Shanda's Profit Up Sharply - Large Online Game Revenue Growth

Summary of the fourth quarter 2004:

* Revenues for the fourth quarter of 2004 increased 133.3% year-over-year, and 21.9% quarter-over-quarter to US$54.7 million, and net revenues increased 134.2% year-over-year and 22.0% quarter-over-quarter to US$52.1 million
* Online games revenues for the fourth quarter of 2004 increased 118.6% year-over-year and 20.7% quarter-over-quarter to US$49.8 million, accounting for 90.9% of total revenues; fourth quarter MMORPG revenues grew 11.7% quarter-over-quarter to US$38.3 million and casual game revenues grew 64.9% quarter-over-quarter to US$11.5 million
* Other revenues for the fourth quarter, which primarily include revenues from online advertising, and other value-added services and products, increased 35.5% quarter-over-quarter to US$5.0 million, accounting for 9.1% of total revenues
* Gross profit margin increased to 67.1% in the fourth quarter compared to 62.7% in the third quarter of 2004, while operating margin increased to 43.5% in the fourth quarter compared to 40.2% in the third quarter of 2004
* Net income for the fourth quarter of 2004 was US$28.0 million, and diluted earnings per ADS were US$0.38

Recent Business Highlights:
Shanda completed the acquisition of an approximately 29% controlling stake of Actoz Soft Company, Ltd, a Korean developer, operator and publisher of online games, ... in early February 2005. In addition, in December 2004, Shanda purchased an additional amount of Actoz's shares ... equal to approximately 9% of Actoz's issued and outstanding shares ... . In total, Shanda currently owns approximately 38% of Actoz and will be accounted for under equity method in 2005. Through this acquisition, Shanda solidified an important alliance with the supplier of one of its leading games, The Legend of Mir II. According to the user survey conducted by IDC, in late 2004, Mir II is the most popular online game in China.

Source: Shanda Interactive Entertainment Limited - Press Release