China mobile games and entertainment group

Corporate presentation NASDAQ: CMGE

May 2014

Disclaimer

1

This presentation has been prepared by China Mobile Games and Entertainment Group Limited (the “Company”) and has not been independently verified. No representations, warranties or undertakings, express or implied, are made by the Company or any of its affiliates, advisers or representatives or the underwriters as to, and no reliance should be placed upon, the accuracy, fairness, completeness or correctness of the information or opinions presented or contained in this presentation. None of the Company or any of its affiliates, advisers, or representatives or the underwriters accept any responsibility whatsoever (in negligence or otherwise) for any loss howsoever arising from any information presented or contained in this presentation or otherwise arising in connection with the presentation. The information presented or contained in this presentation is subject to change without notice and its accuracy is not guaranteed. This presentation contains statements that reflect the Company’s intent, beliefs or current expectations about the future. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or words of similar meaning. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Company’s operations and other factors, many of which are beyond the Company’s control, and accordingly, actual results may differ materially from these forward-looking statements. The Company or any of its affiliates, advisers or representatives or the underwriters has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances. This presentation does not constitute an offer to sell or issue or an invitation to purchase or subscribe for any securities of the Company for sale in the United States or anywhere else. No part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, these materials do not constitute a “prospectus” within the meaning of the U.S. Securities Act of 1933, as amended, and the regulations enacted thereunder (the “Securities Act”). This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company. Any decision to purchase the Company’s securities in any proposed offering should be made solely on the basis of the information contained in the prospectus relating to such proposed offering. In evaluating our business, we use certain non-GAAP measures as supplemental measures to review and assess our operating performance. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performances, investors should not consider them in isolation, or as a substitute for net (loss)/income attributable to the Company or other consolidated statement of operations data prepared in accordance with U.S. GAAP. THE INFORMATION CONTAINED IN THIS DOCUMENT IS BEING GIVEN SOLELY FOR YOUR INFORMATION AND ONLY FOR YOUR USE IN CONNECTION WITH THIS PRESENTATION. THE INFORMATION CONTAINED HEREIN MAY NOT BE COPIED, REPRODUCED, REDISTRIBUTED, OR OTHERWISE DISCLOSED, IN WHOLE OR IN PART, TO ANY OTHER PERSON IN ANY MANNER. Any forwarding, distribution or reproduction of this presentation in whole or in part is unauthorized. By attending this presentation, participants agree not to remove these materials, or any materials provided in connection herewith, from the conference room where such documents are provided. Participants agree further not to photograph, copy or otherwise reproduce this presentation in any form or pass on this presentation to any other person for any purpose, during the presentation or while in the conference room. Participants must return this presentation and all other materials provided in connection herewith to the Company upon completion of the presentation.

Overview

2

Overview of China mobile game value chain

3

Developers

Publishers

Distribution Platform

Self-developed games

Pre-installation and game center

Published games

Design and develop mobile games Publish games through distribution platforms or

license to publishers

License games created by third party developers

Value added services such as game optimization, marketing and user data analysis

Distribution channels for developers and publishers

Includes mobile game portals and pre-installation on mobile devices

Users

Payment Channels

Facilitate the collection and transfer of payment

Include telco operators and third-party payment channels

A leading mobile game developer

Multiple awards for self-developed game "War Valley"

Largest mobile game publisher in 2014Q1 and 2013

Publisher of multiple top games in various game genres

Extensive Game Center pre-installation

Strong relationship with leading distribution platforms

Provide players with access to all major payment channels

Source: Company data, Analysis, Sootoo.com

CMGE Competitive Strengths

17.9%

Chu Kong 16.2%

FL Mobile 13.2%

iDreamSky 13.0%

Kun Lun 11.0%

Game Comb 9.1%

Others 19.6%

18.9%

Chu Kong 16.4%

FL Mobile 13.8%

iDreamSky 13.4%

Kun Lun 11.0%

Game Comb 10.1%

Others 16.4%

Company overview

4

A portfolio of 847 games with 110 social games and 737 single player games

8.2 million paying users in 2014Q1

Social games contribute approximately ~70% of our game

revenue as of 2014Q1

Large and extensive mobile game sales and distribution network in China

Over 1,200 employees with ~500 game developers

Offices and R&D centers in Guangzhou, Shenzhen, Beijing, Chengdu, Shanghai and HK

Business model

Developer

23 self-developed

social games

Publisher

87 licensed social

games as of 2014Q1

Platform

CMGE Game Center

Largest publisher and a leading developer of mobile games in China with integrated capabilities across the mobile game value chain

29 social games

are exclusively licensed as of 2014Q1

187 self-

developed single player games


#1 mobile game

publishers’ market share in 2014Q1 and 2013

Source: Company data, Analysis, Sootoo.com

Mobile game publishers’ market share by in China

2013 2014Q1

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jan'1

3

Fe

b'1

3

Mar'13

Apr'13

May'1

3

Jun'1

3

Jul'1

3

Aug'1

3

Sep'1

3

Oct'13

Nov'1

3

Dec'1

3

Jan'1

4

Fe

b'1

4

Mar'14 -

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Cumulative Paying Users

Cumulative Registered Users

0 20,000 40,000 60,000 80,000

100,000 120,000 140,000 160,000 180,000 200,000

Jan'1

3

Fe

b'1

3

Mar'13

Apr'13

May'1

3

June'1

3

Jul'1

3

Aug' 1

3

Sep'1

3

Oct'13

Nov'1

3

Dec'1

3

Jan'1

4

Fe

b'1

4

Mar'14

Cumulative Gross Billings

A large portfolio of popular and profitable mobile games Self-developed games

5

Wen Ming II 2009 Top 10 Most Popular

Original Mobile Games

Xiao’ao Jianghu Top grossing game in

Maopao app store from Jan-Apr 2011

Kangri Yingxiong Zhuang Most downloaded single-

player game on China Mobile during Jan 2012

Cut Cut Boom Top grossing iPad game in China during Nov-Dec

2010

远洋Online

2008 “Best Social Game” 2008 “Best Strategy

Game” 2007 “Best Mobile

Social Game”

Creation Song 2010 Top 10 Most

Popular Original Mobile Games

Thumb Monopoly 2009 Top 10 Most


YY Three Kingdom 2008 Top 10 Most


G+ Smartphone game bundle

Top grossing game bundle on China Mobile

during Jan-Jul 2012

Paopao Xiyou Golden Plume Award as

Best Mobile Platform Online game in China

2011

Home Aquarium Top 6 on Apple’s China

Region iTunes paid games list and 2nd on

Apple’s China Region iPad paid game list

Joyful Da Ying Jia Golden Apple Award as best

mobile game in 2013

War Valley Golden Finger Award (Best Mobile

game) Jin Ling Award (Most Fav mobile

game), Top 10 Most innovative mobile games in GGS, Social Game excellence award in GMGC

Fist award (Best social game)

RMB ‘000

Paying users ‘000 Registered users ‘000

2008 2009 2010 2011 2012 2013

Consistently develop popular and top-ranked mobile games

6

Top 5 mobile single-player games

Top 5 mobile RPG games

Top 5 mobile card games

Top 5 mobile education games

I Am MT Dream One Piece Wu Xia Q Zhuan San Guo Zhi I am Huo Ying

Plants vs. Zombies 2 Temple Run 2 Carrot Fantasy Fishing Joy 2 Minion Rush

Space Hunter Master Sword Shen Mo The Eternal Warrior 3 Nuzhan Xuanyuan

Happy Fish: Dream Aquarium Monster Island Business Life Monst X Monster Tiantian Xuanwu

A large portfolio of popular and profitable mobile games

Publisher of choice by top mobile game developers

Denotes games published by CMGE

Source: Company data (1) Exclusive on Android (2) Exclusive on all Android platforms except Qihoo 360 (3) Exclusive on all Android platforms except Baidu 91

(1)

(2)

(2) (3)

7

Strong and differentiated distribution channel


Strong partnership with top third-party app store and SNS platform

in China

Close collaboration with major third-party app stores and SNS platforms Multiple top 20 ranked games in major distribution platforms such as Qihoo 360 and 91.com Strategic relationship with major app stores including 91.com, HiMarket and Qihoo 360

“Grade A” strategic partner with mobile operators

Close collaboration with over 400 handset manufacturers Strategic co-operation with Mediatek to pre-install games/game center on Mediatek chipsets

“Grade A” strategic partner of China Mobile Master Application Partner (“MAP”) of China Mobile China Telecom and China Unicom: strategic cooperation to market CMGE’s mobile social games.

Strong self-development capabilities and game pipeline

8

2013-2014Q2 self-developed new games pipeline:

2013Q1 2013Q3 2013Q4 2013Q2 2014H1

Eagle 1945

Zhumo Zhizhan

Immortal Wind War Valley

Social games: 23 self-developed social games as of 2014Q1 Single player games: 187 self-developed single player games as of 2014Q1

Tank Eagle 2

Demonstrated sourcing capabilities and strong publishing pipeline

9

Number of publishing titles of social games

Exclusively licensed social games launch timeline (for game titles which were already acquired up to Mar 2014)

3 8

16 21

29 33 28 28

28

30

58

68

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014 (

E)

Non-exclusive licensed games

Exclusive licensed games

87

101

2013Q1 2014H1 2013Q3 2013Q4

2013Q2

51

31

36

44

Experienced management team

10

VODone’s Chairman and CEO

Chairman of China APEC Development Council

Vice Chairman of the China Internet Association

28+ years of Chinese Government administration and executive management experience

Doctorate degree from Nankai University

17 years of experience in corporate finance and capital markets

Acted as VODone’s Executive Director and CFO from 2009 to 2012. Previously worked at HSBC

Master’s degree in engineering economic systems and operations research from Stanford University

Founder of 3GUU

Over 15 years of experience in mobile industry in China

Bachelor’s degree from Jinan University

Dr. Lijun Zhang Chairman of the Board

Mr. Hendrick Sin Vice-chairman of the Board

Mr. Yongchao Wang Vice-chairman of the Board

Founder of KKFun

Co-founder of Infomobile and Hong Kong listed A8 Digital Music

Over 10 years of mobile games experience in China

Master’s degree from South China Normal University

Mr. Ken Jian Xiao Chief Executive Officer

Over 17 years of experience in corporate finance, research and asset management

Previously worked at Barclays Capital and Merrill Lynch

Master’s degree in engineering economic systems from Stanford University

Mr. Ken Fei Fu Chang Chief Financial Officer

PVG Venture Capital Partners

Zennon Capital Partners

Strong, supportive and well-known shareholders

Mr. Shuling Ying President

Extensive experience in selection, publishing, operation and marketing

Previously worked in Standard Chartered Bank in Shanghai

Mr. Zhenyu Hu Chief Operating Officer

Over 10 years of experience in commercial operations and team management

Assistant general manager of 3GUU

Bachelor’s degree in marketing from Jiangxi Academy for Specialized Economic Management

Strong corporate governance

11

Former CFO of Country Garden Holdings (2007.hk)

Previous senior positions in Hong Kong Stock Exchange and Deloitte

Member of American Institute of CPA and Hong Kong Institute of CPA

Best CFO, all-Asia (Property)*

Expert in finance and

accounting and corporate

governance

General partner and member of the investment committee at Pacific Venture partners

Over 15 years in academic research. Professor at National Taiwan University of Science and Technology

Chairman of Taiwan Internet Association 2006 - 2009


mobile internet

CFO of Mediatek Inc. (2454.tw)

Former investment banker at JPMorgan

Best CFO, all-Asia (Tech/Semi-conductor)*

Expert in finance, and

multi-national company

management skills

Founder & managing partner of AID Partners

Former senior positions at Investec Asia, China Everbright Capital and BNP Paribas Peregrine

Member of Australian Society of Public Accountants and Hong Kong Institute of CPA


investment and corporate

governance

Ms. Estella Yi Kum Ng (Age: 56)

Mr. Chen-Wen Tarn (Age: 53)

Mr. David Ku (Age: 44)

Mr. Joel Chang (Age: 45)

Strong focus on corporate governance with highly reputable independent directors

Audit committee

Remuneration committee

Corporate governance

and nominating committee

Board

3 Independent directors

2 Independent directors & a Director

2 Independent directors & a Director

5 Executive Directors

4 Independent Directors

* - By Institutional Investor

Financial Overview

12

Income statement (2009 – 2013)

13

Successfully transformed from feature phone games to smart phone games as evidenced in the financial performance in 2013

Note: Exchange rate USD/RMB: 6.0537

Revenue

Gross profit

Net profit

(US$ in thousands) (US$ in thousands) (US$ in thousands)

14,002

20,716

40,221

30,988

58,313

2009 2010 2011 2012 2013

7,885 13,628

22,324

15,835

32,544

56% 66%

56%

51%

56%

2009 2010 2011 2012 2013

Gross Profit Margin

5,137 6,725

26,982

(2,391)

4,421

37%

32%

67%

(8%)

8%

2009 2010 2011 2012 2013

Net profit Margin

Quarterly income statement (2012 – 2014Q1)

14

Revenue

Gross profit

Adjusted EBITDA(1)

Net profit/(loss)

Note: Exchange rate USD/RMB: 6.0537 except 6.2164 used for 2014Q1 financials and 2014Q2 revenue estimate (1) Adjusted EBITDA defined as income / (loss) from operations excluding depreciation and amortization, share-based compensation expense, impairment of goodwill and intangible assets, and listing expenses (2) Net income for 2013Q3 of US$4.2 million including other non-operating income of US$4.4 million (3) Net income for 2013Q4 of US$5.8 million including other non-operating income of US$4.6 million (4) Net income for 2014Q1 of US$5.6 million including other non-operating income of US$0.5 million

(US$ in thousands) (US$ in thousands)


8,975 10,032 7,204

4,777 6,037

11,888

16,198

24,190

34,538

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1

4,955 6,062

3,490

1,328 2,412 5,436

9,434

15,262

21,725

55% 60%

48%

28%

40% 46%

58%

63% 63%

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1

Gross Profit Margin

4,105

5,221

1,259

(1,551)

(133)

1,146

3,581

5,099

9,273

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1

3,108 3,869

267

(9,635)

(3,566) (2,078)

(186)

1,240

5,084 4,421 4,590

489

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1

Revenue estimate for 2014Q2: US$41.8 million to US$45.0 million

4,235(2) 5,830(3)

5,573(4)

R&D expenses (2009 – 2014Q1)

15

Yearly research & development expenses (2009 – 2013)

Quarterly research & development expenses (2012 Q1 – 2014 Q1)


770

1,384

4,058

5,793

8,969

6%

7%

10%

19%

15%

2009 2010 2011 2012 2013

Yearly R&D expenses As percentage of revenue

1,421 1,216

1,531

1,625

1,450

1,882

2,348

3,289

2,803

12%

21%

34%

24%

16% 14% 14% 14%

8%

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

Quarterly R&D expenses As percentage of revenue

Note: Exchange rate USD/RMB: 6.0537 except 6.2164 used for 2014 Q1 financials

Balance sheet summary & operating data

16

Note: Exchange rate USD/RMB: 6.2164

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1

Social Games Paying Users 308,039 1,421,301 2,792,223 3,164,935 3,649,599

ARPU (RMB) 23.8 20.8 24.9 36.6 39.8

Single Player Games Paying Users 4,297,296 3,887,271 2,572,160 2,774,508 3,525,911

ARPU (RMB) 3.4 3.3 4.3 7.4 13.6

Game Bundles Paying Users 1,516,974 1,968,606 1,595,621 1,060,667 1,083,766

ARPU (RMB) 4.7 5.2 5.5 4.9 3.6

Summary balance sheet

Operating data

(US$ in thousands)

As of Mar 31,

2014

Cash and cash equivalents (including restricted cash and short term investments) 110,988

Total Assets (excluding Goodwill and Intangible Assets, net) 181,030

Total Assets 293,845

Total Liabilities 33,446

Total Shareholders’ Equity: 260,399

Clear and visible growth strategies

17

Continue to expand and enhance our game portfolio 1

Further grow our player base and monetization capabilities 2

Expand our international presence to enhance reach and profitability 3

Continue to innovate and expand our publishing platform 4

Promote our brand and name recognition 5

Pursue strategic acquisitions and partnerships 6

Tailored solutions enabling multi players interacting on different

devices, such as smartphones, tablet

computers and smart TVs

Expand into overseas markets

51PK.com real time combat platform

Innovative distribution methods such as hot spots

Partnership with hot spots vendors addressing captive audience

Recent developments

18

Strategic partnership with Beijing Super Flash Software with advanced, stable and mature game engine for converting web-games into mobile games, as well as a providing a complete 3D mobile game development kit

Ability to accumulate additional outstanding games in pipeline portfolio, to convert successful web-based games into mobile games and provide additional profit opportunities through the strategic partnership

Strategically accumulated intellectual property in the areas of animation, television, movies, online fiction and well-known PC/mobile games and to enter into collaborations with providers of intellectual property in those areas starting in 2013H2

Recent developments:

− Television: obtained rights to produce mobile games based on popular television programs including Feng Shen Ying Xiong Bang, Bu Bu Jing Xin, Bu Bu Jing Qing and a large ancient Chinese TV drama

− Animation: obtained the right to develop mobile games based on Old Master Q, a very popular comic book series in Chinese speaking areas, and one of the best-selling comic book series in Hong Kong

Investment in Yunva Technology, a company focusing on building a one-stop mobile social network with two major products cutting edge network communication technology and efficient data consumption

Expect to launch games incorporating these products that provide real time communication and facilitate communication in social games in June 2014

User acquisition

Game engine

Intellectual property

User community development

Recent awards

“Best Mobile Game Publisher Award” in May 2014 by 2014 Global Mobile Internet Conference

“San Guo Zhi Wei Li Jia Qiang Ban”, exclusively license game, awarded the “Best Social Game Marketing Award”

CEO and CFO received the “2013-2014 Greatest Growth Potential of Listed Internet Company, CEO and CFO Award” by iResearch

Traditional and continued advantage in pre-installation, number of pre-installations of game centers to exceed 80 million of handsets for 2014E

Starting from 2013H2, significant efforts in providing services to a number of free Wifi service providers such as offering tailor-made mobile game center operating services as well as “51 PK” real time combat platform. Recent strategic cooperation with free Wifi service providers has produced initial positive results from distribution of games through free Wifi networks

Investment in Douwan, to further expand offline distribution channels

Appendix

19

Qualifications

20

Internet culture operation license PRC internet publishing license

PRC value-added communications business operation license Surveying & mapping qualification certificate

State-level high-tech enterprise certificate

Date of NASDAQ listing September 25, 2012

NASDAQ Ticker CMGE

Outstanding shares 442 million Class A and Class B

ordinary shares (1ADS: 14 shares)

Market Cap US$613million(1)

Websites www.cmge.com

ir.cmge.com

Ownership structure & general information

21

Group structure (1) General information

MediaTek / PVG

(2454.tw)

VODone Limited

(0082.hk)

42.9% 6.0% 13.6%

100% 100% 90%

CMGE (Cayman Islands)

3GUU OWX VOGINS

25.6%

Management and

Employees

China Sovereign

Wealth funds

Other Public

Shareholders

6.3% 5.6%

Zennon Capital

(1) As of May 30, 2014

Guangzhou Yingzheng

51PK Huiyou

100%

Shenzhen Lanyue

51%

160

300

480

670

770 800

2011 2012 2013 2014E 2015E 2016E

54 67

89

115

147

184

2011 2012 2013 2014E 2015E 2016E

Rapid growth in China mobile game market

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Driven by robust mobile internet fundamentals, China mobile game market has significant potential with fast-growing addressable market

Source: iResearch, Analysys.

China mobile internet users

China gaming market size

China smartphone users

China tablet users

(In millions) (In millions)

(In millions) (RMB in billions)

431

565

699

799 866

923

2011 2012 2013 2014E 2015E 2016E

’11 – ’16 CAGR

Mobile: 53% Web: 38% PC: 19%

9 29

57

92

143

203

2011 2012 2013 2014E 2015E 2016E

China mobile games and entertainment group

Technology

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