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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 1.2 million 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.

4 Starting 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.

5 Total 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.

6 Total 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.

7 Since 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 accounts for single-player games (excluding single-player game bundles) were 31.7 million, compared with 29.0 million in the 2011, and ARPU was RMB3.56, compared with RMB4.58 in 2011.
  • Total subscriptions for single-player game bundles were 5.9 million in 2012, compared with 9.6 million 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 31.7 million 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.

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