EX-99.3 4 exhibit993.htm EX-99.3 Document

Exhibit 99.3

2023 Annual Business Report


Table of Contents

1.Business Overview
(1)Business Results and Financial Statements for the Past Three Fiscal Years (2021 – 2023)

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 2023

3. Consolidated Financial Statements as of and for the fiscal years ended December 31, 2023 and 2022
(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, 2023 and 2022
(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 (2021 – 2023)

(In thousands of Korean Won)
Category202320222021
Current assets320,313,123250,876,266219,505,575
• Quick assets320,313,123250,876,266219,505,575
Non-current assets56,133,36041,433,07439,159,998
• Investment asset35,451,23426,732,33421,679,845
• Property and Equipment, net4,179,6023,520,3855,608,320
• Intangible asset5,989,5963,867,9393,228,635
• Other non-current asset5,279,5921,574,6231,701,669
Total assets376,446,483 292,309,340258,665,573
Current liabilities41,707,39328,335,11648,803,832
Non-current liabilities3,977,7103,382,4074,184,648
Total liabilities45,685,10331,717,52352,988,480
Share capital3,474,4503,474,4503,474,450
Capital surplus27,482,68327,482,68327,482,683
Other components of equity---
Retained earnings299,804,247229,634,684174,719,960
Total equity330,761,380260,591,817205,677,093
Revenues       242,775,498       232,717,405 288,258,376
Operating income70,755,035         62,144,800 78,174,467
Net income before income tax92,062,740         75,203,609 92,546,064
Net income70,169,563         54,914,724 64,732,833

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 software, 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) Production, development, distribution, sales, and consulting of digital content, including digital content based on the technology of NFT and blockchain as well as corresponding licensing
18)Sports facility business including golf practice facilities and screen golf courses
19)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, Europe and Middle East as of December 31, 2023.


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, 2023)
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, 2023)
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, 2023)
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, 2023)
CompaniesRelationship with the Company
NameLocationCommon StockMain businessShares owned%Relationship
Gravity Interactive, Inc.California, USAUSD 10,540,000Online and Mobile Game Service290,000100.00%Subsidiary
Gravity NeoCyon, Inc.Seoul, KoreaKRW 3,990,990,000Mobile game development794,44099.53%Subsidiary
Gravity Communications Co., LtdTaipei, TaiwanNTD 155,100,000Online and Mobile Game Service15,510,000100.00%Subsidiary
PT Gravity Game Link
Jakarta, Indonesia
IDR 43,221,000,000Online and Mobile Game Service3,025,47070.00%Subsidiary
Gravity Game Tech Co., Ltd.Bangkok, ThailandTHB 88,049,940 Online and Mobile Game Service8,804,994100.00%Subsidiary
Gravity Game Arise Co., Ltd.Tokyo, JapanJPY 100,000,000 Online and Mobile Game Service120,000100.00%Subsidiary
Gravity Game Hub PTE., Ltd. SingaporeSGD 6,819,991Online and Mobile Game Service682,000100.00%Subsidiary
Gravity Game Vision., Ltd.Hong KongHKD 3,900,001
Online and Mobile Game Service39,001100.00%Subsidiary

(9)Directors Holding Concurrent Positions
NameCompany
NamePositionResponsibility
Hyun Chul ParkGravity Co., Ltd.CEOOverall management
Gravity NeoCyon, Inc.Executive DirectorChief Operating Officer
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 Companies20232022
SalesPurchasesSalesPurchase
Parent companyGungHo Online Entertainment, Inc.17,681,836 15,379 24,812,72320,319
Related companyGungHo Online Entertainment America-54,884-42,479
SubsidiariesGravity Interactive, Inc.10,194,989 1,604,089 13,180,9441,462,367
Gravity NeoCyon, Inc.353,437 5,895,579 507,7777,064,199
Gravity Communications Co., Ltd.(*1)19,240,621 4,584,439 19,256,8446,326,904
PT Gravity Game Link126,912 151,217 360,061484,278
Gravity Game Tech Co., Ltd.7,510,241 60,685 7,583,91756,087
Gravity Game Arise Co., Ltd.10,032 3,191,285 27,9283,401,736
Gravity Game Hub PTE., Ltd.32,108,671 -892,325-
Gravity Game Vision Limited15,286,908 -13,257,431-
Total102,513,647 15,557,557 79,879,950 18,858,369
(*1) In 2023 sales, the dividend received KRW 12,072,740 thousand is included, and in 2022 sales, the dividend received KRW 8,839,924 thousand is included.
② Receivables and Payables
(In thousands of Korean Won)
NatureRelated Companies20232022
ReceivablesPayablesReceivablesPayables
Parent companyGungHo Online Entertainment, Inc. 1,839,847 2,6852,707,6402,804
Related companyGungHo Online Entertainment America- 1,380-29,692
SubsidiariesGravity Interactive, Inc.3,079,218559,1783,591,765540,346
Gravity NeoCyon, Inc.364,6761,020,207460,846904,356
Gravity Communications Co., Ltd.1,214,7551,217,1021,581,3561,696,212
PT Gravity Game Link26,42647,333412,174270,362
Gravity Game Tech Co., Ltd.1,818,381266,3541,848,604158,370
Gravity Game Arise Co., Ltd.31,145360,322135,588775,877
Gravity Game Hub PTE., Ltd.6,804,7454,213707,855-
Gravity Game Vision Limited1,322,5839217,359,665-
Total16,501,7763,479,69518,805,4934,378,019

(11)Significant Creditors: The Company had no significant creditors As of December 31, 2023.

(12)Employees
(As of December 31, 2023)
CategoryDirectors & OfficersDevelopersMarketing/OperatingFinance/AdministrationTotal
Employees1222810149390

(13)Directors and Auditors
(As of December 31, 2023)


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-
Hyo Eun LimIndependent Director--

(14)Material Events after the end of fiscal year 2023: None.


3. Consolidated Financial Statements as of and for the fiscal year ended December 31, 2023 and December 31, 2022
(1)Consolidated Statements of Financial Position
GRAVITY CO., LTD. (In thousands of Korean Won)
December 31, 2023December 31, 2022
Assets
Current Assets
　546,899,006421,767,238
Cash and cash equivalents
184,081,815169,877,341
Short-term financial instruments
277,215,000167,000,000
Accounts receivable, net
71,212,89777,256,816
Other receivable, net
3,637,586139,785
Prepaid expenses
2,993,8843,332,317
Other current financial assets
4,438,7173,370,146
Other current assets
3,319,107790,833
Non-current Assets
　31,281,71522,326,742
Property and equipment, net
10,150,7508,140,129
Intangible assets, net
6,369,9583,869,478
Other non-current financial assets
1,824,076　2,175,769
Other non-current assets
6,984,797　2,481,845
Deferred tax assets
5,952,134　5,659,521
Total assets　578,180,721444,093,980
Liabilities
Current liabilities
　106,433,493105,709,908
Account payables
61,777,88973,549,144
Deferred revenue
18,092,46318,543,037
Withholdings
3,072,0363,201,011
Accrued expenses
2,313,0222,040,357
Income tax payable
16,927,0545,469,061
Other current liabilities
4,251,0292,907,298
Non-current liabilities
　8,019,2668,204,251
Long-term account payables
677,520　373,989
Long-term deferred revenue
1,784,849　30,239
Other non-current liabilities
3,174,635　4,968,325
Deferred tax liabilities
2,382,2622,831,698
Total liabilities　114,452,759113,914,159
Equity attributable to owners of the Parent Company　463,087,831　329,527,917
Share capital
3,474,450　3,474,450
Common shares
3,474,450　3,474,450　
Capital surplus
27,098,26427,098,264
Other components of equity
4,016,5352,475,675
Retained earnings
428,498,582296,479,528
Non-controlling interest640,131651,904
Total equity463,727,962330,179,821
Total liabilities and equity578,180,721444,093,980


(2)Consolidated Statements of Comprehensive Income
GRAVITY CO., LTD. (In thousands of Korean Won)
20232022
Revenues　725,515,935463,617,872
Online games
81,017,362　89,256,406
Mobile games
629,604,084　358,771,544
Other revenue
14,894,489　15,589,922
Cost of revenues　484,958,333267,365,143
Gross profit　240,557,602196,252,729
Selling, general and administrative expenses
　79,552,39691,410,933
Operating Profit　161,005,206104,841,796
Non-operating income and expenses　7,693,4035,039,981
Financial income
23,266,528　15,953,466
Financial costs
(14,934,727)　(10,779,361)
Other non-operating income
913,359　605,316
Other non-operating expenses
(1,551,757)　(739,440)
Profit before income tax expense　168,698,609109,881,777
Income tax expense　36,716,54826,824,189
Profit for the year　131,982,06183,057,588
Owners of the Parent Company
132,019,054　83,161,723
Non-controlling interests
(36,993)　(104,135)
Other comprehensive income　1,566,080281,375
Items that may be subsequently reclassified to profit or loss
1,558,944　285,034
Foreign currency translation adjustments
1,536,445　297,848
Non-controlling interest of foreign currency translation adjustments22,499　(12,814)
Items that will never be reclassified to profit or loss
7,136　(3,659)
Remeasurement of defined benefit liabilities
4,415　(2,561)
Non-controlling interest of remeasurement of defined benefit liabilities
2,721　(1,098)
Total comprehensive income for the year　133,548,14183,338,963
Owners of the Parent Company
133,559,914　83,457,010
Non-controlling interests
(11,773)　(118,047)
Earnings per share attributable to the equity holders of the Parent Company　　
Basic earnings per share
　18,99911,968
Diluted earnings per share
　18,99911,968



(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, 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
Defined benefit obligation adjustments
-　-(2,561)　-(2,561)(1,098)(3,659)
Gain on overseas operations translation
--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
Balance at January 1, 20233,474,45027,098,2642,475,675296,479,528329,527,917651,904330,179,821
Profit for the year
---132,019,054132,019,054(36,993)131,982,061
Defined benefit obligation adjustments
--4,415-4,4152,7217,136
Gain on overseas operations translation
--1,536,445-1,536,44522,4991,558,944
Balance at December 31, 20233,474,45027,098,2644,016,535428,498,582463,087,831640,131463,727,962



(4) Consolidated Statements of Cash Flows
GRAVITY CO., LTD. (In thousands of Korean Won)
20232022
Cash flows from operating activities　132,429,73798,278,652
Cash flows generated from operating activities150,231,732124,674,561
Profit for the year
131,982,06183,057,588
Adjustments
36,164,73231,362,848
Changes in operating assets and liabilities
(17,915,061)10,254,125
Interest received
10,434,5743,032,676
Interest paid
(156,631)(121,724)
Income tax paid
(28,079,938)(29,306,861)
Cash Flows from investing activities
(116,579,700))(22,340,445)
Cash inflow from investment activities24,10319,708
Proceeds from disposal of property and equipment
21,02414,609
Decrease in other current financial assets
3,0795,099
Cash outflow from investment activities(116,603,803)(22,360,153)
Increase in short-term financial instruments
(110,179,175)(19,000,000)
Purchase of property and equipment
(2,461,226)(739,413)
Purchase of intangible assets
(3,337,218)(2,055,632)
Increase in other current assets
-(200)
Increase in other non-current financial assets
(626,184)　(564,908)
Cash Flows from Financing Activities　(4,083,272)(3,917,977)
Cash inflow from financing activities-　-
Cash outflow from financing activities(4,083,272)　(3,917,977)
Repayment of lease liabilities(4,083,272)　(3,917,977)
Effects of exchange rate changes on cash and cash equivalents2,437,709(1,247,832)
Net increase (decrease) in cash and cash equivalents14,204,47470,772,398
Cash and cash equivalents at beginning of the year169,877,34199,104,943
Cash and cash equivalents at end of the year184,081,815169,877,341



4. Separate Financial Statements as of and for the fiscal year ended December 31, 2023 and December 31, 2022.

(1)Statements of Financial Position
GRAVITY CO., LTD. (In thousands of Korean Won)
December 31, 2023December 31, 2022
Assets
Current Assets320,313,123250,876,266
Cash and cash equivalents
32,157,09142,985,625
Short-term financial instruments
249,000,000167,000,000
Accounts receivable, net
31,529,99835,117,290
Other receivable, net
1,760,646961,918
Prepaid expenses
1,148,3451,556,323
Other current financial assets
4,476,9773,249,537
Other current assets
240,0665,573
Non-current Assets56,133,36041,433,074
Investments in subsidiaries
35,451,23426,732,334
Property and equipment, net
4,179,6023,520,385
Intangible assets, net
5,989,5963,867,939
Other non-current financial assets
1,164,9262,048,028
Other non-current assets
5,279,5921,574,623
Deferred tax assets
4,068,4103,689,765
Total assets376,446,483292,309,340
Liabilities
Current liabilities
41,707,39328,335,116
Accounts payables
24,162,50417,641,888
Deferred income
4,627,1194,258,298
Withholdings
1,230,3181,540,197
Accrued expenses
1,101,738881,213
Income tax payable
8,270,3052,406,367
Other current liabilities
2,315,4091,607,153
Non-current liabilities
3,977,7103,382,407
Long-term account payables
677,520373,989
Long-term deferred revenue
1,790,09730,239
Other non-current liabilities
1,510,0932,978,179
Total liabilities45,685,10331,717,523
Equity
Share Capital3,474,4503,474,450
Common shares
3,474,4503,474,450
Capital surplus27,482,68327,482,683
Retained earnings299,804,247229,634,684
Total equity330,761,380260,591,817
Total liabilities and equity376,446,483292,309,340



(2)Statements of Comprehensive Income
GRAVITY CO., LTD. (In thousands of Korean Won)
20232022
Revenues242,775,498232,717,405
Online games
32,778,38532,969,528
Mobile games
209,449,600198,512,493
Other revenue
547,5131,235,384
Cost of revenues121,571,928112,512,407
Gross profit121,203,570120,204,998
Selling, general and administrative expenses
50,448,53558,060,198
Operating Profit70,755,03562,144,800
Non-operating income and expenses21,307,70513,058,809
Financial income
16,603,92613,734,710
Financial costs
(7,260,236)(9,975,732)
Other non-operating income
13,476,6819,578,611
Other non-operating expenses
(1,512,666)(278,780)
Profit before income tax
92,062,74075,203,609
Income tax expense21,893,17720,288,885
Profit for the year70,169,56354,914,724
Other comprehensive income--
Total comprehensive income for the year70,169,56354,914,724


(3)Statements of Appropriation of Retained earnings
GRAVITY CO., LTD. (In thousands of Korean Won)
20232022
Confirmed disposition date:
March 29, 2024
Confirmed disposition date:
March 31, 2023
Retained earnings before appropriation
　299,804,247229,634,684
Unappropriated retained earnings carried over from prior year
229,634,684　174,719,960
Profit for the year
70,169,563　54,914,724
Appropriation of retained earnings--
Unappropriated retained earnings to be carried forward
299,804,247229,634,684


(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, 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
Balance at January 1, 20233,474,45027,482,683-229,634,684260,591,817
Profit for the year
-- -70,169,56370,169,563
Balance at December 31, 20233,474,45027,482,683 -299,804,247330,761,380


(5)Statements of Cash Flows
GRAVITY CO., LTD. (In thousands of Korean Won)
20232022
Cash flows from operating activities85,687,10545,514,786
Cash flows generated from operating activities82,075,51659,578,964
Profit for the year70,169,56354,914,724
Adjustments
5,891,37312,550,795
Changes in operating assets and liabilities
6,014,580(7,886,555)
Interest received
8,427,8822,964,848
Dividend received
12,072,7408,839,924
Interest paid
(91,294)(61,533)
Income tax paid
(16,797,739)(25,807,417)
Cash flows from investing activities(94,593,238)(26,443,349)
Cash inflow from investment activities20,295 2,269
Decrease in other current financial assets
- 901
Disposal of property and equipment
 20,2951,368
Cash outflow from investment activities(94,613,533)(26,445,618)
Acquisition of investments in subsidiaries
(8,718,900)(5,052,489)
Increase in short-term financial instruments
(81,999,800)(19,000,000)
Increase in other current financial assets
-(200)
Increase in other non-current financial assets
(545,000)(500,000)
Purchase of property and equipment
(704,398)(291,433)
Purchase of intangible assets
(2,645,435)(1,601,496)
Cash flows from financing activities(2,060,721)(2,049,532)
Cash inflow from financing activities--
Cash outflow from financing activities(2,060,721)(2,049,532)
Repayment of lease liabilities(2,060,721)(2,049,532)
Effects of exchange rate changes on cash and cash equivalents138,320(638,402)
Net increase (decrease) in cash and cash equivalents(10,828,534)16,383,503
Cash and cash equivalents at the beginning of the year42,985,62526,602,122
Cash and cash equivalents at the end of the year32,157,09142,985,625