NEXON : Notice of Change in Equity Method Affiliate (Share Transfer) and Expectation of Recording Extraordinary Gain

	January 20, 2022
Name of Company:	NEXON Co., Ltd.
Representative:	Owen Mahoney, Representative Director,
	President and Chief Executive Officer
	(Stock Code: 3659, TSE First Section)
Contact:	Shiro Uemura, Representative Director and Chief
	Financial Officer
Telephone:	03-6629-5318

Notice of Change in Equity Method Affiliate (Share Transfer)

and Expectation of Recording Extraordinary Gain

NEXON Co., Ltd. ("Nexon") announced that the transfer of all of the shares of Six Waves Inc. (Nexon's equity method affiliate) owned by Nexon to Stillfront Group AB (publ) was approved by its Board of Directors on the night of January 19, 2022. The details are as follows.

Furthermore, Six Waves Inc. will be removed from Nexon's equity method affiliates due to this share transfer.

1. Reason for the share transfer

In 2011, Nexon made a strategic investment in Six Waves Inc. for the purpose of aggressively expanding its domain of business into the social gaming field. The investment at the time was made with an expectation that the partnership will generate synergy between Six Waves Inc.'s track record in social games and Nexon's track record in the operations of popular online games and its expertise in the microtransaction model of monetization. Since then, Nexon and Six Waves Inc. have not achieved the business results initially expected and the investment came to be positioned as pure investment at Nexon.

In this situation, Six Waves Inc. came to us with a request that they wanted us to sell the shares in our holding to Stillfront Group AB (publ) for their vision of further growth in the future. Upon reviewing the matter, Nexon agreed with Six Waves Inc.'s wishes and decided to transfer all of the company's shares owned by Nexon to Stillfront Group AB (publ).

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2. Overview of the equity method affiliate subject to change (as of September 30, 2021)

(1)	Name	Six Waves Inc.
(2)	Location	Hong Kong Special Administrative Region, China
(3)	Name and title of the	Chow Bong Leong, Arthur, CEO
representative
(4)	Description of business	Mobile game development and service business
(5)	Capital stock	USD 44,677 thousand
(6)	Date of establishment	December 3, 2008
	Major shareholders and	NEXON Co., Ltd. 34.8%; Ng Lok Shun, Rex 20.5%; Chow Bong Leong,
(7)	their shareholding
Arthur 13.2%
	ratios
		Capital relationship	Nexon owns 34.8% of outstanding shares of the
		company
	The listed company's
		1 director and 1 employee of Nexon's
(8)	relationship with the
Personal relationship	consolidated subsidiary concurrently serve as the
	company
		company's directors
		Transactional relationship	Not applicable
(9)	Results of operations and financial position of the company for the last three years (Note)
	Fiscal year	FY2018	FY2019	FY2020
	Total equity	USD 12,512 thousand	USD 20,847 thousand	USD 31,558 thousand
	JPY 1,439 million	JPY 2,398 million	JPY 3,630 million
	Total assets	USD 29,533 thousand	USD 39,564 thousand	USD 48,900 thousand
	JPY 3,397 million	JPY 4,551 million	JPY 5,625 million
	Net assets per share	USD 0.12	USD 0.20	USD 0.44
	JPY 13.65	JPY 22.74	JPY 50.74
	Revenue	USD 64,878 thousand	USD 91,600 thousand	USD 137,410 thousand
	JPY 7,462 million	JPY 10,536 million	JPY 15,805 million
	Operating income (loss)	(USD 6,944 thousand)	USD 4,591 thousand	USD 32,105 thousand
	(JPY 799 million)	JPY 528 million	JPY 3,693 million
	Net income (loss)	(USD 7,152 thousand)	USD 8,356 thousand	USD 33,635 thousand
	(JPY 823 million)	JPY 961 million	JPY 3,869 million
	Net income (loss) per share	(USD 0.07)	USD 0.08	USD 0.33
	(JPY 7.80)	JPY 9.12	JPY 37.85
(Note)	These are financial numbers of the company at the time of equity method application. Therefore,
	they may differ from the financial numbers of the company finalized by closing of accounts. The
	foreign exchange rate presumes a rate of USD 1 = JPY 115.02 (as of December 31, 2021).

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3. Overview of the counterparty of share transfer (as of November 30, 2021)

(1)	Name				Stillfront Group AB (publ)
(2)	Location				Stockholm, Sweden
(3)	Name and	title of	the		Jörgen Larsson, CEO
representative
(4)	Description of business		Game development and service business
(5)	Capital stock			SEK 26 million (about JPY 326 million)
(6)	Date of establishment		November 2, 2006
(7)	Major shareholders and		Laureus Capital GmbH 12.0%, Swedbank Robur Funds 9.2%, SEB Funds
their shareholding ratios		6.1%, Handelsbanken Funds 4.3%, AMF Pension & Funds 3.6%
						Capital relationship		Not applicable
		The listed	company's		Personal relationship		Not applicable
(8)	relationship	with	the		Transactional		Not applicable
		company				relationship
						Related party situation		Not applicable
4. Number of shares transferred, transfer price and status of shares owned before and after the transfer
	(1)	Number of shares owned		26,500,000 shares
		(Number of voting rights: 26,500,000)
		before the transfer
				(Voting rights ratio: 34.8%)
	(2)	Number of shares			26,500,000 shares
		transferred				(Number of voting rights: 26,500,000)
	(3)	Transfer price				About USD 93 million (about JPY 10,674 million) (Note)
	(4)	Number of shares owned		－ shares
		(Number of voting rights: -)
		after the transfer
				(Voting rights ratio: -%)
	(Note) The transfer price will be adjusted based on factors including the assets and liabilities of Six
		Waves Inc. on the effective date of the share transfer.
5. Timeline
	(1)	Resolution of the Board		January 19, 2022
		of Directors
	(2)	Date of share transfer			January 19, 2022
		agreement
	(3)	Date of share transfer			January 31, 2022 (scheduled)

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6. Future Outlook

Due to this share transfer, Nexon will record a gain on sales of investments in subsidiaries and affiliates in its standalone accounting for the year ending December 31, 2022 and, in its consolidated accounting for the three months ending March 31, 2022, a gain on sales of investments in affiliates under finance income upon making any adjustment necessary for consolidated accounting.

Furthermore, the impact of this share transfer on the consolidated results for the three months ending March 31, 2022 is currently under examination and we will promptly make an announcement if any impact that should be disclosed is found.

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