (270,936 | ) |
|
| 47,101,922 |
|
|
| 77,788,119 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| 2018 |
|
| 2017 |
| ||||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
| 32,677,145 |
|
|
|
|
|
|
| 12,982,487 |
|
|
|
|
|
Adjustments |
|
| 6,558,769 |
|
|
|
|
|
|
| 2,392,360 |
|
|
|
|
|
Changes in operating assets and liabilities |
|
| (19,018,839 | ) |
|
|
|
|
|
| 11,274,302 |
|
|
|
|
|
Interest received |
|
| 1,161,390 |
|
|
|
|
|
|
| 539,635 |
|
|
|
|
|
Income tax paid |
|
| (7,133,795 | ) |
|
|
|
|
|
| (2,437,390 | ) |
|
|
|
|
Net cash inflow from operating activities |
|
|
|
|
|
| 14,244,670 |
|
|
|
|
|
|
| 24,751,394 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease(Increase) in short-term financial instruments, net |
|
| 13,000,000 |
|
|
|
|
|
|
| (1,000,000 | ) |
|
|
|
|
Decrease in other non-current financial assets |
|
| 3,772,670 |
|
|
|
|
|
|
| 7,014 |
|
|
|
|
|
Decrease in other current assets |
|
| 3,333 |
|
|
|
|
|
|
| 3,333 |
|
|
|
|
|
Disposal of property and equipment |
|
| 68,285 |
|
|
|
|
|
|
| 1,656 |
|
|
|
|
|
Disposal of intangible assets |
|
| 2,434 |
|
|
|
|
|
|
| 13,063 |
|
|
|
|
|
Increase in investments in subsidiaries |
|
| (18,261,560 | ) |
|
|
|
|
|
| — |
|
|
|
|
|
Increase in other non-current financial assets |
|
| — |
|
|
|
|
|
|
| (660,667 | ) |
|
|
|
|
Acquisition of property and equipment |
|
| (797,791 | ) |
|
|
|
|
|
| (383,267 | ) |
|
|
|
|
Acquisition of intangible assets |
|
| (450,832 | ) |
|
|
|
|
|
| (1,141,276 | ) |
|
|
|
|
Net cash outflows from investing activities |
|
|
|
|
|
| (2,663,461 | ) |
|
|
|
|
|
| (3,160,144 | ) |
Cash Flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
| 27,459 |
|
|
|
|
|
|
| (596,309 | ) |
Net increase in cash and cash equivalents |
|
|
|
|
|
| 11,608,668 |
|
|
|
|
|
|
| 20,994,941 |
|
Cash and cash equivalents at the beginning of the financial year |
|
|
|
|
|
| 34,990,206 |
|
|
|
|
|
|
| 13,995,265 |
|
Cash and cash equivalents at the end of the year in the statements of financial position |
|
|
|
|
|
| 46,598,874 |
|
|
|
|
|
|
| 34,990,206 |
|
4. Consolidated Financial Statements as of and for the fiscal year ended December 31, 2018 and December 31, 2017
| (1) | Consolidated Statements of Financial Position |
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| December 31, 2018 |
|
| December 31, 2017 |
| ||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
| 160,166,955 |
|
|
|
|
|
|
| 108,870,868 |
|
Cash and cash equivalents |
|
| 86,050,738 |
|
|
|
|
|
|
| 39,095,216 |
|
|
|
|
|
Short-term financial instruments |
|
| 9,500,000 |
|
|
|
|
|
|
| 22,500,000 |
|
|
|
|
|
Accounts receivable, net |
|
| 60,663,917 |
|
|
|
|
|
|
| 42,167,869 |
|
|
|
|
|
Other receivable, net |
|
| 254,540 |
|
|
|
|
|
|
| 698,059 |
|
|
|
|
|
Prepaid expenses |
|
| 2,515,511 |
|
|
|
|
|
|
| 3,026,966 |
|
|
|
|
|
Other current assets |
|
| 1,182,249 |
|
|
|
|
|
|
| 1,382,758 |
|
|
|
|
|
Non-current Assets |
|
|
|
|
|
| 13,006,874 |
|
|
|
|
|
|
| 7,012,270 |
|
Property and equipment, net |
|
| 1,498,486 |
|
|
|
|
|
|
| 945,943 |
|
|
|
|
|
Intangible assets, net |
|
| 1,163,001 |
|
|
|
|
|
|
| 1,036,049 |
|
|
|
|
|
Deferred tax assets |
|
| 7,413,402 |
|
|
|
|
|
|
| 3,036,165 |
|
|
|
|
|
Other non-current financial assets |
|
| 1,494,032 |
|
|
|
|
|
|
| 1,394,347 |
|
|
|
|
|
Other non-current assets |
|
| 1,437,953 |
|
|
|
|
|
|
| 599,766 |
|
|
|
|
|
Total assets |
|
|
|
|
|
| 173,173,829 |
|
|
|
|
|
|
| 115,883,138 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
| 93,521,039 |
|
|
|
|
|
|
| 64,744,411 |
|
Account payables |
|
| 71,928,274 |
|
|
|
|
|
|
| 44,409,786 |
|
|
|
|
|
Deferred revenue |
|
| 16,476,351 |
|
|
|
|
|
|
| 16,100,168 |
|
|
|
|
|
Withholdings |
|
| 2,018,894 |
|
|
|
|
|
|
| 1,438,723 |
|
|
|
|
|
Accrued expenses |
|
| 1,030,598 |
|
|
|
|
|
|
| 1,037,440 |
|
|
|
|
|
Income tax payable |
|
| 1,943,994 |
|
|
|
|
|
|
| 1,628,368 |
|
|
|
|
|
Other current liabilities |
|
| 122,928 |
|
|
|
|
|
|
| 129,926 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
| 4,101,005 |
|
|
|
|
|
|
| 7,140,276 |
|
Long-term deferred revenue |
|
| 3,598,140 |
|
|
|
|
|
|
| 6,580,815 |
|
|
|
|
|
Other non-current liabilities |
|
| 502,865 |
|
|
|
|
|
|
| 559,461 |
|
|
|
|
|
Total liabilities |
|
|
|
|
|
| 97,622,044 |
|
|
|
|
|
|
| 71,884,687 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the Parent Company |
|
|
|
|
|
| 76,157,746 |
|
|
|
|
|
|
| 44,560,176 |
|
Share capital |
|
|
|
|
|
| 3,474,450 |
|
|
|
|
|
|
| 3,474,450 |
|
Common shares |
|
| 3,474,450 |
|
|
|
|
|
|
| 3,474,450 |
|
|
|
|
|
Capital surplus |
|
|
|
|
|
| 27,140,255 |
|
|
|
|
|
|
| 27,163,600 |
|
Other components of equity |
|
|
|
|
|
| 138,433 |
|
|
|
|
|
|
| (39,679 | ) |
Retained earnings |
|
|
|
|
|
| 45,404,608 |
|
|
|
|
|
|
| 13,961,805 |
|
Non-controlling interest |
|
|
|
|
|
| (605,961 | ) |
|
|
|
|
|
| (561,725 | ) |
Total equity |
|
|
|
|
|
| 75,551,785 |
|
|
|
|
|
|
| 43,998,451 |
|
Total liabilities and equity |
|
|
|
|
|
| 173,173,829 |
|
|
|
|
|
|
| 115,883,138 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
|
| 2018 |
|
| 2017 |
| ||||||||||
Revenues |
|
|
|
|
|
| 286,770,425 |
|
|
|
|
|
|
| 141,623,481 |
|
Online games-subscription revenue |
|
| 25,897,784 |
|
|
|
|
|
|
| 36,428,402 |
|
|
|
|
|
Online games-royalties and license fees |
|
| 13,555,827 |
|
|
|
|
|
|
| 16,244,377 |
|
|
|
|
|
Mobile games |
|
| 239,488,896 |
|
|
|
|
|
|
| 82,624,332 |
|
|
|
|
|
Other revenue |
|
| 7,827,918 |
|
|
|
|
|
|
| 6,326,370 |
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
| 210,043,556 |
|
|
|
|
|
|
| 94,234,263 |
|
Gross profit |
|
|
|
|
|
| 76,726,869 |
|
|
|
|
|
|
| 47,389,218 |
|
Selling and administrative expenses |
|
|
|
|
|
| 42,837,372 |
|
|
|
|
|
|
| 33,250,837 |
|
Operating Profit |
|
|
|
|
|
| 33,889,497 |
|
|
|
|
|
|
| 14,138,381 |
|
Non-operating income and expenses |
|
|
|
|
|
| 550,001 |
|
|
|
|
|
|
| 319,733 |
|
Financial income |
|
| 825,982 |
|
|
|
|
|
|
| 594,574 |
|
|
|
|
|
Financial costs |
|
| (92,202 | ) |
|
|
|
|
|
| (209,969 | ) |
|
|
|
|
Other non-operating income |
|
| 1,369,819 |
|
|
|
|
|
|
| 1,444,954 |
|
|
|
|
|
Other non-operating expenses |
|
| (1,553,598 | ) |
|
|
|
|
|
| (1,509,826 | ) |
|
|
|
|
Profit before income tax |
|
|
|
|
|
| 34,439,498 |
|
|
|
|
|
|
| 14,458,114 |
|
Income tax expense |
|
|
|
|
|
| 3,053,167 |
|
|
|
|
|
|
| 1,144,177 |
|
Profit for the year |
|
|
|
|
|
| 31,386,331 |
|
|
|
|
|
|
| 13,313,937 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent Company |
|
| 31,442,803 |
|
|
|
|
|
|
| 13,319,047 |
|
|
|
|
|
Non-controlling interests |
|
| (56,472 | ) |
|
|
|
|
|
| (5,110 | ) |
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
| 178,112 |
|
|
|
|
|
|
| 37,087 |
|
Items that may be subsequently reclassified to income or loss |
|
|
|
|
|
| 178,112 |
|
|
|
|
|
|
| 37,087 |
|
Foreign currency translation adjustments |
|
| 178,112 |
|
|
|
|
|
|
| 37,087 |
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
| 31,564,443 |
|
|
|
|
|
|
| 13,351,024 |
|
Owners of the Parent Company |
|
| 31,620,915 |
|
|
|
|
|
|
| 13,356,134 |
|
|
|
|
|
Non-controlling interests |
|
| (56,472 | ) |
|
|
|
|
|
| (5,110 | ) |
|
|
|
|
Earnings per share attributable to the equity holders of the Parent Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
| 4,525 |
|
|
|
|
|
|
| 1,917 |
|
Diluted earnings per share |
|
|
|
|
|
| 4,525 |
|
|
|
|
|
|
| 1,917 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
| Share capital |
|
| Capital Surplus |
|
| Other components of equity |
|
| Retained Earnings (Accumulated deficit) |
|
| Total |
|
| Non- controlling interest |
|
| Total Equity |
| ||||||||
Balance at January 1, 2017 |
|
| 3,474,450 |
|
|
| 27,900,199 |
|
|
| (76,766 | ) |
|
| (93,841 | ) |
|
| 31,204,042 |
|
|
| (556,615 | ) |
|
| 30,647,427 |
|
Profit(loss) for the year |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,319,047 |
|
|
| 13,319,047 |
|
|
| (5,110 | ) |
|
| 13,313,937 |
|
Disposition of deficit with capital surplus |
|
| — |
|
|
| (736,599 | ) |
|
| — |
|
|
| 736,599 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| 37,087 |
|
|
| — |
|
|
| 37,087 |
|
|
| — |
|
|
| 37,087 |
|
Balance at December 31, 201 |
|
| 3,474,450 |
|
|
| 27,163,600 |
|
|
| (39,679 | ) |
|
| 13,961,805 |
|
|
| 44,560,176 |
|
|
| (561,725 | ) |
|
| 43,998,451 |
|
Balance at January 1, 2018 |
|
| 3,474,450 |
|
|
| 27,163,600 |
|
|
| (39,679 | ) |
|
| 13,961,805 |
|
|
| 44,560,176 |
|
|
| (561,725 | ) |
|
| 43,998,451 |
|
Profit(loss) for the year |
|
| — |
|
|
| — |
|
|
|
|
|
|
| 31,442,803 |
|
|
| 31,442,803 |
|
|
| (56,472 | ) |
|
| 31,386,331 |
|
Equity transaction within consolidation scope |
|
| — |
|
|
| (23,345 | ) |
|
| — |
|
|
| — |
|
|
| (23,345 | ) |
|
| 12,236 |
|
|
| (11,109 | ) |
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| 178,112 |
|
|
| — |
|
|
| 178,112 |
|
|
| — |
|
|
| 178,112 |
|
Balance at December 31, 2018 |
|
| 3,474,450 |
|
|
| 27,140,255 |
|
|
| 138,433 |
|
|
| 45,404,608 |
|
|
| 76,157,746 |
|
|
| (605,961 | ) |
|
| 75,551,785 |
|
GRAVITY CO., LTD. | (In thousands of Korean Won) |
| 2018 |
|
| 2017 |
| |||||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
| 31,386,331 |
|
|
|
|
|
|
| 13,313,937 |
|
|
|
|
|
Adjustments |
|
| 4,480,905 |
|
|
|
|
|
|
| 1,997,679 |
|
|
|
|
|
Changes in operating assets and liabilities |
|
| 6,703,895 |
|
|
|
|
|
|
| 12,877,744 |
|
|
|
|
|
Interest received |
|
| 680,501 |
|
|
|
|
|
|
| 554,362 |
|
|
|
|
|
Income tax paid |
|
| (7,279,170 | ) |
|
|
|
|
|
| (2,607,286 | ) |
|
|
|
|
Net cash inflow from operating activities |
|
|
|
|
|
| 35,972,462 |
|
|
|
|
|
|
| 26,136,436 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in other non-current financial assets |
|
| — |
|
|
|
|
|
|
| 7,014 |
|
|
|
|
|
Decrease in other current assets |
|
| 3,333 |
|
|
|
|
|
|
| 3,333 |
|
|
|
|
|
Disposal of property and equipment |
|
| 69,318 |
|
|
|
|
|
|
| 1,656 |
|
|
|
|
|
Decrease(Increase) in short-term financial instruments, net |
|
| 13,000,000 |
|
|
|
|
|
|
| (500,000 | ) |
|
|
|
|
Increase in other non-current financial assets |
| - |
|
|
|
|
|
|
| (430,117 | ) |
|
|
|
| |
Acquisition of property and equipment |
|
| (1,141,440 | ) |
|
|
|
|
|
| (899,011 | ) |
|
|
|
|
Acquisition of intangible assets |
|
| (1,108,876 | ) |
|
|
|
|
|
| (1,165,069 | ) |
|
|
|
|
Net cash inflows(outflows) from investing activities |
|
|
|
|
|
| 10,822,335 |
|
|
|
|
|
|
| (2,982,194 | ) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow (outflow) from financing activities |
|
|
|
|
|
| (197,159 | ) |
|
|
|
|
|
| — |
|
Effects of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
| 357,884 |
|
|
|
|
|
|
| (778,698 | ) |
Net increase in cash and cash equivalents |
|
|
|
|
|
| 46,955,522 |
|
|
|
|
|
|
| 22,375,544 |
|
Cash and cash equivalents at beginning of the year |
|
|
|
|
|
| 39,095,216 |
|
|
|
|
|
|
| 16,719,672 |
|
Cash and cash equivalents at end of the year in the statements of financial position |
|
|
|
|
|
| 86,050,738 |
|
|
|
|
|
|
| 39,095,216 |
|
