China Mobile Games & Entertainment Group To Restructure & Sell Portion Of Beijing Zhuoyuechenxing Technology Co Interest

China Mobile Games and Entertainment Group Limited ("CMGE" or the "Company")

, the largest publisher and a leading developer of mobile games in China, today announced that Chengdu Zhuoxing Technology Co., Ltd. ("Chengdu Zhuoxing"), a subsidiary of one of the Company's variable interest entities, has entered into an agreement to restructure and sell a portion of its interest in Beijing Zhuoyuechenxing Technology Co., Ltd. ("Beijing Zhuoyuechenxing"), a subsidiary of Chengdu Zhuoxing, to Tianjin Zhuoyue Mobile Technology Co., Ltd. ("Tianjin Zhuoyue"), a company controlled by Mr. Shuling Ying, the Company's chief operating officer. The Company also announced that Mr. Ying will leave his current position to assume the role of chief executive officer of Beijing Zhuoyuechenxing. This strategic restructuring is intended to increase the profitability of Beijing Zhuoyuechenxing, previously an inactive subsidiary, and to enable CMGE to benefit from Mr. Ying's leadership developing and managing the business of the newly restructured Beijing Zhuoyuechenxing. Mr. Ken Jian Xiao, chief executive officer of CMGE, stated, "I am confident that this strategic restructuring of Beijing Zhuoyuechenxing will benefit the Company in the long run. We believe that elevating Mr. Ying to the role of a strategic partner will help ensure the development of Beijing Zhuoyuechenxing's business and maximize our return in this strategic investment." Under the agreement, Chengdu Zhuoxing will sell up to 51% of its equity interest in Beijing Zhuoyuechenxing to Tianjin Zhuoyue over a period of three years for a total consideration of RMB130 million, including a RMB20 million contribution to Beijing Zhuoyuechenxing's share capital. Chengdu Zhuoxing will also transfer the operations of two social games to Beijing Zhuoyuechenxing: Crisis Action and Charming Dancer. If Beijing Zhuoyuechenxing fails to achieve profit targets of RMB45 million, RMB80 million and RMB107 million for 2015, 2016 and 2017, respectively, Tianjin Zhuoyue will return to Chengdu Zhuoxing up to 25% of its shares in Beijing Zhuoyuechenxing without consideration. Under the agreement, CMGE will obtain the right to appoint members to the Beijing Zhuoyuechenxing board of directors and will also hold a right of first refusal and co-sale rights.