CMGE Reports Fourth Quarter and Full Year 2012 Unaudited Financial Results

CMGE Reports Fourth Quarter and Full Year 2012 Unaudited Financial Results

HONG KONG, March 25, 2013 (GLOBE NEWSWIRE) -- China Mobile Games and
Entertainment Group Limited ("CMGE" or the "Company") (Nasdaq:CMGE), a leading
mobile game company in China, today reported its unaudited financial results
for the fourth quarter and full year ended December 31, 2012.

Fourth Quarter Financial Highlights

  *Revenues were RMB28.9 million (US$4.6 million^1), compared with RMB60.0
    million in the fourth quarter of 2011 and RMB43.6 million in the third
    quarter of 2012. This decline is mainly because 2012 was largely a
    transitional year for the Company, as management's focus was concentrated
    on the R&D of our new generation of social games and expanding
    distribution channels in order to capture the significant growth
    opportunities emerging in smartphone games.
  *Net loss was RMB58.3 million (US$9.4 million), compared with net income of
    RMB108.4 million in the fourth quarter of 2011 and RMB1.6 million in the
    third quarter of 2012. Our net loss includes impairment costs of our
    non-core handset design business of RMB44.4 million. There was also a
    one-time reversal of deferred tax liabilities of RMB51.4 million that took
    place in the fourth quarter of 2011.
  *Non-GAAP^2 net loss, excluding (1) share-based compensation expenses and
    (2) goodwill and intangible assets impairment loss, was RMB10.0 million
    (US$1.6 million), compared with non-GAAP net income of RMB108.3 million in
    the fourth quarter of 2011 and RMB6.7 million in the third quarter of
    2012.
  *Basic and diluted earnings per American Depositary Share^3 ("ADS") were
    RMB-2.71 (US$-0.43), compared with RMB5.01 in the fourth quarter of 2011
    and RMB0.04 in the third quarter of 2012.

Full Year 2012 Financial Highlights

  *Revenues were RMB187.6 million (US$30.1 million), compared with RMB243.5
    million in 2011.
  *Net loss was RMB14.5 million (US$2.3 million), compared with net income of
    RMB163.3 million in 2011.
  *Non-GAAP net income, excluding (1) share-based compensation expenses, (2)
    goodwill and intangible assets impairment loss and (3) listing expenses,
    was RMB61.3 million (US$9.8 million), compared with RMB164.2 million in
    2011.
  *Basic and diluted earnings per ADS were RMB-0.80 (US$-0.13), compared with
    RMB8.68 in 2011.
  *Cash and cash equivalents were RMB128.7 million (US$20.7 million) and
    short-term investments were RMB 45.0 million (US$7.2 million) as of
    December 31, 2012.

^1 This announcement contains translations of certain Renminbi (RMB) amounts
into U.S. dollars (US$) at specified rates solely for the convenience of the
reader. Unless otherwise noted, all translations from RMB to U.S. dollars are
made at a rate of RMB6.2301 to US$1.00, the effective noon buying rate as of
December 31, 2012 in The City of New York for cable transfers of RMB as set
forth in H.10 weekly statistical release of the Federal Reserve Board.

^2 Non-GAAP measures and related reconciliations to GAAP measures are
described in the accompanying sections titled "About Non-GAAP Financial
Measures" and "Reconciliations of Non-GAAP Financial Measures to Comparable
GAAP Measures" at the end of this press release.

^3 One ADS represents 14 Class A ordinary shares of the Company.

Fourth Quarter Select Operating Data^4

  *Total paying user accounts^5 for single-player games (excluding
    single-player game bundles) were 5.0 million, compared with 12.2 million
    in the fourth quarter of 2011 and 9.8 million in the third quarter of
    2012. Average revenue per paying user account ("ARPU") for single-player
    games (excluding single-player game bundles) was RMB2.37, compared with
    RMB2.57 in the fourth quarter of 2011 and RMB2.92 in the third quarter of
    2012.
  *Total subscriptions^6 for single-player game bundles were 1.1 million in
    the fourth quarter of 2012, compared with 2.7 million in the fourth
    quarter of 2011 and 1.2million in the third quarter of 2012. Average
    revenue per subscription for single-player game bundles was RMB4.01,
    compared with RMB5.22 in the fourth quarter of 2011 and RMB4.06 in the
    third quarter of 2012.
  *Total paying user accounts for social games^7 were 48,235, compared with
    199,126 in the fourth quarter of 2011 and 67,995 in the third quarter of
    2012. ARPU for social games was RMB92.47, compared with RMB26.88 in the
    fourth quarter of 2011 and RMB120.87 in the third quarter of 2012.

^4Starting in the fourth quarter of 2012, the Company has organized its
reporting of select operating data by separating its games segment into three
categories based on the nature of the games and their revenue models:
(i)single player games (excluding single-player game bundles),
(ii)single-player game bundles and (iii)social games. The Company derives
revenue from single player games (excluding single-player game bundles) based
on purchases of games from various application stores for a one-time fee and
purchases of in-game items. The Company derives revenue from its single-player
game bundles based on subscription fees paid by subscribers for purchasing the
game bundles. The Company derives revenue from social games based on in-game
item purchase fees.

^5Total paying user accounts represent the number of user accounts that have
purchased in-game items for the relevant period (adjusted to eliminate
double-counting of the same user accounts) and the number of games downloaded
through application stores (not adjusted to eliminate double-counting of the
same user account). Since the fourth quarter of 2012, the Company has
calculated its total paying user accounts to include the number of games
downloaded through application stores, whereas under its previous method such
games were included under total subscriptions.

^6Total subscriptions represent the total number of monthly subscriptions to
game bundles offered through mobile network operators. A user who pays two
subscription fees during one month to subscribe to different game bundles
would be counted as two subscriptions. Since the fourth quarter of 2012, the
Company has calculated its total subscriptions to exclude the number of games
downloaded through application stores and include such games under total
paying user accounts, whereas under the previous method, such games were
included under total subscriptions.

^7Since the fourth quarter of 2012, the Company has reported its total paying
user accounts for social games to combine feature phone social games with
smartphone social games, whereas it previously reported accounts for such
games separately.

Full Year 2012 Select Operating Data

  *Total paying user accountsfor single-player games (excluding
    single-player game bundles) were 31.7million, compared with 29.0million
    in the 2011, and ARPU was RMB3.56, compared with RMB4.58 in 2011.
  *Total subscriptionsfor single-player game bundles were 5.9million in
    2012, compared with 9.6million 2011, and average revenue per subscription
    was RMB4.50, compared with RMB4.64 in 2011.
  *Total paying user accounts for social games were 303,613, compared with
    809,407 in 2011, and ARPU was RMB108.48, compared with RMB26.39 in 2011.

Mr. Ken Jian Xiao, CMGE's Chief Executive Officer, commented, "During the
fourth quarter, we focused on executing our long-term development, operational
and distribution strategy for smartphone games. The performance of our
single-player games (excluding single-player game bundles), as total paying
user accounts increased by 9.0% from the same period last year, reaching
31.7million user accounts. We have also been investing heavily in developing
our new generation of social games for Android and iOS-based smartphones, and
are very excited about the potential of seven new generation social games for
smartphones that we plan to launch in the next few months. We continue to
enhance our distribution channels and our technology and development teams in
anticipation of the strong growth we expect from our smartphone games, which
we expect to account for a significant portion of our game revenues during
2013.

"By the end of 2012, our MMORPG social game portfolio included 'Hero
Alliance,' which we successfully launched in July 2012, 'Purple Wings,' 'Dian
Feng,' 'Xiao'ao Jianghu,' 'Xun Qin' and 'Creation Song.' We have also
developed new social card games, some of which have already been launched and
have garnered positive feedback. We are constantly improving our diverse
portfolio of games with creative and compelling new content. Our
self-developed game portfolio now spans multiple genres, including
action-packed MMORPGs, 3D social games and light social games such as social
card games. During November 2012, our self-developed light social game 'Home
Aquarium' was ranked in the top six on Apple's China Region iTunes paid games
list and second on Apple's China Region iPad paid game list. As of the end of
2012, our own game portfolio has expanded to include 490 single-player games
and seven social games.

"Since November 2012, we have expanded our game research and development
capabilities by acquiring six teams of game developers, including 40
developers. We provide these teams with a certain degree of autonomy so that
they can develop unique games, which will help to diversify our game
selection.

"We also continue to expand the publishing channels for our Android-based
games. In the fourth quarter of 2012, we released a Game Center, a proprietary
application store, for Android-based smartphones, which currently makes
available almost 1,000 games to our users, including games from third-party
developers. We plan to cooperate with other open platforms and to explore
further pre-installation opportunities with the handset and mobile chipset
manufacturers.

"We anticipate that as our platform continues to grow, user traffic will
facilitate the promotion of our own proprietary games and reduce future
promotional costs. Our distribution network currently reaches over 150million
users, with 30million active users per month. Supported by this large user
base, we believe that 2013 holds great potential as we leverage our
investments during this transitional period to deliver value to our
shareholders over the long term. We would like to thank all of our employees
for keeping their focus and dedication throughout 2012, despite the many
challenges we faced. We are confident that with everyone's continued
dedication, motivation and innovation, 2013 will be a very bright and
successful year at CMGE."

Mr.Ken Chang, CMGE's Chief Financial Officer, added, "Financially, 2012 was
largely a transitional year for us as we have been investing and positioning
ourselves to capture the significant growth opportunities in smartphone games.
Our mobile game revenues decreased mainly because we directed significant
resources towards developing our new generation of Android and iOS-based
social games, and our social game pipeline contains nearly twice the number of
games than it has at any time prior. Our non-core handset design business
advanced in successfully transitioning from feature phone to smartphone
design, but decreased significantly throughout most of 2012 because of this
transition, though compared to third quarter it rebounded with growth during
the fourth quarter. The migration to smartphone games from feature phone
games, which historically provided a majority of our revenue, affected our
overall revenue. Nevertheless, we believe that after this transitional year,
we will see a significant portion of our future revenue coming from smartphone
games, which will be the driver for both revenue and earnings going forward.

"In terms of expenses, we had a few large expense items during 2012. First, we
expensed a one-off listing expense ofRMB17.3 million (US$2.8 million),
related to our successful listing on theNasdaq Global MarketonSeptember 25,
2012, during the third quarter of 2012. Second, we incurred a RMB14.1 million
(US$2.3 million) share-based compensation expense relating to share options we
issued in February 2012 to incentivize management and research and development
personnel and restricted share units. Third, we have incurred RMB44.4 million
impairment loss related to our handset design business. Fourth, we continued
to devote substantial resources towards product research and development and
human resources for developing our new generation of smartphone social games,
enhancements to our social game platform and our mobile handset design
business, causing R&D as a percentage of revenue to increase to 18.7% during
2012, from 10.1% during 2011. We expect to see returns from these investments
starting in 2013."

Fourth Quarter 2012 Results

Revenues

Total net revenues were RMB28.9 million (US$4.6 million), compared with
RMB60.0 million in the fourth quarter of 2011 and RMB43.6 million in the prior
quarter.

  *Mobile phone game revenues were RMB20.7 million (US$3.3 million), a
    decrease of 59.3% from RMB50.8 million during the same period last year
    and a decrease of 50.2% from RMB41.6million in the prior quarter. This
    decline is largely a result of the Company's decision to direct
    significant resources towards developing a new generation of Android and
    iOS-based social games. The Company plans to launch at least seven social
    games in 2013, almost twice as many games than it has at any time prior.
    We believe that social games will grow significantly and make most
    efficiently in monetization. As consumers in China continue to migrate
    from feature phones to smartphones, the Company is transitioning much of
    its business to the smartphone segment, though historically feature phones
    have provided the majority of the Company's revenues. In addition, China
    Mobile, the Company's service provider for all of its single-player game
    bundles, has continued to tighten its policy on the number of pop-up
    advertisements broadcast to its users. This has limited the promotion of
    the Company's single-player game bundles on China Mobile's platform and
    resulted in a decline in total subscriptions for the Company's
    single-player games, even though the Company's game bundles ranked first
    on China Mobile's platform in terms of revenue for 11 out of 12 months
    during 2012.

  Beginning in the fourth quarter of 2012, the Company's chief operating
  decision maker has viewed the Company's mobile phone games business as one
  segment. Accordingly, the Company has combined feature phone game revenue
  and social game revenue into mobile phone game revenues. The Company
  believes that as technology in feature phones has improved with larger touch
  screens, faster CPU processing speed and better GPRS connectivity, feature
  phones have become increasingly like smartphones in terms of feel, look and
  user experience. CMGE has positioned itself in the Android- and iOS-based
  smartphone game business so that traditional feature phone games will
  contribute to a decreasing portion of the Company's total revenue. As a
  result, the Company believes that combining feature phone and smartphone
  game revenues will present to investors a clearer picture of the Company's
  overall trend.

  *Handset design revenues were RMB8.2 million (US$1.3 million), compared
    with RMB9.2 million during the corresponding period in 2011 and RMB2.0
    million during the prior quarter. During the fourth quarter of 2012, 84%
    of the handset design revenue was derived from smartphone design, compared
    with 23% in the third quarter of 2012. The strong sequential quarterly
    growth in revenue was primarily due to the Company's progress toward
    transitioning away from feature phone design towards smartphone handset
    design, which the Company views as having far greater growth potential.

Cost of Revenues

Cost of revenues was RMB20.9 million (US$3.4 million) during the fourth
quarter of 2012, a decrease of 31.9% from RMB30.7 million in the fourth
quarter of 2011 and a decrease of 7.1% from RMB22.5 million in the third
quarter of 2012. These declines were primarily due to a decrease in the amount
paid to agents who pre-install the Company's feature phone games and a decline
in distribution costs for smartphone games, offset by an increase in handset
design sales volume, which resulted in higher component costs.

  *Cost of revenue for mobile phone games was RMB11.8 million (US$1.9
    million), compared to RMB22.5 million during the fourth quarter in 2011
    and RMB19.9 million during the prior quarter. The sequential and
    year-over-year declines were primarily due to a decrease in the amount
    paid to agents who pre-install the Company's feature phone games and a
    decline in distribution costs for smartphone games.
  *Cost of revenue for handset design was RMB9.0 million (US$1.5 million),
    compared to RMB8.2 million during the fourth quarter in 2011 and RMB2.6
    million during the prior quarter. The sequential increase over the prior
    quarter and year-over-year was largely due to higher component costs as
    sales orders increased.

The Company's overall gross margin was 27.8% during the fourth quarter of
2012, compared with 48.8% in the fourth quarter of 2011 and 48.4% in the third
quarter of 2012.

  *Gross margin for mobile phone games was 42.9% during the fourth quarter of
    2012, compared to 55.8% during the fourth quarter of 2011 and 52.2% in the
    third quarter of 2012. The sequential and year-over-year declines were
    primarily due to a decline in revenues compared to fixed costs, which
    mainly consist of amortization in intangible assets.
  *Gross margin for handset design was -10.4% during the fourth quarter of
    2012, compared to 9.78% during the fourth quarter of 2011 and -30.1% in
    the third quarter of 2012. The sequential increase was due to an increase
    in sales revenues generated relative to fixed costs, which mainly consists
    of amortization of intangible assets and staff salaries. The
    year-over-year decline was primarily due to a decline in revenues compared
    to fixed cost.

Operating Expenses

Operating expenses were RMB71.7 million (US$11.5 million) during the fourth
quarter of 2012, compared with RMB14.6 million in the fourth quarter of 2011
and RMB40.6 million in the third quarter of 2012. The quarterly increase is
largely because the Company incurred impairment loss for goodwill and
intangible assets of RMB44.4 million.

Research and development expenses as a percentage of net revenue increased to
34.0% in the fourth quarter of 2012, from 15.8% in the fourth quarter of 2011
and 21.3% in the third quarter of 2012 as the Company continued directing
resources towards the development of its new generation of smartphone games
and mobile Game Center platform for Android-based smartphones.

Share-based compensation expenses totaled RMB4.0 million (US$0.6 million)
during the fourth quarter of 2012, compared with a gain of RMB0.1 million in
the fourth quarter of 2011 and expenses of RMB5.1 million in the third quarter
of 2012.

Impairment Loss

During the fourth quarter of 2012, the Company recorded a non-cash impairment
of goodwill of RMB33.5 million (US$5.4 million) and a non-cash impairment of
intangible assets of RMB10.9 million (US$1.8 million). Both impairment charges
reflect a decline in the fair value of OWX Holding Co. Ltd. ("OWX"), the
Company's subsidiary engaged in the handset design business, the assets of
which were mostly acquired in October 2010. The decline in the fair value is
largely the result of the Company transitioning the handset design business
from feature phone to smartphone design, as prior to 2012 OWX designed mainly
handsets for feature phones, and reflects the Company's conservative estimate
of the fair value of OWX. The fair-value is estimated using the discounted
cash flow model. The Company has largely transitioned to the smartphone
handset design business and expects that as the smartphone design business
grows the fair value of OWX will increase. However, there is generally
uncertainty in estimating an impairment, and future impairments of goodwill
and intangible assets may still be possible as a result of changing market
conditions.

Operating Income (Loss)

As a result of the above factors, the Company's operating loss was RMB63.7
million (US$10.2 million) during the fourth quarter of 2012, compared with
operating income of RMB14.7 million in the fourth quarter of 2011 and
operating loss of RMB19.5 million in the third quarter of 2012.

Operating loss excluding (1) share-based compensation (2) goodwill and
intangible assets impairment loss (non-GAAP) was RMB15.3 million (US$2.5
million) during the fourth quarter of 2012, compared with operating income
(non-GAAP) of RMB14.6 million in the fourth quarter of 2011 and operating loss
(non-GAAP) of RMB14.4 million in the third quarter of 2012.

Contingently Returnable Consideration Assets

Changes in the fair value of contingently returnable consideration assets
resulted in a gain of RMB2.8 million (US$450,000) during the fourth quarter of
2012, compared with RMB31.9 million in the fourth quarter of 2011 and RMB20.6
million in the third quarter of 2012. The slight gain was primarily due to a
minor increase in the fair value of the consideration shares to be returned to
VODone pursuant to the contingent conditions related to the acquisitions of
the 3GUU Group and the OWX Holding Group.

Income Tax

The Company had an income tax benefit of RMB1.7 million (US$279,000) during
the fourth quarter of 2012, compared with an income tax benefit of RMB61.4
million in the fourth quarter of 2011 and an income tax benefit of RMB0.2
million in third quarter of 2012. This was mainly due to the reversal of
deferred tax liabilities as a result of the full impairment of RMB10.9 million
made to the intangible assets.

Net Income (loss)

Net loss during the fourth quarter of 2012 was RMB58.3 million (US$9.4
million), compared with net income of RMB108.4million in the fourth quarter
of 2011 and net income of RMB1.6 million in the third quarter of 2012.

Net loss excluding (1) share-based compensation (2) goodwill and intangible
assets impairment loss (non-GAAP) was RMB10.0 million (US$1.6 million) during
the fourth quarter of 2012, compared with net income excluding share-based
compensation (non-GAAP) of RMB108.3 million in the fourth quarter of 2011 and
net income excluding share-based compensation (non-GAAP) of RMB6.7 million in
the third quarter of 2012.

Basic and Diluted Earnings per ADS

Both basic and diluted earnings per ADS were RMB-2.71 (US$-0.43) during the
fourth quarter of 2012, compared with RMB5.01 in the fourth quarter of 2011
and RMB0.04 in the third quarter of 2012. Basic and diluted earnings per ADS
excluding (1) share-based compensation (2) goodwill and intangible assets
impairment loss (non-GAAP) were RMB-0.48 (US$-0.08), RMB0.25 and RMB5.01,
respectively, during the fourth quarter of 2012, third quarter of 2012 and
fourth quarter of 2011.

Cash and Cash Equivalents

As of December31, 2012, the Company had cash and cash equivalents of RMB128.7
million (US$20.7 million) and short-term investments were RMB 45.0 million
(US$7.2 million). Operating cash flow for the fourth quarter of 2012 was a net
inflow of RMB25.6 million (US$4.1 million).

Full Year 2012 Results

Revenues

Total revenues in 2012 were RMB187.6 million (US$30.1 million), representing a
decrease of 23.0% from RMB243.5 million in 2011. The decrease was due mainly
to a result of the Company's decision to direct significant resources towards
developing in a new generation of Android and iOS-based social games. In
addition, the handset design business had a decline in the first three
quarters in 2012 although there was a strong sequential quarterly growth in
revenue in the fourth quarter due to the Company's progress toward
transitioning away from feature phone design towards smartphone handset
design.

Cost of Revenues

Cost of revenue was RMB91.7 million (US$14.7 million), compared with RMB108.3
million in 2011, representing a decrease of 15.3%. The decrease was due
largely to a decrease in the amount paid to agents who pre-install the
Company's feature phone games and a decline in distribution costs for
smartphone games.

Operating Income (Loss)

Operating loss was RMB52.4 million (US$8.4 million), compared with operating
income of RMB86.8 million in 2011, representing a decrease of 160.4%.

Operating income excluding (1) share-based compensation (2) goodwill and
intangible assets impairment loss and (3) listing expenses (non-GAAP) was
RMB23.4 million (US$3.8 million) in 2012, compared with operating income
(non-GAAP) of RMB87.6 million in 2011.

Net Income (loss)

Net loss was RMB14.5 million (US$2.3 million), compared with RMB163.3 million
in 2011, representing a decrease of 108.9%.

Net income excluding (1) share-based compensation, (2) goodwill and intangible
assets impairment loss and (3) listing expenses (non-GAAP) was RMB61.3 million
(US$9.8 million) during 2012, compared with RMB164.2 million in 2011.

Basic and Diluted Earnings per ADS

Both basic and diluted earnings per ADS were RMB-0.80 (US$-0.13) during 2012,
compared with RMB8.68 in 2011. Basic and diluted earnings per ADS non-GAAP
were RMB2.47 (US$0.40) during 2012, compared with RMB8.62 during 2011.

Common Shares

CMGE had 331.1 million common shares outstanding as of December 31, 2012, or
the equivalents of 23.6 million ADSs outstanding.

Business Outlook

In 2013 the Company is determined to capture the growth opportunities in the
smartphone social games and game publishing businesses by leveraging its prior
investments in developing its new generation games as well as its expanded
distribution channels. The games the Company develops for smartphones will
also be available for download on tablets through the same channels as
smartphones, an aspect of its business the Company anticipates will expand
significantly during 2013 because of the better user experience available
through tablets, in particular for MMORPGs, due to their larger screen size
compared to phones. During 2013, CMGE plans to launch more than seven
self-developed social games, all of which will be available for both Android
and iOS-based phones and their tablets and to launch over 100 self-developed
or sourced single player smartphone games. The Company has already established
a strong network that reaches over 150million users with over 30million
active users a month and recently released the Game Center application store,
which can leverage its extensive pre-installation and open-platform channels
to distribute and publish smartphone games. In 2013 the Company wishes to
install its Game Center application and its selected games on approximately 60
million mobile handsets. CMGE plans to exclusively publish eight third-party
developed social games and to operate and publish over 100 additional social
games for third-party game developers through its publishing platform.

CMGE is a leading mobile game company in China and according to the Analysys
report in March 2013, for the third consecutive year, it had the largest
market share among mobile game developers in terms of revenues. The Company
aims to further expand and consolidate its leading position in the mobile
games market in China.

2013 Major Game Launch Schedule

War Valley (Zhan Gu) - Expected launch: May 2013

"War Valley" is a heavy MMORPG social game set against a western fantasy myth.
Players navigate around the virtual world through their mobile phone screens
or controller. Through exploration, players gradually customize their
characters as the game plot develops. Revenue is generated through the in-game
sale of virtual items.

Compatible systems: PC (web game), iOS, Android.

Immortal Wind (Xian Feng) - Expected launch: June 2013

"Immortal Wind" is a RPG social game based on the ancient Chinese legend
"Shanhai Jing." Players navigate around the virtual world by tapping their
mobile phone screens. Through exploration, players gradually customize their
characters as the game progresses. Revenue is generated through the in-game
sale of virtual items.

Compatible systems: iOS, Android.

Che Che Bomb (Che Che Dan) - Expected launch: June 2013

"Che Che Bomb" is a RPG social game set in the Stone Age era. Players move
their characters around the virtual world and hit targets with bombs by
controlling the launch trajectory. Revenue is generated through the in-game
sale of virtual items.

Compatible systems: PC (web game), iOS, Android.

Dazzling Dance (Xuan Wu Pai) - Expected launch: July 2013

"Dazzling Dance" is a 3D music dancing game with fun interactive gameplay.
With a high degree of community interaction and personalized in-game
preferences, the game can be played both offline and online. The game provides
upgradable items such as costumes, as well as a cooperative game mode along
with other unique game settings. The game differs from other games of the same
type in terms of gameplay, interaction and personalization level.

Compatible systems: iOS, Android.

Conference Call

CMGE's management will host a conference call to discuss the results at 8:00
a.m. Eastern Daylight Time on March25, 2013 (8:00 p.m. Beijing time on the
same day).

The dial-in details for the live conference call are:

U.S.TollFreeDial-In +1 855-500-8701
                      
HongKongDial-In      +852 3051-2745
                      
China Dial-In          +86-4001-200-654
                      
InternationalDial-In  +65 6723-9385
                      
Conference ID          CMGE

A telephone replay of the call will be available after the conclusion of the
conference call at 10:00 a.m. Eastern Daylight Time on March25, 2013 through
11:59 p.m. Eastern Daylight Time on April1, 2013. The dial-in details for the
replay are:

U.S.TollFreeDial-In +1855-452-5696 
                                     
International Dial In: +61 2-8199-0299 
                                     
Conference ID         19475723        

A live webcast of the conference call will be available on the investor
relations section of CMGE's website at: http://www.cmge.com/

About CMGE

CMGE is a leading mobile game company in China with the largest market share
among mobile game developers in terms of revenues in 2010, 2011 and 2012,
according to Analysys International, an independent market research firm. CMGE
has integrated capabilities in the development, operation, sale and
distribution of mobile games in China. Its mobile handset design business
complements its game development business as it pre-installs CMGE's mobile
games and game platforms in the handsets it designs, and enhances CMGE's
knowledge of user habits and preferences and industry trends. CMGE has a large
and diversified portfolio of games for smartphones and feature phones, and has
strong development capabilities, evidenced by the fact that it develops
single-player games and social games for both types of handsets.

Forward-looking Statements

This press release contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," "confident" and similar
statements. CMGE may also make written or oral forward-looking statements in
its periodic reports to the U.S. Securities and Exchange Commission, in its
annual report to shareholders, in press releases and other written materials
and in oral statements made by its officers, directors or employees to third
parties. Statements that are not historical facts, including statements about
CMGE's beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. A number
of factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not limited to the
following: the Company's growth strategies as well as business plans; future
development, results of operations and financial condition; ability to
continue to develop new and attractive products and services; ability to
continue to develop new technologies or upgrade existing technologies; ability
to attract and retain users and customers and further enhance brand
recognition; the expected growth of and trends in the mobile game industry in
China; PRC governmental policies and regulations relating to the mobile game
industry in China; competition in the mobile game industry; and general
economic and business conditions in China. Further information regarding these
and other risks is included in the Company's registration statement on Form
F-1 and other documents filed with the Securities and Exchange Commission.
CMGE does not undertake any obligation to update any forward-looking
statement, except as required under applicable law. All information provided
in this press release and in the attachments is as of the date of the press
release, and CMGE undertakes no duty to update such information, except as
required under applicable law.

About Non-GAAP Financial Measures

To supplement CMGE's financial results presented in accordance with U.S. GAAP,
the Company uses non-GAAP financial measures, which are adjusted from results
based on U.S. GAAP to exclude (1) share-based compensation expenses (2)
goodwill and intangible assets impairment loss and (3) listing expenses.
Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures
are set forth in tables at the end of this earnings release, which provide
more details on the non-GAAP financial measures.

Non-GAAP financial information is provided as additional information to help
investors compare business trends among different reporting periods on a
consistent basis and to enhance investors' overall understanding of the
historical and current financial performance of the Company's continuing
operations and prospects for the future. Non-GAAP financial information should
not be considered a substitute for or superior to U.S. GAAP results. In
addition, calculations of this non-GAAP financial information may be different
from calculations used by other companies, and therefore comparability may be
limited.


CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"))

                                             As of December 31
                                             2011*    2012        2012
                                             RMB      RMB         US$
                                                     (Unaudited) (Unaudited)
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                     187,237 128,736    20,664
Short-term investments                        —      45,000     7,223
Accounts receivable                           56,121  41,726     6,697
Inventories                                   2,103   2,359      379
Prepayments and other current assets          24,966  37,164     5,965
Amounts due from related parties              1,349   —         —
Deferred tax assets                           1,491   262        42
Total current assets                          273,267 255,247    40,970
Non-current assets:                                              
Property and equipment, net                   5,435   4,814      773
Goodwill                                      598,358 564,841    90,663
Intangible assets, net                        70,101  42,998     6,902
Deferred initial public offering costs        2,010   —         —
Deferred tax assets                           916     129        21
Prepayments                                   —      28,600     4,590
Other non-current assets                      343     343        55
Total non-current assets                      677,163 641,725    103,004
TOTAL ASSETS                                  950,430 896,972    143,974
LIABILITIES AND SHAREHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                              9,150   3,689      592
Accrued expenses and other current            17,577  19,597     3,145
liabilities
Deferred revenue                              3,894   1,697      272
Income tax payable (prepaid)                  11,115  (146)      (23)
Dividends payable                             63,000  —         —
Amounts due to related parties                6,542   991        159
Total current liabilities                     111,278 25,828     4,145
Non-current liabilities:                                         
Unrecognized tax benefits                     27,844  21,944     3,522
Deferred tax liabilities                      12,580  7,844      1,259
Other non-current liabilities                 2,550   2,150      345
Total non-current liabilities                 42,974  31,938     5,126
Total liabilities                             154,252 57,766     9,271
Commitments and contingencies                                    
Mezzanine equity                                                 
Contingently redeemable ordinary shares
(US$0.001 par value, 26,485,961 shares
authorized; nil and 26,485,961 shares issued
and outstanding as of December 31, 2011 and   —      76,858     12,337
2012, respectively. As of December 31, 2012,
aggregate liquidation preference and
redemption amount were RMB75,899 and
RMB76,858, respectively)
Shareholders' equity:                                            
Ordinary shares (US$0.001 par value,
1,000,000,000 shares authorized; 302,729,550
and 304,588,550 shares issued and outstanding 1,937   1,937      311
as of December 31, 2011 and 2012,
respectively)
Additional paid-in capital                    709,815 726,203    116,564
Retained earnings                             84,853  34,563     5,548
Accumulated other comprehensive loss          (427)   (420)      (67)
Total China Mobile Games and Entertainment    796,178 762,283    122,356
Group Limited's equity
Noncontrolling interests                      —      65         10
Total shareholders' equity                    796,178 762,348    122,366
TOTAL LIABILITIES, MAZZANINE EQUITY AND       950,430 896,972    143,974
SHAREHOLDERS' EQUITY
                                                                
*Amounts for the year ended December 31, 2011 were derived from December 31,
2011 audited consolidated financial statements.



CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(Amounts in thousands of Renminbi ("RMB") and U.S.Dollars ("US$"), except for number of shares and per
share data)

              ThreeMonthsEnded                                   Twelve MonthsEnded
              December31, September30, December31, December31, December31, December31, December31,
               2011         2012          2012         2012         2011*        2012         2012
              RMB          RMB           RMB          USD          RMB          RMB          USD
              (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)              (Unaudited)  (Unaudited)
Net revenues                                                                            
(a)
Games          50,804      41,630       20,722      3,326       204,794     172,185     27,638
Handset design 9,170       1,983        8,194       1,316       38,694      15,408      2,472
Total net      59,974      43,613       28,916      4,642       243,488     187,593     30,110
revenues
Cost of                                                                                 
revenues (b)
Games          (22,459)    (19,906)     (11,830)    (1,899)     (79,311)    (74,878)    (12,019)
Handset design (8,247)     (2,579)      (9,049)     (1,452)     (29,037)    (16,852)    (2,705)
Total cost of  (30,706)    (22,485)     (20,879)    (3,351)     (108,348)   (91,730)    (14,724)
revenues
Gross profit   29,268      21,128       8,037       1,291       135,140     95,863      15,386
Operating                                                                               
expenses:
Selling        (2,420)     (3,992)      (4,792)     (769)       (7,561)     (15,838)    (2,542)
expenses
General and
administrative (2,647)     (9,273)      (13,385)    (2,148)     (16,263)    (35,633)    (5,719)
expenses
Research and
development    (9,489)     (9,270)      (9,840)     (1,579)     (24,566)    (35,071)    (5,629)
expenses
Impairment of  —          —           (33,517)    (5,380)     —          (33,517)    (5,380)
goodwill
Impairment of
intangible     —          —           (10,910)    (1,751)     —          (10,910)    (1,751)
assets
Listing        —           (18,053)     746         120         —          (17,307)    (2,778)
expenses
Total
operating      (14,556)    (40,588)     (71,698)    (11,507)    (48,390)    (148,276)   (23,799)
expenses
Operating      14,712      (19,460)     (63,661)    (10,216)    86,750      (52,413)    (8,413)
income (loss)
Interest       303         235          674         108         927         1,474       237
income
Other income   89          113          113         18          293         451         72
Changes in
fair value of
contingently   31,913      20,550       2,806       450         39,446      27,326      4,386
returnable
consideration
assets
Income (loss)
before income
taxes and      47,017      1,438        (60,068)    (9,640)     127,416     (23,162)    (3,718)
noncontrolling
interests
Income tax
(expenses)     61,373      176          1,738       279         35,927      8,689       1,395
benefits
Net income     108,390     1,614        (58,330)    (9,361)     163,343     (14,473)    (2,323)
(loss)
Accretion of
contingently   —          (576)        (560)       (90)        —          (3,023)     (485)
redeemable
ordinary share
Net income
(loss)
attributable   108,390     1,038        (58,890)    (9,451)     163,343     (17,496)    (2,808)
to
shareholders
Net income
(loss)
attributable   —          —           (135)       (22)        11,837      (135)       (22)
to
noncontrolling
interests
Net income
(loss)
attributable
to China
Mobile Games
and            108,390     1,038        (58,755)    (9,429)     151,506     (17,361)    (2,786)
Entertainment
Group
Limited's
ordinary
shareholders
Other
comprehensive                                                                           
income (loss):
Foreign
currency       337          23           (36)         (6)          (278)       7           1
translation
adjustment
Total other
comprehensive  337         23           (36)        (6)         (278)       7           1
income (loss)
Total
comprehensive  108,727     1,061        (58,926)    (9,457)     163,065     (17,489)    (2,807)
income (loss)
Total
comprehensive
income
attributable   —          —           (135)       (22)        11,908      (135)       (22)
to
noncontrolling
interests
Total
comprehensive
income
attributable
to China
Mobile Games   108,727     1,061        (58,791)    (9,435)     151,157     (17,354)    (2,785)
and
Entertainment
Group
Limited's
ordinary
shareholders
Earnings per                                                                            
share:
Basic earnings 0.36        0.0032       (0.19)      (0.03)      0.62        (0.06)      (0.01)
per share
Diluted
earnings per   0.36        0.0030       (0.19)      (0.03)      0.62        (0.06)      (0.01)
share
Weighted
average number
of ordinary                                                                             
shares
outstanding in
computing:
Basic earnings 302,657,192 302,729,550  303,194,300 303,194,300 244,594,415 302,853,059 302,853,059
per share
Diluted
earnings per   302,657,192  316,228,294   303,194,300  303,194,300  244,594,415  302,853,059  302,853,059
share
(a) Net
revenues from                                                                           
related
parties
Games          —          —           —          —          13,752      —          —
(b) Cost of
revenues to                                                                             
related
parties
Handset design —          —           —          —          (774)       —          —
                                                                                       
* Amounts for the twelve months ended December31, 2011 were derived from December31, 2011 audited
consolidated financial statements.



CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"))
                                                                               
            For the three months ended                         For the twelve months ended
            December31, September30, December    December    December  December    December
                                        31,        31,        31,      31,        31,
            2011         2012          2012        2012        2011*     2012        2012
            RMB          RMB           RMB         US$         RMB       RMB         US$
            (Unaudited)  (Unaudited)   (Unaudited) (Unaudited)          (Unaudited) (Unaudited)
Net cash
provided
(used in) by 48,124      (12,405)     25,572    4,105     108,461  47,815      7,675
operating
activities
Net cash
used in      (10,519)    (28,880)     (39,012)  (6,262)     (16,584) (100,051)   (16,059)
investing
activities
Net cash
used in      (8,400)     (2,038)      (14,115)    (2,266)     (8,400)  (6,272)    (1,007)
financing
activities
Exchange
rate effect
on cash and  415         23           (36)       (5)        (278)    7          1
cash
equivalents
Net increase
(decrease)
in cash and  29,620      (43,300)     (27,591)   (4,428)    83,199   (58,501)   (9,390)
cash
equivalents
Cash and
cash
equivalents, 157,617     199,627      156,327    25,092     104,038  187,237    30,054
beginning of
the period
Cash and
cash
equivalents, 187,237     156,327      128,736    20,664     187,237  128,736    20,664
end of the
period
                                                                               
*Amounts for the year ended December 31, 2011 were derived from December 31, 2011 audited
consolidated financial statements.



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP MEASURES
(Amounts in thousands of Renminbi ("RMB") except per ADS data)
                                                                                                                     
              Forthethreemonths ended     Forthethreemonths ended                   Forthethreemonths ended
              December31,2011               September30,2012                            December31,2012
              GAAP    Adjustment(a) Non-GAAP GAAP          Adjustment(a)     Non-GAAP     GAAP          Adjustment(a)     Non-GAAP
              RMB     RMB            RMB      RMB           RMB                RMB          RMB           RMB                RMB
Operating      14,556  121            14,677   40,588        (5,054)           35,534       71,698        (48,351)          23,347
expenses
Income/(loss)
from           14,712  (121)         14,591   (19,460)     5,054              (14,406)    (63,661)     48,351             (15,310)
operations
Operating      24.5%                 24.3%    -44.6%                          -33.0%       -220.2%                         -52.9%
margin
Net            108,390 (121)         108,269  1,614         5,054              6,668        (58,330)     48,351             (9,979)
income/(loss)
Net margin    180.7%                180.5%   3.7%                            15.29%       -201.7%                         -34.5%
Net income
attributable   108,390 (121)         108,269  1,038         5,054              6,092        (58,755)     48,351             (10,404)
to CMGE
Net margin
attributable   180.7%                180.5%   2.4%                            14.0%        -203.2%                         -36.0%
to CMGE
Diluted
earnings per   5.01                  5.01     0.04                            0.25         -2.71                           -0.48
ADS(b)
Non-GAAP                                                                                                              
adjustments
                                                                                                                     
                                           ForthetwelvemonthsendedDecember31,2011 ForthetwelvemonthsendedDecember31,2012
                                           GAAP          Adjustment(c)     Non-GAAP     GAAP          Adjustment(c)     Non-GAAP
                                           RMB           RMB                RMB          RMB           RMB                RMB
Operating                                   48,390        (815)             47,575       148,276       (75,803)          72,473
expenses
Income from                                 86,750        815                87,565       (52,413)     75,803             23,390
operations
Operating                                   35.63%                          35.96%       -27.9%                          12.5%
margin
Net income                                 163,343       815                164,158      (14,473)     75,803             61,330
Net margin                                 67.1%                           67.4%        -7.7%                           32.7%
Net income
attributable                                151,506       815                152,321      (17,361)     75,803             58,442
to CMGE
Net margin
attributable                                62.22%                          62.6%        -9.2%                           31.2%
to CMGE
Diluted
earnings per                                8.68                            8.62         (0.80)                         2.47
ADS(b)
                                                                                                                     
Non-GAAP                                                                                                              
adjustments
                                                                                                                     
(a) Adjustment to exclude the share-based compensation expense and goodwill and intangible assets impairment loss of each period.
(b) 1 ADS = 14 Ordinary Shares.
(c) Adjustment to exclude the share-based compensation expense, goodwill and intangible assets impairment loss and listing expense of each
period.

CONTACT: For investor and media inquiries, please contact:
        
         China Mobile Games and Entertainment Group Limited
        
         In China:
         Tel: +86 20-8561-3455
         E-mail: ir@cmge.com
        
         Christensen
         Christian Arnell
         Tel: +86 10-5826-4939
         E-mail: carnell@ChristensenlR.com
        
         In the U.S.:
         Christensen
         Linda Bergkamp
         Tel: +1 480 614 3000
         E-mail: lbergkamp@ChristensenIR.com
 
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