GRAVITY Co., Ltd. — Regulatory Filings 2019

Aug 8, 2019

6-K/A 1 grvy-6ka_20190808.htm 6-K/A HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd" grvy-6ka_20190808.htm NG Converter v5.0.19114.147

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 6-K/A

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 2019

Commission File Number 000-51138

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

(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 ☑ Form 40-F ☐

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): ☐

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): ☐

EXPLANATORY NOTE

This amendment to the Report on Form 6-K of GRAVITY Co., Ltd. previously filed on the date hereof, is being filed in order to correct data of Consolidated Statements of Comprehensive Income. Except as set forth herein, there are no other changes to the original Report on Form 6-K.

GRAVITY REPORTS SECOND QUARTER OF 2019 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – August 8, 2019 – GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), a developer and publisher of online and mobile games based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2019, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2019 HIGHLIGHTS

• Total revenues were KRW 78,127 million (US$ 67,667 thousand), representing a 41.5% decrease from the first quarter ended March 31, 2019 (“QoQ”) and a 24.0% increase from the second quarter ended June 30, 2018 (“YoY”).

• Operating profit was KRW 12,998 million (US$ 11,257 thousand), representing a 45.0% decrease QoQ and a 56.2% increase YoY.

• Profit before income tax expenses was KRW 14,037million (US$ 12,158 thousand), representing a 42.4% decrease QoQ and a 62.4% increase YoY.

• Net profit attributable to parent company was KRW 10,861 million (US$ 9,407 thousand), representing a 45.0% decrease QoQ and a 64.2% increase YoY.

REVIEW OF SECOND QUARTER 2019 FINANCIAL RESULTS

Revenues

Subscription revenues for the second quarter of 2019 were KRW 6,746 million (US$ 5,843 thousand), representing a 7.8 % increase QoQ from KRW 6,256 million and a 10.3% increase YoY from KRW 6,116 million. The increase QoQ was mainly attributable to increased revenue from Ragnarok Online in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok online in Taiwan and Korea. Such increase was partially offset by decreased revenue from Ragnarok Prequel in Taiwan.

Royalty and license fee revenues for the second quarter of 2019 were KRW 2,832 million (US$ 2,452 thousand), representing a 23.9% decrease QoQ from KRW 3,720 million and a 11.7% decrease YoY from KRW 3,209 million. The decrease QoQ was primarily due to decreased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Thailand and Brazil.

Mobile game and application revenues were KRW 66,463 million (US$ 57,565 thousand) for the second quarter of 2019, representing a 45.1% decrease QoQ from KRW 121,147 million

and a 28.3% increase YoY from KRW 51,789 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, and Oceania, Taiwan, and Korea. Such decrease was partially offset by revenue from Ragnarok M: Eternal Love in Japan, which was launched on June 5, 2019. The increase YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, Oceania, and Japan. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Korea and Taiwan. RO: Idle Poring in global markets except for China and Japan, and Ragnarok R in Taiwan and Korea.

Character merchandising and other revenues were KRW 2,086 million (US$ 1,807 thousand) for the second quarter of 2019, representing 16.6% decrease QoQ from KRW 2,500 million and a 9.1% increase YoY from KRW 1,912 million.

Cost of Revenue

Cost of revenue was KRW 56,858 million (US$ 49,246 thousand) for the second quarter of 2019, representing a 43.8% decrease QoQ from KRW 101,237 million and a 31.8% increase YoY from KRW 43,150 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania, Taiwan, and Korea. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania and salaries.

Operating Expenses

Operating expenses were KRW 8,271 million (US$ 7,164 thousand) for the second quarter of 2019, representing a 5.4% decrease QoQ from KRW 8,746 million and a 28.4% decrease YoY from KRW 11,553 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Ragnarok M: Eternal Love in Korea. Such decrease was partially offset by increased commission paid and research and development expenses. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok M: Eternal Love in Korea. Such decrease was partially offset by increased research and development expenses and salaries.

Profit before income tax expenses

Profit before income tax expenses was KRW 14,037 million (US$ 12,158 thousand) for the second quarter of 2019 compared with profit before income tax expense of KRW 24,389 million for the first quarter of 2019 and profit before income tax expenses of KRW 8,642 million for the second quarter of 2018.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 10,861 million (US$ 9,407 thousand) for the second quarter of 2019 compared with net profit attributable to parent company of KRW 19,760 million for the first quarter of 2019 and a net profit attributable to parent company of KRW 6,615 million for the second quarter of 2018.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 111,164 million (US$ 96,281 thousand) as of June 30, 2019.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,154.58 to US$ 1.00, the noon buying rate in effect on June 28, 2019 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online IP-based Games

• Ragnarok M: Eternal Love, a MMORPG mobile game

Ragnarok M: Eternal Love (locally named Ragnarok Masters in Japan) has launched in Japan on June 5, 2019 by GungHo Online Entertainment Inc, (“GungHo”), the licensee of Ragnarok Online. Also, Gravity is preparing the service for Europe (except for some regions), Turkey and Russia in the third quarter of 2019.

• Ragnarok Web MMORPG, a web browser-based 3D new version of game

Ragnarok web MMORPG has launched in Taiwan, Hong Kong and Macau on June 5, 2019.

• Other Ragnarok Online IP-based games

Gravity is planning to launch RO Click H5, a HTML 5 version of idle game globally in September 2019.

A 3D Action MORPG mobile game, Ragnarok Spear of Odin , is expected to be launched in Taiwan, Hong Kong, and Macau in the second half of 2019. The game was developed by NeoCyon, our subsidiary in Korea.

Ragnarok Online

• The company is scheduled to be re-launched Ragnarok Online in Indonesia in September 2019. The publisher of the game has changed from Gravindo to Gravity Game Link, a joint venture in Indonesia.

Other IP games

• The Color of Dream Fantasy Latele , a MMORPG mobile game , is expected to be launched in Japan during the second half of 2019.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of second quarter in 2019 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at http://www.gravity.co.kr/en/ir/pds/list.asp. Korean and Japanese versions of the presentation

are also provided on the website.

About GRAVITY Co., Ltd. ---------------------------------------------------

Based in Korea, Gravity is a developer and publisher of online and mobile games. Gravity's principal product, Ragnarok Online, is a popular online game in many markets, including Japan and Taiwan, and is currently commercially offered in 83 markets and countries. For more information about Gravity, please visit http://www.gravity.co.kr .

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 annual report for the fiscal year ended December 31, 2018 on Form 20-F, together with such other documents that 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. Jin Lee

Ms. Minji Oh IR Unit Gravity Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800~1

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GRAVITY Co ., Ltd.

Consolidated Statements of Financial Position

(In millions of KRW and thousands of US$)

31-Dec-18				30-Jun-19
KRW		US$		KRW		US$
(audited)		(unaudited)		(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	86,051		74,530		88,664		76,793
Short-term financial instruments	9,500		8,228		22,500		19,488
Accounts receivable, net	60,664		52,542		34,817		30,156
Other receivables, net	255		221		239		207
Prepaid expenses	2,516		2,179		2,096		1,815
Other current assets	1,182		1,024		2,390		2,070
Total current assets	160,168		138,724		150,706		130,529
Property and equipment, net	1,498		1,297		5,843		5,061
Intangible assets	1,163		1,007		1,687		1,461
Deferred tax assets	7,413		6,421		7,035		6,093
Other non-current financial assets	1,494		1,294		1,554		1,346
Other non-current assets	1,438		1,245		1,411		1,222
Total assets	173,174		149,988		168,236		145,712
Liabilities and Equity
Current liabilities:
Accounts payable	71,928		62,298		38,350		33,215
Deferred revenue	16,476		14,270		12,421		10,758
Withholdings	2,019		1,749		1,456		1,261
Accrued expense	1,031		893		1,050		909
Income tax payable	1,944		1,684		2,005		1,737
Other current liabilities	123		106		2,135		1,849
Total current liabilities	93,521		81,000		57,417		49,729
Long-term deferred revenue	3,598		3,116		1,960		1,698
Other non-current liabilities	503		436		2,401		2,080
Total liabilities	97,622		84,552		61,778		53,507
Share capital	3,474		3,009		3,474		3,009
Capital surplus	27,141		23,506		27,140		23,506
Other components of equity	138		120		277		240
Retained earnings (Accumulated deficit)	45,405		39,326		76,026		65,847
Equity attributable to owners of the Parent Company	76,158		65,961		106,917		92,602
Non-controlling interest	(606	)	(525	)	(459	)	(397	)
Total equity	75,552		65,436		106,458		92,205
Total liabilities and equity	173,174		149,988		168,236		145,712

• For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,154.58 to US$ 1.00, the noon buying rate in effect on June 28, 2019 as quoted by the Federal Reserve Bank of New York.

GRAVITY Co., Ltd.

Consolidated Statements of Comprehensive Income

(In millions of KRW and thousands of US$ except for share and ADS data)

31-Mar-19		30-Jun-18		30-Jun-19				30-Jun-18		30-Jun-19
(KRW)		(KRW)		(KRW)		(US$)		(KRW)		(KRW)		(US$)
(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
Online games-subscription revenue	6,256		6,116		6,746		5,843		15,012		13,002		11,261
Online games-royalties and license fees	3,720		3,209		2,832		2,452		7,828		6,552		5,675
Mobile games and applications	121,147		51,789		66,463		57,565		103,185		187,610		162,492
Character merchandising and other revenue	2,500		1,912		2,086		1,807		3,312		4,586		3,972
Total net revenue	133,623		63,026		78,127		67,667		129,337		211,750		183,400
Cost of revenue	101,237		43,150		56,858		49,246		88,934		158,095		136,929
Gross profit	32,386		19,876		21,269		18,421		40,403		53,655		46,471
Operating expenses:
Selling, general and administrative	6,665		9,470		5,733		4,966		23,297		12,398		10,738
Research and development	1,877		1,742		2,432		2,106		3,616		4,309		3,732
Others, net	204		341		106		92		347		310		268
Total operating expenses	8,746		11,553		8,271		7,164		27,260		17,017		14,738
Operating profit	23,640		8,323		12,998		11,257		13,143		36,638		31,733
Finance income(costs):
Finance income	1,062		892		1,141		989		1,482		2,203		1,907
Finance costs	(313	)	(573	)	(102	)	(88	)	(866	)	(415	)	(359	)
Profit before income tax	24,389		8,642		14,037		12,158		13,759		38,426		33,281
Income tax expenses(profits)	4,627		2,042		3,208		2,779		3,635		7,835		6,786
Profit for the year	19,762		6,600		10,829		9,379		10,124		30,591		26,495
Profit attributable to:
Non-controlling interest	2		(15	)	(32	)	(28	)	(40	)	(30	)	(26	)
Owners of Parent company	19,760		6,615		10,861		9,407		10,164		30,621		26,521
Earning per share
- Basic and diluted	2,844		952		1,563		1.40		1,463		4,407		3.80
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
Earning per ADS (1)
- Basic and diluted	2,844		952		1,563		1.40		1,463		4,407		3.80

• For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,154.58 to US$1.00, the noon buying rate in effect on June 28, 2019 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents one common shares.

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 8, 2019