NetDragon Websoft Inc. Reports Profit Up 2,662.3% to RMB266.1 Million for 3Q 2007

HONG KONG, Nov. 14 /Xinhua-PRNewswire-FirstCall/ — NetDragon Websoft Inc. (“NetDragon” or the “Company”, or, together with its subsidiaries, the “Group”, Stock Code: 8288), a leading online game developer and operator, announced today its unaudited operating results for the nine months ended 30 September 2007. During the period, the Group’s turnover increased by 699.6% to RMB453.3 million, while profit reached RMB266.1 million, which represented an increase of 2,662.3% over the same period last year, given the continuous popularity of its flagship games, namely Conquer Online, Eudemons Online and Zero Online.

The basic earnings per share of the Group was RMB59.98 cents for the nine months ended 30 September 2007 (2006 same period: RMB2.41cents). The board of Directors of the Company did not recommend the payment of dividend for the three months ended 30 September 2007.

Commenting on the satisfactory results, Mr. Liu Dejian, Chairman and Executive Director of NetDragon said, “The significant results not only demonstrate our development strategy is on the right track, but also provide a solid proof of NetDragon’s potential to the shareholders.”

For the third quarter of the year, the revenue derived from Conquer Online and Eudemons Online were RMB37.9 million and RMB128.3 million respectively, representing increases of 231.4% and 582.9% over the corresponding period last year, while the revenue of Zero Online which was launched in late April 2007, amounted to RMB24.5 million. The revenues of Conquer Online, Eudemons Online and Zero Online accounted for 19.8%, 67.0% and 12.8% of the Group’s total revenue for the three months ended 30 September 2007.

Thanks to the increased player usage, the Group’s gross profit margin increased by 5.8% to 94.5% for the nine months ended 30 September 2007.

NetDragon has signed an exclusive cooperation agreement with China Film Group Corporation (CFGC) a renowned film making company to develop a new online game based on the theme, contents and characters of the movie “Tuo Ming Zhuang,” and aimed to launch the game at the same time of the movie launched.

“Following the success of many adaptations of classic works of literature and film into online games in mainland China, we are now seeing great attention to online game adaptations of popular movies, TV series, and bestselling books. This cooperation will not only help us create a new kind of online game, but will also raise our profile and market share. We are confident that this new online game will become a new driving force for NetDragon’s future development,” Mr. Liu added.

In order to enhance its overall competitiveness, NetDragon continued to upgrade its games both in content and technical aspects, and had launched the Portuguese version of Eudemons Online during the period under review. The Group also established partnership with two well-know Internet portals and an online payment service provider to further expand its business channels.

The Group currently had three games in the development pipeline, namely Happiness Q, Piao Miao Online and Heroes of Might and Magic Online, targeting various types of players. Happiness Q was expected to be launched by the end of 2007 and expected to provide contribution to the Group’s revenue starting from the first quarter of 2008. Meanwhile, Piao Miao Online and Heroes of Might and Magic Online were scheduled to be launched in the first half of 2008. The English version of Zero Online was also expected to be launched in the fourth quarter of 2007.

“Looking forward, we will further strengthen our game development capability through recruiting experienced talents and internal training, and enhancing game development software so as to cope with our fast-growing game development. Leveraging our experience and expertise in the online game industry, we believe we can capture the emerging market potential of the PRC online game industry and in turn maximise our returns to shareholders,” Mr. Liu concluded.

About NetDragon

Founded in 1999, NetDragon Websoft Inc. is one of the PRC’s leading online game developers and operators and is headquartered in Fuzhou, the PRC. The Company listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited on 2 November 2007 and has been named “2007 The Best Employer in the PRC — The Best Company to Work For” by Fortune magazine (Chinese edition).

The Company currently has more than 600 employees and has successfully developed and operated several large-scale online games, including a demon fantasy game Eudemons Online; Conquer Online, a game featuring ancient martial arts heroes; a robot fighting game Zero Online; 2D turn-based cartoon pets game Monster and Me; and Era of Faith, a game featuring a virtual medieval fantasy world.